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WTEC REPORT ON THE KOREAN ELECTRONICS INDUSTRY
(08-12-2006)

HCM CITY — Thirty computer processing units containing unauthorised software applications were confiscated on Tuesday at the My Duc Ceramics company in HCM City’s district 10 by inspectors from the Ministry of Culture and Information.




EXECUTIVE SUMMARY

STUDY OBJECTIVES AND PROCESS

Rising from obscurity 25 years ago, Korean electronics companies have come to own a significant share of the world electronics market today. They are now the major DRAM suppliers in the world. They conduct state-of-the-art R&D projects, establish foreign ventures, and support world-class university science and technology (S&T) programs. The purpose of this study was to provide a clear English-language analysis of how Korean corporations operate and what technologies, manufacturing procedures, capabilities, and infrastructure have made them so successful. This information, coupled with understanding of the future direction of the Korean electronics industry, is vital to U.S. competitiveness, to help U.S. businesses determine in which market sectors to compete and in which areas subcontracting, outsourcing, and partnership agreements would be beneficial.

The study was sponsored by the National Science Foundation, through the World Technology Evaluation Center (WTEC) at Loyola College in Baltimore, Maryland, and the CALCE Electronic Packaging Research Center at the University of Maryland. The full report of the study, The Korean Electronics Industry1(Pecht et al. 1997; see also http://www.calce.umd.edu), is based on the WTEC team's visits in early summer 1996 to Korean electronics companies, institutions, and government agencies, on conversations with company employees, and on research of the available literature. All Korean hosts were given an opportunity to review and make corrections to the report prior to publication.

PRINCIPAL FINDINGS

Korea's electronics capabilities in the past 25 years have undergone remarkably consistent and rapid expansion in terms of (1) size and capacity of facilities, (2) technological expertise and sophistication, and (3) income earned and impact on the world market. Korea has built and is continuing to build a stand-alone capability in a broad range of electronics technologies, including DRAM, SRAM, and ASIC design approaches; electronics materials and packaging; and development of key new information technology products (e.g., displays). The nation's strategic focus is on achieving dominance not only in production and manufacture of electronics products and components, but also in creation and innovation of new technologies in the field. Korea is determined to remain internationally competitive in electronics in the long run and is prepared to commit the required long-term financial and logistical resources to achieve its goals.

Korean manufacturers dominate markets for DRAMs and other such commodity devices. The growth of the Korean semiconductor industry has been stunning. Within a 10-year period, Korean "chaebols" (industrial conglomerates) went from being virtual non-players to capturing one-quarter of the world semiconductor market in 1994. Samsung is now the world's largest DRAM manufacturer. Korean players in semiconductor markets are regarded by U.S. and Japanese counterparts as formidable competitors.

Government support of electronics includes substantial tax benefits for R&D and product testing, plant improvement or facility construction, and manpower development. Support has also included considerable direct funding of projects in line with national priorities. Government support is now turning to new priorities such as information technologies and startup of a domestic semiconductor equipment industry.

The government and chaebols have worked both independently and in concert to obtain foreign technology from industrialized nations through direct and indirect methods. However, their ultimate goal is for the country to transition from "investment-driven" development to "innovation-driven" development in which the country's major competitive advantage will be innovation capability. This drive permeates the industry. In striving to emulate the electronics expertise of Japan and the United States, Koreans are zealously improving their educational infrastructure and domestic R&D facilities.

Solid public support for science and education (carefully nurtured by government, industry, media, and the educational establishment) has provided a strong foundation for technological infrastructure development. Educators are focused on developing new creative, independent, and cooperative thinking skills within the population that will support national self-reliance in high-technology. They are also upgrading the quality of training for technicians and engineers and making R&D contributions.

Korea's willingness to invest heavily and long-term in R&D, plants, and manpower is impressive. Some investment is catch-up, but as Samsung's early prototyping of the 1 Gbit DRAM and LG's development of its MPEG chip show, this investment is increasingly contributing to leading-edge industry breakthroughs.

Korea's rapid industrialization and its success in electronics manufacturing have been driven in part by capitalizing on human resources. Koreans exhibit high levels of motivation, discipline, loyalty, pride, and very hard work at all levels. Also important are mutuality of employer-employee relationships and a view of the workplace as an extended family and consistency and long range of vision at managerial levels.

Korean electronics investments are global in scope. Korea's 27+ R&D centers in the United States (most focused on electronics-related research, especially semiconductor research) make Korea the 7th-largest foreign investor in such U.S. facilities. Korea is building fabs in in the United States and Europe as well as in countries with low labor costs.

The economic dominance of the huge chaebol conglomerates continues to restrict the viability of innovative small- and medium-sized enterprises, despite government programs to nurture smaller enterprises.

ROLE OF THE GOVERNMENT

The Korean government has placed a high priority on developing the country's indigenous technological capabilities and creating a world-class industrial infrastructure by the year 2001. It has maintained an emphatically proactive position with respect to internal development of advanced technology that has been especially beneficial to the domestic semiconductor industry.

Government nurtures the electronics industry in Korea in at least four ways.

  1. It provides a legislative basis for growth of high-technology industry through means such as national banking regulations, low-interest loans, tax incentives, and duty-free import of selected capital goods.
     
  2. It promotes education and R&D for high-tech industry by providing direct financial support to public and nonprofit institutes, universities, and other educational institutions, primarily through the Ministry of Science and Technology (MOST); the Ministry of Trade, Industry, and Energy (MOTIE); and the Ministry of Information and Communication (MOIC). Such support often involves "partnering" with both established and emerging firms in cost-sharing new product or technology development.
     
  3. It funds infrastructure development, including highways and transportation systems, rapid dissemination of Internet-type services, etc., and through construction of "science parks." The most prominent of these is Taedok, twenty miles outside Seoul. Infrastructure development still lags manufacturing growth, however.
     
  4. It uses its authority and leadership in cooperation with industry, the educational establishment, and the media, to promote development of a sophisticated technoculture in Korea.
In this decade, the government has taken steps to encourage establishment and growth of small- to medium-sized companies, including setting up institutes such as the Korea Electronics Technology Institute (KETI) to assist small and emerging high-tech industries in product development, augmenting their tool bases and providing other specialized services to help them get started. Despite these measures, the government's emphasis appears to still be on more mainstream silicon-based technologies. This is in line with the development plans of the large chaebols, which are pressing to move out from the DRAM market into the ASIC and display fields.

All pertinent activities of the Korean government are organized around a general outline for technological development that recognizes major domestic as well as global market trends resulting from the so-called "G7" joint government and industry study. This study combined internal discussions of Korean industry trends with the roadmaps of extra-national agencies such as the U.S. SIA semiconductor development roadmap.

The government's Highly Advanced National (HAN) program was a product of the G-7 survey. Over its ten-year life (1992 through 2001), this program will spend $4.7 billion on broad-ranging R&D programs focused on strategic technologies and linking many disciplines and technologies together for synergistic advancement. In the electronics area, it coordinates ULSI-related projects and assists in the development of broadband integrated services digital networks (B-ISDN), high-definition television (HDTV), and advanced manufacturing systems. At the time of the WTEC visit, the government was planning investment of some $27 million for high definition television R&D. Starting in 1995, the HAN program began branching into such areas as advanced materials, microelectromechanical systems (MEMS), and flat-panel displays.

The DRAM project (started in the early 1980s but now part of the HAN program) is an example of direct government support for the electronics industry. In such projects as this, 50% cost-sharing has been expected. Revenues from licensing technology derived from this research go back to the ministries for reinvestment. Current industry sentiment in Korea seems to run against government support for the DRAM project: while the government's support is relatively constant, industry cost-sharing is declining (about 30%, as projected from 1989-97). This is a result of a perceived maturation of the industry and the fact that semiconductor research is so highly competitive that companies are reluctant to accede to the reporting requirements or the externally supplied schedules and milestones of the government program.

On the other hand, industry appears to welcome some degree of government support in semiconductor and other electronics equipment development. Korea has little indigenous equipment supplier base (although the nucleus of one exists - LG has robotics and control business units, and Korea's packaging assembly industry makes wafer handlers and positioners). Lithography tools, vacuum deposition equipment, and CVD reactors must all be brought in from abroad, creating at least a perception of vulnerability and giving Korean corporations a minimal role in defining design-rule evolution.

In the area of displays, the government apparently has a rather large funding and regulatory role, due at least in part to the request in about 1990 from the major electronics firms for government assistance. Their request led to establishment of EDIRAK, the Electronic Display Industrial Research Association of Korea. MOTIE funds about 40% of EDIRAK's budget, distributed as loans and matching funds. EDIRAK distributed about $15 million in 1995, about 30% of that to small companies. Overall government funding of display projects is difficult for outside observers to tabulate, complicated by the fact that various ministries have overlapping interests in some specific projects. It appears, however, that government direct funding and tax breaks for display development will total over $350 million this decade.

While individual programs and projects identified and sponsored by the legislature and the ministries may be criticized by some, their ultimate value is undeniable. The government programs lower the cost of basic research and plant modernization, and government funding of university and other educational programs improves the availability of skilled technologists and serves to maintain a pool of basic researchers and educators who serve as consultants to industry at large. Government planning and coordination reduces redundancy of effort and contributes to synchronized development in many related areas. Finally, the government has made great strides in creating and promoting development of a nationwide science culture and a strong technological infrastructure within its society.

ROLE OF THE CHAEBOLS

Korea's economy, including its electronics industry, is dominated by the relatively small number of single-family-dominated industrial chaebols that often enjoy vertical monopolies (i.e., the company and its subsidiaries control most of the steps in production, from the acquisition of the raw materials to fabrication). Chaebols also extend horizontally across diverse industries, similar to the Japanese keiretsu. In the immediate post-Korean War years, the chaebols took advantage of subsidized loans and tax breaks provided by the Korean government that allowed them to grow very quickly. By the early 1980s, the four most prominent chaebols, Samsung, LG, Hyundai, and Daewoo, were immense and were thriving. In essence, the story of the remarkable growth of Korea's economy is the story of the growth of its chaebols. Their success and the success of Korea's industrialization and modernization are inseparable.

The chaebols have based much of their success on foreign trade, and exports continue to be essential to the stability and growth of the Korean economy. (In 1995, Korea was the world's 13th largest trading nation, with $96 billion in exports and $102 billion in imports.) Electronics goods have been among the chaebols' most profitable exports. Korea expects to have steady export growth of 12.3% in industrial electronics, 11.7% in electronic parts, and 4.7% in consumer electronics (Kim 1994). Table 1 shows the rising level of total electronics exports of Korea's leading firms; Table 2 shows total sales. Comparison of the two tables indicates the importance of exports to the chaebols' successes.

Table 1
Value of Exports by Major Electronics Companies, 1987-1995

Table 1

Table 2
Total Sales of Major Electronics Companies, 1987-1995

Table 2

Semiconductors have been especially important to Korea's export earnings. A total of $10 billion worth of semiconductors was exported in 1994, of which $4 billion was attributable to Samsung alone. Korean semiconductor companies have made significant strides in capturing global semiconductor market share in the past ten years. At the time this report was written, Samsung had become the world's highest-volume DRAM supplier, and Hyundai and LG were in second and sixth places, respectively. Together they made up almost 30% of the revenues earned by the top 10 DRAM producers in the world. A major factor in this considerable success is that Korean manufacturers successfully implemented more efficient mass production techniques, allowing more competitive unit pricing.

In 1996, forecasts for Korean semiconductor exports were revised downward several times due to a global market glut and plummeting prices for 16 Mbit DRAMs. In response, the industry pushed ahead with early transition to 64 Mbit DRAMs and higher-value-added memory chips.

Korean companies have progressed to the point where they are able to develop products specifically for individual market requirements. They have been very successful in Europe, despite specifications that vary considerably from country to country. Samsung's European sales increased from $510 million to over $1 billion from 1993 to 1994. It has experienced exceptionally high growth in the European market in recent years compared to European, U.S., and Japanese firms.

As pressure has increased for manufacturers to develop more heavily integrated circuits in the sub-0.5 µm range, Korean companies have have started to address the problem of indigenous manufacturing technology. Much of the equipment relevant to microelectronics manufacturing, such as sputterers, ion implanters, and diffusion furnaces, are supplied by foreign equipment manufacturers. According to the Korean Semiconductor Industry Association (KSIA), domestic chip makers in 1994 relied on foreign manufacturers for 84% of equipment and 52% of materials. To counteract this dependence on foreign equipment and materials suppliers, the government has encouraged Korean companies to develop indigenous semiconductor manufacturing equipment through tax incentives and low-interest loans for R&D.

Contributions of Corporate Culture to Economic Success

Nationalism plays a key role in Korea's culture; among professionals and workers alike, there is a common resolve for Korea to become an economic giant in the world market. Business groups also appear to be like enormous families, where the growth of the whole group is targeted but is accomplished through interdependent growth of smaller units at successively lower levels. To a very great extent, companies enjoy loyalty from employees, and companies return that loyalty. Besides patriotism and mutual management-employee loyalty and teamwork, other standout characteristics of Korean corporate culture include highly focused and extremely hard work, manufacturing excellence, investment of a high percentage (10% or more) of revenues into R&D, and aggressive globalization.

ACQUIRING TECHNOLOGY FROM ABROAD VS. BUILDING DOMESTIC CAPABILITIES

A good deal of the technology crucial to the success of Korean electronics firms historically has been transferred from other countries, primarily the United States and Japan. Aiming for ultimate self-reliance in technology innovation, a key Korean business strategy for remaining competitive in the global electronics market is to engage in joint ventures. Benefits include maintaining the flow of technology with leading foreign companies, distributing R&D costs, mitigating the effects of rising domestic labor costs, securing more favorable trade agreements, and contributing to advancement of the human community.

Korean government, educational organizations, and private companies all have collaborations with overseas universities. Goals for these collaborations include training Korean engineers and advancing new technological frontiers.

Another method espoused by Korean government and industry to speed up technology transfer and increase technology self-reliance is recruitment of foreign nationals and overseas Koreans with knowledge and experience in high-technology fields. Korea has been actively recruiting U.S.-educated Koreans or persons of Korean descent and other foreign engineers to fill technology gaps.

Korean companies continue to pay large royalties for foreign technology. Royalty payments from January 1995 through February 1996 reached almost $1.9 billion. Electric and electronics companies made the largest share of the payments. Samsung's payments far exceeded those of other companies.

An important aspect of the growth of Korea's electronics industry has been its use of original equipment manufacture (OEM) agreements, which have allowed Korean companies to sell products under other companies' names to compensate for their own brands' lack of name recognition. Korean companies now observe that to lead the global electronics market with products bearing their own names, they must reduce exporting through OEM agreements. Most of them are striving to become independent of OEM agreements by increasing their prestige through innovations in design and technology.

ROLE OF THE UNIVERSITIES

Korea's national commitment to education is shared by government, corporations, and the population at large. The literacy rate is 95%. A high percentage of high school graduates enter universities, and roughly 20% of college graduates obtain advanced degrees. It is an absolute national priority to educate the population at all levels, especially in math and sciences. The Korean university system is a source of great national pride. Both public and private (industry) universities offer strong programs in support of electronics. As in industry, nationalism and a drive to excel in S&T is evident in the university culture in Korea.

Government Support for Science and Technology Education

The Ministry of Education administers public universities, but MOST separately contributes funds to university science and technology programs -- both public and private -- through the Korean Science and Engineering Foundation (KOSEF), Korea's equivalent of the U.S. National Science Foundation. KOSEF has established approximately 30 university S&T centers of excellence, which it funds annually at the million-dollar level. These centers are required to collaborate with at least three other institutions and are strongly encouraged to attract supplemental support from industry (Swinbanks 1993).

Centers with the best reputations include the Korean Advanced Institute of Science and Technology (KAIST) and Seoul National University (SNU). KAIST is the only national university administered under the auspices of MOST, which has allowed it to skirt some government employment rules; for example, it offers triple the salary of other public universities to recruit the best professors worldwide. Its curriculum emphasizes research in applied fields defined by MOST as national priorities (Swinbanks 1993). Historically SNU has been the premier Korean university. It continues to attract the best student population, and it boasts one of the most prestigious faculties in the country.

Special facilities and training in electronics-related disciplines offered by these institutions include KAIST's Material Surface Engineering Center, SNU's Research Center for Thin Film Fabrication and Crystal Growing of Advanced Materials, and SNU's first-rate facility for teaching semiconductor processing. This latter facility is a 4-inch fab that can run a full CMOS line with 1.5 micron design rules, with equipment comparable to that of UC Berkeley, MIT, or Stanford. The facility has an e-beam direct-write lithography system that routinely processes runs of multiple project chips with designs from other universities.

Of the 150 colleges and universities in Korea, approximately 100 have electrical engineering departments; 70 of those are active in the Integrated Circuit Design Center (IDEC). At least 40 of the institutions active in IDEC are well regarded by the Korean semiconductor industry for their teaching of IC design.

Industrial Support for S&T Education

Korean industry takes the position that a well-educated workforce is critical to competitiveness. Corporations generally sponsor research of considerable educational value, even if the practical applicability may not be immediately apparent. Industry leaders do not believe that research of individual university professors working with small groups of graduate students can lead to commercially important innovations; nonetheless, they do strongly believe that university research produces well-qualified graduates and therefore well-qualified employees -- that is, highly skilled and innovative engineers. Approximately half of the research money in the most highly regarded electronics programs such as those of KAIST and SNU comes from industry. The universities then engage in the balancing act of trying to accommodate the research needs of professors while trying to train students that meet the needs of industry. Company executives develop close relationships with individual professors in order to have confidence in their abilities to attract and train top students that the companies will ultimately employ; as a consequence, professors often have a great deal of clout within the industry.

As the success and profitability of large Korean companies have increased, several have started their own educational institutions, some of which are full-fledged universities that offer degrees up to the PhD level. The most highly regarded industrial universities include Daewoo's Institute of Advanced Engineering (IAE), Samsung Advanced Institute of Technology (SAIT), and Pohang Institute of Science and Technology (POSTECH), owned and operated by the Pohang Steel Company. In less than a decade since POSTECH opened its doors, it has come to attract the top 2% of the nation's college students (Pettit 1989). Like other industry schools, POSTECH pays competitive salaries to its faculty, much higher than those offered at government-run schools and even more than at KAIST.

There appear to be at least three factors contributing to the trend of companies founding universities: dissatisfaction with the political climate within public Korean universities; desire to better guide training and recruitment of a skilled workforce; and the philosophy of diversifying whenever and wherever possible. An unstated goal of company-owned schools appears to be to build loyalty with top engineering students at the same time as training them, so that they will come back and work for the company. Private industry's universities are completely independent of government agencies, funded solely by the parent companies.

Availability of cleanroom facilities at Korean institutions of higher learning, programs like IDEC, and the excellent teaching programs at KAIST, SNU, POSTECH, and other fine technical universities, puts Korea on a par with the United States for educational resources to support the semiconductor industry. Electrical engineering students emerge from Korean programs with strong skills in solid state device processing, design, and layout. While industry emphasizes support for applied research at universities, this does not suggest a weakness in basic science: through KOSEF, the government primarily supports basic research.

Perceived Weaknesses in University S&T Education

To WTEC panelists, there seems to be a surprising degree of self-criticism within the university community, considering the excellence of the facilities and the training offered. An overwhelming proportion (>80%) of faculty at the more prestigious Korean universities are educated in the United States. A number of them express concern that their graduates are unprepared for the demands on creativity required to make new designs and more competitive products, anticipating that "the future does not remain with DRAM, but with sophisticated and advanced circuit design." Many U.S.-trained faculty members in Korea appear to be committed to teaching global awareness and creative, independent thinking skills as well as those technical skills their students will need. They acknowledge that future competitiveness will require combining all fields related to electronics manufacture (layout, architecture, systems, fabrication, analog, and others), and that it will take imaginative and resourceful minds and team efforts to achieve interdisciplinary solutions. They also realize that they have a difficult job to overcome cultural hurdles in order to nurture a more creative workforce for the future. The Ministry of Education also realizes this and has begun implementing changes to foster creative and independent thinking skills at the secondary and university levels.

THE KOREAN SEMICONDUCTOR INDUSTRY

Memory technology dominates the Korean electronics industry. A very high percentage of Korea's memory sales are overseas, making the industry's revenues highly sensitive to the global market, requiring Korea to excel in the technologies that shape market trends. Korean electronics manufacturers are moving into higher-performance, higher-value-added markets.

There is a shortage of engineering and research professionals in the Korean industry.

Among other efforts to build proficiency in advanced technologies, Korean firms are partnering with U.S. and Japanese manufacturers to build state-of-the-art facilities in Korea. Examples include Anam's Sept. 1996 $3 billion contract with TI to build nonmemory semiconductors, involving TI's transfer to Anam of 0.35 µm processing technology, CMOS technology, and future joint plans to commercialize 0.24 µm, 0.18 µm, and 0.13 µm processing technologies.

DRAM industry successes/strengths include the following:

  • world leadership in DRAM production - in 1994, Samsung was #1, Hyundai #2, and LG #6
     
  • ability by all major firms to produce high-speed, highly integrated (as 64 Mbit) memory packages
     
  • several leading-edge technology developments, including Samsung's announcement in Dec. 1995 of its 1 Gbit DRAM, ahead of all competition (and LG's MPEG chip?)
     
  • combined processing capacity for 0.5 µm 8-inch wafers by Samsung, Hyundai, and LG in excess of 70,000/mo.
     
  • world-class training facilities at universities/R&D institutes, including 2 IC prototyping centers, and chaebols serving as foundries for fabricating chips designed by R&D center researchers/trainees
DRAM industry R&D/planned improvements include the following:

  • design for faster speeds, larger capacities, lower power dissipation, higher integration, and wider I/O architectures
     
  • work on R-DRAM, S-DRAM, C-DRAM to bring memory speed closer to microprocessor speed
     
  • enhance transistor and capacitor fabrication technologies to effect size reductions, and design chips to operate at lower voltages to ensure transistor and capacitor stability as they become smaller
     
  • customize DRAMs for telecom and video equipment
SRAM industry successes/strengths include the following:

  • Samsung was the world's 6th-largest SRAM manufacturer in 1993, with sales of $200 million
     
  • ability of Korean firms to produce highly integrated products
     
  • a strong focus on SRAM because it is considered more ideal than DRAM for applications requiring lower power dissipation and increased speed since it doesn't require periodic refreshment.
     
  • a steady and ongoing improvement in basic R&D
On the other hand, Korean companies lag market leaders by six months to one year in producing BiCMOS, high-speed CMOS, high-pin-count, and special-function SRAMs

SRAM industry R&D/planned improvements include the following:

  • goals closely parallel to the main goals for DRAM
     
  • use of BiCMOS to shorten access time to 10 ns or less
     
  • use of heavily integrated architecture and pseudostatic DRAM technology to increase capacity
     
  • use of lead-on-chip architecture to reduce chip size and increase capacity
     
  • development of wider I/Os to supplant the X1/4 I/O standard
     
  • movement from resistance-type to TFT-type structures to reduce voltage requirements
Korean industry is putting a premium on becoming a major player in flash memory, expecting it to be a key market after 1997, especially for portable computers. The perceived advantages are (1) its low power consumption and high capacities because smaller cells do not require separate capacitors; (2) it requires a relatively small facility investment; and (3) it allows for highly integrated, low-cost mass production. Development efforts in this area focus on NAND-type flash memories.

The Korean memory industry appears interested in ferroelectric random access memory because it is nonvolatile like flash memory but allows the freer bit-access and bit-rewriting capabilities of a RAM. The technology does have major difficulties, which make some in the global industry skeptical; however, many in the Korean industry believe these problems can eventually be overcome to give FRAM a significant market share in the next 10-15 years

Samsung is one of the world's top producers of mask ROM, at fourth place in 1994. Mask ROM should continue to be a central member of Korea's memory market and a constituent of consumer applications such as game machines, karaoke machines, and electronic note pads and dictionaries. In the future, it is expected to compete with high-density products like CD-ROMs in such applications as fax machines and printers. Korean firms are competitive in the production of high-capacity and even special-function mask ROM memory modules. Korean firms lag the market by about half a year in the production of high-pin-count products.

Applications for other memory technologies are relatively minor and are concentrated in digital signal processing, telecommunications, large systems, etc.; they include low-power VLSI circuits, CDMA modem chip sets, ASICs, CMOS, and compound semiconductor devices.

In the area of process technology R&D, work is still focused on improving photolithography and plasma etching for mass production. Work is underway on X-ray and other new lithographic techniques for next-generation massively integrated circuits. Materials work is focused on new materials to improve homogeneity of wafer surfaces. CVD is being developed to replace sputter method for Al wiring. Importance is placed on new packaging technology like lead on chip, 3D packages, and chip-sized packages, especially for very thin packaging for memory cards for portable electronic equipment.

THE KOREAN DISPLAY INDUSTRY

The Korean display industry is only a decade old, built through a concerted, ongoing industry-government effort, based on the perception that Korean strength in electronics and information markets increasingly requires strength in display technologies. Overall, Korea's display industry is strong in conventional technology and weak in new technology, but it has successfully entered the marketplace.

Government funding of display R&D has been considerable, through various HAN projects and 40% government funding of EDIRAK. At the time of the WTEC visit, the government was supporting about 40 display development projects, with emphasis on manufacturing technology for information displays. Ten of the projects were for flat panel displays (based on WTEC interviews, it appears that FPD funding was in the neighborhood of $60 million in the first half of the 1990s), and 6 were for wide CRTs. MOTIE is investing some $280 million in display development, as both direct funding and tax exemptions, from 1996-2001, and other ministries have complementary programs.

Some display development projects and some government diplomatic efforts involve participation from or technical cooperation with foreign entities, including the U.S. Department of Defense. Korean display industry successes/strengths include the following:

  • a 30% world market share in CRTs in 1995; number one in number of units sold
     
  • a 5% world market share in LCDs, mostly twisted nematic (TN) and super twisted nematic (STN) products in 1995, with plans to overtake Japan as market leader by 2000
     
  • LG, Samsung, and Hyundai produce thin-film transistors (TFT) under a (joint?) 1995 agreement
     
  • development of a 4-in. monochrome field emission display (FED)
On the other hand, as of the time of the WTEC visit, no Korean firm had plans yet for production of plasma display panels or edge-lit displays, although Samsung, Hyundai, and Orion have all started basic research. Samsung was producing vacuum fluorescent displays in very small volume.

Korean display industry research and development programs are focused on the following:

  • high-quality 25-29-in. TFT Liquid Crystal Displays (LCD)
     
  • full-color 55-in. plasma display panel (PDP) flat-style HDTVs
     
  • low-electric-power TFT LCDs
     
  • a 10-in. FED
The main Korean firms active in this field are Samsung Display Devices (division of Samsung Electronics Company, SEC), Orion Electronics ( owned by Daewoo), Hyundai, and LG Electronics.

SEC's developments and plans include the following:

  • has led Korean development of flat panel displays since 1991: mass production of 10.4-in. VGAs began on its line #1 in 1995; by June it had 20,000 starts/mo., was shipping 9.4-in. and 10.4-in. VGAs, and was sampling 10.4-in. and 12.1-in. SVGAs; equipment cost ~$360-400 million
     
  • $1.3+ million spent on developing 3.1-in. polysilicon LCDs, allowing driver circuit integration into the panel to control liquid crystal elements of the TFT LCD, thus raising aperture rates to 80%, lowering fabrication time, and enhancing reliability; application is to movie/slide screens, miniature LC TVs, video/TV projection, and HDTVs
     
  • has a TFT LCD mass production line capable of fabricating up to 80,000 10.4-in. panels (for notebook PCs), with expectations to have a second facility running in 1997 with a monthly capacity of 20,000 substrates (or 80,000 panels), and by 2000 to have a total monthly capacity of 120,000 substrates or 480,000 panels
     
  • has PDP joint development activities with a Japanese firm
Orion's developments and plans include the following:

  • display sales in 1995 of $1 billion, 85% in color picture tubes and color display tubes
     
  • numerous joint ventures overseas, including
    • Orion-Hanel Picture Tube Co. in Vietnam, with annual production capacity of 1 million color picture tubes (CPTs) for color TVs and 600,000 B&W picture tubes for TV monitors; exports to Indonesia, Thailand and Brazil started in October 1995
       
    • 15% equity in an Indonesian CPT plant with Toshiba and Sumitomo (Japan) and PT Tabung Gambar (Indonesia), with a planned annual capacity by 1999 of 2.3 million CPTs
       
    • others in France and South Africa, with plans for plants in Mexico, the United States (California), and Russia

     
  • investment of $163 million in 1995 to develop a 28-in. CRT, a 17-in. color monitor, a 10.4-in. color monitor STN LCD for notebook PCs, and a 21-in. color plasma display panel for TVs
     
  • mass-production beginning in October 1995 of 10.4-in. STN LCDs with Toshiba.
     
  • establishment of the Orion-Ajoo University FED Research Center, with the goal of becoming one of the world's top-three specialty display manufacturers by 2000
Hyundai's developments and plans include the following:

  • expenditure of $428 million from January 1995 - June 1996 to fund construction and production equipment for a mass-production TFT LCD line, aimed at 20,000 starts per month
     
  • joint venture since 1992 with U.S. Imagequest, which specializes in avionics displays, its high-end products being for the Boeing 777 and the F-16
Developments at LG Electronics include work on TFT LCDs (since 1987) and completion of a mass-production fab in June 1995.

KOREAN PRODUCTS AND SYSTEMS

The Korean electronics industry has a growing presence in the world markets for PCs, telecommunications equipment, and automotive and consumer electronics products, but these products and systems usually trail in their insertion in markets in the Unites States and Europe. Its development programs emphasize information services technologies, from computers to satellite communications. Many products now only available in Korea are expected to be marketed globally within a few years. Some of Korea's specific developments in these areas are listed below:

Computers

  • Multimedia computers with an intelligent interface, ComBi Station and ComBi Station I (a high-performance personal workstation)
     
  • An intelligent multimedia workstation (by 1998)
     
  • An electronic multimedia book (Oksuh) and authoring tool (Okdang)
     
  • A high-capacity, multifunctional information networking system called GIANT (gigabit information processing and networking technology)
     
  • A state-of-the-art highly parallel computer, TICOM IV. Joint development by industry and government began in February 1994, will run to January 1998, and will cost about $70 million, half of that invested by MOIC and MOST, the other half by participating companies, including Samsung, LG, Daewoo, and Hyundai, and by research institutes. TICOM IV uses up to 256 Intel P6 processors, has 20 GIPS data processing capability, 10,000 tpmC transaction processing capability, and has an open-system architecture that satisfies international standards.
Multimedia communications development includes establishment of a domestic HDTV transmission standard based on the MPEG-2 CODEC chip set; a video terminal adaptor for broadband integrated services and data network (B-ISDN), a desktop video conferencing terminal for ISDN, and optical cable TV with video on demand (VOD). Already in Korea's domestic market are a Korean-Japanese interpretation system for hotel reservation tasks and a spontaneous speech translation system, Speechmate.

Communications Processing and Transmission Equipment and Systems

  • A sophisticated information communications processing system (ICPS), in operation in Korea since March 1995, operates as a ready gateway for open information retrieval, value-added network services, and information guidance services between users and information service centers.
     
  • Work is ongoing on synchronous digital hierarchy (SDH)-based systems that interface 155 Mbps, 622 Mbps, and 2.5 Gbps optical signals.
     
  • Two simple terminal multiplexers, SMOT-1 (1992) and ADM-155 (1993), are already in mass-production by 4 Korean telecommunications companies.
     
  • Commercial prototypes of a 2.5 Gbps optical transmission system, HLS-2500, were being tested between Seoul and Taejon at the time of the WTEC team's visit.
     
  • A BDCS I (and later BDCS II) (broadband digital communications) system, based on SDH multiplexing, is being deployed as a network hub node that provides cross-connection functions on 50 Mbps (and 150 Mbps) path signals, has a 576 x 576 switching matrix, and performs add/drop and protection functions; to minimize size, 3 ASICs of 20-30,000 gate sizes are being designed.
     
  • New technologies for optical cable television systems include POTS, an N-ISDN system, a broadband switching system, and subscriber equipment.
The HAN B-ISDN Project is developing network integration technology, a large-scale 64 x 64 commercial ATM switching system (now being upgraded to include more intelligent functions), 10 Gbps and 100 Gbps transmission systems, a broadband network termination system, and terminal adapters, etc., to support the information superhighway.

The Intelligent Network (IN) Service Systems Development Project includes development of common channel signaling equipment, intelligent network service controlling and management equipment, and various service logics. Parts of the system have already been commercialized.

The TDX-10 ISDN Project is developing an advanced switching system that can accommodate nonvoice services and advanced switching technologies for next-generation broadband switches, to be competitive with foreign systems. It includes development of special ISDN terminals and chips and complex multifunctional desktop video conference terminals. The project includes collaboration with the University of Texas at Arlington on object-oriented testing technology.

Digital Cellular Mobile Systems development responds to skyrocketing demand for mobile telecommunications services. Korea is concentrating development on code division multiple access (CDMA) technology, because of its high capacity and privacy benefits, for implementation in its Personal Communications Network (PCN) system. Major activities slated for 1996 were operational testing of the integrated system and development of ASICs.

Satellite Communications: Koreasat was launched in 1995 by a McDonnel-Douglas Delta II rocket. Development was with Martin Marietta (U.S.) and Matra Marconi (U.K.). Further development is expected to focus on DAMA/SCPC and VSAT earth station facilities. Development of the digital satellite broadcasting transmission system was expected to be operational in 1996.

REFERENCES

DOC (U.S. Department of Commerce). 1996. Globalizing Research and Development: Methods of Technology Transfer Employed by the Korean Public and Private Sector. Washington D.C.: Office of Technology Policy, Technology Administration, DOC.

Kim, N. H. 1994. Korea's semicon industry will continue strong growth. Electronics. 67(March):6.

Pecht, M., J. B. Bernstein, M. Peckerar, D. Searls. 1997. The Korean electronics industry. Boca Raton, Fl: CRC Press.

Pettit, F. 1989 The Pohang Iron and Steel Company: Its research institute and technical university in South Korea. ONRFE.

Swinbanks, D. 1993. What road ahead for Korean science and technology? Nature. 364(July):377-384.


1 Available from CRC Press, 2000 Corporate Blvd. N.W., Boca Raton, FL 33431-9868 (561-994-0555). This summary prepared by the WTEC staff, which is responsible for its content. This material is based on work supported by the National Science Foundation (NSF) of the United States government under NSF Cooperative Agreement ENG-9416970, awarded to the International Technology Research Institute at Loyola College in Maryland. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the United States government, the authors' parent institutions, or Loyola College. The U.S. government retains a nonexclusive and nontransferable license to exercise all rights provided by copyright.



 

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