Market Trends of South Korea Digital Transformation Industry
Analytics, Artificial Intelligence, and Machine Learning to Witness the Growth
- South Korea's government is investing in AI and ML technologies as a part of a broader digital transformation strategy. Initiatives like the "AI National Strategy" aim to position Korea as a global leader in AI by 2030. Korea is pushing for widespread AI adoption, targeting a 30% uptake among local companies by 2030. Additionally, the nation is striving to nurture a minimum of 100 companies to become global AI solution providers. These objectives underscore Korea's acknowledgment of AI's pivotal role in digitally transforming its businesses and industrial landscape.
- Artificial Intelligence and Machine Learning have various applications across industries, such as manufacturing, healthcare, finance, and transportation. The adoption of AI technologies is expected to drive rapid growth. Additionally, as an OECD member, South Korea plays an active role in the organization's AI Task Force. The nation collaborates in initiatives like the Global Alliance on Artificial Intelligence (GAIA), focusing on ethical and socio-economic AI concerns.
- Moreover, the country recognizes the pivotal role of international collaboration in advancing AI. South Korea has forged strategic alliances with major global AI leaders, including the United States, Japan, and the European Union. These partnerships facilitate the exchange of expertise, foster joint research initiatives, and promote cross-training programs. For instance, In May 2024, the UK and the Republic of Korea unveiled their intentions for the imminent global talks on the safe advancement of Artificial Intelligence (AI) technologies. The agenda included deliberations on AI safety, harnessing the potential of advanced AI models, promoting inclusivity, and paving the way for future innovations.
- There is a growing startup ecosystem promoting analytics, artificial intelligence, and machine learning, with many startups receiving the necessary support and funding for growth. In February 2024, SK Telecom, South Korea's leading telecommunications company, announced a strategic partnership with the U.S.-based AI startup Perplexity. The collaboration aimed to introduce an AI-powered search engine as a direct competitor to Google and Naver and to SK Telecom's user base. Under this partnership, SK Telecom's subscribers planned to gain complimentary access to Perplexity's premium services.
- The rollout of 5G technology in South Korea is also facilitating the deployment of AI and ML by providing the necessary infrastructure for advanced applications and services. As per the Ministry of Science and ICT (South Korea) data, there is growth in 5G connections in the country, which reached 33.37 million by March 2024, from 33.12 million connections in February 2024. This growth will also drive the market for AI and ML in 5G infrastructure.
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IT and Telecom Holds the Largest Share
- South Korea was one of the first countries to launch 5G, and continuous investment is made in expanding and enhancing this network. Various opportunities exist in developing applications that leverage 5G’s and 6 G's low latency and high-speed capabilities, such as smart cities, industrial automation, and autonomous vehicles. Thus, IT and Telecom hold the largest share of the market.
- Many market players are collaborating to enhance their service offerings. For instance, in May 2024, Japanese companies Rakuten Mobile, Rakuten Symphony, and South Korean mobile network operator Stage X announced an agreement to establish a comprehensive framework for strategic collaboration between the companies, South Korea’s new mobile network operator. The agreement focused on technological collaboration between the three companies. Partnership aimed at discussion of Stage X’s upcoming projects ranging from business operations to technical areas, as well as cooperation considering expansion to mid-band frequency and the development of a 6G-based national network.
- Combining AI with 5G technology is expected to create new services and applications, enhancing real-time data processing and connectivity in healthcare, manufacturing, and entertainment sectors.
- Digital technologies drive a swift transition from outdated to streamlined systems. While some businesses view digital transformation as an IT strategy to secure a competitive edge, other businesses are required to meet evolving client demands and maintain relevance. Organizations increasingly rely on real-time big data analysis for prompt feedback, aiding in enhancing products and services or creating new ones, all in pursuit of a competitive edge.
- Additionally, companies are adopting hybrid and multi-cloud environments to optimize performance, cost, and security. This trend is driving demand for cloud management and integration services. Cloud services help businesses to scale IT resources based on demand. This flexibility facilitates rapid growth and helps manage the fluctuating demand without any significant upfront investment in hardware. According to a 2023 survey by the Korea Information Society Development Institute, 69% of respondents identified Naver's NDrive as one of their primary cloud services.
