LG Display Co Ltd (LPL) 2023 Q1 法說會逐字稿

[Interpreted]

[解讀]

Good morning and good evening. First of all, thank you all for joining this conference call and now we will begin the conference for our Fiscal Year 2023 First 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，現在我們將開始召開 LG Display 2023 財年第一季度財報會議。本次會議將以演示開始，然後是部門問答環節。 （操作員說明）

Now we shall commence the presentation on the Fiscal Year 2023 First Quarter Earnings Results by LG Display.

現在我們將開始介紹 LG Display 的 2023 財年第一季度收益結果。

[Interpreted]

[解讀]

Good afternoon. This is Brian Heo, In-Charge of IR at LG Display. On behalf of the company, I would like to thank all the participants for joining this conference call. Today, I'm joined by the CFO, Sung-Hyun Kim; CSO, Hee-Yeon Kim; Senior Vice President of Corporate Planning, Seung Min Lim; Vice President of Auto Marketing, Ki Hwan Son; and [Jeong Lee] in charge of Business Intelligence; [Won Jae Lee], in charge of Large Display Marketing; and Tae Gwang Kim, in charge of Medium Display Marketing.

下午好。我是 LG Display 的 IR 負責人 Brian Heo。我謹代表公司感謝所有與會者參加本次電話會議。今天，首席財務官 Sung-Hyun Kim 加入了我的行列； CSO，Hee-Yeon Kim；企業規劃高級副總裁Seung Min Lim；汽車營銷副總裁 Ki Hwan Son； [Jeong Lee] 負責商業智能； [Won Jae Lee]，負責大型顯示器營銷；以及負責媒體展示營銷的 Tae Gwang Kim。

The conference call will be conducted in both Korean and English. Please refer to the provisional earnings released today, or the IR Events section of the company's website for more details on the financial results of Q1 2023.

電話會議將以韓語和英語進行。有關 2023 年第一季度財務業績的更多詳細信息，請參閱今天發布的臨時收益或公司網站的 IR Events 部分。

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

另外，在我們開始演示之前，請花點時間閱讀免責聲明。

Please also 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.

另請注意，今天的結果基於統一的 IFRS 標準，為您的利益而準備，並且尚未經過外部審計師的審計。

I will first start with Q1 business results. In the midst of sluggish demand for TV and IT products and inventory corrections continuing in the downstream industries, there were added impacts from slow seasonality and the company's downsizing of its LCD TV business, which all drove Q1 revenue down 40% Q-on-Q and 32% year-over-year, reporting KRW4,411 billion.

我將首先從第一季度的業務成果開始。在電視和IT產品需求低迷、下游行業庫存調整持續的情況下，加上淡季和公司縮減液晶電視業務的影響，一季度營收環比下降40%同比增長 32%，達到 44,110 億韓元。

Meanwhile, underpinned by preemptive inventory downsizing since Q4, we continue to rationalize large panel business, undertook intense cost savings, introducing cost innovations, thanks to which we were able to narrow the fluctuations in profit and reported operating loss of KRW1,098 billion.

同時，在第四季度以來先發製人的庫存縮減的支持下，我們繼續合理化大型面板業務，進行了大量的成本節約，引入成本創新，從而縮小了利潤波動，並報告了 10,980 億韓元的營業虧損。

Next on area shipment and ASP per square meter; first quarter area shipment was down 46% Q-on-Q, reporting 4.24 million square meters on the back of muted downstream demand and seasonal shipment declines across all product segments, as well as downsizing of the company's LCD TV business with the closure of domestic LCD TV fab end of last year. Typically, ASP per square meter follows a downward trajectory during the first quarter, as mobile demand seasonally declined during this period. But this quarter, on a lower LCD TV mix whose ASP is the lowest, ASP per square meter actually increased 20% Q-on-Q, reporting $850.

接下來是面積出貨量和每平方米的平均售價；第一季度出貨面積環比下降 46%，報告出貨面積為 424 萬平方米，原因是下游需求疲軟和所有產品領域的季節性出貨量下降，以及公司 LCD 電視業務因國內工廠關閉而縮減規模液晶電視晶圓廠去年底。通常，由於移動需求在此期間季節性下降，因此第一季度每平方米平均售價呈下降趨勢。但本季度，在平均售價最低的較低液晶電視組合中，每平方米的平均售價實際上環比增長了 20%，達到 850 美元。

In terms of the revenue breakdown by each product segment, on the back of downsizing of the LCD TV business, revenue mix of the TV panel was down 6 percentage points Q-on-Q, reporting 19%, while IT panel mix reported a relative increase, recording 38%. Driven by seasonality and ensuing decline in panel shipments, mobile and other products saw their revenue mix dip by 2 percentage points Q-over-Q to 32%.

從各產品板塊的收入分佈來看，在液晶電視業務收縮的背景下，電視面板的收入結構環比下降6個百分點，為19%，而IT面板的收入結構則相對下降增加，錄得38%。在季節性因素和隨之而來的面板出貨量下降的推動下，移動和其他產品的收入組合環比下降 2 個百分點至 32%。

Auto business continued to show steady top line growth, reporting mid-20% revenue growth year-over-year with its revenue mix at 11% this quarter. OLED revenue mix was lower Q-on-Q due to seasonal declines for large and mobile OLEDs, but on a year-over-year basis, driven by sustained efforts towards business structure upgrades, OLED revenue mix was up 13 percentage points, reporting 45%.

汽車業務收入繼續保持穩定增長，本季度收入同比增長 20% 左右，收入佔比為 11%。由於大型和移動 OLED 的季節性下降，OLED 收入組合環比較低，但與去年同期相比，在業務結構升級的持續努力的推動下，OLED 收入組合增長了 13 個百分點，報告 45 %。

Next is on the financial position and key metrics; company's cash and cash equivalent was KRW3,894 billion, maintaining above the mid-KRW3 trillion level. While on the back of active inventory management to keep it at the minimum level, Q1 inventory was flat Q-over-Q at KRW2,811 billion.

接下來是財務狀況和關鍵指標；公司現金及現金等價物為38,940億韓元，維持在3萬億韓元的中期水平之上。在積極的庫存管理將其保持在最低水平的支持下，第一季度庫存環比持平，為 28,110 億韓元。

Key financial ratios were up Q-on-Q on rise in debt, with debt-to-equity ratio of 248% and net debt to equity ratio at 126%.

由於債務增加，主要財務比率環比上升，債務權益比率為 248%，淨債務權益比率為 126%。

In terms of cash flow, opening cash balance was KRW3,547 billion, and with increase in cash inflow from financial activities, there was an increase of KRW347 billion Q-over-Q, reporting ending balance of KRW3,894 billion.

現金流方面，期初現金餘額為35,470億韓元，隨著金融活動現金流入增加，環比增加3,470億韓元，報告期末餘額為38,940億韓元。

Next on Q2 guidance; although market volatilities and uncertainties persist, we expect pickup in seasonal demand following the launch of new models from each product segment in the second quarter, driving Q-over-Q shipment growth for large and mid-sized panels. As such, area shipment is expected to rise by around 10% Q-on-Q. On seasonal declines in mobile panel shipment, ASP per square meter is expected to fall mid-single digit on a Q-over-Q basis.

接下來是第二季度的指導；儘管市場波動和不確定性依然存在，但我們預計第二季度各產品領域推出新型號後季節性需求將回升，從而推動大中尺寸面板出貨量環比增長。因此，預計出貨面積將環比增長 10% 左右。由於移動面板出貨量的季節性下降，預計每平方米平均銷售價格環比下降中等個位數。

Next, our CFO, Sung-Hyun Kim, will walk through key highlights.

接下來，我們的首席財務官 Sung-Hyun Kim 將介紹要點。

[Interpreted]

[解讀]

Good afternoon. This is CFO, Sung-Hyun Kim.

下午好。我是首席財務官 Sung-Hyun Kim。

Looking back over the first quarter, difficult market backdrop continued as last year's macro uncertainties persisted, while inflation squeezed down on consumption, which drove muted demand for display panels, with inventory corrections continuing in the downstream industries. In particular, sluggish demand for high-end products was more pronounced versus what was seen previously for general B2C products, and as the company downsized its LCD TV business as part of the strategy to advance its business structure, shipment and revenue declined by somewhat of a large margin, compared to previous years.

回顧一季度，去年宏觀不確定性依然存在，市場形勢依然嚴峻，通脹打壓消費，顯示面板需求疲軟，下游行業庫存調整持續。特別是高端產品的需求低迷比之前一般B2C產品的需求更為明顯，並且隨著公司縮小液晶電視業務作為其業務結構調整戰略的一部分，出貨量和收入下降了一定程度與往年相比，有很大的差距。

To respond to such business environment, the company has engaged in preemptive inventory cuts, rationalized the operation of large panel business, and actively and intensely reduced and innovated our cost base, in order to narrow the extent of fluctuation in profit.

為應對這樣的經營環境，公司提前去庫存，合理化大面板業務的運營，積極大力壓縮和創新成本基礎，以縮小利潤波動幅度。

Under continuing slump of the downstream industry, market dynamic had been such that panel shipment has been weaker, below actual set sales for around 1 full year now, making it difficult to predict the exact timing of recovery or normalization of sell-through demand. Accordingly, the company is focusing on recovery of its financial soundness, and upgrading to advanced business structure in order to pull forward its execution capabilities.

在下游行業持續低迷的情況下，市場動態使得面板出貨量疲軟，低於實際銷售量約一年，因此很難預測恢復或銷售需求正常化的確切時間。相應地，公司正著力恢復其財務穩健性，升級至先進的業務結構以拉動其執行力。

First, to strengthen our liquidity position, in Q1, we entered into a strategic financing arrangement with LGE. Through this arrangement, we were able to expand business cooperation, while at the same time strengthen stability in operating our funds in the face of uncertain external environment. The funds raised will be used to bolster financial strength, develop products and technologies to strengthen our OLED business, and to further advance company's business structure, such as through driving market-creating businesses, including transparent and gaming OLED applications.

首先，為了加強我們的流動性狀況，在第一季度，我們與 LGE 達成了戰略融資安排。通過這樣的安排，我們能夠在擴大業務合作的同時，在不確定的外部環境下加強資金運營的穩定性。籌集的資金將用於增強財務實力，開發產品和技術以加強我們的 OLED 業務，並進一步推進公司的業務結構，例如通過推動市場創造業務，包括透明和遊戲 OLED 應用。

Also, throughout the first half, we plan to tap into multiple financing options to further strengthen our liquidity position and build up an agile financial structure to flexibly respond to challenging environment. This will push up some of our financial ratios, but after the start of the second half, on gradual earnings improvement, we will enhance financial metrics in stages.

此外，在整個上半年，我們計劃利用多種融資方式進一步加強我們的流動性狀況，並建立靈活的財務結構以靈活應對充滿挑戰的環境。這將推高我們的一些財務比率，但下半年開始後，隨著盈利的逐步改善，我們將分階段提高財務指標。

In terms of upgrading the business structure, by growing the contribution from order-based business, where volume and price can be managed favorably based upon close collaboration with our customers, we plan to focus our capabilities on future-proofing and bolstering competitiveness towards differentiation.

在業務結構升級方面，通過與客戶的密切合作，通過增加訂單業務的貢獻，在這些業務中，我們可以通過與客戶的密切合作來有利地管理數量和價格，我們計劃將我們的能力集中在面向未來的能力和增強差異化競爭力上。

Share of order-based business increased to early 40% this year and our target is to reach 70% in 2 to 3 years' time. High value-added mobile products, slated for additional mass production this year, will see increase in shipments, while we will solidify global #1 positioning by securing orders and growing revenue from displays for automobile applications. For the mid-sized OLEDs, including OLED for tablet PCs where investment is currently ongoing, we plan to thoroughly prepare for supply and mass production in 2024, underpinned by technology leadership.

基於訂單的業務份額今年增加到 40%，我們的目標是在 2 到 3 年內達到 70%。預計今年將追加量產的高附加值移動產品出貨量將增加，同時我們將通過確保訂單和增加汽車應用顯示器的收入來鞏固全球第一的地位。對於目前正在進行投資的中型OLED，包括用於平板電腦的OLED，我們計劃在技術領先的基礎上為2024年的供應和量產做好充分準備。

For the supply and demand-based business where market volatilities are high, we are focusing on high value-add segments. For large OLEDs, we are broadening the lineup of differentiated products, underpinned by stronger fundamental competitiveness in i.e. brightness and power consumption and through cost innovations, we plan to solidify our Premium TV market positioning and accelerate market-creating businesses, which includes transparent and gaming OLED applications. For the order-based business where volume and price are more favorable, as we can engage in close collaboration with customers, we will continue to grow its share and focus our capabilities on future-proofing and bolstering our competitive edge.

對於市場波動較大的供需業務，我們專注於高附加值的領域。對於大尺寸OLED，我們正在擴大差異化產品陣容，以更強的亮度和功耗等基礎競爭力為支撐，並通過成本創新，我們計劃鞏固我們的高端電視市場定位並加速市場創造業務，包括透明和遊戲有機發光二極管應用。對於數量和價格更有利的基於訂單的業務，因為我們可以與客戶進行密切合作，我們將繼續擴大其份額，並將我們的能力集中在面向未來和增強我們的競爭優勢上。

Market uncertainties and volatilities still run high, and although demand is muted and inventory adjustment continues in the downstream, driven by intense cost-saving efforts, we expect Q2 profit to marginally improve versus the first quarter. As we bottom out in the first half following recovery of inventory levels and soundness, thereof, across the overall ecosystem of the industry, in the second half of the year we will see rise in demand for panels and with increase in shipment for mobile products and positive performance from the order-based businesses, we plan to achieve a turnaround in profit in the second half of the year and drive earnings improvement on a full year basis.

市場不確定性和波動性依然高漲，雖然需求低迷，下游庫存調整持續，但在大力節約成本的推動下，我們預計二季度利潤較一季度略有改善。由於我們在整個行業的整體生態系統中庫存水平和穩健性恢復後上半年觸底反彈，下半年我們將看到面板需求上升以及移動產品出貨量增加和訂單業務的良好表現，我們計劃在下半年實現盈利的轉機，並推動全年盈利改善。

Notwithstanding unprecedented weakness in the market, by advancing the business structure that will form the basis for steady earnings going forward and stronger financial soundness, we commit to do our utmost to overcome this difficult situation with speed and drive meaningful results. Thank you.

儘管市場出現前所未有的疲軟，但通過推進將構成未來穩定收益和更強大財務穩健基礎的業務結構，我們承諾盡最大努力迅速克服這一困難局面並取得有意義的成果。謝謝。

This brings us to the end of the earnings presentation for Q1 2023. We will now go into questions. Operator, please commence with the Q&A session.

這使我們結束了 2023 年第一季度的收益報告。我們現在將提出問題。接線員，請開始問答環節。

[Interpreted]

[解讀]

(Operator Instructions) The first question will be presented by Dongwon Kim from KB Securities.

（操作員說明）第一個問題將由 KB 證券的 Dongwon Kim 提出。

[Interpreted] I have several questions relating to your large panel business, as well as to mid --related to your mid-to-small-sized panel business. First, can you provide some color as to how things are going with regards to your plan to sell off your plant and fab in Guangzhou and Paju? If you could also provide a little more color on the entire LCD TV fab exit roadmap, that will also be quite helpful.

[解釋] 我有幾個問題與你們的大型面板業務有關，以及與你們的中小型面板業務相關的中型面板業務。首先，您能否提供一些關於您出售廣州和坡州工廠的計劃進展情況的顏色？如果您還可以在整個 LCD 電視工廠退出路線圖上提供更多顏色，那也會很有幫助。

And according to the press coverage, would like to understand what your assessment is with regards to the likelihood of your success, vis-a-vis the large panel OLED and acquiring of new customers compared to your past endeavors? And also, would that mean that we can expect to see some improvement on your profitability on your white OLED business going forward?

根據媒體報導，與過去的努力相比，您是否想了解您對大面板 OLED 和獲得新客戶的成功可能性的評估？而且，這是否意味著我們可以期待看到您的白色 OLED 業務的盈利能力有所改善？

And second question relates to your P-OLED business. Your profitability has not been all that great and also the amount of sold volume was quite low at -- below by about 40 million. Would like to understand whether you see that going forward as we enter into the second half of the year, we will see improvement in profitability in a meaningful manner, as well as improvement in volume.

第二個問題與您的 P-OLED 業務有關。您的盈利能力並不是那麼好，而且銷量也很低——低於大約 4000 萬。想了解您是否看到我們進入下半年時，我們將以有意義的方式看到盈利能力的提高以及銷量的提高。

Another question relates to your tablet OLED business for next year. What is your assessment as to your positioning on your key customers vis-a-vis your competitors? And can we look forward to profitability improvement from this business as well?

另一個問題與您明年的平板電腦 OLED 業務有關。相對於競爭對手，您如何評估您對主要客戶的定位？我們是否也可以期待這項業務的盈利能力提高？

[Interpreted]

[解讀]

Yes, I will respond to the first question on our LCD exit planning.

是的，我將回答關於我們 LCD 退出計劃的第一個問題。

As you are already aware, we closed down our domestic LCD fab end of last year, and we are currently running our China 8th Generation fab at about 50%. We have downsized the running of that China fab.

如您所知，我們去年底關閉了國內 LCD 工廠，目前我們的中國第 8 代工廠正在以大約 50% 的速度運行。我們已經縮減了那家中國工廠的運營規模。

Now with regards to the LCD TV fab, we are looking at various different aspects to come up with ways to meaningfully utilize the LCD TV fab, and at this point, we are carrying out with initiatives to sell off our domestic Gen 7 TV fab.

現在關於 LCD 電視工廠，我們正在研究各種不同的方面，以提出有意義地利用 LCD 電視工廠的方法，在這一點上，我們正在採取措施出售我們國內的 Gen 7 電視工廠。

And with regards to other fabs, we are at this point tapping into various different options that could help us maximize the profit of the company by looking at potentially transitioning it or migrating it for different use case, or through selling it off, or maybe engaging in strategic partnerships. Interpreted

對於其他晶圓廠，我們目前正在探索各種不同的選擇，這些選擇可以幫助我們通過考慮潛在的轉型或遷移以適應不同的用例、出售或參與來最大化公司的利潤在戰略合作夥伴關係中。解釋

Hello. I am [Won Jae Lee], in charge of Large Display Marketing. Before I provide you with an answer, I hope that you could appreciate and understand that it will be difficult for us to provide you with any specific information that relates to our customers.

你好。我是 [Won Jae Lee]，負責大型顯示器營銷。在我給您答復之前，我希望您能理解並理解我們很難向您提供與我們客戶相關的任何具體信息。

The company, as we speak, is really endeavoring to bring improvements with regards to our overall customer relationship and the overall dynamics of the structure. We will very actively engage in collaborations with any customer who we deem we could create mutual synergies and who really appreciate and understand the value of OLED. At the same time, we are at this point continuously strengthening our other businesses, including gaming and transparent OLED applications that fully utilizes the strength of the OLED technology, so that we may further bolster our business portfolio in the future.

正如我們所說，該公司確實在努力改善我們的整體客戶關係和結構的整體動態。我們將非常積極地與我們認為可以創造相互協同效應並且真正欣賞和理解 OLED 價值的任何客戶進行合作。與此同時，我們正在不斷加強我們的其他業務，包括遊戲和充分利用 OLED 技術優勢的透明 OLED 應用，以便我們在未來進一步加強我們的業務組合。

Now, if you look at the recent macro environment, the volatilities are running high and we have seen market really significantly dampen. And if you look at the sluggishness in the market demand, what we experienced in the high-end market, including the OLED TV, is much weaker compared to what we previously explained in our general purpose B2C products.

現在，如果你看看最近的宏觀環境，波動性很高，我們看到市場確實顯著受挫。如果你看一下市場需求的低迷，我們在高端市場（包括 OLED 電視）所經歷的情況與我們之前在通用 B2C 產品中所解釋的情況相比要弱得多。

So under this backdrop, we have seen, during the first quarter, in terms of the OLED panel shipment, really perform weaker compared to the actual set sales or sell-through, due to the fact that there has been the inventory adjustment in our set customers, as well as from the channel, as well as influenced by the slow seasonality. On the other hand, from our major customer, GE, we have seen through preemptive inventory adjustment, as well as cost efficiency efforts, we have seen significant improvements in terms of our performance for the Q1, and going into Q2, we expect to see a gradual improvement in terms of the volume, as well as in terms of our market position.

所以在這種背景下，我們看到，在第一季度，就 OLED 面板出貨量而言，與實際的銷售或銷售相比，確實表現較弱，這是由於我們的庫存調整所致客戶，以及來自渠道，以及受緩慢的季節性影響。另一方面，從我們的主要客戶 GE 那裡，我們看到通過先發製人的庫存調整以及成本效率方面的努力，我們在第一季度的業績方面看到了顯著改善，進入第二季度，我們預計會看到在數量和我們的市場地位方面逐漸改善。

So based off of this assessment, our positive expectations going forward for the large OLED market still stands, it is still valid, and despite the difficult situation by utilizing and leveraging our competitive edge that we have in the OLED business, we will continue to strengthen our positioning in the high-end TV market.

因此，基於這一評估，我們對大型 OLED 市場的積極預期仍然存在，仍然有效，儘管處境艱難，但通過利用和利用我們在 OLED 業務中的競爭優勢，我們將繼續加強我們在高端電視市場的定位。

[Interpreted]

[解讀]

Yes. This is the CFO. I will respond to your question about the volume growth for smartphones.

是的。這是首席財務官。我將回答您關於智能手機銷量增長的問題。

Now, if you look at our company's smartphone capacity based on Generation 6, our capacity is 30,000, and this year we will be adding 15,000 more.

現在，如果你看一下我們公司基於第 6 代的智能手機產能，我們的產能是 30,000 部，今年我們將增加 15,000 部。

And we expect to see that our volume growth will be aligned with such capacity additions.

我們希望看到我們的銷量增長將與此類產能增加保持一致。

[Interpreted]

[解讀]

Hello. I am Tae Gwang Kim, In-Charge of Medium Display Marketing. I will respond to your question about tablet OLED.

你好。我是 Tae Gwang Kim，負責媒體展示營銷。我會回答你關於平板電腦 OLED 的問題。

As we start to enter into the OLED tablet segment in the first half of the year 2024, we are expecting to have a share of about 50% in our strategic customer in the OLED tablet segment, and in terms of the overall OLED tablet market, we are seeking to have more than 60% positioning.

隨著我們在2024年上半年開始進入OLED平板領域，我們預計在OLED平板領域的戰略客戶中佔有約50%的份額，而就整體OLED平板市場而言，我們正在尋求超過60%的定位。

Now, as we enter into this tablet OLED business, we are looking forward to 2 areas of improvement in terms of profitability and narrowing the volatility of earnings performance.

現在，隨著我們進入平板電腦 OLED 業務，我們期待在盈利能力和收窄盈利表現波動方面的兩個方面有所改善。

Now, because the panel price is 2x higher compared to the LCD price, we are looking forward to higher levels of revenue growth. And also, secondly, compared to smartphones, tablets have a much lesser seasonal volatility across the first half and the second half of the year, hence we believe or we hope to see a reduced extensive volatility experience in the first half of the year.

現在，由於面板價格比 LCD 價格高出 2 倍，我們期待更高水平的收入增長。其次，與智能手機相比，平板電腦在上半年和下半年的季節性波動要小得多，因此我們相信或希望看到上半年的廣泛波動性有所降低。

(foreign language) We will take the next question, please.

（外語）請回答下一個問題。

[Interpreted] The next question will be presented by Jung Hoon Chang from Samsung Securities.

[解讀]下一個問題將由三星證券的Jung Hoon Chang提出。

[Interpreted]

[解讀]

Thank you for taking my question. I'm from Samsung Securities. During the presentation, CFO mentioned that you are looking to increase the revenue mix from the order-based business from 40% to above 70% going forward into the future. Would like to ask for more color with regards to this, is that, in the first half of the year I see that your auto application business accounts for 11% of the total mix. Then can we expect to see this increase to 40% at the end of the year and what will be the key driver that will enable that? And also if you are seeking to expand your auto display business and also expand your order-based business, I would assume that your customers would want to have -- would want to confirm the level of capacity that you can provide them. Would like to hence understand what your business management plans are with regards to capacity management?

謝謝你提出我的問題。我來自三星證券。在演示過程中，CFO 提到您希望在未來將基於訂單的業務的收入組合從 40% 增加到 70% 以上。關於這個我想多問幾個顏色，就是上半年我看到你們的汽車應用業務佔總組合的11%。那麼我們能否期望在今年年底看到這一增長到 40%，實現這一目標的關鍵驅動因素是什麼？而且，如果您正在尋求擴展您的汽車展示業務並擴展您的基於訂單的業務，我認為您的客戶希望擁有 - 想要確認您可以為他們提供的能力水平。想因此了解您在容量管理方面的業務管理計劃是什麼？

[Interpreted]

[解讀]

Yes, hi. This is Sung-Hyun Kim. I am the CFO. I will respond to your questions.

是的，嗨。我是 Sung-Hyun Kim。我是首席財務官。我會回答你的問題。

When we say order-based business, we are not just referring to the auto business. The concept of order-based business is -- its comp is -- I guess, is opposite to what we are used to in the display industry, whereby the display industry has usually been based off of supply and demand dynamics, based upon the growth of the market. What the companies usually did was, build out capacity, add capacity before the actual orders come in, and there has been significant market fluctuation that, hence, the companies were exposed to. So the order-based business is a concept that is in opposite to this demand and supply-based dynamic.

當我們說基於訂單的業務時，我們不僅指的是汽車業務。基於訂單的業務的概念是——它的補償是——我想，這與我們在顯示器行業所習慣的相反，顯示器行業通常基於供需動態，基於增長的市場。公司通常做的是，在實際訂單進來之前，先建立產能，增加產能，並且市場波動很大，因此，公司會受到影響。因此，基於訂單的業務是與這種基於需求和供應的動態相反的概念。

Now in that sense, the order-based businesses, basically under this mechanism, the volume of the business is managed based upon the agreement or contracts, as well as communications with the customers. So it provides one with a clearer visibility and stability, as compared to the demand and supply-based business.

現在從這個意義上講，基於訂單的業務，基本上在這種機制下，業務量是根據協議或合同以及與客戶的溝通來管理的。因此，與基於需求和供應的業務相比，它提供了更清晰的可見性和穩定性。

So, based upon that definition, this order-based business will include tablet, mobile phone, watch and auto applications. And auto, as you've correctly mentioned, it's mix will be around 10%, whereas everything else will account for around 30%.

因此，根據該定義，這種基於訂單的業務將包括平板電腦、手機、手錶和汽車應用程序。而汽車，正如你正確提到的那樣，它的混合將在 10% 左右，而其他一切將佔 30% 左右。

So auto business, in terms of its order backlog and business visibility, is very high and quite clear, and with regards to how the auto business will play out going forward, I will turn it over to Mr. Son from Auto Marketing to respond to that question.

所以汽車業務在訂單積壓和業務可見性方面非常高，非常明確，關於汽車業務未來如何發揮，我將由汽車營銷的孫先生回答。那個問題。

[Interpreted]

[解讀]

Yes, I am Ki-hwan Son from Auto Marketing.

是的，我是 Auto Marketing 的 Ki-hwan Son。

Now responding first to the overall growth trend in terms of the top line revenue and order backlog for auto business, allow me to speak on that first.

現在首先回應汽車業務收入和訂單積壓方面的整體增長趨勢，請允許我先談談。

Now, auto business, as of the first quarter, we actually reported above KRW3 trillion in the orders booked, and on a YTD basis, in terms of the order backlog, this is a 20% growth, when compared to end of 2021, a [70%] growth.

現在，汽車業務，截至第一季度，我們實際報告的預訂訂單超過 3 萬億韓元，從年初至今的訂單積壓來看，與 2021 年底相比，增長了 20%， [70%] 增長。

And so, for the auto business, the revenue for year 2023, in 3 years' time, we expect to see about a twofold growth going forward, going above the KRW2 trillion. In 3 years' time -- within 3 years' time, excuse me.

因此，對於汽車業務，我們預計 2023 年的收入在 3 年後將增長兩倍，超過 2 萬億韓元。 3 年內—— 3 年內，對不起。

[Interpreted] Next question, please.

[已解釋] 請下一個問題。

[Interpreted] The next question will be presented by Won Suk Chung from HI Investments and Securities.

[解讀] 下一個問題將由 HI Investments and Securities 的 Won Suk Chung 提出。

[Interpreted]

[解讀]

Yes. With regards to your long-term horizon approach, you talked about the auto display. But at the end of last year, you started to reduce and phase out your LCD TV capacity. And the fact that the panel prices started to pick up in Q1, of course, didn't really influence your earnings that much, because of your downsizing of the LCD TV business. It seems you lost -- significantly loss-making businesses are OLED TV and your IT business. And with regards to improving the earnings, that seems to be quite necessary at this point. And from the investors' perspective and as you mentioned during the presentation, you are looking forward to a turnaround in profit in the second half of the year, but would that mean that we would just have to wait for an improvement in the overall market demand, or even if the demand recovery is delayed and pushed back to next year, can we still expect a profit turnaround driven by your cost-savings efforts or maybe potentially a human -- restructuring of your headcount?

是的。關於您的長期視野方法，您談到了自動顯示。但在去年年底，你們開始減少和淘汰你們的液晶電視產能。當然，第一季度面板價格開始回升的事實並沒有真正影響你的收入，因為你縮減了 LCD 電視業務。看來你輸了——虧損顯著的業務是 OLED 電視和你的 IT 業務。而關於提高收益，這在這一點上似乎是非常必要的。從投資者的角度來看，正如您在演講中提到的，您期待下半年盈利出現好轉，但這是否意味著我們只能等待整體市場需求的改善，或者即使需求復蘇被推遲並推遲到明年，我們是否仍然可以期待通過您的成本節約努力或可能的人力重組來推動利潤的轉變？

[Interpreted]

[解讀]

Thank you very much for that good question. I will respond as a CSO to your question.

非常感謝你提出這個好問題。我將以 CSO 的身份回答您的問題。

In such a large scale equipment-based industry such as that of a display industry, when there are 3 factors that are all coming into play, including macro uncertainties, adjustment of the inventory, as well as a muted sell-through demand, I have to admit it is extremely difficult and not easy to predict earnings improvement going forward.

像顯示行業這樣一個規模龐大的設備型行業，當宏觀不確定性、庫存調整、去化需求疲軟這3個因素同時作用時，我有承認預測未來收益的改善是極其困難和不容易的。

Now we are, however, looking forward to a turnaround next year in turning around into profit, driven by one of the -- one driver, which is industry-based and 3 very corporate-specific drivers.

然而，現在我們期待明年扭虧為盈，由其中一個驅動因素驅動，這是基於行業的驅動因素和 3 個非常特定於公司的驅動因素。

Now, regarding the industry factor, we do admit that it will be quite difficult to expect a recovery that is significantly driven by improved -- or a rebound in the actual end user demand, in light of the macro situation that we foresee next year. However, it's been about 1 year since the industry had undergone a significant inventory correction phase and there has been a significant adjustment in the inventory levels and also in terms of the gap or the difference between the panel demand, as well as the sell-through demand.

現在，關於行業因素，我們確實承認，鑑於我們預計明年的宏觀形勢，很難預期由改善或實際終端用戶需求反彈顯著推動的複蘇。然而，該行業經歷了大約 1 年的庫存調整階段，庫存水平以及面板需求之間的缺口或差異以及銷售率都發生了顯著調整要求。

And so, we believe that inventory adjustments in the channel had been taken -- had taken place quite extensively. So although, very minor, we are seeing positive signals, where there is a inventory restocking demand that is starting to pick up.

因此，我們認為渠道中的庫存調整已經進行了——已經進行了相當廣泛的調整。因此，雖然非常小，但我們看到了積極的信號，即庫存補貨需求開始回升。

Now typically, the market dynamic is such that the set inventory and channel inventory and sales, usually is at a higher level compared to the panel sales. But over the past year, it was quite unusual where the panel volume or the panel sales was much weaker compared to the set sales. And I think as we go into the second half of the year, we will see normalization of this market dynamic, whereby the panel volume or the sales volume will find its alignment with the actual set sales.

現在通常情況下，市場動態是這樣的：與面板銷售相比，固定庫存和渠道庫存和銷售通常處於更高水平。但在過去的一年裡，面板出貨量或面板銷量遠低於固定銷量，這是很不尋常的。而且我認為，隨著我們進入下半年，我們將看到這種市場動態正常化，面板數量或銷量將與實際銷量保持一致。

And also there are three specific reasons from the company's perspective. First is the 15,000 capacity for mobile fab coming online, which is going to drive up the volume by about 50%, and that will be the biggest contributor behind a turnaround in profit.

從公司的角度來看，還有三個具體原因。首先是移動晶圓廠15000台產能上線，將拉動50%左右的出貨量，這將是扭虧為盈的最大功臣。

And early next year, we will also start to see our tablet fab come online, and as a result, we will be able to see the revenues to around KRW2 trillion level on an yearly basis. And that will also make contributions to next year's earnings performance. And at the same time, our order backlog for auto business is also growing. And, as was mentioned previously, we will be able to drive up this business from KRW2 trillion to KRW3 trillion by next year.

明年年初，我們也將開始看到我們的平板電腦工廠上線，因此，我們每年的收入將達到 2 萬億韓元左右。這也將為明年的盈利表現做出貢獻。與此同時，我們汽車業務的訂單積壓也在增長。而且，如前所述，我們將能夠在明年將這項業務從 2 萬億韓元提高到 3 萬億韓元。

(foreign language) We will now take the final question.

（外語）我們現在開始最後一個問題。

[Interpreted] The last question will be presented by Dong Jun Kim from Shinhan Securities.

[解讀]最後一個問題將由新韓證券的Dong Jun Kim提出。

[Interpreted] Thank you. I would like to ask two questions. First has to do with your auto electrical business -- display business. You talked about the order backlog. Would like to get some color on what your assessment is in terms of short to mid- to long-term profitability. Second question is on your OLED business. Your competitor -- your domestic competitor has announced a new investment into a bigger sheet or bigger -- higher generation investment for OLED. What is your take on this and what is your direction going forward?

[翻譯] 謝謝。我想請教兩個問題。首先跟你的車電業務——顯示業務有關。你談到了訂單積壓。想了解一下您對短期、中長期盈利能力的評估。第二個問題是關於您的 OLED 業務。您的競爭對手——您的國內競爭對手已宣布對更大或更大的薄板進行新投資——更高世代的 OLED 投資。您對此有何看法，您的前進方向是什麼？

[Interpreted] Yes, hello. I will respond to your question about the auto business. I am Ki Hwan Son from Auto Marketing.

[解釋] 是的，你好。我會回答你關於汽車業務的問題。我是汽車營銷部的 Ki Hwan Son。

Now, for the auto business, rather than looking at short-term profitability, what's more important is to look at the profitability of the order backlog. That is considered more important.

現在，對於汽車企業來說，與其看短期盈利能力，更重要的是看訂單積壓的盈利能力。這被認為更重要。

Now looking at the auto backlog, basically, our profitability is on high-single digit, and we will, of course, manage our order in a steady manner, so that -- up until the time that they actually accrue revenue.

現在看看汽車積壓，基本上，我們的盈利能力處於高個位數，當然，我們將以穩定的方式管理我們的訂單，以便 - 直到他們實際產生收入為止。

[Interpreted] Yes, I am Tae Gwang Kim, In Charge of Medium Display Marketing.

[解讀] 是的，我是 Tae Gwang Kim，負責媒體展示營銷。

Now, before tackling your question on OLED investment, allow me to just provide our market outlook and the company's strategy on IT OLED.

現在，在回答你關於OLED投資的問題之前，請允許我提供我們的市場前景和公司在IT OLED上的戰略。

Now, from a mid to long-term perspective within the IT Products segment, depending on the level of acceptance -- consumer acceptance, that is, for each of the product segment, OLED penetration we believe is going to be quite different for different products and for customers.

現在，從 IT 產品領域的中長期角度來看，取決於接受程度——消費者接受程度，即對於每個產品領域，我們認為不同產品的 OLED 滲透率將大不相同和客戶。

So as mentioned briefly just some moment ago, through the tablet OLED fab, we will be maximizing our mass production efficiency and supported by our proven experience in mass production, we will be able to further bolster our technological leadership.

因此，正如剛才簡要提到的，通過平板電腦 OLED 工廠，我們將最大限度地提高量產效率，並在我們成熟的量產經驗的支持下，我們將能夠進一步鞏固我們的技術領先地位。

And also against our global customers, we will be testing the economics of the OLED market by taking our white OLED-based monitor as well as notebook panels, which we supply and which has the Tandem OLED technology applied. We will do this to -- we will take these products to test the OLED market, or test the feasibility of our capabilities and will build out the high-end IT product portfolio, supported by the OLED.

同樣針對我們的全球客戶，我們將通過採用我們提供的基於白色 OLED 的顯示器和筆記本電腦面板來測試 OLED 市場的經濟性，這些面板我們提供並應用了 Tandem OLED 技術。我們將這樣做——我們將用這些產品來測試 OLED 市場，或者測試我們能力的可行性，並將構建由 OLED 支持的高端 IT 產品組合。

So in light of all of these aspects, our decision for investment will consider the IT OLED market size, the speed of growth, as well as our financial strength and the amount of available investment capital. All of those aspects will be thoroughly considered in making the investment decision.

所以綜合這些方面，我們的投資決定會考慮IT OLED的市場規模、增長速度，以及我們的資金實力和可用的投資資金量。在做出投資決定時，將全面考慮所有這些方面。

[Interpreted]

[解讀]

Well, with that, we will now close the first quarter 2023 earnings conference call. Thank you very much for joining us today. And please contact the IR team if you have any further questions. Thank you.

那麼，我們現在將結束 2023 年第一季度的收益電話會議。非常感謝您今天加入我們。如果您有任何其他問題，請聯繫 IR 團隊。謝謝。

[Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.]

[此抄本中標記為已翻譯的部分是由現場通話中在場的口譯員說的。]