LG Display Co Ltd (LPL) 2009 Q2 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'll begin the conference of the fiscal year 2009 two quarter earnings results by LG Display.

This conference will start with a presentation followed by a division and Q&A session.

(Operator Instructions).

Now we shall commence the presentation on the fiscal year 2009 two quarter earnings results by LG Display.

Hello, everybody.

I'd like to welcome everybody to LG Display's second quarter 2009 conference call.

My name's Anthony Moon, I'm the Vice President, the head of -- heading up the IR department here at LG Display.

On behalf of our Company, I'd like to welcome everyone to our global quarterly earnings conference call.

I am joined here by my IR staff, as well as Kevin Choi, Vice President of TV Marketing; Davis Lee, Vice President of IT Marketing; and last but not least, Y.H.

Jeong, Senior Manager of Market Intelligence.

Before we go into the Q&A session, please allow me to highlight our second quarter results and touch upon our outlook for third quarter and the rest of the year.

Before I move into that actually, I would like you to take a minute to read over the disclaimer on page two.

I'd like to remind everyone that the second quarter results on our slides are un-audited and based on consolidated Korean GAAP.

Our results based on US GAAP will be posted on our website in the near future.

Moving right along to slide three, and looking at our revenues, sales grew 33% Q on Q and 16% year on year, to KRW4.9 trillion.

This growth was mainly driven by strong sales in TV and IT panels which grew a respective 31% and 38% Q on Q.

Operating profit reached KRW218b in the second quarter.

The return to profitability is mainly due to the rise in panel prices and our continued cost-cutting efforts.

Note that our ASP per square meter rose 11%, while our cost of goods sold per square meter decreased 5% Q on Q, both in US dollar terms.

Moving on to slide four, as of June 30, 2009, we had KRW2.7 trillion in cash and cash equivalents.

While our absolute inventory levels have increased a bit, please note that the inventory to sales actually declined in the second quarter from first quarter due to our strong increase in sales.

At the end of the second quarter, our finished goods inventory for large panels was less than two weeks.

This is lower than the normal inventory level of three weeks.

Our debt at the end of January was approximately KRW4 trillion.

While our absolute debt levels have not increased over the first quarter, our net debt to equity ratio rose slightly to 15% as our cash position fell.

Going on to slide five and looking at our cash flow, our net cash position declined a bit due mostly to a rise in working capital which was the result of our rising sales volumes and our greater CapEx, which includes regular maintenance as well as some investments in the Gen 8 and Gen 6 extension fabs.

Finally touch upon the shipments and ASP on slide six.

During the second quarter our shipments increased by 33% to 5m square meters, which is better than our initial expectations in the first quarter.

This better-than-expected shipment increase was mainly driven by strong performance of our major customers and our speedy ramp-up of our new Gen 8 and Gen 6 extension plant.

Our ASP also increased by 11% Q on Q, to $739.

That's -- per square meter, excuse me.

For TV segment, average ASPs in the second quarter increased by 9% Q on Q, while the IT increased close to 15% Q on Q.

Moving right along to slide nine, looking at our product mix, you'll see that during the second quarter TV segment still represents the largest portion of our sales at 55%, followed by monitors at 22%, notebooks at 18%, and applications at 5%.

Looking at our capacity on slide eight, you'll see that, again, our capacity has increased by 31% Q on Q due to the addition of our new Gen 8 and Gen 6 extension plant.

In order to meet the strong customer demand, we sped up the ramp-up schedule for the Gen 8 plant and our production now actually exceeds the designated full capacity of 83,000 mother glass per month during the second quarter.

Our original plan was to reach full utilization by the end of the year, if you recall.

Now going on to the outlook for third quarter, well, we expect our total shipments will increase somewhere in the mid-teens level due to strong seasonality and market share gains by our customers.

In the case of ASP, we expect a gradual increase during the quarter.

We expect our cost of goods sold to be maintained at a similar level to second quarter due to the component shortage situation currently in the market.

Our CapEx for 2009 is estimated to be between KRW3 trillion and KRW3.5 trillion.

That's up from our original guidance of KRW2.5 trillion.

Most of that increase is for the announced new facility which I will go into a bit more in the next slide, if I may, on slide 10.

We have decided to add another Gen 8 fab.

This new fab we refer to as the Gen 8 extension.

It will be set up at our existing P8 building in our Paju LCD cluster.

Our plan is to start mass production of phase one, which has a designed mother glass input capacity of 60,000 per month in the second half of 2010.

The second phase, which is of equal size of 60,000 per month, is scheduled to come on line in 2011.

So the second phase we will be flexible in the ramp-up depending on the supply/demand situation in 2011.

If I may give a little more detail on our decision to expand capacity at this time, it comes upon three key factors.

First, our strong customer base.

Currently we are unable to fulfill our customers' demand requirements with our current capacity.

With major customers continuing to expanding their market share, we believe we need this new facility to meet the rising demand.

In addition, we believe this new fab will allow us to regain some of the lost market share we were forced to forgo in China.

The second reason is strong TV demand expectations.

According to DisplaySearch, the global LCD TV market is expected to grow 15% per annum over the next three years.

Moreover, we think the larger size LCD TV market will be leading the growth in TVs in the years to come.

To meet this demand surge, we believe this is again the right time to invest in another Gen 8 fab.

Third and perhaps the most important point for us is that we believe the Gen 8 fab is the most cost-effective way to enhance our competitiveness.

Based on our experience of operating a highly efficient and productive fab, we are confident that we can maximize investment, efficiency and improve our cost competitiveness with our new Gen 8 fab.

With that, I'll end my presentation and discussion of second quarter results.

I'll open the floor to any questions that you may have.

Operator, can we start the Q&A session please?

(Operator Instructions).

The first question will be provided by Mr.

Matt Evans from CLSA.

Please go ahead, sir.

Hi.

Good evening.

Thanks for taking my question.

Two questions -- or three questions, I'm sorry.

The first one is on inventory.

You mentioned your own inventory.

Could you tell us how you feel your customers' inventory is right now in terms of weeks, and perhaps remind us what the normal level would be?

The second question is a follow-up from something you said three months ago that was very helpful.

At that time you said that you felt the demand in the industry was sufficient to accommodate 85% of the gross supply, but because of the glass shortage the industry would only be able to operate at 80% and hence you'd get a shortage.

If you could give us a sense of where those numbers actually came out in your opinion, and also similar numbers for the current quarter?

And thirdly, on the -- at the local analyst briefing you mentioned that there is some, perhaps, small risk that you might have a bit of a glass shortage problem yourselves.

If that does come -- or my question is does your shipment guidance assume that you will have all the glass that you need?

This is Kevin Choi.

First, customer inventory situation.

Since March, inventory was continuously shortage and April, May, June, the LCD industry increased production and then that shortage has been improved.

But still July still channel has some shortage, but the shortage level has been improved most -- more than -- from more than three weeks' shortage and now I think about one weeks' shortage level.

But the problem is that from now on, almost September coming, and actually the LCD industry production increase compared to second quarter cannot cover the actual third quarter demand increase.

Therefore I think that the August to September inventory situation will be getting worse again.

So I think September, October come, the inventory situation is very tough for our customers.

That will be our expectation.

As to your second question about utilization, in our estimation, second quarter I think the industry as a whole were in the high 80 percentile range.

For this quarter I think will be slightly north of 90%.

As to the component shortage that you mentioned, and in particular glass, the whole industry is facing, I would say, a shortage of that key component in particular.

Ourselves, it is a bit tight.

We are -- but it is in manageable range as of now.

And as Mr.

Choi just mentioned, I think July will probably be the toughest time of the three months this quarter.

But as of now I think we could still meet the -- our guidance of plus 15% -- excuse me, mid-teens growth in panel shipments.

Again, if there is an impact, I think it will be marginal for us this quarter.

Would you say that July being the toughest month that observation would extend to the whole industry or is that just specifically for LG Display?

No, that's for the whole industry.

Okay.

The following question will be presented by Mr.

Brian White from ING.

Please go ahead, sir.

Yes.

I've just got a question on what you're seeing in China.

There's been a couple of extensions of the stimulus program.

One is the CNY3500 limit, the other would be the trade in your old TV for a new one and get a discount.

So I'd be curious if those programs are in place, if you've seen any impact from that.

This is Kevin Choi again.

The China market, there's two things going on.

One is, like you mentioned, CNY3500 and there's some tax benefit so people can buy consumer electronic products, including TVs.

And that actually helped the promoting the rural area TV sales volumes.

And also another one is the TV area right now, there is another program started from June.

They call it if you bring an old CRT TV then you can get a discount -- you can get a refund for when you buy the LCD TV.

That's actually a maximum CNY400.

So that CNY400 is also helping people to buy new LCD TVs.

So that will continue one year.

So until next year June, there's a one-year period.

And -- but the CNY3500 rural area promotion is actually the time is about a four-year period of time.

So I think that that will continuously improve the shifting from CRT to LCD until next year also.

So that's why most of the people in China right now think that this year LCD TV volumes should reach higher than 20m, and some people say 23m, some people say 20m.

And next year a lot of people expecting between 28m to 30m LCD TVs next year.

That means that last year China market, the CRT TV was about 20m to 23m CRT TVs.

But this year, that shrinks from that number to less than 10m.

Some people say 8m right now.

And next year that will go down to, again, maybe 4m level.

So that will continuously shift the CRT to LCD.

And so I think that the China market will be continuously strong until October, because October 1 week is eight days vacation time.

It's a very long period of vacation because October 1 is the 60th anniversary of China -- new China country.

60 years ago they start their -- this country.

So this is 60-year anniversary.

So government also wants to promote something, and then electronic companies also want to promote something.

So August to September they are pull -- they actually really try to pull more volume to prepare that sale.

So until this early October, China market continues to see very strong demand.

That's different with other countries.

And do you feel like you're participating more in the CNY3500 program versus the CNY2000 program?

We are actually selling our products -- that CNY3500 is normally 32-inch TV and below.

And we are supplying 32-inch panel and they are using that panel to many different kinds of 30-inch TVs, because there is are some 32-inch TVs, CNY2900, some things CNY3500, some things CNY4000.

So it's many different levels of 32-inch different product lineups.

So they are using some of our panels to that line and also they are using some of our panels to higher line also.

So it's all mixed up right now.

So yes, they are using our panel in that promotion model also.

Okay.

Thank you.

The following question will be presented by Mr.

Jeffrey Toder at RBS.

Please go ahead, sir.

Hi.

Good evening.

I have a few questions.

First on your cost guidance for third quarter.

It's pretty unusual to have your cost on a per-square-meter basis flat Q on Q.

Can you explain maybe or elaborate as to why you're not seeing any cost reductions?

Many of the components, especially the key components, such as glass, is right now, is in shortage.

And we are also facing a bit of the tightness.

I think that is one of the main reasons we have anticipated.

We have continued to cut cost in other ways, but I think some of the key components there is a possibility we will see some increase in the third quarter.

So in addition to glass, where do you see component prices potentially rising?

Well, right now, glass is masking a lot some of the shortages in other areas.

So it's acting as a, if you want to call it, a bottleneck.

So the other places we're not seeing as much, but I think glass is the one area that is the most important right now.

Okay.

And I think Corning was saying a month or so ago that they felt that the glass shortages would end by the end of third quarter.

Do you agree with that?

I'll defer that to them and say I hope so.

Okay.

And if -- looking forward, I guess, a little bit beyond the quarter, do you think that the abnormally low cost savings in third quarter will be an anomaly or do you think that component prices could still constrain your ability to bring down costs in fourth quarter.

Very good question.

Going to fourth quarter, we -- the industry as a whole goes into the seasonally low period.

So we do anticipate probably some utilization ratios probably won't be as high as it will be in the third quarter.

So we should see some alleviation in this tightness situation in components.

So it's a bit early to say right now which direction it will go, but I think in the fourth quarter there will be some alleviation in the pressure.

Okay.

So if -- just, I guess, staying on that, you're running at 100% utilization right now.

And would you expect you'll be able to maintain that to year end or are you expecting that -- to bring that down in fourth quarter?

That will depend on the market situation in the fourth quarter.

Right now I would have to say we're probably, right now, looking at the picture -- the demand picture and supply, there's a possibility we may need to bring it down somewhat in fourth quarter, be very, very flexible, to maintain our profitability.

But we are looking at the situation and updating on a daily basis.

And there is a possibility that the demand side in fourth quarter could be better than what we are thinking now.

But as of right now I would have to say we will likely not be keeping that type of utilization going -- in the fourth quarter.

Okay.

And on your ASP guidance, you have gradual increase expected.

Does that mean that you expect prices to continue to rise each month during third quarter?

Let me just say, I think by the end of the quarter prices most likely will be higher than the beginning of the quarter.

As to the extent of that, it's very difficult to say at this time.

Okay.

And price has obviously moved up all through second quarter.

Yes.

So you're getting a big jump on an average basis Q on Q.

Yes.

So do you think that that will actually, you've posted a great number for Q2, do you think you'll be able to match that number in 3Q?

We don't usually give earnings guidance, but I think if you go by that logic, I think you could come to a general conclusion on your own.

Okay.

Fair enough.

Now, next question, also related to pricing.

Prices have gone up quite substantially, and --.

You mean panel prices?

-- and TV prices have recently had some upward movements, TV panel prices, which is unusual.

Set pricing I don't believe has really seen any positive moves yet.

Do you think that set pricing will cap panel pricing or do you think we might see set prices rising as we move into third quarter and the higher panel prices are factored into the end markets?

Yes, there's many options because it depends on different customers, also different markets.

Some customers only shift their sales model mix because if you are selling, for example, 32-inch TV, when you sell 100 TVs, 30% is entry model, 40% is middle line, and high end is 20%, something like that.

But they are shifting that entry model to middle line and middle line to high end because in shortages anyway -- shortage situation they try to sell more higher margin products.

Anyway, if you do not have enough volume inventory then you want to sell higher margin models.

So they are shifting that model mix.

And because of that, some areas actually, average retail sale -- retail price, the average ASP is increasing a little bit.

So I think that it's not just -- you cannot just say that the retail price increase.

Without retail price increase, you can also manage it with your model mix also.

There's many options for the set company can do.

So that -- we think that's still a manageable situation.

Okay.

Do you still think, and I think in the last call, I don't have the notes in front of me, you might have given some guidance as to where you expected some TV prices, set prices to be towards the end of the year.

Do you have any feeling on where 32 and 42-inch TV sets might be at that time?

I don't -- I cannot say my opinion to you because I don't know what will happen ending of this year.

I don't believe we've given that sort of guidance in the past.

Okay.

Maybe it was one of the other panel makers who came up with the numbers.

Okay.

Now you mentioned inventory -- channel inventories or set inventories have gotten back much toward a normal level, right?

You said it's about one week short now?

Yes.

And what level do you -- what level are we at now in weeks?

You mean on the TV set makers?

Yes.

You said we were one week short of what a normal inventory level should be, right?

Right.

And what is that normal level?

Normal level, it depends on different company actually.

Different companies have different normal levels, so I cannot just say that this is the right normal level.

So normally I talk to each different company, and some people have higher as normal, some companies lower as normal.

But I cannot give you exactly some -- one level.

Okay.

And then you expect the inventory shortage to widen again in August and September?

That's what I expect.

Okay.

Got it.

Just a couple more questions.

First, P8 I guess looks like it's running at full capacity right now.

What are your plans for ramping up P6E for the rest of the year?

This is Davis Lee from IT Marketing.

P6E ramp-up is on schedule, actually a little bit early -- about a month earlier than our ramping-up schedule.

But if you compare with Gen 8 ramp-up, the ramp-up method was different.

So you can see the difference that a very sharp ramp-up at Gen 8 there, compared to scheduled phased ramp-up schedule on Gen 6E.

But it is still ahead of our schedule.

And that's what I can tell you.

Okay.

So what's your glass input currently?

Currently the 46K.

Currently 46K in July.

And where do you expect that to be at the end of the quarter?

End of the quarter, absolutely we hope to reach design capacity, maximum capacity.

So 60K?

Okay.

So basically you'll have everything on line then in -- by the end of third quarter.

Looks like fourth quarter maybe you'd squeeze a little bit more out, but not a lot of capacity additions at that point?

Correct.

Okay.

And just one final question, and you may have done this -- you may have given this number in the Korean meeting before.

Do you have a number for depreciation for this quarter?

KRW720b.

KRW720b?

And do you expect that to be a little bit higher in fourth quarter?

That number was for second quarter.

I think for this quarter and next quarter it will be slightly higher.

So each slightly higher.

Yes, slightly.

Okay, great.

Thank you very much.

The following question will be provided by Mr.

Andrew Abrams from Avian Securities.

Please go ahead, sir.

Yes, I have two questions.

First, can you give us a little feedback from your customer base on how they view panel price increases?

Is this a situation where they look to pass these through directly to the retail side, or are they going to eat some of those panel price increases in order to keep actual set prices at the retail level stable to the consumer?

And second, the increase in monitor pricing, is that due to a shift away from monitors a quarter or so back by the industry generally, or two quarters back?

And if that is the case was there any real increase in demand or is this just above and beyond seasonal or is this just normal monitor seasonal demand?

Let me -- this is Davis Lee, let me answer your question.

First, we -- the price is really supply/demand is just the key how the industry determines price.

But we carefully watch out the system price very closely.

We also are concerned about whether the increase the price will stifle the demand -- the increase.

But judging from all those data that we collect each and every month the -- still in the monitor case industry inventory level is very low.

On our monthly -- the collected data base shows just 17 days of the inventory of the [SI] and customers own hub inventories.

And also if you look at the NPD data, which was published based on May data, this is also very low, under four weeks.

So judging from all those data that we collect and published by outside companies we do believe demand is real, and still in spite of the increased demand the inventory level shows very healthy and very tight.

So we do not believe it is just the inventory capping or inventory stocking kind of demand.

That I can explain.

Okay.

And feedback from your customers in terms of how they are going to deal with the price increases, not necessarily only in monitors but in TVs more than in the monitor side.

Do they pass that on directly or are they going to lower their margins in order to take some of that?

And how much concern do you see from them in terms of the kind of feedback that they give you.

Okay, let me, Davis Lee again.

Let me put it this way.

Last year the peak price, industry's peak price and low price, the price decline was about 63%, unprecedented the price decline.

Although with that kind of price decline actually system price decline was not as big as that kind of that kind of panel decline.

So we do believe there is still some rooms that accommodate the prices increase.

But moving forward, toward third quarter that kind of room is going to be very small so we are expecting that some of our customers will try to increase system price in case of monitor.

And on the TV level the same or different at the TV level?

I think that each company has different kind of strategy.

So I cannot say exactly what it interprets.

Some companies -- normally August to September set companies decrease their retail price.

That's normal, every year September, August time frame they set new price map.

But this time some companies decide not to lower the price.

Maybe some companies are still thinking about lowering the price, it depends on their strategy.

So I think each company can take a different position, because I believe that some companies made the money in the first half, so they still want to use that profit for their promotion budgets.

Or some company doesn't want to do that, it depends on different companies.

So it's very hard to tell.

Okay.

And last if you could just talk a little bit about the Gen 8 extension, the P8E.

And I assume that you are going to build everything from 32 to 55 in there based on what you've already said.

Is there something that you guys are optimizing the entire fab for or is this just going to be very flexible back and forth between 32 and larger panels?

No it will be predominantly 55, 47 and 32, that combination depending on what the market situation is, but it will be optimized for those three sizes.

And when you are running the -- let's say you are running a number of lines with 32, how fast can you change from 32 to 47 if you so desire or if you get an order?

Is this a week or longer?

It doesn't take that long.

There is some lead time that we need from our customers when they want to make that kind of switch.

But mechanically the switch can be made, it doesn't take a whole lot of time.

We try to give a flexibility to our customers, so when they want to shift it from 32 to 47 we work together to make that happen.

So it's kind of everyday talk between customers and us.

So it happens on a day to day basis, and you're not the constraining point, it's more their issue, got it.

No.

Great, thank you very much.

Thank you.

The following question will be provided by Mr.

Conor O'Mara from [Balasna] Asset Management.

Please go ahead sir.

Hello there.

I was just trying to understand demand trends going into Q4, and maybe I could break it down in two ways.

If you look at IT I guess in May everybody was worried (technical difficulty).

I am sorry to stop you, interrupt, we have a very bad connection I could barely understand you.

Oh really?

Yes, it's really very difficult to understand what you say.

Perhaps can you call back or --?

That's fine, I'll call on a different line, thank you.

Thank you very much.

The following question will be provided by [Pranab] from Daiwa Securities.

Please go ahead, sir.

Thank you for taking my question.

My first question is basically on the LED backlight side can you give us some ideas like what would be -- what percentage of your TV panels and notebook panels and monitor panels would be LED backlight by end of fourth quarter, and also potentially end of 2010.

And what is the progress you have done so far in procuring LED chips and LED lamps basically for your backlight?

For TV area still LED area is starting point, so I think that -- also for the fourth quarter customer is just launching the product.

So I think that this year second half the portion of TV still I think that low single digit level.

So that range is not showing the big percentage in the TV area.

And for notebook.

Yes, notebook case our -- this year's target is 52%, slightly ahead of the industry.

And actually we do believe that we are leading the LED transition in the industry.

In the case of next year actually we don't have any new product developments based on CCFL product starting from second half of this year.

That means more than 95% will be LEDs just based on our analysis.

Although there is some concern that at this moment the price premium over CCFL looks like the industry has to do some more work to narrow it down.

But with the kind of concern I am quite optimistic about the virtually complete transition to LED in the case of notebook.

When it comes to monitor side the transition is following the notebook case.

So the (inaudible) is about a year.

So next year we are projecting about 30% LED transition in case of monitor, although there is not so much the -- a mandate or the requirements to transfer to LED backlight.

But as we go into the LED transition and the cost curve will be there so that kind of the cost curve and we'll expect it -- we are expecting somewhat accelerated transition to LED in case of monitors too.

Yes, there is some sort of shortage on the high [bracket] LED chips now.

And what type of -- how you are going to procure your LED chips for this year and next year, could you elaborate a bit?

Our affiliate, LG Innotek, is starting -- start to do some work on the chips, packaging and arrays, and they will become a larger portion of our overall procurement going forward.

So on that front I think we need not worry too much about procuring of LEDs going forward.

And also the LED itself, the light efficiencies increase every year, so although it looks like high efficiency LEDs are in tight situation, but we are expecting that kind of tightness will go away.

The more problematic area is not just the chip, just the Blu supply chain.

But as Mr.

Moon explained we are constructing our own supply chain in many different ways.

So we are maintaining some confidence projection next year too.

My last question is on the glass price, what is your expectation on glass price per square foot basis for 3Q and 4Q this year?

I wish I could answer that question but unfortunately I am unable to do so.

I apologize.

That is -- glass prices themselves is something we cannot comment on.

Better to ask Corning.

Okay, thank you very much.

One thing you ask the TV portion of fourth quarter what is the percentage of LED TV out of total TVs.

Actually total TVs there are so many different sizes, so normally LED TV right now, most of the LED TV popular right now is the big screen size LED.

Still small screen size LED is not popular, so if you ask out of total what percentage TV should be low.

Okay, got it.

Thank you.

Thank you.

The following question will be provided by Mr.

Shailesh from Nomura.

Please go ahead.

Yes, hi, this is Shailesh from Nomura.

Just wanted to clarify about your comment regarding the glass shortages masking shortages in other components.

I was wondering if you could quantify the price increases that you are seeing in some of the other companies, particularly LCD drivers.

As a policy at LG Display we try to avoid mentioning our procurement prices from our vendors just as a practice.

I apologize.

I understand the market's concerns and interest in where the prices are trending.

And I would have to say they, right now, because of the tight situation, they are trending slightly upwards.

But as to where they are right now it's very, very difficult for us to say, I apologize.

Yes.

Our (inaudible) suggests that it is in the range of 10% to 15%, slightly double digit size increase as we go into 3Q, does that seem about right or it's not in the ballpark?

Sorry I can't even go there, sorry.

I understand.

Have you changed in any way your procurement policy, means the percentages that you used to source from Taiwan or is the same as the previous quarter.

You mean for IC drivers and substrates and such?

That's right.

No major changes that I know of.

One final question on the demand front, there has been so much talked about the demand coming from China, is there any data which supports the sell-through or any data points which suggests that there are no inventory builds in China?

China data, China data we are gathering on a weekly basis, and we are also talking with our customers.

And so the issue in China is, as of now, 32-inch and below inventory level is an okay level.

But 37-inch and higher area is actually a shortage we see here.

And also they are preparing October big sale season, so they continue to try to build up their inventory, so that's current situation in China.

And 37-inch and above what is the proportion of overall shipments in China for you guys?

I don't have that data with me right now.

Can we get back to you on that one?

Sure, thank you very much.

The following question will be presented by Mr.

Matt Evans from CLSA.

Please go ahead, sir.

Hi, thanks for giving me another question.

I think at the local briefing again today you mentioned something in regard to double booking or overbooking.

I think it was related to your comments that you can only meet 20% to 30% of your customer demands and there was some question about whether some of this was overbooking.

Did I understand that correct, and maybe you could elaborate on that?

And secondly, coming back to the point you made earlier you said you thought the utilization rate would be 94% in the third quarter.

If there was no glass shortage what do you think that number would be?

In other words what's the underlying balance?

Matt, I am not quite sure where you are getting these numbers.

I think I said the industry would be slightly north of 90%.

I don't think I would mention 94%.

Without the glass shortage I think, yes, the industry would probably be very close to full utilization.

Okay.

And I don't recall a question about double-booking in the local conference.

But, yes, we are -- right now we are unable to -- of the total demand that is coming through to us we are unable to meet anywhere between 20% to 30% of the orders.

I think Davis has something to add on that front.

Yes, the only reason that we mentioned double-booking was some of the industry observers are expressing that kind of concern, but judging from all those data and demand that we do not see that kind of double-booking, although it is a very difficult job to sort out how much percentage is double-booking or not.

But judging from our -- the demand sectors we do not see big double-booking in our demand stream.

That's all I can say.

But the demand level compared to our capacity is about 20% to 30% higher than what we can really offer.

Okay got it.

That's very helpful.

If I could ask just one last question, in terms of going over the design capacity for the Gen 8 did that require any extra equipment or is that just from process improvement and de-bottlenecking and that kind of thing?

The vast majority of it is from our own internal technicians who were able to get more out of the existing equipment, the vast majority.

Got it, thank you very much.

The following question will be provided by Mr.

Andrew Abrams from Avian Securities.

Please go ahead, sir.

Thank you.

Just one other question, on a shipment basis can you break down your customer base by region for the second quarter, if you think there is going to be any major change in the third quarter, and maybe give us some perspective on where that was a year ago so we can get kind of get an idea of how that's changed?

No, I am sorry once we give it to our customers it's up to them which regions they want to ship it to, but we cannot provide that, I apologize.

Okay, thank you.

Sorry.

Currently there are no participants with questions.

(Operator Instructions)

Operator?

Yes, sir.

If there are no further questions perhaps we can end the conference call at this moment.

Okay, I see.

If I just make some closing remarks.

Again, I'd like to thank everybody for participating in second quarter, LG Display's second quarter 2009 results conference call.

Again, I am new to this position.

I've only been here a month and a half.

We will be on the road over the next two weeks.

I hope I'll be able to see each and every one of you in your offices or in our offices.

And we hope to increase the dialogue between LG Display and the investment community.

Again, thank you very much for participating in the call.