Korean IT Companies Need to Expand Semiconductor Patents Derek Lidow / CEO of iSuppli Corp. South Korea has not yet been able to translate its market leadership in many information technology (IT) hardware categories into commensurately unique and valuable intellectual properties, a leading market expert said. "Even in industries where Koreans dominate, Korea does not own a significant number of fundamental patents," Derek Lidow, CEO of market researcher iSuppli Corp., told The Korea Times. Prior to founding iSuppli, Lidow was CEO of International Rectifier, a power semiconductor company. In Lidow's view, South Korean IT companies face the dual challenge of increasing the quantity and quality of their semiconductor patents. His research firm estimates that Korean semiconductor and IT companies will pay out over $2 billion in licensing fees in 2005. Lidow was positive on Samsung's efforts to set the standard for the TFT-LCD display market. It is often a good strategy for the industry leader to try to set product and manufacturing standards, he said. Last month, Lidow was among the speakers at the Seoul Digital Forum. The following is the major content of the interview with Lidow: Korea Times: What major intellectual property rights (IPR) challenges do you see facing Korean semiconductor companies Derek Lidow: Although Korea has reached leadership market positions in many IT hardware categories and operates the most advanced IT networks in the world, Korea has not yet been able to translate that valuable market experience into commensurately unique and valuable IP. For example, Korea only generates half the number of semiconductor IC patents as Taiwan. Even in areas of Korean dominance, Korea does not own a meaningful number of fundamental patents. Korea has a dual challenge to increase the quantity and quality of its semiconductor patents. KT: How much do Korean semiconductor companies have to spend on licensing fees annually DL: iSuppli estimates that Korean semiconductor and IT companies will pay out over $2 billion in licensing fees in 2005. KT:Compared to sectors such as the automotive or consumer electronics industries, the Korean IT sector still files a lot of patents every year. Why is this DL: Korea wants to generate more valuable patents to reduce royalties, and eventually maybe even collect royalties. Because it is often difficult to tell which semiconductor patents will be valuable in the future, many semiconductor companies, not just Korean, utilize the strategy of applying for a patent on any advance or improvement they make. In all areas of the world, semiconductor companies file more patents than other companies. KT: To what degree are Korean IT companies dependent on Japanese patents and technology DL: Japanese companies own valuable patents in the area of flash memories, displays and semiconductor processing on which Korean companies pay royalties. KT: What do you think about Samsung's latest efforts to set standards in the TFT/PDP market DL: It is often a good strategy for the industry leader to try to set product and manufacturing standards. Whether it's a good idea for others to follow is another question. In the display industry, equipment suppliers will need to play a more dominant role in insisting on standards, as in the semiconductor industry, to achieve real standardization.