Lg Elec S/Gdr 144A

Good morning and good afternoon. Thank you for joining LG Electronics Earnings Release Conference Call for the fourth quarter of 2021. This conference call will start with a presentation on the earnings results, followed by a Q&A session, at which time, if you wish to ask a question, you will need to press star and one on your telephone. I would now like to hand the conference over to the first speaker. Good afternoon. My name is Sangbo Shim from Investor Relations. Thank you for joining LG Electronics Earnings Release Conference Call for the fourth quarter of 2021. With me are representatives of each business management division, Mr. Lee Kwon Kim from Home Appliance and Air Solutions, Mr. Jung Ae Lee from Home Entertainment, Mr. Joo Young Kim from Vehicle Component Solutions, Mr. Chung Hyun Park from Business Solutions. We are also joined by Mr. Sang-ho Park from Global Business Management Group, Mr. Hyung-kyu Lee from Finance Division, and Mr. Hong-soo Lee from Accounting Division. Please note that all statements we will be making today regarding our financial results of the fourth quarter are subject to change in accordance with the result of the external audit. I would also like to remind you that uncertainties in the market and changes in strategies may cause our results to be different from the outlooks and forward-looking statements made today. Today I will outline the overall performance results of the fourth quarter of 2021 and the outlook for the year 2022 and the first quarter. After that, each division will take turns to deliver its business results and outlook. Now let me start with the consolidated financial results of the fourth quarter of 2021 and the outlook for 2022 and the first quarter. Consolidated sales of the fourth quarter was $21 trillion won and operating profit was $677.7 billion won. Sales grew 21% year-on-year, driven by growth in overseas markets for HNA and increased sales of OLED TVs in HE. Though affected by rising raw material and logistics costs, we recorded sound performance in operating profit by shifting our revenue structure to focus on premium products. I will now briefly review the fourth quarter performance of each business. H&A recorded $6.5 trillion won in sales, $157.1 billion won in operating profit, and 2.4% in profitability. H&G recorded $5 trillion won in sales, $162.7 billion won in operating profit, and 3.3% in profitability. BS recorded $1.7 trillion won in sales, and 53.6 billion won in operating loss. ES recorded 1.7 trillion won in sales and 35.1 billion won in operating loss. Each business will later share its respective business results and outlook in detail. Let's move on to the profit and loss and cash flow of the fourth quarter. In terms of profit and loss, Reflecting financial income and expense, equity method gain and loss, other non-operating income and expense, corporate income tax, and income and loss from discontinued operations, we posted 21.3 billion won in net income. Next on cash flow. Cash flow from operating activities of the fourth quarter was 441.7 billion won, and cash flow from investment activities was negative 391.8 billion won. As a result, net cash flow amounted to 18.8 billion won. and when reflecting cash flow from financial activities of negative 596 billion won, net change in cash decreased by 577.2 billion won. After reflecting changes in cash held for sale of 8.9 billion won, cash balance at the end of the fourth quarter came to stand at 6.1 trillion won. Next is the key financial position and indicators for the fourth quarter of 2021. As of the end of the fourth quarter, our assets stood at 53.5 trillion won, liability at 33.4 trillion won, and equity at 20.1 trillion won. In terms of leverage ratios, though there was a slight increase in net debt to equity, liability to equity and debt to equity all decreased quarter on quarter and year on year, and we continue to maintain a healthy financial condition. Next is the outlook for the year 2022 and the first quarter. In terms of the macro environment following last year, difficulties may persist as uncertainties remain with the spread of the COVID-19 variant, continued supply chain issue, and increase of raw material and logistics costs. Amidst this environment, we will strengthen business competitiveness by solidifying our position in the premium segment and focus our capabilities on responding to the external environment and cost structure risks. In line with this direction, we seek to continue generating stable profit together with revenue growth in 2022. We project our first quarter revenue excluding LG Indotech to grow year on year and expect a stable level of profitability on the back of revenue growth centered around premium products. We will move on to the fourth quarter results and outlook by business, but Before that, as disclosed on July 29, 2021, in adjusting our business portfolio, the CEM business was transferred from BS to LG Chem as of November 1, 2021. Now the business results and outlook, starting with H&A. Let me share the fourth quarter results of H&A. Sales stood at 6.5 trillion won with an 18% increase year-on-year driven by growth in overseas markets such as North America. Despite the upside of revenue growth and marketing cost savings, operating profit decreased year on year due to increased raw material prices and logistics cost hikes. Next is the outlook for the year 2022 and the first quarter. The global demand growth is projected to slow down and uncertainties and risks related to business operations are expected to persist as increased logistics and other cost burdens remain due to the imbalance in supply and demand. Amidst this environment, we will continue efforts to enhance sales armed with our product competitiveness and will focus our capabilities to secure stable profitability by increasing selling price and optimizing costs. For the first quarter, we believe the impact from increased logistics costs will persist, but we plan to maintain solid profitability based on continued revenue growth in overseas markets.

I will share the fourth quarter results of HE.

Sales grew year-on-year despite the decrease of global TV demand thanks to expanded product sales of OLED TVs. Though marketing costs increased due to intensified competition, we maintained sound profitability stemming from improved product mix focusing on premium products. Now let me share the outlook for a full year 2022 and the first quarter. In the market, global TV demand is projected to decrease slightly year-on-year as people spend less time at home, but we expect demand for premium products such as OLED TVs to be maintained. Accordingly, we will pursue continuous revenue growth and sound profitability by strengthening our market position in the premium product segment with increased sales of OLED TVs. For the first quarter, Marketing cost is expected to rise with fiercer competition in the global TV market, but we will secure solid profitability through revenue growth.

Let me share the fourth quarter results of ES.

Sales recorded a decrease of 12% year-on-year and 3% quarter-on-quarter with the continued OEM production disruptions due to the supply shortage of automotive semiconductors. Though some cost reduction was achieved through efforts to improve profitability, operating loss continued due to the drop in revenue and increased cost burden from the semiconductor risk. Regarding the market environment in 2022, the automotive semiconductor risk may gradually ease from the second half based on collaboration among global OEMs Tier 1 companies and semiconductor suppliers. Meanwhile, our revenue growth and profitability improvement is expected to be limited with the continued semiconductor supply issue and subsequent disruption in auto production. So we expect the situation to improve after the first half. In the short term, difficulties are expected in achieving a turnaround in the first quarter. I will share the fourth quarter results of BS First, in line with efforts to adjust and enhance our business portfolio, the CEM business was transferred to LG Chem as of November 1, 2021. Post-quarter sales grew quarter-on-quarter and year-on-year on the back of the seasonality effect in IT business and recovering demand in the B2B market. Operating profit declined year-on-year despite the sound growth in revenue, due to rising prices of major components and logistics costs and sluggish performance in the solar module business. Now the outlook going forward. There are both opportunities and risks in the market as the non-face-to-face trend continues along with instability in the global supply chain. But for monitors, the market is expected to expand for premium products such as gaming monitors And for PCs, the demand for high-performance laptops is likely to remain. For information display, demand in major verticals, namely retail, corporate, and education, is projected to increase fueled by recovering demand in B2B. We expect to further strengthen our market position in premium products such as gaming and high-resolution monitors and grand PCs in IT. And we will actively respond to sales opportunities in each vertical in line with the recovering market demand in information display. That brings us to the end of the fourth quarter earnings release and outlook for the year 2022 and the first quarter. We will now take questions. Operator, please commence with the Q&A session.

Now, Q&A session will begin. Please press star 1 if you have any questions. Questions will be taken according to the order you have pressed the star and number 1. For cancellation, please press star 2 on your phone. The first question will be provided by Dongwon Kim from KB Securities. Please go ahead with your question.

Yes, thank you for the opportunity to ask a question. I have two questions for the H&A headquarters. Recently, there has been an increase in raw material costs and an increase in the cost of logistics, so I would like to ask for your opinion on the future response plan. Thank you for taking my questions. I have two questions on HNA. My first question is,

How did the rise in raw material prices and logistics disruptions affect you? And what is your response to this? And what's your outlook for the demand for home appliances in the global market this year? And my second question is, what is your premium home appliance business strategy in response to Samsung Electronics' bespoke marketing?

First of all, I would like to talk about the impact of raw materials on logistics, large-scale solutions, and the potential demand for home appliances. In order to minimize the impact of raw materials on prices, we are increasing the number of makers for raw materials integration and negotiation, and we are optimizing 6CM by diversifying small and medium-sized companies. Through these activities, we are minimizing the impact on prices.

Let me answer your first question. In order to minimize the impact of rising raw material prices, along with globally integrated negotiations, we are fostering key makers in each region and making various efforts, such as multi-sourcing and SEM optimization.

As you know, in the field of logistics, shipbuilding is at its lowest point in recent years due to the dramatic change in the number of shipbuilders

And as you know, due to the spread of Omicron variant and global port congestion, vessel schedule reliability is at record lows. This leads to container shortages and longer waiting times, further aggravating logistics cost burden. And to save logistics costs, we are making various efforts such as improving the efficiency of truck transportation and implementing activities such as mixed loading, maximization of container utilization rate, and expansion of global direct shipment.

This year due to the resurgence of the COVID variant,

and accelerated tapering in the U.S., uncertainties in the global market this year are expected to grow versus last year. Until the current COVID situation subsides, we believe the demand for durable goods will remain largely flat versus last year.

Also, after two years of pandemic, new commerce platforms such as live commerce and metaverse are growing rapidly,

Also, throughout the pandemic over the past two years, new commerce platforms such as live commerce and metaverse have rapidly emerged, and the way consumers purchase products and their expectations for home appliances have also changed. They are now looking for emotional and innovative factors going beyond basic features.

In line with this change in consumer demand,

We are closely monitoring the growth trends in each region and developing growth strategy to maximize sales, with a focus on premium products and products with large capacity and high efficiency.

Next, I would like to talk about the Samsung Electronics Bespoke model, which you mentioned earlier. Although the company's object collection was released later than competitors, it has been established as a public space interior.

Now let me answer your second question. Even though we have launched our Objet Collection later than the competitors bespoke, Objet Collection has firmly established itself as space interior appliances.

There is a new history in the market with the product competitiveness of only one company, such as the ice water purifier refrigerator and WashTower, and a total of 12 products have won the first place of national customer satisfaction for six consecutive years.

With its differentiated product competitiveness, including craft ice refrigerator and wash tower, Object Collection is writing a new history in the market. We ranked number one in customer satisfaction with 12 different products, making us the most frequent winner of the award in the home appliances sector for six consecutive years.

Whereas our competitor's Bespoke is now applied to all of its home appliance products,

We are aiming to gain a competitive edge with a differentiated strategy of having a well-balanced portfolio centering around object collection, including ultra-premium signature and individual brands.

The company is focusing its capabilities on customer experience improvement for customer satisfaction this year, and the core of the company's home business strategy is up home. The company is focusing its capabilities on customer satisfaction

This year, we are focusing our capabilities on enhancing customer experience for customer delight. At the core of our H&A business strategy is software upgradeable appliances, or what we call UP appliances. It refers to appliances that flexibly change and constantly evolve throughout customers' journey, according to their lifestyle.

Finally, the company has built a customer data platform one step ahead of competitors through various channels so far, in line with the digital transition era. In particular, it has played a key role in improving customer care and upgrading business in the use stage after the sale of new products,

And in the era of digital transformation, we have built a customer data platform through various channels before our competitor did. In particular, ThinQ will play an essential role in providing customer care and upgrading their experience after the purchase.

Next question, please.

The next question will be presented by Kangho Park from Daesin Securities. Please go ahead with your question.

Yes, thank you for the opportunity to ask a question. I will ask a question about VS and H&A. First of all, in the case of VS, since the second half of last year, Elec S & Gdr 144A The second question is about LTE. As the question mentioned earlier, the price of raw materials is increasing rapidly. I see that the price of major products is also rising a lot. If you look at it that way, I think that the loss of profitability for 2022 will be inevitable compared to last year. I am curious about what is the strategy to secure profitability for this in the company. Please comment on that.

I have two questions. My first question is on VS. Due to the semiconductor shortage and a slowdown in production volume on the OEM side, you're experiencing supply constraints. And I'm wondering, when do you think this constraints supply chain disruptions will ease? Also, when do you expect to make a turnaround? And my second question is on HNA. If the rise in raw material prices persists, your annual profitability will unavoidably decline. In this context, what is your strategy to secure profitability?

Yes, I will answer to the VS Department. The biggest reason why the turnaround was delayed compared to what was expected at the beginning is that the production of finished vehicles decreased due to the negative impact of the semiconductor for the vehicle, the purchase cost for the semiconductor increased,

Let me answer your first question on VS. The delay in making a turnaround was primarily driven by the decrease in OEM production due to the automotive semiconductor shortage and the increase in operational cost caused by price increase in semiconductors and supply constraints.

A slowdown in vehicle production due to supply constraints is expected to gradually ease on the back of collaboration between global OEMs, automotive part makers,

and Semiconductor Suppliers. However, uncertainties remain for certain components as the structural issue hasn't been fully resolved.

The V.S. Headquarters is expected to see an increase in sales due to the launch of a new project and a fundamental improvement due to the improvement of operations, but it is expected that the production quality of the finished vehicle company due to the short-term semiconductor risk and the increase in raw material costs will increase,

With new projects, sales have increased, and we have been making operational and fundamental improvements. That being said, in the short term, risks associated with production disruptions on the OEM side due to the semiconductor shortage is expected to put upward pressure on cost. So profitability improvement is expected to be limited.

We'll make efforts to make a turnaround as early as possible. H&A 말씀드리겠습니다. 2022년도는 매출 성장률은 전년 대비 다소 하락할 것으로 예상이 되고 있고, 수익성 또한 원자재 가격 및 물류비 인상 등 비용 증가 영향으로 전년 대비

Let me answer your question on H&A. Revenue growth in 2022 is forecast to decline year-on-year, and due to rising raw material prices and logistics costs, profitability is expected to slightly decline year-on-year. To offset the impact of the increase in raw material prices, we are working on expanding sales and increasing the ASP in each region at the same time. Elec S & Gdr 144A And regarding our strategy to secure profitability, first of all in North America, we expect to see a deceleration in demand growth from the levels we saw last year. But we are working on boosting revenue and securing profitability through differentiated products and supply stabilization.

In Europe, as many countries are maintaining their flexible monetary policy stance, we expect consumer spending to remain largely unchanged.

and we will continue to increase our market share by expanding sales of premium and high-end products and the coverage of cost-effective products.

As for Asia and Korea, first of all, we believe that there will be opportunities for growth due to COVID-19 restrictions on entry and vaccination rates, and we hope to strengthen market dominance through sales expansion, focusing on our own hygiene and health. And in Asia, with the easing of entry restrictions and increased vaccination rates, we believe there are opportunities for growth. We aim to further strengthen our market dominance

by expanding sales with a focus on our differentiated hygiene and health related home appliances. In the Korean market, we are launching new products related to our software upgradeable appliances or UP appliances, increasing the ASP and implementing cost improvement activities to boost sales and improve profitability.

Next question please.

The next question will be provided by Simon Woo from Bank of America Securities. Please go ahead with your question.

Thank you for the question. My name is Woo Dong Jae. I have two questions. The first is a question related to LG Magna re-entry, which was already launched last year. Elec S & Gdr 144A Elec S & Gdr 144A I have two questions. My first question is on the VS Company's LG Magna JV. Can you give us an update on LG Magna JV?

Can you please provide details such as detailed products or your volume and your execution strategy in order to achieve high profitability and revenue?

And then I have a follow-up.

Yes, I will answer. After the establishment of LG MAGNA JV, the company is actively conducting discussions for cooperation in all areas of the MAGNA and value chain,

Since the establishment of LG Magna JV, there have been ongoing discussions about making concrete plans for collaboration in all areas. We have secured manufacturing competitiveness and purchase competitiveness, and we are seeing some results with newly won projects. by partnering with new channels.

Although we cannot provide details as we have signed a contract with channels, in addition to existing North American channels, we have also won new European and Asian customers.

thereby expanding our customer portfolio.

We believe we are on track to achieve our mid- to long-term target, and profitability is also expected to improve.

Please continue with your next question.

Please continue with your next question. Please continue with your next question. Please continue with your next question. Please continue with your next question. My next question is on BS. Could you please talk about the BS business strategy? In the second half of last year, the business was in the red.

and I would like to hear in detail in particular about your solar business. I don't believe we are seeing expected results from the solar PV business. So, what are your strategies down the road?

I will answer your question. For the past 2-3 years, the BSF has been facing difficulties due to COVID-19 due to the change in the external environment of the business, but we have accepted and overcome them,

Over the past two to three years, the BS business has experienced challenges caused by the dramatic changes that took place in the external environment brought on by COVID. But by embracing and overcoming such challenges, we are growing externally, exceeding pre-COVID levels.

Our IT business, such as Monitors and Graham, has achieved solid growth and improvement in many indicators driven by contactless trends. And we are aiming to accelerate this growth momentum

by continuously providing differentiated experiences and value to customers. and our ID business, including signage and hotel TVs, saw severe negative growth in demand caused by reduced investments on the demand side due to the pandemic. But after the second half of 2021, sales have recovered to pre-COVID levels on the back of resumed investment by key verticals such as retail, education, and enterprises.

We are going to further enhance product competitiveness and provide customized services for each vertical and foster the LED signage business as a new growth engine to capture future business opportunities. As for the robotics business, we are working on projects related to robots that can guide, serve, and disinfect

based on the indoor autonomous driving platform. At the same time, we are exploring business opportunities in related areas by accumulating relevant core technologies.

And regarding the renewable energy business, it is difficult to tell you in detail, but we are looking at additional business opportunities in the renewable energy business ecosystem. For example, we are looking at additional opportunities Solution Solution Solution Solution Solution Solution Solution The BS Division will secure competitiveness for future business by providing differentiated customer value and solutions. Next question please.

The next question will be provided by Sunggyu Kim from Daiwa Capital Market. Please go ahead with your question.

Hello. Thank you for the opportunity to ask a question. I have two questions for you. The first one is about HE and VS. First of all, HE is a question about OLED TV. In the fourth quarter, OLED TV output, And I wonder if you have achieved the 4 million goals you have previously set for the year. So, I wonder if you have achieved the 4 million goals you have previously set for the year. So, I wonder if you have achieved the 4 million goals you have previously set for the year. So, I wonder if you have achieved the 4 million goals you have previously set for the year. So, I wonder if you have achieved the 4 million goals you have previously set for the year. So, I wonder if you have achieved the 4 million goals you have previously set for the year. So, I wonder if you have achieved the 4 million goals you have previously set for the year. So, I wonder if you have achieved the 4 million goals you have previously set for the year. In fact, in the market, LG Electronics and LG InnoTech, LG Display, etc. I think there is a lot of expectation that we will be able to provide autonomous vehicles and autonomous driving solutions in the future through cooperation with companies such as LG InnoTech and LG Display. So, in fact, I can't tell you the information about the trade line right now, . . . . .

I have two questions. My first question is on HE. What is the shipment volume of OLED TVs for Q4 2021? And did you meet your annual target of 4 million units? And also, what is your target shipment volume of OLED TVs this year? I think I heard yesterday that LGD mentioned a 20% increase, so I'd like to know what your target shipment volume of LED TVs this year is. And my second question is on VS. There are expectations that LGE, in collaboration with its affiliates such as LGI and LGD, will provide solutions for autonomous vehicles. Are there any ongoing projects related to autonomous driving or any projects you're looking to start? On the other hand, there are concerns that the commercialization of the autonomous driving market may take longer than expected, as the relevant technology is not quite ready yet. What is your outlook for autonomous driving, and could you talk about the opportunities and the risk factors?

Yes, I will answer the questions from the HR department. Regarding the questions related to the 21-year 4-minute OLED charging, Regarding your first question, in North America and Europe, driven by optimized supply chain and robust LED TV demand, we saw over 60% year over year growth.

and we have exceeded our target.

And we have exceeded our annual sales target for OLED TVs and the growth doubled year on year. Regarding the shipment volume of OLED TVs for 2022, although we are unable to provide specific figures,

We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market. We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market. We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market. We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market.

We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market. We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market. We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market. We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market. We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market. We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market. We will continue the growth momentum by launching improved new models and leveraging our dominant position in the market. We will continue the

Let me answer your question on VS. Although we are unable to provide detailed information, there is a project we are working on related to components for autonomous driving for OEMs in Europe and Korea. We also have several ongoing projects with European OEMs.

In the case of self-driving business, it is expected that it will be difficult to implement it in a short period of time due to the social agreement and regulation issues.

The autonomous driving business has hurdles to overcome, such as legal regulations and gaining technological reliability and social consensus. So the general view is that commercialization will take some time.

OEMs and tier 1s are looking for a fast supply and autonomous driving market through inorganic strategies with powerful companies, and existing tier 2 SOC companies are looking for a fast supply and autonomous driving market

OEMs and Tier 1 suppliers are looking to quickly secure capabilities and become a first mover in the autonomous driving market by working with companies with capabilities through inorganic strategy. And the SOC companies that were Tier 2 suppliers are also making moves to expand the business, which is intensifying the competition.

As it is expected that Europe and the US will make it mandatory to have every vehicle equipped with autonomous driving solutions, we are making efforts to meet customers' requirements.

and the risk factor would be, as mentioned before, intensified price competition as the business expands.

Next question please. The next question will be provided by Nicholas Godoa from UBS. Please go ahead with your question.

Yes, good afternoon. Thanks for taking my question. On the EV business within vehicle solutions, and more specifically the MagnaRJV, one of the key parts about is motor and inverters for the EV market. I think your peers have been commenting throughout last year and year to date that they are seeing a fair degree of pricing pressure in this segment. So could you comment on the market outlook for motor and inverters going forward and how profitability in this segment may actually evolve? And number two, going back to OLED TV demand and the other question we had from SK here, you were reasonably cautious about overall TV demand outlook for 2022. There are two questions.

My first question is a question about Vs. Car parts competition companies are talking about the price pressure of motor inverters in the electric car market. Please tell us how LG will look at the electric car parts market in the future and how it can improve profitability. And the second question is a question related to HE OLED TV. It is confirmed that the growth rate in 2022 is lower than in 2021. This is a signal that OLED TV demand is negatively affected by macro issues. When considering this, please tell us how the expected output amount of OLED TV will be. Yes, I will answer the VS Department.

As of this year, the rapid growth of the electric vehicle market is expected in the electric vehicle parts market,

Let me answer your first question on VS. Starting from this year, large volume mass production by major OEMs will begin, which will lead to the rapid growth of the EV component market. Therefore, cost competitiveness has become a key factor in winning business. based on our technological competitiveness secured by being a first mover in the EV component market and by improving purchase and manufacturing competitiveness through synergies generated from LG Magna JV, we have been maintaining our competitive edge. And regarding the increase in raw material prices such as copper and magnet, we have signed price contracts with suppliers, so its impact on our profitability will be limited.

I will answer the following question. As with the previous question, we, LG Electronics, have said that the basic OLED sales output in the fourth quarter has exceeded our goal, and the 22-year OLED output is expected to grow more than this year due to the increase in demand for already acquired product competitiveness and premium market.

As I said previously, we have exceeded our target in Q4 in 2021. And in 2022, in terms of shipment volume, we expect to see solid growth based on our premium products and our competitiveness.

Next question, please.

The next question will be provided by JJ Park from J.J. Morgan. Please go ahead with your question.

Yes, there are two questions. One is about HA and the second one is about VX. HA is falling from the presentation data for the entire market this year, but our company said that it drives a lot of premium products. . . . . . I have two questions. My first question is on HE. What is your outlook for the TV market demand for 2022?

And did you experience any disruptions to your TV production caused by a constrained supply chain and the global semiconductor shortage? And my second question is on VS. Could you provide outlook for the CAGR of each business unit? What is your target market share, and what's your strategy to achieve the target?

Yes, I will answer from the ACHI headquarters. Let me answer your first question on HE. In the first half last year, we saw strong growth in TV demand, and there was a slowdown in growth in the second half.

Even amid this overall deceleration in growth, the sales of premium products that cost over $1,000 such as OLED TVs have steadily increased.

We expect the overall demand for TV in 2022 to decline slightly year-on-year, but the demand for premium products and in growth markets is forecast to be robust. Regarding production, since last year, we have been taking preemptive measures, such as developing alternative components

and multisourcing to manage global supply chain. And so we haven't experienced any production disruptions yet.

Let me answer your question on VS. Looking ahead,

Market demand in the mid to long term is expected to see robust growth at around 7%.

The market demand that has been stagnant over the past few years due to the US-China trade dispute in COVID-19 and the global semiconductor shortage

is expected to gradually recover starting from 2022.

In particular, with a surge in demand for green vehicles, we expect the production of green vehicles to represent around 40% of the automotive market after 2025. In order to be fully ready for the rebound in the automotive market,

We are going to focus our capabilities on smart integrated solutions for infotainment and EV components with integrated solutions which currently have high growth potential and next generation intelligent headlamps. In doing so, we expect to outgrow the market which will improve our market share.

Next question please.

The next question will be provided by Sung Yeol Kwon from DB Investment. Please go ahead with your question.

I have a question about H business. I have a question about the OLED panel collection. In fact, domestic TV companies have allowed the OLED TV to be introduced, and in fact, LGD has found a panel purchasing doctor Elec S & Gdr 144A Elec S & Gdr 144A If the panel demand increases, the price may rise or the supply may be very tight, but I think that the OLED TV competition company has come in. Even if there is a good opportunity to boost the high-end TV market, I think that it will be more difficult to supply or deliver this panel, or I think that it will be another factor in the pressure on profitability as the panel price rises.

One question on HE regarding the supply of OLED panels. A domestic player has recently announced that they will be purchasing panels from LGD. And as we know, we only have one supplier in Korea who can supply OLED panels. and with this limited capacity if volume increases panel supply will not be able to meet the demand and it will result in increased price so I'm actually skeptical whether the company's entry into the OLED TV market is good news I believe it will add pressure to the supply market so what do you think about this?

panel supply as far as we understand, we don't have any major issue. And regarding cost pressure,

We will be offering a wide range of lineup in terms of size from 97 inch to 42 inch which means we have improved our product mix so it will improve our profitability which will offset any negative impact.

Thank you for attending today.

That brings us to the end of LG Electronics Earnings Release Conference Call for the fourth quarter of 2021. For further questions, please contact the IR team. Thank you.