LG Display Co., Ltd.

The conference call for the fiscal year 2022 fourth quarter earnings results by LG Display will commence in a few minutes. Please wait until the conference begins. Hello. Thank you for joining us today. Good morning and good evening. First of all, thank you all for joining this conference call, and now we will begin the conference out of Fiscal Year 2022 First Quarter Earnings Results by LD Display. This conference will start with a presentation, followed by a divisional Q&A session. If you have a question, please press Start 1, that is, start N1 on your phone during the Q&A. Now we shall commence the presentation on the Fiscal Year 2022 First Quarter Earnings Results by LD Display.

Hello, I'm Heo Seok, CEO of LG Display IRC. I would like to thank all of you who attended this quarter's performance announcement conference call. At the conference call on Friday, CEO Kim Sung-hyun of CFO, CEO Kim Hee-yeon of CSO, CEO Lim Seung-min of management management, CEO Lee Ki-young of business intelligence, CEO Lee Won-jae of large-scale marketing, CEO Kim Chang-won of medium-sized marketing, and CEO Song Gi-an of auto marketing attended the conference call.

Good morning. This is Brian Ha in charge of LG Displays IR. On behalf of the company, let me thank all the participants at this conference call. Today, I'm joined by the CFO, Sung Hyun Kim, the CSO, Hee Yeon Kim, Seung Min Im, Senior Vice President of Corporate Planning, Ki Young Lee, in charge of Business Intelligence, Won Jae Lee, in charge of Large Display Marketing, Chang Won Kim, in charge of Medium Display Marketing, and Kyu-hwan Son, Vice President of Auto Marketing. The conference call will be conducted in both Korean and English. please refer to the Provisional Earnings Release Today or the IR Events section of the company's website for more details on the financial results of Q4 2022.

Before we begin the presentation, please take a moment to read the disclaimer. 아직 외부 감사인의 감사가 완료되지 않은 상태에서 투자자 여러분의 편의를 위하여 작성된 자료임을 안내 드립니다.

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.

금일 실적 발표에는 실적 설명에 앞서 당사 CFO 김성현 전무가 회사의 중점 과제와 주요 추진 활동에 대해 먼저 말씀드리겠습니다.

Before we begin the earnings presentation, CFO Sung Hyun Kim will provide a briefing on the company's main tasks and activities. Good morning. This is Sung Hyun Kim, CFO of LG Display.

2022년을 돌아보면 거시경제 환경이 약화되며 주요 제품군의 수요 부진이 더욱 심화되었고, Looking back on 2022, we see demand slowdown accelerate in major product groups on the heels of worsening macro environment,

resulting in year-long inventory correction in downstream industries, softening demand that started in general B2C products spread to B2B, then to high-end product groups as well, which had shown relatively solid demand.

The price of the display panel has also decreased, but the price of the display panel has continued to drop, and the situation of the display panel has continued to be difficult in many ways. As the market environment has become less favorable, The display market continues to face headwinds, with panel prices still on the trend of decline, although the pace slowed down.

Given the protracted challenges in the market, the company is focusing on recovering financial soundness and future-proofing. Upgrading our business structure remains our utmost priority, where we will concentrate our internal capabilities.

Allow me to first brief you on our activities and achievements in recovering our financial soundness. The 7th generation LCD TV set in Korea has completely stopped production at the end of last year. The remaining 8th generation LCD TV set in China has also been downsized to 50% from the beginning of this year. In the future, the LCD TV business is going to be organized in order to respond to the amount of commercial products and customers that are no longer competitive.

The company is moving ahead of the original timeline to downsize LCD TV business, which has structurally weakened competitiveness. Production in Gen 7 LCD TV fab, located in Korea, was terminated at the end of last year, and the remaining Gen 8 LCD TV fab in China is scheduled to downsize to 50% of its capacity starting this year. Under the assessment that LCD TV business is unlikely to recover competitiveness, we will phase it out while responding to commercial products and the volume agreed with customers.

China's LCDTB Kepa Downsizing To address the continued soft demand and secure operational flexibility, the company undertook intense production adjustment.

The inventory reduction by around 1.6 trillion won from Q3 affected profitability in Q4, but it placed the company in a better position to flexibly respond to market environment in the first half of this year. The preemptive inventory adjustment in Q4 is expected to reduce cost in Q1 this year. The company plans to keep reducing cost and improving operational efficiency through LCD TV capacity downsizing in China, intense production adjustment in large OLED fabs in Korea, and close monitoring of real demand changes and market inventory.

다음으로 사업 구조 고도와 관련된 경과 및 향후 계획입니다. 수급형 사업은 고부가 영역에 집중하고 시장 변동성에 대응해 합리적인 운영체계를 구축하여 안정적인 수익성을 확보하고 밸류를 창출하고자 합니다.

Next is on the progress of the company's business realignment efforts and future plans. In supply and demand-based business, we will enable a more rational operational structure and secure consistent profitability and create value by focusing on high-value-add products while responding to market volatility.

We will also accelerate the change in business structure at Sujuyeong, which has been continuously promoted. In the second half of this year, we are preparing projects systematically with IT-type OLEDs, which will be mass-produced in the second half of this year, and IT-type OLEDs, which will be mass-produced in the second half of next year. This is expected to increase by 30% last year, 40% this year, and 50% in 2024.

Not stopping there, the company will add a stronger drive to the transition in order-based business structure. We are systematically preparing for projects agreed with customers, like the new smartphone lines to be mass-produced in the second half of the year, and OLED for IT products to be mass-produced in the first half of next year. Such order-based business took up 30% of our business last year,

expected to be in the low 40% this year and exceed 50% in 2024.

We also continue to broaden market-creating businesses. The company keeps exploring new markets with our competitive products like gaming and transparent. We will build a stable revenue structure by strengthening the future business portfolio.

The demand for panel purchases, such as now, is expected to continue until the first half of this year. With market volatility remaining high,

Sluggish demand for panels is expected to last into the first half of the year. The market situation where panel shipment falls short of actual set sales is expected to persist in the first half, but the panel inventory issue is likely to be mostly addressed in the first half regardless of the real demand for sets, thanks to intense production adjustment across the industry.

This will hopefully return the industry-wide inventory to healthy levels in the second half.

Having said that, with recovery in real demand remaining uncertain, the company remains focused on large-scale cost-cutting. Both volume and revenue are expected to decrease in Q1, given its traditional seasonality on top of industry-wide inventory adjustment.

JASA has been implementing active stock management activities since the fourth quarter, including LCD TV downsizing, high-frequency production adjustment of OLED TVs, The company expects about a trillion won cost reduction in Q1 from the large-scale business rationalization underway from Q4.

such as active inventory control, LCD TV downsizing, and OLED TV production adjustment. In addition, new capacity utilization for smartphones and strong improvement in fundamentals will improve performance quarter to quarter and help achieve a turnaround in the second half of the year.

In terms of investment, only the minimum ordinary investment will be made, along with the investment in order-based projects already agreed with customers.

CapEx for the year will be around $3.1 trillion on a cash-out basis.

In the end, before I go into a detailed explanation of quarter-final performance, I would like to explain about the size of the short-term net loss in the quarter-final. In the meantime, the medium-sized business was evaluated as a cash-out unit, but due to the gradual withdrawal of the LCD TV, which is a limited business, the large OLED part was evaluated as a separate cash-out unit 지난해 4분기 일을 분리하게 되었습니다.

The last point before we present the Q4 earnings is regarding the increase in Q4 net loss. The company's mid- to large-size panel businesses have been accounted as one cash-generating unit, but following the decision to phase out the marginal LCD TV business, large OLED business was separated as standalone cash-generating unit in Q4.

The U.S. economy is in a state of crisis. The U.S. economy is in a state

For the separated cash generating unit, asset valuation was reviewed and assessed by an outside organization in accordance with the standards and procedure in place. With soft demand for premium TVs last year due to economic slowdown, as well as the downward revision of demand outlook, asset impairment of approximately $1.3 trillion was recognized for OLED business to ensure proper accounting.

The result was reflected as non-operating expense in Q4, which increased the net loss.

But as you would all understand, it is the result of accounting adjustment that has nothing to do with cash flow. The company expects positive impact down the road as it reduces our business uncertainties.

AOLA is a leading company that leads large-scale OLEDs, and it has unique competitiveness in the national TV market, and we will continue to increase its share in the national market. AOLA's future products and original competitiveness are strengthened.

As the leader in large OLED, the company possesses incomparable competitiveness in premium TV market, where we intend to keep growing our market share. We will keep creating a consistent revenue structure by enabling qualitative growth. As we keep strengthening our product and cost competitiveness and accelerate our push to open up new markets like transparent and gaming. Thank you very much for your attention.

Next, I would like to talk about the performance of the fourth quarter. Due to the deterioration of the market economy, the demand for sets has been continuously poor. As a result, as the supply and demand of the entire industry continues to adjust, Let me now continue with our business performance in Q4.

With worsening macroeconomy in Q4, said demand continued to remain subdued. It was followed by inventory adjustment across downstream industries, the impact of which also spread to high-end products, which had been showing relatively solid trends.

The sales of the fourth quarter increased by 8% compared to the previous quarter due to the drop in smartphone new products. On the other hand, Sonic recorded a sales loss of 87.6 billion won due to a high-intensity production adjustment to reduce the drop in IT panels and the drop in panel prices. The sales profit rate of the fourth quarter is minus 12%, and the EBITDA margin rate is 3%, and the sales cost is 1.33 trillion won. Revenue in Q4 went up 8% QOQ thanks to shipment of new smartphone products.

But there was operating loss of $876 billion following shipment decrease of IT panels, decline in panel prices, and intense production adjustment to reduce inventory. Operating profit margin in Q4 was minus 12%, with EBITDA margin at 3%. There was net loss of 2.094 trillion won, with 1.33 trillion won of impairment being accounted as non-operating loss.

2022年 연간 실적은 매출 26조 1520억 원, 영업 손실 2조 850억 원으로

For the year, revenue in 2022 was 26.152 trillion won down 13% YOY. There was operating loss of 2.085 trillion won. Operating profit margin was minus 8%.

Next, we will look at the price range for each area. In the fourth quarter, the price range showed a weakening performance compared to the previous quarter, with a 2% increase of 7.86 million square meters compared to the previous quarter. The price range recorded a 7.08 million square meters, which increased by 5% compared to the previous quarter due to the increase in the proportion of smartphones and wearable products.

Next is area shipment and ASP trend. Area shipment in Q4 was 7.86 million square meters, increasing 2% from the previous quarter. It was slower than ordinary seasonality due to demand decrease in midsize products and structural innovation in large product business. ASP per square meter was $708, going up 5% QOQ. This is owed to the increase in portion of smartphones and wearables.

다음으로 제품별 매출 비중을 말씀드리겠습니다. OLED로의 사업 구조 전환으로 OLED 매출 비중은 4분기에는 52%, 연간 기준으로는 21년 32%에서 22년 40%로 성장하였습니다. 올해에도 하반기 스마트폰 캡파 확대 및 패널 출하 증가, Next is revenue breakdown by product segment.

OLED accounted for 52% in Q4 following the transition to OLED-focused business structure. For the year, its portion grew sharply from 32% in 2021 to 40% in 2022. OLED's contribution to financial performance is expected to keep growing this year, with its portion out of revenue exceeding 50%. It will be largely driven by growth in smartphone capacity and panel shipment in the second half of the year, as well as the continued phase-out of LCD TV business. TV panels accounted for 25% unchanged QOQ. Share of IT panel was 34%, falling by 9 percentage points QOQ. There was decrease in panel shipment and decline in panel prices.

The mobile and other sector sales volume has increased by 9% compared to the previous quarter due to the decline in smartphone and wearable products, and recorded 34%. The auto business sector, which is a new growth power, has been growing continuously, and the sales volume of the respective sector has increased from 5% in 2021 to 7% in 2022. This year, auto business sales recorded a two-digit growth rate, and the volume is expected to continue to rise.

Portion of mobile and other products was 34%, up by 9 percentage points QOQ, on the back of higher shipment of smartphones and wearables. Auto business, which is a new growth engine for the company, has maintained growth, with its portion moving up from 5% in 2021 to 7% in 2022. It is expected to keep growing by double digits this year, with its portion continuing to rise.

Next is the company's financial position and ratios.

The company's cash and cash equivalent was 3.547 trillion won, staying above the 3 trillion line. Inventory was 2.873 trillion won, decreasing by 1.644 trillion won QOQ as a result of the decision to keep inventory at the minimum and the subsequent strong adjustment in production.

As for the main financial ratios, debt-to-equity ratio was 215%, and net debt-to-equity ratio 101%, both up QOQ. Next is cash flow.

The company's cash and cash equivalent at the start of Q4 was 3.264 trillion won. It increased by 283 billion won. and stood at 3.547 trillion won at the end of Q4 with increased cash flow from financial activities.

Last but not least, outlook for Q1.

With growing market volatility and demand uncertainty, as well as the company's execution of LCD exit strategy, area shipment is expected to fall more sharply than in ordinary seasonality.

JASA will continue to respond to the demand bias and ensure financial stability as a focus operator, and improve the profit per share through continuous structural innovation activities.

In response to the demand slowdown that will last for some time, the company will keep improving profitability quarter to quarter by improving financial soundness and remaining on the path of structural innovation. In addition to 1 trillion won cost cutting in Q1, we will strive to achieve a turnaround in the second half by helping recover panel demand and utilizing new smartphone capacity. That completes my briefing.

Thank you very much.

That brings us to the end of earnings presentation for Q4 2022. We will now take your questions.

Operator, please commence with the Q&A session. Now Q&A session will begin. please press star 1, that is star N1 if you have any questions. Questions will be taken according to the order you have pressed, the number 1 and star. For cancellation, please press star 2, that is star N2 on your phone. In order to allow as many Q&A chances as possible within the restricted time, we would appreciate only two questions per participant. 다음으로 질문해 주실 분은 This is Kim Dong-won from KB Securities. The first question will be presented by Dong-won Kim from KB Securities. Please go ahead with your question.

Hello, this is Kim Dong-won from KB Securities. First of all, thank you for the opportunity to ask a question. I would like to ask a question about the financial strategy and the large OELED. First of all, I would like to ask about the financial strategy and the large OELED. Thank you. Thank you. Thank you.

Thank you very much for giving me the chance to ask my questions. I have two questions, one each for the company's financial strategy and the large OLED business. The first is about the company's financial plan, including any potential borrowings following the worsening of the financial performance. And related to that, can you also give us an overview of the CapEx implementation in 2022 and what is the company's plan for CapEx this year? And next is about the large OLED business strategy and also the exit strategy. So if the company can also brief us about the large OLED business strategy and also what will be the way for OLED to continue to enhance its premium image over LCD. So what would be the strategy to differentiate OLED from LCD?

Thank you very much for the question.

This is the CFO responding. Now, for a company, fundamentally, the financial strategy would be to

keep earning revenue from our operations. . . . . .

But now, given the nature of the industry and also the market situation, sometimes that is not conducive. So in such a case, then we will try to improve the financial soundness through better cash flow management, which is what we are doing currently. So as for now, the plan is to accelerate our exit strategy in LCD TV, which has been proven to be a marginal business so as to minimize our potential losses from this business. And we will also keep reducing our investment as well as expenditure and also enhance the efficiency of such costs so that we will also be able to create the kind of operational structure that will be in line with the current market situation. Another part of the plan is to minimize our inventory and the working capital. And in order to do that, and by doing so, we will be able to minimize our cash flow expenditure.

Recently, we have been working with 7th generation LCD PEPs, and 8th generation Chinese PEPs, to reduce production costs. So, as I said earlier, we will reduce the cost of driving capital management and efficiency by about 1 trillion won in the first quarter.

And some of our recent actions, for example, the termination of the production in the Gen 7 LCD fab, as well as the downsizing of production in Gen 8 LCD fab in China. So these actions are not just about downsizing production. It also entails reducing expenditure or reducing the cost. And by doing so, we intend to reduce costs by about $1 trillion in the first quarter of this year, as has been explained earlier, by better managing our working capital and improving the efficiency of our cost structure.

I mentioned the principles of CapEx earlier. Since last year, this year, and next year, investment has been to maintain production facilities, and I only carry out water-based projects where demand and sales are almost guaranteed. But last year, the cash out was about 5.2 trillion won. In fact, that was a little more than we expected. But if you look at the increase rate,

And now about the CAPEX, I did explain about the principles earlier in the briefing, and that is that for last year and this year, we will be maintaining the minimum ordinary investment so as to that will be necessary to maintain the production facilities and also maintain the investment for the order-based businesses for which demand and revenue are pretty much fixed. And also on a cash-out basis, last year it was 5.2 trillion won, which was a bit higher than expected.

Yes, the reason why there was a lot of investment cash-out in 5.2 trillion won is because, as I said in the investment principle, it falls under the principle of running a water-based project. This has accelerated the trend. The fact that it has accelerated the trend is also based on the fact that sales have also accelerated. If you look at the content, it's a little bit of what will happen this year, what will happen in the next year, so as a total cash flow of a few years, So for last year, on a cash out basis, it was $5.2 trillion, which was a bit higher than expected.

But then, so what this means is that this actually is in line with our principle of transitioning more towards the order-based business. So we have accelerated our investment timeline for some of the order-based business, and this also means that the achievement of revenue or the accrual of the revenue would also be pulled up. So this means that the revenue to occur this year and the year afterwards will also be pulled up as well. So when we look at the cash flow across the next few years, then we will see that the investment expenditure will not go up.

Then we will see that the investment expenditure will not go up.

And about the funding, so there are some concerns about potential shortage of funds due to our investment plan as well as the current performance. But then regarding that, I would like to assure the investors and the shareholders that there is no cause for concern as we are making preparation and also implementing the preparation

with regards to the funds aspect as well.

Now, when it comes to investment or the operations of our business, then there are ways in the market that are available aside from borrowing or aside from using our own funds to do so. So when it comes to cash management, once again, I would like to reassure the shareholders and investors that you do not have to worry about them because we will be making the best use of the other means and ways that are available in the market.

Hello, I'm Lee Won-jae, the head of large-scale strategic marketing. First of all, the decline in OLED in the last 23 years is expected to be similar to the previous year, but there have been recent changes in demand in the high-end market, and there is still uncertainty about the recovery of demand, so while carefully monitoring the market situation, This is Won Jae Lee in charge of large display marketing responding to your question about the OLED plan for 2023.

In terms of the shipment, shipment of OLED is expected to be similar in 2023, why or why? But now in the high-end market, the demand keeps changing. And also given that it is not clear when there is going to be recovery in the demand, we will keep closely monitoring the market and try to continue to differentiate OLED in the high-end TV market so that we will be able to increase our market share from the current high 20% level to over 30%.

Also, we are planning to carry out high-intensity production control and fixed cost reduction activities with the goal of improving inventory and set customers' stock.

And with the goal of improving the inventory level among the distributors and the set customers, we will be adjusting our production and also trying to reduce the fixed cost in line with the trends in the actual demand.

Next, I would like to talk about the business strategy. The large OLED business is already secured in terms of the economic level of 10 million units that can compete in the high-end market in terms of infrastructure, and there are still plans in terms of the new market and new customer acquisition, so based on this, the existing production system

And about the business strategy for large OLED, now in terms of the infrastructure, we have already achieved the economy of scale in large OLED based on which we can compete in the high-end market, meaning that that is 10 million units. So we have already achieved the economy of scale. And we also see more opportunities still arising in terms of new markets as well as new customers. So we will continue to strengthen our competitiveness and strengthen our structure so that we will also be able to see profitability from the existing market as well.

And another positive aspect is the fact that we are also seeing visible results come out of our market-creating businesses like gaming and transparent OLED

So these are the new markets that go beyond the existing TV market as the current TV market continues to remain subdued.

Because it is a business with potential and opportunity, we will promote the price innovation in the future

In short, although demand in the downstream industries remains slow, mostly due to the macroeconomic situation, this is the business segment where there are still potential and many opportunities. So we will continue to strengthen our cost innovation and also strengthen the OLED-specific competitiveness so that we will be able to keep growing this market as well as the business.

Yes, you gave a brief answer to the question about product differentiation elements, but this part is additionally extended, so if there is an additional opportunity, I will tell you in detail. That's all.

And there was also a question about the differentiation of the product, especially between OLED versus LCD. But given the fact that my answer has become quite long-winded, I would like to wait for another opportunity to give you more details.

Thank you.

We will take the next question. The next question will be presented by Sowon Kim from Kiwoom Securities. Please go ahead with your question.

Hello, I'm Kim Sowon from Kiwoom Securities. Thank you for your question. I have two questions. First, you said that you have foreseen the exit strategy of LGTB. Are you looking forward to showing a different performance from foreign competitors? Thank you.

I also have two questions. Now, first is about the LCD TV exit strategy, and the company explained earlier how the company has accelerated the execution of this exit strategy. So I believe that as a result of this, it will place the company in a different position from the peers in terms of financial performance. So if you could give us a guidance on the financial performance for the first quarter as well as for the year. And the second question is about the specific business plan. Since the company also discussed the market creating businesses as well as the plan to strengthen the future business portfolio. So if the company can provide more details about the business plan. Thank you.

If I were to talk about the related prospects, I would like to talk about

Now first, about the outlook for the year, and there's a clear response to this, and it is low in the first half and high in the second half.

As you know, the economic situation is not very good, so it is expected that the demand will continue in the first half of the year. In the past, We predict that it will continue to happen until the first half of the year due to the situation that occurred last year, where the number of panel purchases was higher than the number of actual sales.

And now we all know that the macro economy continues to struggle. So then this means that demand is likely to remain slow into the first half of the year. And then also the situation that we had been seeing since last year where the purchase of panels fell short of the actual sales of sets. We believe that this phenomenon is likely to continue into the first half of the year as inventory adjustment continues.

In the same situation, the task our company can choose is to reduce large-scale costs. For example, as I said, in order to minimize the burden of inventory that can occur this year, we adjusted the inventory to 1.6 trillion won over the first quarter of the previous year. These things are in the first quarter.

Now, given this environment, then one of the options given to the company is to go into a large-scale cost cutting. And that is what we have been doing. So in order to reduce the inventory burden, Last year, we had reduced the inventory level by about 1.6 trillion won across one quarter. So we believe that that is going to provide us with positive benefits in the first quarter of this year.

Also, as you well know, we are promoting business harmonization by downsizing and adjusting large-scale businesses. We are expecting a cost reduction of about 1 trillion won per minute.

In addition to that, we also have taken actions to downsize or reduce production of the large size business. And we are also cutting costs by rationalizing our business structure. So all in all, I believe that in terms of the innovation or the rationalization of our business and also reducing of the inventory, This will bring about a cost-cutting benefit of about 1 trillion won in the first quarter.

This will bring about a cost-cutting benefit of about 1 trillion won in the first quarter.

So at the end of this process, what we are expecting is to see revenue growth start in the second quarter and the loss shrinking. And as a result, we hope to see the beginning of a turnaround in the second half of the year.

Yes, this is CSO Kim Hee-yeon. We are working on the LG Display market creation project gaming monitor, transparent, and sound solution.

This is the CSO, Hyun Kim, speaking about our business plan. I would like to explain our business plan based on the three businesses, gaming monitors, transparent OLED, and sound solution.

Based on the large OLED technology, Based on our competitive large OLED, we are trying to target the new business segment, which is the high-end gaming monitor.

where the customers are willing to pay more. So we are currently in discussions with around eight to nine customers, and our plan is to go into mass production within the year.

And second, for the transparent OLED,

We are currently targeting the key vertical customers who can see the importance of these products for retail and construction purposes.

Since transparent products need to approach and create a new ecosystem from the point of view of solutions, through cooperation with various partners in the core vertical area,

Now, for the transparent product, unlike others, this is not something that we can address as standalone products. It's more appropriate as a solution product. So that is why it is important for us to build the right ecosystem, and that is why we are currently discussing with and also cooperating with the important key vertical partners. By doing so, we hope to keep building up the ecosystem and see and achieve visible progress and outcome within the year.

The third is the sound solution. Unlike the speakers that used to require space, Next is about the sound solution.

Now, usually speakers would require space to be installed. But unlike the traditional products, we have come up with the film-type sound solution that will take up less space. And this is the solution that also won the Innovation Award at the CES.

And we believe that there is a particular value to be gained in applications

where the space is limited, in other words automotive. So the automotive sector is where we are going to concentrate with our film type sound solution. It can be provided together with OLED or as I mentioned earlier in automotive or vehicles where the space is limited.

Thank you.

We will take one last question. The last question will be presented by Simon Wu from Bank of America. Please go ahead with your question.

Thank you for the question. My first question is, thank you for your presentation. I think the direction we're going to take is the 6th generation OLED. I think this side will also have a lot of demand. There's a competition in Korea, and there's BOE. And the price of a tablet is very low compared to a smartphone. But I'd like you to explain what it is that you can sell well by cooperating with customers at such a high price. The second is... In the past month or two, there have been concerns that micro-OLEDs could replace small-sized OLEDs. This could happen in two or three years, but from an expert's point of view, I would appreciate it if you could explain how the micro-OLEDs can replace the 6th generation OLEDs that we are preparing.

Now, I also have two questions, and first of all, thank you very much for the presentation. Now, it appears as if the company's trajectory is headed towards Gen 6 OLED, but even in this business, demand is not probably easy to come by because, first of all, there are competitors, and also there is BOE, and also the tablet prices remain lower than smartphones. Now, given the current environment, then what is the rationale for the company to believe that the company will be able to drive sales in discussions with the clients for the high-priced OLED products? And the second question is about the recent press reports about the micro-OLED, and that there have been reports about how the micro-OLED is likely to replace a small OLED in the near future. And of course, that is probably in two to three years' time, but what does the company see in terms of the possibility of the Gen 6 OLED panel being replaced by micro OLED?

Thank you.

This is CSO Hee-yeon Kim, and I will be responding to both questions.

Second question first.

About the press reports on micro-OLED, I do not believe that the company is in the position to respond to this particular question.

Now having said that, in any market, there are always alternative technologies.

And for the TV market as well, there are both OLED and microLED. And I believe that there is a market size to accommodate both, and the company has been responding to these new developments quite effectively.

Mobile has a variety of technical options, and we will prepare a variety of technical preparations, and we will prepare a variety of technical preparations, Likewise, there are different technological options available in the mobile sector as well.

So the company has been making preparation for different types of technology. And when there is business case to be made and business visibility, and if there are any visible potential in negotiations with the customers, then, of course, we'll move ahead with this. So allow me to complete my response to this question by providing you with this, let's say, a fundamental response.

We will monitor the changes in the market and respond well.

And last point, we will keep closely monitoring the changes in the market and respond accordingly.

Next is about the question on IT OLED.

Now, this is the segment where we need to maintain not only the short-term perspective but also the mid-to-long-term perspective because it involves not only tablet but also monitors and notebooks as well.

먼저 모니터의 경우도 고객의 프리미엄 지불 의향이 높은 게이밍 모니터를 중심으로 해서 사업화를 시작해 나가고 있으며 태블릿도 그 일환으로 보시면 될 것 같습니다.

In terms of the monitor segment, we will also start targeting the gaming monitors, which is a premium market where the customers are willing to pay more. So this is the segment that we will start targeting, and tablet is a part of that.

When you look at the mobile case, the POE share is expanding to about 30% of the high-end market. And looking at the mobile case, we see that the BOE's market share is now about 30% in the high-end segment.

Of course, there had been concerns of the premium price and also concerns about the potential scalability. But then I believe that there has been value-up from the set maker's side, and we believe that that is how it was able to increase the penetration. And we believe that the same development could occur in the tablet segment as well.

However, as you said, compared to smartphones, tablets or monitor laptops' performance But at the same time, as the questioner had rightly pointed out, the high-end payment value in tablets, monitors, or notebooks

would be lower than for the smartphones. And also the use cases might be limited still. So we would be looking into the different factors and the circumstances and try to come up with a rational prospect for penetration rate and also set our business plan and strategy accordingly.

If there are no further questions, we will now close Q4 2022 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.