| 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
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
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
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)