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  • Korean Wireless Firms Look Abroad for Market Share
  • May 26, 1998 (SEOUL) -- The Korean mobile telecommunications industry is looking abroad to market its technology and equipment based on confidence that it now stands shoulder-to-shoulder with global rivals after years of furious development and investment.
    The country's economic crisis, which poured cold water on domestic demand, is also behind its push into world markets, which the company sees as hungry for new gadgets of mobile telecommunications.

    According to industry estimates, exports of cellular terminals increased 64 percent to US$253 million in the first quarter of this year from US$154 million a year ago. If the trend continues, total exports of cellular devices will reach US$1.5 billion this year, up 76 percent year-on-year. That will make mobile telephones Korea's third-largest electronic export item after semiconductors and computer monitors. It means more Korean-made hand sets will be sold than color TV sets.

    The selling point of Korean cellular phone exporters is a relatively new technology known as the code division multiple access (CDMA), which Korea commercialized on a nationwide basis for the first time in the world. Leading electronics makers such as Samsung Electronics Co., Ltd., LG Information and Communications Ltd. and Hyundai Electronics Industries Co., Ltd. are producing CDMA-based equipment under licensing agreements with Qualcomm Corp. of the United States for five domestic digital mobile telecom carriers including three personal communications service (PCS) providers.

    The companies are also developing their own know-how to replace Qualcomm microchips going into their hand sets with their own products by year-end, raising the use of local parts to 70 percent.

    That will further sharpen the price competitiveness of Korean cellular equipment makers, which already benefit from a weaker Korean currency. The Koreans bet the diffusion of the CDMA system in advanced and developing countries at the expense of the conventional analog system will give a great boost to their sales in those countries.

    Most recently, Hyundai signed a US$100 million contract with U.S. telecom retail firm Audiovox to supply its handsets over a one- year period. Samsung, Korea's largest cellular phone manufacturer, sold some 710,000 units worth US$250 million in foreign markets between January and April, roughly double its exports in the same period last year.

    Some foreign telecom giants are beginning to take the Korean cellular power seriously. Motorola Inc., which lost the lion's share of the Korean cellular market to the Korean competitors a few years ago, entered into a strategic alliance with Pantech Co. in May. The U.S. company has agreed to invest US$15 million in the upstart manufacturer of paging devices and digital hand sets for joint development and exports.

    The future of Korean exports of CDMA hardware is further bolstered by efforts of service providers to develop foreign markets.

    Samsung, for instance, received a ticket to Brazil, where SK Telecom, Korea's largest cellular carrier, recently won a mobile telecom license. SK Telecom also has a license in Thailand and India, while developing a CDMA market in Japan in a partnership with NTT Mobile Communications Network, Inc. (NTT DoCoMo).

    LG Telecom Co. is deploying PCS service in Venezuela. Korea's Ministry of Information and Communication is throwing heavy support behind the telecom industry with Minister Bae Soon-hoon, former head of Daewoo Electronics Co., drawing on his experience as a captain of Daewoo's globalization. The ministry sees the share of the Korean telecom industry in the world market will grow to 3.8 percent by 2002 from 2.9 percent this year.

    (James Lim, Asia BizTech Correspondent)

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    Updated: Mon May 25 17:55:47 1998