Kim Hyun-seok, Head of R&D Strategy Planning Division of the Ministry of Trade, Industry and Energy (former President of Samsung Electronics), explains the measures to revitalize the domestic science and technology industry at the Korea Technology Center in Seocho-gu, Seoul, on the 20th of June. /Courtesy of Jo In-won.

The innovation in Korean industries has long since disappeared. At some point, the very question of 'What should we do next?' faded away.

Kim Hyun-seok, former president of Samsung Electronics, which is recognized for leading Samsung Electronics' Consumer Electronics (CE) division and achieving the number one position in the global TV market, pointed to the 'disappearance of innovation' as the fundamental reason for the crisis in the Korean economy.

A former engineer, Kim served as the president of the Video Display Division at Samsung Electronics, head of the Consumer Electronics (CE) division and representative director, and chair of the Future Technology Division. At the end of last month, he was appointed as the new Director General of the Industrial Science and Technology R&D Strategy Planning Division.

The Industrial Science and Technology R&D Strategy Planning Division is an organization responsible for planning the strategy and investment directions for R&D in the industrial and energy sectors of the government and overseeing the performance management system. Established in 2010, Kim is the second businessperson to be appointed as the head of the R&D Strategy Planning Division since Hwang Chang-kyu, former president of Samsung Electronics, was appointed as the inaugural director.

On the 20th, Kim held an interview with this publication at the Strategy Planning Division office in Seocho-gu, Seoul, focusing on the reality facing the Korean economy and the R&D direction for enhancing national competitiveness.

He pointed out the narrow perspective and low data utilization as reasons for the decline in innovation in domestic industries.

Kim noted, "We viewed the launch of smartphones as a new hardware market, but the U.S. understood it as a platform market," adding, "The background of the fact that the U.S. has dominated all global mobile platforms, including e-commerce."

He commented, "In this process, we lacked consideration for data," and stated, "We say data is important, but we haven't actually thought much about data."

He continued, "Focusing only on privacy protection has rendered data almost unusable," and noted, "China views data as a tool for business or service. The rapid growth of China's AI industry is due not only to talent and investment but, more importantly, to data."

Kim presented 'demand-centered' as the direction for R&D reform. He also raised issues about the current structure, which is biased towards small and medium-sized enterprises in terms of government R&D support and is conducted in a small-scale, 'sharing-like' manner.

He stated, "I believe that the shift of government R&D support towards small and medium-sized enterprises has created a gap with large corporations," adding, "Due to a lack of funding and manpower, small and medium-sized enterprises find it difficult to lead R&D themselves. Even if the government provides projects, commercialization is not easy." He further stated, "Government-led R&D should also be led by corporations" and emphasized, "Key Performance Indicators (KPI) should align with corporate standards."

The following is a Q&A session.

Kim Hyun-seok, Head of R&D Strategy Planning Division of the Ministry of Trade, Industry and Energy (former President of Samsung Electronics), explains the measures to revitalize the domestic science and technology industry at the Korea Technology Center in Seocho-gu, Seoul, on the 20th of June. /Courtesy of Jo In-won.

―How long has it been since you left Samsung? When did you receive the public office proposal?

"It seems I've been away from Samsung for about 6 months now. After serving as a representative, there is a mandatory 3-year term as a full-time advisor. Just as I was about to transition to a part-time advisor early this year, I received a call just in time. I had previously worked on a project with the government, and they suggested, 'How about actually trying out the contents of the report submitted at that time?'

―What was the project about?

"It was a project called 'Industrial Transformation Measures' conducted at the end of 2022. Someone inside recommended me, I heard. At first, I didn't even know what 'industrial transformation' meant. It started with the understanding that it would only take 3 months, but it ended up taking almost a year due to delays in reports resulting from the president's overseas schedule."

―What contents were included in the report at that time?

"There were divisions for education, workforce, and investment at that time, and I took charge of the productivity division. I thought it would deal with enhancing manufacturing productivity, but it actually covered 'total factor productivity'. The report concluded that 'The innovation in Korean industries has long since disappeared.' Although it's said that many new things are being done, there seems to be no innovation that can create the future of Korea or secure competitiveness. Specifically, I diagnosed that the national economic growth rate would lean severely towards low growth and pointed out that cooperation between the government and corporations in R&D is not functioning well."

―What do you think is the reason for the disappearance of innovation?

"Until the 2000s, there was a 'fast follow' strategy. That was innovation. However, at some point, the very question of 'What should we do next?' faded away. During that time, countries like the U.S. shifted towards a platform approach, while we remained focused on hardware."

―Are you saying we shouldn't have focused on hardware?

"Originally, the U.S. was also manufacturing-focused. They eventually passed manufacturing to Japan and Korea, while they transitioned to software. A typical example is the smartphone. We viewed the launch of smartphones as a new hardware market, but the U.S. understood it as a platform market. This is the background to why the U.S. has dominated all global mobile platforms, including e-commerce."

We do have platform companies like Naver, Kakao, and Coupang, but we haven't properly developed platform-based services. It's not that focusing solely on hardware was wrong. What I'm saying is that we should have taken a broader perspective. Particularly in this process, we lacked consideration for data. While we say data is important, we haven't really thought much about data.

―What are the issues in the data sector?

"Focusing only on privacy protection has rendered data almost unusable. Nowadays, discussions about relaxing regulations are emerging, and it really needs to happen quickly. China is different. They view data as a tool for business or service, not as technology."

While there are factors like talent and investment behind the rapid growth of China’s AI industry, the more important aspect is that there was data. Without data, it's meaningless. China also shares platforms with each other. While we tend to close off our platforms claiming ownership, China has the government create a car platform for everyone to use. China competes through services, while we are merely quarreling over platform development.

―Should we also adopt a method where the government creates and opens platforms?

"That's a somewhat different discussion. Korea has a pyramid structure in its ecosystem. At the top are large companies like Samsung and Hyundai, and within them, platforms already exist. There is no need for the government to create platforms in such areas. However, in fields where ecosystems like robots have not formed, the government needs to get involved. The government should create platforms, allowing corporations to compete in providing services on top of them."

―Is this story applicable to the AI semiconductor sector as well?

"AI semiconductors are needed across various industries such as automotive, robotics, and consumer electronics. Our country has strengths in edge devices (like smartphones or home appliances) rather than servers or clouds. We should focus R&D on on-device AI semiconductors that go into these devices."

If the government leads on-device related projects, we can expand into various fields, including automotive and robotics. The approach of 'we developed this, so you should use it' from the past will not work. Now, the platform owner must state, 'this is what we need,' and development should be aligned accordingly.

―Are you suggesting we shift to a demand-centered R&D strategy?

"Correct. For this, both the government and corporations need to be more honest."

―When discussing the restructuring of the R&D framework, we cannot overlook the previous government's restructuring attempts. How do you evaluate them?

"The problem was that the discussion at the time started with the term 'cartel.' Cutting budgets and pushing ahead inevitably led to backlash. They should have improved the operating methods. Establishing regulations and changing the structure should come first, but it became twisted as they framed it in a certain way."

―Earlier, you diagnosed that 'cooperation between the government and corporations in R&D is not functioning well' through government projects.

"Korea has traditionally been a country where the government and corporations have collaborated on R&D. The initial semiconductor and CDMA developments would have been impossible without the government. However, at some point, they began to act separately."

―What do you think is the reason for this?

"While there is no clear explanation, I believe that the shift of government R&D support towards small and medium-sized enterprises has created a gap with large corporations. The domestic industry still centers around large corporations. Small and medium-sized enterprises are also within that ecosystem. Due to a lack of funding and manpower, it is challenging for these small and medium-sized enterprises to lead R&D on their own. Even when the government provides projects, commercialization is not easy. There seems to have been a difference in expectations and perspectives between the giving and receiving sides."

―What is the corporations' perspective on the government and public institutions?

"When I was in a corporation, I avoided anyone from the government. If they came to propose a government project, I was always opposed. It is not easy to deliver results. There was a difference in KPIs between the two. The government thought, 'If we just meet this level, that’s enough,' whereas corporations thought, 'This level is insufficient for me to actually use it.' Government-led R&D should also be corporation-led and KPIs should be aligned with corporate standards."