Last Sunday, the Korean Blue House (the presidential office) publicized Ericsson’s plan to invest $1.5 billion in Korea for the R&D of LTE technology. The statement came after a meeting of Korean President Lee Myung-bak and Ericsson`s CEO Hans Vestberg in Sweden. The Blue House touted it as one of Lee`s major achievements in attracting foreign investment into the country. But it was corrected quickly by Ericsson spokesman asserting company had not such intention. Why does this happen?
[Handshake between Chairman of KCC and CEO of Ericsson]
The context is the current battle for the 4th mobile communication dominant technology. Two standards are competing: WiBro is the South Korean developed variant of mobile WiMax, while Ericsson champions 3GPP Long Term Evolution, LTE. Currently, LTE progresses globally, and Ericsson Korea said LTE would become the dominant technology in the market, accounting for 90 percent of the global market in 2014. Rival mobile WiMax will account for only 1 to 2 percent, according to Ericsson Korea.
Korean manufacturers show different positions. LG Electronics is supporting LTE while Samsung Electronics supports WiBro technology. In fact Samsung owns significant amount of original technology for WiBro and thus are not willing to develop LTE.
The government’s position is quite mixed. On the one hand, they want safeguard its homegrown WiBro in their domestic market. On the other hand, they want Korean manufactories lead global LTE market through exporting. That is why the Korean government wanted Ericsson to cooperate with Korean manufacturers to develop and export LTE devices targeting for the global market.
However, Ericsson’s position is that it would invest in Korea only if the government creates LTE opportunities in Korea.
But Korea stays adamant: “We cannot give up our homegrown technology,” said Korean Communication Commission head yesterday.
It will be interesting to watch if the Korean government’s strategy can succeed. I will follow up with this issue continuously.