Samsung Elect Ltd

Good morning. Thank you very much for joining our conference call. We will now start the 2020 fourth quarter earnings conference call of Samsung Electronics. This conference call will start with a presentation by the company, followed by a Q&A session. If you have a question, please press star 1 on your phone. Now we will start the presentation by Samsung Electronics. Good morning. This is Ben Seo from Investor Relations. Thank you for joining our earnings call for the fourth quarter of year 2020. Before we announce our fourth quarter results, I would like to invite President and CFO Yunho Choi to share details on our shareholder return policy regarding both the additional return for the period just ended last December as well as the new policy regarding the next term. Now, I would like to turn it over to our CFO. Good morning. This is Yunho Choi, CFO of Samsung Electronics. It's a pleasure to talk to our shareholders and market professionals in this call today. As always, thank you for your continued support for Samsung Electronics, and I wish you and your family good health. The Board of Directors and Executives are committed to enhancing shareholder value. With that, I would like to provide an update on two resolutions regarding our shareholder return policy that were approved by the BOD today. To fulfill our commitment for our shareholder return policy for year 2018 to 2020, the Board of Directors today approved a one-time special cash dividend of 10.7 trillion won. This was calculated by deducting the regular dividend of 28.9 trillion won from 50% of 79.2 trillion won, which is the total free cash flow for the previous three-year policy term. As a result of the joint efforts of our employees and stakeholders, including our partner companies Amid numerous difficulties, including COVID-19, we are able to deliver results that enable this special dividend. This special cash dividend of 10.7 trillion won or 1,578 won per share will be paid out to shareholders together with the year-end regular dividend of 354 won per common share and 355 won per preferred share. In April, Shareholders of record as of end of 2020 will receive 1,932 won per common share and 1,933 won per preferred share after approval in March at the annual general meeting of shareholders. Now I would move on to the shareholder return policy for the next term. When considering the direction for our new policy, the Board of Directors reviewed various factors in depth including ways to enhance shareholder value, the business environment, and our investment strategies and financial structure. As you are aware, the global business environment has been and is still mired in unprecedented macro uncertainties caused by global trade conflicts and the spread of COVID-19, significantly decreasing visibility for our outlook. Even under these circumstances, R&D investments as well as capital expenditures are expected to increase. This is due to intensifying competition, especially in foundry and increasing technology challenges. And considering the dynamic changes in the industry landscape, we need to ensure we have the resources to execute on M&A activities to seize opportunities for growth. For the period covering 2018 to 2020, we changed our shareholder return policy with a focus on dividend, significantly increasing the regular dividend amount to enhance the predictability on total shareholder return. For the next term, we will continue with this policy direction and have decided to increase the annual dividend to 9.8 trillion won. Regarding the shareholder return pool beyond the dividends, for the 2018 to 2020 term, uncertainty such as COVID-19 caused rapid changes in the external environment and kept us from executing on an early return. For this term, from 2021 to 2023, we kept the shareholder return pool at 50% of the free cash flow generated over the three-year period. But that said, we will make a regular announcement each year sharing the annual free cash flow to enhance clarity on the amount of additional expected return. Also, if a significant amount of expected return has been generated, we will actively consider executing a portion of it at the close of each year's results. Our board of directors and executives are well aware of shareholder concerns over our increasing cash levels over the last three years. For the 2021 to 23 periods, difficult business conditions and macro uncertainties are expected, but we believe there are opportunities as well. Market growth is accelerating with increasing digitalization and technology advances. Semiconductor display and mobile communication businesses will play crucial roles in such growth. We will further enhance our leadership in the market for our established businesses and at the same time strengthen the foundation for continued growth in emerging businesses. For this, we will leverage our resources to increase strategic capital expenditures and execute M&A opportunities. We ask for your support and understanding as we solidify our foundation for sustainable growth. The board of directors and executives firmly believe that the most effective and reliable way to enhance shareholder value is through continued growth of the company. Therefore, on top of increasing our business competitiveness, we will do our best to enhance shareholder value with global level achievements in ESG and compliance management that will enhance and grow our corporate value. As always, we deeply appreciate your trust and support, and we look forward to more engagement with our shareholders and active communication with the market. We hope that you and those close to you stay strong and in good health. Thank you. Yes. Thank you, Mr. Choi. We will now have a Q&A session about the shareholder return policy that was just announced. As you know, we also have our full fourth quarter earnings conference call left that needs to follow the Q&A session. So given the limited amount of time, we will only take three questions and each person will be limited to one question. The Q&A session will be consecutively interpreted.

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, star N1. For cancellation, please press star 2, that is star N2 on your phone. The first question will be presented by Changwon Jung from Nomura.

Please go ahead with your question.

Yes, my question is about the reason behind your decision to execute the remaining shareholder shareholder return in the form of a special cash dividend this time.

Yes, I will tell you. We need to consider a variety of situations at the time of execution, but considering the current situation and the uncertainty of COVID-19 and the inconsistencies in the future, I thought it was the most efficient way to return. To determine the form of the return of the remaining portion, we considered multiple factors and market conditions

at the time of execution. Given the current status of the stock market, as well as uncertainties related with COVID-19 and low visibility in the industry environment, we determined that a cash dividend was the most effective way to return the capital. Moreover, the number of our individual shareholders soared last year, so we decided that dividends allows us to assume social responsibility when governments around the world, including the Korean government, are doing their best to support people and revitalize the economy.

Thank you for your answer. Next question, please.

The next question will be presented by Ricky Seo from HSBC Seoul. Please go ahead with your question.

Yes, thank you for the question. Last time, there was no meaningful M&A in the policy period. When considering the environmental and global situation around the company,

Is there a particular reason why the company expects that there will be meaningful M&A during the period that has just started, given the overall environment as well as where the global stock market currently stands?

Yes, I will tell you. The company has been very carefully reviewing the M&A targets for the past few years. Accordingly, a lot of preparations are underway. Currently, it is difficult to determine the time of execution due to uncertain situations, but based on what we have prepared so far, we will be able to

For the last few years, we have been evaluating possible M&A opportunities very carefully and have made significant progress in terms of preparation. Although it is difficult to pinpoint a specific timing due to uncertainties in the internal and external business environment, given the preparation, we are optimistic about meaningful M&A activities during this term.

The last question will be presented by J.J. Park from J.P. Morgan. Please go ahead with your question.

Yes, thank you for your question. In the previous policy, we set the rate of return of free cash flow as 50%, It seems that the cash flow has continued to increase. If we maintain the same ratio in this policy, won't the cash flow continue to increase?

The question is about the free cash flow payout level, which is set at 50% even for the new term. It seems that during the last term, cash levels at the company have been rising because the return was set at 50% of free cash flow. If the same 50% is kept, wouldn't cash continue to rise during this new period?

Yes, I will tell you. As I explained earlier, in the next three years, we will expand our strategic facility investment and look positively at the possibility of meaningful M&A.

To answer your question, the level of cash increase during the last period, mainly because we could not execute meaningful M&A activities and continued increase in cash It's also a concern in managing the company. As I mentioned, in addition to the increased strategic investment levels, we believe that M&A activity of a meaningful size is likely in the next three years period, and we will do our best to reduce the risks associated with increasing cash.

Yes, thank you. Then, with this, we will end the presentation and Q&A on the stock market policy, and we will soon proceed with the 4-minute performance presentation.

Thank you very much, shareholders and investors. This completes our shareholder return policy Q&A, and we move on to the regular earnings conference call.

Now, we will begin the conference of the fiscal year 2020 fourth quarter earnings results by Samsung Electronics. This conference will start with a presentation followed by a Q&A session. If you have a question, please press Start 1 during the Q&A. For a cancellation, please press Start 2. Now, we shall commence the presentation on the fiscal year 2020 fourth quarter earnings results by Samsung Electronics.

Hello. This is Ben Seo again. Now let's begin our earnings call for the fourth quarter of 2020. With me, representing each of the business units are Mr. Hanjin Man, Executive Vice President of the Memory Global Sales and Marketing Office, Mr. Jo Jang Hoon, Vice President of the System LSI Marketing Team, Mr. Han Seung Hoon, Senior Vice President of the Foundry Marketing Team, Mr. Choi Geon Young, Senior Vice President of Samsung Display, Mr. Kim Sung Goo, Vice President of the IT and Mobile Business, and Mr. Sungwon Joon, Vice President of the Visual Display Business. In addition, Mr. Kang Taegyu from Investor Relations is present on this call as well. Among the presenters today, Mr. Cho Jangho, Kim Sunggu, and Sungwon Joon are newly joining the IR presentation. I would like to remind you that some of the statements we will be making today are forward-looking, based on the environment as we currently see it. And all such statements are subject to certain risks and uncertainties that may cause our actual results to be materially different from those expressed in today's discussion. I will start with the results for the fourth quarter of 2020. When I delivered my first earnings call as the new head of IR last year, use flows on emerging health risk were starting to increase. As we all know, that risk transformed into a global crisis and created an incredibly challenging environment for business and individuals alike. One year later, despite all efforts, we remain vigilant as the crisis is not yet behind us. Throughout this, our management and employees have done their utmost to overcome all obstacles, and as a result, I am pleased to report that we once again achieved solid results in this difficult environment. Total revenue in the quarter declined 8.1% quarter-on-quarter to $61.6 trillion. A solid growth in display revenue from strong OED demand was outweighed by intensifying competition for our mobile business and CE division, along with price declines from memory. Compared to last year, total revenue increased by 2.8% as component demand improved. Gross profit decreased $3.2 trillion sequentially to $23.7 trillion, mainly due to results in the semiconductor business and IM division, and gross margin declined to 38.6 percent. Both gross profit and gross margin improved year on year, led by the display business. SG&A expenses increased slightly sequentially and also as a percentage of sales, mainly due to higher marketing expenses caused by intensifying competition. Despite the display business's improved performance, operating profit was down 3.3 trillion won quarter-on-quarter to 9 trillion won due to weak memory prices, a decline in sales, and higher marketing costs for our finished products, and negative currency effects. Operating margin for the quarter declined to 14.7%. On a year-on-year basis, both operating profit and operating margin increased, backed by improved conditions for the display and memory businesses. I will now briefly review the results of each business unit. In the memory business, despite solid shipments mainly for mobile and consumer products, our results weakened sequentially due to continued ASP declines, currency headwinds, and initial costs associated with ramping up of new fabs. On a year-on-year basis, however, the results improved, led by demand from mobile segment. For system semiconductor, orders from major global customers continued to rise, but profits declined sequentially as well as annually due to a weak U.S. dollar. In display, Earnings grew significantly quarter-on-quarter and year-on-year as utilization rates increased sharply for mobile panels and conditions improved in the large panel market. The mobile business saw its profits decline quarter-on-quarter due to a decline in sales and an increase in marketing costs, but was able to keep its earnings near last year's level thanks to a continued cost structure improvement. Network improved its performance by responding to domestic 5G expansion and global 4G and 5G expansions. For the CE division, despite another quarter of solid sales, mainly due to seasonality in developed countries, increased costs weighed on profitability. Regarding currency effects, significant weakness of the U.S. dollar, euro, and some emerging currencies against the Korean won had a negative impact equivalent to approximately 1.4 trillion won quarter on quarter. The effects were felt mostly in the component business, including semiconductor and display, as they are highly affected by the strength of the U.S. dollar. Next, I would like to share our business outlook. In the first quarter, we expect overall profitability to decline due to relative weakness in the memory and display businesses, despite strength in the mobile business, with the early launch of the Galaxy S21 and the release of new volume models. For memory, while demand is expected to remain solid for mobile and recover for data centers, our results are likely to weaken due to currency effects and continued costs associated with new fab ramp-ups. This will increase supply of SOCs, CISs, and DDIs for flagship smartphones, and the foundry business will expand mass production of EUV 5-nanometer SOCs and 8-nanometer high-performance computing chips. For display, we expect mobile panel earnings to decline considerably quarter on quarter, but improve year on year due to increased demand for OLED. The large panel business will continue the work to shift its business base to QD technology. The mobile business should improve due to strong sales of flagship devices, including the Galaxy S21 and the launch of mass market models. In C, we expect our solid performance to continue with timely launches of new products and expansion of premium product lineups. even though sales are likely to decline amid weak seasonality. Now let's move on to our full year outlook. Global demand is forecast to recover, although uncertainties such as new waves of COVID-19 infections are unlikely to ease. The component business will focus on accelerating the shift to next generation node processes, strengthening cost competitiveness, and enhancing both product and technology leadership. For memory, we expect business conditions to improve in the first half based on continued demand from mobile and server. However, global macro uncertainties, including currency movements, are likely to continue to influence the business environment. We will enhance cost competitiveness and market leadership by accelerating migration to 1Z nano DRAM and 6th generation VNAND while also expanding application of EUV technology. System LSI will actively address the markets for 5G SOCs and high resolution sensors with differentiated products and foundry will accelerate growth by expanding mass production of the 5 nanometer EUV process and diversifying application areas. For display, the mobile panel business will continue to further differentiate our technologies and enhance cost competitiveness, while the large panel business will focus on laying a foundation for the new business via timely development of QD display products. For our finished products, we will continue to work to improve profitability by further strengthening premium lineups and operational efficiency. The mobile business will continue to focus on enhancing profitability by expanding smartphone sales and by improving cost structure. Sales will be boosted by a strengthened flagship lineup, which includes the Galaxy S21 and foldable phones, as well as our 5G models for the mass market. The network business will continue to strengthen its global 5G business by exploring new business opportunities. TE will strive to keep growing by expanding its premium lineup, which includes NEO QLED, microLED, and bespoke products, while also executing marketing expenses efficiently and strengthening online sales. Now I will address capital expenditures. CapEx in 2020 was approximately $38.5 trillion won, with $32.9 trillion allocated to semiconductor and $3.9 trillion to display. For the semiconductor business, CAPEX increased significantly year on year for both memory and foundry. Memory investments concentrated on capacity expansions and advanced process migrations to address growing demand. Foundry CAPEX focused on capacity expansion in 5 nanometer EUV for which orders are continuously rising. Display investments also increased compared to last year, mainly for QD display capacity and new processes for mobile panels. Along with enhancing our business competitiveness, we are committed to creating environmental and social value. And I would like to share some of the efforts we made last year to strengthen governance of our sustainability management. First of all, the corporate sustainability management office, formerly under the corporate management office, has been elevated and renamed the corporate sustainability center. It is now overseen directly by our CEO, reflecting the goal to strengthen its role as a control center for the company's sustainability management. In addition, we established sustainability offices in each division to ensure that sustainability is reflected throughout the life cycle of all of our products and services from the planning stage right through to the after service care. Furthermore, the sustainability council in which key executives formulate the company's overall sustainability management strategies was elevated It is now led by the CFO, increasing the priority of sustainability in the decision-making of our top executives. Meanwhile, we believe that product innovation is the bedrock of sustainable growth, and our ceaseless efforts to innovate were recognized at CES 2021 as 44 of the 173 awards we received at the event were CES Innovation Awards. We'll keep adding to our foundation of sustainability management by continuing to strengthen our response regarding ESG issues while also enhancing our financial performance. I will now turn the conference call over to gentlemen from each business unit to present fourth quarter performances and outlooks for their corresponding business segment. Thank you.

Good morning. This is Hanjin Man from the Memory Global Sales and Marketing Office. In the fourth quarter, mobile demand grew considerably, building on an upward trend that started in the third quarter. And overall demand was strong, backed by demand from data centers and PC. However, our earnings declined due to effects of a weakening dollar and initial cost associated with ramping up new lines. In the case of DRAM, for mobile, demand was strong because smartphone sales recovered to the level they were one year ago, thanks to launches of new models by major customers and continued upticks in consumer confidence. For server, purchasing demand increased based on growing investment in data centers by cloud companies, and the trend for demand was solid as customers were finishing up inventory adjustments. Although demand for PCs remained strong, mainly for Chromebooks and gaming notebooks, there were partial disruptions in set bills due to short supply of some components. For graphics, demand for graphic cards increased due to the release of new GPUs, while demand for game consoles has also been solid. On top of that, Graphics demand was bolstered for mining applications due to a rise in cryptocurrency prices. We achieved solid shipments because we actively addressed the continued growth in mobile demand with proactive product mix adjustments and sales of consumer products such as TVs increased due to growth in home entertainment culture. Next, I will talk about the NAND market. For mobile, demand has been solid due to an increase in demand centering on Chinese customers since the Huawei sanctions, as well as with growth in content per box. For server, inventory adjustment at major OEMs in the fourth quarter alongside lingering effects of increased purchase by data centers in the first half contributed to somewhat weak demand in the quarter. For client SSD, sales of low to mid-price laptops remain strong due to contactless activities such as telecommuting and online education. And demand for new game console has also been solid. We achieved a decent result for shipments by actively responding to strong mobile demand and solid client SSD demand. Next, let me tell you about the outlook for the first quarter of 2021. We expect our profits to weaken compared to the previous quarter due to continued weakness in the dollar and ongoing initial costs associated with ramping up new lines. For DRAM in mobile, based on the release of numerous new smartphones and penetration of 5G through low-end and mid-range devices, we expect the market to expand in earnest. However, various risks such as currency effects and additional waves of COVID-19 require monitoring. As for servers, the demand seems to be improving with increased purchasing following inventory adjustment, mania data centers, and expanded CAPEX. For PCs, we expect demand to be solid as demand for laptops is likely to persist amid the ongoing need for contactless activities And demand for desktop, which had been shrinking, is also projected to recover in certain markets. In the midst of continued market uncertainties, we will optimize our product mix to actively address demand across all applications, including strong demand from mobile and solid demand from PCM servers. At the same time, we will enhance cost competitiveness and market leadership by expanding our sales portion of 1G nano DRAM. and ensuring timely supply of the product to our customers. In the case of NAND in the first quarter, for mobile, despite the traditionally weak seasonality, demand is likely to be solid thanks to increasing demand from Chinese customers in particular and growing sales of 5G smartphones due to an expansion of fiber infrastructure made in major markets. For server SSDs, We think customers' inventory adjustment will continue, and data centers will show gradual growth in demand due to the basic effect of weak demand in the fourth quarter. For client SSDs, we expect demand to stay robust amid continuing demand for low-end to mid-range laptops and rising content per box. We will actively respond to increasing demand from mobile and from client SSDs and strengthen our technology leadership and cost competitiveness by increasing production of sixth-generation green end, which has already been on track. Next, let's talk about the outlook for 2021. Last year, the onset of the pandemic caused numerous unexpected changes in applications. The smartphone market was hit hardest, while servers showed better-than-expected growth in demand in the first half. PCs led by laptops were in strong demand throughout the year, influenced by the stay-at-home economy all around the world. This year, business activities that were delayed by COVID-19 are expected to start gathering momentum. We expect mobile demand to be robust as demand for the set bill from Chinese customers increases and the content per box rises as 5G models expand their presence in low-end and mid-range lineups. We expect server demand to pick up from weakness shown in the second half of last year, thanks to impacts of resumed investment of data centers and effects of new CPUs launch in August. In addition, we expect content per box for PCs to continue to rise and demand for TVs to benefit from sporting events that were postponed until 2021. Considering the demand from overall applications, we expect the direct market to turn around in the first half of this year. Still, the pace of worldwide vaccination efforts and of an economic recovery are unclear at this point amid other uncertainties such as geopolitical risk and a weak dollar. Hence, we will keep monitoring demand for related fluctuations and maintaining flexibility in our product mix. Moreover, we will continue to strengthen both cost and product competitiveness with 1Z Nano DRAM and 6th generation VNET. We will also continue cooperating with major global customers and proactively introduce next-generation lineups to the IT industry that include products such as the world's first 1A Nano DRAM with multi-step EUV and SSD implementing 7th generation VNET which we will fully introduce to the solution-based market in the second half of this year. Samsung will solidify our position as a trusted partner by continuing to focus on excellence in quality, cost competitiveness, and customer relationships. I wish you a year full of health and happiness. Thank you.

Good morning. This is from Business Unit. In the fourth quarter of last year, demand for mobile and image sensor products increased according to the launch of smartphones by major customers and active expansion strategies of Chinese customers. Earnings, however, declined due to the weak dollar. Through the release of our first 5 nanometer SoC product, the Exynos 1080, we solidified our foothold to continue leading the market and to expand our customer base. Let me share our business outlook. In the first quarter, we expect demand to keep rising, mainly for mobile SoCs and related products. As major smartphone makers continue to expand their active sales strategy and launch new 5G smartphones, differentiating with higher resolution cameras and high frame rate displays. We plan to expand our supply of 5G mobile processors, ultra high pixel image sensors, and high frame rate PDIs in line with launches of new models of flagship and high-end smartphones in Korea and China. In 2021, although there are external uncertainties caused by the factors including prolonging pandemic, we expect the market to recover backed by increased demand following aggressive expansion strategies and major smartphone manufacturers. Accordingly, we'll expand shipments centered on products with solid demand such as 5G associates, high-resolution image sensors, and DDIs to achieve double-digit sales growth for the year. Thank you.

Good morning. This is from the Foundry region. In the fourth quarter, we achieved a new high for quality sales once again, led by rising demand for 5G chips and image sensors from major mobile customers and by increased demand for HPC chips. However, earnings declined due to currency effects caused by a weak dollar. Positively, we proved our leading-edge process competitiveness with a timely design completion of second-generation 5nano and first-generation 4nano mobile products. In addition, we continue to strengthen our ecosystem by maximizing outcomes of collaborations with partners, evidenced by our successful hosting of the first online SAFE 2020 forum in October last year. Turning to our outlooks, in the first quarter, demand is likely to stay strong for all processes from legacy to advance, and we expect supply shortages to persist for the time being. In response to strong demand for EUV7 nano and below, we will continue to operate our lines flexibly such as by increasing the portion of the advanced processes. In addition, we are continuing to strive to add to leadership in advanced processes by focusing on the development of first and second generation of three nanoprocesses. On top of that, these processes will result in a significantly decreased carbon footprint thanks to their improved power efficiency. In 2021, we expect the overall foundry market to continue growing due to increases in silicon content driven mainly by acceleration of 5G expansion and strong HPC market growth related to continuation of telecommunicating and online learning trends. We plan to add to our foundation for growth by expanding our portion of global customers and by diversifying applications in HPC, network, and auto through the capacity expansion centered on advanced processes to respond to our customer demand in a timely manner. Thank you.

Good morning. I'm from the business planning department at Samsung Display. In the fourth quarter, the display business recorded its highest earnings thanks to an ongoing recovery in demand for major products such as smartphones and TVs amid an economic rebound in the second half of 2020. To be more specific, earnings in the mobile display business grew sharply quarter on quarter amidst a gradual recovery of smartphone demand. driven by an increase in utilization to meet surging demand from our major customers. In the large display business, losses narrowed quarter on quarter, supported by steady demand and rising ASPs of TVs and monitor panels, led by the expansion of contactless services. Next, let me share the outlook for the first quarter of 2021 For the mobile display business, we expect earnings to decline quarter-on-quarter due to a decrease in demand from major customers and seasonal variation in demand. However, utilization is projected to improve year-on-year as the major customers widen the adoption of OLED pen displays within their product lineups to align with the pace of 5G commercialization. Meanwhile, the large display business is preparing to launch QD display products as scheduled, while also continuing to fulfill FDA orders for some customers as planned. Finally, I will share our outlook for the display market and the display business course for 2021. For the mobile display business, we expect demand to rise for all OLED panels for high-end models and OLED penetration to increase in mid-range segments driven by expansion of 5G smartphone market alongside recovery of smartphone demand. We will further solidify our leadership in the OAD market by taking full advantage of our such market conditions. Moreover, we will further differentiate our proprietary technologies for features such as adaptive refresh rates and lower power consumption to brace for uncertainties caused by demand fluctuation under prolonged impact of the pandemic and also aggressive market entry of competitors. At the same time, in response to growing demand in contact with communication and services, we will endeavor to diversify applications within areas such as note pieces, tablets, and automotives by employing advantages of OAD, including ultra-thin and narrow bezier. Also, we'll promote market expansion for foldable displays. In the meantime, we'll also fortify our presence in the display market through innovative form factors such as rollable and slideable displays. For the large display business, we'll develop a QD display with its leading technology as scheduled and build a stable customer portfolio to create a foundation for QD display to cement in place within premium product segments. Thank you.

Good morning. This is Sung-Guk Kim from the mobile communications business. I would like to discuss the first quarter results and outlook for the IM division. In the first quarter of 2020, market demand increased quarter on quarter amid year-end seasonality and a gradual economic recovery. For our mobile business, revenue decreased QOQ due to intensified competition in the year-end season. Even though profits decreased QOQ due to an increase in marketing expenses, we maintained the double-digit operating profit margin thanks to improvements to our cost structure, including component standardization. For the network business, we improved our performance QOQ as a result of 5G expansion in South Korea and 4G and 5G business expansion overseas, including North America. Now let me move on to the outlook for the first quarter of 2021. As first quarter is a seasonally weak period for mobile, we expect market demand to decrease QOQ for both smartphones and tablets. As for our mobile business, we expect to increase both revenue and profit as the early launch of the Galaxy S21 drives sales growth of flagship models and increase in overall ASP. The release of new mass market models will also contribute to the performance. In particular, the Galaxy S21 series announced on January 15th will provide a more innovative mobile experience with its superior performance and professional quality camera that leverages AI technology along with a unique contour cut design and addition of the S Pen experience to the Galaxy S21 Ultra. Along with the Galaxy S21, we are strengthening the Galaxy ecosystem even further with Galaxy Buds Pro, a true wireless earbuds that provide the best audio experience. and Galaxy Smart Tech, which provides convenient and rich usability by expanding connected experience. For the network business, we will continue with network rollouts, focusing on overseas markets such as North America and Japan. Now let me move on to the 2021 annual outlook. We expect market demand to recover to a pre-COVID-19 level amid a gradual economic recovery and full-fledged expansion of the 5G market. As for our mobile business, we will strengthen our leadership in the premium segment by maximizing sales of the Galaxy S21 and by popularizing the foldable category, which includes Z Fold and Z Flip. At the same time, we will work to increase overall smartphone sales by actively addressing replacement demand for 5G, with our expanded lineup of competitive 5G devices for the mass market. We will also continue to strengthen our tablet and wearable business to add to our foundation for growth. In addition, we will further extend the Galaxy ecosystem by collaborating with leading global partners, providing users with a more valuable experience to enrich their daily lives. We will also continue our efforts to enhance our cost structure and operational efficiency to secure solid profitability. For the network business, we will actively respond to 5G commercialization globally and continue to explore new business opportunities. Thank you.

Good morning, everyone. I'm Wonjun Sung from sales and marketing team of Visual Display. First, I would like to review the market conditions and our performance in fourth quarter in 2020. The TV market in Q4 expanded quarter-on-quarter thanks to a strong release of pent-up demand in advanced market during year-end peak season. Even with unexpected risk factors such as an increase of COVID-19 cases and lockdowns, We have continued to strengthen our competitiveness in contactless sales and preemptively address seasonal demand. In particular, we tried to spread over peak season demand with earlier promotions, given the potential for additional lockdown aimed second waves of pandemic. Also, we expanded online sales and O2O services as the social distancing policies. caused the offline consumption to shrink. As a result, we improved our sales mix with expanded sales of higher value products like QLED TVs, super large screen TVs, and gaming monitors. However, TV earnings decreased slightly year on year because of rising costs and intensifying competition during peak seasonality. For digital appliances, although market conditions were quite unstable due to additional waves of COVID-19, demand decreased slightly thanks to a recovery of economic activities in emerging markets. As a government stimulus package around the world took off effect, as well as an effect of the stay-at-home trend. We achieved revenue growth in advanced markets as well as in emerging markets such as in India and Latin America. Profitability improved year on year as we implemented flexible peak season promotions tailored to each region focusing on premium products. Now let us look at our outlook for first quarter and 2021. As the first quarter is considered off-season in the TV industry, demand is likely to fall quarter on quarter, but it should rise compared to last year. We will strengthen cooperation with our channel partners and kick off promotion tailored by region to maximize sales opportunities. Also, we will successfully launch Nail QLED, offering a quantum lift in picture design and sound quality. And we'll improve our sales structure by prioritizing high value products such as a super large screen TV, lifestyle TVs to secure profitability and drive growth. For digital appliances in first quarter, we expect the market to grow compared to last year. We will keep adding growth momentum based on launching our innovative new premium lineups and enhancing online marketing activities. Although the TV market in 2021 may fluctuate heavily due to the pandemic, it will probably stay around the same level year on year. With the business experiences we gain in 2020, along with our global SCM competitiveness, We will continue to grow by implementing a sales strategy to respond flexible to any changes in the market. Also, we will continue to lead the market with our product innovations and tech leadership as the industry leader. Along with new QLED, We will offer consumers a great viewing experience through micro LED, which is opening a new era of breathtaking picture quality. And we will also deliver new screen value by expanding sales of lifestyle TVs that reflect various styles and the taste of consumers. Moreover, as we presented at the First Look event in January, Along with our product innovation, we will continue our activities to protect the environment while also working on the ways to improve accessibility of more consumers. In 2021, the digital appliances market is projected to grow year on year, backed by a continued release of pent-up demand in advanced markets. We will continue Apple's to increase sales of premium products, especially by expanding our bespoke platform to other product categories and by launching them globally based on our SM capabilities. Also, we will achieve sustainable growth by strengthening our online and B2B businesses and executing efficient marketing strategies that are tailored to conditions in each region. Thank you.

Thank you for the presentations. That sums up the fourth quarter results presentations. Before we move on to the Q&A session, I would like to share several data points in key business areas. Considering the heightened macro uncertainties, we will not be providing annual guidance at this time. For DRAM in the fourth quarter, our bid growth was about 10% and ASP declined in the upper single-digit range. In the first quarter of 2021, we expect market bid growth to decline a mid-single-digit percentage, and we expect to perform slightly better than the market. For NAND, in the fourth quarter, our bid growth was in the upper single-digit percentage range, while ASP declined by just over 10%. In the first quarter, market bid growth is likely to be around 10%, and our bid growth should be around that level as well. For the display panel business in the fourth quarter, the OLED portion of sales was in the mid 80% range, and OLED sales volume growth was in the lower 50% range. In the mobile business in the fourth quarter, Sales volume was around 67 million units for handsets and 10 million units for tablets. The blended ASP, including tablets, was 205 U.S. dollars, and the smartphone portion of handset sales volume was in the low 90% range. For the first quarter, we expect quarter-on-quarter shipments to increase for handsets but decline for tablets. And we expect blended ASP to rise compared to the previous quarter. The smartphone portion of handset sales should stay in the low 90%. In the TV business, sales volume increased in the low single digit percentage range in the fourth quarter. And we expect first quarter shipments to decline in the high 20% range. With that, I will now move on to 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 star N1. For cancellation, please press star 2, that is star N2 on your phone. The first question will be presented by Peter Lee from Citigroup. Please go ahead with your question.

Hello, this is Citigroup's Lee Se-chul. I would like to ask two questions about semiconductor memory. First, other memory companies are offering positive guidance for DRAM this year. And recently, the price of SPA is reflecting, and the expectation for the return of DRAM price is increasing from the first quarter. I would like to ask for your opinion on the first quarter and this year's DRAM supply and price outlook. This year, the supply increase for demand recovery will be limited, and I think it will be possible to expect a big cycle that will go up from 2017 to 2018. I ask for your opinion on this. And the second question is, if you look at the reactions of the investors after the announcement of the other companies' results, there seems to be some concerns about the possibility of double booking in the mobile part, especially in the second half of the year. Even if I check it, I think it's true that there were a lot of stocks accumulated in the mobile sector last year. There are concerns that this might affect the second half. In the past, I think you have responded well to the change in demand in the period of the trade war between 2014 and 2018. Please answer what strategy you are dealing with and preparing for this time.

I have two questions on the memory side. First is about the DRAM. I think competitors have also been providing positive guidance for the DRAM market condition this year. And recently, the spot prices have been rebounding, raising the expectation that perhaps the DRAM prices will be able to rebound during the first quarter. Within that context, can you share with us your outlook on DRAM supply as well as price for first quarter as well as this year on a full year basis? In particular, I think many people are expecting that compared to the strong demand recovery, the increase in supply would be limited. This is even indicating some expectations of maybe of another big cycle coming on similar to what we saw in 2017 to 18. Can you share us your views about such expectations? Second question continues with the memory side. When we look at what the competitors have been announcing in terms of their earnings and the market, the investors' responses to this, I think there is some concern building in the market of possible double booking on the mobile side and maybe an inventory adjustment coming towards the second half of this year. When I talk to the mobile side, there seems to be some inventory that's already built up. I recall that the company did a very good job in responding to the demand volatility that happened in the 2014 or 2018 timing when there was some trade-related tensions. Given that experience, how is the company planning or preparing to respond to the concerns about mobile high inventory and adjustments?

Yes, I will answer the question regarding the DLMC network. First of all, I'd like to talk about the demand for each application. It seems that the customer stock adjustment has been completed on the server. As the investment that was delayed last year was resumed, it is expected that the demand will remain. And from the second quarter, it seems that the demand for the new server CPU will be dramatically expanded, so I think the demand for the server will continue to rise.

To answer your question about the DRAM outlook, I think it's best to address that by application. First of all, regarding the server, we think that there will be solid demand as it seems customers have completed their inventory adjustments and some of the investments that were postponed from last year are being resumed. Also from the second quarter in the case of servers, there will be demand related with a new server CPU that is being introduced. So that will be another driver of server related DRAM demand. And so overall, the server side demand outlook looks bright.

Mobile is also improving the consumer's purchasing power, and 5G infrastructure is being developed around the main country, so it is expected that demand will increase as the 5G body is spread to medium-priced products.

For the mobile applications, we expect that the demand will increase given the fact that consumer sentiment is improving and there is a rollout of 5G infrastructure, especially around the key countries. And also 5G is being adopted on a wider range of mass-tier models.

Since demand is rising mainly from applications, we expect DRAM's ASP to rise in the first half of this year.

So given that solid demand outlook for the key applications, we are expecting that the DRAM ASP would turn around to an increasing trend during the first half of this year.

Yes, but COVID-19 is still on the rise, and there is a possibility of a change in demand due to the risk of COVID-19. I think we need to be more careful about the big cycle of 2017-2018.

But that said, there's still a lot of risks and uncertainties, including possible resurgence of COVID-19 and unresolved geopolitical risks. So this would be risks and possibilities for demand fluctuation going forward. And so we advise caution to those who are anticipating, for example, a big cycle similar to what happened in 2017 and 18.

The second question is about mobile. To answer your second question about mobile demand, about the possibility of mobile customers having double booked, that is also a possibility that we are carefully monitoring. As we observed last year, the mobile market was hit by COVID-19, so there is enough momentum for mobile demand due to the rise in demand and the build demand compared to 5G, which is expanding this year.

That said, our basic assessment of the current mobile market is that even though, yes, there is some demand increases from the Chinese OEMs, especially after the sanction against Huawei, we do still see demand growth from the base effect against last year when the mobile market contracted quite significantly due to COVID-19. And also, we do see strong build demand in the market as 5G is going to be rolled out in a larger scale this year. And so given these factors, we do see that there is sufficient momentum behind mobile demand overall.

Yes, but the supply issue of other semiconductors due to the lack of foundry supply, which is currently an issue all over the world, seems to have an effect on mobile demand, so we are paying close attention to this effect.

Given that one variable that we are carefully watching and monitoring is the issue of the supply issue of other semiconductor products that's being caused by overall foundry supply shortages. This is a global issue. There is a possibility that the shortage of other semiconductor parts may impact mobile demand, and so we're carefully watching how that plays out.

Thank you for your answer. I'll take the next question.

The next question will be presented by Nicola Godoa from UBS. Please go ahead with your question.

Good morning, and thanks for taking my question. The first one relates to the foundry business. There has been, first of all, quite a bit of discussion around Intel outsourcing, including last week from Intel itself. Could you please update us on what it means as an opportunity for Samsung foundry? In addition, there was also recently a media report on Samsung considering a fund reinvestment in the United States. And one of the backdrop of that is the lackliness of a CHIPS Act coming through. I'm wondering if you're actually reviewing those plans right now and if you could elaborate on anything more specific in terms of options there. Secondly, regarding the smartphone business, the Galaxy S21 came out with reduced pricing compared to Galaxy S20, in spite of going 5G across the board. This may clearly support volumes, but how should we think about this from a profitability perspective for the high-end smartphone segment in 2021 compared to 2020? Thank you.

There are two questions. The first is about Intel's outsourcing announcement. Last week, Intel also made a announcement. Please tell us about the meaning and impact of this Intel's outsourcing plan on the Samsung Foundry business. A few days ago, there was a report that Samsung is considering US Foundry investment. Could you tell us more about the possibility of US Foundry investment? The second question is about wireless. The Galaxy S21 has been released at a lower price than the previous Galaxy S20. Even though all 5G has been adopted, the price is lower than the previous model. Of course, this will help in terms of capacity, but compared to last year, how should we expect the profitability of the premium segment this year?

Yes, I will answer about the Foundry first. First of all, please understand that it is difficult to mention in detail when it comes to customers. Intel outsourcing expansion is expected to continue with the expansion of the market size of the Foundry, and the company will continue to expand the market size of the Foundry

To answer your first question, even though we're not able to comment on details of specific customers, we do think that Intel's decision to outsource from the entire foundry market perspective will lead to increasing the overall foundry market size. And our position is to actively respond and capture the increasing HPC demand by continuing to gain leadership in the cutting-edge nodes and also providing differentiated solutions.

And in the U.S., investment in FAP construction has not yet been decided. Due to the nature of the foundry business, we always conduct a quick and efficient response to customer demand. um regarding investments including uh building a fab in the u.s new decisions have been reached yet

One of the requirements of a foundry business is to meet customer demand in a timely and efficient manner when demands are placed. And so actually studying ways of gaining and securing the production capacity by nature of the foundry business is something that we go through on a routine basis. And so as part of that routine review, we continuously study ways of operating our sites in the most optimized manner, including the sites in Kiwoong, Hwaseong, and Pyeongtaek, as well as the site in Austin.

Yes, I will answer your question. The newly released Galaxy S21 series is a product that has improved its price structure through the optimization of product specifications that the company has been consistently promoting, standardization of parts, and utilization, as well as development, manufacturing, logistics, We've been preparing thoroughly for the rest of the process. And in terms of sales, we're going to increase the volume of the product with the pre-release effect and competitive price. And especially in the S21 series, we're going to increase the price of the high-end models, improve the product mix, and try to ensure good profitability.

To answer your second question about the Galaxy S21, while developing and preparing the Galaxy S21, one of our focuses was on improving the cost structure by finding the optimum product specification and also increasing standardized and common parts, which has been one of the consistent policies that we have been implementing. Also, at the same time, we have been raising the efficiency in the overall process, starting from the development, manufacturing and logistics, And so in terms of sales, given the fact that we have launched the model earlier in the year than before, and also we're offering it at a very competitive price, we do expect there to be increase in volume, which will give us additional economies of scale And at the same time, we're expecting that the higher-priced models within the S21 series will be accounting for a larger share of the entire volume so that we will have a more attractive product mix and delivering us solid profitability.

Yes, thank you for your answer.

I'll take the next question. The next question is from Kim Dongwon of KB Securities. The next question will be presented by Dongwon Kim from KB Securities. Please go ahead with your question.

Yes, thank you for the opportunity to ask a question. I will ask a question about memory and IM. First of all, in the case of NAND, it seems that there will be a possibility of price rebound as the demand for NAND in the second half of the year will also stabilize depending on the price rebound in the first half of the year. What is your opinion on the 21-year NAND supply prospects? Next, please tell us about this year's foldable phone lineup and mid-term strategy. Thank you.

I have two questions. First question is about the NAND. As people are expecting the DRAM prices to rebound during the first half, I think that is leading also to expectations of the NAND market also stabilizing and possible price rebound happening in the second half of this year. So in that context, can you share with us the company's outlook for NAND both on the demand and supply side for 2021? Second question is about the mobile business. About the foldable form factor, I think there are more people expecting the company to launch new foldable models. Can you share with us some more details about your foldable lineup and your mid- to long-term strategy regarding this form factor?

Yes, I will answer the question regarding the NAND market. The demand for mobile phones and PCs will also increase, and the demand for companies and PCs will also increase, so the demand is positive.

To answer your first question about the NAND outlook, and I think same as DRAM, even the NAND market, overall demand seems to be very solid this year for all applications. First of all, with servers and mobile demand continuing to or expected to continue growth overall this year, we're seeing increase in content, NAND content on PCs, and also we're seeing We are expecting that even enterprise PC demand would gradually increase as the economy recovers. So overall, the demand side looks positive.

Yes, but the demand side looks positive. Yes, but the demand side looks positive. Yes, but the demand side looks positive. We will do our best to respond to the changes in demand as a trusted supplier.

Now, as the demand expectations are solid, depending on the supply side, the production side of the industry, there is some possibility of some imbalances happening during the year. If such imbalances happen in the market, as we mentioned during the presentation, our priority is to maintain our relationship with the customers as a trusted supplier by sufficiently responding to changes in the demand.

In 2021, we will continue to strengthen the G-Fold and G-Flip lineups to promote foldable publicization. G-Fold will continue to strengthen its usability in terms of entertainment and productivity through the big screen, making it a super premium positioning. On the other hand, G-Flip wants to satisfy the needs of the millennial generation and female customers with stylish design differentiation and competitive price. And I will actively reflect the opinions of the previous model users and expand the foldable ecosystem through strategic cooperation with partners to continue to improve product completion and consumer experience.

To answer your question about the foldable model lineup, in 2021, we will continue to strengthen our Z Fold and Z Flip lineup with the aim of popularizing the foldable form factor. In the case of the Z Fold, it will solidify its positioning in the super premium segment, especially highlighting the usability it offers with a large screen, for example, for entertainment or productivity. cases for the Z Flip that will aim to satisfy and target the needs of the millennials as well as female users with its differentiated stylish design and also competitive prices. Also, in addition to these product launches, we will focus on expanding the foldable ecosystem by actively reflecting the feedback of users of previous foldable models and also increasing the strategic cooperation with strategic partners so that we're able to provide a higher level of completeness of the product and also better consumer experience.

In the medium term, it is difficult to tell you the specific roadmap for future products, but we are reviewing various form factor designs

In terms of the mid- to long-term product line of strategy, even though I cannot disclose the details of our future product roadmap, we do have several form factors, designs currently that we're working on in the pipeline, and we will be unveiling them to the market once we have a sufficient level of product completeness and also able to provide a satisfying level of usability and quality.

The next question will be presented by Hyunwoo Do from NAC Securities. Please go ahead with your question.

Hi, I'm Do-eun from NH투어. I have two questions for you. The first one is about semiconductors. I'm curious about the trend of investing in DRAM and NAND this year. Recently, the supply of memory has been improving, so there are various opinions on whether to increase the investment in the market or focus on profitability. I'd like to know the company's opinion. The second one is about displays. Recently, there has been a change in the number of new applications. I'm curious about the expansion of the company's new applications.

I have two questions. First question is about the semiconductor, about the investment plans and the approach that the company has for both DRAM and NAND. As memory supply situation seems to be improving, I think there are some in the market that are expecting the company to invest more. Others are saying, no, the company will focus more on profitability. Can you share with us your basic approach to investments in memory business this year? Our second question is about the display business. I think we're noticing some new applications emerging, for example, foldable and other IT applications.

Can you share with us details about the company's plan on how to capture these new application opportunities?

To answer your question about our investment approach, as you know, it has always been our consistent approach to investment to first carefully study and monitor the supply and demand situation in the market and to align our investments with what we see in the market.

Yes, and there may be a gradual change in the demand of the memory market, but we expect to see a strong growth in the medium term. Based on this medium-term outlook, as I have emphasized, we are continuing to invest in infrastructure-centered investment in order to compete with the positive medium-term fundamentals. We are also actively investing in facilities according to the trend.

And so when we look at the demand side of the memory market, even though there are still factors that may have short-term volatility on the demand, we have always thought that on the mid- to long-term, there is drivers for solid growth in the memory market on the demand side. And so based on this mid- to long-term outlook, as we have emphasized, In order to prepare for the positive mid- to long-term fundamental demand, we have continued on preemptively investing on the infrastructure while executing the equipment investments flexibly depending on the market situation.

In addition to profitability, our goal is to maintain investment in proportion to future demand. And since you've mentioned profitability, our basic approach, our target profitability

is a profitability that is sufficient enough for us to continue our investment to prepare for future demand. Having gone through rapid demand and supply fluctuations and also Rapid price fluctuations, we have reached the position that rapid increase in memory prices overall has a more negative impact on the IT ecosystem. And so our mutual long-term investments as well as supply will be kept in line or aligned to the demand growth.

Yes, I'll answer the display. uh foreign foreign Your second question was about the display business and the foldable and IT and other application, how we plan to capture this.

If I answer your question first from some of a macro perspective, I think especially as we went through COVID-19 and more people started to work from home and study from home, there has been an increase in the overall digital experience and digital demand. I think during the past year, the users of these digital devices have become more diverse. We have children and older people using it. Also, this digital transformation is expected to pick up pace. as the 5G communication technology is rolled out further. So, we are expecting to see a rapid increase in IT-related needs that we have not seen before. And also, these diverse IT devices will be used in very different use cases.

So, according to this, the company is planning uh uh uh uh

And so as more people are communicating on a non-contact or online basis and there's more services being used, our goal in terms of our foldable and OLED display offering is to provide differentiating experiences for these different use cases. And so to go into the specifics, currently we have two types of foldable offerings, the flip and the fold or the book type. We will be adopting new technologies into the foldable offering so that we're able to further solidify our positioning in the premium segment. And also this year we'll be focusing on expanding our customer base as well as the end applications or products that the foldable displays are adopted into.

And finally, OLED IT is appealing to consumers who enjoy gaming, streaming, and video on their laptops based on excellent performance for competitive technologies such as fast response speed, game, and video viewing. The company plans to continue to expand sales based on high-end products. The new model will be doubled in size from last year's four models, and we will expand the customer base to achieve a large-scale sales and sales expansion and sustainable growth compared to last year.

Also, in addition to the foldable, there has been laptops that are adopting OLED displays. OLED displays have an advantage in terms of response speed and also the ability to express real black. And so compared to other display technologies for computers and laptops, It is especially being found attractive by people who are using, for example, gaming or video applications on their laptops. And so we will continue to focus on supplying our OLED displays for high-end laptops. Last year, there were four models that were launched with our OLED displays. This year, we're expecting that to increase by more than two-fold. And we will also be increasing the customer base for our OLED IT displays so that we will be able to, this year, achieve increase in sales volume as well as continue to grow.

Yes, it's been a long time, so I'll take two more questions.

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

Yes, thank you for the question. I have two questions for the semiconductor memory and the IEM network business. First of all, the question is related to the roadmap of DRAM and NAND technology. Recently, an overseas competitor announced the production of 1α node DRAM, and at the end of last year, domestic and foreign competitors announced the development and production of 176th 3D NAND in a row. I'm curious about the meaning of these competitors' announcements. As you said, despite the recovery of the 1st quarter, the initial influence of the new line, You gave us a very conservative guidance. Can we say that the gap between the competitors and the technology has been reduced in the past? I would like to ask you to explain it in connection with the roadmap of the company. The second is that this year's global 5G introduction is in full swing, and I have high expectations for the additional supply of 5G network equipment following Verizon's deal last year. Thank you.

I have two questions. The first question is for the semiconductor, the memory side. It's about your roadmap. You would have heard that recently some competitors, for example, one competitor adopted the 1-alpha node on the DRAM side, and also a Korean competitor had announced 176-layer VNAND. Can you share with us the meaning of these announcements by competitors? The reason I'm asking about your roadmap is because despite the positive outlook for the market environment for the first quarter, I think your stance today has been more of a conservative stance. For example, mentioning the possibility of continued impact from the new line ramp-up And so is there a possibility of reading that this may hint the gap, the technology gap between you and the competitors narrowing than before? So in that context, can you share with us your detail about the DRAM and NAND roadmap going forward? Second question is about the mobile, the 5G equipment business. Last year, there was the contract with Verizon on the 5G equipment side. This year, overall, the 5G rollout is expected to continue. Can you, first of all, share with us your outlook on 5G network businesses and markets? And are there specific regions where you are expecting to win additional orders for your 5G network business?

Yes, I would like to answer about our technology competitiveness. In the case of DRAM,

To answer your first question about our technology competitiveness, in the case of DRAM, as we mentioned during the last conference call, the DDR5 is currently preparing for mass production without any issues, and we're currently going through marketing activities by cooperating with key chipset companies.

We have successfully introduced 1A for the first time in the world by applying multi-step EUV to 14nm 4th generation DRAMs based on EUV know-how and EUV ecosystem.

Also, as we have continuously emphasized, we have successfully applied multi-step EUV for the first time in the world on 1A, which is the fourth-generation DRAM in the early 14-nano ranges, based on our differentiated EUV know-how and ecosystem.

We are planning to produce 1A products that will be applied to EUV from this year. Accordingly, we will continue to improve the efficiency, competitiveness, quality, and performance competitiveness

This year, we're planning to produce the 1A node with EUV starting from this year, which will give us continued strength in terms of cost competitiveness, quality, and performance.

In addition, we would like to talk about the Hi-K MetalGate process. We have been developing DRAM's Hi-K MetalGate process since 2017, Also, I would like to mention the high key metal gate process.

We have already developed the high-key MetalGate process from 2017 for the DRAM operation. We actually have experience of applying the high-key MetalGate technology and the high-end graphic products and supplying to customers. So based on our experience of having applied high-key MetalGate processes, we have already built the know-how and we are planning to maintain our technology advantage by applying the technology, not only in graphic products, but other key products.

To give you an update on our NAND, our single-stack, six-generation VNAND has already completed ramp-up, and this year we will be scaling up production. And we are planning to apply double-stack technology for the 7th generation V-Land for the first time, and we will use single-stack know-how based on the industry's minimum stack height to maintain excellent price competitiveness even after buying 7th generation V-Land or multi-stack.

Also in the next generation, that's the seventh generation VNAND, we are planning to adopt double stack for the first time. This will give us the advantage of having the smallest stack height in the industry. And on top of that, by using the know-how we've accumulated working with single stack, we are expecting that we will maintain outstanding cost competitiveness even with multi-stack on seven generation VNAND.

. . . . . .

also, regarding applications, I think on the server side, there is continuous expansion on the high capacity, high density TLC SSD market. And so we will be actively supplying the high density high reliability products with eight terabytes or more in order to capture this market demand. On the mobile application side, we are noticing that the high density MCP products of 128 gigabytes and more are being adopted, not only on the flagship, but also towards the high and mid ranges. And so we will be offering our 512 gigabit sixth generation Renan product that has the cost competitiveness, the best cost competitiveness in the industry in order to expand our positioning in the value market.

Yes, I will answer the question. In 2020, due to the COVID-19 pandemic, there was a delay in the development of 4G and 5G in many countries, but in December 2020, with the start of the U.S. C-band auction, in the fourth quarter of 2021, a frequency auction was held in India, and business opportunities were expected. We Based on 5G technology, we are conducting a 5G trial with major global telecommunications companies. We are also continuing to explore new business opportunities in Central and South America and Europe.

Regarding your second question about the 5G network business, as you know, in 2020, due to COVID-19, a lot of the 5G and 4G network projects were postponed in key countries. But the U.S. went through or started its C-band auction last December, And also this year, during the fourth quarter of this year, we are hearing that there will be resumption of frequency auctions, for example, in countries like India. And so we do see business opportunities appearing throughout this year. And so we are currently in 5G trials with major carriers around the world using our 5G technology. And also we're continuing to explore new business opportunities in areas such as Latin America and Europe.

The last question will be presented by Claire Gim from Hana Financial Investment. Please go ahead with your question.

Hello. I have a question about memory and TV. It seems that the price of products will continue to fall in the landflash market. Do you have any plans to promote consolidation in the industry? Next, regarding TV, it is expected that Samsung Electronics will release a mini LED TV not only for Samsung Electronics but also for competition companies. What is the differentiated competition and response strategy of Samsung Electronics' Neo QLED TV and mini LED products? Thank you.

I have two questions. First question is about the NAND market. It seems that the weak price, the soft price in the NAND market will continue for some time being. In that context, does Samsung have any plans of pursuing consolidation in the industry? Second question is for the TV side. This year, we're hearing not only Samsung but also other competitors are planning to launch mini-LED TVs. Can you share with us the competitive, the differentiating advantage and also the strategy of Samsung's Neo QLED product, which I understand would be the Mini LED TV?

Yes, we don't have any plans to artificially promote consolidation in our NAND strategy. And I don't think it's possible just because we promote it.

To answer your first question, we do not have any plans of pursuing an artificial consolidation as part of our NAND strategy. Also, I think we believe that that is not something that will happen just because we push for it either.

As I explained earlier, we are going to continue to achieve overwhelming price competitiveness based on technical leadership and actively respond to customer demand.

And to once again clarify our position towards the NAM business, it is basically to leverage our technology leadership to continuously gain and strengthen our undisputed cost competitiveness and to actively meet and satisfy customer demand.

Yes, I will answer the TV question. First of all, Neo QLED It is a product with innovative technology that is different from the existing QLED. Quantum Mini LED is applied to reduce the size of the material and make it possible to adjust the precision of the light. In addition, quantum matrix technology, which implements the best contrast and black detail of the industry with ultra-fine control technology, has been applied. Oh, you've asked about your second question, you're asked about our Neo QLED.

And the Neo QLED is the next generation display that embodies are innovative technology capabilities that are at a totally different dimension from the existing QLED. For example, it embodies the quantum mini LED, which has a smaller cell size and is able to therefore control the light in a more precise manner. Also, the Neo QLED adopts the quantum matrix technology, which can actually deliver the highest level of contrast in the industry and also is able to express black details with this ultra-precision control technology. In addition, the Neo QLED uses the Neo quantum processor that consists of 16 neural networks and has better AI upscaling performance so that the The content, or excuse me, the picture quality and the sound is optimized depending on the content and the viewing area.

This is an Infinity One design with a slim and beautiful exterior design that perfectly harmonizes with the surrounding environment.

In addition to these cutting-edge technologies, we have adopted the Infinity One design that makes the NeoQLED slim but also to be in harmony with its surrounding environment. Also, we have noticed that many people are now using the TV for home training and home office and other in-home activities. So we have adopted and included various smart functions into the Neo QLED TV.

So in general, Neo QLED is a product that allows you to experience premium TV in all aspects, such as quality, sound, design, and smart functions.

And so the Neo QLED actually enables the perfect premium TV experience in terms of all dimensions, picture quality, sound design, as well as the smart functions. And we will be highlighting these differentiating strengths of the Neo QLED as we promote the product to consumers.

That completes our conference call.

Thank you very much for staying with us. Also, once again, we wish for the health and happiness of everyone close to you. Thank you.