In 2016, WEF announced that Korea’s manufacturing technology innovation ranked 3rd out of the G20 countries, behind the US and Germany. However, Korean technology and investments related to competitiveness in Industry 4.0 are not as advanced as the US, Europe or Japan. According to a report by the Hyundai Research Institute on international comparisons of the research and development status of industries based on Industry 4.0, Korea’s total score for industrial technology evaluation is 77.4 points out of 100. The US tops the list with 99.8%, followed by Europe with 92.3% and Japan with 90.9%. The scores are based on a nation’s development according to five detailed industry specifications: IT services, communication services, electronics, mechanical equipment and biomedical products. Korea achieved its highest score of 79.4 in the field of electronics, which includes the development of devices in semiconductors, electronic components and computers.
Looking to further expand their investment in the field of electronics, Samsung Electronics and SK Hynix, the world’s leading semiconductor manufacturers, plan to invest USD 32.8 billion in the industry by 2024 (Samsung Electronics USD 19 billion, SK Hynix USD 13.8 billion). Their turnover in 2017 is expected to reach over USD 89 billion, the highest ever. Thanks to longer booming in DRAM and NAND Flash, their operating profit will be about USD 40 billion in 2017. In Korea, the semiconductor industry is considered important as a leading axis of Industry 4.0, because it has exploded in the Cloud and Big Data markets. It is expected that there will be new demand from the AI, Robot, IoT and VR markets and they appear to play important roles in these new growing markets.
Similarly, the Korean government plans to invest USD 1.4 billion in 2018 in the core technology development of AI, IoT, Cloud, Big Data, Mobile, intelligent sensors, and semiconductors. Following this investment, 2,000 factories will be turned into so called ‘smart factories’. Currently, Korean factories are positioned in the middle between mass production through automation in China and customized production through flexible automation in Germany.
Samsung relies on Artificial Intelligence
There is a lot of movement at Samsung Electronics toward Industry 4.0. They are betting their future on AI, IoT and auto driving. The microchip industry in Samsung is expected to see growing demand for high-capacity, high-functioning memory chips for big data processing, as well as chip sets for automotive components and devices operated by AI.
AI – to make AI technology more interactive for people, Samsung plans to deliver an AI based open ecosystem across all of its devices. This year, Samsung rolled out the voice-powered digital assistant Bixby on its Galaxy S8 smartphone, and applied voice recognition technology to home appliances, including TVs, washing machines and air conditioners.
IoT – to develop IoT technology, Samsung launched the Open Connectivity Foundation in 2014 with Intel, Microsoft, Qualcomm and Electrolux, and plans to deliver a framework enabling easy discovery and reliable connectivity between devices. They are looking for IoT related firms with potential.
Auto driving – in 2016 they launched the auto component business and acquired a US car infotainment and audio company. In the connected market, Samsung could improve its position, where it is growing 9% annually. In September 2017, Samsung established the Samsung Automotive Innovation Fund, which manages USD 300 million for connected care development. The company has decided to invest USD 90 million in TTTech, a leader in advanced driver-assistant system development.
Business Opportunities in Korea