The Competitiveness of Value Chains for the Telecommunications Equipment Industry: Analysis and Policy Implications

With the COVID-19 pandemic accelerating digital transformation, demand for 5G networks is soaring. 5G networks are an indispensable part of infrastructure supporting immersive content, self-driving technologies, the Internet of Things (IOT), remote services, and smart manufacturing. Telecommunications equipment is at the center of reaching this next generation of mobile network technology. Given the intense demand for highly advanced technologies, the global 5G network market is already dominated by leading Chinese and European companies, which are raising steep barriers to market latecomers. Despite the fact that Korea was the first in the world to roll out commercially viable 5G networks and services, Korean companies have struggled to expand their share of the global 5G equipment market. The Korean telecommunications equipment industry is currently led by a few large corporations and their long-standing smaller partners. A lack of extensive growth-oriented infrastructure, core technologies, and competitive products, along with the volatility of materials and parts supplies limits the Korean telecommunication industry’s prospects for growth relative to its counterparts in other developed countries. In this report, we examine the structure and characteristics of value chains for the Korean telecommunications equipment industry, assessing its competitiveness at different stages of the value chain against its global competitors, and identify the implications for future growth policy carried by our findings.