LG Display Co., Ltd.

Good afternoon.

This is Kim Hee-yeon in charge of LG Display's IR.

On behalf of the company, let me thank all the participants at this conference call. Today, I am joined by the CFO, D.H.

Seo, Seungmin Im in charge of Corporate Business Management, Matthew Kim of TV Marketing, Jae Young Kwon of IT Marketing, and Ki Hwan Son of Auto Marketing.

The conference call will be conducted for one hour in both Korean and English, starting with a presentation on the financial results of Q3 2020 and the company's outlook, followed by Q&A. Please refer to the IR presentation document in the company's website for more details on the financial results of Q3 2020.

For those joining through the webcast, please refer to the details on the widget on your screen.

Before we begin the presentation, please take a moment to read the disclaimer.

Please note that today's results are based on consolidated KIFRS standards prepared for your benefit and have not yet been audited by an outside auditor. With that said, we will now start with the presentation on Q3 2020 earnings results. Let me start off with our business performance in Q3.

Revenue in Q3 was 6.7 trillion won, up 27% quarter-on-quarter.

There was increase in IT product shipment, following the trend of work from home and online schooling due to COVID-19. Supply of new P-OLED products began for strategic customers, and there was robust global demand for TV.

Operating loss was 164.3 billion won,

turning around to profit after 7 quarters. I'm sorry, so operating profit was 164.3 billion won, turning around to profit after 7 quarters. Operating margin was 2%, EBITDA margin 19%, and net income was 11 billion won.

Next is area shipment and ASP.

Area shipment in Q3 was 8.3 million square meters, of 23% QOQ. It is owed mostly to growth in TV panel shipment and IT products, as work from home and online schooling became the new norm.

Myeon-deok-dang pang-gwa-neun dae-yeong OLED mit P.O.T. mobile chura-bijung-hak-dae LCD panel gageok sang-seung-yo-in-ro jeon-ppeum-gi-dae-bi 8% jeon-nyeon-dae-bi 38% sang-seung-han 706 dollar-eul gi-rok-haet-sim-da.

ASP was $706, up 8% QOQ and up 38% YOY. This is due to growth in the share of large OLED and PO mobile product shipment and rise in LCD panel price.

자사이 생산가능 캐파는 광주 OLED 신공장 가동효과 및 The company's production capacity increased by 15% QOQ following the start of the Guangzhou New OLED Fab, conversion of Gen 8 facilities to IT,

and the start of new lines for a small to mid-sized OLED. But there was a decrease by 17% YOY due to LCD FAP downsizing.

Next is Q3 Revenue Breakdown by Product Segment.

IT revenue was maintained after the spike in Q2 due to working from home and online schooling. TV revenue rebounded rapidly after the downturn in Q2.

TV revenue was maintained after the spike in Q2 due to working from home and online schooling. TV revenue rebounded rapidly after the downturn in Q2. TV revenue share was 28%, up 5 percentage points QOQ due to increase in OLED TV panel shipment following the start of Guangzhou New Fab.

Mobile and other product share was 29%, up 4 percentage points with full-scale shipment of new products for strategic customers.

Next is the company's financial position and ratios.

The company's inventory at the end of Q3 was 2.4 trillion won, which is an increase to Q. There was production ramp-up of TV panels ahead of seasonal demand and preparation of mobile product shipments for strategic customers.

As for financial ratios,

Current ratio improved, while liabilities-to-equity ratio and net debt-to-equity ratio remained little-changed QOQ.

According to the change in the short-term interest rate for the previous quarter, the cash flow for the previous quarter was reduced by 3.367.4 trillion won, which is a small decrease in cash flow compared to the previous quarter, even though there was a significant increase in driving capital.

Cash flow at the end of the quarter was 3.3674 trillion won, falling slightly from the previous quarter. Although net income turned around to profit, there was increase in working capital, along with revenue growth, as well as partial repayment of debt.

Especially after 2017, when large-scale capital investment was implemented, the difference in interest per quarter has increased, but in the third quarter, the difference of 3.1 billion won decreased for the first time.

Particularly noteworthy is interest-bearing debt decreasing by 310 billion won for the first time since large-scale CapEx began in 2017.

마지막으로 자사이 2020년 4분기 가이던스입니다.

Next is the company's guidance for Q4 2020.

코로나19 매크로 변수 등의 불확실성은 지속될 것으로 예상되나, Due to the increase in sales due to the resumption of Chinese OLED PAP production, the area of output is in the first place compared to the previous quarter. Blended ASP is also expected to rise at a similar level due to the increase in strategic customer-oriented output and the increase in the price of LCD panels.

Although uncertainties are expected to persist in Q4, such as COVID-19 and macro factors, the company expects to see a low single-digit growth in area shipment following increased sales with mass production starting in the Chinese OLED fab. Blended ASP is expected to keep up the pace of increase as shipment for strategic customers grows and LCD panel price rises.

Next is presentation by the company CFO, D.H.

Saul.

COVID-19 is lasting longer than expected. First and foremost, I wish health and safety for all our shareholders, investors, and analysts.

Allow me to add more details on the company's Q3 performance. As work from home and online schooling are becoming a new lifestyle due to COVID-19, the company's IT business has shown robust performance thanks to its preemptive response to the changes.

In addition, the safety of the P-OLED panel has been high-supplied, and the light OLED light factory has been upgraded.

The company was able to turn around to profit for the first time in seven quarters thanks to stable supply of P-OLED panel to strategic customers and start of volume production in the Guangzhou new OLED fab. Area shipment in Q3 was up 23% QOQ. Shipment of IT products continues to grow, and shipment of large-size panels also jumped amidst robust global demand and sales of TV.

In addition, in the mobile sector, the price of LCD panels for strategic customers and new products has increased by 8% compared to the previous quarter,

In addition, supply of new mobile products to strategic customers increased, and the rising LCD panel price pulled up ASP by 8%, bringing the total revenue up by 27% QOQ. There was even improvement in financial performance across the businesses.

By product segment,

IT is maintaining consistent profit structure thanks to unique competitiveness, while mobile P-OLED achieved meaningful improvement in profitability thanks to better quality and yield and growth in new products for strategic customers.

TV department was also able to contribute to the vertical improvement by the dynamic LCD PAP operation linked to supply and demand.

TV also contributed to profitability improvement with the start of mass production in the Guangzhou OLED FAB and flexible operation of LCD FAB according to supply-demand status.

Next is Q4 2020 outlook and the company's direction. There continue to be both opportunities and volatility.

Non-face-to-face culture and home entertainment have fast become the new norm while uncertainties in the external environment persist.

COVID-19 has given new roles and a high level of importance to display.

And along with changes in the industry's competitive landscape, volatility in the display industry in the future is likely to be in different patterns than in the past. The company plans to double down on our activities in various fronts to remain flexible to the market environment. One example is converting part of the LCD TV facilities to IT to strengthen our readiness to respond rapidly and flexibly to new opportunities like non-face-to-face and remote online activities.

LCD TVs maintain the basic direction of structural innovation, but we want to operate in a flexible fashion considering the supply situation. As a result, the LCD TV panel production in Korea is flexible in terms of customer needs, short-term supply situations, etc., based on the basic principle of structural innovation.

For LCD TV, we intend to have greater flexibility in FAB operations according to supply and demand while maintaining the basic principles of structural innovation. Production of LCD TV panels in Korea is running flexibly within the existing facilities and available resources based on customers' needs and short-term supply-demand status while following the principles of structural innovation.

The OLED TV has started to be released after the stabilization of the Guangzhou new factory, and the stable supply base has been secured with the OLED trend. Due to COVID-19, there was a high-end demand in the first half of the year, but as the offline distribution increased in the second half of the year, sales will be doubled compared to the first half of the year. As a result, the sales volume for this year is expected to be in the middle of 4 million.

For OLED TV, we were able to lay the basis for a reliable supply to mainstream OLED with the stabilization of the Guangzhou New Fab followed by full-scale shipment. COVID-19 slowed down demand for high-end products in the first half, but sales in the second half are expected to double from the first half with the reopening of offline retailers.

For the year, shipment is expected at mid-4 million units.

Production capacity for large-size OLED is total 140,000 sheets in Paju and Gwangju combined. We will grow to 7 to 8 million units in 2021 by responding to demand for mid-size of up to 48-inch and for ultra-large size of 77-inch or bigger.

Recently, with the change in lifestyle due to COVID-19, The COVID-triggered changes in lifestyle have also highlighted various uses of TV in addition to just watching.

For such uses as gaming, work from home, and home training, OLED's unique strengths such as natural colors, flexible design, and eye comfort will stand out even more.

We will continue to expand the market leadership as a display that is optimized for these customers and flexible for new form factors.

With display products that are optimized for the new environment and customers' needs, and that are able to flexibly respond to new form factors, the company will keep broadening its market leadership.

In the POLED segment, strategic customer-to-customer supply of new products has been maximized. Based on stable product quality, demand, and strategic customer-to-customer relations, we have minimized short-term variability,

As for P-OLED, supply of new products began fully for strategic customers. We will try to minimize seasonal volatility and ensure consistent business management by achieving reliable product quality and yield and stronger relations with strategic customers.

LCD 구조혁신에 Let me also touch upon the path of our LCD structural innovation.

The purpose of this is to further strengthen the company's already competitive areas and speedily rationalize the fabs and products that are structurally less competitive.

Under this standard and direction, China's LCD-PEP competitiveness will continue to strengthen. Some of the domestic LCD-TV-PEPs will be used for IT use, and the self-sufficient KEPA will respond flexibly to the needs of the market and customers in terms of existing facilities and additional personnel.

It is under this principle that our China LCD Fab will be made even more competitive. Part of the domestic LCD TV Fab will be converted to IT, and the remaining capacity will be flexibly run within the given facilities and available resources in response to the market situation and customers' needs. Next is management direction and financial management.

In order to respond to the business environment where uncertainty and variability are high, we are continuing to carry out preemptive financial management activities based on the worst-case scenario. This year, CapEx will continue to monitor the investment policy of EBITDA according to the reduction in the second quarter through additional adjustments. We will continue to strengthen the management so that financial stability can also be improved gradually.

The company is continuing with preemptive financial management under the worst-case scenario to respond to uncertainties and volatility in the business environment. CapEx for this year has been adjusted to a high 2 trillion won level to keep investment within EBITDA.

We will further tighten control of our finances to keep improving our financial position. Thank you.

That concludes the company's presentation on Q3 performance and outlook. I hope to come back to you at the next earnings release with more improved performance and outlook.

Thank you for your attention.

This brings us to the end of earnings presentation for Q3 2020. We will now take questions. Operator, please commence with the Q&A session.

The first question will be presented by Dongwon Kim from KB Securities. Please go ahead with your question.

Yes, thank you for the opportunity to ask a question. I will ask a question about LCD and P-OLED. Please tell us if there are any changes in the LCD business reduction and structural innovation strategy that you have set up recently due to the improvement in the LCD situation. If possible, I would appreciate it if you could answer in detail, including the Paju LCD line and IT panel, including the P7PA. Next is a question related to plastic OLED. What is the order direction of P-OLED orders for North American strategy customers in the fourth quarter, I have two questions.

First is about the LCD and the second followed by the P-OLED question. So now first, the LCD market recently has been showing quite a good pickup. So does this mean that there would be any changes to the company's strategy to reduce the portion of the LCD business as well as the structural innovation? And if you could also give some specific details regarding the Paju lines, for example, the P7 and P8, and also including your IT panel business. And the second question is about the P-OLED. So can you give us an update on the orders in the fourth quarter coming from your North American customer? And also, what is your outlook for the P-OLED demand for next year?

Now, this is the CFO speaking.

I would take the first question, and I understand that your question is about whether there are any changes regarding our strategy for structural innovation in LCD and also the current update on the progress.

Due to the COVID-19 pandemic, the market has changed a little bit.

Now, on one hand, because of the COVID-19 impact, and also when it comes to the changes in the supply-demand dynamics in the market, and also on the impact of ASP, It is true that there has been some, let's say, help on improving the company's profitability.

Now, having said that, let me emphasize that the company's strategy for structural innovation in the LCD business remains unchanged.

Now, the structural innovation is about strengthening the already competitive areas of the company, especially for the LCD, and then also to speedily rationalize the structurally less competitive FABs or products.

As I mentioned in the last part, we will further strengthen the IT products, which are now taking up a considerable portion of the LCD.

So first of all, as was mentioned in the last quarter, now out of the LCD business where we already have a competitiveness, so the IT products, now in IT products, we will continue to strengthen this. Because we believe that when it comes to the customer base or the technology base, and also the competitiveness of the products themselves, the IT business for the company has unique competitiveness compared to others. So this is where we will continue to strengthen competitiveness.

We will continue to strengthen the competitiveness of Chinese LCD panels in this direction. The LCD PAP in Korea has been adjusted to a certain extent, but there is a device that can be converted into an IT product. It will be a P8 factory. In terms of the existing equipment and the range of use, the change in time and customer needs will be quite severe, but it seems to be quite flexible.

So, it is under such principle and direction that the LCD Fab in China will continue to strengthen competitiveness. Now, on the other hand, the LCD Fab in Korea, it is true that we have already made some adjustments. So, for example, part of the facilities have been converted for IT. applicable to p8 as you have asked about and then for the remaining capacity we will make sure that they are run flexibly according to the market situation and customer needs although we believe that they are prone to changes on these fronts as well so we will try to run them according to the given facilities and the available resources And now with regards to your second question about the POLED business. As you would know, extensive amount of time and efforts have been spent on trying to normalize the POLED business so far.

Since the second half of this year, we have been struggling with various problems, but we have developed stably, and according to the development results, we have reached a level where we can provide a large volume of production in terms of quality and yield.

And yes, so far a lot of hard work has gone into this, and now starting in the second half, we were able to stabilize the development, and as a result, we were able to ensure reliable quality and yield. And based on these achievements, we are now able to have mass production and volume supply to our strategic customer.

The situation in the second half of this year is that we are currently responding to the supply of the production line by fully utilizing the KEPA that we can use. There will be a change in demand due to seasonal factors after next year, but if we minimize the change in demand based on the capacity we have already secured,

So as for the progress in the second half of this year, now we are currently fully utilizing the available capacity to respond to the demand coming from the strategic customers. And then looking toward next year and on, although there would be some changes in demand depending on the seasonality, Based on the mass production capability that we have already secured, we believe that we have now laid the basis for consistent business down the road.

One of the three strategies that we have set up since the beginning was the plastic OLED turnaround. We were not satisfied with the results in the second half of the year, Now, of course, in the early part of this year, we have explained about the three strategic tasks for the company.

One of them was turnaround in the plastic OLED business. So, we will not be resting on our laurels when it comes to the achievements in the second half of this year. and we will continue to work toward a fundamental turnaround of the plastic or lead business. So rest assured that we will not be complacent.

The next question will be presented by Jungwoo Goh from NH Investment and Securities. Please go ahead with your question.

Hello, I'm Jungwoo Goh from NH Investment and Securities. Thank you for the opportunity to ask a question. I have two questions related to the OLED business. The first is a question related to W OLED. It seems that the 48-inch OLED TV demand is good recently. I wonder if the 48-inch OLED TV demand has changed the target of the W OLED panel drop. You mentioned the drop guidance in the middle of 4 million this year. I wonder if there has been any change compared to the existing plan. And although it is still a bit early, please let me know if there is anything else that you can share other than the fall guidance for the next year's W OLED business perspective. The second question is a question related to P OLED. It seems that the progress of the Chinese Huawei business will not be easy. What is the impact of the P OLED business, and how will it be in the future? Thank you.

Now, I have two questions regarding the OLED business. First is about the W OLED. Now, it seems as if there is a quite healthy demand for the 48-inch OLED TV recently. So, I'm wondering whether the changes in the demand for the 48-inch OLED TV have brought about any changes in the company's investment targets for the W OLED. And also, your shipment guidance this year was for 4 million, but then I wonder whether there have been any changes since then. And also, perhaps it is a bit too early to tell, but then can you also give us some further guidance about the W-OLED business for next year, aside from the guidance that you have already given? So, for example, what would be your guidance for the shipment outlook of the W-OLED next year? And the second question is about the European OLED business. It seems as if your business with Huawei in China would be a bit suffering more recently. So then based on that, what would be your outlook for the P-OLED business down the road?

I will first respond to your question about the white OLED. First of all, there are two interpretations of whether the sales figure of the expected sales of 4.5 million units was changed in terms of goals and how much 48 inches influenced it. Before COVID-19, we said that we would be able to sell about 6 million units in this year, but due to the influence of the COVID-19 situation in the first half of the year, First of all, I believe that your question was about whether there have been any changes to our shipment guidance, which was around 4 million this year.

and also whether the demand for the 48-inch OLED TV have brought about any changes to the company's strategy. Now, first of all, the number that we have given in the pre-COVID timing was about 6 million for this year. But then because of the COVID-19 situation lasting throughout the first half, now things have changed. And of course, the situation is slightly different even today. But then immediately after the COVID-19 situation, the demand for high-end TV has slowed down considerably, and that is why we have adjusted the guidance to around 4.2, 4.5 million this year.

Next, I would like to talk about the impact of the 48-inch demand increase. Recently, the 48-inch demand for gaming Especially in terms of gaming, there seems to be a lot of demand. Unfortunately, our 48-inch production is made of 77-inch and MMG from Guangzhou. Because there is a limit to the production capacity, the 48-inch demand increase has not reached the stage where we can raise the sales capacity decisively.

And then regarding the impact of the increasing demand for 48-inch, now it appears that it is mostly for gaming purposes. Now, and yes, there has been increase in the demand for 48-inch, but then unfortunately, the Guangzhou Fab, it's mostly for 77-inch and MMG. So this means that there is limitation in our production capacity for the 48-inch. And because of that, we were not able to rapidly ramp up the production.

Therefore, we are making quick corrections to the lack of production capacity. For example, we are building a development and production base that can be produced by inputting 48 inches in the Paju factory as a raw material. I think that 48-inch supply will be quite smooth from the beginning of next year.

So, we are currently trying to make improvement in order to improve the currently limited production capacity. So, for example, we are currently developing the technology to produce the 48-inch in the Paju lines. So, following such development, we do believe that we will be able to produce more 48-inch next year.

The second question is from China. And then now to your question or the second question about the strategic customer in China. As you would also know, there is a big question mark about when we can resume our business because

It's not only about the company gaining the license for the export, but then also for the other companies in the supply chain gaining the export. So I believe that most of the semiconductor companies would have to gain the license in order to resume the business.

It's a very important trade line for us strategically, but we haven't seen a large volume yet. Now of course, strategically speaking, it's a very important client for the company.

But then when it comes to the volume itself, then we were not at the stage of providing mass volume. So when it comes to the impact on the business itself, then I would say that it is more than manageable. But of course, having said that, if the business were to resume, then we would be ready to move in very quickly.

So we are continuing to make preparation. The next question will be presented by Hyunsoo Kim from Hana Financial Investment. Please go ahead with your question.

Hello, I'm Hyunsoo Kim from Hana Financial Investment. Thank you for the question. I also have two questions. I will ask about the TV and IT side. The first is the TV side. Recently, in the process of changing the TV strategy of competitors, interest in mini-LED technology is increasing. Please tell us about the view that LGD has and the future response strategy for mini LEDs. The second is IT. IT product demand has been very good recently due to COVID-19. Recently, competitors are also strengthening marketing in this way, such as switching the TV line to the IT line. I would appreciate it if you could tell us about the changes in competition and the view of LGD on the market. Thank you.

Other on IT. Now, first, regarding the TV market, now the competitors recently appear to be highly interested in the mini LED. So I wonder what the company's view is regarding mini LED and also what is your response strategy to this? And then the second question is about the IT. Now, COVID-19 has actually driven up demand for IT products. And as a result of this, many of your peers are also strengthening marketing for IT. For example, converting some of their facilities for TV for IT. So then as a result of this, do you see any changes in the competitive landscape? And what is the company's view on the market going forward?

The first question is for you. The second question is related to IT. Now, then, this is the CFO, and I will be responding to the first question, and then the second question on IT will be taken by Mr. Kwon of the IT marketing business. Now then, first about the mini LED.

And the companies, so your question is about the company's view on the mini-LED. And now, yes, we do see that there have been some moves by the competitors recently regarding the mini-LED. But then when it comes to the set market, then we see that some of the Chinese companies have launched mini-LED backlit TV sets. But then we see that what we have seen so far is that the market, the impact on the market has been minimal.

As far as we know, we know that the device structure is a mini LED with a backlight LCD concept. In some aspects, we are judging that there will be various improvements according to the efforts of the set-up companies.

So, based on our understanding so far, when it comes to the device structure, then basically this is a LCD that is backlit by mini-LEDs. But of course, depending on the efforts of the set of solution companies, there would be some improvement over the LCD.

In this COVID-19 period, There is a lot of time for consumers to watch TV, take classes, and watch displays at home. We have recently investigated the pain points that customers feel the most as they grow.

Now if I may explain the background to this, during the COVID-19 era, many people in the home have been increasingly watching more TV or utilizing the monitor to do online schooling. So basically we see that there has been an increase in the time spent on utilizing or viewing the display. So we have done some survey on the users to identify their pain points in using the display.

And in analyzing the customer's pain points, we were once again affirmed

that the solution that would resolve many of the biggest challenges that the customers are experiencing would be OLED.

Among the various concerns, there were a lot of people who were concerned about eye health while watching or watching the display for a long time. In addition, while working from home or doing online shopping, the interest in color has also increased considerably. The color you think is, for example, A, but when you actually receive the item, the color changes,

So there were many pain points that have been mentioned, and some of the most frequently mentioned ones are the concerns on the impact on the eye health or the ocular health for having watched the display for so many hours. And another is, Now, because of the increase in working from home or online shopping, many more customers also became interested in the color or the color representation. So, for example, on the monitor or on the display, they would see color A, and then they would make their choice based on that. And then when they received the product, then they see that the color is different or not what they had expected. So, many also complained that there are some limitations in the color representation.

As you know, there are parts that can be improved by using various mini LEDs, but if you think about the pain points of customers earlier, it is a device that reduces the burden of the eyes that OLED has in its own way, and it is a device that can properly reproduce the original color. It is a display that can show the closest performance of True Color. We express it as a crystal sound OLED, but it is convenient to move and carry because it is a display that includes speakers. Many advantages are that the mini LED has a limit of LCD, so I think it is an area that cannot be easily followed. If we can strengthen the promotion of this part and cooperate with our customers to fully show the characteristics of OLED TV, I think it will be a big help to achieve a sales goal of 7-8 million units next year.

And as I have mentioned earlier, yes, of course, there would also be some improvement in the mini LED, but then when it comes to the customer's pain points, then once again we see that some of the OLED specific features are well suited to relieve such pain points. For example, the OLED display is less harder on the eyes, and also it is one of the best technologies to represent the true colors, so it shows the natural colors and also what we call the crystal sound OLED or the CSO. So this is the display embedded with speakers, meaning that it is also good for mobility or portability. So we believe that these are some of the advantages and strengths of OLED that the mini LED being an LCD will find very difficult to keep up with. So we will continue to promote these advantages and strengths of OLED, and also in consultation with the customers, we will try to fully take advantage of the OLED-specific advantages so that we will be able to achieve the 7 to 8 million shipment target for next year.

Yes, I'm Geon-Jae Young, and I'm in charge of IT marketing. The second question is about the future of IT. I would like to talk about the change in business environment and competitiveness.

And now regarding your question about the IT business strategy and also the competitive landscape.

First of all, I would like to talk about the business environment of IT. Due to COVID-19, the upside demand of IT

Now, first of all, about the IT business environment, the COVID triggered upside demand, of course, this is highly subject to the developments in the COVID-19 situation, as well as the real economy. But we do believe that the upside demand, so the demand overall, will remain high into the first half of next year.

In terms of the change in competition, many suppliers are planning to increase the volume next year in order to respond to the increase in IT demand. That is certainly a negative factor, And regarding the competitive landscape, yes, it is true that some suppliers are trying to increase their production volume.

to respond to the IT demand. So that is one factor that does not bode well for the company. But then, on the other hand, there is also a positive factor for the company, and that is the decrease in the number of suppliers. For example, there was an LCD exit by a domestic player, and also the Chinese LCD makers are set to be going through restructuring.

I would like to add one more thing. We are predicting that there will be changes in the IT business environment, but we have strengths in two areas. First, we have competitive technology such as IPS, Oxide, Narrow Bezel, and high resolution, and we are leading the high-end market based on this technology.

But now also when it comes to the IT business environment and the changes, the company has two advantages that it can rely on. And one is the technological advantage that we have. For example, IPS for oxide, nano bezel, and high resolution. So these are the technological edges of the company that allow us to keep leading the high-end market.

The second advantage is The most important thing in the evaluation of customers is technology. And as I said before, assets already have excellent technology. Based on this technology, we are planning to continue to operate stable BG through long-term partnership relationships with strategic customers.

And the second advantage is the fact that among the customers' feedback, the most important is the technology. So because the company has technological advantage over the peers, this has allowed us to build long-term partnership with strategic customers, which has ensured consistent business.

Yes, then I will take one more question from the audience and wrap it up. We will take one last question.

The last question will be presented by Nicholas Godoa from UBS. Please go ahead with your question.

Good afternoon. Thanks for taking my question. The first one is regarding your Gen 7 LCD capacity remaining in Korea, which we believe is around 80,000 to 90,000 sheets per month and is currently used for TV panels. It seems like that will continue to operate into year-end, partly because of the upside in the market currently. Could you update us on your plans regarding this capacity going into 2021, since initially you intended to actually close it down? And the second question relates to CAPEX. You explained you're adjusting down your CAPEX this year in line with EBDA. Next year, your EBDA is very likely to go up. Should we expect an increase in CAPEX from the levels indicated for 2020? or do you actually intend to start lowering your debt next year by keeping capex as low as possible? Thank you.

I have two questions. First, regarding the Gen 7 LCD Kappa, the remaining Kappa in Korea, about 80,000 to 90,000 TV panels I assume that the production capacity is still there. Since the situation is good now, I guess it will continue to operate at least until the end of the year. But then, can you tell me about the plans for the future after 2021? Because as far as I know, you were planning to close down, but I wonder if there will be any changes in the future depending on the current situation. The second question is, This year, CapEx has been adjusted to run within EBITDA, but we expect EBITDA to increase next year. If so, is CapEx likely to increase in 2020? Or, will you focus on reducing CapEx to lower interest rates next year?

Yes, I will answer the first question. As I mentioned earlier, the GEN7 KEPA in Paju is maintained at the level of 80-90%. Recently, we have been considering the market situation in general and making decisions, but fundamentally, it is a very suitable factory for commercial use.

Now, regarding your first question about the Gen 7 capacity in Paju, yes, currently it is maintained at between 80,000 to 90,000 per month. And of course, we are taking all the factors of the market into consideration when we make decisions. The way we see it now is that it is a FAB that is well-suited for ultra-large commercial products, and so we believe that it is a FAB that is quite competitive for that product category.

As I mentioned earlier, LG TV has switched to IT, and the remaining KEPA is in the 8th and 7th factories. For example, in the case of 7 factories, we operate in a commercial center, and the child CAPA part is in a large direction. The market situation and the needs of customers cannot be ignored in terms of the number of employees. Considering these two aspects,

And as I have explained earlier, much of the LCD TV capacity has been converted to IT. And then what remains in P7, P8, especially for P7, it is currently being run mostly for commercial products. And then for the remaining capacity, as was explained earlier, we will be running them within the given human resources. And of course, we also have to take into account the market situation as well as the customer's needs. So our position now is to make sure that it can be and it will be flexibly run in response to the customer's needs and the market situation.

The second question is, we implemented CapEx this year within the EBITDA range, and we are preparing to implement CapEx within the EBITDA range next year as well. As we invest as much as possible so that there is no negligence in future preparation, And then regarding your question about the CAPEX for next year, yes, for this year, our plan is to keep CAPEX within EBITDA.

And then for next year, the plan is similar, meaning that the capex would be kept within the EBITDA. And of course, we want to be fully ready for the future, so what we intend to do is make investment where necessary as we continue to improve financial ratios. So once we are ready with the final plans, then we would be communicating them to you.

Basically, the plan for next year is to keep CapEx within EBITDA. So that concludes the Q3 2020 earnings conference call.

Thank you once again for joining us today. Please do contact us at the IR team for any additional questions. Thank you.