Samsung Elect Ltd

Good morning and good evening. Thank you all for joining this conference call. And now we will begin the conference of the fiscal year 2022 first quarter earnings results by Samsung Electronics. This conference will start with a presentation followed by a divisional Q&A session. If you have a question, please press star one, that is star N1 on your phone during the Q&A. For cancellation, please press star two, that is star N2 on your phone. Now, we shall commence the presentation on the fiscal year 2022 first quarter earnings results by Samsung Electronics.

Welcome, everyone. This is Ben Seo from Investor Relations. Thank you for joining our first quarter 2022 earnings call. For additional details regarding our quarterly results, please refer to our earnings presentation which is available on our IR website at www.samsung.com slash global slash IR. On the call with me today are the following representatives from each business unit. We have EVP Hanjin Man representing memory, VP Han Kyuhan for system LSI, EVP Kang Mansu for foundry, EVP Choi Geon Young for Samsung display, VP Kim Sung Goo for mobile experience, and VP Kim Young-moo for visual display. I want to remind you that some of the statements we'll 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. Also, please note that last December, we merged the IM and CE divisions to form the DX division. However, the earnings call materials provided today are based on the business structure before the reorganization to prevent investor confusion regarding our results. Before reviewing our quarterly results, I would like to address the first quarter dividend. Today, the Board of Directors approved a quarterly dividend of 361.1 per share for both common and preferred stock. Based on the annual dividend payout under the current dividend policy, the total payout for the first quarter is 2.45 trillion won, or one-fourth the annual total for 2022. It will be paid in mid-May. With that, I would like to present the results for the first quarter. We once again delivered record results despite a highly challenging external environment. thanks to the hard work and dedication of our employees and strong cooperation with our partners to deliver the products in demand by our customers. Total revenue in the first quarter grew 1.6% sequentially to $77.8 trillion, setting a new all-time quarterly high for the third consecutive quarter. We raised the bar again by delivering solid growth across all our businesses, with the DX Division registering its highest revenue since 2013, thanks to our premium focus strategies, and the DS Division setting a historical high for quarterly revenue by actively meeting strong server memory demand. On a year-on-year basis, revenue grew 19%, driven mainly by the memory and visual display businesses. And I would also like to highlight that there was at least 10% growth in all of our business units, except for large panels in which we are ramping down LCDs. Gross profit decreased by 0.9 trillion won sequentially to 30.7 trillion won, mainly due to increased material and logistics costs affected by macro issues. Gross margin also declined slightly compared to last quarter, falling 1.8 percentage points to 39.5%. SG&A expenses were lower by 1.2 trillion won quarter-on-quarter to 16.6 trillion won, mainly due to a reduction in R&D combined with more efficient advertising and promotional spending. As a percentage of sales, they declined by 1.9 percentage points. Although R&D was down sequentially, this was due to the record levels set in the previous quarter, and R&D spending reached an all-time high for a first quarter as we continue to invest in future growth. Both operating profit and operating margin increased quarter on quarter, with operating profit reaching $1.4 trillion due to solid sales of S22, the new flagship smartphone, and premium TVs, despite a decline in memory ASP. On a year-on-year basis, both operating profit and operating margin increased substantially, rising by 51%, and 3.8 percentage points to 14.1 trillion won and 18.2% respectively. I will now briefly review the results of each business unit. In memory, we outperformed market expectations amid a milder than expected price decline. We also achieved record high quarterly sales for server due to an active portfolio shift to meet solid demand from server and PC. In System LSI, the results improved sequentially as positive impacts from favorable exchange rates and higher ASP outweighed the effects of a decline in SOC and CIS supply amid a weak mobile season. In Foundry, demand was solid across all applications. Despite concerns around delivery issues, we increased our advanced process portion of production and were able to align on a stable yield trajectory. For the display segment, the mobile panel business delivered historically high results for a first quarter, driven by strong sales at major smartphone customers and increased sales in new application areas such as gaming. In the large panel business, the production yield of QD displays improved faster than projected, and monitors featuring QD display were released during the quarter. For the MX business, Although we faced component shortages, geopolitical issues, and adverse currency effects, we delivered sequential increases in both revenue and profitability. This was mainly due to strong sales centered on S22 Ultra, which integrates specialties of the note, positive responses to new mass market 5G models that offer flagship experiences, and solid sales of device ecosystem products, such as premium tablets and watches. The network business expanded its sales overseas while meeting domestic 5G expansion needs. In VD, revenue and profit grew year on year, even amid declining market demand, with increased sales of premium, high-value strategic products, such as Neo QLED and SuperBig TVs. In digital appliances, we achieved record high quarterly revenue based on growth trends across our entire premium lineup centering on bespoke, despite an increased cost burden. Regarding currency effects relative to the Korean won, positives related to the strong dollar for the component businesses outweighed adverse impacts from a strong dollar and weakness in some emerging currencies for the finished product businesses. All in all, the net result was positive, resulting in an approximately $300 billion gain for operating profit compared to the previous quarter. Next, I want to share our business outlooks. In the second quarter, we expect that macro uncertainties and logistics issues will persist. For a company-wide business outlook, DS will work to meet expected solid demand and DX will focus on securing profitability by expanding sales of new smartphone and TV products, while strengthening its leadership position in the premium segments. Now, for each business unit's outlook, in memory, we will focus on meeting expected solid demand centering on server, while maximizing the quality of our portfolio by expanding sales of high value-added products, leveraging our market-leading technologies. For system LSI, we will mainly focus on maximizing the supply of key components such as SOCs and image sensors. For foundry, we will solidify our technology leadership position with the world's first mass production of the three nanometer gate all around process and prioritize increasing supply to our global customers. We also expect to continue to win new business opportunities and new customers. For the display segment, in the mobile panel business, despite macro uncertainties, we expect to maintain solid results compared to last year thanks to continued solid demand from major customers for their flagship smartphones and demand for gaming and other applications. In the large panel business, we expect revenue to increase with the release of TVs featuring QD display and losses to narrow. LCD production will be ramped down as planned. In the MX business, amid improved availability of key components, we expect solid sales of S22 and expanded sales of new 5G models for the mass market to fuel significant year-on-year revenue growth. And we expect to achieve solid profitability despite macro impacts by utilizing our global supply chain management capabilities. For network, we will deliver a stable supply of products to our telecommunications customers and also work to win new business opportunities. For VD, we will focus on selling new models, including Neo QLED and the Freestyle, and capture demand for premium products to help counter an expected market slowdown. For digital appliances, we expect to increase revenue and profitability by improving the product mix with increased availability of bespoke premium products in the global market and by expanding sales of air conditioners amid strong seasonality. Now let's move on to our outlook for the second half of the year. For a company-wide business outlook, as we project uncertainties related to the macro environment and geopolitical issues to persist, our component businesses will prioritize increasing the portion of our advanced processes and expanding into new application areas. New products introduced in the market should help conditions to improve during this period. In the DX Division, we will continue to strengthen our premium lineup leadership position while working to enhance multi-device experiences via seamless connectivity between different products that encompass home, including TVs and digital appliances, mobile, and automotive. We aim to create customer experiences on a level that only Samsung can provide. Now for each business unit's outlook, for the memory business, we expect server demand to remain solid backed by an accelerating shift to high-core CPUs. We also anticipate a recovery in mobile demand on effects of new model launches later this year. Thus, we plan to extend our leadership position by increasing sales of next-generation interfaces, such as DDR5 and LPDDR5X, and by focusing on a high-value added product portfolio. System LSI will focus on reinforcing its lineup of SOC models targeting the volume zone. For Foundry, we will push to outperform the market and also achieve meaningful profit by raising the yield and increasing the portion of our advanced processes. Meanwhile, we will adopt pricing strategies to enable continued investments and solidify technology leadership in the GAA process. For display, in the mobile panel business, we expect sales to increase, driven by expansion of foldable products and the accelerated adoption of OLED in new application areas such as IT, gaming, and automotive. The large panel business will establish its leadership position in the premium segment and narrow losses with QD display. The MX business will target to maintain a solid level of profitability. First, we will expand our premium user base by improving flagship experiences. Second, we will maximize sales of new foldable products via strengthened cooperation with our partners and offer an undisrupted supply to meet the market demand. Lastly, we will increase sales of new device ecosystem products that will enhance customer experiences. For network, we intend to maintain our growth momentum by meeting domestic needs for 5G installations in a timely manner and actively expanding our business in overseas markets. We will also continue to reinforce our leadership position in VRAN, or Virtualized Radio Access Network, technology. For VD, we will strengthen our premium market position by expanding sales of our differentiated strategic products, such as Nail QLED 8K and lifestyle products, during a seasonally strong period, and by sales of innovative products, such as MicroLED and Odyssey Arc. For digital appliances, as issues related to material costs and logistics are likely to persist, we will continue to focus on increasing sales of premium products and enhancing local production capabilities of our global manufacturing base. Now turning to capital expenditures, CapEx in the first quarter was $7.9 trillion won, with $6.7 trillion won invested in semiconductor and $0.7 trillion won in display. Memory investments concentrated on infrastructure at P3 and on process migrations at FABs in Hwaseong, Pyeongtaek, and Xi'an to address growing future demand. Boundary investments focused on developing and establishing the production capacity of advanced processes under 5 nanometers. Next, I would like to share some of our key activities in sustainability management. In the first quarter of this year, we released the Galaxy S22 series, which features specific components made from high-quality recycled plastic created from discarded fishing nets. We are committed to preserving the environment. By 2025, all new Galaxy products will use recycled materials, and single-use plastics will no longer be used in packaging. Meanwhile, the memory business's portable SSD T7 acquired a low carbon product certificate as it reduces carbon emissions. In particular, it uses eco-friendly pulp rather than plastic for the tray in the packaging material and consumes less energy in the usage stage. We will strive to achieve low carbon product certification in our subsequent products and add to our certified green low-carbon product portfolio. Next in February, Samsung joined forces with the Ministry of Small and Medium Enterprises and Startups to alleviate a domestic shortage of COVID-19 self-diagnostic testing kits by supporting a local kit manufacturer. Our collaboration helped improve production by early stabilization of new facilities and by supporting logistics firms and partners to improve the local response to COVID-19. We are committed to finding new ways to strengthen ESG management and incorporating them into our business. To learn more about our latest ESG initiatives and priorities, please visit our corporate sustainability website. I will now turn the conference call over to the representatives from each business unit to present first quarter performances and outlooks for the corresponding business segment. We will start with the memory business. Thank you.

Good morning. This is Hanjin Ma from the Memory Global Sales and Marketing Office. The fourth quarter, price declines in memory are modest relative to market expectations thanks to solid demand mainly from server and PC. As a result, but performance exceeded market forecasts. However, results declined slightly quarter on quarter due to a one-off special incentive and mild seasonality in some applications. In DRAM, overall server demand continued to show a favorable trend thanks to increased DRAM content related to rising adoption of high-core CPUs alongside still strong demand from data centers. Starting in the fourth quarter of last year, set build momentum for enterprise PC has been recovering thanks to improvements in component shortages. And demand for high-end products has been solid, which have impacts of weak seasonality to a degree. Mobile demand was somewhat tepid as launches of new models by major manufacturers were weighed on by effects of the crisis in Ukraine and China's lockdown in major cities amid weak seasonality. We preemptively identified shifts in demand through our own machine learning-based market system and actively responded to server demand. As a result, we exceeded our big growth guidance and achieved record high quarterly sales per server. Next, I will talk about the NAND market. Demand for server SSD from data centers remained solid thanks to pent-up demand from last quarter, in which said build was partially influenced by disruptions in IC component shortages. While server OEMs contributed to strong demand for server SSD related to increased investments in new IT infrastructure. The demand trend for client SSD was solid, backed by robust demand for enterprise PCs. as companies increasingly follow back-to-office trend and expand hybrid work models, and by increasing SSE penetration in conjunction with growing adoption of high-end PCs. In mobile, despite ongoing partial improvement of supply for low-to-mid-price APs and events such as launches of flagship models from major manufacturers, memory demand slowed somewhat. due to weak seasonality and inventory adjustment by some customers. Considering the limited inventory situation and future market conditions, we have maintained our business strategy, which is to refrain from excessive expansion of sales and continue to increase our portion of high-density, high-value added products as we remain focused on improving the quality of our business Ultimately, we exceeded our bid growth guidance due to reasons above, including the base effect from last quarter. Now let's move on to the second quarter outlook. In DRAM, for servers, set bill will likely depend on the pace as to how quickly supply chain issues get resolved. Thus, we need to continue to monitor the situation meticulously. Meanwhile, we expect the server demand centering on high density products to be relatively solid, aided by continuous penetration of DDR4 8-channel CPU. As for PC, there are some demand uncertainties caused by inflation as well as economic slowdowns and reduced consumption influenced by the crisis in Ukraine. On the other hand, there is also potential for solid demand based on the continuing trend toward high density combined with the rising penetration of DDR5. In mobile, a surge in raw material prices caused by the Russian Ukraine war may add pressure to inflation and affect smartphone consumer sentiment, while supply chain issues also present risk factors. However, we see changes of a demand recovery, chances of a demand recovery, depending on the pace of reopening in some countries. So we need to monitor the situation carefully. Despite a variety of supply constraints, we will continue to pursue the highest quality portfolio by expanding sales of high-value added, high-density products, while actively responding to demand for applications that show the most growth potential In NAND, amid shortage in chip production provoked by external issues and impacts of short supply of active passive components, we expect server demand centering on high-density products to grow, based on the investment expansion mainly for data centers. However, we should keep an eye on possible demand changes, considering uncertainties, including macro issues. Meanwhile, due to various macro issues, we expect to see some effects on demand in consumer-oriented product lines. First, for client SSD, consumer PC demand is likely to shrink amid global inflation and effects of the crisis in Ukraine. Enterprise PC demand is likely to be solid, and the high density trend of SSDs backed by increased sales of high-end PCs will continue. We should ease some effects of weak demand. For mobile, the short-term market environment is unfavorable due to lockdowns in major Chinese cities amid slow seasonality. The consumer sentiment has potential to recover later in the quarter with the launch of new form factor models. With people spending more time outside, following gradual easing of quarantine regulations in some countries, and with the resumption of investment in 5G infrastructure. Amid impacts of shortages of active passive components, we will maintain our efforts to promptly address customer demand, including strong SEC demand for enterprise sector by our business competitiveness. Coming to the full year outlook, we will share our prospects for each application for the year. However, the situation requires continuous monitoring, as it is an immense challenge to predict the duration or market ripple effects of various macro issues, such as the Russian-Ukraine war and global inflation. Server demand is expected to be relatively solid compared to other applications, resulting from increased demand for DDR5 and high-density trend as high-core CPU transition grows. But the pace of improvement in component shortages, which can affect set build, needs attention. For PCs, demand for consumer-oriented products is projected to weaken somewhat due to macro issues and the base effect from last year. But enterprise demand should be relatively solid as companies normalize operations and expand hybrid working patterns. Moreover, Considering growth and changes in the utilization of PCs, rising portion of high-end products and growing content per box should help partially offset weak consumer demand. For mobile, it seems that the micro-issues mentioned previously will have a greater impact on mobile than on the other applications. However, as the visibility clears on the recovery of the issues, there is potential for a sooner-than-expected demand recovery. In particular, as major manufacturers are scheduled to release new products in peak seasonality in the second half, we anticipate that said build will recover. In addition, demand centered on high-density products and the LPDDR5X, which is a cutting-edge interface, is forecast to increase as manufacturers strengthen flagship lineups. Under the circumstances of extremely high uncertainties, continually upgrading our machine learning-based market sensing system, allocating more resources to improving the accuracy of our demand predictions in order to secure flexible supply capabilities linked to market conditions. By maintaining a product mix oriented towards server and high-end PCs, we will respond to new demand in a timely manner by expanding supply of cutting-edge interfaces such as DDR5 and LPDDR5X. In addition, while we closely observe changes in market demand, we'll center our portfolios on high-value-added and high-density solutions while steadily realizing cost reductions based on our industry-leading technologies and strengthening our market leadership. Thank you.

Good morning. This is Han-Gyu Han from the system and SI business. In the first quarter of this year, the supply of major components such as SOC and image sensors decreased due to weak seasonality of the mobile industry and inventory adjustments at manufacturers in China. However, earnings improved quarter on quarter, lifted by benefits of foreign exchange movements and increase in ASP. DDI sales increased by over 30% year-on-year for both large panel and mobile display. And despite a weak TV market, TV DDI demand has remained strong, keeping shipments at a steady level. To secure second quarter earnings, we have started shipping SOCs for the volume zone and commenced mass production of new 5G FR2 RFICs as well as 0.64-micrometer 108-megapixel image sensors. In the second quarter, we expect our SOCs supply to grow significantly backed by yield improvements for flagship SOCs and the addition of mid-range products to our lineup. Meanwhile, Demand for high-resolution image sensors in both Korea and China is expected to stay steady. For DDIs, we expect the price to stay solid, given the still tight power supply and relatively low driver IC inventory at customers. In the second half of this year, we plan to further expand our lineup of 5G SOCs, and supply our cutting-edge ultra-high 108 and 200 megapixel sensors as planned to meet our customers' requests. We expect to deliver higher growth than we have in previous years thanks to new product launches and lineup extensions and to achieve improvements in both profitability and sales. Thank you.

Good morning. This is Moon Soo Kang from the Foundry Business. In the first quarter, we achieved our highest-ever first-quarter revenue, which increased 35% on a year-on-year basis thanks to solid demand across all applications, improving yields, and increasing revenue share from our advanced process nodes. In particular, through close collaboration with our semiconductor R&D, We have stabilized the yield trajectory of advanced process nodes while continuously improving our production capability by stabilizing new equipment. Additionally, we continued our effort to diversify and secure future growth by adding new orders in HPC and consumer segments, where revenue increased 75% and 57% on year-on-year basis, respectively. We are also improving our ability to respond to future demand with new investment in Taylor USA as well as in domestic PEPs and by optimizing our currently operating lines. In the second quarter, we expect market conditions to remain tight with demand exceeding supply across all process nodes. We will continue to improve use of our advanced nodes to actively address demands from the major customers while striving to expand supply and secure more new orders from global customers. Additionally, we aim to secure technology leadership by completing qualification of the first generation GAA process and entering high volume manufacturing being the first in the industry. In the second half of the year, Although we expect uncertainties due to a slowdown in economic growth and continued geopolitical instability, we forecast foundry supply to remain short of demand due to rising penetration of 5G and a strong demand for HPC. We will continue to widen the gap in technology leadership by improving the yield and maturity of our first-generation GAA process. We also aim to exceed market growth in the second half through yield improvement and ASP increase due to the expansion of our business in the advanced nodes, along with a proper pricing strategy to secure future investment. Thank you.

Good morning. I'm from Samsung Display. In the first quarter, although earnings of mobile display business declined quarter on quarter, influenced by inflationary pressure and geopolitical issues. They improved year on year, boosted by solid demand for premium products and in effects of foreign exchange movements. In particular, the increasing adoption of OLED displays in the notebook PCs and gaming device segments contributed to the results. In the large display business, we recently rolled out QD monitors and TVs, and their outstanding picture quality and performance gained high praise from the market. Additionally, we are quickly improving and stabilizing yield of QD displays. Next, let me share the outlook for the second quarter. Despite risk factors such as prolonged geopolitical conflicts, and the lockdowns in some regions in the wake of resurgence of COVID-19, we expect the performance of mobile display business to remain strong, thanks to the continued demand for the smartphone adopting OLED displays. For the large display business, we expect earnings to improve as we ramp down LCD production and expand our shipments of QD products in earnest. Next, let me turn to the outlook for the display market and our core strategies for 2022. While we expect business risk to linger due to growing uncertainties in the external environment, the overall size of the smartphone market is likely to stay at the 2021 level owing to the economic recovery led by the advanced countries. As the smartphone market continues to adopt new technologies such as whole display, UPC, and LTPO. Samsung display will further widen the gap with competitors through development and all the stabilization of such technologies. Additionally, the overall size of OLED display market is likely to expand continuously owing to the growing demand for OLED displays. In markets ranging from IT to automotive and gaming. This expectation is attributable to IT market that has grown by increased demand from non-face-to-face services since the outbreak of the pandemic. The automotive market that has high demand for premium displays for electric vehicles and the gaming markets that gravitated toward portable gaming devices offering high picture quality. With the addition of large QD displays to our rigid and flexible mobile OADs that are already leading the premium display market, Samsung Display now has a full lineup of solutions with which we can deliver perfect self-luminous displays to wherever they are needed. Moreover, capitalizing on our competitive edge that are no match for competitors, we will actively target new OLED display markets and secure mid and long-term growth engines by satisfying both ever-growing expectations of consumers and diversifying market demands. Thank you for your listening.

Good morning. This is Sung-Guk Kim from the MX business. I'd like to share with you our Q1 2002 results and outlook for the MX business. In Q1 2022, the mobile market decreased QOQ and YOY due to seasonality and political instability in certain regions. At Samsung, the MX business delivered sequential revenue growth and profitability improvements despite supply shortage issues and a decline in demand in the mobile market. The Galaxy S22 series, which we launched in Q1, generated strong sales, and in particular, the Galaxy S22 Ultra, the top of the series that features the S Pen, has garnered great feedback from our loyal Galaxy Note customers. As a result, the Galaxy S22 Ultra accounted for higher portion of sales than its predecessor did, helping drive revenue growth. Furthermore, our mass market 5G smartphones, including new A-series models, have further strengthened premium experiences, so sequential sales growth with their improved profitability also contributing to the Q1 performance. We expanded sales of tablets and continue to generate solid sales of wearables through marketing that highlighted our device ecosystem products, which included our event where we unpacked our new premium tablet, the Galaxy Tab S8, together with the Galaxy S22. Next, I would like to discuss the outlook for the Q2 2022. We expect the smartphone market to decrease QoQ due to seasonality and a prolonging of the COVID-19 situation and geopolitical uncertainties. For the MX business, we will try to resolve supply shortage issues affecting key component by strengthening cooperation with partners and forming long-term agreements in order to achieve YOY revenue growth. Specifically for the Galaxy S22 series, we expect to resolve supply issues of key component and we will closely monitor supply balance of other major parts as well in order to maintain strong sales of flagship smartphones. In addition, our marketing centered on core experiences of the new 5G mass market models that we released in Q1 led to positive feedback, so we will actively address demand in the mass market and expand sales of these models. Amid uncertainties related to COVID-19 and the macro environment, we will strive to minimize impacts on our business and secure solid double-digit profitability by stabilizing supply of flagship products and by enhancing the efficiency of our SCM capabilities. Now, let me share the outlook for the second half of 2022, why risks related to COVID-19 and parts supply are likely to persist, we expect the smartphone market in 2022 to continue to grow annually. And the wearable market is projected to post another year of high growth in the double digits. The MX business will continue to offer customer-centric, innovative experiences that increase customer satisfaction and loyalty and thus expand our customer base in the flexion market. For the new foldable models, we will thoroughly prepare to ensure seamless supply of key parts so we can fully address market opportunities and maximize sales from the moment they hit the market. In addition, we will further optimize experiences tailored to the form factor through collaboration with partners. With these efforts, we will strive to achieve significant growth of the foldable phones following its successful mainstreaming. Also for device ecosystem products, we will work to increase sales by leveraging enhanced customer value. And following the integration of the DX division, we will cooperate intimately with the VD and DA businesses to further advance seamless connected experiences across Samsung products and ensure they add value to our customers' daily lives. With these efforts, we aim to achieve sales growth in 2022 and also continue solid profitability with improved product mix and operational efficiency.

Thank you. Good morning. I'm Youngmook Kim from the sales and marketing team of Visual Display. First, I'd like to review the market conditions and our performances in the first quarter of 2022. Market demand for TB contracted both year-on-year and quarter-on-quarter. The former is due to the base effect of last year's pent-up demand, and the latter was caused by entering weak seasonality following year-end peak season and also by effects of geopolitical issues, including those involving Russia. By closely cooperating with channel partners, we expanded revenue year-on-year by taking advantage of various sales promotion opportunities in each country and intensively targeting demand for high-value premium products. Furthermore, we improved our profit by enhancing the cost efficiency of sales activities. Next, I'd like to talk about the second quarter and second half forecast of 2022. We expect TV demand in the second quarter to contract both quarter-on-quarter and year-on-year due to acceleration of a trend in which demand shifts from home entertainment to outdoor activities and travel, led by easing restrictions mainly in advanced markets and also due to pressure from continued uncertainties spurred by geopolitical issues involving Russia. Against this backdrop, Samsung plans to focus on capturing premium demand with new models. In particular, the Neo QLED for 2022 has garnered praise for providing an incredible immersive experience with a new level of picture quality and sound, and also for its minimal design. And the Freestyle, praised for its innovation, is creating a significant buzz in markets. We will achieve growth in revenue by continuously driving sales of these strategic products. Moreover, we will further optimize our operations by establishing preemptive plans of sales and supply to address market risks such as raw material and logistics issues. For TV market in the second half, although there are opportunities for us to expand sales including peak season and sporting events, macro risks are likely to continue to cast uncertainties on overall TV demand. Samsung will closely observe the rapidly changing market conditions and take preemptive actions against uncertainties by capturing demand of peak season and sporting events. while also expanding sales of our own differentiated strategy products, such as NeoQLED and LifestyleScreen. At the same time, we will solidify our status as a market leader through innovative products like MicroLED and Odyssey Arc. Thank you.

Thank you for the presentations. And that sums up the first quarter results presentations. Before we move on to the Q&A session, I would like to share several data points on key business areas. However, due to continued macro and geopolitical uncertainties, we will not be providing annual guidance at this time. In the first quarter for DRAM, our bid growth increased by a low single-digit percentage. And ASP also declined by a low single-digit percentage compared to the prior quarter. For the second quarter, we expect market bid growth to be in line with the mid-teen percentage range, and our bid growth should be similar. For NAND, our bid growth increased sequentially by a high single-digit percentage, while ASP declined by a mid-single-digit percentage. In the second quarter, we expect market bid growth of high single-digit percentage, and we should be similar to the market. For display in the first quarter, the mobile portion of revenue was in the mid 90% range. And sales volume declined sequentially by a percentage in the high teens. In mobile in the first quarter, shipments were approximately 74 million units for smartphones and 8 million units for tablets. Smartphone ASP was 278 US dollars. For the second quarter, we forecast that we will see a decline in sequential sales volume for both smartphones and tablets, but an increase in smartphone ASP. For TVs, sales volume of LCD TVs in the first quarter declined by a mid-single-digit percentage compared to the previous quarter. For the second quarter, we expect sales volume to decline sequentially by a percentage in the low to mid-teens. With that, I will now move on to the Q&A session.

First, we will start taking questions from the conference call. 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 Nicola Godoa from UBS. Please go ahead with your question.

Good morning, and thanks for taking my questions. The first one relates to memory, and specifically DRAM. There has been some recent discussions on Samsung possibly skipping one beta nanometer to go straight to one C nanometer. Is that the case? And if so, could you elaborate as to what is actually driving this? If not, could you recap for us where we actually are on the development of one beta nanometer And when is the intended timing for mass production? And the second question is for MX. Obviously, the current geopolitical situation is directly impacting sales for smartphones, for instance, in Russia. But beyond this, how do you consider the indirect impact that higher inflation may have on smartphones sell-through, as well as possibly product mix? And what is your current expectation for flagship smartphone unit shipments from the second quarter onward? And how can Samsung mitigate the impact? Thank you.

There are two questions. The first question is related to memory. We heard that Samsung can go from 1B nano to 1C nano. I wonder if that's true and what the reason is. If that's not the case, I'd like you to tell us where the current status of 1B nano development is, and how much do you expect it to improve? The second question is about MXO. Including Russia, due to the geopolitical situation, Smart phone sales are directly affected, but beyond that, how do you expect the indirect impact of smartphone demand due to indirect influence such as inflation? And I'm curious if you expect this to affect not only the amount of smartphone sales but also the product mix. What do you plan to do to ease the impact of flagship smartphones after the 2nd quarter? There's something I'd like to say first.

It's not true that we're skipping 12nm. And there will be no difference in the existing production schedule.

To answer your question, first of all, I can confirm that it is not true that we have any plans of skipping 1B, that's 12 nano, and our mass production schedule is on schedule without any disruptions.

As well as the well-known fact, the air shrinkage difficulty of DRAM is rapidly increasing. The EUB, which is currently being introduced into the memory industry, is also to break the limit of this air shrinkage difficulty. In this situation, We introduced EUV for the first time in the industry, and we proved our overwhelming technology competitiveness and original competitiveness. If we introduce new technologies such as EUV and implement them, there will be some changes in the plan. However, as a leading company, we have to go through new technology introduction challenges, and we need to apply this to our roadmap and expand it. We think so.

Regarding the DRAM, as you know, the difficulty of process shrinkage does increase quite deeply. And the adoption of EUV, which the rest of the memory industry has just started to adopt on a larger scale, is also the purpose of EUV was to overcome and break through the limitations of the process and note difficulties. That is why we were the first in the industry to adopt EUV on DRAM, and we have already proven the overwhelming technology competitiveness as well as cost competitiveness of DRAM on EUV. In the process of adopting new technologies such as EUV, changes to the original plan would be involved. But we think that part of being a leader in the industry is taking on these challenges of adopting new technology and to incorporate that into our technology roadmap.

And now, memory demand is expanding from existing consumer products to IT infrastructure. What's important is that the ability to provide fewer products with mature technologies is becoming really important. So, considering the overall cost of water quality, stability, and raw materials in the development process, the process of optimizing the design rules is natural. There have been similar situations before. We are optimizing the design rules for this process considering these priorities.

I think what's also becoming quite important is that as IT infrastructure accounts for a larger share of memory demand versus the existing consumer applications, the importance of the ability to supply mature technology products at the right timing is becoming more critical than ever before. I think the process of optimizing the design rules, considering yields, stability, cost, and other factors overall is a natural part of developing the advanced nodes. Similar situations have existed before, and right now we are going through this process of optimizing the design rules of this node, considering various priorities. So I think it's fair to say that our 12-nano development plan is being carried out stably, and the subsequent nodes would also be developed according to our mid- to long-term technology roadmap.

Yes, I'll tell you about MX. The Galaxy S22 series had a lack of main parts and unstable international status, but the S22 Ultra, which combined the Note experience, showed a good sales performance. As a result, the S22 series increased the Ultra's share, improved the product mix, improved the ASP, and expanded the flagship sales compared to the previous year.

To answer your second question, yes, as you mentioned, even during the first quarter, there were difficulties, including the unstable geopolitical situation and also a shortage of the key component for the S22 series. But actually, we were able to deliver very positive sales, especially around the S22 Ultra, which incorporated the experience from our Galaxy Note series. With the increase of Ultra within the S22 series, Our product mix improved. Our ASPs also went up. And so overall, in first quarter, our flagship revenue increased quarter over quarter.

Yes, and the second quarter is expected to continue to be uncertain, such as the market downturn and, as you said, the logistics issue, the instability of the international economy, and the possibility of a long-term recession. However, we are working hard to resolve the problem of supply of main parts through cooperation with partners and long-term contracts, and we expect that the difficulty of supply of parts will be resolved from the second quarter. And we plan to thoroughly monitor the supply-balancing situation between important parts, and in the case of the S22 series, we plan to stabilize supply more clearly to minimize the impact of market uncertainty.

You've asked about second quarter and onward, and we also expect uncertainties, including the SCM disruptions related with COVID-19, as well as the international political instability to continue. And there's possibility that these factors may remain for the long term. We do expect, though, we will respond by strengthening our cooperation with partners and also by using long-term contracts to address the supply issues of key components. We do expect that from second quarter, our supply, part supply difficulties would be resolved. Also, we will try to minimize the impact of any market uncertainty by carefully monitoring the balance situation of the supply and demand balancing situation of our key components, and also by focusing on stabilizing the supply of the S22 series. With these responses, despite the market uncertainties, we will focus on continuing the positive sales of our flagship smartphone so that we will be able to grow both top and bottom line again in the second quarter.

The next question will be presented by Peter Lee from Citigroup. Please go ahead with your question.

Hello, I'm Mi Se-cheol from Citigroup. I'd like to ask a question about memory and Foundry. First, I'd like to ask a question to Mr. Han Jin-man about memory. Regarding the demand for servers, the data center demand, which was expected to change slightly last year, has continued to grow, and it seems that the supply of server OEMs has also increased. In the second half of the year, uh, uh, I have two questions.

The first question is about the memory. Actually, data center demand, which has been expected to be weak since the end of last year, has actually turned around and proven to be quite solid. Also, we're sensing that inventory at the OEM level has also increased since. Do you think that such a solid demand on the server side may continue in the second half of this year, or do you see a possibility of an oversupply as the industry all focus on the server segment? Second question is a foundry question. There is some concern regarding your foundry orders. There's talk that your key customers are moving over to competitor foundries. And so, in that context, I'm wondering if you can share your current status of new order wins on your advanced node for the Foundry, and what are your future outlook?

Yes, I'll give you an answer regarding the server. As you just said, the fact that the server demand has been relatively reduced compared to other applications is a fact. But if you look at the cause of the increase in demand in the market, these companies are expanding their IT infrastructure. AI, machine learning, and cloud companies are expanding their investment in order to start a new growth market. In addition, we are expanding our high-core CPUs, which means that the amount of memory is increasing. Because of the increase in demand due to the growth of fundamental demand, we believe that the possibility of removing and collecting memory is not that high.

To answer your question, first of all, yes, I can confirm that there is a relatively strong demand on the server side versus other applications. And this strong server application demand is driven by multiple factors. One is that companies are also increasing their IT infrastructure investments. But at the same time, many cloud service providers are also increasing their investments as they move into new growth areas such as AI and machine learning. At the same time, there's also an increase in memory content with the adoption of high-core CPUs. So given the fact that the strong server demand is backed up by fundamental demand drivers, I think that there isn't much of a high possibility of there being an excessive memory inventory buildup.

And in the second half of the year, the fundamental server demand will continue. Uh, uh, uh, uh,

And so even in the second half, I think these fundamental drivers supporting the server demand will continue. And so while the underlying server demand appears to be relatively more solid, how that will materialize in actual demand will be dependent on factors including the supply issues around certain components that have caused that build disruptions. And that may have an impact on second-half server demand. Given that, we will continue to very carefully check the demand-changing situation so that we're able to provide supply that is in line with market demand.

Yes, and I know that there are concerns about the server-oriented supply situation. In conclusion, we think that the server-oriented supply situation is low.

You've also asked about our opinion about a possible oversupply towards server applications. And our answer is that we do not, the possibility of an oversupply to servers is low.

I'll tell you the reason. First of all, each CPU used by the server company requires the quality of the memory product by process. And this process, capacity, this product mix, the material that appears as the product mix is converted, If you consider KEPA restrictions, conversion efficiency, and so on, there will be a restriction on supply increase. And the customer request between products such as DDR4, DDR5, and the match with the supplier should be considered. So we will do our best so that the customer can respond to the market demand as much as possible. In the process, I would like to say that there are definitely supply restrictions.

And the reason why we think that an oversupply towards server, the possibility is low, is the following. Number one is that server companies use a very wide range of different CPUs, and for each CPU, the memory product also has to go through qualification for each node. Also, in the process of switching across nodes or density or different applications, there are restrictions in how much supply can be increased when you consider issues such as material, capacity restrictions, and also the switching efficiency. On top of that, you also have to think about the match of customer request and supply between DDR4 and DDR5. So considering all of these operational constraints, even though we will try to do our best to respond and meet the customer and market demand, there are some constraints into the increase of supply for servers.

I'll answer your question about the construction of the foundation. Unlike what you're worried about, the demand of the major customers is expected to continue due to the lack of supply due to the construction of the Kepa we have. The company is in a long-term supply contract with a number of major customers, LTA, and I think it will be able to increase supply stability through stable trade operations.

To answer your second question about foundry, even though you've mentioned there's some concern, actually, the demand of our key customers are above our capacity. It's very solid. And so we expect the tight supply situation to continue for some time. We have entered into long-term contracts, LTAs, with our key customers. And through this, we're able to gain comfort in terms of stable fab operation and supply stability.

Also, if you look at our order book for the next five-year period, that order book size is around eight times our previous year revenue.

And because we are also driving our promotions, especially around our advanced nodes, we expect our order book to continue to grow.

So, I think the recent market concerns are too much, and the company is looking for a tier 1 customer in the HPC network automotive field, And so to answer your question, we think that if there is any concern in the market, it is excessive and unfounded.

We are actually establishing very solid partnership with our key customers, key customers ranging not only in the mobile segment, but also HPC network and automotive tier 1s. And so we're continuing to improve our customer portfolio and business structure. And with very solid demand behind our advanced nodes, we are very confident that we will be able to continue sustainable and stable growth going forward.

Thank you for your answer.

We'll move on to 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 question. The first question is from Foundry. Since the last quarter, there seems to be a lot of concern about the 4nm rate. I am curious about the current situation of the 5nm and 4nm rates that you are currently producing. I am also curious about the current situation of the 3nm rate Thank you.

I have two questions. The first question is a foundry question. As you would remember, there were a lot of concerns about your four nano yields since last quarter. In that context, can you share with us the current status of your yield for five nano and four nano respectively, which are your advanced notes currently in mass production? Also, can you share with us the yield of three nano that you're seeing under development and also the production timing, if you can please share? The second question is about the display, the OLED side. Recently, competitors have announced new investments into OLED capacity, and so we're seeing more competitors entering the OLED market. Given that competitive situation, how do you plan to maintain your technology leadership and market share?

First of all, I would like to answer your question about the supply and demand of the First of all, the 5nm process has entered the maturity stage and is maximizing the main customer supply based on stable demand. In the case of the 4nm process, the initial demand ramp-up was somewhat delayed, but it is currently entering the expected demand growth curve due to early stabilization.

To answer your question first about our foundry yield, the 5-nano node is currently in mature yield stage. It is delivering stable yield, and we are maximizing our supply to our key customers. In the case of 4-nano nodes, there was a bit of a delay in the initial yield ramp-up, but currently we are back on the expected yield improvement curve since we have been focusing on early stabilization.

Oh, you both asked about our three nano nodes.

Actually, we've improved the node development system from three nano. And so we actually now have a verification for each stage of development. This will help us reduce the yield ramp-up period later on, improve our profitability, and also ensure a stabler supply. Also, in order to accelerate our development process, we're preparing to secure a new R&D line.

Yes, I will answer the display question. The question is about the strategy to maintain the competitiveness and technology discrimination of SDC due to the fierce competition of OLEDs. I will answer it. As OLED has become the target of high-end smartphones, recently, the area has been increasing from mid to low-end, This is a trend that has been continuously expanded in the market. On the other hand, in this situation, competitors are also accelerating their investment. This is a fact that the competitive environment is getting more and more fierce. In addition, the company needs under-panel cameras, hole displays, touch built-in technology, and continuous technology innovation such as LTPO to develop a competitive paradigm Uh, to answer your second question, which was about the OLED and how we plan to maintain our technology competitiveness and market share,

To just describe the OLED market, OLED became the standard in high-end smartphones. Recently, it's been penetrating to mid- and low-end products. And so overall, the OLED market size is continuing to grow. But on the other hand, as the market grew, as you mentioned, competitors have also been picking up their investments in OLED. And so competitively speaking, the OLED competitive environment has become quite fierce. Now, in order to maintain our gap against the competitors, despite this fierce competition, we have shifted the competitive paradigm from a quantitative competition towards a qualitative competition by continuing our technology innovation on technologies such as under panel camera, UPC, whole displays, embedded touch, and also LTPO.

Yes, and in the future, the OLED market is expected to expand into IT, automotive, gaming, and other areas of the industry. In particular, the company will continue to develop new technologies such as high-quality, eco-square, and low-consumption technologies such as form-factor innovation and high-quality, eco-square, and low-consumption technologies such as form-factor innovation and low-consumption technologies such as form-factor innovation and low-consumption technologies such as form-factor innovation and low-consumption technologies such as form-factor innovation and low-consumption technologies such as form-factor innovation and low-consumption technologies such as form-factor innovation and low-consumption technologies such as form-factor innovation and low-consumption technologies such as form-factor innovation and low-consumption technologies such as form-factor innovation and low-consumption technologies such as form-factor innovation and low-consumption technologies such as form Looking forward, the OLED market is expected to have a very positive outlook as it expands beyond smartphones to other IT applications, automotive, as well as gaming.

And we will maintain our market leadership by continuing to develop innovative new technologies such as form factor innovations, ultra high picture quality, and also low power technology such as Echo Square. Also, we will make timely investments to further widen the gap between us and the competitors so that we're able to maintain the status and position we have in the smartphone market onto these new applications. Another focus that we will be placing is IP protection. As I mentioned during the last conference call, we will continue to bring in and implement various measures to protect our OLED technology-related IP and also to have it recognize its fair value.

Yes, thank you for your answer. I'll take the next question.

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

Yes, thank you for the question. I have a question about MX and VD. Last year, foldable smartphones sold better than expected, and recently, other companies We're releasing a foldable smartphone model, and I'm curious about the overall market growth and how much Samsung will take over the entire foldable market this year. Second, regarding VD, I think you talked about the entire market in the second half of the guidance that you mentioned earlier. How do you see the global TV market in the second half of this year?

I have two questions. First question is about the MX. The foldable that you launched last year actually was sold more than originally expected. Also, this year competitors are also lining up foldable models for launch. Given all of that, what is your outlook for full global market growth this year? And with that market, what is your goal in terms of position? Second question is about the VD side. I think during your presentation, you provided cautious guidance for second half market outlook. In that context, can you share with us your global TV demand outlook for the second half?

To answer your first question about foldable market growth, we expect this year foldable market will grow around two times versus last year, and that going forward, it will continue to grow at high levels. In the second half of the year, we are already preparing for the release of the new foldable model. It is natural to prepare thoroughly from the beginning so that there is no difference from the initial supply. We plan to maximize the effect of the new model by allowing customers to know effectively about the foldable experience we are preparing. In this way, we will continue to expand the sales of the G-series and make it the main product of the S-series. And in addition to increasing product completion based on technology leadership, we will continue to innovate to further expand cooperation with partners to improve user experience optimized for foldable form factor.

Also regarding our goals and position, we are currently all hands on deck regarding preparing the new foldable model scheduled for launch in the second half. This involves not only making the supply and production preparation so that there are no disruptions and there's smooth supply from the beginning of the launch, but also this involves maximizing the effects of a new model launch by finding ways of more effectively delivering the foldable experience to our customers. Our goal in terms of foldable is to continue the increase of V-series sales so that Z series becomes another main pillar next to the S series within our business. In addition to enhancing the completeness of the foldable product based on our technology leadership, another emphasis is to further widen the cooperation and collaboration programs that we have with partners so that the user experience becomes more optimized for the foldable form factor.

Yes, I'll tell you about the VD. As I said before, the TV market in the second half of the year is entering the maturity period, and sports events are being held. So there are opportunities for TV demand to increase, but at the same time, it is expected that the consumption pattern will change as the anti-epidemic policy is eased, and there are many variables in the local economy, so it is difficult to predict the future.

To answer your question about second half global TV demand outlook, in the second half there are some upside factors in terms of demand, including the fact that second half is usually the strong season. There's seasonality for TVs in the second half. And also there's some sports events in the second half that would be upside factors to TV demand. But also it's more difficult this year to forecast demand than usual years. given that there's many variables, including the possible change in consumption patterns as some countries go back to reopen and ease their social distancing policies. And also, there's many variables in terms of macroeconomic side.

Yes, but in this uncertainty of demand, premium and ultra-large screens are still expected to be of high demand, Now, despite that demand, overall demand uncertainty, we do expect that there will be solid demand still around the premium and ultra-large size

green segments, and that is why our plan is to continue to lead market demand in the second half around the premium product segments such as our Neo QLED 8K, ultra large size, and also micro LEDs. Also, we would continue to strengthen our market sensing activities within the rapidly changing environment to able to preempt supply and sale size risks.

Yes, thank you for your answer.

I'll take the next question. The next question will be presented by Do Yeon Choi from Shinhan Investments. Please go ahead with your question.

Yes, hello. I'm Do Yeon Choi from Shinhan Investments. Thank you for your question. I'd like to ask you a memory question. Recently, as you know, the macro-web activity has been continuing too much. In the market, we are very worried about the demand for semiconductors in smartphones and PCs in the 2nd quarter. I would like to ask you to tell us more about the demand for the 2nd quarter, or even better, the 3rd quarter. And I would like to ask you to tell us the background or the reason why you think so.

I have one question regarding the semiconductor demand. Recently with so much macro uncertainty, I think there is increasing concern that there will be weak demand in second quarter for smartphone and PC semiconductor demand. In that context, can you share with us your outlook for PC and smartphone-related semiconductor demand for second and third quarter, and also the reasons why?

I'll answer your question about the demand for smartphones and PCs. The market is always talking about the uncertainty, but the macro issues that are happening right now are really hard to speed up. And in the case of PCs and mobile phones, the consumer-to-business ratio is a big factor,

To answer your question, well, I guess there was always uncertainties in the market, but the type of macro issues that we're currently experiencing are I think particularly more difficult for us to forecast in terms of its ramifications or how long it may last. especially the PC and mobile applications that you've mentioned. Consumer applications account for a large share of PC and mobile, and therefore it's more directly affected by issues such as inflation or lockdown related with COVID-19.

Yes, so if I were to tell you what we think about each application, in the case of PC, it's a high-end PC. high-end PC and commercial demand. This is where we expect to see a strong level. Consumer demand is affected by macro issues, so we can see a weakening. With the need to increase the spec of games, hybrid work, and such PCs, there is an effect that it is added to this and becomes high-efficiency, so I think that this weakening effect may be a part of it.

Now, to answer your question first on the PC side, within the PC, we think that the demand for high-spec PCs and commercial PC demand would remain solid. Now, the consumer PC application, we're expecting the demand to be somewhat weak or soft given the impact of various macro issues we've been talking about. But even within the consumer PC segment, There is a drive towards higher-spec PCs from gaming or hybrid work needs. Also, there is this consistent trend of higher density in PCs, which may partially offset the softness in consumer PC demand.

Yes, and it is true that mobile demand is undervalued due to macro-influence. But because 5G and the new form factor, the time has come for the spread to change, If the economy recovers and the consumer mentality improves, I'm looking forward to the recovery of the demand. Especially in the second half of the year, we're going to have a high-end product, the LP-DDR5X, in full swing. So when we consider the influence of high-efficiency, I think the basic needs for memory demand are sufficient.

Regarding the mobile memory outlook, it is true due to the impact of various macro issues, mobile memory demand is somewhat soft. That is true. But looking towards the second half, there will be continued penetration of 5G and also the introduction and wider penetration of new form factors. So given that, if economy recovers and consumer sentiment also improves, this may actually work together to drive a rebound of mobile demand, especially what we're looking forward to in the second half is that adoption of LPDDR5X, which is the higher spec product, will become more large scale, and therefore this will continue to drive the higher density trend on the mobile side. And so considering that, we think that the basic needs towards mobile memory is sufficiently there.

Yes, thank you for your answer.

Due to time constraints, I will take one more question. The last question will be presented by Sungkyu Kim from Daiwa Capital Market. Please go ahead with your question.

Thank you for the question. Congratulations on your good performance. I have two questions. The first question is for the memory and display side. Regarding memory, I would like to ask a question related to the issue of raw materials and production. A little while ago, you talked about the shortage of parts in terms of demand. Recently, through these macro issues, the introduction of semiconductor equipment is constantly being supported, and the supply of raw materials continues to be difficult. These supply chain issues seem to continue in terms of supply production. I would appreciate it if you could explain the status of these issues and how you are responding to these issues in terms of strategy. Regarding display, it seems that the main customers in the first half of the year have started to launch products that have been adopted by the company's QD display. The response of the customers to the QD display, and I think there was also a recent improvement in the demand. And lastly, I think you said last time that the LCD business was over in the first half of the year. I would like to ask you to give us some specific information about the end of the LCD business. Thank you.

I have two questions. First question is about the memory side. You've talked about the macro factors and the supply issues with certain parts impacting the demand side of the memory business. We're also seeing that it's impacting the supply side of the memory business due to longer equipment lead times and also difficulties in sourcing raw materials. I wonder if you can share with us the current situation that you're seeing of these supply chain issues on the supply side of your memory business and how you plan to respond to this going forward. Second question is about the displays. I think during the first half, we'll see many of your OEM customers launch products with a QD display incorporated in them. Can you share with us the initial customer response to the QD display? Also, can you share with us your latest yields on the QD display? Also, I have a question about the LCD, large panel LCD business. I think previously you mentioned that the plan is to close that business down completely during the first half. Can you confirm and give us some details of that?

Yes. In the case of raw materials, supply instability is increasing. So, of course, we are focusing on supply management. To answer your question of the supply side impact of these macro issues and raw material supply,

First of all, yes, the supply side instability has been increasing in the case of raw materials. We are responding to this by further strengthening our existing supply chain management and also using our built-up inventory and also possibly looking into adding additional supply chains to our supply side so that there is minimum disruption in our production. And so when it comes to impact due to the raw material side, I don't think there's need for you to be concerned.

Yes, and it's true that equipment introduction lead time is getting longer recently. So we are considering this part and collecting and collecting investment measures based on long-term investment measures. You've also mentioned the impact of longer equipment lead time.

And yes, we can confirm that equipment lead times, we're seeing longer lead times now. We're responding to this by actually widening, extending the horizon according to which we establish and execute our investments. Basically, our investments, as we have described before, is to make the appropriate level of infrastructure and advance node technology investments in response to mid- to long-term demand, but keep our equipment investments flexibly in line with the industry situation.

Yes, I will answer the display question. As you asked, the QD display, which was prepared as a fourth-generation large-scale display project, was released as a 55-inch, 65-inch TV product in April, following the 34-inch monitor in March. In the case of TV, the market is receiving the most anticipated product this year, with the evaluation that the quality is excellent, such as color resolution and optical resolution. And the monitor is It is true that the quality and performance are outstanding in terms of speed and accuracy, and that it has been evaluated as a new standard for gaming monitors. With the spread of this market, the production rate, which has been worried about, has improved in the early stage, and supply restrictions have been quickly resolved, and the QG display will become a game-changer in a large high-end segment. To answer your question about the QD display, the QD display, which is our next generation large size display business,

was launched as a 34-inch monitor in March and also in the form of a 55-inch and 65-inch TV product in April. It received very positive reviews and responses in terms of picture quality, including color luminescence and wider viewing angle in the case of the TV. It also was referred to as one of the most exciting products to look forward to this year. Also, in the form of a monitor, the QD display delivers excellent picture quality and response speed and is considered to have set a new standard for gaming monitors. With the such positive response, we were also able to quickly resolve the production yield issues and were quickly removing the supply constraints that we were under. And we think that the QD display will become the game changer in the large size high end segment. Now that said, the QD display market and demand for it is also subject to various external factors. and is also part of the overall supply chain management situation. And so while we are preparing the QD display business, we're carefully watching the market environment.

Yes, and as you said, we are planning to finish the LCD business with the QD display business. As of now, we are planning to finish the QD display business We opened up the era of large-scale display, and through continuous technological innovation, we have raised the added value of the consumer experience and display industry. We will continue to work hard so that the QD display can become another successful case in the display industry, especially so that there is no shortage of discrimination and intellectual property protection in the LCD industry.

You've also asked about the LCD, large size LCD business, and as we bring online the QD display business, we will be closing down the LCD business as originally scheduled. To just recap, it was in 2004 that we were the first to operate a seven generation LCD line to open the era of large size flat panel displays. We continued with continuous technology innovation to deliver new consumer experience and also enhance the value add in the overall display industry. Even though we'll be closing down the LCD business, the business capabilities that we have built during that experience stays with us and we will leverage that to make the QD display another success story in the overall display industry. Also with the QD display, we will place emphasis on IP protection and technology differentiation.

Yes, thank you for your answer. Lastly, we will answer the questions that have been put forward online. We made it possible for you to ask questions in advance through the homepage to strengthen communication and improve understanding with individual investors at the time of the performance announcement, and many people have left various questions this quarter as well. Now finally, we will answer questions that were submitted online in advance.

We have been accepting questions via our web page in advance of an earnings release as part of our efforts to strengthen communication with individual investors and to enhance understanding of the company. A variety of questions were submitted this quarter as well. I believe a majority of these questions were sufficiently answered during the Q&A session. So, we will answer two more questions on topics that garnered a high level of interest from our shareholders but were not addressed during the Q&A session.

The first question is, although Samsung Electronics still maintains its memory technology leadership, Now the first question is that Samsung Electronics is maintaining its leadership in memory technology

But there are opinions that the gap with other competitors in terms of technology and cost efficiency is narrowing. Now, against this backdrop, what kind of strategies does the company have to sustain its lead in memory? And this will be answered by EVP Jinman Han, representing the memory side.

Yes, the individual investor has asked a good question. I will answer it. What I want to say first is that as the difficulty of technology increases, uh... Well, first of all, thank you for that question.

I would like to say that when the level of technology becomes more difficult and suppliers overall are converging towards a higher technology level, It's only natural that the gap in terms of us and the competitors in technology and cost appear to decrease. However, I can confirm that we are maintaining leadership as a leader in the industry despite this competitive environment. A good example would be DRAM and our adoption of EUV. With EUV in DRAM, we were able to preempt the inflection point in technology. Of course, this preemptiveness in technology innovation does involve its set of challenges, but we believe that this is the right approach to deliver us not only our own competitiveness, but also to contribute to the development of the overall IT industry.

In addition, we are researching new markets and various business models that are out of the existing market. In this process, we are actively responding to the demand of the market and customers for D-RAM and NAND solution products. For example, in the case of D-RAM, we are paying attention to CXL, which is expected to lead the AI era, as the next generation of memory solution. We are not only focusing on memory hardware, but also on software solutions. And we are also expanding the technology development through a consortium for CXL.

I would also like to share with you that we're also looking into developing new markets and also new business models. For example, for both DRAM and NAND, there is a greater market and customer demand for solution-based products, and we are one of the leaders in providing DRAM and NAND-based solution products. For example, in the case of DRAM, CXL is actually attracting quite a lot of attention as the next generation memory solution, especially with future AI-related needs. And we have introduced not only CXL memory hardware, but also software solutions. And we're also expanding the overall technology infrastructure in CXL through formats such as the CXL Consortium.

As for NAND, NAND is a solution that combines controllers, software, SSDs, and mobile storage. The competitiveness of these solutions is really important. Based on the overwhelming competitiveness of these products, we are providing high-quality products that meet the needs of the market. In the future, we will strengthen cooperation with partner companies The same goes for NAND.

For example, in the NAND, the solution product competitiveness is becoming quite critical. Examples of a NAM-based solution product would be SSD, which combines the controller and software, as well as mobile storage. And based on our overwhelming competitiveness, we have continued to supply high-value products that meet the market needs. In addition to that, we will continue to focus on collaboration with a wide range of partner companies which will further strengthen our market leadership. I appreciate your question and would also like to ask that you continue to give us your trust and also frank feedback going forward.

Yes, thank you for your answer. The second online question is, I think there is a prospect that the tablet market, which has recently shown growth, is going to grow again this year. I would like to ask you about the line-up, price, and other partner response strategies. And, The next question is the following.

There are projections that the tablet market, which has been on a growth trajectory recently, will be contracting this year. Does the company have any strategies to address the issue in terms of lineup or pricing? And this will be answered by VP Song-gu Kim of Mobile Experiences.

From the market point of view, the tablet market has grown significantly with the increase in non-face-to-face demand in the COVID-19 situation from 2020 to 2021. This year, the market is expected to decrease rapidly due to the big demand, but since home work and the online learning trend are on the rise on a daily basis, we expect the demand for premium tablets to continue at a high level.

Yes, to answer your question, as you've mentioned, the demand for tablets have grown quite a lot across 2020 and 2021 with COVID-19 and more people working and studying from home. So compared to the previous years, the overall tablet market is expected to slightly decrease. But given the fact that working or studying from home is becoming a part of our everyday lives, we think that even with the overall market slight decrease, the demand for large size and premium tablets will maintain at high levels.

We have launched the first tablet Ultra model, Galaxy Tab S8 Ultra, which is in line with the big screen trend, and we are strengthening the premium product lineup. We will continue to sell Tab S8 series, grow the premium tablet sales, And in the last Unpack, the Tab S8 Ultra was introduced at the same time as the S22 series, leading the attention of consumers. We will continue the momentum of the Tablet and Galaxy Echo business by effectively marketing and informing consumers about the convenient connection experience with Galaxy Tab, phone, PC, and Buds.

And so we launched the Galaxy Tab S8 Ultra, which was the first Ultra model for the tablet and is quite in line with this trend of larger size even in the tablet market. We're overall strengthening our premium product lineup for tablets. We will continue to record positive sales for the Tab S8 series. and grow the premium tablet revenue to contribute more to our overall business profits. Also, during the most recent unpack, we actually unveiled the Tab S8 Ultra together with the S22, and that was very effective in attracting consumer attention. We will continue to place our marketing focus on highlighting the convenient connectivity experience across the overall Galaxy ecosystem that encompasses, for example, the Galaxy Tab, our smartphones, laptops, and Buds in order to drive the momentum behind our tablet and Galaxy ecosystem business?

Yes, thank you for your answer. Due to time constraints, we're unfortunately unable to answer every question.

However, I would like to thank everybody who shared their opinion, providing us with valuable information that we will refer to in our decision-making process. And that completes our conference call for this quarter. We wish all of you and those close to you stay strong and in good health. Thank you very much.