LG Display Co Ltd (LPL) 2008 Q1 法說會逐字稿

Good morning, and good evening. First of all, thank you all for joining this conference call. And now, we will begin the conference of the fiscal year 2008 first quarter earnings results by LG Display.

This conference will start with a presentation, followed by a divisional Q&A session. (OPERATOR INSTRUCTIONS). Now we shall commence the presentation on the fiscal year 2008 first quarter earnings results by LG Display.

Welcome to LG Display's first quarter 2008 conference call. My name is Thomas Hyun, Vice President of LG Display. I recently joined the IR department to serve as the Head of IR. And I am very glad to host my first conference call to you.

The former Vice President and Head of IR department, Daniel Kim, has taken a new leadership position within the Company to carry out new challenging responsibilities. So, taking this opportunity, I would like to thank him for his efforts and I assure you that we will continually be working closely with you. So your continuous support would be highly appreciated.

For today's conference call, I am joined by the Vice President of Marketing, Brian Kim, Vice President of IT Marketing, David Choi, Vice President of TV Marketing, Kevin Cho, Head of R&D Planning [G. S. Che] and the Head of Corporate Strategy [S. Y. Lee].

We have approximately one hour for this call and we will spend the first part of the call discussing the key issues for the quarter, which correspond to the slides available on our website. After that we will take your questions.

Before we move into our discussion of the earnings results, please take a minute to read the disclaimer.

We are reporting in consolidated Korean GAAP, with an appendix to the presentation that includes our reconciled U.S. GAAP numbers.

Let me begin by saying that the first quarter of 2008 was remarkable for us. As you may be aware, we had several changes as a result of Philips stake sell down. Our Board members have been changed. A new CFO and director was appointed. And the Company has been transited into a single representative director's organization at the Annual General Meeting in February.

Moreover, our corporate name has been changed from LG Philips LCD to LG Display. This new name reflects our intention to expand the Company's business scope and to diversify the business models for our further growth.

While there were changes in our corporate governance, we remain committed to maintain our integrity, continuing to be transparent and consistent.

As part of our ongoing efforts to enhance our strength and to successfully implement a profitable growth strategy in this dynamic industry, we've been thinking of various possibilities, such as forming strategic alliances.

And the first few results of these efforts during the last quarter were the cross-license agreement with Kodak for AMOLED business, and Skyworth's decision to invest in our Guangzhou module plant. Also, we have a plan to set up an R&D Joint Venture with Skyworth.

Through these efforts we would like to strengthen our AMOLED business and enhance the customer intimacy in China. Going forward, we remain committed to achieve sustainable growth by emphasizing collaboration with our customers and investing in technology leadership.

Now to the financial details. Next slide, please. We are pleased with our performance from the past quarter. Although the market was overall slow due to the seasonality, our performance was better than guided, mainly attributed by our cost reduction efforts and better than expected ASP.

Revenue in the first quarter was KRW4 trillion, down 7% from the fourth quarter of 2007. Total cost of goods sold decreased 8% quarter on quarter to slightly less than KRW3 trillion.

COGS per square meter in U.S. dollars decreased by 6% quarter by quarter, exceeding our guidance. This was the result of our ongoing cost reduction efforts, our continuous focus on lowering purchase price, developing lower cost models and working on process improvements. We will continue these activities throughout the year to further strengthen our cost competitiveness.

Cash COGS per squarer meter in U.S. dollars decreased by 6% as well. In Korean wan, this represents a decreased of 2% for both COGS and cash COGS per square meter.

Operating income for the quarter was KRW881b, up 1% sequentially from the fourth quarter of 2007. EBITDA margin and net margin was 40% and 18% respectively.

Next slide, please. As of March 31, 2008, cash was approximately KRW3 trillion, up 51% compared to the previous quarter. Please note, that the increase of our short term debt is mainly due to the export deal discount, considering deposit interest rate in Korea and the interest rate decrease in U.S. dollars.

Finished goods inventory turnover levels for Large Panels remained slightly under two weeks this past quarter. TV inventory levels increased from under three weeks to four weeks, while IT inventory levels remained at under two weeks. We will continue to carefully manage the inventory levels. Our net debt to equity ratio as of March 31 was at 12%.

Please turn to the next slide. Cash flow from operations decreased to KRW1.1 trillion, mainly due to net change in working capital, mostly affected by increased accounts receivable and inventory.

Cash flow from investing activities during the first quarter of 2008 was KRW330b; an increase of KRW64b compared to the previous quarter. On a [delivery] base, it was KRW440b compared with KRW281b in the fourth quarter of 2007. As communicated before, we paid our fist dividend during the last quarter, which was a total of KRW268b.

Next slide, please. Now I would like to explain in more details about several specific performance metrics. Please turn to the next slide. Shipment of the total Display area decreased by 7% and reached 3.2m square meters during the first quarter. Main reason for the decrease in shipment came from the seasonally slow TV market.

ASP came in better than guided. On average, ASP per square meter of net Display area decreased at a rate of 3% to $1,339, and total ending ASP per square meter also decreased 4% to $1,323.

For the TV segment, average ASP per square meter in the first quarter fell 2%, while quarter ending ASP per square meter fell 1%. For IT, quarterly average ASP fell 8% and quarter ending ASP per square meter fell 11%.

Please turn to the next slide. For the first quarter of 2008 the TV segment represented 44% of revenues, maintaining the largest proportion of sales. This was followed by Monitors at 26%, Notebooks at 24% and Other Applications accounted for 6% of our revenues.

Please turn to the next slide, please. As communicated before, we have proceeded de-bottlenecking and retooling equipments across our facilities during the last quarter to expand our capacity and to prepare for further growth. Due to these activities, our production input capacity has slightly decreased in the first quarter of 2008 compared to the previous quarter.

We expect the results of these activities will start showing an impact from the second quarter on, positioning us well to prepare for the anticipated demand increase in the second half of the year.

Please turn to the next slide. Cash ROIC in the first quarter of 2008 decreased from the fourth quarter of 2007 by 8% to 64%. This is mainly due to a decrease in sales over invested capital in the first quarter.

Next slide, please. Now we turn to our outlook discussion. Please go to the next slide. We expect our total shipments to increase by a mid-teens percentage. Average ASP per square meter is expected to decline by a mid-single digit percentage.

Our COGS production per square meter basis is expected to decrease by low single-digit percentage in the second quarter.

Our CapEx for this year remains at KRW3 trillion and will be mainly used for Gen 8 preparation.

Let me conclude by saying that we will continue to focus on prudent CapEx spending, cost reduction activities, ongoing product innovations, enhancing customer intimacy and securing technology leadership for sustainable growth in the future.

We will continue to update you on our progress, and thank you for your ongoing support for LG Display.

This ends our presentation for the first quarter of 2008, and we are glad to answer your questions now.

Now, Q&A session will begin. (OPERATOR INSTRUCTIONS). The first question will be provided by C. J. Muse from Lehman Brothers. Please go ahead, sir.

Yes, good evening. Thank you for taking my question. I am not sure if you covered this in your prepared remarks; I may have missed it. But can you tell us what your shipment growth on an area basis was in Q1, and what you expect it will be in Q2?

Okay. In Q1 -- the shipment went down by 6.7% in Q1. And our expectation for next quarter, I mean Q2, is a mid-teens up.

Right. Is that on an area basis, or a unit basis?

This is the area basis.

Okay, great. And then, secondly, the real concern here is end-market demand. And I'd love to hear what you are hearing in terms of slowdown in the U.S., slowdown in Europe, some inventory build in China because of the snowstorm. Are those factors that you are seeing? What are your thoughts there? How do you see the inventory build on the TV side proceeding through 2008? And when to expect -- when to expect -- when we will see whether or not TV sales have actually slowed, or that demand remains robust?

[Surely] they must have been up and down. But, January, we can say that 2008 is a balanced status in terms of demand and supply. Supply/demand status for TV panels was different from category to category in our first quarter.

As you know, with less than 40 inch case there has been slightly slowdown in sales. But 32 wide and the smaller TV's were tight as well this period. The supply/demand environment is [object] to the panel and the [set top] makers price policy.

But from second quarter we expect that for 40 inch and the right product depends on that policy and [slowly] to widen the small product continues to small tight situation as first quarter, according to the [RM] base and the euro 2008 and the seasonal demand flows for second half.

And IT panels have been in [ordinary] sales [dragging] in first quarter. Though the sales seem to be slow during first quarter, it grows faster than our expectations. Supply/demand had a turn [to] shortage and the price rebounded from April.

In Monitor, already it's starting increase from April, and Notebook will start from May. And we expect that this situation continues until the middle of [fourth] quarter this year. And this also helped by new markets, such as Monitor TV, low-price Notebook market, what we call the [EPG].

And I think now we can say when you say at the inventory level, in case of the TV market, we think the normal inventory level is almost six or eight weeks.

And the U.S. market and euro market, the situation is the same as that inventory level. But only the China market is a little bit higher than the level. As we know, maybe China market's inventory should get 10 weeks' inventory now. But after June or July, as you know we have the -- for the Olympic Games the market will move to the upside. That's all.

That's all very helpful. Thank you.

Thank you.

(OPERATOR INSTRUCTIONS). The following question will be presented by Jeffrey Toder from ABN Amro. Please go ahead, sir.

Hello, good evening. I have a couple of questions. First, what are your currency assumptions for 2Q?

And what was your average wan/U.S. exchange rate in 1Q?

Can you wait one second? We are looking at the data.

Sure, no problem.

Okay, let us just try and find the data. Can we take another question?

Sure, I will keep going. This is actually related to cost down. Because it looks like -- depending on what your forecast is, it looks like the wan cost down, particularly on the cash side that you are guiding for is very, very small, or maybe even zero. Am I misinterpreting the numbers? Or is the cost down effort in 2Q -- or the guidance for cost down effort in 2Q likely to be less than what we saw in 1Q?

Cost down expectation for Q2 is less than first quarter. Actually, first quarter cost down was about --

6%.

Yes, 6% range. But Q2, we expect -- is actually a low single-digit range. That was our original plan.

That's -- if you look at your past guidance, almost every quarter your cost down is better than your guidance, which is a great record, including actually your first quarter guidance, which was the same as your second quarter guidance now. Do you think there is a possibility that you will be able to exceed that?

It depends on actually market situation. If actually market situation is actually different with our assumption, then maybe we can take some action in the future. But, as of now, our forecast is that we think that that is the right direction.

Can you maybe elaborate on that? How would -- what factors in the market situation might change your cost assumptions?

Market situation -- we think the IT area price will be increased from second quarter. And also, TV area we expect some price decrease. So if that's the right -- the range, then we think that our cost target reduction plan is okay.

But if that IT area increase is actually not happening, or TV decrease is a little bit bigger than our expectation, then maybe we can change our direction slightly. But, as of now, we think that our forecast is okay. Some range is within our target range, so we think its okay.

Okay. I noticed also from your presentation today that your guidance parameters have changed a little bit. Do you have guidance on the EBITDA margin for 2Q?

Yes. Our EBITDA margin, the expectation for Q2 is mid 30s.

Mid 30s.

Right.

30%. Okay.

Now, we got the numbers for your first question, which is our exchange assumption. For our business plan, for Q1, we assumed a low 900s.

Low 900s.

And for Q2, we have modified that assumption to mid 900s.

Mid 900s. Okay. So, mid 900 means around 950?

Yes.

Okay. So you are looking for some appreciation from the current level?

Well, yes, exchange can go either way.

Of course. But I am, again, trying to get a gauge because you are guiding in U.S. dollars but your EBITDA margin is in wan, so there is obviously some impact between the two.

Okay. Just a couple of other questions; a follow up actually to the previous question. You talked a bit about the demand front. And I was in The States and in Europe pretty recently, and I know investors are very concerned about sub-prime and how it affects demand. Have you seen any incremental change, or either positive or negative, any surprises on the demand front coming into 2Q?

Are you talking of a whole industry range or some specific product range?

Well, particularly on the TV side in the consumer. Not just -- you mentioned 32 and 32 wide were strong and 40 was weak. We've heard that as well. And you mentioned that 40 inch was picking up a bit. But I think the main concern in the market is that overall TV demand is under some pressure because of slowing economic environment. Have you seen any influence -- or any impact of that?

Yes, we have concerns about the impact of sub-prime [various] issues. However, we have learnt that the impact on the LCD TV business is minimal, especially there seems to be no impact on the IT consumer market. In second quarter the demand for the IT panel is tight by looking at the inventory level of the IT panel and (inaudible).

Appropriate inventory of a system integrate is four weeks, but currently is three weeks. Our IT inventory level is within three weeks [already].

So, IT product inventory is three weeks?

Yes.

Okay. And normal for you is four weeks.

I am sorry, our (multiple speakers) inventory is two weeks.

Wait; normal is two weeks and on the level now is three weeks?

No.

I got that backwards.

No, normal inventory level is three weeks, but our internal inventory level is two weeks.

Okay. So normal is three weeks. And what about TV?

As I mentioned that normally six or eight weeks.

Right. And it's normal every place except China. How high is China compared with that range?

Because during the New Year season there are so many heavy winds, heavy snow.

But that was two months ago. That hasn't worked its way out yet?

But most of TV brand makers previously prepared for their -- that high market season.

Okay. And right now you said the normal range is six to eight weeks, right?

Yes.

So, what is the -- what do you think the China level is right now?

10 weeks.

Okay. And what was it at its peak? So, maybe right after New Year when the sell-through didn't go through, how high was the inventory level at that point?

The peak time was 10 weeks' inventory level.

So, the inventory level has now come down since the New Year?

Yes.

Okay. So you are expecting demand to pick up to absorb the -- [emit] the additional inventory around the end of second quarter beginning of third quarter, ahead of the Olympics?

Yes.

Okay, great. I just wanted to make sure that I had that straight. Let me see, what else? Just a couple of other quick questions. What was your utilization rate in first quarter, or the average utilization rate?

Hold one second. Between 90% and 95%.

Okay, so in line with guidance. And when you give your capacity figures, are those adjusted for maintenance or not, because I know that you did some maintenance during 1Q, right?

Yes.

And when you do maintenance do you lower the capacity figure, or is that the actual capacity and that just shows up in a lower utilization rate?

Yes, it went down.

It went down, okay. So we will get a snap back on that. So what would you expect on your -- you've given some guidance on output. How much will capacity increase in 2Q?

Hold one second. So, we are looking at the data.

Okay, great. Thank you.

It's about 8%.

Capacity increase is 8%.

In Q2.

In 2Q, okay. That's on an average basis. And can you -- so most of that is coming from which Fabs?

Mostly P7.

Mostly P7. Okay, great. P7, okay, thank you very much. I'll get off the line so somebody else can ask questions. I may have a few follow ups, in which case, I'll re-queue for them. Thank you very much for your time.

The next question will be given by [Philippe Pajara] from Apex Capital. Please go ahead, sir.

Thank you for taking my question. I had, actually, a couple of separate questions. The first one was we hear the news that Philips is going to withdraw from the U.S. market on the TV side. What is the impact on your side? How much of your sales comes to -- selling to Philips?

The second question I had is the increased cash that you have, is there any new plans in terms of CapEx or debt reduction with the increased free cash flow? Thank you.

Okay. This is Kevin Cho. Regarding your first question, that's regarding Philips TV business in the U.S., I am going to take the answer for that. We had thr business with Philips, but Philips -- actually a big portion of the business is actually main area, the Europe area. And we were also focused on bigger than 32 inch area business. Small-size business, actually, we were not that much involved.

And then their main business in the U.S. is more focusing on no large size area. It's mid-size and small-size area is most of the business. And our portion of the U.S. market with Philips was pretty small. So that kind of change, it didn't give us an impact to our whole business area. That's my answer for you.

Thank you.

The next question will be given by Jae Lee from Daiwa Securities. Please go ahead, sir.

Yes. For your Display area shipment, which declined about 7% for first quarter, is it possible to break it down to -- for TV and IT panels?

Sure. The TV -- TV is in the range of 20% down.

No, no.

Sorry, let me --.

Mid-teens (inaudible).

TV [area] I have. Okay, let me tell you. It's mid-teens down.

Mid-teens down.

And IT increased a tenth.

Increased by low teens?

Low-teens, low-teen increase.

Okay, great. Thank you so much.

The following question will be presented by Miss. Darice Liu from Maxim Group. Please go ahead, madam.

Good evening. In terms of your affirmation of CapEx being KRW3 trillion, what is that going to transit into capacity increase for 2008?

Hold one second. Okay, it will have an impact mostly for next year, and just in a partial -- just partially -- retail business partially impact in this year.

Can you give a rough estimate in terms of what that transition will be for 2009 from a capacity standpoint?

About 25%.

25%. And when will you have P8 fully ramped up?

It's early next year.

And is that 60,000 or 90,000 [plates]?

It's about 83k ship -- in the -- at the end of the year -- at the end of 2009.

At the end of 2009. And on your last conference call you -- the 2008 shipment guidance was a 30% increase year over year. Is that still the case?

Yes.

Okay. And then, in terms of your 2Q '08 guidance, you talked about shipment in ASP expectations. Can you break that out between TV and IT?

All right. For TV, it's low teens up and, for IT, high teens up.

Is this for -- I am sorry, is this ASP or shipment?

Sorry, sorry about that. That was the shipment in area -- area shipment.

And then, ASPs?

For TV, high single digit down. For IT, low single digit down.

And my last question is this. Some of your peers, [CMO] and Sharp, are expanding its revenue opportunity outside of display just because the industry seems to be maturing, and they are expanding their opportunity in thin films [filler]. Are you also looking at opportunities outside of Display?

No.

No. Okay, thank you, guys.

The next question will be given by C. J. Muse from Lehman Brothers. Please go ahead, sir.

Yes, hello. I just wanted to confirm what you said to the last question. So you are looking for roughly 25% Panel area growth this year and, again in 2009, 25%?

Can you hold one second?

Sure.

Yes, it is just still too early to say, so we don't know.

Okay. So that 25% figure you gave, that was for 2008?

That's right.

Okay. And in terms of P7, what's the maximum capacity now for that line?

Hold one second. Okay. At the end of last year it went up as high as 136k. And this year we are expecting that it's going to be even more increase.

Is there a maximum figure there, or is it garnering more efficiencies that are still uncertain?

Hold one second. All right, we are expecting about a 20% increase over last year for P7. And -- yes.

Okay. And then, can you talk about how you expect P8 to come online? When do you expect first output? And then how you ratably will see that -- whether you see that ratably or all in one chunk, to get to that 83,000 starts by the end of 2009?

Let me answer for that. We will start the production from next year, first half. And then after we start, we will ramp up that Fab until we hit the 83k.

Okay. And then last question from me, as you think about your TV mix in -- particularly in the second half of 2008 -- and I guess this question is really earmarked for the TVs 40 inches and above. What percentage of the mix do you think will include 120 hertz panels?

Okay. 120 hertz panels are -- you mean next year?

No, this year.

This year? You mean out of total, or some --?

40 inch and over.

40 inch and over. 40 inch and over this year average [right] -- because 47, 46 inch area, actually, that's rated very high. But 43 -- 40 inch area is still below 50. So I think that this year we think that 40, 42 inch area is around 60% area range and then 46, 47 is higher.

So if you say the 40 inch and over with -- I think that average wise maybe -- I don't know. It's volume is a different mix, so I don't -- I cannot calculate it right now, [the full] average.

Okay but I guess if you were to (multiple speakers) --

Anyway, you can say that it's -- 40 inch area is about 50% range. 47 area, maybe around higher than 75 range, that range you can expect.

Okay. Great, that's very helpful. Thank you.

(OPERATOR INSTRUCTIONS). The next question will be given by Martin O'Sullivan from Arete Research. Please go ahead, sir.

Yes, good evening. Hello, guys, and thanks for the presentation. Could you give us your cost reduction target for this year and also talk about the factors which underpin the target?

(Spoken in Korean).

Okay. We cannot provide the exact -- the target numbers at the moment. However, our cost reduction will be targeted in line with ASP movement.

Okay. This is something which is quite unusual in the context of -- the normal thing you do is to give the cost reduction guidance at the start of the year. Is there a particular reason why you're not giving cost reduction guidance at this point?

Just -- we are doing everything we can in terms of achieve -- to achieve our cost competitiveness. So -- but we try not to mislead. We try [to leave] more longer-term basis. That's why.

Sure, okay. And with regard to the effective tax rate for this year, should we be assuming a low 20s, a figure in the low 20s per cent?

Sorry, could you repeat the question?

Yes. With regard to the effective tax rate for this year --

Tax rate.

-- should we be modeling a figure in the low 20s?

Yes, it's about 20%.

Okay, great. Thanks very much.

The next question will be given by Michael Bang from Macquarie Securities. Please go ahead, sir.

Yes, thank you. Just looking for some clarification on inventory. Can you tell me what the finished goods inventory was at the end of 2007?

Okay. Hold one second. Yes, the end of 2007 inventory is IT Panel was below two weeks, and the TV Panel was below three weeks.

And overall, it was under two weeks?

(Multiple speakers). Yes.

And at the end of 1Q '08, the overall inventory was two weeks, or over two weeks?

IT Panel is around two weeks, and the TV Panel is around four weeks.

And so the overall is?

Three weeks.

Three weeks. Okay, thank you.

(OPERATOR INSTRUCTIONS). Currently, there are no participants with questions. The next question will be given by Chun Tan from [Anxhai Capital]. Please go ahead, sir.

Hello, good evening. I've got a question just regarding your inventory levels. You mentioned that your TV inventories had risen to four weeks. I know in the past you've talked about temporizing your production levels if inventory levels rise too far. At which stage would you actually consider cutting production levels?

Hold one second. (Spoken in Korean).

So, from second quarter we are focusing on the increased our order base using our [strategic] customer, especially LG Electronics and Video, and mostly our key customers in China. So, end of second quarter we can touch the -- below three weeks.

Okay. Now, just a quick question regarding your Q2 guidance as well. You mentioned -- you said that for your TV you're looking at low-teens growth. Do you have any --? Could you just give us some kind of indication as where the -- where you -- which region you see the strongest incremental demand from?

It's not just the one vision. I mean it's, generally, we expect -- because of Olympic Games, I think the China market is actually better than first quarter basically. And then other market, actually, the second quarter is basically better than first quarter. So it's not a -- some -- big special issue. The 10% kind of increase is actually very normal to us.

Okay. But, just regarding China, because you've mentioned that China inventories are quite high at 10 weeks, so are you still seeing the quarter-over-quarter growth in spite of the high inventory levels?

Actually, China market, late April to -- and [early] May, actually, they expect some big sales because it's actually a special labor day, a special sales season. So they think that they can clear the inventory during that time. And then, from there until Olympic Games, they think that it's a big time for them.

So I think the China market in second quarter, most of the people in China is actually comfortable with their forecast, actually.

Okay. Thank you. And just one follow-up question regarding your customer base. I know LG Electronics is one of your main customers now. What would you say is the -- your share of shipments within LG Electronics? And is it something you can increase further?

We've been continuously supplying as a major supplier. And then the supply quantity share -- actually, steadily, we keep the similar kind of share last several years. So we don't think suddenly that share percentage change soon. As of now, we think that we can keep that kind of trend.

And then, one of the things we can now think about is that, recently, market data shows that their market share is increasing right now. So, automatically actually, our shipment volume is growing, even the share in LG Electronics is not changing our total shipment can [be] grow because they are taking their market share up.

Okay. Have you made any progress in terms of penetration into Japanese customers?

Japanese customer, as you know, that we have Panasonic and Toshiba. And then, Panasonic continuously are a very important customer. And they also think we are a very important vendor for them. And then also, technologically, they recently actually purchased IPS Alpha. And then (technical difficulty) IPS panel, because of their IPS Alpha factory.

So I think that, automatically, our position is getting stronger in Panasonic. That's one of our progress. And as they -- I think that in the future if Panasonic is more getting into the LCD business area because they are investing their LCD, that's in year 2009, fourth quarter, or year 2010 first quarter, then I think that that may have some possibility of their market share increasing in the future. So that's also good sign for us because of that kind of reason.

And Toshiba also keeping their position in the market, and we have a good relationship. We also have a good relationship in Toshiba in IT area also. So we have a pretty good position in Toshiba also.

And then one more thing is that Toshiba invested in our product [volume] plan. We still have a close relationship with them.

One of the strongest things for us is that, as you all know, that we are very strong in the China market. And, as you know, that this year and next year and until year 2011, China market is the fastest growing area. And we believe that in the future that will help our market position also.

Okay. Thank you very much for all that. That's very useful. Thank you.

Currently, there are no participants with questions. Next question will be given by Jeff Kim from Hyundai Securities. Please go ahead, sir.

Thank you. In account of customer base in TV Panels, so could you tell us how much LG Electronics their current market share is?

LG Electronics current market share?

Yes, to your TV Panel shipments.

So, their market share in the industry or --?

The -- their supply share of TV Panels.

That's the middle [or so] teens.

Teens, so --

No, no, no. What do you want to know? Is that our share?

Yes, your share to LG Electronics.

In LG Electronics.

Middle [or low 15s].

No, no. No, your question is what is our market share in LG Electronics as a supplier, right?

Yes, right.

Okay. I think that it's about the 50% range, but sometimes plus/minus from there. So it cannot be exactly some percentage. It depends on the situation. A little bit higher, lower, that kind of range.

Okay. So, my second question is, is there any concrete plan for special TV marketing strategy between LG Electronics and LG Display at the moment?

Yes, because they are the very important customer to us. So, actually, we are collaborating each other in kind of design, kind of co-design concept. Sometimes their factory [sets that] production line location is next to our Module factory so that they can save some kind of logistic cost. That kind of core work is very efficiently working together.

No, the reason why I ask you this is [question] so, from second quarter, Sony and Samsung, they are going to gain more market share in the U.S. specifically. So that's why I'm just wondering, LG Electronics will want to get into this and market share gain.

I think that that kind of marketing strategy is very -- is actually LG Electronics marketing strategy. So it's, actually -- we cannot comment on their marketing strategy.

Okay. Okay, do you think that if you increase the market share to LG Electronics, it's going to be enough to make up for losing market share to Viseo?

You mean Viseo?

Yes, because I heard that Viseo is giving you less orders to LG Display.

I think that LG Electronics and Viseo is totally competing in different markets in the U.S.

Okay.

So they are not actually directly the related issue.

And also, then, my last question is could you tell us about the demand situation on 120 hertz TVs?

120 hertz TV's demand?

Yes, current demand situation, just give me a little hint, please.

You mean U.S. actually -- I'm Brian. In this year the demand will be level with -- [there'll be 12%], around that.

[12%].

Okay, thank you.

The following question will be presented by Gerard Masci from Moore Capital. Please go ahead, sir.

Hello. Yes, I was just wondering -- my question was on the -- on LGL. The 50% share that you had, is that 50% share that you have of LG Electronics TVs? You supply them with 50% of their Panel needs for TV?

Yes. Well, that --

Okay, and --

-- [figure] actually is kind of plus/minus.

Okay, right. Roughly of their TV Panels they source from you?

Yes.

Okay. And then, what percentage of your TV output goes to LG Electronics? Of your TV shipments, what percentage of that goes to LG Electronics?

That percentage is -- let me see.

And then, while you're looking --

About -- around the range of -- about range is actually -- range is one fourth range.

14%?

No, no, no. 25 range.

About 25%?

Range, yes.

Okay. And then, how much of your TV Panel capacity goes to China [in] China customers?

That's actually several other customer is all together, so -- but it's higher than 10%. It's between 10% to 15% range.

Okay, so it's 10% to 15%. And then, in your guidance for 2Q, IT shipments to be up high teens, sequentially. I'm just curious, how does that break down between Notebook and Monitor? Are they both up roughly the same, or is one up faster than the other?

We are looking at the data. Hold one second.

Okay, that's fine. And while you're looking at that, the other question I had is just the Japanese customer base, as a whole of your TV Panel shipments, if China is 10% to 15%, roughly what is Japan in terms of total TV shipments for you? How much of your TV Panel supply do they take up?

It's also higher than 10%.

Okay, so that's also 10% to 15%?

Yes.

Okay. And have you ever said what Viseo is as a customer in terms of percentage?

It's --

Roughly.

It's -- it's higher than 5%, but below 10%.

Okay, so --

So it's in between that range.

Okay, great. Did you find the answer on Notebook versus Desktop IT for 2Q? And, as you're looking for that too, the low-teens growth that you saw in IT in the first quarter, also if you have the break-out for me on that one between Notebook versus Desktop IT, that would be great.

Yes, hold one second.

Thank you.

Currently, there are no participants with questions.

(Spoken in Korean).

We are not communicating the exact numbers between Notebook and Desktop.

Roughly in line with each other? Is one growing faster, like Notebook growing faster than Desktop, Desktop growing faster than Notebook?

Actually, normally Notebook market is faster than Monitor now.

Okay. And, just on the Japan situation, IP -- Panasonic is taking full control of IPS Alpha and then it looks like they're going to build their own Gen 8. And Toshiba is -- has now a new agreement with Sharp.

I guess what I'm trying to understand is how you -- you said that your position is improving with both of these guys. But I guess I don't understand exactly how it's improving when the -- it seems like they're moving away from you as a supplier. Maybe if you could just explain that one a little bit better?

You mean Toshiba?

Yes, both Toshiba and Panasonic.

Okay. Toshiba today, as you know, that they invested to our Poland Module factory. So, in Europe area, we are cooperating very well. And then they are -- I think that anyway Toshiba needs a minimum three vendors to actually have their TV business operation. So they have us and other -- one vendor in Japan, one vendor in Korea also. They may buy from Taiwan also.

But I think that, historically, we have a very good relationship with that company. So, whatever situation happens, I think that we can secure our share and our position, so we don't have any question about that.

Okay. And just in terms of IT and in terms of the shipments that you had in the first quarter and the guidance, if I look at total PC shipments, like, for example, if I just look at Desktop, PC shipments worldwide, or Notebook shipments worldwide, they're both down in the first quarter. Second quarter, Notebooks will probably be up a little bit, and Desktops will be down again.

I'm just trying to square that with your IT Panel guidance and the shipments that you had already in the first quarter which -- both seem to be up in low teens and then up again in the high teens. Do you think that your customer base is just building some inventory here as a buffer, pulling forward from the second half?

And I guess, follow on to that, do you -- would you expect, then, that the second half seasonality will be a little bit more muted than what you would normally see because people have pulled in from the second half to the first half, just in anticipation of a potential plate supply situation?

Yes.

As I mentioned, already -- as I mentioned, the price (inaudible) [will] weaker. And --

Right. I'm not asking about price. I'm asking, specifically, if I just look at your shipments versus the end market shipments of PCs, your shipments are going -- are growing a lot faster than what the end market shipments of PCs are growing.

[Yes].

They were down in the first quarter. Your shipments were up low teens. In the second quarter, you're going to be up high teens for IT and Desktop shipments are going to be down, sequentially, Notebooks are going to be maybe mid-single digit.

So my question is, on a shipment basis, do you think your customers are just building some buffer inventory because they expect tight supply in the second half? And, if so, does that mean we see less than normal seasonality in the second half of the year for IT? Or do you think we still see the same kind of seasonality for IT in the second half of the year?

I think that we have a good customer base compared to others [like us].

Okay. So maybe your customers are taking market share you think, and that's why your shipments are better?

Yes. (Technical difficulty).

Okay. And then the last question, just TV data in the U.S., and it seems like also now in Europe, has been getting softer. How are you comfortable with the inventory? I think you said inventory six to eight weeks in those markets.

[That's] we -- we can find that [that's] inventory level was six or eight months.

No, eight weeks.

I'm sorry, six or eight weeks.

Six to eight weeks. And it seems like retail -- the sales on a retail basis are slowing in those two markets. Do you think that six to eight weeks, is that -- do you think that's the appropriate level? Do you think that inventory needs to come down?

Yes, actually, is different customer to customer [it] rather than [four inch is] getting [faster] inventory level, but 32 inch [case] is very tight.

So have you shifted some of your capacity to more towards 32 inch? Because I noticed also that LG Electronics made this announcement to source some panels from Sharp. What are you doing there in terms of how you're adjusting capacity internally to compensate for the shifts down in sizes?

I think that the Europe area, the big screen size, like 42, 40 -- 46, 47 is only a bit slower than their expectation. But instead of that 32 inch area, that kind of area is bigger than their expectation a little bit. So kind of the adjustments needed, so actually -- we are actually adjusting that kind of production line also.

Okay. So you -- internally, you are changing some of the production to be focused more on 32 inch?

Yes.

And would that come out of P7, or where does that -- where do you -- where are you guys doing that?

We are producing 32 from P6.

P6, okay. Okay, great. Thanks so much.

All right, we'll just take one more question.

Currently, there are no participants with questions.

All right. On behalf of LG Display, we thank you for your participation in our first quarter earnings conference call. If you have any further questions, please contact either myself or my colleagues. Thank you.