SEOUL, South Korea -- South Korea is losing global market share in the liquid crystal display and flat-screen TV sectors, and must innovate to counter increased competition, a leading market research company said Wednesday.

"It is across a fairly wide spectrum of IT product lines that Korea is suffering from competitiveness of other regions" such as Taiwan, China, Europe and North America, said Derek Lidow, president and CEO of iSuppli Corp., which compiles data on various technology industries.

"Korea is battling on many fronts and has unfortunately been forced into a more defensive position," he said. "Korea is being outspent and also outmarketed."

South Korea's Samsung Electronics Co. and LG.Philips LCD Co. are the world's top makers of LCDs, used in computer screens, cell phones and televisions.

But Mr. Lidow said that Taiwan has replaced South Korea as the world's largest LCD maker late last year. And in the market for LCD televisions, South Korea has slipped to third place from second, now trailing Japan and "the combination of Taiwanese companies with Chinese production partners."

Mr. Lidow spoke to journalists just ahead of the Seoul Digital Forum 2006, which brings together leading industry figures including Microsoft Corp. CEO Steve Ballmer, Qualcomm Inc. CEO Paul Jacobs, Renesas Technology Corp. President Satoru Ito and Hwang Chang-gyu, head of Samsung Electronics Co.'s semiconductor business over three days through Friday.

South Korea has also seen its market share gains in mobile phones slow, he said, in 2005 being "effectively contained by a resurgence in European and North American competitiveness."

For example, in 2005, the top two global brands, Nokia Corp. of Finland and Motorola Inc. of the United States, sold almost US$500 million per handset platform, or major category of phone, he said.

South Korea's top players, Samsung and LG Electronics Inc., meanwhile, sold about $100 million per platform.

Mr. Lidow said that Korean companies enjoyed a "remarkable" global emergence beginning in the late 1990s based on "strong investment and also operational efficiency." What they need now, he said, is more innovation.

"To reverse this trend will require a strong dialogue between government and industry ... with a focus on how to create an environment of investment in riskier ideas across a broad spectrum of product areas," he said.