LG Display Co Ltd (LPL) 2022 Q1 法說會逐字稿

(foreign language) 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 First Quarter Earnings Results by LG Display. (Operator Instructions)

（外語）早安晚安。首先，感謝大家參加本次電話會議。現在我們將開始 LG Display 2022 財年第一季度收益結果會議。 （操作員說明）

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

現在，我們將開始介紹 LG Display 2022 財年第一季度的收益結果。

[Interpreted] Good afternoon. This is [Brian Ha] 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; [Jeong Hee], in charge of Business Intelligence; Daniel Lee, in charge of Large Display Marketing; Kwan Kim, in charge of Medium Display Marketing; and Ki-Joon Jin, Vice President of Auto Marketing.

[解釋] 下午好。我是負責 LG Display IR 的 [Brian Ha]。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； [Jeong Hee]，負責商業智能； Daniel Lee，負責大屏營銷； Kwan Kim，負責媒體展示營銷；和汽車營銷副總裁 Ki-Joon Jin。

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 Q1 2022. Before we begin the presentation, please take a moment to read the disclaimer. 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.

電話會議將以韓語和英語進行。有關 2022 年第一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的 IR 事件部分。在我們開始演示之前，請花點時間閱讀免責聲明。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 Q1. Revenue in Q1 was KRW 6.471 trillion, down 27% Q-o-Q and 6% Y-o-Y. Seasonality was a factor as well as the macroeconomic environment and market volatility following the change in the pandemic situation. Operating profit was KRW 38 billion. Shipment of large and small OLED panel decreased and LCD price fell. Operating profit margin in Q1 was 1% with EBITDA margin at 19%. Net profit was KRW 54 billion.

讓我從第一季度的業務表現開始。第一季度收入為 6.471 萬億韓元，環比下降 27%，同比下降 6%。季節性是一個因素，也是大流行形勢變化後的宏觀經濟環境和市場波動的一個因素。營業利潤為380億韓元。大小OLED面板出貨量減少，LCD價格下跌。第一季度的營業利潤率為 1%，EBITDA 利潤率為 19%。淨利潤為540億韓元。

Next is area shipment and ASP. Area shipment in Q1 was 8.14 million square meters, decreasing 13% from the previous quarter. Again, seasonality was a factor as well as soft demand in the downstream industry, leading to reduced shipments in large and medium panels. There were also production and shipment disruptions arising from part supply and logistics issues due to lockdowns in China. Area ASP was $660, down 18% Q-o-Q. Mobile shipments slowed due to seasonality and LCD panel price continued its downward slide.

接下來是區域出貨量和平均售價。一季度出貨面積814萬平方米，環比下降13%。同樣，季節性因素以及下游行業需求疲軟，導致大中型面板出貨量減少。由於中國的封鎖，零件供應和物流問題也導致生產和運輸中斷。區域平均售價為 660 美元，環比下降 18%。受季節性因素影響，手機出貨量放緩，液晶面板價格繼續下滑。

The company's production capacity in Q1 remained almost flat from the previous quarter. Next is Q1 revenue breakdown by product segment. TV's share was 26% from the adverse seasonality and sustained decline in LCD price. Mobile and others accounted for 26%, 5 percentage points lower Q-o-Q. LCD TV and OLED TV took up low 10%, respectively, high-end IT products, where the company has competitiveness took up 48%, maintaining solid performance.

公司一季度產能與上一季度基本持平。接下來是按產品細分的第一季度收入細分。受不利的季節性因素和液晶價格持續下跌的影響，電視的份額為 26%。移動和其他佔 26%，環比下降 5 個百分點。 LCD TV 和OLED TV 佔比分別低至10%，公司具有競爭力的高端IT 產品佔比48%，表現穩健。

Next is the company's financial position and ratios. The company's cash and cash equivalents at the end of Q1 was KRW 4.11 trillion. Inventory was KRW 4.23 trillion, increasing by KRW 880 billion Q-o-Q. The inventory value was higher than usual due to increased portion of OLED and high-end LCD products. Overall, inventory level also increased with the build-up of buffer stock to prepare against supply chain uncertainties like materials and logistics issues. Liabilities to equity ratio was 159%, almost flat Q-o-Q. Net debt-to-equity ratio came in at 67% and current ratio was 90%. Next is cash flow. The company's cash and cash equivalent at the start of Q1 was KRW 4.285 trillion. It decreased by KRW 174 billion, ending up at KRW 4.111 trillion at the end of Q1.

其次是公司的財務狀況和比率。該公司在第一季度末的現金和現金等價物為 4.11 萬億韓元。庫存為4.23萬億韓元，環比增加8800億韓元。由於 OLED 和高端 LCD 產品的份額增加，庫存值高於平時。總體而言，庫存水平也隨著緩衝庫存的增加而增加，以應對材料和物流問題等供應鏈的不確定性。負債權益比率為 159%，幾乎與 Q-o-Q 持平。淨負債權益比率為 67%，流動比率為 90%。其次是現金流。該公司在第一季度初的現金和現金等價物為 4.285 萬億韓元。它減少了 1740 億韓元，在第一季度末達到 4.111 萬億韓元。

Next is presentation by the company's CFO, Sung-Hyun Kim on guidance for Q2 2022 and strategy.

接下來是公司首席財務官 Sung-Hyun Kim 關於 2022 年第二季度和戰略的指導。

[Interpreted] Good afternoon. This LG Display's CFO, Sung-Hyun Kim. Let me now move on to guidance for Q2 2022 and the company's operation strategy. First is Q2 guidance. Individual panel price is expected to fall in large and medium segments. Area price is expected to fall by around 10% Q-o-Q due to continued seasonality in mobile panel. But area shipment in Q2 is expected to increase by low to mid-10% Q-o-Q. Shipment of large OLED is expected to surge with recovery in part of the volume affected by logistics and parts issues in Q1 and TV set makers preparation for seasonality and new product launches.

[解釋] 下午好。這位 LG Display 的首席財務官 Sung-Hyun Kim。現在讓我繼續介紹 2022 年第二季度和公司運營戰略的指導。首先是第二季度的指導。單個面板價格預計將在大中型板塊下跌。由於移動面板的持續季節性，預計面積價格將環比下降約 10%。但預計第二季度的面積出貨量將環比增長 10% 至 10% 左右。隨著第一季度物流和零部件問題的影響以及電視機製造商為季節性和新產品發布做準備，預計大型 OLED 的出貨量將出現大幅回升。

In the first half, there are concerns of persistent external factors such as demand and supply chain uncertainty due to seasonality. In the second half, we look forward to improved performance to come from increased supply of large OLED and new small to medium OLED models and stable operations in high-end IT. The company will keep an eye on demand uncertainty and persistence in supply chain issues and strengthen risk management to help achieve our targets.

上半年，由於季節性因素，需求和供應鏈不確定性等外部因素持續存在。下半年，我們期待業績的改善來自於大尺寸 OLED 和中小 OLED 新機型的供應增加以及高端 IT 的穩定運營。公司將密切關注需求不確定性和供應鏈問題的持續性，並加強風險管理以幫助實現我們的目標。

Next is operational strategy for each business. Although market volatility has reasonably gone up, the company will keep improving performance with OLED and high-end LCD products that have differentiated competitiveness. The company continues to secure stability in business operation by minimizing volatility. We are gradually reducing the portion of supply-demand businesses susceptible to market conditions, while increasing the businesses that can produce consistent results in strategic collaboration with customers. And based on our OLED technology, we will keep upgrading our business structure to expand businesses that create new demand end market.

接下來是每個業務的運營策略。儘管市場波動性有所上升，但公司將通過具有差異化競爭力的 OLED 和高端 LCD 產品不斷提升業績。公司繼續通過最大限度地減少波動來確保業務運營的穩定性。我們正在逐步減少易受市場條件影響的供需業務部分，同時增加與客戶戰略合作能夠產生一致結果的業務。並以我們的OLED技術為基礎，不斷升級業務結構，拓展業務，創造新的需求終端市場。

As a part of this strategy, the company plans to run the ever-competitive LCD business with focus on areas where the company has competitive advantage. The part of LCD business that maintains competitiveness like high-end IT will be strengthened. In LCD TV, the non-competitive products will be gradually adjusted. Next is an update and plan on large OLED business.

作為該戰略的一部分，公司計劃經營競爭激烈的 LCD 業務，重點關注公司具有競爭優勢的領域。 LCD業務中高端IT等保持競爭力的部分將得到加強。在液晶電視中，非競爭性產品將逐步調整。接下來是大型OLED業務的更新和計劃。

Although the TV set market saw a negative growth of 10% in Q1 in continuation from last year, sales of OLED TV set grew over 40%, thanks to technological and product differentiated strength, driving the expansion in high-end TV market in general. The high-end TV market grew at a 10% level Y-o-Y. The company's large OLED business is expected to see significant growth in shipments from the second half of the year as more consumers recognize their value. Profitability is also expected to improve on a phase-by-phase basis.

儘管第一季度電視機市場延續去年10%的負增長，但OLED電視機銷量增長超過40%，得益於技術和產品的差異化力量，整體帶動了高端電視市場的擴張。高端電視市場同比增長 10%。隨著越來越多的消費者認識到其價值，該公司的大型 OLED 業務預計從下半年開始出貨量將出現顯著增長。盈利能力也有望逐步提高。

For large OLED, the company intends to keep expanding its customer and product lineups to keep growing its performance. Life Display area will also focus on exploring new markets to keep broadening its performance. In the case of small- and medium-sized OLED, we aim to further improve profitability from last year by increasing supply to new smartphone models in the second half. We will strengthen our business competitiveness with focus on high-end products.

對於大型 OLED，該公司打算繼續擴大其客戶和產品陣容，以保持其業績增長。生活展示區也將重點開拓新市場，不斷拓寬業績。在中小型 OLED 方面，我們的目標是通過在下半年增加對新智能手機型號的供應，進一步提高去年的盈利能力。以高端產品為重點，增強業務競爭力。

Based on our automotive competitiveness and leadership in the wearable market, we will broaden the achievements of small OLED business. We will also try to preempt the premium midsized OLED market, leveraging our unique competitiveness such as tandem. The company will keep highlighting its differentiated technological competitiveness in small and medium OLED as well.

基於我們在可穿戴市場的汽車競爭力和領先地位，我們將拓寬小型OLED業務的成就。我們還將努力搶占高端中型OLED市場，利用我們獨特的競爭力，如串聯。公司還將繼續突出其在中小型OLED領域的差異化技術競爭力。

Last is our investment plan. CapEx this year will grow Y-o-Y with the start of investment execution in medium OLED fab that was decided last year, but it will remain around EBITDA. The principles and implementation of investment will strictly focus on growth and profitability. We will spare no effort to continuously create higher market values, while leveraging our unique difference.

最後是我們的投資計劃。隨著去年決定的中型 OLED 晶圓廠投資執行的開始，今年的資本支出將同比增長，但仍將保持在 EBITDA 附近。投資的原則和實施將嚴格關注增長和盈利能力。我們將不遺餘力地不斷創造更高的市場價值，同時發揮我們獨特的差異。

Thank you.

謝謝你。

(foreign language) That concludes the earnings presentation for Q1 2022. We will now take questions. Operator, please commence with the Q&A session.

（外語）2022年第一季度的收益報告到此結束。我們現在將回答問題。接線員，請開始問答環節。

(foreign language) The first question will be presented by Dongwon Kim from KB Securities.

（外語）第一個問題將由KB Securities的Dongwon Kim提出。

[Interpreted] I have 2 questions, one each for OLED and LCD. Now in the first quarter, we see that shipment for large OLED underperformed expectations. Then does this mean that there would also be some changes in terms of the large OLED revenue for the year as well as the profitability and also the shipment? And also, will this mean that there would be some changes in the company's plans for capacity ramp-up for large OLED as well as the customer diversification? And what would be the company's mid- to long-term strategy for white OLED?

[翻譯]我有2個問題，OLED和LCD各一個。現在在第一季度，我們看到大型 OLED 的出貨量不及預期。那麼這是否意味著今年OLED的大額收入以及盈利能力和出貨量也會有一些變化？此外，這是否意味著公司的大型 OLED 產能提升計劃以及客戶多元化的計劃會有一些變化？該公司對白色 OLED 的中長期戰略是什麼？

And the second question is about the LCD. We see that the LCD panel price continues to fall. And I missed this, there is also more fierce competition coming from the Chinese panel makers. And the market situation continues to appear to worsen. Then what is the company's outlook for the LCD demand as well as the price in the second half? And also what is the company's approach to secure profitability?

第二個問題是關於 LCD 的。我們看到液晶面板價格繼續下跌。而我錯過了這一點，來自中國面板製造商的競爭也更加激烈。並且市場情況似乎繼續惡化。那麼公司對下半年LCD需求和價格的展望如何？以及公司確保盈利的方法是什麼？

[Interpreted] Thank you very much. I would like to respond from the large marketing team. Now first of all, it is true that shipment of OLED in the first quarter underperformed our plan. But then on the other hand, we see that whereas the TV market in general was shrunk by 10%, the sales of OLED TV grew by over 40%. And now looking at the trend from April, then we see that the shipment of OLED is likely to pick up from the second quarter and alongside it the profitability as well. And as for our medium- to long-term strategy for large OLED, now as was explained by the CFO earlier, based on the principles of profitability and growth, we will continue to make preparation for the investment and communicate with the market when they are ready.

[解釋] 非常感謝。我想從大型營銷團隊做出回應。現在首先，第一季度OLED的出貨量確實低於我們的計劃。但另一方面，我們看到，雖然電視市場總體萎縮了 10%，但 OLED 電視的銷售額增長了 40% 以上。現在從 4 月份的趨勢來看，我們看到 OLED 的出貨量可能會從第二季度開始回升，同時盈利能力也將有所回升。而對於我們在大尺寸OLED的中長期戰略，現在正如CFO之前所解釋的那樣，本著盈利和增長的原則，我們會繼續做好投資準備，在市場成熟的時候與市場溝通。準備好。

And with regard to the continued drop in the LCD panel price, now when we were coming up with the business plan for this year, now last year, we had expected that the Chinese makers would also become more disciplined, given the market situation at the time. But today, we see that even as the market is shrinking by over 10%, they are offering very aggressive pricing. So, in response to this, as the CFO had explained earlier, rather than trying to directly respond to the market price, what we will do is try to adjust our business structure, for example, reducing the portion of the non-competitive products, for example, the general TVs that are produced from the fab, so that we can continue to manage risk.

而對於液晶面板價格的持續下跌，現在我們在提出今年的商業計劃時，現在去年，我們預計中國製造商也會變得更加自律，因為現在的市場情況是時間。但是今天，我們看到即使市場萎縮了 10% 以上，他們仍然提供非常激進的定價。所以，對此，正如CFO之前解釋的那樣，我們不會試圖直接響應市場價格，而是嘗試調整我們的業務結構，例如減少非競爭產品的比例，例如，由晶圓廠生產的普通電視，這樣我們就可以繼續管理風險。

[Interpreted] And this is from the medium marketing team. And I'd like to respond to your question about the LCD and IT. Now, in terms -- I would like to respond in 2 perspectives from demand and price. Now, for demand, in terms of the B2C, with the waning of the COVID-19 boom, the B2C is also expected to fall. And for the B2B, we had initially expected a slight improvement but then the improvement has been slower than expected because of the macro situation. Having said that, the demand level still will be higher than the pre-pandemic level.

[解釋] 這是來自中型營銷團隊。我想回答你關於 LCD 和 IT 的問題。現在，就需求和價格而言，我想從兩個角度做出回應。現在，對於 B2C 的需求，隨著 COVID-19 繁榮的消退，B2C 也有望下降。而對於 B2B，我們最初預計會有輕微的改善，但由於宏觀形勢，改善比預期的要慢。話雖如此，需求水平仍將高於大流行前的水平。

Now, next is from the price perspective. Now for the price, it has started to decline from late last year and the decline has continued into this year. But for the company, we have a very high share in the high-end market. So, out of our IT revenue, the high-end portion is over 70%. So, high-end, meaning that it is less susceptible than the pricing. And so this means that for the company, it has a more stable structure. So, we will continue to strengthen our positioning in the high-end, so they will be able to secure profitability.

現在，接下來是從價格的角度來看。現在價格從去年年底開始下降，並且一直持續到今年。但是對於公司來說，我們在高端市場的佔有率非常高。因此，在我們的 IT 收入中，高端部分超過 70%。因此，高端，意味著它比定價更不容易受到影響。所以這意味著對於公司來說，它有一個更穩定的結構。因此，我們將繼續加強我們在高端的定位，以便他們能夠確保盈利。

(foreign language) The next question will be presented by Sung Eun Kim from Meritz.

（外語） 下一個問題將由 Meritz 的 Sung Eun Kim 提出。

[Interpreted] I have 2 questions regarding investment. The first is that I understand the company's investment policy, meaning that the CapEx would be kept within EBITDA. And of course, that would be advisable. But then also at the same time, looking at the current environment where there is a surge in demand and also the lockdowns in China as well as the geopolitical risks, it appears as if the uncertainties in profitability are growing. So, given the situation then is the company also open to more flexible operation of your policy or perhaps a turn -- for turn to be more conservative in terms of the investment policy?

[解釋] 我有兩個關於投資的問題。首先是我了解公司的投資政策，這意味著資本支出將保持在 EBITDA 範圍內。當然，這是可取的。但與此同時，從當前需求激增的環境以及中國的封鎖以及地緣政治風險來看，盈利能力的不確定性似乎正在增加。那麼，鑑於目前的情況，公司是否也願意對您的政策進行更靈活的操作，或者可能是轉向——轉向在投資政策方面更保守？

And the second question is now I also understand that the company has been making investments for strategic customers in the Americas. And so when does the company foresee the completion of the fab and also when will the revenue start to arise from these tabs? What is the company's expectation for the ROIC for this fab? And also for the OLED, we see that the applications are quite broad. So for example, from mobile to IT and also even a motor -- and so with the broad applicability, how does the company believe that this will affect the profitability of this business? And also, the Chinese makers are continuing to increase their presence in this business as well. So, how does the company plan to respond?

第二個問題現在我也了解到該公司一直在為美洲的戰略客戶進行投資。那麼公司什麼時候可以預見到晶圓廠的建成，以及何時開始從這些標籤中產生收入呢？公司對該晶圓廠的投資回報率有何期望？而且對於 OLED，我們看到應用非常廣泛。例如，從移動設備到 IT，甚至是電機——因此具有廣泛的適用性，公司認為這將如何影響這項業務的盈利能力？此外，中國製造商也在繼續增加他們在這一業務中的影響力。那麼，公司打算如何應對呢？

[Interpreted] Now, this is the CFO responding to your question about investment. And of course, over the years, we have maintained a policy and emphasized the policy that CapEx would be kept within EBITDA. And this is because we want to make sure that investment will not be detrimental to our financial structure or financial health, at least we do not want to increase the burden.

[解釋] 現在，這是首席財務官回答你關於投資的問題。當然，多年來，我們一直保持著一項政策，並強調資本支出將保持在 EBITDA 內的政策。這是因為我們要確保投資不會損害我們的財務結構或財務健康，至少我們不想增加負擔。

And now when the company comes up with a plan of investment for the year, then a lot of factors would be taken into consideration. For example, when do we need to make the investments. In other words, when will be the timing that would be the best for making the investment, what is the importance of the investment and also what would be the relevance in terms of the revenue or the market presence and so forth. And based on these different factors, we would also define the phases of the investment. And now along the course of the investment if the market situation were to sour, so, if things were to change, then of course, the company will remain flexible in its investment plan to make sure that it will not become too burdensome.

而現在公司在製定年度投資計劃時，會考慮很多因素。例如，我們什麼時候需要進行投資。換句話說，什麼時候是進行投資的最佳時機，投資的重要性是什麼，以及在收入或市場佔有率等方面的相關性是什麼。基於這些不同的因素，我們還將定義投資的階段。而現在在投資過程中，如果市場形勢惡化，那麼，如果情況發生變化，那麼公司當然會在投資計劃上保持靈活，以確保不會變得過於繁重。

And the risks that you have pointed out, for example, the Chinese lockdowns and the geopolitical risks and profitability uncertainties, of course, we see them as the characteristics of the market this year. But what we look for when -- what we look for with CapEx is profitability for the future. So, this means that for the current constraints or the earnings or cash flow, let's say, the cash flow constraints, then, of course, we would take them into consideration and try to be flexible. But then for investment for the future, we plan to continue with it.

而您所指出的風險，例如中國的封鎖以及地緣政治風險和盈利能力的不確定性，當然我們認為它們是今年市場的特徵。但是我們在什麼時候尋找——我們在資本支出中尋找的是未來的盈利能力。因此，這意味著對於當前的約束或收益或現金流，比方說，現金流約束，那麼，當然，我們會考慮它們並嘗試保持靈活性。但是對於未來的投資，我們計劃繼續進行。

[Interpreted] And this is Senior Vice President Hee-Yeon Kim of Corporate Strategy Group, responding to your question about the small to medium OLED. And of course, you would understand that we are not able to name specific customers. But regarding the revenue, the timing of the revenue is being generated. When we were making the disclosure last year for the investment, we specified 2024, and the plan currently is on track.

[翻譯]我是Corporate Strategy Group的高級副總裁Hee-Yeon Kim，回答你關於中小型OLED的問題。當然，您會明白我們無法命名特定客戶。但關於收入，正在產生收入的時機。當我們去年披露投資時，我們指定了 2024 年，目前該計劃正在按計劃進行。

[Interpreted] And you also asked about the company's expectations for the ROIC. And I take this question to mean how does the company verify the feasibility of the investment. So, allow me to respond along that line. Now, in the -- during the days of the LCD, then at that time, there were expectations of high growth. So, the investment decision we're making was based on the high growth expectation and it was made despite the possibility of fluctuations in the supply and demand. But that was then.

【解讀】你還問到了公司對ROIC的期望。我認為這個問題是指公司如何驗証投資的可行性。所以，請允許我沿著這條線作出回應。現在，在液晶顯示器的時代，那時，人們對高增長的期望。因此，我們做出的投資決策是基於高增長預期，並且是在供需可能出現波動的情況下做出的。但那是那時。

And today, there is a slowdown or even, let's say, stagnation in growth and also the new growth would have to come from penetrating the existing products. So, this means that we cannot just go for high growth without the expectations of profitability. So, the investment today would also have to be based on having visibility in the profitability. And that is also how our decision-making is being done. So, we also have safeguards in our making process to make sure that there would be profitability. And I believe that the challenge for us down the road is to continue improving the visibility of the profitability in our investment decision-making.

而今天，增長放緩甚至停滯不前，新的增長必須來自對現有產品的滲透。因此，這意味著我們不能只追求高增長而沒有對盈利能力的期望。因此，今天的投資還必須基於對盈利能力的可見性。這也是我們進行決策的方式。因此，我們在製作過程中也有保障措施，以確保有盈利能力。我相信，我們未來面臨的挑戰是繼續提高我們投資決策中盈利能力的可見性。

(foreign language) The following question will be presented by Junwoo Cho from Hyundai Motor Securities.

（外語）以下問題將由現代汽車證券的Junwoo Cho提出。

[Interpreted] Now my question is about the electronification of auto. Now we see that globally, the automotive industry is going through electrification and electronification. And I wonder what the LG Display's positioning would be in this trend. So, in terms of products or technological competitiveness and also about your medium- to long-term strategy and what would be your position or the role within the LG Group as the group response to this trend in the auto industry?

[解釋] 現在我的問題是關於汽車的電子化。現在我們看到，在全球範圍內，汽車行業正在經歷電氣化和電子化。我想知道 LG Display 在這一趨勢中的定位是什麼。那麼，就產品或技術競爭力以及您的中長期戰略而言，您在 LG 集團中的立場或角色將是什麼？作為集團對汽車行業這一趨勢的回應？

And second question is, of course, we understand the company's competitiveness, but vision -- but so for this type of competitiveness and vision, if you could help with the investors' understanding. So, if you could give us some more details as much as possible about, let's say, the order backlog for both the LCD and OLED as well as the outlook for the 2 businesses as well?

第二個問題是，當然，我們了解公司的競爭力，但願景 - 但是對於這種競爭力和願景，如果你能幫助投資者理解的話。那麼，您能否提供更多細節，比如 LCD 和 OLED 的訂單積壓以及這兩項業務的前景？

[Interpreted] This is Ki-Joon Jin, Vice President of Auto Marketing, responding to your question. Now yes, we believe that the auto electrification and autonomous driving trend presents greater opportunities to utilize large-sized display and especially the OLED premier technology. So, for LG Display, we have the world's only technology, the tandem technology that can fulfill the automotive reliability requirements. So, with this technology as well as the InTouch LTPS LCD, we intend to strengthen our market dominance.

[翻譯]我是汽車營銷副總裁 Ki-Joon Jin 回答您的問題。現在是的，我們相信汽車電氣化和自動駕駛趨勢為利用大尺寸顯示器，尤其是 OLED 領先技術提供了更大的機會。因此，對於 LG Display，我們擁有世界上唯一可以滿足汽車可靠性要求的串聯技術。因此，通過這項技術以及 InTouch LTPS LCD，我們打算加強我們的市場主導地位。

And in terms of the synergy among the different group companies, of course, each company is competing in its own area or its own business under a fair competition. But we can also, of course, cooperate in order to strengthen our customer portfolio. So for example, we can have co-promotion to provide a total solution to the customers, for example, between batteries, infotainment, sensor, camera and display. And by doing so, we will be able to create the kind of synergy that can enhance the customers' overall value.

而就不同集團公司之間的協同效應而言，當然，每個公司都是在自己的領域或自己的業務上進行公平競爭。當然，我們也可以合作以加強我們的客戶組合。因此，例如，我們可以進行聯合推廣，為客戶提供整體解決方案，例如電池、信息娛樂、傳感器、攝像頭和顯示器之間的解決方案。通過這樣做，我們將能夠創造出能夠提升客戶整體價值的協同效應。

And last is about the order backlog and the outlook for the orders. And please understand that I am not able to give you the specific number for the order backlog, but I would like to tell you about the portfolio. So, we have continued to receive the OLED orders for premium auto for the past couple of years. And as a result, the OLED orders is now over 30%. And down the road, we believe that the orders will continue to increase so that we will be able to continue to strengthen our OLED business.

最後是關於訂單積壓和訂單前景。請理解，我無法為您提供訂單積壓的具體數量，但我想告訴您有關投資組合的信息。因此，在過去的幾年裡，我們繼續收到高端汽車的 OLED 訂單。因此，OLED 訂單現在超過 30%。在未來，我們相信訂單將繼續增加，以便我們能夠繼續加強我們的 OLED 業務。

(foreign language) The following question will be presented by Han Soo Kim from Hana Financial Investment.

（外語） 以下問題將由韓亞金融投資的韓秀金提出。

[Interpreted] Now, I have questions about the OLED TV and the XR display. Now, for the OLED TV, as have been reported by the media so far, I understand that there are negotiations underway with a new domestic customer. So, when does the company believe that the negotiations can be concluded? And then more importantly, then afterwards, then for the years 2022 and 2023, do you -- does the company believe that this is going to change the supply volume for the TV OLED panel? And also does this mean that there will be possibility of a ramp-up?

[解釋] 現在，我對 OLED 電視和 XR 顯示器有疑問。現在，對於 OLED 電視，正如媒體迄今為止所報導的那樣，據我所知，正在與一個新的國內客戶進行談判。那麼，公司認為談判什麼時候可以結束呢？然後更重要的是，然後是 2022 年和 2023 年，您是否認為這會改變電視 OLED 面板的供應量？這是否也意味著會有加速增長的可能性？

And the second question is about the XR market. Now, in the display market, what we are seeing is that rather than any company's immediate earnings or performance, the stock prices are reacting more sensitively to XR-related demand or XR-related orders. And this is because there are quite a lot of expectations about the potential growth in this market. So, what is the company's preparation for the XR and what is the company's expectation of the potential revenue to come from XR?

第二個問題是關於 XR 市場。現在，在顯示器市場，我們看到的是，與任何公司的直接收益或業績相比，股價對 XR 相關需求或 XR 相關訂單的反應更為敏感。這是因為人們對這個市場的潛在增長有很多期望。那麼，公司為 XR 做了哪些準備，公司對 XR 的潛在收入有何預期？

[Interpreted] Now first of all, about your question about the potential transaction with Samsung Electronics, Now, I would have to say that there is nothing to say for certain at this time. And when there is, then we will, of course, communicate it with the market. And our positioning regarding this is the same as the previous quarter, meaning that the possibilities are open and the need between the 2 companies have to be aligned.

[解釋]首先，關於你關於與三星電子的潛在交易的問題，現在，我不得不說，目前沒有什麼可以確定的。如果有，那麼我們當然會與市場進行溝通。我們對此的定位與上一季度相同，這意味著可能性是開放的，兩家公司之間的需求必須保持一致。

And for the XR devices, of course, we are very closely watching the market at this time. And whenever we believe that the profitability and the volume are up to our standards, then we will be ready to enter the market as soon as possible because we are making the preparation for it. So, in terms of R&D and also preparation whenever the market is ready to take off. So the company is getting thoroughly ready, and we will make sure that we respond to this market accordingly.

當然，對於 XR 設備，我們目前正在密切關注市場。而當我們認為盈利能力和數量達到我們的標準時，我們就會準備盡快進入市場，因為我們正在為此做準備。因此，在研發和市場準備起飛時的準備方面。所以公司已經做好了充分的準備，我們將確保我們對這個市場做出相應的反應。

This is Hee-Yeon Kim from Corporate Strategy Group. I would just like to add a few more things to the CFO's comment. Now, as we all know, for the XR market, there are high hopes indeed. But also at the same time, this is the market where there is a very high level of grievances and pain points for the display. So, this means that there would be a lot of potential opportunities. So, we believe that LG Display has the technological leadership to overcome the display pain points and also, let's say, for the large OLED, auto OLED or the IT OLED. So, all the core technologies that we use for these different product types, we believe that these are the technologies that can help open up and lead in the XR market.

我是 Corporate Strategy Group 的 Hee-Yeon Kim。我想在 CFO 的評論中補充一些內容。現在，眾所周知，對於XR市場，確實寄予厚望。但同時，這也是對顯示器有非常高的怨氣和痛點的市場。所以，這意味著會有很多潛在的機會。因此，我們相信 LG Display 具有克服顯示痛點的技術領先地位，也可以說，對於大型 OLED、汽車 OLED 或 IT OLED。因此，我們用於這些不同產品類型的所有核心技術，我們相信這些技術可以幫助開拓和引領 XR 市場。

So, based on such market outlook and technological leadership, we are now currently gauging the timing as well as the size of the company's entrants into this market and how -- when we can start our business in this field. But also at the same time, we have to look at the other factors, for example, the price premium and also the pace of the market growth. So, considering all these different factors, we will make sure that we are ready to respond to the market in a timely manner.

因此，基於這樣的市場前景和技術領先地位，我們現在正在評估公司進入該市場的時機和規模，以及我們何時可以在該領域開展業務。但同時，我們還必須考慮其他因素，例如價格溢價以及市場增長的速度。因此，考慮到所有這些不同的因素，我們將確保我們準備好及時響應市場。

(foreign language) The last question will be presented by Simon Wu from BoA Securities.

（外語）最後一個問題將由美銀證券的Simon Wu做。

[Interpreted] Now my questions might be a bit redundant from the previous ones, but I would just like to ask about the management's views about the LCD market or the LCD cycle. Now, in that respect, when we look at the LCD boom last year, then that probably was thanks to the shutdown in the Gen 8 process and also the high demand driven by the COVID pandemic. Then looking ahead, what does the company believe would be the assumptions for both the supply and demand for the LCD cycle to improve again?

[解釋] 現在我的問題可能與之前的問題相比有些多餘，但我想問一下管理層對 LCD 市場或 LCD 週期的看法。現在，在這方面，當我們回顧去年 LCD 的繁榮時，這可能是由於第 8 代工藝的停產以及 COVID 大流行推動的高需求。那麼展望未來，公司認為 LCD 週期供需雙方再次改善的假設是什麼？

And the second question is about the OLED TV. So, there are expectations of profitability for OLED TV improving. We see that the Chinese factory capacity has gone over 90,000. And also the -- now the company is set to really try to reduce the production cost. But then also at the same time, it appears likely that the improvement in the OLED is going to coincide with the drop in the price of the high-end LCD. So, then what is the company's view or the guidance for the pricing and also for the cost reduction? And not just for the second half of the year, but then for the OLED TV panel, so in terms of the cost reduction and also the pricing, then what does the company foresee for the next few years? And also, does the company believe that the operating profit margin of high single-digit, like around 5% is going to be doable in the near future?

第二個問題是關於 OLED 電視。因此，OLED 電視的盈利能力有望提高。我們看到中國工廠的產能已經超過90,000。還有——現在該公司將真正嘗試降低生產成本。但與此同時，OLED 的改進似乎與高端 LCD 價格的下降相吻合。那麼，公司對定價和降低成本有何看法或指導？不僅是下半年，還有OLED電視面板，那麼在降低成本和定價方面，公司對未來幾年的預測是什麼？此外，公司是否認為在不久的將來能夠實現 5% 左右的高個位數營業利潤率？

[Interpreted] Now first, regarding the LCD cycle, I would like to respond from the Business Intelligence. Now, I would mention 2 conditions. First is demand. In terms of demand, we see that the COVID boom has created a lot of pull in demand, meaning that for this year, quite a large extent of negative growth is expected. And given the current situation as well as the risk factors, we believe that the demand uncertainty is going to remain for some time. So, this means that for the LCD supply demand cycle to improve, then we would have to have improvement more from the supply side.

[解釋] 現在首先，關於 LCD 週期，我想從商業智能部做出回應。現在，我要提兩個條件。首先是需求。在需求方面，我們看到新冠疫情的繁榮對需求產生了很大的拉動，這意味著今年預計會出現相當大的負增長。鑑於目前的情況以及風險因素，我們認為需求的不確定性將持續一段時間。因此，這意味著要使 LCD 供應需求週期改善，那麼我們必須從供應方面獲得更多改善。

So for example, for the short term, there is a need to adjust the utilization rate across the industry. And then for the longer term then there are quite a number of old fabs over 15 years old. So, for these non-competitive fabs, we might have to close down some of them or make adjustments in order to improve the LCD cycle. To sum up, given that the demand uncertainties are not likely to go away anytime soon and this means that there is going to be some down cycle continuing this year. And moving into next year, then perhaps some of the demand uncertainties will be lifted and there could be some adjustments on the supply side and combined with these factors, then the LCD cycle could improve next year.

因此，例如，就短期而言，需要調整整個行業的利用率。然後從長遠來看，有相當多的老晶圓廠超過 15 年。因此，對於這些沒有競爭力的晶圓廠，我們可能不得不關閉其中一些或進行調整，以改善 LCD 週期。總而言之，鑑於需求不確定性不太可能很快消失，這意味著今年將繼續出現一些下行週期。而進入明年，或許一些需求不確定性會被解除，供給端可能會有一些調整，再加上這些因素，明年液晶週期可能會有所改善。

[Interpreted] And this is Daniel Lee from Large Display Marketing responding to your question about OLED. Now it is true, as you have asked earlier that we also have to be mindful of the competition with the high-end LCD. But at the same time, as I explained earlier, we have seen that even as the TV market continues to shrink in the first quarter, we saw the OLED TV grow by 40% Y-o-Y. This means that the OLED-specific value is increasingly being recognized in the market. So, we believe that it is going to see less price volatility and we believe that we will be able to run the business according to our plan.

[翻譯] 我是大顯示器營銷部的 Daniel Lee 回答您關於 OLED 的問題。現在確實如此，正如您之前所問的，我們還必須注意與高端 LCD 的競爭。但與此同時，正如我之前解釋的那樣，我們看到即使第一季度電視市場繼續萎縮，我們看到 OLED 電視同比增長了 40%。這意味著OLED特有的價值越來越被市場認可。因此，我們相信價格波動將會減少，我們相信我們將能夠按照我們的計劃經營業務。

And in terms of the cost, well, there are persistent factors that can actually drive up costs. For example, the rise in the commodities price as well as the logistics price. But then we continued to make improvement in our materials costs and also the development CI, so that we can improve on our cost as well. So, if all these efforts are to produce results, then we believe that the OLED profitability can be reached on a phase-by-phase basis.

就成本而言，有一些持續性因素實際上會推高成本。比如商品價格上漲，物流價格上漲。但隨後我們繼續改進我們的材料成本和開發 CI，以便我們也可以改進我們的成本。所以，如果所有這些努力都是為了產生結果，那麼我們相信OLED的盈利能力是可以分階段實現的。

(foreign language) We will now close Q1 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.

（外語）我們現在將結束 2022 年第一季度財報電話會議。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。

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

[此成績單中標記為 [已翻譯] 的部分由現場通話中的口譯員朗讀。]