Lg Elec S/Gdr 144A

Good afternoon. My name is Won Jae-bak from Investor Relations. Thank you for joining our earnings call for the first quarter of 2026. With me are Chang-Tae Kim, CFO and EVP of LG Electronics from each company's business management division, Jong-In New from HS, Sang-Ho Park, SVP of MS, Joo-Young Kim, VP of VS, and Dong-Woon Shin, VP of ES. From Headquarters, Jiwan Park, SVP of Corporate Business Management, Youngkyun Kim, VP of Finance, Ingeun Park, Head of Accounting, Sungmin Hong, Head of ESG Office, and Jiho Song, Head of Global Trade Customs. Today's presentation will proceed as follows. Our CFO will review the Q1, 2026 results in Q2 outlook, followed by an overview of our new growth businesses and the progress on our share buyback program. I will then present the first quarter financial highlights. After that, each business will share its individual results and outlook. Lastly, the head of the ESG office will present the results of our ESG activities. Please note that all statements made today regarding the first quarter financial results are subject to change in accordance with external review. Actual results may differ from today's outlooks and forward-looking statements due to market uncertainties and strategic adjustments. Now, let us begin with the Q1 2026 performance review and the Q2 outlook. Good afternoon. I'm Chang-Tae Kim, CFO of LG Electronics. Here are our Q1 financial results. Our consolidated sales reached 23.7 trillion won with operating income of 1.67 trillion won. Despite sluggish consumer sentiment amid geopolitical risks, including the Middle East conflict and intensified competition, Total sales grew year over year, driven by the peak appliance season, higher TV demand from major sporting events, back-to-school demand for PCs, and stable order volumes in automotive electronics. Operating income improved year over year, despite uncertainties stemming from geopolitical risks and rising raw material prices, driven by overall sales growth expansion in high-value added segments, and ongoing cost control efforts. In particular, HS and VS companies achieved record high quarterly sales, with VS also attaining record high operating income during the same period. Oil price fluctuations and raw material cost increases driven by ongoing geopolitical risks along with global demand shifts stemming from supply chain disruptions are pressuring the business in Q2. To address these challenges, we will conduct a thorough analysis of demand changes and establish region-specific strategies for our main businesses while securing growth momentum through our Global South strategy. Production will be stabilized and cost competitiveness strengthened by securing advanced inventories and using a cost-efficient manufacturing ecosystem. Leveraging our bargaining power as a major shipper, we plan to enhance shipping line efficiency to minimize the impact of rising logistics costs. I would like to take a moment to outline the progress of our new growth businesses including home robots, robotic components, and AI data center cooling solutions. Chloid, our humanoid robot business, is on track to begin production for POC validation this year. Collaboration with leading technology companies including NVIDIA, to advance the development of a foundational robot model is accelerating. The POC validation will commence within the first half of this year, gradually expanding into industrial and home segments. We will explore the potential of industrial humanoid robots by leveraging our robot technologies and process data learning. Drawing on our understanding of the home environment, and the strength we've gained from our appliance business, we aim to lay the foundation for commercializing home robots by 2028. Business for actuators, a key robotic component, is preparing to begin initial mass production in the first half of the year. Collaboration with major companies and academia is accelerating to develop and internalize reduction gear technology. Leveraging our competitiveness in lightweight, high efficiency, high torque motor technology gained through the annual production of over 45 million motors, we are pursuing rapid product development and establishing a production base while aiming to secure a product lineup that meets both internal demand and diverse customer needs. We are also seeing meaningful progress in AI data center cooling solutions. Certification of key products such as chillers and CDUs targeting key partners including global big tech companies is well on track, and I believe we'll be able to deliver good news in the near future. Technology and product development for immersion cooling, a next generation solution, is also accelerating. We are expanding collaborations with major players to develop comprehensive solutions, including cooling management software and power management systems. Lastly, I would like to share the progress of the Share Buy Back program, which began earlier this year and aims to enhance corporate value. Last November, we announced an additional shareholder return plan totaling $200 billion won by 2027. As part of this plan, in February, the Board resolved to repurchase Treasury shares worth $100 billion won and cancel them by the end of September. Since then, about 50% of the purchase has been completed. We will continue to proceed with the remaining share repurchases at a swift pace to clearly demonstrate our commitment to enhancing shareholder value. I'll now briefly review the Q1, 2026 performance of enterprise-wide operations in each business. Our consolidated financial results for Q1 were 23.72 trillion won in sales and 1.67 trillion won in operating income. HSE recorded sales of $6.94 trillion won and operating income of $569.7 billion won. MS recorded sales of $5.16 trillion won and operating income of $371.8 billion won. ES recorded sales of $3.64 trillion won and operating income of $211.6 billion won. Lastly, ES recorded sales of $2.82 trillion won and operating income of $248.5 billion won. Moving on, the next focus is on B2B and subscription businesses, which serve as key drivers of qualitative growth in our portfolio transformation. In Q1, B2B sales grew year-over-year and quarter-over-quarter, driven by stable orders in automotive electronics. The B2B sales proportion of total sales remains steady, supporting qualitative growth. For the subscription business, double-digit year-over-year sales growth continues in the Korean market, supported by a strong competitive edge through differentiated care services. The overseas subscription business continues to grow, expanding into regions like the Middle East, beyond Malaysia, and Thailand. Though still early, its share of overall sales shows a year-over-year increase due to rapid overseas expansion. We will continue to enhance our business outcomes by continuously advancing our business portfolio including both B2B and subscription businesses. Moving on to the income statement and cash flow for Q1. Reflecting financial income and expenses, equity method gains and losses, other non-operating items, corporate tax, and discontinued operations, the Q1 net income was 1.51 trillion won. Now let's look at cash flow. Cash flow from operating activities was 1.1 trillion won, while cash flow from investing activities was negative 1.17 trillion won, resulting in a net cash flow of negative 188.1 billion won when reflecting a negative 326.3 billion won in cash flow from financing activities. The cash balance at the end of Q1 stood at 8.63 trillion won down 138.2 billion won from the previous quarter. Key financial positions and indicators for Q1 are as follows. At the end of Q1, assets stood at 71.2 trillion won, liabilities at 40.7 trillion won, and equity at 30.5 trillion won. Leverage ratios, including liability to equity, debt to equity, and net debt to equity, have improved and remain at healthy levels. Now we will hear from each business company regarding its Q1 2026 results and Q2 outlook. Here are the Q1 results for HS Business. Despite a delayed recovery in consumer sentiment due to the Middle East conflict and inflation concerns in the U.S., our sales grew year-over-year supported by a strengthened two-track strategy targeting the peak season and by the expansion of our online and subscription businesses. Profitability also achieved solid result despite the impact of material price increases in U.S. tariffs supported by improvements from sales growth, expansion of high margin businesses like subscriptions, and ongoing cost reduction efforts. Looking ahead to Q2, the ongoing macroeconomic uncertainties including potential changes in U.S. tariffs, delays in interest rate cuts, and possibly inflationary effects from the Middle East conflict are likely to hinder demand recovery. In response, we aim to sustain sales growth momentum by further strengthening product lineups within our proven two-track strategies, accelerating growth in B2B, online, and subscription businesses, and focusing on expanding our presence in global south markets. We will address rising raw materials and logistics costs by optimizing the supply chain. Profitability will be secured by enhancing cost competitive competitiveness through the manufacturing cost structure improvement initiative, which has been actively pursued since early this year. Let's now turn to the Q1 results for the media solution business. Sales decreased quarter over quarter, mainly due to the off-peak season, but year-over-year growth was achieved driven by higher premium TV sales, PC growth from back to school demand, and expanded webOS platform sales. Operating income turned positive, driven by a higher share of high value added product sales, continued fixed cost reductions, and efficient management of competitive cost, resulting in both quarter-over-quarter and year-over-year improvements. Next is our outlook for the second quarter. If the conflict in the Middle East persists, macroeconomic volatility will rise due to inflation and higher oil prices, likely hindering demand recovery. Additionally, a sustained strong dollar and rising memory prices are further increasing costs. In response, we will aim to achieve sales equal to or exceed those of the previous year by strengthening our market position through premium products, timely introduction of new offerings, and leveraging major sporting events. Additionally, operational efficiency will be further enhanced to minimize the impact of rising cost pressures on our profitability. I will now review the VS Company's Q1 results. Despite external factors, including concerns about slowing EV demands, sales grew both quarter-over-quarter and year-over-year, supported by sustained, stable sales momentum from orders on hand. Operating income also improved both quarter-over-quarter and year-over-year, driven by the leverage effect of sales expansion, product mix improvement focused on high-value added products, and cost structure innovation. Let me now move on to the Q2 outlook. Given the ongoing uncertainties in the market, the recovery of global automotive demand is likely to remain limited for some time. Accordingly, we'll respond to market changes by ramping up mass production for new products and restructuring our portfolio to focus on high-value-added products. We will continue to pursue profitable growth through strategic collaboration and improved cost efficiency. I will now review the ES Company's Q1 results. Sales declined year-over-year mainly due to sluggish demand from a shrinking construction market domestically and abroad, along with constrained consumer sentiment amid rising uncertainties like U.S. turf and the Middle East conflict. In terms of operating income, profitability decreased year-over-year as intensified market competition led to lower sales and higher competition costs, while higher oil prices from the war in the Middle East pushed up logistics costs and component prices. Let me now move on to the Q2 outlook. Consumer sentiment is likely to decline due to rising energy costs and a decrease in real household income. We will pursue year-over-year sales growth in overseas markets by introducing region-specific new products and expanding the solution business. Additionally, by managing resources efficiently, we will minimize cost pressures resulting from rising competition and new hires in growth areas. Finally, I would like to highlight our ESG activities and achievements. LG is widely recognized for its competitiveness in highly efficient HVAC solutions. We received the Performance Award from ASHRAE for the ninth consecutive year. Our residential integrated heat pumps and commercial HVAC solutions also won eight awards at MCE2026, Europe's largest HVAC exhibition. We are accelerating our Asia-tailored business initiatives by hosting LG HVAC Connect 2026, inviting 15 major Asian partners, and securing orders to supply cooling solutions to food chains in the Philippines and Thailand. LGE is expanding our differentiated product and service offerings For six consecutive years, LGE has been ranked the most trusted home appliance brand in eight key categories, including refrigerators, by Consumer Report, a leading U.S. consumer media outlet. At CSUN AT2026, we showcased accessibility technologies, including voice-controlled appliances linked with DingQ On and new kiosks featuring adjustable height and tactile pads which were well received by attendees. Finally, we are enhancing trust in the capital market. By appointing outside directors as board chairpersons, we strengthened board independence and transparency, advancing corporate governance. We earned an AA rating from MSCI's ESG and were named industry leader in the top 1% in S&P Global's CSA for three consecutive years. Moving forward, we will continue to expand ESG management through industry-leading AI-driven solutions, differentiated products and services, and enhanced trust in the capital markets. This brings us to the end of LG Electronics Q1 2026 Earnings Release and Q2 Outlook. We will now take questions. Operator, please begin the Q&A session.

If you want to cancel the question, press star and 2.

Now Q&A session will begin. Please press star 1, that is star and 1, if you have any questions. Questions will be taken according to the order you have pressed the number star 1. For cancellation, please press star 2, that is star and 2 on your phone.

The first person to ask a question is Simon Owning from Bank of America.

The first question will be provided by Simon Wu from Bank of America. Please go ahead with your question.

Hello, I'm Woo Dong Jae from Bank of America. First of all, congratulations on your good performance in difficult conditions. I have two questions. The first is a question related to the cooling business of the data center. How have you been doing recently? Elec S & Gdr 144A Thank you for taking my questions. I have brought two questions.

Before moving on to the question, I would like to deliver my congratulatory message for your good performance despite the difficult situation. My first question goes to ES and this is about the data center cooling center. Taking a look at the recent performance, I believe that I would like to know more about the order backlog and your revenue target and the lead time from order intake to actual sales.

My second question is for the corporate as a whole regarding the tariff refunds. It has been reported that the U.S. authorities began procedures to refund previously paid duties and interest. So the first question is, is LG eligible for these tariff refunds? And if so, what is the expected refund amount and timing?

The first question on ES Company's data center business will be addressed by the head of ESG.

Business Management Division, and we have been receiving a lot of questions regarding tariffs. We have the head of Global Trade Customs Department, Mr. Song Ji-ho, with us today, and he will answer the second question on tariff refunds.

Song Ji-ho, Global Trade Customs Department Director, Global Trade Customs Department of Korea I will answer the second question on tariff refunds. I will answer the second question on tariff refunds. I will answer the second question on tariff refunds. First, let me answer your question about the data center.

Please understand that I cannot disclose detailed figures regarding order size, contract terms, or specific timing of sales of individual customers due to confidentiality obligations. However, our order intake tripled year-on-year in 2025, and our chiller business revenue target of 1 trillion KRW is expected to be achieved ahead of schedule, demonstrating steady growth even though the business is still in its early stages.

Elec S & Gdr 144A Unlike conventional HVAC, the data center cooling business is a market with limited access that requires multiple upfront qualification steps.

Elec S & Gdr 144A The lead time from order intake to delivery is approximately 6 months for standard chillers, and 9 months for customized equipment for large data centers. We are also working to further shorten lead times by internalizing key components and leveraging standardized design platforms.

In the medium term, we are growing the business with both cold and liquid chillers, In the mid to long term, we are fostering our business with air-cooled chillers and liquid cooling as our two main pillars.

Based on internal estimates, the addressable market size for the chiller business is projected to expand from $1.6 billion in 2026 to $12.7 billion by 2030. Thank you. Yes, I will answer in relation to the exchange rate.

The company is also judging that it is subject to the exchange rate because it has paid the respective income tax in the U.S.

To answer your second question regarding tariff refunds, as LGE has paid import tariffs in the U.S., we believe that we fall within the scope of entities eligible for such refunds and are proceeding with the related procedures in line with guidance from the U.S. government authorities. We ask for your understanding as we are not able to provide a definitive estimate of the expected refund amount or timing.

Elec S & Gdr 144A

Based on the information disclosed to date, the refund process is expected to proceed as follows. First, the tariff payer submits a refund application. Second, the local customs authority conducts an eligibility review based on the supporting documents. And third, the eligible amount is refunded together with applicable interest. We expect the overall process to take some time. According to the U.S. Customs and Border Protection website, A valid refund claim is expected to be paid within 60 to 90 days after acceptance. However, in cases requiring more detailed review, additional time may be required for processing. We will communicate further with the market in due course should there be any definitive developments. Thank you. Next question please.

The following question will be presented by Sungkyu Kim from Daiwa Securities. Please go ahead with your question.

Yes, hello. Thank you for the question. I have one question for each of the H.S. headquarters and the M.S. headquarters. The first question is a question that is expected to directly influence the recent Middle East war. Elec S & Gdr 144A Elec S & Gdr 144A

Good afternoon. Thank you for this opportunity. I have brought two questions, and those are about HS and MS. To begin, what is the proportion of logistics in the region directly affected by the conflict in the Middle East, and to what extent have logistics costs risen? Additionally, if high oil prices persist, to what extent do you anticipate the impact of rising ocean freight rates?

My second question is for the MS Company. It seems as though MS's first quarter profitability is sound, and I understand that LGE has been making rigorous efforts to improve its fundamentals at a corporate level. However, given the ongoing headwinds in the business environment, how likely is a turnaround at MS Company this year? In addition, could you elaborate on how LGE's cost efficiency initiatives are being developed and executed to support this turnaround? The first question on logistics costs will be addressed by the head of HS Business Management Division and the second question on MS Company's performance improvement will be addressed by the head of MS Business Management Division.

Let me answer your question about the impact stemming from logistic cost.

Shipping to the Middle East accounts for approximately 5% of our total maritime cargo volume, which is not a significant proportion. For the shipment to the Middle East, shipping companies are imposing war risk surcharges. Therefore, we are expanding our capacity to handle locally sourced goods, including those from our local manufacturing plants. Also, we are optimizing logistics by increasing the volume of shipments with the lowest-cost carriers and exploring the use of alternative routes.

In the case of the European waters that cross the Middle East, we were using a replacement route, the Himangbong route, so there is no direct impact on the water traffic. However, if the replacement routes of existing ships using the Middle East routes are unavoidable,

For shipments to Europe that pass through waters near the Middle East, we do not face any direct impact on our shipment as we have been using the Cape of Good Hope route. However, in case existing ships that previously used the Middle East route are forced to switch to alternative routes, This could lead to an increase in overall transit times and demurrage charges, as well as constraints on global couriers' capacity management.

The overall shipping cost of all shipments is expected to increase by more than 10% compared to the previous estimate. However, there is an improvement in the previous year's basic contract with shipments, and there is an increase in the previous year's basic contract with shipments

Although total maritime logistic costs are expected to increase by more than 10% compared to previous estimates due to fuel and water risk surcharges, our annual base contracts with shipping lines this year have improved compared to last year, and through proactive measures such as strengthening negotiations on surcharges and optimizing maritime cargo operations, We aim to keep actual logistics costs within manageable limits.

Yes, second, I would like to give an answer about MS headquarters' business. Last year, the sales of MS headquarters in 2025, the momentum of demand growth of the main products such as TVs was absent, Elec S & Gdr 144A Elec S & Gdr 144A

To answer your second question regarding MS Company, in 2025 MS Company sales declined primarily due to sluggish demand growth in key product categories such as TVs, as well as intensifying competition among industry players. Despite various initiatives to improve profitability, including operational efficiency improvements through organizational integration synergies, the rollout of smart manufacturing lines at overseas production sites, and material cost reductions, competition intensified across both premium and entry-level segments. As a result, higher competitive costs and declining selling prices weighed on profitability leading to an operating loss. In 2026, we expect demand to improve, supported by major global sporting events such as the World Cup. However, if the conflict in the Middle East is prolonged, a sharp rise in oil prices and elevated inflation could increase macroeconomic volatility and pose downside risks to a demand recovery. In addition, a sustained strong U.S. dollar and rising memory prices are placing pressure on our cost structure.

However, this year, our MS headquarters is promoting customer value and sales growth based on the brand recognition of differentiated product leadership. Elec S & Gdr 144A

Against this backdrop, MS will focus on enhancing customer value and expanding sales by leveraging strong brand recognition built on differentiated product leadership. At the same time, we plan to establish a cost structure that enables us to compete effectively with Chinese brands by actively leveraging manufacturing ecosystems in cost efficient countries. Furthermore, with profitability as our top priority, We will continue to strengthen our cost structure through rigorous operational efficiency measures, building on the fixed cost reduction efforts implemented last year.

As a result, we will continue to strengthen our cost structure through rigorous operational efficiency measures,

In addition, we will further continue to strengthen the competitiveness of MS companies' strategic growth businesses, including the webOS platform and B2B operations. By creating virtuous synergies across devices and platforms, as well as between our B2C and B2B businesses, we aim to reinforce market leadership and enhance profitability.

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Next question, please. The following question will be presented by Peter Lee from Citigroup. Please go ahead with your question.

Elec S & Gdr 144A Good afternoon. This is Secheol Lee from SETI. I have brought two questions, and my first one is about tariff, and the second one is about production.

To begin with, the Trump administration has announced that it will impose a 25% tariff on finished products, including steel and aluminum. What percentage of your products are subjected to this measure, and to what extent do you anticipate the impact? Also, do you have any plans to mitigate this impact? I would like to also ask if this will affect your previously communicated production strategy as well. My second question is on the production of Mexico and Hungary plants. What is the current production status following the expansion of LG Magnus plants in Mexico and Hungary, and how the production facilities in Korea and China will be utilized going forward?

The first question on steel and aluminum tariffs will be addressed by the head of HS Business Management Division as they are the most heavily impacted by these tariffs.

and the second question on LG Magnet will be addressed by the head of VS Business Management Division.

I will answer regarding the tariffs. The current tariffs policy announced by the Trump administration is to increase the tariffs by 50% on steel raw materials in addition to the existing national tariffs, and to increase the tariffs by 25% on steel and aluminum products, and to increase the tariffs by 50% on steel and aluminum products, Elec S & Gdr 144A

Let me answer your question about the tariff-related one. The Trump administration announced a change in its tariff policy. The previous structure, which combined country-specific reciprocal tariffs with a 50% tariff on steel raw materials, has been replaced by a 25% tariff on finished products, including those containing steel and aluminum. As part of this change, Mexico, which had has been removed from the list of exempted countries. As a result, we expect the tariff burden to increase compared to the previous situation. However, this impact is not limited to LG Electronics as local brands that manufacture in Mexico and sell into the U.S. market are facing the same conditions. Looking ahead, Discussions on tariffs for products manufactured in Mexico are expected among USMCA member countries, the United States, Mexico and Canada, but there have been no finalized decisions so far.

We have already established diverse production sites and supply structures for the North American market and are operating our logistics accordingly.

As a result, even if the policy is implemented, we expect any additional impact on our overall performance to be limited. Furthermore, LG Electronics have extensive experience in responding to changes in the tariff and trade environment. While there may be some short-term cost volatility, we believe we possess the systems and capacity in place to manage these fluctuations effectively.

Elec S & Gdr 144A

To mitigate any additional tariff impact, we are continuously reviewing and implementing various measures including the flexible management of product mix and pricing strategies, the optimization of supply chain operations, and the flexible use of regional production and procurement options. In particular, We plan to review and respond to adjustments in production volumes by region, including operations at regional production sites in line with global supply flexibility and future tariff trends.

Moving forward,

We will continue to comprehensively consider market and competitive conditions and closely monitor changes in the trade environment, striving to achieve sound business performance based on our position as the market leader and our product leadership.

Yes, I will answer the question related to the production of LG Magna. Since the production of LG Magna in September 2023, Elec S & Gdr 144A Let me answer your question on LG Magna production. LG Magna's Mexico plant has seen a steady increase in both utilization rates and revenue contributions since mass production began in September 2023.

As a U.S.-bound project for an Asian OEM is scheduled to enter mass production in 2026, we expect utilization to continue to improve going forward. LG Magnus Hungarian subsidiary is scheduled to begin mass production at the end of 2026 and steadily ramp up production in 2027 with additional new projects currently in preparation. Korea is being reorganized as a production hub for Asian customers, while the Chinese subsidiary is planned to operate as a best-cost country production hub, leveraging local SEM and manufacturing competitiveness. Thank you.

The following question will be presented by Yeonmi Kim from Dale Investment and Securities. Please go ahead with your question.

I would like to ask two questions. The first is a full-scale question. Yesterday, there was an article that NVIDIA's key official visited LG Electronics headquarters. Please explain the details of the agreement and the possibility of strengthening cooperation between the two companies in the future. And the second is a question related to MS headquarters. Good afternoon. This is Yeonmi Kim from Dowel Securities. Thank you for the opportunity to ask questions. I have two questions, one for the corporate and second for the MS company. My first question for the corporate is,

It was reported that a key NVIDIA executive visited LG Electronics headquarters yesterday. Could you provide more details on the discussions and the potential for further strengthening collaboration between the two companies? My second question is for the MS Company. Could you elaborate on how the recent supply constraints for the semiconductor and rising prices are affecting the MS Company's product lines including TVs, monitors, and PCs, and outline LGE's response to these challenges.

The first question on NVIDIA will be addressed by the Head of Investor Relations Division,

And the second question on semiconductor supply and rising prices will be addressed by the head of MS Business Management Division.

First of all, this is NVIDIA. LG is the heart of AI. We believe that AI technology is not just a single field, but will become an infrastructure that supports industry and daily life. In various spaces such as home, mobility, and commercial areas, Elec S & Gdr 144A

First, regarding your question on NVIDIA, I can say that LG is highly invested in AI. We view AI not as a standalone technology, but as a critical infrastructure that underpins industries and everyday life. In this context, AI serves as a core enabler for meaningfully enhancing customer experiences across a wide range of environments, including home, mobility, and commercial settings. In line with the evolution of AI, we are expanding our traditional collaboration with NVIDIA into a more strategic partnership in physical AI. Recent discussions cover potential cooperation across areas including robotics, AI data centers, and mobility.

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By bringing together LGE's hardware manufacturing capabilities across multiple verticals, its long-established and continuously expanding data assets, and NVIDIA's leadership in AI technology, the discussions covered not only short-term business collaboration opportunities, but also forward-looking joint R&D initiatives including the development of shared references to support future growth. In robotics, both companies agreed to explore broad ecosystem-wide and strategic cooperation with mutual expectations for meaningful synergies. We appreciate your understanding as we are unable to disclose specific details at this time.

Yes, secondly, semiconductor supply shortage and price rise Elec S & Gdr 144A Elec S & Gdr 144A Elec S & Gdr 144A Elec S & Gdr 144A To answer your question on how the semiconductor supply constraints and rising prices are affecting the MS company, driven by the rapid increase in AI server demand,

The semiconductor market continues to face tight supply conditions and rising prices, which are affecting our TV, monitor, and PC products. The market appears to have entered a super cycle beyond earlier expectations, and these supply constraints are likely to persist for an extended period. Against this backdrop, securing a stable supply through close collaboration with key memory manufacturers remains critical. To mitigate supply side risks, MS is rolling out a broad set of supply chain stabilization measures, including supply MOUs with key partners, supplier diversification and component multi-sourcing, and the build-up of advanced inventory through collaboration with suppliers.

Yes, in the situation I mentioned, I would like to summarize the supply and response methods for each product group. First of all, the TV product group Elec S & Gdr 144A Elec S & Gdr 144A is a smart monitor that has a small price impact on memory. However, in the case of PC products with high memory, the whole industry is under a lot of pressure. To briefly summarize the impact and our response by product categories,

For TVs, memory content is relatively low compared to PCs, and therefore the impact from supply shortages and price increases remains limited. We are responding by further expanding cost reduction initiatives, leveraging manufacturing ecosystems in cost-efficient countries to enhance price competitiveness, and continuing to improve production efficiency. For monitors, apart from certain smart monitor models, the impact from memory-driven price increases is minimal. For PCs which have relatively high memory content, the industry is facing significant cost pressure. As a result, price increases of approximately 15% to 20% have already been implemented. Should the sharp rise in memory prices persist, additional price adjustments may become unavoidable.

Yes, to sum up the answer, in the future, additional cost reduction, optimization of specifications,

In conclusion, as we look ahead, we plan to secure profitability through additional cost reduction efforts, specification optimization, and portfolio adjustments with a greater focus on premium products while closely monitoring market conditions and implementing an optimal pricing

Operator-nim, 질문이 없으면 여기서 마칠까 합니다. 그럼 이상으로 2026년 1분기 LG 환자 실적 발표 conference call을 마치도록 하겠습니다. 예상치 못한 어려운 사업 환경이 계속되고 있습니다. 다만 저희가 지금 다양한 사업에서 준비해온 것들이 가시화되고 있는 것들도 좀 있는데요. 열심히 하고 있으니까 응원을 좀 잘 부탁드리겠습니다.

This concludes LG Electronics earnings call for the first quarter of 2026. We are facing many uncertainties in the business market. However, we are seeing tangible results in various sectors as we have prepared beforehand. We ask for your continued and unwavering support. For further questions, please contact the IR team. Thank you.