LG Display Co Ltd (LPL) 2008 Q4 法說會逐字稿

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

Welcome to LG Display's fourth quarter 2008 conference call. I am C. H. Lee, Senior Manager of IR team. On behalf of LG Display, I would like to welcome everyone to our global quarterly earnings conference call. I'm joined by Kevin Choi, Vice President of TV Marketing department, Davis Lee, Vice President of IT Marketing department and Y. H. Jeong, Senior Manager of Market Intelligence department.

We have approximately one hour for this call. 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. Afterwards, 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 with this presentation that includes our reconciled Korean GAAP numbers. We have not finalized the US GAAP numbers yet and will report this on our website as soon as we can. Over the next hour, I will review our earnings results from the fourth quarter of 2008, discuss our performance and conclude with the outlook for the first quarter of 2009. Afterwards, we will be glad to take your questions.

Please turn to the next slide. Firstly, we will present our earnings results from the fourth quarter of 2008. Please turn to the next slide. Revenues in the fourth quarter was approximately KRW4.2 trillion, up 8% from the third quarter of 2008, and down 4% compared to the same period last year. [COGS] (inaudible) in US dollars decreased by 7%, quarter-on-quarter. We recorded an operating loss of KRW288b in the fourth quarter and our EBITDA margin was 6%. We reflected the total amount of $400m price fixing fine as non-operating expenses in the fourth quarter. Next slide, please.

As of December 31, 2008, we reported approximately KRW3.4 trillion in cash. During the fourth quarter, our finished goods (technical difficulty).

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Firstly, we will present our earnings results from fourth quarter of 2008. Please turn to the next slide. (technical difficulty) the fourth quarter was approximately KRW3.8 trillion. Cash flow from operating activities was KRW1.2 trillion. Cash flow from investing activities during the fourth quarter was negative KRW1.2 trillion. Cash, at the end of the quarter, was approximately KRW3.4 trillion, which is KRW360b decrease compared to the beginning of the quarter. Next slide, please.

Now, I'd like to explain in more details about several specific performance metrics. Please turn to the next slide. During the fourth quarter, shipments of the total display area increased by 5% average, 3.9m square meters. Shipments didn't increase as much as we had originally anticipated in the fourth quarter, due to the global economic recession.

Also, ASP decline was steeper than our original expectation in the fourth quarter. On average, ASP per square meter of this net display area decreased by 23%, quarter-on-quarter, to $766. For our TV segment, average ASP per square meter in the fourth quarter fell 21% and, for IT, average ASP per square meter fell 28%. Please turn to next slide.

The revenues portion of our TV segment increased significantly during the fourth quarter. This is mainly from the TV shipments increase in the quarter. During the quarter, the TV segment represented 57% of revenues, followed by monitors at 20% and notebooks at 18%. Other applications accounted for 5% of our revenues. Please turn to next slide.

During the fourth quarter, the total production capacity at LG Display increased by 4%. However, as was previously announced, we had to cut our production by around 10% during the quarter. Please turn to the next slide.

Now we turn to our outlook discussion. Please go to the next slide. We expect our total shipments to decrease by a low single digit percentage. In the TV segment, we anticipate shipments to decrease by a mid single digit percentage. In the IT segment, we expect shipments to increase by a low single digit percentage. In case of ASP, we believe that there is a limited possibility for further price decline, compared to the end of 2008. Also, price rebound is expected in some product categories. We expect our COGS reduction per square meter, in the first quarter, to be a low teen percentage.

Our CapEx for 2008 was approximately KRW4 trillion. We expect it will reach KRW2 trillion to KRW2.5 trillion in 2009, including approximately KRW577b investment for the LTPS.

Thank you. This ends our presentation for the fourth quarter of 2008. We are very glad to answer your questions now.

Now Q&A session will begin. (Operator Instructions). The first question will be provided by Jeffrey Toder from RBS. Please go ahead, sir.

Hi, good evening. Thanks very much for holding the call late at night in Korea. I have a few questions. First, I'll start with the CapEx number. The -- it's increased from your previous guidance. Is that because of the LTPS investment, or is that for some other investments?

Okay, Jeffrey. It was a -- totally from the addition of the new investment to our guidance of investment. Actually, LTPS was KRW0.6 trillion. So, our earlier guidance last year was KRW1.5 trillion to KRW2 trillion for 2009, so that automatically increased to KRW2 trillion to KRW2.5 trillion. That's the reason.

Okay, good. And, I understand, in the meeting this afternoon you said that -- or the CEO said -- that capacity would increase by 30% this year. 10% from existing fabs and 20% from 8.5G and 6G extension. Is that correct?

Yes, that's correct.

What capacities by -- that's -- well, what capacities does that imply for 6G and -- 6G extension and 8.5G in fourth quarter?

Okay. In fourth quarter we target the design capacity of 83,000 for 8G in Q4 -- by Q4, and 60,000 for 6G extension by Q4 this year.

Okay. Now, you're running at 80% utilization in fourth quarter, on average, and I think you said you're going to be 90%, on average, in this quarter. I guess I have two questions. The first is, for first quarter, I -- you've -- why are you confident that you'll be able to maintain good shipment numbers? The last two quarters, you've actually revised down towards the end of the quarter, as shipments haven't met expectations.

Okay. There is some changes in our -- the demand status. Our customer base -- we are -- regionally, in the US market, Euro market, China market, we are well-balanced. And then, in the US market case, last year, November, December, our customers' sales was picking up and then it was better than market performance. So, their inventory level is very low right now. So, they ask additional the volume in January, February, March time, so that's increased.

And the Euro market also. LG Electronics is pretty strong in Europe so they are, actually, volume is growing faster than our expectation, also. In China market, our -- we are very strong in our China local company. And their share used to be about 40% to 45% range, but after November, December, their share has continued to increase. Right now, their local share is about 65% right now. And we have the biggest share in there. So, compared to other company, in first quarter our customer base is a little bit stronger, so our demand is higher than others. That's what we are thinking, right now.

Okay. And you have -- or you feel that you have firm orders that will be able to drive your increase in capacity?

Right.

Okay. And, on the cost side, the cost-down for fourth quarter I guess was a little bit disappointing? Especially since you raised your guidance for cost savings in fourth quarter. Could you explain a little bit why that came in short of expectation?

Yes. We actually plot out our guidance targets in every perspective, in -- especially for ASP, as well as cost reduction. So, the main reason is that we actually lower our utilization rate very much, in December, than our original expectation when we forecast the December, actually. So that's the main reason. So, we didn't share the fixed cost. So, that is actually the one big reason.

And another one is that we carried over our -- some material cost reduction, to -- for this year, actually, because we are -- our volume was so low. So our [objective] for cost reduction was very -- relatively small than our original expectation.

Okay, so you've rolled some of it forward and that's why you're looking for a sharper cost reduction in first quarter?

Yes.

So, is it fair to assume then, in second quarter, you'll go back to a normal trend of 3% to 5% per quarter, something like that?

Yes. But at this moment, it is very difficult to forecast the second quarter.

Yes.

Yes. So we are now talking about the first quarter. So, when we have fixed the corporate plan, so then we will communicate it again.

Okay, fair enough. Was there any inventory write-down in fourth quarter?

Yes, there was.

How much was that?

Yes, but it was relatively big, compared to first quarter. So, if really you consider the ASP decline in Q3 and Q4, --

Yes?

-- the inventory write-down will be almost the same in both quarters. So just I can say is that the mark is not small.

So, if I took the end of third quarter inventory and then marked it down by the percentage decline in ASP during the fourth quarter, that would be an accurate estimate?

Yes, you may.

So, in that case, on an unmarked-down basis, your inventories actually went up, right? Because you marked down by, roughly, 25%, but your inventories as a whole didn't fall by that, Q-on-Q.

So you mean -- so 25% of the inventory maybe do a write-down?

Well, just because that's what the ASP decline was. Well, the ASP decline was, I think, 23%, you said, right?

Yes, that's right.

So, if the ASP declined by 23%, and you're indicating that that is the amount -- that that's a fair number to use for an estimate. And if I look at your -- you had inventories in the December period of KRW1.1 trillion, right?

Yes.

And it's down from KRW1.5 trillion, so -- in September. So, basically, the entire reduction in inventories is due to write-down?

Not the entire the part of the inventory, but just -- we actually lower our utilization rate in December very much --

Right.

-- to [half] the inventory level.

Right.

Yes. I don't have the concrete -- the accurate numbers here, but it is not the entire amount.

So it's not the entire amount. So it's something like KRW300b, something like that?

No, not that much.

So, like KRW200b? I'm just trying to get a range. It doesn't have to be in exact numbers, I'm just trying to get a range.

No. Just -- you just think very big numbers, not really. Our number is not that -- so big.

Well, you told me it was a big number. That's why I'm thinking in big numbers.

Yes, but it is very different from person to person, to think of big numbers.

I suppose. Could you give me a little bit of guidance on what you think a large number might be, in this case?

I am very sorry, sir. It is our policy not to give the write-down numbers.

Okay, fair enough. Because I think that that might be distorted -- and when you booked the write-down, you booked that into cost of goods sold?

Yes, we did.

Okay. And is that part of the reason why your cost reductions weren't what you expected?

Yes, that is one of the reasons.

Yes. Because that's what I'm getting at, with the question. Okay.

This is Davis Lee from IT Marketing.

Hi, Davis.

To look at the inventory situation, other than markdown or markup, but finished good point of view, LG Display inventory level is really healthy. IT side is write-down significantly. We are maintaining less than two weeks inventories and -- Kevin Choi may have a say about it, but TV side, also, inventory level is very low. So that will help you understand our inventory situation.

TV is very low. What was the numbers at the end of third quarter?

It was more than two weeks for IT side, but it was -- at this moment, it is under two weeks.

Okay. And what's the TV inventory, now?

Even that inventory is below 18 days.

Below 18 days. And what was that at the end of 3Q?

End of September? End of 3Q is about 20 days -- I don't remember exactly, about 20, 21, at that range. But right now, it's below 18 so, actually, it's pretty tight. And some model, actually, we are air-shipping right now.

Okay. I have one last question and then I'll let somebody else come on, and then maybe circle back later. Guidance for margins. Usually, you give an EBITDA margin guidance and you haven't given one this quarter.

Yes. As you know, the visibility is very low at this moment. So, current market situation is changing very suddenly and our visibility is very, very low. So that's the reason why we didn't provide EBITDA margin guidance. Actually, profitability guidance is very critical to investors, so we don't want to mislead the market.

Bloomberg quoted the CEO as saying that the non-operating -- that the EBITDA -- no, he said OP, would be similar in first quarter as in fourth quarter. Is that correct?

No, we don't communicate in OP margin.

So there's no guidance in OP margin. And then, on ASP, your guidance, I think, was a little bit confusing. You're guiding for prices to stay at current level and, for some product prices to increase. Is that correct?

Yes, but the starting point is the end of last year.

Right, of course. Which is low, which means that -- and what products do you expect to be increasing?

This is Davis Lee, again. The first product that will see some slight adjustment is going to be monitor side.

Yes.

Just, the price elasticity is usually pretty big in monitor case. At this moment, industry has a very low inventory level. On top of that, we have some upside [variable boost] from our customer. So we expect, not all across the product lines increase but some of the tight products will be adjusted upwardly.

Okay. And TV panel prices continue to fall, in line with cost reductions? (multiple speakers) to greater pace because the fourth quarter, actually, we saw quite a sharp decline in TV panel prices.

So TV, also, we think that right now, end of December, the price is already very low. So TV side, also, first quarter, we think it's flat. So most of the TV model minimum flat. And but small, medium size TV panel price will also, we think, it will go up, because monitor 19" to 20" kind of monitor panel price will go up. So, automatically, TV panel -- small, medium sized TV panel will also follow the same track. And another thing is the 32-inch area. 32-inch area, in fourth quarter, price decline was too fast. So I think that, in 32-inch area, maybe some changes may happen.

So you think the price could rebound.

Yes.

Right. Thank you very much.

Yes. Thank you.

The next question will be provided by Andrew Abrams from Avian Securities. Please go ahead, sir.

Thank you. I was wondering if you could give a little more clarification on the Gen 6 and Gen 8 changes that you're going to do in -- I guess targeted for the end of '09. Is P6, when it's completed in '09, going to be running 90,000 capacity? Or is it going to be at 120,000 capacity? And if you could give a little clarity on that, just to make sure we have that one straight.

And then, I think you said 83,000 for P8. Is that one line, or is -- I assume that that's a phase one, but two lines running, at least? Is that the correct capacity number that you're using for the end of 2009?

I just want to clarify your questions. The first question was the schedule of the ramping up, right?

Yes. And your Gen 6 capacity and your Gen 8 capacity in total. Right.

Yes. Our Gen 8 were online in Q1 this year. Actually, Gen 6 extension will be online second quarter of this year. So their design capacity will be 83,000 per month for Gen 8 facility. And 60,000 per month for Gen 6 extension. So both fabs will hit the design capacity by end of this year.

Okay. And your total Gen 6 capacity, at that point, will be what?

The design capacity?

Yes, for all your Gen 6 facilities.

Yes. I understand your question, and now -- our Gen 6 capacity is around from 198,000 to 200,000 per month.

Right. And that's at the end of 2009?

No, it is just at the -- Q4 last year.

Oh, Q4. Thank you. So we can add onto that another 60 as --?

Right.

-- as you develop. Okay, got it. And one other question. On a unit basis in shipments, and I know you don't normally talk about it on a unit basis as opposed to a square meter basis, but shipment numbers on a unit basis for fourth quarter, can you give us some idea of how that compared to third quarter? Just on a unit by unit basis?

Okay, hold on a second.

Sure.

Okay. We usually do not provide the unit base numbers, but we actually increased in unit basis in Q4, compared to Q3. So just -- it did just increase around -- a slight increase.

Okay. And that includes -- that's just large panel? Or is that both large and small?

Yes, this is just for all categories including small and medium sized.

And just one point of clarification. You were talking about the guidance and I know what the overall number was. I think you were talking about breaking out both TV and IT, in terms of your guidance. Can you just review that one more time?

Okay. But in area basis, right?

Area basis and ASP, if it's broken out that way.

Yes. Our shipments actually over, expect the low single digit decrease, in area basis in Q1 2009, compared to Q4 2008. And, by segment, TV case is mid single digits down and IT low single digits down increase. That is the -- our -- the shipment outlook.

Right. And what about ASPs?

ASP side -- actually, we do not provide the percentage, but we provided the overall descriptions. So, the overall description is that there is limited possibility for further price decline, compared to the end of 2008, overall. And, also, price rebound is expected in some further categories. That is our outlook in -- at this moment.

Okay, thank you. I appreciate it.

Thank you.

The following questions will be presented by [Dan Malcolm] from [Moore Capital]. Please go ahead, sir.

Hi, yes. Just a clarification on the IT shipment guidance, I apologize. You said low single digit increase or decrease?

Increase.

Increase. So it'll be up. You'll have more IT panel shipments out in the first quarter than fourth quarter?

Yes, indeed.

Okay. And what's the -- just in terms of the outlook for IT panel. I mean, if you look at PC shipments and the like, it seems like everyone's expecting a down, 15% to 20% type number for the first quarter, for PCs. So where is the IT -- why are you guys increasing shipments in the first quarter?

This is Davis Lee again. I think the fourth quarter last year was unusually lower, compared to other years' performance. So, based on fourth quarter's -- the performance, every OEM projected even lower number, initially, but now they are revising their -- the forecast. And also, on top of this, we are seeing some of the upside because of the very healthy channel inventory, especially in monitor side.

Notebook side relatively flat, we expect. And partially it is also from our customer base may be slightly different from general market trend. We are seeing some upside from our customers.

Okay, and so you think it's your customer base is particularly exposed to this. And then just in terms of shipments in the fourth quarter, if you're up down -- if you're up low single digits in the first quarter for IT panels, what were you in the fourth quarter? How much were you down for IT panel shipments?

It was down around the mid single digits.

Mid single digits. Okay. So what do you think the industry was? Because I assume you guys outperformed the industry, then. For IT panel shipments. Because I thought what you were saying is, look, we under-shipped in the fourth quarter relative to demand and now we're -- now we have to build back some of that inventory, right? It seems that's what you're saying. But down mid single digits for IT panel doesn't seem like it's that much really under-shipping relative to where demand was in the fourth quarter. So maybe you think the industry was down a lot worse than you?

I think so. I cannot come up with any comfortable number of our competitors. However, based on their operation ratio, which is believed to be around 50% in average during fourth quarter, their shipment was much lower than on our side. That is why, yes, we are able to gain market share during the fourth quarter too.

I see, okay. So you kept your utilization rates higher and you shipped more and you were able to take market share in the declining market? That makes sense, okay.

Can I just ask you, just on the cost down, obviously you guys have a nice target for this quarter. How much of that is coming from glass pricing? It sounds like some of your competitors were able to get pretty aggressive price cuts on input glass in the November-December timeframe. And I guess that doesn't really feed through to your COGS maybe until first quarter '09. Is that part of the cost down that you're getting as well?

So we think that it is not appropriate to mention about specific guidance in this conference call. But we think the cost reduction in Q1 2009 is actually the combination of the material cost as you mentioned but the [performance] cost cut as well as we have announced this afternoon, the utilization rates in Q1 were very much higher than Q4, which means the fixed cost will be shared by utilization rate. So of course, the material side as well as the fixed cost sharing would make the low teens percentage cost reduction.

Okay. Is it roughly half, half component cost price cuts and half utilization? Is that how we should think about it in terms of the cost down sequentially?

We don't have any data on that forward.

Okay. But it is safe to assume that you are getting some good component price cuts, better than what you normally would get?

Yes, this is true.

Okay. Okay, thanks. And just last question on your area capacity growth for the year. Did you say 35%? Is that your target for 2009?

Yes, it's Y. H. Jeong here. Our target for the capacity increases this year compared to the last year, around the 30% (inaudible) 30%. And also we estimate that the industry would be around 20%. But yes, the other panels buyers already cut their investment starting this year as a new cap, yes.

Okay. And in terms of 20% industry growth, where do you -- for supply, where do you see demand shaking out, just in terms of TV growth plus whatever you think is going to happen in IT?

We see around the 13% as a demand growth in area for this year. So it is inevitable the many panel makers cut the production for this year, especially in first half of this year. So the -- actually the last year Q4 industry production cut would be around 60%, 62%, 65% according to our information. But Q1 this year also the -- we think similar or a little higher than the number. So I think with that, Q1 this year, we think the demand is higher than the potential supply with the production cut. So --

Okay, I'm sorry, I couldn't understand. So you think that the 20% industry supply growth, demand, will be in excess of 20%?

No, less than that, around 13%.

13%, okay. So demand growth 13%, industry supply growth 20%?

Yes.

Okay, great. And last question, I apologize. Just on the inventory issue, I know Jeffrey Toder was trying to ask this question. Can you give us an understanding on maybe an area basis because of the write-down that you took? Third quarter versus end fourth quarter where you ended up in terms of inventory, on an area basis how much inventory -- what was the relative change? Then that maybe might help us get to the answer that Jeffrey was trying to get to, since it's hard for you to tell us from a dollar perspective or a won perspective how much the write-down was.

Sorry, we do not provide information, inventory information in area basis. We just -- our inventory base is just a unit basis (inaudible) unit basis.

Okay, so on a unit basis, is it down significantly, flattish? Down a little? Versus end 3Q?

So the DIO basis was one day decreased and the total unit basis, the number was reduced overall compared to Q3.

Okay, so on a unit basis it was down?

Yes.

Okay. All right, thank you very much. I appreciate it.

Thank you.

The next question will be presented by Tom Tong from Lusight. Please go ahead, sir.

Hi, good evening. Actually it's Tony Tang. Some of my questions has been answered already so it's just one question here is -- so you provide CapEx in (inaudible) basis. So what is the cash basis CapEx for 2009? And how -- what is the CapEx schedule? How much will be spent on the first half and the second half of '09? Hello, can you hear me?

Okay. Yes. Our CapEx actually, as you know, our Gen 8 and Gen 6 facilities are scheduled online in first half of this year. So the CapEx for the fabs were focused on the first half spending. So I guess the first half will be much more spending than the second half in CapEx. So you mentioned about the cash [out] cash basis, the CapEx for 2009. But as you know, we actually didn't finalize the full year plan at this moment considering the volatile market environment at this moment. So we are very sorry not to provide that kind of information.

Okay, okay that's fair. Another question is, you've mentioned utilization is still high for you. Just what's the [September], what are the loading rates for fourth quarter '08? And also since we asked for the same quarter and now what is the -- what will it look like in first quarter of '09?

So I'm wondering if I understand your question correctly. But I think our loading in Q4 last year was around 80%. But we think you want this year it will be over 90%. So Q1 will improve much more than Q4 numbers in utilization rates.

I think 90% for '09 that you give for the first month is --?

Just the Q1. Q1 this year.

What is the capacity conversion factor that you have?

Yes. The Q4 number was -- it was between 70% to 75%. So --

What would be the first quarter '09 you think it will be like?

Yes, we think Q1 will see some improvement in CCF compared to Q4.

You can't quantify that, right?

So it will be around 75%.

Okay, great. Just one final question. Does anyone guarantee your short-term debt? Like do you get guarantees from LG Electronics? Or from anyone?

No, I don't think so. We don't have such kind of guarantees at this moment.

Okay. All right, thank you very much.

You're welcome.

The following questions will be presented by Miss C. J. Muse from Barclays. Please go ahead, madam.

Hi, this is [Olga Vinson] calling for C. J. Thanks for taking the question. You mentioned that you've seen the 2009 area growth up 13% for the industry. Can you talk about what kind of assumptions you're making in terms of TVs and monitors and notebooks?

Yes, this is Y. H. Jeong again. For the -- in terms of the area, the TV we expected a 21% area growth year-over-year. And 0% for the monitor. And 5% for the notebooks.

Can you say the monitor one? I missed that.

Flat. Flat. 0%.

Okay, got you. Great. And can you talk about the channel inventory right now? You mentioned that yours has come down on both the TV and IT side. Where do you see channel inventory for TV and IT right now?

Yes, for the TV, actually retail channel inventories are very tight at this time. And we -- each of the -- are very difficult to quantify the [vehicle] base, because the IT channel is not -- those numbers are different. So we recognize that one or two weeks' inventories are shorter than normal levels at this time. And in set, set makers' inventories are fairly normal level at [least]. But it is depending, it's depending on the set makers. Some set makers are a little large numbers, but many -- most of the set makers have a very tight inventory at this time, especially in our customers. And the Chinese (inaudible) manufacturers.

This is Kevin Choi. The inventory level in TV area right now, it's a -- as Mr. Jeong said, one or two weeks shorter than their normal situation in the channel area. And the TV set maker also, each set maker's situation is a bit different. Because of economic situation low price model is selling better than expectation. So during the Christmastime, and Thanksgiving time, when we look at that low end -- in each category, low price model people's demand is bigger than expectations. So in that category actually the inventory level is very tight right now.

And only the high expensive model area inventory level is a little bit high. So each category by category actually inventory situation is a little bit different. So 32-inch case low price model 32-inch inventory is very tight right now. So it -- that actually cause some delivery issue right now.

Continue on IT side, we believe monitor side is around in the channel four weeks. And the notebook side, a little over five weeks, while we are maintaining in general component, the outside inventory is less than two weeks. Very healthy. So we believe inventory situation industry as a whole is pretty tight.

I've got you. And then one last question. You mentioned that you expect TV area demand to increase 21%. Can you talk about how that's driven in terms of units versus the screen size increase? We saw I think Sony or Sharp decrease their outlook for TV sell-through in 2009 to I think about 5%. So could you talk about what assumptions you're making in terms of unit growth and I guess average size growth. Hello?

Yes. Okay. I mentioned that the growth (inaudible) 21% in terms of the area. But in terms of the units we have the 16% growth this year. The driving fact is currently the very low price, very affordable price, the (inaudible) price and also [check] price reduced -- had reduced a lot last year. And for the low end, the small size, 32 and smaller than 32 inch size, the price -- LCD price is very close, getting close to the CRT prices. So especially in China market we can see the (inaudible) replacement of the LCD by -- of the CRT by LCD at this time. So those are the one prime factors.

Another one is the -- we can see in China market [Hammond] bought some LCD for the TV purchasing for these. And also the China government give some economic stimulus packages for the TVs, so those are another factors at this time.

Got you. Okay, thank you very much.

Next question will be presented by Jeffrey Toder from RBS. Please go ahead, sir.

Hi, thanks for taking my question again. You're looking at increasing your capacity by 30%. You think that overall demand will increase by about 13%. And you've mentioned the utilization rates are low and I calculate the industry level at around 70%. So given those metrics, it looks like you're trying to take a lot of market share. What makes you confident that you can expand that much faster than the market without causing over-supply? Or I guess what makes you confident enough to think that others won't also try to do the same thing as we run into a big inventory correction, three to six months down the line?

So, Jeff, we understand that 2008 -- actually last year, we underperformed but it grows. So this year actually we will have some outgrow the market. So if you see the both 2008 and 2009 together then we will outperform the market, actually. So that is one of the reasons.

And also the -- we actually have said that our capacity will be adjusted flexibly than the market growth. So already we have executed some investment as we communicated before. So it should be established as a plan. So the only way we can do at this moment is to adjust our ramping up schedules depending on time. So the 30% is that the assumption that we will execute our two largest fabs on line as planned. So it will depend on market development in further. So that's why we didn't fix the whole year forecast at this moment.

How much flexibility do you -- obviously a lot of the equipment's already coming in. How much flexibility would you have to change your CapEx numbers?

So please understand our presentation of the CapEx numbers. We actually this time presented the range, not fix the numbers for 2009 CapEx. So you can just assume that the range can be flexible among -- between the range. So that is my answer.

Okay. Okay, good. And then I guess just as a final question, there was a discussion earlier, I guess it was Mr. Choi who was talking. Smaller sized TVs or lower priced TVs, which I guess I interpret as being smaller size TVs, were in stronger demand. Yet that's one of the areas where we saw some of the sharpest price declines, especially in December. Am I reading your meaning of low priced incorrectly by interpreting that as being smaller sized?

Yes.

So then what is -- what are you saying is a low price TV -- low price panel or low price TV then if it's not the smaller sized models?

What I'm saying is that for example in 32 inch category, for example, the lowest price right now is $399. And then highest price may be $699. But demand, because of economic situation demand for that kind of $399, $429 and below $449, that kind of range demand is much bigger than normal. So people is now buying some kind of commodity 32-inch more low price models.

Okay, I understand.

Yes. So that demand is actually picking up very fast. Even in China market, RMB2999 after China market as prices start. And then middle income people start buying it. And also small TV area also, very -- not major cities, Shanghai, Beijing or used to be that kind of city drives the demand. But now after that RMB299 32-inch start then suburban area and the small TV demand is picking up right now. So that kind of demand is increasing the additional demand. So that's creating some additional order for us.

Okay. And obviously lower price TVs have lower cost panels. How does that trend affect your margins in the TV space?

That's already -- that already, we announced our performance indication.

Okay, fair enough. All right, thanks very much.

Getting back to your earlier question about the capacity and outside flexibility and the market share. As C.H. Lee mentioned, we have a limited, even though we have a limited flexibility in our CapEx spending, this first. Secondly, we are able to adjust our ramping up speed based upon market demand. On top of it generally speaking, our customer portfolio is better than our competitors', we believe. And on top of it we also demonstrated some of our cost competitiveness over our competitors. So we believe we can gain market share. But that does not mean that we simply wage a war to gain simply market share at the sacrifice of our profitability. That's all I can say.

In top of that, the -- our market share was around 20% in -- according to the results from [Bata]. In Q4 in our [free gather information], it's around 26%, 6% increase. You can see the situation. If we can keep that Q4 last year market share for this year, throughout this year, we can -- we need much more the capacity for our customers. That's another (inaudible) comment for that.

We have just time to take just one more question.

The following question will be presented by Andrew Abrams from Avian Securities. Please go ahead, sir.

Just two points of clarification. I just want to make sure I understand this. If inventories are relatively low in the channel and at the set makers, especially at the low end on the TV side, you're still estimating price declines overall. Would you be seeing a price increase, a sustainable price increase at the low end? Or is this just you're going to increase your unit volume at the low end without a price increase there?

We already explained, previously already explained to you monitor area, that there will be some price increase possibility. And I also explained that small size TV area, that area when monitor panel price increase automatically TV area also, same size will follow.

Okay. So it isn't a demand change? Or at least, it's a small demand change but it's more a unit for unit, if monitors go up then TVs will go up in that same size category?

Yes. Because recently, small sized area panel price for monitor and TV was almost similarly moving together.

Right. And just one other question. Have your supplier shares changed? Meaning have you radically changed who it is that supplies you with basic materials, glass, color filters and back lights? Or is it still relatively the same as it was last year? Building into the beginning of last year?

Yes, we're -- we didn't see any change in our suppliers' positions for us. So it is very constant.

Great. Thank you very much.

You're welcome.

I'd like to revise my comment on quarter-over-quarter shipment change on unit base which was discussed during the call earlier. Q4 three months on a yearly base has decreased compared to the third quarter. So please disregard my previous comment on the shipment increase.

On behalf of LG Display we thank you for your participation in our fourth quarter earnings conference call. Should you have further questions please contact either myself or my colleagues. Thank you.