6 - Investment of Korean Electronics Industry in Southeast Asia

Summary

Introduction

The Korean electronics industry started with the production of radio receivers in 1959. The semiconductor industry (mainly memory chips) emerged in the late 1960s with the investment of U.S. producers and subsequently became an icon of Korean industrialization. In the late 1960s, Korean manufacturers started to produce colour television sets and other consumer electronics. Currently, semiconductors, mobile phones, and products based on Liquid Crystal Display (LCD) technology are the main export goods from Korea's electronics industry. Even though LCD monitors are well developed, the computer sector, including peripherals, is still below its full potential.

From the very beginning, this industry was developed as an export industry. In order to respond positively to the increase in production costs in Korea and in the world market, manufacturers began to engage in overseas investment in the late 1980s. Increasing production costs, particularly of labour, and protectionism in developed countries were the two dominant factors that led Korean manufacturers into Southeast Asia by the end of the decade.

In Southeast Asia, the electronics industry is also an engine of economic growth, with semiconductors leading industrial output in Singapore and Malaysia. The remaining ASEAN countries adopted export-oriented industrialization after the Plaza Accord; the consumer electronics industries, led by Japanese firms, became the top export earner. The MNC-led electronics industry in ASEAN resulted in a surge of imports and low-technology diffusion to local companies. Accordingly, continuous structural change and the technological development of the electronics industry in Southeast Asia are critical for sustained economic growth in the region.

This chapter will examine the current state of Korea-Southeast Asia cooperation by focusing on Korea's investment in Southeast Asia in the electronics sector. Therefore, the key questions to be addressed in this study are: What is the status of Korean investment in Southeast Asia? And what is the impact of this investment on the electronics industry in the region? This chapter seeks to address various questions related to the presence of Korean firms in Southeast Asia. First, the most basic purpose is to answer in detail the question of what Korean electronics firms are doing in Southeast Asia. This chapter seeks to examine which sectors are the most popular and to evaluate investment flows by country.