LG Display Co., Ltd.

Good morning.

This is Daniel Lee 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, Hee-yeon Kim, Senior Vice President of Corporate Strategy Group, Seung-min Im, Vice President of Corporate Planning, Steven Ko, Vice President of TV Marketing, Jae-young Kwon, Vice President of IT Strategy Marketing, and Kihwan Son in charge 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 Q2 2021 and the company's outlook for Q3. followed by Q&A.

Please refer to the IR presentation document in the company's website for more details on the financial results of Q2 2021.

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

먼저, 실적 발표에 앞서 디스클레머를 읽어주시기 바랍니다.

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

금일 실적 발표 내용은 실제 회계 기준인 IFRS에 따라 연결 기준으로 작성된 재무 수치로 아직 외부 감사인의 감사가 완료되지 않은 상태에서

Please note that today's results are based on consolidated IFRS 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 Q2 2021 earnings results.

Let me start off with our business performance in Q2.

7,010,000,000 won revenue in q2 was six point nine six six trillion one of one percent qoq despite the seasonality there was increase in TV shipment including OLED TV and continued solid demand for IT operating profit was seven hundred 1 billion won an increase qoq and thanks to rise in LCD panel price and improvement in OLED TV profitability.

Operating margin was 10%, with EBITDA margin at 25%.

Net profit was 424 billion won.

Next is area shipment and ASP.

Area shipment in Q2 was 8.91 million square meters, up 4% from the previous quarter.

대형 패널 중심의 개별 판가는 2분기에도 지속 상승했으나, 계절적 요인에 따른 모바일 제품 출하 감소로 인해

individual panel price kept up its rising trend in q2 led by large size panels but area asp was 703 dollars down four percent qoq but up seven percent yoy There was reduced shipment of mobile products owing to seasonality. The company's production capacity in Q2 increased 3% QOQ. Next is Q2 revenue breakdown by product segment.

In terms of share out of revenue, IT panel maintained its highest portion at 39%.

Key panels came in next with 38%, up 7 percentage points from the previous quarter thanks to OLED shipment growth and LCD price hike. Mobile and others accounted for 23% due to reduced shipment from seasonality.

Next is the company's financial position and ratios.

The company's financial position and ratios.

The company's financial position and ratios. The company's cash and cash equivalent at the end of Q2 was 4.3 trillion won.

Inventory was 2.723 trillion won, increased by 371 billion won QOQ. As we increase the share of high-value ad products, and prepared for the seasonality in the second half.

Financial ratios kept showing improvement.

Liabilities to equity ratio was 164%, improved by 11 percentage points. Current ratio was 96%. Net debt-to-equity ratio came in at 69%, improved by 6 percentage points, GOQ.

Next is cash flow.

Nothing was out of ordinary in the net cash flow, and cash equivalent was 4.317 trillion won, largely unchanged quarter-on-quarter.

Let me now move on to guidance for Q3.

In Q3, area shipment is expected to grow by mid-single-digit QOQ. We are entering what is normally a positive seasonality, but it may be susceptible to some variability due to part supply issues. Area price is expected to rise by mid-single-digit QOQ, driven by the growth in mobile shipments. Next is presentation by the company's CFO, D.H.

Song, on business performance and strategy.

Good morning. This is D.H.

Saul, CFO of LG Display.

Let me first thank all of you, all stakeholders, including our shareholders, investors and analysts, for your support and interest in LG Display, even as uncertainties continue from the extended impact of COVID-19. First and foremost, I wish for your health and safety.

I will now brief you on the company's Q2 performance. revenue was 6.966 trillion won the highest ever in q2 operating margin recovered to double digits and EBITDA margin at 25.4% was the highest since Q3 2009.

Breaking down the performance by business, large OLED TV shipment in the first half was 3.5 million units, which is around 80 percent of last year's shipment.

It has significantly bolstered its position in the premium TV market.

global oled tv set the actual global sales of oled tv sets in the first half of 2021 was over 60 yy in growth thanks to this development we have been expanding our market share in the over 1 000 premium tv market

IT also kept up its improvement despite some parts supply disruptions thanks to solid demand for enterprise and education.

The company also has strong competitiveness in both the products and customer base in IT and has been achieving solid performance.

Mobile部分은 2분기에 통상적으로 나타나는 계절 요인이 있었습니다만, 하반기 전략 거래선 양 신 모델의 대규모 물통 대응을 위해 개발 및 생산 품질의 안정화에 역량을 집중하였습니다.

For mobile business in Q2, there was some typical seasonality, but we focused on stabilizing our development, production, and quality to respond to the large volume for strategy clients in the second half.

Next is the company's outlook on Q3.

As we move into positive seasonality, shipment growth is expected across all segments. Channel shipment for OLED TV is planned at low 2 million units, while improved performance is expected quarter-on-quarter in all products of IT on the back of strong demand.

In mobile, expanded production of customers' new models are expected to have positive effects.

At the same time, it is believed that uncertainty remains, with the prolonged impact of COVID-19, as well as issues with key parts supply. The company will strengthen market monitoring and ensure preemptive management so as to minimize volatility.

Next is on the company's strategic direction for each business.

First is the large OLED. Large-size OLED has staked out a firm position in the premium TV market with stronger internal capability, such as yield and productivity, along with enhanced product lineup and size diversification.

We believe it has laid the basis for a generating profit. Going into the second half, we will try to further boost OLED TV's position in the ultra-large

While broadening the 40-inch specialized premium market that we have been working on, we will also identify applications beyond the existing TV market where OLED can unleash its distinct inherent value and focus our capabilities on developing them into high-margin, high-growth business. For the large OLED business, we will try to turn around to profit in the second half of the year, achieve mid-single-digit operating margin or higher in 2022, and double-digit margin or higher for the longer term.

Next is P-OLED.

The P-OLED business has been stabilized thanks to improved internal capability. We have also laid the basis for stable volume and built up a revenue structure by solidifying our trust with customers. We will work toward growing the volume and preparing for new models based on stronger partnership with customers and reinforce our revenue base by broadening our high-margin portfolio such as wearables.

Third is our operational plan and strategy for LCD.

under the principle of focusing on where we are competitive we shifted part of our capacity to high value at it products and will focus our tv business on high margin products like ultra large and commercial products we are enhancing our mid to long-term cooperation with major customers to build a stable operating basis stay resilient against market changes.

Next is on financial activities.

Borrowing was reduced by around 500 billion won in Q2. For the mid-to-long term, we will improve our financial structure and keep financial ratios stable without increasing borrowings as we maintain the principle of keeping capex within EBITDA.

Last is an update on the current discussion regarding dividend policy.

one of the frequently asked questions of late. The company is currently working on a policy to use a certain percentage of the consolidated net profit as the dividend resource. Once we finalize a dividend policy that will be predictable and sustainable for the mid to long term, we will communicate with the market without delay. We will also strengthen IR activities in the second half to better communicate with the recently increased individual shareholders. Thank you very much for your attention.

That brings us to the end of earnings presentation for Q2 2021.

We will now take questions.

Operator, please commence with the Q&A session. Now, Q&A session will begin. Please press star 3. That is star and 3 if you have any questions. Questions will be taken according to the order you have pressed star and 3. For cancellation, please press star 4. That is star and 4 on your phone. The first question was presented by Kim Dong-won from KB Securities. Please go ahead with your question.

Yes, thank you for the question. Congratulations on your good performance. I will ask LCD and OLED questions one by one. According to our sales, LCD TV is the product with the greatest change in profitability due to price change. I'm curious about the sales of LCD TV panels based on the second quarter. And please give us your opinion on the price of LCD panels in the second half of the company. Also, please let us know if there is any change in the output strategy of the LCD business scheduled for next year. Next is the OLED part. As CFO said, large OLEDs and medium-sized OLEDs seem to have been secured based on revenue based on price structure improvement. In the market, it is seen that additional evidence of China's Guangzhou or E6 will be needed for future demand response. If additional evidence is made, it will increase the cost, including the cost-effectiveness ratio,

first of all congratulations on the good performance i have one question each for lcd and oled now first when we look at the revenue share then it seems as if it is the lcd tv where the profitability is the most susceptible to change depending on the changes in the pricing So I wonder what was the share out of revenue in the second quarter of the LCD panels? And also looking ahead to the second half of the year, what do you see in terms of the price trend for the LCD panel? And then for next year, the company plans to have the LCD exit. And are there any changes to your exit strategy for LCD? And the second question is regarding OLED. I do agree, according to the Air Force presentation, that the company was able to lay the basis for profitability thanks to improved cost structure in the small to mid-sized panels, as well as the increased sales of large-sized panels. But then there are also some press reports saying that there could be a need for additional wrap-up of the Guangzhou plant or the e6 line if that does happen then it will increase additional cost including depreciation amortization so then do you believe that if this does happen then it could potentially delay the timing of the oled business turning around to profit

I take it that you asked questions about the LCD followed by OLED, so let me respond to the second question first. The first thing I can say is that in recent years, we have had an influence on the deterioration of the LCD vision, but on the other hand, we have invested in large-scale OLEDs, and we have not been able to invest in this part at the right time and at the right price. I feel that it has made it quite difficult for the company.

Now, for both the large-sized OLED and small to mid-sized plastic OLED, doesn't the company need additional investment, meaning that it could potentially delay or turn around to profitability, is the gist of your question, as I understand it. Now, first of all, let me say that for the past few years, of course, on one hand, there was the sluggishness of the LCD market. But also, on the other hand, the company had to invest a large sum into OLED, but at the same time was not able to have a timely mass production or secure revenue in a timely manner. So these are also some of the issues that pose challenges for the company.

So it's a matter of course, but we will once again confirm the basic principles of large-scale investment. So, large-scale investments that will be in the future are based on a thorough preliminary review to see if we have enough capacity, and if we can get enough volume and profitability after investment, and to review this part more carefully and coldly, and to review this part more carefully and coldly, and to review this part more carefully and coldly, And based on this, I will continue to review it, but no matter what investment it is, I will make sure that there is no such thing as not being able to properly mass-produce, not being able to secure water supply, and not being able to secure profitability. I will tell you this.

So then obviously this was also an opportunity for us to remind ourselves of the very fundamental principles of making investment, especially large-scale ones. In other words, for the future, whenever we make large-scale investment, then the decision will be based on a very thorough and objective analysis of the status quo as well as the outlook. In other words, whether we have the capability and whether it will be possible for us to support the volume as well as profitability as a result of making this investment. So again, this was a chance for us to further consolidate our principle in investment, meaning that we should move ahead with any type of large-scale investment only when such conditions are fulfilled. So no matter the type of investment, we will make sure that those principles will be fulfilled, and also we will make sure that mass production will follow in a timely manner as well as ensuring the volume and profitability.

To sum up my answer to your question, in our decision-making for any investment, the Obviously, this will not lead to delay in turnaround to profit or gain profitability.

regarding a second question about the LCD so in terms of the sales out of the share out of sales for the LCD TV of course it depends on the quarter but then overall it is around 15% of any sales so on

Double-digit. I remember saying this a few times when I was at the last panel meeting, but I think there are two main points of view when it comes to the price of the panel. The first is the supply point and the second is the demand point. I think the price of the panel will decide how to balance these two points. For the time being, I think it will be possible to grow the demand from the demand side to the demand side in the second half of the year. If you look at it from the point of view of whether it is possible to supply more than the demand, I think that when considering various parts, then the preparation of the module Kepa, and various situations, I think that it will go to a strong tax. Then, after next year, I will have to review various additional things, but how will the 19 situation change to what kind of image? Then, how can competitive companies prepare IT Kepa or supply parts? These are so complex that I don't want to say anything about the situation of the IT panel price in the future, but from our point of view, we are planning to run the business with the assumption that the panel price may calm down and fall. LCD TVs, especially the 32-inch, 43-inch, medium-sized ones, seem to have a little difficulty in demand. I see it from two perspectives. One is that the demand for gas has calmed down during the COVID-19 pandemic. The other is that from a market perspective, 43-inch and 32-inch are mainly sold in emerging markets. In emerging markets, including India, after the COVID-19 pandemic resumed in many countries, . . . . .

now regarding the panel price of course this is an obvious point of interest for the company and we are always closely monitoring the trend so i understand your question to be the final price outlook for the second half of the year and perhaps into next year now i remember reiterating this in last IR session as well, but then it comes to the panel pricing, then there are largely two perspectives, supply and demand. And where the supply and demand dynamics meet, then that's where the price is formed. Now, for the time being, for IT, we believe that the demand growth will remain solid into the second half of the year. Then the question is whether there will be a point where supply exceeds demand in the near future. But when we look at the parts as well as the module readiness, then it appears likely that price will remain strong for some time. And then, of course, looking ahead to next year, there would be various factors at play, including, not the least, COVID-19. And also, we have to take a look into the peers' readiness, for example, whether they have a sufficient IT parts supply and so forth. So at this point, it is difficult for us to decisively say what the IT panel price trend is going to be for next year. But then we will be running our business under the assumption that panel price could stabilize or even go into a downward slide. Then regarding the LCD TV, especially for the 30-inch or the 33-inch, in other words, the small to mid-size LCD TV, we see that the 30-inch or the 43-inch so the small to mid-size LCD TV. But the demand appears to be dwindling. And perhaps, of course, there could also be various factors. Perhaps one factor is COVID-19. So perhaps it has also driven down the pseudo-demand. And another factor, also related to COVID-19, is that I understand that the sales of 30-inch or the 43-inch LCD TVs were occurring mostly in emerging markets. And now with another surge in COVID-19 in major emerging markets, including India, we understand that the retail sales are suffering. But then the question is whether this is going to be transient. In other words, whether it is only limited to the COVID-19 impact, or is it more of a structural phenomenon? So we will have to wait and see and also closely monitor the situation. But our assumption is that unlike IT, demand for LCD TV is probably going to fall faster. And as a result of that, the pricing is likely to be weaker than IT.

I don't know if I understood the question correctly, but I understood that the LCD output strategy

And then your next question, not sure whether I understood this correctly, but then I think you were asking about the LCD exit strategy. And let me first off say that this is actually not the right way to call it for the company.

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I believe I have had the chance to repeat this point at various channels, including quarterly IR and other communication channels regarding the company's LCD operation strategy. And of course, out of our three major innovation projects, LCD business realignment was one of them. And our LCD structural innovation project was not about reducing or even abandoning the LCD business.

Once again, the core of our LCD structural innovation is to further strengthen the areas that are competitive and can compete with each other. uh uh uh uh uh and some of them are still in progress. Then, from the perspective of whether we can secure stability in future operations with the increased IT capacity, as I explained earlier, from a long-term perspective, we will continue to cooperate with major strategic exchanges I will build a stable foundation that will not be shaken by change. Especially among our LCDs, IT has a fairly distinctive technology and competitiveness, and it has a solid customer base, and it has a considerable PEP competitiveness. Because there is such a part, the IT department at LCD is more differentiated and has more competitiveness,

Now for the LCD business, the key to the LCD business realignment was to strengthen where we are differentiated, where we are competitive already. And so in our operation of the LCD business, of course we have the LCD fab in China as well, but then what we had intended to do was to remain flexible in the utilization of the LCD fabs so that from the, let's say, less competitive areas, maybe we can shift the resources to the more competitive areas as we have done so for the TV capacity. So much of the TV capacity has been shifted to IT, and there would be some additional capacity to be shifted further. So this is what we have been intending to do so that we will be able to shift from less competitive areas to more competitive ones. And as a result of shifting the capacity from TV to IT, does this mean that we now are able to have a stable operation of the IT capacity. Now, perhaps so, but then what we intend to do now is to look ahead from a more mid to long term perspective. That is why we are strengthening our partnership with major clients, as I have explained in my presentation earlier, to remain resilient to short term volatility or variability. And especially for the IT business of LCD, we have the technology and the competitiveness as well as the customer base and fab competitiveness so for the lcd business especially for the it we will continue to differentiate and strengthen our competitiveness and solidify our customer base uh

I can tell you that my body has become lighter. In the lightened situation, we will operate in the center of high-profit commercial and large-scale operations that we can do. Then, similar to IT, we will make sure that we can operate stably even if there are changes in the future through collaboration with strategic exchanges. so for the and then for the lcd tv now uh

Compared to the maximum level, the capacity is now about half of that. So for the LCD TV, I would say that it has become much leaner and lighter. So now then utilizing this lighter capacity, we would be focusing more on the high profitability businesses, like commercial or large size products. And similar to IT, we would also be strengthening our partnership with the strategic clients so that we will be able to be resilient to market changes. And of course, still, it could be subject to some variability down the road. But then, as I mentioned earlier, we also have the capability to have flexible operation and utilization among the different labs. So whenever there are some changes, then we would also exercise the operational agility to be flexible toward the market circumstances.

The following question will be presented by Kim Hyun-soo from Hana Financial Investment.

Please go ahead with your question. There are still two questions. I will ask a question related to CAPEX. As you said earlier, CAPEX said that it will maintain a direct foundation of EBITDA, but this year and next year, of course, it is not easy at this stage, but I would like to ask you to mention the approximate range of EBITDA guidance this year and next year, which you are expecting internally. Recently, there have been a lot of talks about the possibility of verifying the P-OLED line. In particular, the possibility of verifying the P-OLED line for IT product response is being mentioned. The same goes for the mobile line. So, you've been talking about additional investment in a conservative way, and you've been talking about it in a conservative way I have two questions and one is regarding the EBITDA guidance because it was mentioned earlier in the presentation that the company will maintain the principle

that the CAPEX execution will remain within EBITDA. Now then, of course, because of the higher earnings expected for this year and next, perhaps it would be difficult for you to give us a definitive response to this. But then, what would be the EBITDA guidance for this year and next? And the second question is for the CAPEX. Now, there are talks of eOLED ramp-up. in response to IT demand and also further investment in mobile area as well. And regarding the investment, you have been conservative and even now your response has been conservative. And of course we do understand that this requires cautious review and decision making. So I also do understand that it would be difficult to give a conclusive response at this point. But do you believe that the

Investing into the P-OLED rampa would be necessary? I think it depends on the level of sales. First, regarding the EBITDA guidance,

Now as it stands today, the company's depreciation and amortization for this year and also will be similar for next year, but it would be around 4.5 trillion won. So then assuming that there is going to be a BEP in the second half of the year, then 4.5 trillion plus operating profit of 1.1 trillion would be about 5.7 trillion won. Of course, at this point, we cannot pinpoint what the operating profit is actually going to be in the second half, but then looking at the market expectations, then perhaps that is where it is going to be. So then with the $4.5 trillion in depreciation and amortization, then also with the operating profit, then I would say that the EBITDA would be around $5 to $6 billion, and that is what we need to achieve, and I believe that that would be achievable.

And then IT related to plastic OLEDs and mobile investment. We are currently reviewing it. We are reviewing it right now. We will wait a little longer for this part to be confirmed and shared with the market. Please wait a little longer.

And for the plastic OLED, especially investment in IT and mobile, what I can tell you at this point is that these issues are under review at this time. There has been some progress in the review. So once we have something final and concrete to share with the market, we will do so without delay. I would like to ask for your patience a bit longer.

We will take the next question.

The following question will be presented by Woo Dong-jae from Bank of America.

Please go ahead with your question. If you look at the performance of the last quarter, it seems that the first place holder for such good performance despite the lack of time is probably LCD. But as CF said a few times before, I think it will be okay because of our discrimination strategy. In fact, the LCD of IT companies can't do as much as Taiwan, China, Japan, and other competing companies can do with oxide materials. I would appreciate it if you could explain in detail what the reason is. The second is that Chinese companies are also investing in large-scale LCDs, not only 8G, but also in the 10th generation. Then, isn't the drop in the price of LCD TVs, which was almost 100% up, getting worse and worse? But earlier, the strategy with the exchange, Thank you for explaining once again what we can do about it. Lastly, every quarter, I think there will be an investment of about 1 trillion won again. In my opinion, I think it will be about 5-6 trillion won per quarter, but I think the investment in the market is increasing again, so we don't necessarily have to increase the investment as much as we earn a lot. Thank you for your explanation.

Now, also congratulations on the excellent performance. That makes me also feel a lot better. Now, regarding the quarterly performance, then I see that the number one contributor to the quarterly earnings this time was once again the LCD, despite the seasonality. And it appears as if the company feels that it is also in a good position with the LCD, perhaps because of its differentiation. But then now looking at the IT use LCD, for example, with the oxide. Now, what are the reasons, if any, that the companies in Taiwan, Japan, or China not do as well as the company today? And also looking at China, then it seems as if they are making large-scale investment, not only Gen 8 LCD, but now in Gen 10 LCDs. This means that the LCD TV price, which had gone up by over 100% recently, is now at the risk of falling dramatically. Of course, the company mentioned its response strategy, for example, strengthening its partnership with the strategic clients and also strengthening your differentiation. But still, when we look at the history of LCD so far, especially for the past 10 years, then whenever there has been an oversupply, then Without exception, it led to plummeting prices. So perhaps that is a risk that could materialize as early as the end of this year or next year. So I would say that that could be one of the biggest risks for the company. And what can the company do regarding this potential risk? And then also, this is the last question. It seems as if the facility investment has been consistently going over 1 trillion won for every quarter. But from my perspective, about 500 to 600 billion won of facility investment per quarter would be sufficient. So because the EBITDA is growing, does this mean that we also have to increase the facility investment in correspondence to the growth in EBITDA? Or perhaps you could just stabilize the capex at around 3 trillion won per year. And then for the surplus EBITDA, maybe we can utilize that as free cash flow and perhaps use that for the CD conversion or use that for share buyback to assure the shareholders. Perhaps that would be a better strategy than providing cash dividends.

First of all, I know that you have dealt with the situation of Chinese, Taiwanese, and Japanese competitors in terms of differentiated technologies in IT. Some companies are of course doing IPS, and I know that Oxide is also doing it. Regarding your first question about the differentiation of IT products,

And I understand that your question was about the competitors in China, Taiwan, or Japan. And of course, some are utilizing IPS and some are also utilizing oxide for certain products. But I understand that there is still some entry barrier, especially in infrastructure or the development process. And of course, I'm not in the position to tell you what the other players are thinking or what their judgment is.

But then as far as I understand at this point, there is still quite a high entry barrier. There was a lot of pressure on the market. There was a lot of pressure on the market. There was a lot of pressure on the market. There was a lot of pressure on the market. and then how to manage the LCD risk. The evaluation is of course prepared by looking at the possible scenarios. As I said, the LCD TV CAPA is running in half. The meaning of strengthening the relationship with the strategy trading line is the stability of operation in various aspects. There are two LCD TVs that can turn TVs, Paju's P7 factory and Guangzhou's LCD TV. We are trying to secure the stability of the LCD TV by operating the two in a flexible way. We are considering the LCD TV's price and we are making efforts to secure profits from a positive point of view.

And for the LCD TV, a price potentially falling and how the company intends to respond to this potential risk. Now, as we had reiterated earlier, the challenges for the company last year and the year before, not about the LCD itself, because for the LCD business, although the, let's say for the LCD, the sales were falling, but still, We were never in the red with the LCD, so it was not actually the LCD business itself that was the cause of the company's challenges, but rather for the large-size OLED or the plastic OLED. After making the investment, we were not able to go on our scheduled track for batch production and sales. As a result, we were amassing large-size deficits So those were the biggest cause of our difficulties for the past few years. And now these issues are largely going away. And now what are we going to do about the LCD potential risk? Now regarding the potential fall in the prices, we have our scenario planning and we would be making preparation in accordance with these scenarios. And for the LCD panel capacity, I have already mentioned that the capacity has been halved already. Then I also mentioned strengthening our partnership with the strategic clients. And this is to assure operational stability down the road. And as for the fabs for the LCD, we have the Pachu P7 as well as the Guangzhou LCD fab. So these are where we are able to make the LCDs for TV. And we will continue to ensure operational stability in these fabs as well so that we will be able to flexibly respond to changes. So in line with that strategy, we would also be responding to the price drop in the LCD TV whenever that happens so that we will be able to ensure mid- to long-term profitability in the LCD business.

The third is about the service investment pattern. I heard you talk about it. The meaning of investing in EBITDA is not the meaning of using EBITDA as much as it was created. If possible, I think it would be best to use it in the field of tourism. This year, I think it will be possible to run CapEx in the field of tourism. I think it will be useful to reduce the difference in income and strengthen the financial structure. When a strategic investment is initiated after next year, I think it is a part that should be done to ensure future growth and future better profitability. I think it also means that we are not a little over-invested. I'll tell you that it's never going to be like that. The part where CapEx can go up a little in this year is the safety environment. From the point of view of ESG enhancement, the parts that were lacking, and then the parts that need to be better prepared for the future. I think CapEx will be implemented in this regard. I think you can see that those parts are a little different from the past. What I want to say is that the EBITDA range is a big frame, and as you said, if possible, we are moving in the direction of having a financial strategy that strengthens the financial structure and strengthens the financial structure while operating very tightly, excluding strategic investment.

Your next question was regarding some concerns about the company's patterns and facility investment, I would say. Now, let me reiterate that when we said that we will maintain the principle of CapEx execution within EBITDA, does not mean that we will use up all the EBITDA that we earn. So, of course, it would be best if it can stay within the depreciation and amortization level. And for this year, that is what the company intends to do. Our capex would be within the depreciation amortization level. And then now for the additional EBITDA or the incremental EBITDA, we can use it to lower our borrowings or further consolidate our financial structure as we have done this time around. And then, of course, for next year and on, if there are any strategic investments that are necessary, especially for the purpose of future growth drivers or to ensure future profitability, then those are necessary investments that we will make. But other than that, we would remain, of course, tight in our investment. So I believe that the implication in your question was that perhaps the company was a bit, let's say, going overboard with our investment. And I would like to assure you that no, that is not the case. And some of the CAPEX needed this year was to build a stronger safety environment in relation to the ESG management and also to preemptively prepare for the future. I would like to explain that what we are doing in terms of the preparation is a bit different from what we have done in the past. It's more of an aggressive, preemptive preparation for the future. And of course, for the EBITDA, yes, this will remain as the large, let's say, threshold for the CAPEX. Then aside from the strategic investment, we would remain tight in our investment operation, and we will continue to strengthen our financial structure and also leave room for some strategic financial operation for future preparation as well.

We will take one last question.

The last question will be presented by Kim Sung-kyu from Daiwa Securities.

Please go ahead with your question. You have achieved a very high sales performance in the first half of the year, and considering the seasonality in the second half of the year, it seems that you can achieve up to 8 million units this year. However, as you said earlier, there is a possibility that the demand for LCD TVs will drop in the early stages, and I think this will have an impact on the demand and price. Then, will OLED TVs Relatively, in the second half of the year, is there a reason for the pressure of the price to fall in order to achieve the amount we want? I have an opinion about such a risk, and it's a little early, but I think it's increasing twice as much as it did last year. In the second half of the year, I know that there are about 30,000 Kepa in Gwangju. Then, the sales goal for next year is How are you looking at it now? There are 10 million and 11 million stories, but I would like to ask you about the prospects for next year. The second question is about the display business of cars. Recently, the supply issue of car semiconductors has continued in the first half of the year, and in the second half of the year, it seems that the EV side is solved, but in general, such a supply issue I have two questions.

One is about the OLED TV. I see that the sales in the first half of the OLED TV were quite high. And in the second half, considering the positive seasonality, I believe that it is more than likely that the company will be able to achieve the target of 8 million units. But then for the LCD TV, as was mentioned earlier, it is likely that demand is going to fall earlier than expected, which could then have an impact on the demand and pricing as well. But then in addition to this, regarding the OLED TV, Does the company believe that there are also some, let's say, pressure, so downward pressure on the pricing so that you will be able to achieve the target for this second half of the year? So do you believe that there is such a risk of the downward pressure on the OLED TV pricing? And the second question is, it seems as if this year the shipment is to double, then Of course, in the Guangzhou FAB, there is an additional capacity of 30,000 that is available. But then for next year, then what is the company's target capacity? There are, sorry, so the target shipment, because there are talks of 10 million or even 11 million. So could you give us a guidance about the company's target shipment next year? And then the second question is about the automotive display business. Because in the first half, there have been a lot of issues regarding the automotive semiconductor supply. And in the second half, we see that the issue has been somewhat eased for EVs. But overall, the semiconductor supply issues continue, and perhaps all the way into late this year as well.

I would just like to ask for the company's update on the automotive display business as well as OLED. The first question is about the price. Because LCD and OLED are representative TV panels, I think it will be influenced and received. But as we all know, Last year, the price of the LCD panel went up twice as much as last year, but the price of the OLED panel did not go up. The reason is not that we decided the price of the OLED panel compared to the LCD panel, but through thorough market analysis, We have studied the actual price of street spots that consumers can buy. We have selected the right price, and we have decided on the price of the panel that can be win-win with the set customers. So, the change in the price of LCD in the future will have various influences, but it is not a price management that is linked to that, but it is a price that can be accepted by the market by looking at the market price.

First question was, I believe, on the pricing of OLED in relation especially to the LCD price. So whether the fall in the LCD price will come around to affect the OLED price? especially what is also going to be the shipment for next year. Now, for the first question about the pricing, yes, it is true that because the LCD and OLED are the two leading panels for TV, they tend to exchange impact with each other. But as you would also know, for the LCD TV, while the price for the LCD TV has close to doubled compared to last year, it has actually not affected the OLED TV pricing much. And that is because we set the OLED pricing not in relation to the LCD, but based on a very thorough market research. So based on the market research, then we tried to determine the sweet spot in terms of the OLED TV pricing that would be acceptable to as many consumers in the market as possible. Then based on this, we also discussed the panel pricing with the customers, with the set makers. And because of this, of course, the changes in the LCD price could have some impact on the OLED price as well. But then this will not directly affect the price because we look to the market to come up with the acceptable, the appropriate pricing. So given this situation, we believe that changes in the LCD pricing in the future.

But despite that, we would be able to manage the OLED price.

regarding the oled shipment for next year of course we are in the preparation for this but yes we do have the capacity of additional 30k in guangzhou and based on that we can ship 10 million next year and also with some enhanced

productivity and other preparation, we could also potentially ship 11 million the year after that. Next about the auto display.

It is true that there have been semiconductor shortage issues, especially among the OEMs and the Tier 1 suppliers. They have been intermittent, and some have been in large-scale shortage. So yes, for the company, it is also a risk. But then so far, there have been no disruptions in our production because of shortage of these semiconductors. But still, yes, as you have mentioned, it is a risk. And we are always remaining vigilant regarding the risk of parts shortage, not only for the company but also for our clients as well. So we will keep a very close eye on the situation so that we will be able to manage any circumstances or changes so that we will not be losing out on valuable opportunities.

As you know, most of the auto panels were based on Amorphos. In terms of LCDs, we have been working on converting them to LTPS for the past 2-3 years. Most of the levels are being converted to LTPS and are being promoted in the field of LCDs. And some update on our overall LCD business operation.

So far for the auto panels, they have been based on amorphous. But then we have been shifting to LTPS, at least for the LCD. And then the orders that we are receiving recently for LCD are mostly LTPS. And then now for the next two to three years, once we finish supply of the LCD based on amorphous for the next two to three years, then we believe that we will no longer be producing based on the amorphous technology. And from then on, it would be solely LTPS or LCD.

And from then on, it would be solely LTPS or LCD. And from then on, it would be solely LTPS or LCD. Recently, there are a lot of OEMs that are entering electric vehicles. There are a lot of OEMs that are entering electric vehicles. There are a lot of OEMs that are entering electric vehicles. There are a lot of OEMs that are entering electric vehicles. There are a lot of OEMs that are entering electric vehicles. There are a lot of OEMs that are entering electric vehicles. There are a lot of OEMs that are entering electric vehicles. There are a lot of OEMs that are entering electric vehicles. We are working hard to create mechanisms that will ensure the growth and profitability of the auto industry in the future. In the plastic OLED sector, we are doing a lot of research and activities, and we are strategically focusing on this area, but if we get good results, we will communicate with the industry in the possible range.

And for the plastic OLED, we believe that this is the panel that is optimized for electric vehicles. And we have been trying to increase the orders received for plastic OLED and especially for the EV OEMs and also new OEMs and some of the OEMs that are preparing to enter the EV. So we are trying to target them for the plastic OLED. But then, yes, for the plastic OLED, as well as the large size OLED, we believe that it is important to first define the right target segment and then try to improve the profitability and also the business feasibility of the auto display. So we need to create the kind of mechanism that will allow us to ensure profitability in this business as well. So again, we are focusing on receiving the orders for the plastic OLED and This is our strategic focus at this moment.

Once we get good results in this front, then we would also communicate this with the market in due time.

will now close q2 2021 earnings conference call for lg display thank you once again for joining us today please do contact us at the ir team for any additional questions thank you