Samsung Electronics 10 th KRX Global Investors Conference June 2007-1 -
Corporate Overview -2 -
Business Portfolio TV N-PC DVD/STB Printer Memory System LSI Storage Home Theater Monitor Digital Media 27% of sales Semiconductor 26% of sales TFT-LCD 14% of sales LCD Panel Mobile Display 26% of sales Electronics 7% of sales MITs Telecommunication Digital Appliance Washer Microwave oven Mobile Phone Network System Home Messenger Refrigerator Air Conditioner -3 - (as of 2006)
Financial Performance (Sales & OP) 60 40 20 0 Sales & Operating Profits (Parent) 34 6.1 02~ 02~ 0606 CAGR of Sales: 17%, OP: 5% 37 6.0 56 11.6 57 18.3 9.7 18.7 8.0 6.5 3.4 (Unit : $Bn) 64 20.5 12.6 19.6 7.5 6.8 3.3 '02 '03 '04 '05 '06 '02 '03 '04 '05 '06 KRW/$ (1186.3) (1192.6) (1035.0) (1004.5) (928.6) 80 60 40 20 0 Sales & Operating Profits (Consolidated) 45 6.9 02~ 02~ 0606 CAGR of Sales: 19%, OP: 8% 50 6.6 76 13.0 78 20.2 8.7 20.8 8.9 17.6 5.6 (Unit : $Bn) 90 22.3 11.8 21.8 9.5 22.3 6.0 '02 '03 '04 '05 '06 Semiconductor LCD Telecommunication Digital Media Digital Appliances -4 -
Financial Performance (OP by Division) Operating profits by division (Parent) (Unit : $Bn) Operating profits by division (Consolidated) (Unit : $Bn) 11.0 7.0 3.0-1.0 6.1 6.0 3.2 3.0 0.7 2.5 2.3 0.3 0.1 11.6 7.2 1.8 2.7 8.0 7.5 5.4 5.4 0.7 0.7 2.3 1.9 Δ0.3 Δ0.4 '02 '02 '03 '03 '04 '04 '05 '06 KRW/$ (1186.3) (1192.6) (1035.0) (1004.5) (928.6) 11.0 8.0 5.0 2.0-1.0 6.9 6.6 3.2 3.1 0.7 2.6 2.4 0.6 0.5 13.0 7.5 1.8 3.0 0.4 9.5 8.9 5.4 5.5 0.6 0.9 2.5 2.1 0.2 0.6 '02 '03 '04 '05 '06 Semiconductor LCD Telecommunication Digital Media -5 - Digital Appliances
Semiconductor -6 -
07 Business Outlook: Memory DRAM: Strength intensified with the seasonality - Seasonal pick-up of PC demand coupled with further Vista penetration Expecting sequential PC growth of 13% in Q3 and 14% in Q4 The average PC MB/Sys is expected to be over 1.5GB in Q4 Greater adoption of 2GB already started due to low DRAM prices - New high-end mobile phones drive demand for mobile DRAM - Samsung: Firm pricing and cost reduction from 68nm expected to improve margin NAND: Strong recovery from 2H - New products adopting high density (8Gb & 16Gb) High-end music phones, Video enabling MP3P, Solid State Disk (SSD) for Notebooks - Gradual increase of NAND production from major suppliers - Samsung: Margin expansion expected with cost reduction coming from 51nm In Q4, 51nm portion expected to reach 30% -7 -
Mid-term Market Outlook: DRAM Continuous market growth with both PCs & non-pc applications - 05~ 09: Revenue 11% CAGR (bit ~50%, price ~25% ) Favorable main memory growth with Windows Vista - Microsoft, Vista/XP mix forecast: Jan 07~Mar 07 50/50, Jul 07~Jun 08 85/15 Aggressive bit growth of Non PC applications - PC(48%), HHP(66%), Game(66%), DTV(110%), CAGR 05~ 09 [ DRAM Market growth ] [ Windows Vista penetration ] CAGR 11% $39B 70% 82% 82% 58% DRAM Rev. $25B 35% 22% 05 06 07(E) 08(E) 09(E) 02 07(E) 03 08(E) 04 09(E) (Source : SEC 2007) (Source : IDC, SEC 2007) -8 -
Mid-term Market Outlook: NAND Expand from small-size to large-size storage categories - Revenue: 16% CAGR (bit ~120%, price ~50% ) - Continue to replace micro HDD in mobile applications (up to 16GB in 07) Rapid growth expected from 3G & music phones - Portion : 05(11%) 06(21%) 07(23%) Price elasticity stimulates the demand for SSD (Solid State Disk) from 2H 08 $400 32GB SLC 64GB MLC [ Storage Paradigm Shift ] $300 $200 Sweet spot price MP3P Music phone HDD 1~4GB NAND 4~8GB Time 06 4~8GB 1~8GB Now $100 HDD 1.8, 40GB (Source : SEC 2007) 06 07 08 09 10 PMP PC (SSD) 20GB 10GB+ 08 40~80GB 32~64GB 08-9 -
TFT-LCD -10 -
07 Business Outlook: TFT-LCD Seasonal Demand Outgrowing the Capacity Expansion [Market] - IT panels: Expecting further volume and price increases in 2H Expecting strong seasonal demand coming from Windows Vista & size upgrade to 20+ s IT dedicated capacity (4G~6G) expansion will be limited - TV panels: Volume increase and moderate price decline expected in 2H LCD TV market will continue to grow in all regions of the market Developed market: Premium TVs (46+ & FHD) Emerging market: Mass-market TVs (low-cost 40 TVs & mid-size 32 TV) [Samsung] - Expecting business performance to improve throughout 2H Further M/S gain through additional ramp-up of 7G & early ramp-up of 8G Faster cost reduction through productivity enhancement More aggressive product launches in 46+ & FHD to capture premiums in high-end segment -11 -
Mid-term Market Outlook: TFT-LCD LCD panel market will continue to show a solid growth LCD TV panel market is expected to show the strongest growth Large panel revenue: $44bn ( 05)( $65bn ( 10)( Large panel units: 210mn ( 05) 480mn ( 10)( (USD Billion) 70 60 50 40 30 20 10 Revenue Large Panel: CAGR 8% TV CAGR 24% 0 '05 '06 '07 '08 '09 '10 LCD TV panels will generate 50+% of the large panel revenue in 10 Notebook Phase (~ 00) -12 - Monitor Phase ( 01~ 04) TV Phase ( 05~ 10) Note PC 68% 49% 27% 21% 17% Desktop Monitor 31% 48% 56% 52% 29% LCD-TV 1% 2% 17% 27% 54% 40+ segment is expected to show the strongest growth LCD TV Desktop Monitor Note PC - 1.3 mn ( 05) 18.5mn ( 07) 38.3 ( 09) 48.1 mn ( 10) 600 500 400 300 200 100 (Million) Units TV CAGR 37% Large Panel: CAGR 18% 0 '05 '06 '07 '08 '09 '10 LCD TV Desktop Monitor Notebook (Source : DisplaySearch, 07 1Q) (Source : DisplaySearch, 07 1Q)
Samsung s Strength: 40 + LCD TV Panels Samsung will continue to have the best customer base and the most efficient 40+ capacities in the industry - Two global LCD-TV leaders (Samsung DM & Sony) as our main business partners LCD TV market share in 06: DM 13.4%, Sony 11.6% - Samsung will continue to maintain the capacity leadership in 7G+ segment - Further cost structure improvement in 46+ LCD-TV panel segment with an early ramp-up of 8G line 40+ Market (Million units) 7G+ Fabs by 07 Expected 7G+ Capa. share in 07 07 18.5 SEC (7G-2, 8G-1) SEC (47%) 08 28.1 09 38.3 10 48.1 A Company (7.5G-1) B Company (8G-1) C Company (7.5G-1) D Company (7.5G-1) A Company (25%) B Company (12%) C Company (11%) D Company (5%) -13 - (Source : DisplaySearch, 07 1Q)
Telecommunication -14 -
07 Market Outlook: HHP 07 Global handset demand may exceed 1.07B units - Global market growth rate to slow down YoY, but to sustain above 10% stable growth - Expansion of WCDMA & deployment of HSDPA (82% YoY) - High speed data network accelerating multi-media phone demand Camera phone portion: 06 50% 07 59% Music phone demand to accelerate in 07 (73% YoY) Music Phone defined as mobile phone with MP3 capability Emerging market demand to increase 17% YoY - Emerging market (India, China, Brazil, Russia) demand and portion to increase but growth rate to slow down Demand (Portion): 06. 258m units(27%) 07. 303m(28%) Growth Rate: 33%( 06) 17%( 07) - Main demand growth expected to come from the replacement rather than net addition Strong replacement demand expected in $60~$80 segment -15-06 07 (E) 06 07 (E) 06 07 (E) 92 (9%) 3G 10 (1%) 165 (15%) W-CDMA 248 (26%) Camera 233 (24%) 21 (2%) HSDPA 231 392 (22%) (37%) VGA Mega + 246 (25%) Music 425 (40%) [mn units) 82% [mn units) 30% [mn units) 73% (Source : SA, Company)
07 Business Outlook: HHP 07 Shipment is expected to exceed sales target of 133mn units - Better performance expected with strong seasonality in 2H Q1 shipment exceeding the initial target & more aggressive product launches expected in 2H - Strengthened high-end product line-up Launch many new models: UE II, Ultra Music (Beyonce)/Video, HSDPA Differentiated products with various form factors in the slimmest design - Shipment increase of profitable mass-models in emerging market special - Increase shipment by enhancing product line-up - Cost reduction with module standardization 10.9 9.6 5.9 12.1 Ultra Ultra Music Video Ultra Messaging -- Focus more on WCDMA & HSDPA market by enhancing product line-up -- Expand into global Mobile WiMAX market with various types of Mobile WiMAX devices Secure new operators to deploy Mobile WiMAX business -16 -
Digital Media -17 -
07 Business Outlook: Flat panel TV Flat panel TV market will continue to show strong growth - 07 flat panel TV market: 84M units (53% YoY) Quarterly market size to grow throughout the year Strong growth of the 40+ segment in LCD TV market ( 6.1M in 06 15.5M in 07, 154% ) - FPTV demand in 2H is better than 1H due to strong seasonality Semi-annual demand distribution (1H 39% / 2H 61%) 07 Market Forecast (Unit : Mn) Samsung will continue to strengthen the market leadership in flat panel TVs LCD 13 PDP 2.3 15 2.7 18 3.2 26 4.1 Q1 Q2 Q3 Q4 ( Source: D/Search, March 2007) - Strengthening of market leadership in Flat panel TVs Annual sales target of 11M units of LCD TV and 2.5M units of PDP TV On top of the phenomenal success of Bordeaux LCD-TV last year, the new-models promise to be another success in 07 Continue to focus on 40+ and full HD segments Samsung will launch more high-end models in 2H (46, 52, FHD) -18-40 + FP-TV forecast (Unit : Mn) LCD 6.1 PDP 8.5 15.5 2006 2007 11.7 ( Source: D/Search, March 2007)
Mid-term Market Outlook: Digital TV Strong growth in flat panel TV market: 55M( 06) 146M( 10), CAGR 28% LCD-TV and large (37+ ) TV are expected to drive the FPTV market growth - Large-size(37+ ) FPTV portion: 35% in 06 51% in 10 - LCD-TV portion within 40 ~49 FPTV segment: 47% in 06 83% in 10 (mn units) LCD PDP CRT PJ $bn 189mn 46 9 130 TV shipment CAGR 3% (FPTV 28%) 194 29% 72 43% 12 107 202 54% 4 3 2 1 216 06 07 08 10 $101bn 107 115 119 (FPTV) (67%) (79%) (85%) (92%) 95 15 90 128 18 69 68% Samsung - Leader in TV market ( 06) - No.1 market share in Total TV(10.6%), FP-TV(13.5%), and LCD-TV(13.4%) -19 -
Core Competency in Digital TV Full Product Line-up -LCD: 19 70, PDP: 42 63, DLP: 46 72 Strategic Channel Partnership - Collaborative planning, forecasting, & replenishment LCD-TV PDP-TV DLP-TV Size 19 40 46 60 70 Vertical Integration Global Operation Excellence - Securing core components & technology - Over 90% of TV manufacturing outside Korea Corning Glass SEC LCD Panel SEMCO Tuner SEC System LSI SDI PDP Panel SlimFit Tube Slovakia Hungary Korea China India Thai Vietnam Malaysia Indonesia (12 Global Production Bases) -20- Mexico Brazil
Q & A -21 -