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Decreased Investment in ICT Manufacturing Creates Worries about Losing Growth Engines
Dark Shadows
Decreased Investment in ICT Manufacturing Creates Worries about Losing Growth Engines
  • By matthew
  • September 25, 2014, 06:42
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A noticeable decrease in investment is casting dark shadows on growth prospects for local ICT manufacturers and electric, mechanical, and equipment companies. In the past, those companies comprised a large proportion of local venture investment.

On Sept. 23, the Korean Venture Capital Association (KVCA) announced that the investment in the ICT manufacturing area amounted to 114.7 billion won (US$109.9 million) in January-July of this year, a 70.9 billion won (US$67.9 million) decrease compared to the same period last year. The announcement was made at a press event held at VR Tower, Seoul. During the same period, investments in electric, mechanical, and equipment companies also went down by 26 billion won (US$24.9 million). In contrast, the investment in the biotech and medical fields increased by 75.4 percent to reach 55.2 billion won (US$52.9 million).

The amount of new venture investment was 830 billion won (US$795 million), up 5.4 percent compared to the same period in 2013.

From 2009 to 2013, investment in the ICT manufacturing sector and electric, mechanical, and equipment areas accounted for more than 30 percent of the total. Nevertheless, the proportion of investment in these businesses was merely 26.1 percent in January-July of this year.

Those who attended the event predicted that the scale of investment in these areas would gradually decrease. In particular, Lee Young-soo, head of Songhyun Investment, remarked, “So far, semiconductors, displays, and smartphones have been the nation's growth engines. But related materials and components industries are all dead.” He concluded by saying, “Since large companies and related firms have problems, it can be said that the growth engines of Korea's ICT sector have already disappeared.”