Invest KOREA

In 2009, the iPhone made a belated debut in South Korea, heralding a meaningful beginning in the country's attempt to shed its smartphone laggard image and become a smartphone wonderland.

 Three years later, South Korea has successfully regained its tech-savvy reputation, emerging as the home turf of some of the world's biggest smartphone makers, component makers and mobile carriers.

Leading the smartphone bandwagon is the world's top smartphone maker, Samsung Electronics Co. Putting behind the painful flop of its "Omnia" smartphones, which consumers burned and hammered in a sign of frustration, the company has regained its presence this year with the "Galaxy" series.

Its flagship "Galaxy S3" phone, which has sold more than 30 million units since late May, has helped the company bolster its smartphone line-up that now includes bigger phablet models such as the "Galaxy Note 2."

Buoyed by the Galaxy's success, Samsung was estimated to have taken over Nokia Corp. as the world's biggest handset maker this year despite intensifying competition and an entrance of low-end manufacturers. It also reigned as the world's biggest smartphone maker, dwarfing its U.S. rival Apple Inc.

"Samsung's successes and Nokia's struggles in the cellphone market this year were determined entirely by the two companies' divergent fortunes in the smartphone sector," said Wayne Lam, a senior analyst at IHS iSuppli.

The Galaxy smartphone was also voted one of this year's top three products after the viral hit "Gangnam Style" and mobile game "Anipang," according to a survey of 19,701 people by Samsung Economic Research Institute.

LG Electronics Inc., which has desperately sought to regain its mobile prowess, also managed to catch up with rivals with key models such as "Optimus G" and "Optimus Vu."

In the July-September period, the company saw its global smartphone sales hit a record high of 7 million units, compared with a previous high of 6.2 million.

Growing demand for smartphones at home and abroad, meanwhile, has given a boost to component makers such as Samsung Display Co., LG Display Co. and LG Innotek Co.

LG Display, which supplies panels to Apple and LG, logged its first operating profit in two years in the third quarter, driven by solid demand for smartphones and tablet PCs.

Another driving force for South Korea's smartphone growth this year was a rapid rise in subscriptions for the long-term evolution (LTE) network, which enables faster data transaction compared with third-generation connectivity.

LTE subscriptions at the country's three major mobile operators -- SK Telecom Co., KT Corp. and LG Uplus Corp. -- reached 12.7 million as of end-October, according to the Korea Communications Commission (KCC).

While competition to lure subscribers has ramped up marketing costs, a growing demand for the faster network has also nurtured local mobile carriers into some of the world's biggest LTE operators.

Top player SK Telecom recently announced its LTE subscriber base topped the 7 million mark, becoming the world's No. 3 LTE provider after Verizon Wireless and NTT DoCoMo.

In line with the global smartphone fever, South Korea has also witnessed a sharp rise in its smartphone population.

The rate of South Korea's smartphone users reached 63.5 percent this year, more than doubling from 31 percent a year earlier, according to a recent report by the KCC and the Korea Internet Security Agency. The figure marks a 60-fold leap compared with 2009 when smartphone users accounted for less than 1 percent of total subscribers.

Market watchers said the smartphone juggernaut is likely to continue for the time being and spawn overall growth in mobile devices.

"South Korea saw one of the world's highest smartphone penetration rates happen due to the help of its unique peer culture. Of course, the convenience also really appealed to consumers," said Eugene Park, a manager at DigiEco, a research arm of KT.

"We are likely to see more changes over the next few years amid the evolution of mobile networks and growing use of multiple mobile devices," Park said, referring to the recent introduction of data-sharing price plans and "smart" devices.

"Rather than one device leading growth, a multi-device environment will become more general as people use different devices for different functions," said Chang Soon-yul, research director at IDC Korea.

In terms of units, the country's mobile phone shipments are expected to grow 4.3 percent in 2013, while tablet PC shipments are expected to surge 24.7 percent, according to IDC Korea.

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Source: Yonhap News (Dec. 21, 2012)