Korean Chipmakers Widen Technology Gap in Memory Chips

Just after my previous post about Samsung Electronics development of 40 nanometer technology for manufacturing memory chips, Hynix announced on Sunday that it has developed the world's first one gigabit DRAM chip using 44 nanometer technology!  These announcements make it clear that Korea's main semiconductor manufacturers have opened up a technology lead over their major rivals in other countries.  Reports in the Korea Times and other local press noted that prices of DRAM chips are gaining momentum after the German-based firm Qimonda filed for insolvency.  The productivity of this latest DDR3 (double data rate) chip will be 50 percent greater than chips now on the market.   Production costs and power consumption by the chips will also be lowered.  A significant aspect of this development is that it is based on technology advances within Hynix.

"Job Creation 7 Times Slower Than Economic Growth"

An article in today's Korea Times quickly caught my eye with the headline "Job Creation 7 Times Slower than Economic Growth." Fundamentally, this is all due to the advances in communication technology that started in the 1980s and are now bearing fruit. The newspaper article quotes an official from the Ministry of Strategy and Finance as saying ``Korea's industrial structure has transformed into a technology-and capital-dependent one from a labor-intensive one. Manual jobs have largely been moved to China and other Asian economies in which labor costs are much cheaper than here. The economy is expanding without creating as many jobs as it used to." This Ministry official's reference to technology really refers to information and communication technologies (ICT), more than any others. Even more specifically, I would note that there are four key anchor technologies in the fields of industrial and consumer electronics that underpin South Korea's economy today. They are:

• Semiconductors
• Flat screen displays including color television displays.
• Mobile handsets and other devices.
• Electronic switching systems which are key components of digital networks.

As shown in the accompanying graphic, employment elasticity ― the job growth rate divided by output growth rate ― fell to an all-time low of 0.15 in the second quarter of the year, down from 0.25 in the same period last year.

The Government's Role in ICT Development

Hello Readers! I just returned from a one week visit to the United States and am enjoying connecting to the internet at a reasonably fast speed. The motels in which we stayed for most of the past week offered wireless internet, but at speeds around 11 Mbps. That obviously placed some limits on my internet activity. Even checking e-mail was a painfully show process.

One of the first things I found upon my return was an excellent short article by Dr. Lim Young Mo of the Samsung Research Institute entitled "Six Promising Technologies Awaiting Government-Led Development." The title of this article underscores a point that I will explore in some detail in this blog. South Korea's telecommunications revolution of the 1980s was built upon key technology-development projects such as the TDX electronic switching system and the 4 Mb DRAM semiconductor. These projects, while involving the private sector, were government led, as were the decisions to initiate color television broadcasting and to privatize telecommunications services. As show in the chart from his article, government R&D investment led the way in Korea until about the turn of the century. Indeed, it is no exaggeration to say that Korea's lively ICT sector and information society today owes its very existence to government-led technology development. The opening paragraph of Dr. Lim's article states that "A nation’s wealth has largely depended on its ability to develop innovative technologies, rather than on capital and labor. Therefore, many governments around the world have spearheaded technological development. The trend will likely intensify rather than ease as the connection between the national wealth and its technological development ability becomes stronger into the future; while R&D may be more effective if the private sector takes the lead in areas in which it excels, the government will need to continue to play a major role." The article goes on to discuss the process of selecting promising technologies and nominates six for government support in Korea. They are: Intelligent Infrastructure, Biopharmacy, Clean Energy, Unmanned Military, Nanomaterial and Cognitive Science. While the role of the private sector and venture capital in R&D is clearly increasing, the United States serves as a shining example that deregulation and the private sector alone cannot build a comprehensive nationwide broadband infrastructure. I commend Dr. Lim's article, but I would carry it one step further and suggest that the revolution in information technology underlies all six of the technology fields he nominates for government support. In other words, it is a basic or fundamental source of innovation. One final thought: government-led development does not necessarily mean government-dictated development. The Korean model deserves more attention for the sort of government-industry-academia cooperation that underly its telecommunications revolution.