Samsung Elect Ltd

Hello everyone, and welcome to the Samsung Electronics 2026 First Quarter Financial Results Conference Call. I will be your coordinator. All participants will be in a listen-only mode until we open the question and answer session following the presentation. As a reminder, this call is being recorded. I would now like to turn the conference over to the Investor Relations team. Please go ahead.

Good morning, good afternoon, and good evening, everyone around the world. And thank you for joining Samsung Electronics first quarter 2026 earnings score. I'm Daniel Oh, head of Investor Relations. As a reference, all materials presented today, including the slide deck and this webcast, are available at samsung.com backslash global backslash IR. And they will be accessible for your convenience even after the call. Please note that certain aspects of today's discussion may contain forward-looking statements from which actual results may vary. Please refer to the associated slide for our full legal disclaimer. For our meeting agenda, today's core agenda, EVP Seungchul Park, our Head of Corporate Management Operations and Chief Financial Officer, will lead off the discussion with the company's first quarter 2026 financial results and outlook. I will then follow up to address capital expenditures and shareholder returns before handing over to our executives for their own business segment updates. We will then hold a Q&A session before completing the call today. The executives joining us today are as follows. EVP Central Park, our head of corporate management operations and financial officer. EVP Jae Joon Kim, head of the global sales and marketing office representing memory. EVP Jason Shin, head of the sales team for system NSI. EVP Seok Chae Kang, head of the sales and marketing office for Foundry. EVP Charles Hall, head of the corporate strategy team for Samsung Display Corporation. EVP Seong Jo, head of the strategic marketing office for mobile experience And finally, VP Wonwoo Kim, head of the sales strategy group for visual display. Now, I would like to invite our CFO, Seungchul Park, to present the first quarter financial performance and our outlook.

Good morning, and thank you to our investors from around the world for joining us today for our first quarter 2026 earnings call. I am Seungchul Park, CFO of Samsung Electronics. In the first quarter, we delivered our high-stable quarterly revenue and operating profit driven by continued AI technology innovations and our proactive market response. Amid the challenging macro environment, this performance reflects the strength of our technology leadership within core businesses and successful execution focused on our high-value-added product portfolio. Looking ahead, we will continue to strengthen our competitive edge through innovation and lead the global market. Let me now go into the details of our first quarter 2026 results. please be advised that the figures I am about to present have been rounded for clarity. Total revenue reached a new record high of $134.31, up by 43% from the record set one quarter ago. Operating profits also reached a new all-time high of 57 trillion won of 185% QOQ, and the operating margin expanded from 21% in the previous quarter to 43%. Net profit recorded 47 trillion won, 2.4 times that of the previous quarter. Earnings per share came in at 7,123 Korean won for common shares and 7,124 Korean won for preferred shares. In the DS division, revenue increased from the previous quarter driven by stronger sales of high-value-added AI products and higher ASPS, and the memory business posted its second straight quarterly earnings record. Operating profit rose sharply, led by the memory business, while system semiconductors delivered improved results thanks to expanded sales of flagship SOCs. In the DX division, revenue grew from the previous quarter, supported by the launch of new flagship smartphones. Despite higher cost pressures, we limited the profit decline through expanded sales of high-value added products across businesses, and improved resource efficiency. On the currency front, the appreciation of major currencies, including the U.S. dollar, had a positive impact of approximately 1.8 trillion won on operating profit quarter-on-quarter, mainly in component businesses. Additional details for each business will be provided shortly by the executives. Let me now turn to our outlook. In the second quarter, despite geopolitical headwinds such as Middle East tensions and rising oil prices, semiconductor demand is expected to remain strong supporting continued improvement in overall earnings. In the DS division, we expect memory price to stay on the current upward trend driven by ongoing expansion in AI infrastructure. In memory, we will continue to increase sales of HDM4 high-density EDR5 and ESSD to expand profitability. System LSI will look to offset earnings pressure through volume zone projects with a key customer. Foundry will drive earnings improvements through increased sales in advanced processes while continuing to secure orders for leading edge knowledge based on our two nanometer technology. In this play, amid demand on certainties, we target performance improvement by ensuring stable supply to key customers with our leading technology and mass production expertise. In the BX division, We expect profit to decline due to rising cost burdens. To mitigate the earnings impact, we enhanced the product mix with the self-extension of the S26 series and the launch of premium lineups, including micro RGB TVs and AI combo while improving our cost structure and driving efficiencies. To strengthen our core business, we'll expand our market share and presence while enhancing our need to long-term competitive position. At the same time, we aim to secure future growth drivers, including through M&A. In the second half of this year, we expect a mixed business environment with growth in semiconductor demand driven by AI extension on-hand and the rising costs for IT products on the other. Despite continued external uncertainties such as geopolitical risks, and global tariffs. Against this spectrum, we will remain agile in responding to market changes while maintaining a profitability-focused approach and expanding high-value-added products to deliver stable business performance. Thank you.