LG Display Co Ltd (LPL) 2022 Q2 法說會逐字稿

[Interpreted]

[解釋]

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 2022 Second Quarter Earnings Results by LG Display. This conference will start with a presentation, followed by a divisional Q&A session. (Operator Instructions)

早上好，晚上好。首先，感謝大家參加本次電話會議。現在我們將開始 LG Display 的 2022 財年第二季度收益結果會議。本次會議將以演講開始，隨後是部門問答環節。 （操作員說明）

Now we shall commence the presentation on the fiscal year 2022 second quarter earnings results by LG Display.

現在我們將開始介紹 LG Display 2022 財年第二季度的收益結果。

[Interpreted]

[解釋]

Good afternoon and good morning. This is Brian Heo, in charge of LG Display's IR. On behalf of the company, let me thank all the participants at this conference call. Today, I'm joined by the CFO, Sung-Hyun Kim; Hee-Yeon Kim, Senior Vice President of Corporate Strategy Group; Seung Min Lim, Vice President of Corporate Planning; Jeong Yi, in charge of Business Intelligence; Daniel Lee, in charge of Large Display Marketing; Seong Gon Kim, in charge of Medium Display Marketing, and Ki Hwan Son, Vice President of Auto Marketing.

下午好，早上好。我是負責 LG Display IR 的 Brian Heo。我代表公司感謝本次電話會議的所有參與者。今天，首席財務官 Sung-Hyun Kim 也加入了我的行列。企業戰略部高級副總裁 Hee-Yeon Kim； Seung Min Lim，企業規劃副總裁； Jeong Yi，負責商業智能； Daniel Lee，負責大屏營銷；中型顯示營銷負責人 Seong Gon Kim 和汽車營銷副總裁 Ki Hwan Son。

The conference call will be conducted in both Korean and English. Please refer to the provisional earnings release today or the IR Events section in the company's website for more details on the financial results of Q2 2022.

電話會議將以韓語和英語進行。有關 2022 年第二季度財務業績的更多詳細信息，請參閱今天的臨時收益發布或公司網站上的 IR 事件部分。

Before we begin the presentation, please take a moment to read the disclaimer.

在我們開始演示之前，請花點時間閱讀免責聲明。

Please note that today's results are based on consolidated IFRS standards prepared for your benefit and have not yet been audited by an outside auditor.

請注意，今天的結果基於為您的利益而編制的綜合 IFRS 標準，尚未經過外部審計師的審計。

Let me start off with our business performance in Q2. Due to COVID-19, there were lockdowns in some of the Chinese production basis, which have also affected the production and shipment of the company's high value and IT products, and as a result, the result, the company's business performance in Q2 has underperformed on the initial guidance. Revenue in Q2 was KRW5.607 trillion, down 13% Q-o-Q and 19% Y-o-Y. There were shipment disruptions from lockdowns in production bases, soft demand in the downstream, and continued fall in LCD panel price. There was operating loss of KRW488 billion. Operating margin in Q2 was minus 9% with EBITDA margin at 12%. There was net loss of KRW382 billion.

讓我從我們在第二季度的業務表現開始。由於 COVID-19，中國部分生產基地出現停工，這也影響了公司高價值和 IT 產品的生產和出貨，因此，公司第二季度的業績表現不佳關於初步指導。第二季度收入為 5.607 萬億韓元，環比下降 13%，同比下降 19%。生產基地停工，下游需求疲軟，液晶面板價格持續下跌，導致出貨中斷。營業虧損4880億韓元。第二季度的營業利潤率為負 9%，EBITDA 利潤率為 12%。淨虧損3820億韓元。

Next is area shipment and ASP trend. Area shipment in Q2 was 7.85 million square meters, decreasing 4% from the previous quarter. Aside from the impact from Chinese lockdowns, concerns of economic downturn led to slowing demand in the downstream. Set makers, to minimize inventory, reduced their purchase, resulting in less shipment of both large and medium display products. ASP per square meter was $566, down 14% Q-o-Q. Shipment of POLED smartphones decreased due to seasonality, and LCD panel price continued to decline.

其次是面積出貨量和平均售價趨勢。第二季度出貨面積為785萬平方米，環比下降4%。除了中國封鎖的影響外，對經濟下滑的擔憂導致下游需求放緩。電視機製造商為了盡量減少庫存，減少了採購，導致大中型顯示器產品的出貨量減少。每平方米平均售價為 566 美元，環比下降 14%。 POLED智能手機出貨量受季節性影響下降，液晶面板價格持續下滑。

The company's production capacity in Q2 decreased 5% Q-o-Q, owing to active adjustment in general use LCD production as well as new product development and maintenance.

公司二季度產能環比下降 5%，主要是由於通用 LCD 生產的積極調整以及新產品的開發和維護。

Next is revenue breakdown by product segment. TV panels accounted for 31%, up 5 percentage points Q-o-Q. Even as LCD panel price continued to decline, shipment of OLED TV panels increased, thanks to its positioning in the high-end TV market. IT panel took up 45%, down 3 percentage points Q-o-Q with a significant impact from shipment disruptions resulting from Chinese lockdowns. Mobile and others were 24%, flat Q-o-Q.

接下來是按產品細分的收入細分。電視面板佔比 31%，環比上升 5 個百分點。在液晶面板價格持續下滑的情況下，OLED電視面板的出貨量有所增加，這得益於其定位於高端電視市場。 IT 面板佔 45%，環比下降 3 個百分點，主要受中國封鎖導致的發貨中斷影響。移動和其他為 24%，環比持平。

Next is the company's financial position and ratios. The company's cash and cash equivalent was KRW3.669 trillion. Inventory was KRW4.722 trillion, increasing by KRW492 billion Q-o-Q. The inventory was prepared against shipment disruptions from Chinese lockdowns and to be ready for high-end product shipments in the second half, such as new POLED models.

其次是公司的財務狀況和比率。公司現金及現金等價物為36.69萬億韓元。庫存為4.722萬億韓元，環比增加4,920億韓元。庫存已準備好應對中國封鎖造成的發貨中斷，並為下半年的高端產品發貨做好準備，例如新的 POLED 型號。

Liabilities to equity ratio was 162% and net debt-to-equity ratio came in at 71%, increasing Q-o-Q. There was increase in borrowing to invest in OLED to preempt the future markets.

負債權益比率為 162%，淨負債權益比率為 71%，環比上升。用於投資 OLED 以搶占未來市場的借貸增加。

Next is cash flow. The company's cash and cash equivalent at the start of Q2 was KRW4.111 trillion. It decreased by KRW442 billion and stood at KRW3.669 trillion at the end of Q2. There were investment in OLED, payout of annual dividends for 2021, and net loss in Q2.

其次是現金流。該公司在第二季度初的現金和現金等價物為 41.11 萬億韓元。第二季度末減少了 4420 億韓元，為 3.669 億韓元。 OLED有投資，2021年派發年度股息，Q2出現淨虧損。

Let me now move on to guidance for Q3 2022. In Q3, area shipment will increase by mid-single digit Q-o-Q. Shipment of IT panels affected by Chinese lockdowns will recover and shipment of large OLED and POLED smartphones is expected to grow, in response to the seasonal demand. But recovery in Q3 is likely to be limited, due to demand slowdown caused by macro instability and weaker consumer confidence, as well as customers' attempt to minimize inventory.

現在讓我繼續對 2022 年第三季度的指導。在第三季度，區域出貨量將環比增長中個位數。受中國封鎖影響的 IT 面板出貨量將恢復，大型 OLED 和 POLED 智能手機的出貨量預計將增長，以應對季節性需求。但由於宏觀不穩定和消費者信心減弱導致需求放緩，以及客戶試圖盡量減少庫存，第三季度的複蘇可能有限。

ASP per square meters is also expected to rise to 20% level, thanks to increased shipment of POLED smartphones and wearable products as well as OLED TV panels. Per product, price is expected to keep declining for IT panels, while for LCD TV panels, the price decline is expected to gradually moderate as panel makers adjust production such as utilization rates.

由於 POLED 智能手機和可穿戴產品以及 OLED 電視面板的出貨量增加，每平方米的平均售價也有望上升到 20% 的水平。按產品來看，IT面板的價格預計將繼續下降，而對於液晶電視面板，隨著面板製造商調整產能（例如利用率），預計價格下降將逐漸放緩。

Next is presentation by the company's CFO Sung-Hyun Kim on operational strategy.

接下來是公司首席財務官 Sung-Hyun Kim 關於運營戰略的介紹。

[Interpreted]

[解釋]

Good afternoon, shareholders, investors and analysts. This is the CFO Sung-Hyun Kim. Following the briefing on Q2 business performance, allow me to explain to you the company's operational strategy.

下午好，股東、投資者和分析師。我是首席財務官 Sung-Hyun Kim。在介紹完第二季度的經營業績後，請允許我向大家解釋一下公司的經營策略。

As the economic downturn looms, consumption is expected to generally slow down except for essential goods. Set makers and retailers in general are becoming more conservative in their business operations. Assuming that the trend will continue for some time, the company will strengthen risk management, while actively seeking to identify new growth drivers for the future.

隨著經濟下滑的臨近，預計除必需品外的消費將普遍放緩。總體而言，佈景製造商和零售商在其業務運營中變得更加保守。假設該趨勢還將持續一段時間，公司將加強風險管理，同時積極尋找未來新的增長動力。

Let me first share with you the company's current focus on risk management. We will remain unwavering in our business realignment initiatives, more so now, to reduce volatility and ensure stability in operations. Under the principle that insufficiently competitive and thus unprofitable businesses will be quickly realigned, we will further accelerate internal decision making and execution.

我先跟大家分享一下公司目前在風險管理上的重點。我們將堅定不移地實施業務重組計劃，現在更是如此，以減少波動並確保運營穩定。在加快調整競爭力不足、不盈利業務的原則下，進一步加快內部決策和執行。

One example is LCD TV panels, where differentiation is deemed to be limited. It is currently being downsized in phases with the goal of discontinuing domestic production of LCD TV panels sometime next year. We will now speed up this process, given the worsening market and competitiveness.

一個例子是液晶電視面板，其差異化被認為是有限的。目前正在分階段縮小規模，目標是明年某個時候停止國內生產液晶電視面板。鑑於市場和競爭力的惡化，我們現在將加快這一進程。

The company will strengthen operational efficiency to respond to the highly volatile environment. We are revisiting the optimum capacity for each fab, and finalizing how to enhance cost efficiency, such as reducing fixed costs. We will also ratchet up activities for cost innovation and efficiency, as the insecure supply chain and inflationary pressure have driven up volatility in production costs.

公司將加強運營效率以應對高度動蕩的環境。我們正在重新審視每個晶圓廠的最佳產能，並最終確定如何提高成本效率，例如降低固定成本。由於不安全的供應鍊和通脹壓力推高了生產成本的波動，我們還將加大成本創新和效率的活動。

Next is strengthening inventory management. The company intends to focus more on minimizing inventory, given the uncertainty in market outlook. There was the specific issue of Chinese lockdowns in Q2, but in the second half, we will focus on recovering the shipment disruptions and proactively and flexibly adjusting production to minimize inventory by the end of the year.

其次是加強庫存管理。鑑於市場前景的不確定性，該公司打算更多地專注於減少庫存。第二季度有中國封鎖的具體問題，但下半年，我們將專注於恢復出貨中斷，並積極靈活地調整生產，以在年底前盡量減少庫存。

Last, we will further improve investment efficiency. While remaining steadfast in investment to upgrade the business structure and secure future competitiveness, we will revisit all adjustable investments, including current investment, to review their size and timing as well as execution speed. Annual CapEx will be adjusted to the level of depreciation and amortization, to secure financial soundness. We will keep strictly managing investment discipline. Even as uncertainties remain high in the global economy and business environment, the company intends to preemptively control risks, by flexibly responding to changes enabled by stronger internal operation activities.

最後，我們將進一步提高投資效率。在繼續堅定投資以升級業務結構和確保未來競爭力的同時，我們將重新審視所有可調整的投資，包括當前投資，以審查其規模和時機以及執行速度。年度資本支出將根據折舊和攤銷水平進行調整，以確保財務穩健。我們將繼續嚴格管理投資紀律。儘管全球經濟和商業環境的不確定性仍然很高，但公司打算通過靈活應對內部經營活動加強帶來的變化來先發製人地控制風險。

Meanwhile, the company is also actively implementing activities to create unique performance that is unaffected by the market and to discover future growth engines.

同時，公司也在積極開展活動，創造不受市場影響的獨特業績，發掘未來增長動力。

First is to strengthen dominance in the large OLED and IT segments, where the company already has differentiated competitiveness. OLED TV is showing meaningful performance, growing in actual sales, even when the overall TV market is showing negative growth. We will continue solidifying our market dominance in large OLED, based on our fundamental competitiveness, as large OLED increasingly becomes the mainstream.

首先是加強在大型OLED和IT領域的主導地位，公司已經具備差異化競爭力。即使整體電視市場呈現負增長，OLED 電視也顯示出有意義的表現，實際銷售額也在增長。隨著大尺寸OLED日益成為主流，我們將在基礎競爭力的基礎上，繼續鞏固我們在大尺寸OLED市場的主導地位。

In IT, even as the market in general is slowing down, IT devices have now positioned themselves as essentials. Due to post pandemic change in lifestyle. The company will keep consolidating its positioning in the market, based on our customer base and competitiveness in high end IT products and generate differentiated performance.

在 IT 領域，儘管整個市場正在放緩，但 IT 設備現在已將自己定位為必需品。由於大流行後生活方式的改變。公司將繼續鞏固市場定位，立足客戶基礎和高端IT產品競爭力，打造差異化業績。

Second, the company will actively develop make-to-order business to establish more consistent business operations. As business volatility keeps rising the company is accelerating our push to increase the portion of make-to-order business, based on alliance with key customers.

二是積極發展定制業務，建立更加一致的業務運營。隨著業務波動性不斷上升，公司正在加速推動我們在與主要客戶結盟的基礎上增加按訂單生產業務的比例。

In mobile, we plan to ensure profitability with differentiated POLED products and establish the basis for new technology businesses in collaboration with strategic customers. We will also expand our IT product portfolio and solidify high-end leadership through mid-sized OLED, where investment is ongoing. We will make differentiated preparation for the future, based on existing infrastructure and customer basis.

在移動領域，我們計劃通過差異化的 POLED 產品確保盈利，並與戰略客戶合作為新技術業務奠定基礎。我們還將擴大我們的 IT 產品組合，並通過正在進行投資的中型 OLED 鞏固高端領導地位。我們將根據現有基礎設施和客戶基礎，為未來做好差異化準備。

In auto, the company continues to broaden its market dominance by providing differentiated solutions to global customers, with our lineup ranging from OLED to high-end LCD. We remain global number one in auto display, in terms of sales. We will strengthen activities to win contracts from global OEM customers, with the goal of exceeding 30% market share in the next three years.

在汽車領域，公司通過為全球客戶提供差異化解決方案，繼續擴大其市場主導地位，我們的產品陣容從 OLED 到高端 LCD。就銷售額而言，我們在汽車展示領域保持全球第一。我們將加強贏得全球OEM客戶合同的活動，目標是在未來三年內市場份額超過30%。

Third, we will accelerate rollout of market-creating businesses and aggressively explore markets. We will focus on broadening new businesses, to prepare for a differentiated future, where we are already seeing visible results in large OLED. Market-creating businesses include gaming and transparent OLED, as we are actively trying to open up or broaden new markets in life display.

三是加快開展創市業務，積極開拓市場。我們將專注於拓寬新業務，為差異化的未來做準備，我們已經在大型 OLED 中看到了明顯的成果。市場創造業務包括遊戲和透明OLED，因為我們正在積極嘗試開拓或拓寬生活顯示的新市場。

Last is preempting future businesses and building the base for business development. Similar to OLED TV and high-end IT, the company plans to broadly utilize our differentiated technologies, to more diverse applications. We will actively open up new display areas and build up competitiveness.

最後是搶占未來業務，為業務發展奠定基礎。與 OLED 電視和高端 IT 類似，公司計劃將我們的差異化技術廣泛應用於更多樣化的應用。積極開拓新的展示領域，增強競爭力。

Although volatility remains high in today's business environment, the company will continue to differentiate and create value through preemptive risk management and operational efficiency improvement while preparing for the future and ensuring growth.

儘管當今商業環境的波動性仍然很高，但公司將繼續通過先發製人的風險管理和運營效率提升來實現差異化和創造價值，同時為未來做準備並確保增長。

Thank you very much for your attention.

非常感謝您的關注。

[Interpreted]

[解釋]

That brings us to the end of earnings presentation for Q2 2022. We will now take questions. Operator, please commence with the Q&A session.

這使我們結束了 2022 年第二季度的收益報告。我們現在將回答問題。接線員，請開始問答環節。

[Interpreted]

[解釋]

(Operator Instructions) The first question will be provided by Won-Suk Chung from Hi Investment Securities. Please go ahead with your questions.

（操作員說明）第一個問題將由 Hi Investment Securities 的 Won-Suk Chung 提供。請繼續您的問題。

[Interpreted]

[解釋]

I have two questions, one for each, -- one for LCD and another for OLED. Now, for the LCD, we see that the set makers that utilize LCD display are also seeing demand decline. So then my question is, what is the company's plan for the LCD lines? So will they be scrapped or will they be converted to OLED production? And related to this, it appears as if the domestic company's realignment of the LCD business has been a bit delayed or a bit belated, despite the fact that the LCD market's sluggishness has already been predicted since COVID-19. So I wonder what the specific reasons or causes are, for this lack of flexibility in the LCD line operations?

我有兩個問題，每個問題一個，一個是關於 LCD 的，另一個是關於 OLED 的。現在，對於 LCD，我們看到使用 LCD 顯示器的設備製造商的需求也在下降。那麼我的問題是，公司對 LCD 生產線的計劃是什麼？那麼它們會被報廢還是轉為 OLED 生產？與此相關的是，儘管自 COVID-19 以來 LCD 市場的低迷已經被預測到，但國內公司對 LCD 業務的調整似乎有點延遲或遲到了。所以我想知道液晶線操作缺乏靈活性的具體原因或原因是什麼？

And the second question is about OLED. Now, the -- overall, the demand for TV continues to fall, and also we see that the LCD panel prices are also declining. So this does not bode well for the OLED TV market in general either. So what is the company's plan for shipment for the remainder of the year?

第二個問題是關於 OLED。現在，總體而言，對電視的需求繼續下降，而且我們看到液晶面板的價格也在下降。所以這對 OLED 電視市場來說也不是好兆頭。那麼公司今年剩餘時間的出貨計劃是什麼？

[Interpreted]

[解釋]

This is Hee-Yeon Kim, Senior Vice President of Corporate Strategy Group responding to your question about the operation of LCD lines. Now, because of the lesser competitiveness, the LCD TVs fab capacity has been -- gradually been reduced since 2019. But we have been utilizing the existing capacity to the fullest extent possible to respond to the demand arising during the pandemic period.

我是企業戰略部高級副總裁 Hee-Yeon Kim 回答您有關 LCD 生產線運營的問題。現在，由於競爭力較弱，液晶電視工廠的產能自2019年以來逐漸減少。但我們一直在最大限度地利用現有產能，以應對疫情期間出現的需求。

And now, for the domestic LCD business, where the competitiveness is weak, the business will be downsized and we are planning for an earlier exit. So where we are aligned with the customers and we will begin to discontinue production, and we will be reducing our capacity into the first half of next year.

而現在國內的液晶顯示器業務，競爭力較弱，將進行小型化，我們計劃提前退出。因此，如果我們與客戶保持一致，我們將開始停止生產，我們將在明年上半年減少產能。

But for the LCD TV fab in China where we do have cost competitiveness, we will keep converting them to the more competitive products, like IT or commercial.

但對於我們在中國有成本競爭力的液晶電視廠，我們會繼續將其轉化為更具競爭力的產品，如 IT 或商業。

Now, in the Korean P7 fab, the capacity is 150,000 and we will be reducing 60,000 in the second half of the year and another 30,000 in the first half of next year. The Chinese fab, we have 200,000 capacity, and of this, 10% has already been converted to IT, and the remaining 170,000, they will be converted, as I explained earlier, to either commercial or IT, whichever is more -- whichever has bigger competitive edge. So by the second half of next year, about 40% of the TV capacity would have been reduced.

現在，在韓國的P7工廠，產能是15萬片，我們將在下半年減少6萬片，明年上半年再減少3萬片。中國晶圓廠，我們有 200,000 產能，其中 10% 已經轉換為 IT，其餘 170,000，正如我之前解釋的，它們將轉換為商業或 IT，以更多者為準 - 以更大的競爭優勢。因此，到明年下半年，大約 40% 的電視容量將減少。

And aside from the TV capacity, the IT capacity, for which we have about 200,000, so the IT capacity will remain depending -- so based on the cost competitiveness, as well as the product competitiveness.

除了電視容量，我們有大約 20 萬台的 IT 容量，因此 IT 容量仍將取決於 - 因此基於成本競爭力以及產品競爭力。

[Interpreted]

[解釋]

Next, this is Daniel Lee in terms of Large Display Marketing, responding to your question about the OLED shipment and the plan for the remainder of this year.

接下來，我是大顯示器營銷部的 Daniel Lee，回答您關於 OLED 出貨量和今年剩餘時間計劃的問題。

As has been duly noted by the questioner, the display market in general is struggling. So for the TV market, there was negative growth of 24% in 2021 and another negative growth of 10% in the first half of this year.

正如提問者所指出的那樣，顯示器市場總體上正在苦苦掙扎。所以對於電視市場來說，2021年出現了24%的負增長，今年上半年又出現了10%的負增長。

But in the first half of this year, what we have seen is, despite the challenges, the OLED TV, the actual sales of OLED TV has increased by about mid 20% Y-o-Y, and we believe that this is quite a meaningful performance that has been achieved, in cooperation with our customers.

但在今年上半年，我們看到的是，儘管OLED電視面臨挑戰，但OLED電視的實際銷量同比增長了20%左右，我們認為這是一個相當有意義的表現。與我們的客戶合作，實現了這一目標。

And now in the second half of the year, now, unlike the market in general, we still expect the actual sales of OLED TV to continue to grow. Having said that, because of the economic downturn, as well as the sluggish demand in the downstream, we believe that the overall sales are also going to slow down, compared to the first half. So it is projected to be in the mid-teen percent.

而現在到了下半年，現在，不同於一般的市場，我們仍然預計OLED電視的實際銷量會繼續增長。話雖如此，由於經濟不景氣，以及下游需求低迷，我們認為整體銷售與上半年相比也將放緩。因此，預計將在 10% 左右。

So because of the difficulties, the retailers as well as set makers have been quite conservative in their inventory management. So the company will keep monitoring the market situation, and will run our own operations and inventory, according -- based on the assumption that the downside risks are going to materialize. And so overall, the shipment Y-o-Y is going to grow slightly.

因此，由於困難，零售商和電視機製造商在庫存管理方面一直相當保守。因此，公司將繼續監控市場情況，並將根據下行風險將成為現實的假設運行我們自己的運營和庫存。因此，總體而言，出貨量 Y-o-Y 將略有增長。

(foreign language)

（外語）

The following question will be presented by SK Kim from Daiwa Capital Market.

以下問題將由大和資本市場的 SK Kim 提出。

[Interpreted]

[解釋]

I also have two questions. First question is about the OLED. Now, as the CFO has also pointed out earlier, now the company is quite strong in terms of technology in IT and automotive. And then also, there are the OLED, new MI devices. So the company appears to be strong in terms of technology for new applications. So if you could elaborate a bit further on your technological advantage compared to other players. So for example, what are the differentiating factors and what is the extent of the technological gap with other players?

我也有兩個問題。第一個問題是關於 OLED。現在，正如首席財務官之前也指出的那樣，現在公司在 IT 和汽車技術方面相當強大。然後還有 OLED，新的 MI 設備。因此，該公司在新應用技術方面似乎很強大。因此，如果您可以進一步詳細說明您與其他玩家相比的技術優勢。例如，差異化因素是什麼，與其他參與者的技術差距有多大？

And the second question is about the LCD outlook. So up until July, it appeared as if the LCD TV price decline had slowed down, but more recently, we see that the pace of decline has picked up again. So based on the latest developments then, what is the company's view regarding the market outlook in the second half, as well as the price trend for LCD in the second half?

第二個問題是關於液晶顯示器的前景。所以直到7月份，液晶電視價格的跌勢似乎已經放緩，但最近，我們看到下跌的速度又加快了。那麼根據最新的發展情況，公司對下半年的市場前景，以及下半年LCD的價格走勢有何看法？

[Interpreted]

[解釋]

This is Ki Hwan Son, Vice President of Auto Marketing responding to your question about the OLED technology. Now, for the automotive OLED, because of the nature, it is very important for this product to withstand extreme environment and conditions. And because of this, LG Display has been developing the long living OLED and also the tandem OLED technology. So we have been developing the tandem OLED devices since 2015, and as a result, in 2019, we were able to launch the tandem OLED for automotive applications.

我是汽車營銷副總裁 Ki Hwan Son，回答您關於 OLED 技術的問題。現在，對於汽車OLED來說，由於其性質，該產品能夠承受極端的環境和條件是非常重要的。正因為如此，LG Display 一直在開髮長壽的 OLED 以及串聯 OLED 技術。因此，我們自 2015 年以來一直在開發串聯 OLED 設備，因此，在 2019 年，我們能夠推出用於汽車應用的串聯 OLED。

And now, this type of tandem OLED technology, this can also be applied to IT products because -- thanks to its high brightness as well as longevity. And it is also good in terms of low power consumption. So this means that they would also be good for latest technologies like MI. So we believe that the technology that we have developed for automotive purposes are also appropriate for IT products as well.

而現在，這種串聯 OLED 技術也可以應用於 IT 產品，因為它的亮度高且壽命長。而且在低功耗方面也不錯。因此，這意味著它們也適用於 MI 等最新技術。因此，我們相信我們為汽車目的開發的技術也適用於 IT 產品。

[Interpreted]

[解釋]

This is Jeong Yi in charge of Business Intelligence, and I would like to respond to your question about the second half market outlook as well as the LCD price trend.

我是商務智能的鄭義，我想回答你關於下半年市場前景以及液晶價格走勢的問題。

Now, first of all about demand for -- in the second half, because of the sluggish actual sales for the set makers, their inventory level at the end of the second quarter range from four weeks to seven weeks, meaning that they have an excessive level of inventory.

現在，首先是關於需求——下半年，由於設備製造商的實際銷售低迷，他們在第二季度末的庫存水平從四周到七週不等，這意味著他們有過多的庫存。庫存水平。

And because of the high inventory level, the set makers will continue to adjust their purchasing of panels into the third quarter of the year. And as a result of this, there is likely to be bigger decline in the purchase of panels, more so than the decline in the actual sales of the set products.

並且由於庫存水平較高，到今年第三季度，設備製造商將繼續調整面板採購。並且因此，面板採購量的降幅可能會比成套產品實際銷量的降幅更大。

And that is also the reason why the panel makers have started to adjust their utilization rate in the second quarter and such adjustment is likely to become broader in the third quarter. So against this backdrop, then looking toward the price trend in the second half, it appears as if the price decline is likely to continue into the third quarter, but then now, in the fourth quarter, as a result of the supply adjustment, the price trend is likely to at least partially stabilize.

這也是面板廠商在二季度開始調整利用率的原因，而且這種調整在三季度可能會擴大。所以在這樣的背景下，再看下半年的價格走勢，似乎價格下跌可能會持續到第三季度，但現在第四季度，由於供應調整，價格走勢可能至少部分企穩。

(foreign language)

（外語）

The following question will be presented by Hyun-soo Kim from Hana Securities. Please go ahead with your questions.

Hana Securities 的 Hyun-soo Kim 將提出以下問題。請繼續您的問題。

[Interpreted]

[解釋]

I have one question on the LCD IT. Another question on OLED TV. Now, first about the LCD IT business, it's assumed that the profitability in the second quarter would have deteriorated. So what was the extent of the profitability decline in the second quarter versus the first quarter? And also if you could -- if the company could also give us a guidance on the IT profitability in the second half of the year.

我有一個關於 LCD IT 的問題。關於OLED電視的另一個問題。現在，首先關於LCD IT業務，假設第二季度的盈利能力會惡化。那麼二季度與一季度相比，盈利能力下降的幅度有多大？如果可以的話 - 如果公司也可以在下半年給我們關於 IT 盈利能力的指導。

And the second question is about the OLED TV and the company was in negotiation with a new customer, domestic customer. So is there anything that the company can share with us at that point regarding the negotiation? And also regarding the OLED TV, is there any update on potential ramp-up?

第二個問題是關於OLED電視的，公司正在與一個新客戶，國內客戶進行談判。那麼，在談判的這一點上，公司有什麼可以與我們分享的嗎？還有關於 OLED 電視，是否有任何關於潛在增長的更新？

[Interpreted]

[解釋]

This is Seong Jong Kim in charge of Medium Display Marketing, and I would like to give you a response regarding the IT market, as well as the profitability and profitability outlook.

我是Medium Display Marketing的Seong Jong Kim，我想就IT市場以及盈利能力和盈利前景給你一個回應。

Now, as has been mentioned several times by other speakers already, the IT market is now in a downturn, and because of this, demand for most of the products, including monitors and notebooks is also declining. And that is why we also see that overall in the market, there also is quite a high level of inventory, and this also translated into lesser purchasing of panels as well.

現在，正如其他演講者已經多次提到的那樣，IT 市場現在處於低迷狀態，因此，對包括顯示器和筆記本電腦在內的大部分產品的需求也在下降。這就是為什麼我們也看到整體市場上的庫存水平也很高，這也轉化為面板採購量減少。

So we see that overall the market is struggling and slowing down, but then now, as you would also know, the company is mostly engaged in the high-end segment where the volatility is less. So in the -- between the first quarter and the second quarter, compared to the overall decline in the IT market in general, I would say that the company's profitability impact has been lesser than the average market level.

因此，我們看到整體市場正在掙扎和放緩，但現在，正如您也知道的那樣，該公司主要從事波動較小的高端市場。因此，在第一季度和第二季度之間，與整體 IT 市場的整體下滑相比，我會說公司對盈利能力的影響小於平均市場水平。

And then in terms of the outlook for the next quarter and on, now although the other players are adjusting their utilization rate, which is also going to affect the overall demand and supply dynamics, the company will keep focusing on the high-end segment to generate consistent performance.

再來看下一季度及以後的展望，雖然目前其他廠商正在調整利用率，這也將影響整體供需動態，但公司將繼續專注於高端領域產生一致的性能。

[Interpreted]

[解釋]

Now, this is the CFO. And the questioner asked for an update on the negotiation in the OLED business. Now, as you would also know, the company has been focusing on solidifying the position of OLED panels in the market, to make it a norm in the market. And I would say that the company has been making strides in that direction so far. And in this process, a new potential customer expressed intent to use our panels and the market also became aware of it. So negotiations have been underway. But now at this time, there is nothing in progress.

現在，這是首席財務官。提問者要求提供有關 OLED 業務談判的最新情況。現在，您也知道，該公司一直致力於鞏固 OLED 面板在市場上的地位，使其成為市場常態。我想說，到目前為止，該公司一直在朝著這個方向邁進。在這個過程中，一位新的潛在客戶表達了使用我們面板的意圖，市場也意識到了這一點。因此，談判一直在進行。但現在這個時候，沒有任何進展。

And down the road, we will be cooperating with any potential customers to create synergy effects, as long as they recognize the value of OLED and are willing to work together to create new markets.

而在未來，我們將與任何潛在客戶合作，創造協同效應，只要他們認識到OLED的價值並願意共同創造新的市場。

(foreign language)

（外語）

The next question will be presented by Junghoon Chang from Samsung Securities. Please go ahead with your questions.

下一個問題將由三星證券的 Junghoon Chang 提出。請繼續您的問題。

[Interpreted]

[解釋]

Now, in terms of the inventory, it became higher in the second quarter and in the presentation, it was explained that this was a preemptive preparation for the demand to come in the future. So I would just like to ask for further clarification of the higher inventory level. So was this the result of a deliberate buildup in the inventory per plan or is it also at least partially due to the changes in the end demand?

現在，就庫存而言，它在第二季度變得更高，並且在演示中解釋說這是對未來需求的先發製人的準備。因此，我只想要求進一步澄清較高的庫存水平。那麼這是故意增加每個計劃的庫存的結果，還是至少部分是由於最終需求的變化？

And another question is, now in the financial statement, it seems as if the short-term borrowings has increased significantly to about KRW6 trillion level. So I would imagine that it was probably due to investments, so the company probably needed some financing for investment, but if you could give us some explanation about the increase in the short-term borrowings?

另一個問題是，現在在財務報表中，短期借款似乎已大幅增加至約 6 萬億韓元的水平。所以我想這可能是由於投資，所以公司可能需要一些融資來進行投資，但是您能否解釋一下短期借款的增加？

[Interpreted]

[解釋]

This is Seung Min Lim, Vice President of Corporate Planning and I would like to respond to your question about the higher inventory level.

我是企業規劃副總裁 Seung Min Lim，我想回答您關於更高庫存水平的問題。

Now, for the inventory increase, now, a considerable part of the increase is owed to our plan, to respond to the higher demand for POLED in the second half. And then another part of it is, because of the lockdown in Shanghai, and as a result, the inability to produce IT modules. So we also have built up the panels to make up for the shortfall from the first half of the year.

現在，對於庫存的增加，現在，增加的很大一部分歸功於我們的計劃，以應對下半年對POLED更高的需求。另一部分是，由於上海的封鎖，導致無法生產 IT 模塊。所以我們也建立了面板來彌補上半年的不足。

But in terms of the specific inventory level, we will be running it according to strict planning. So in the second half, according to the sales situation and changes in the demand, we plan to normalize the inventory level.

但在具體的庫存水平上，我們會按照嚴格的計劃運行。所以下半年，根據銷售情況和需求變化，我們計劃將庫存水平正常化。

[Interpreted]

[解釋]

And this is the CFO and you -- the questioner also asked about the increase in the short-term borrowings. But I must clarify that this is not the type of short-term borrowings that you would know or it's probably not the same kind of short-term borrowings in -- under the conventional definition.

這是首席財務官和你——提問者還詢問了短期借款的增加。但我必須澄清的是，這不是你所知道的短期借款類型，或者它可能與傳統定義下的短期借款不同。

Now, on one hand, the long-term borrowing is not acceptable in the market these days and also the interest rate for long-term borrowings has gone up considerably. And the case that you have mentioned, that is actually where we set up credit line based on mutual agreement, and then we would draw -- we would continue to roll over in the form of short-term borrowings. So that is why I said that it is different from the type of short-term borrowing that we know. And also because of the -- but then also because of the higher inventory level, for example, the materials costs or other costs, probably would become (inaudible) costs. So that probably has partially affected our borrowing level as well.

現在，一方面，現在市場不能接受長期借款，而且長期借款的利率也大幅上漲。你提到的情況，實際上是我們根據雙方協議設置信貸額度，然後我們會提取——我們將繼續以短期借款的形式展期。所以這就是為什麼我說它不同於我們所知道的短期借款類型。也因為——但也因為更高的庫存水平，例如，材料成本或其他成本，可能會變成（聽不清）成本。因此，這可能也部分影響了我們的借貸水平。

[Interpreted]

[解釋]

It appears as if there are no further questions. And we will now close Q2 2022 earnings conference call. Thank you once again for joining us today. Please do contact us at the IR team for any additional questions. Thank you.

似乎沒有進一步的問題。我們現在將結束 2022 年第二季度財報電話會議。再次感謝您今天加入我們。如有任何其他問題，請聯繫我們的 IR 團隊。謝謝你。

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

[本成績單上的英文陳述由現場通話中的一名口譯員說出。]