Good morning and good evening. Thank you all for joining this conference call. Now we will begin the conference out of FY 22 first quarter earnings results by Samsung Electronics. This conference will start with the presentation followed by a divisional Q&A session. If you have a question, please press star one, that is star and one on your phone during the Q&A. For cancellation, please press star two, that is star and two on your phone. Now we shall commence the presentation on the FY 22 fourth quarter earnings results by Samsung Electronics.
Welcome, everyone. This is Ben Suh from Investor Relations. Thank you for joining Samsung Electronics fourth quarter 2022 earnings call. For additional details regarding our quarterly results, please refer to our earnings presentation, which is available on our IR website at www.samsung.com/global/ir. On today's earnings call, other than for display, I am joined by new representatives from each business unit due to our reorg at the end of last year. We have EVP Jaejune Kim, representing Memory, VP Hyeokman Kwon for System LSI, EVP Gibong Jeong for Foundry, EVP K.C. Choi for Samsung Display Corporation, which I will refer to as Display during today's call, VP Daniel Araujo for Mobile Experience, and VP KL Rho for Visual Display.
I want to remind you that some of the statements we will be making today are forward-looking based on the environment as we currently see it and are subject to certain risks and uncertainties that may cause our actual results to be materially different from those expressed in today's discussion. I will start with the results for the fourth quarter of 2022. The business environment deteriorated significantly in the fourth quarter, showing weak demand amid an economic slowdown triggered by global macro and geopolitical issues. Our consolidated quarterly revenue declined sequentially by 8.2% to KRW 70.5 trillion. We delivered a second straight record for annual revenue, thanks to our performance in this year's first three quarters. Although the Memory Business revenue declined due to extremely challenging market conditions, the Foundry Business reported record quarterly revenue.
Gross profit decreased by KRW 6.9 trillion sequentially to KRW 21.8 trillion, mainly due to the impacts of a significant price decline and an inventory valuation loss in Memory, coupled with weak sales of smartphones. Gross margin also decreased by 6.4 percentage points to 31%. SG&A expenses declined by KRW 0.3 trillion quarter on quarter to KRW 17.5 trillion, primarily due to reduced advertising and promotional spending. However, as a percentage of sales, they increased by 1.6 percentage points. R&D expenses reached a record high as we continue to invest in the future. Operating profit declined KRW 6.5 trillion sequentially to KRW 4.3 trillion as Memory profit dropped significantly due to the aforementioned issues and as MX profit decreased due to softened new product effects.
Operating margin also fell 8 percentage points to 6.1%. I will now briefly review the results of each business unit. Please note that all results mentioned refer to sequential quarter-on-quarter changes, unless otherwise specified. For the DS Division in Memory, results were down sharply due to a large ASP decline as customers continued to adjust inventory. There was also a significant inventory valuation loss. In System LSI, earnings decreased as sales of key products were weighed down by customers' inventory adjustments. Foundry delivered record high quarterly revenue, thanks to increased sales to its major customers. Profit increased year-on-year based on expanded advanced node capacity as well as a diversification of the customer base and application areas. For Display, the mobile panel business earnings declined due to reduced demand from smartphones.
Nonetheless, the business delivered unrivaled results among industry peers through its strategic focus on the high-end segment. The large panel business narrowed its losses as sales of QD-OLED for TV grew amid strong year-end seasonality and as the business fully depleted its LCD inventory. For the MX business, both revenue and profit declined due to the waning launch effects of new products and weak demand in the mid to low-end segment. The Network business recorded revenue growth led by domestic demand for 5G installations and business expansion overseas, including in North America. In VD, both revenue and operating profit grew as we actively addressed year-end seasonal demand and increased sales centering on premium products, including Neo QLED and super big TVs. In digital appliances, profit decreased as market conditions further deteriorated, while material and shipping costs remained high and competition intensified.
Harman delivered a record high quarterly profit for the second consecutive quarter, driven by increased revenue in the automotive business and solid sales of consumer audio products. Regarding currency effects against the Korean won in the fourth quarter, the positive impacts of a strong US dollar on our component businesses had the effect of a company-wide gain of approximately KRW 0.5 trillion in operating profit when compared to the previous quarter. Regarding our corporate tax rate, Korea recently reformed several tax measures, including the introduction of dividends received exclusion for dividends from subsidiaries. Under this new exclusion measure, our corporate tax for the fourth quarter decreased, resulting in a net income of KRW 23.8 trillion for the fourth quarter. Previously, the company conservatively deferred corporate tax liabilities under the assumption that the entire earnings of our subsidiaries would repatriate in the form of dividends.
The recent reform that prevents the double taxation on subsidiaries dividends eliminated the need for such deferrals. The corporate tax rate expense for the fourth quarter became a negative number under the Korean International Financial Reporting Standards. Please note this is a one-time consequence of the recent tax law changes. It does not mean that the company received a corporate tax refund, nor is it related to the company's actual tax payments. I would like to share an overview of our business outlooks. In the first quarter, we expect global IT demand and the memory market to remain weak. DS will minimize adverse impacts by addressing the demand for high-end products such as DDR5, LPDDR5X, and 200 megapixel sensors. Concerns over continued customer inventory adjustments do persist. Display will actively engage to meet the demand for our major customers' new products.
DX will increase revenue and profits by expanding our leadership in the premium segment via Galaxy S23, for example, and improving operational efficiency. I will now brief you on the outlooks for businesses that are not covered by separate speeches, as those will follow shortly. Network will focus on expanding our domestic and overseas businesses, including North America, and address new opportunities. Digital Appliances aims to increase sales in the premium segment by launching new models such as Bespoke Infinite Line, despite continued earnings pressure due to the poor economic conditions. For Harman, we expect earnings to decrease, mainly affected by weak seasonality for consumer audio products. Let's move on to our outlook for 2023. Although macro uncertainties are expected to remain high, we anticipate demand to start to recover in the H2, following continued weakness in the short term.
DS will further reinforce its market and technology leadership as we optimize its line operations to strengthen future competitiveness, while also expanding the proportion of its advanced nodes and products such as DDR5, LPDDR5X, and Gate-All-Around technology. Display's mobile panel business is expected to deliver solid earnings based on its competitiveness, and the large panel business will focus on growing the QD- OLED business and improving profitability. DX will enhance its competitiveness by leveraging our technology leadership to strengthen the premium lineups. The division will further expand the SmartThings ecosystem based on differentiated technologies and diverse partnerships that will provide customized, hyper-connected experiences. As for the businesses not covered later, Network will sustain revenue growth momentum by actively responding to major opportunities, particularly in our overseas business. We will reinforce our technology leadership in 5G core chips and virtualized radio access networks.
For digital appliances, we will continue to lead the market in providing hyper-connected experiences by further enabling our products with SmartThings. At the same time, we will enhance the competitive edge of our premium products centered on Bespoke. Moreover, we will accelerate the growth of high-margin products such as system air conditioners and expand B2B and online sales in order to promote revenue growth. For Harman, both the automotive and consumer audio markets are projected to grow slightly in 2023. The audio business will strive to increase both on and offline sales based on the competitiveness of our differentiated products and brands. The automotive business will push to increase its sales in digital cockpits and car audio products.
Turning to capital expenditures, CapEx in the fourth quarter was KRW 20.2 trillion, of which KRW 18.8 trillion was invested in the DS Division and KRW 0.4 trillion in display. Memory CapEx concentrated on preparations for advanced technologies, which included investing in P3 and P4 infrastructure to provide readiness for mid to long-term bit supply, as well as in EUV to further bolster future competitiveness. We also invested in securing infrastructure for future generation R&D. Foundry investments focused on expanding the production capacity of advanced nodes at our Pyeongtaek site, as well as on initial capacity for 3 nm and infrastructure for our Taylor site to address future demand. Display investments covered flexible display production capacity expansion, as well as facility improvements in infrastructure.
The annual CapEx was KRW 53.1 trillion, with KRW 47.9 trillion invested in DS and KRW 2.5 trillion in display. Although the CapEx plan for 2023 has not been finalized, I can share some high-level directions. In memory, we will continue to invest for the mid- to long-term to prepare for future demand and further enhance technology leadership. In addition to continuing with our EUV differentiation, our mid-term plan includes investments for the transition to advanced technology nodes to address the markets for high-performance, high-density DDR5, LPDDR5X products, which are expected to be in high demand starting in the H2 of 2023.
For the longer term, we will also invest in infrastructure for P4 and multiple R&D capabilities, including a new dedicated semiconductor R&D fab, as well as in capacity for the development of future generation processes. Foundry investments will continue to center on expanding the production capability at our Taylor and Pyeongtaek sites to address the demand for advanced processes, which is in line with our shell-first strategy that enables us to respond swiftly and flexibly to customer demand. Next, I would like to address shareholder returns. Today, the board of directors approved a quarterly dividend of KRW 361 per share for common stock and KRW 362 per share for preferred stock.
Based on the annual dividend payout under the current dividend policy, the total quarterly dividend payout is KRW 2.45 trillion. It will be paid after final approval at the annual general meeting of shareholders. As we close out the results for 2022, I would also like to share that the annual free cash flow was KRW 9.8 trillion, and the shareholder return pool at 50% of the free cash flow is approximately KRW 4.9 trillion. Considering the projected annual dividend for 2022 is KRW 9.8 trillion, there was no additional pool for an earlier return.
In 2023, as we set out to implement large investments for our future growth and differentiation amid a challenging business environment, we will be especially more conscious about continuing to enhance our capital management efficiency. Next, I would like to share some of our key activities in sustainability management. First, as we recently showcased at CES 2023, we are committed to enhancing resource circularity throughout our products' life cycle and improving their energy efficiency, such that using Samsung products contributes to a low carbon and sustainable future. As prime examples of everyday sustainability, our SmartThings Energy service allows users to effectively manage the energy use of all devices linked through this service. Through collaboration with Patagonia, we have developed and introduced a laundry cycle that can reduce microplastic release by up to 54% based on results from the European market.
Finally, we applied innovative technologies to transform discarded fishing nets into recycled plastic components for use in our smartphones. Through these recycling efforts, we were honored with the SEAL Sustainable Product Award, an acknowledgment of our commitment to a sustainable future. Moreover, we are joining forces with like-minded global partners to create ecosystems that enhance sustainability. For example, we are working together with Carbon Trust and other industry leaders to establish an industry standard to measure and reduce carbon emissions in the use stage of connected devices.
Moreover, as part of our advocacy efforts to increase the supply of renewable energy in Asia, we are participating in the Asia Clean Energy Coalition as a member of the steering committee. Last but not least, to address the challenges faced by the semiconductor industry, we have joined the Semiconductor Climate Consortium as one of its founding members, and have also been elected as a member of the governing committee. Furthermore, Samsung Global Goals, an application on Galaxy smartphones, raised more than $10 million to contribute to the United Nations Development Programme's efforts to implement the Sustainable Development Goals. Meanwhile, Samsung ranked fifth for the third consecutive year in Interbrand's Best Global Brands, achieving the highest growth in ranking among non-U.S. companies. We will continue our efforts to enhance sustainability in all aspects of our businesses going forward.
I will now turn the conference call over to the representatives from each business unit to present fourth quarter performance and outlooks for their respective business segments in more detail. We will start with EVP Jaejune Kim of the Memory Business. Thank you.
Good morning. This is Jaejune Kim from the Memory Global Sales and Marketing. For the memory market, in the fourth quarter, demand weakened as customer continued to adjust inventory on the increased uncertainties in the external environment. Our Bit growth outgrew the market by expanding sales focusing on server applications, aided by the base effect of coming in on the market last quarter. However, memory price fell further as deepening macro issues eroded customer consumer sentiment. Additionally, with the impact of meaningful loss from the valuation of inventory, our result decreased significantly compared to the previous quarter. In DRAM, for server, as you know, it's a component supply issues gradually eased.
However, demand growth was limited because of a decline in set build caused by economic uncertainties and customer stance to maintain their inventory adjustments. On mobile and PC, it seems that demand was muted because of continued inventory adjustment at major customers and a reduction in set builds amid its shrinking consumer sentiment coming from concerns over an economic slowdown. While the decline in demand was steepening across the overall industry, we expand the portion of cutting-edge node by optimizing our product portfolio. In addition, we actively responded to demand for high-density products, focusing on major data centers and our server-oriented customers, and our quarter-on-quarter Bit growth exceeded market. Next, I will talk about the NAND market.
For server SSD, despite continued growth in our contents per box, customers continued to delay purchases because of their inventory adjustments and demand was somewhat stagnant. As for mobile, while consumer sentiment remained weak due to the economic slowdown, demand was sluggish, especially in China, because of a zero-COVID policy until early December and production disruption at some customers. Also for client SSD, with the reduction of set build at some customers, the burden of inventory adjustment increased and the demand for memory purchase somewhat slowed. As demand continued to weaken due to macro issues, we actively addressed demand for high-density product across all applications and diversify our product and customer portfolios. As a result, QOQ Bit growth exceeded market.
Now let's move to the outlook for the first quarter. For DRAM in server, as economic uncertainties continue, our customer have maintained their stance on inventory adjustment so far. Thus, under concerns over weakening momentum for a demand recovery in the short term, we should monitor if demand will improve in accordance with macro variables such as interest rate policies. For mobile and PC, under the effect of slow seasonality, and a weakened consumer sentiment due to concerns over a deepening economic slowdown, there is a possibility that demand will shrink. However, we need to keep watching for signs of demand recovery, along with developments in China's COVID-19 recovery situation, and economic stimulus packages.
As new CPU launches, we will work to prepare for expected fast-growing DDR5 demand for server and PC. In mobile application, we will actively address demand for high-density LPDDR5X for high-end products. For NAND, in server SSD, there is a possibility that demand will drop significantly, slightly compared to previous quarter as customer continue to adjust their inventory due to supply constraint under concerns over a deepening economic slowdown. Considering the hybrid cloud trends over enterprise area, can positively influence demand and we need to monitor detailed impacts. For mobile, although we expect continued high density trends, based on price elasticity, we expect demand to be weak as customer sentiment continue to be sluggish because of inflation and interest rate hikes.
Also, for client SSD, even though demand for high-density products is expected to increase steadily, purchase activities are projected to be delayed as OEM customers deplete their accumulated set inventories . Based on our cost competitiveness, we plan to expand the sales portion of high value-added products by addressing a demand for high-density server SSDs. Also, we will actively accommodate the high-density trends over smartphone and PCs to strengthen our market leadership. Let's move on to our look for 2023. While the industry's overall inventory level has increased due to the lowest ever demand decrease last year, our customers are likely to maintain their stance on inventory adjustment in the near term.
We expect customer purchasing sentiment to recover after inventory adjustments are complete, but it's necessary to monitor whether change in economic conditions and consumer sentiment result in improved demand. Looking at by each application, first of all, for server, for the time being, our customers are expected to keep adjusting inventories due to economic uncertainties. However, we expect fundamental demand to remain solid given the investment in core infrastructure such as for AI and machine learning. In particular, demand for DDR5 is projected to increase in earnest in the H2 of the year thanks to increasing contents per box and the launch of new CPUs. For mobile, consumer sentiment is likely to keep muted due to various macro issues.
However, demand may recover relatively in the H2 of the year, thanks to the high density trends and the spread of new form factors in smartphones. Considering the numerous variables affecting demands, such as inflation and interest rate trends, as well as China's easing COVID-19 policy and economic stimulus packages, we will continue to observe market conditions for variable scenarios. For PC similar to mobile, the surge in sales induced by COVID-19 is likely to cause the replacement cycle to take some times. Shipment are forecast to weaken for the time being. However, we will continue to watch for factors that positively affect demand, such as the launch of new CPUs and increased adoption of high density products.
While actively addressing to the demand for DDR5, with the rising adoption of new CPUs, we will respond to demand growth in a timely manner, focusing on high density products for server and mobile by optimizing our product mix. Moreover, to strengthen our future competitiveness, we are going to optimize line operations. In addition, we will increase the portion of essential R&D investments, including the expansion of engineering learn for further process stabilization. We believe that it will bring us enhanced market and technology leadership. Furthermore, under the market uncertainties, we will carefully keep monitoring the market demand changes from both short and mid to long term perspective. Thank you.
Good morning. This is Hyeokman Kwon from the System LSI business. In the first quarter, System LSI earning declined due to sluggish sales caused by inventory adjustment in the industry and a decrease in sales for major components. However, even under difficult conditions, the mobile SoC business achieved its highest year ever full year revenues, and it has continued to increase market share by expanding sales of volume zone products. Furthermore, the automotive SoC business has solidified its mid to long term growth base by supplying on initial sample on for a European premium OEM, and by signing a MOU for product development with autonomous driving solution company in the US. Additionally, our fingerprint authentication card product won the Best of Innovation award at CES 2023.
In the first quarter, impact of slow issue demand and inventory adjustments are expected to continue for the time being, and it may be difficult to avoid weak sales of major components such as SoC and sensors. In order to minimize the drop in earnings, we will strive to expand the sales of low to medium price, the volume zone SoCs, and 200 megapixels image sensors. For automotive SoCs, we will try to sustain growth momentum through additional orders from European premium OEMs and for self-driving products. For 2023, we expect impact of the economic downturns to continue for the timing. However, analysis of smartphone purchase patterns suggest that demand will continue to polarize between premium and low price, the mobile phones.
In order to respond to this divided market for associates, we will expand the sales in the volume zone while also reinforcing the position of our product for flagship devices. We will ensure our major smartphone OEM customers successfully launch flagship models by smoothly supplying and expanding the line of our differentiated 200 megapixels sensors. Thank you.
Good morning and good evening. This is Gibong Jeong from the foundry business unit. The foundry business in the fourth quarter, we once again set a new record for quarterly revenue. Our full year sales also reached the all-time high. This was thanks to increased contribution from the advanced nodes, an increased portion from the HPC sector, and the continuous evolution of our mature processes. Nonetheless, our capacity utilization started to decline in relation to inventory adjustment at the customer side. In the mobile and HPC sectors, customers' interest in our next generation Gate-All-Around GAA processes has increased meaningfully. Regarding GAA processes, this 3 nm first generation process is currently being mass-produced with stable yield. The development of the 3 nm second generation process is progressing rapidly based on our first generation mass production experience.
In the automotive sector, we started to develop 4 nm process following the mass production of the 5 nm for our future growth in advanced nodes. In the 1st quarter of 2023, we expect our capacity utilization to decrease and our earnings to decline accordingly. It's due to weak demand amid slowing global economic growth in inventory adjustment of customers. In 2023, on the whole, demand may fall temporarily in the 1st half of the year due to the economic slowdown and inventory adjustment by customers. In the H2 , however, we expect market demand to recover in the HPC and automotive sectors. Customer interest in multi-sourcing is ever-growing amid geopolitical uncertainty. To address such a demand, we aim to invest in advanced processes and outperform the market growth.
Based on the competitiveness of our GAA processes, we will win new customers for the 3 nm second generation process. We will strengthen technological leadership by focusing on the development of the first generation 2 nm process. In addition, we will continue to develop specialty and mature processes in order to increase share in automotive and IoT sectors. Finally, we have established an advanced packaging business team within the DS division. It is reflecting the rising importance of next generation packaging technology in the HPC and mobile markets. This will expand our packaging business and bolster synergies between business units. We will strengthen our end-to-end advanced packaging processes from development to mass production, testing, and shipments. We will strive to preemptively address future demand and expand our advanced packaging business in this newly growing area. Thank you.
Good morning. I'm K.C. Choi from the corporate strategy team at Samsung Display. I will now summarize our results for the fourth quarter of 2022. For the mobile display business, the market demand continued to contract due to continued global unfavorable factors despite the peak season. We have achieved solid results by focusing on high-end smartphone products. For the larger display business, sales improved due to increased TV sales during the year-end peak season. The deficit has also eased. In addition, LCD inventory was exhausted and the company switched to a full-fledged QD center business. Overall, 2022 can be said to be an year in which we achieved a tangible result from preemptive business restructuring, such as early exit from LCDs.
Strengthening portfolios focused on high-end smartphones and conversion to larger size QDs. Let me share the outlook for the first quarter of 2023. For the mobile display business, smartphone demand is expected to show negative growth compared to the previous year due to economic slowdown in major regions, as well as the off-season effect. We'll continue to maintain our superiority in performance by actively responding to the launch of major customer flagship products. For the larger display business, we'll secure additional demand and promote an early ramp up by introducing a new item of ultra large TVs and larger size monitors. I will share our outlook for the display market and display business strategies for 2023.
Although a difficult business environment is expected due to unstable market conditions such as inflation and tight monetary policy and the entry of competitors in earnest, we plan to strengthen our market dominance by taking advantage of the technological performance gap in the relatively solid high-end smartphone market. In addition, we'll actively utilize market changes that accelerate to the transition to OLED to maintain our leadership in the market with cost competitiveness, which is a result of preemptive investment. Demand for larger size panel is expected to be decreased, continued due to continued economic uncertainty, but we'll continue to improve profitability by strengthening our sales base in the premium market base on stable yields. Thank you.
Hello, everybody. This is Daniel Araujo from the MX division. I'd like to share our Q4 results and the outlook for the MX business. In Q4, demand for smartphones remained sluggish, with the mass market contracting sharply due to continued inflation and geopolitical instability. The MX business sales and profit fell sequentially due to fading new product effects of flagship models and the drop in smartphone sales on weak demand stemming from the economic slowdown. In particular, the impact of the decline in sales of mass market smartphones was greater than previously expected, but our flagship sales held up well relative to market projections despite the difficult macro situation. Next, let me share the Q1 outlook. In Q1, we expect demand across all smartphone segments to decrease Q-on-Q due to the continuing economic slowdown and other lingering factors contributing to macroeconomic instability.
For the MX division, we will push to expand flagship sales with the successful launch of the S23, which we've prepared thoroughly and will be unveiled at Samsung Galaxy Unpacked tomorrow. With smooth supply in place to confidently respond to initial demand, we'll actively promote our maximized competitiveness in areas like camera and gaming performance, and expand revenue centered on sales of flagship products through a variety of sales programs tailored to regional characteristics. As for Galaxy ecosystem devices, such as premium tablets and wearables, we will continue marketing activities that are linked to our smartphones in order to expand sales. In addition, as competition in the market intensifies and the economic downturn persists, our continued efforts in effective resource management will help secure solid profitability. Now I'd like to discuss the outlook for 2023.
Amid prolonging geopolitical issues, continued inflation, and a continued global economic slowdown, we expect the smartphone market to contract in 2023, with the mass market impacted the most. Although we expect the overall tablet market to stay similar year-over-year, the consumer preference for premium tablets and smartphones should remain solid. As for the wearables market, growth is forecast to decelerate. To press ahead with the high growth of foldables and revenue expansion of the S series, MX will further enhance the completeness of our flagship experience based on actual user experiences by focusing our technology capabilities on strengthening the competitiveness of flagship products. With these efforts, we will further expand our premium customer base and thereby improve the sales mix and sales growth.
Based on the strength of our collaborations with mobile carriers, we will actively facilitate a variety of sales programs to expand sales of 5G smartphones in the mass market segment in order to overcome negative market growth. For tablets, we will continue to pursue sales growth by strengthening our lineup of premium products in line with the large screen trend, and by upgrading experiences through features such as the S Pen. In wearables, we will expand sales by strengthening product competitiveness through an improved multi-device experience. Through these efforts, we will achieve sales growth in 2023, with continued progress on operational efficiencies in response to the macroeconomic instability, we will secure solid profitability. Thank you.
Good morning. This is KL Rho from the sales and marketing team of Visual Display. First, I would like to review the market condition and our performance in the post quarter of 2022.
TV market demand increased quarter-over-quarter, thanks to year-end peak seasonality, but it contracted year-over-year, led mainly by declines in developed market due to a global economic downturn. For Samsung, we improved our performance quarter-over-quarter by proactively addressing regional peak season demand, such as Black Friday, and by expanding sales centering on high value-added product, including Neo QLED and lifestyle pro-models. However, our performance declined year-over-year due to a contraction of consumer sentiment caused by high interest rate and inflation, and also impact from currency movement. Now, let's look at the outlook for first quarter in 2023. Market demand in the first quarter is expected to decline both quarter-over-quarter and year-over-year due to seasonality and continued impacts of global economic downturn.
Samsung will capture premium demand utilizing our 2023 Neo QLED, which provide a richer and more valuable user experience via enhanced device-to-device connectivity on top of its high definition, high performance. To this end, we will strengthen partnership with major channel partners by region, maximize the performance of various marketing promotions for each country by utilizing strategic products. At the same time, we plan to focus on securing profitability by continuing to optimize operation and manage its cost. Regarding the TV market in 2023, along with various external uncertainties that are expected to continue in 2023, overall TV demand is likely to remain stagnant. Demand for premium products, including QLED, OLED and Super Big TV should keep growing.
We will continue to lead the ultra large screen market with our 98-inch Neo QLED, and we plan to release Micro LED models in various sizes so that more consumer can enjoy what we feel is the world's best picture quality and screen experience. For OLED TV, we will provide consumers with a wide range of options by adding 77-inch models to the current 55-inch and 65-inch models in our lineup. We will continue innovation in premium products, including the release of 57-inch and 49-inch OLED gaming monitors. At the same time, we will continue to strengthen sustainable eco-friendly management throughout the life cycle of all our products, and provide a new consumer experience that connect screen and other products, all to further solidify our position as an industry leader. Thank you.
Thank you. That sums up the fourth quarter results presentations. Before we move on to the Q&A session, I would like to share several data points in key business areas. Considering the continuing macro uncertainties, we will not be providing annual guidance at this time. Comparative figures are on a quarter-to-quarter sequential basis. For DRAM, in the fourth quarter, our bit growth increased by a percentage in the high single digits, and ASP declined by a percentage in the early 30% range. For the first quarter of 2023, we expect market bit growth to decrease by a low single-digit %, and our bit growth should be similar. For NAND, in the last quarter, our bit growth increased by a percentage just into the double digits, while ASP fell by a percentage in the high 20%s.
In the current quarter, we expect market bit growth to decrease by a mid-single digit%, our bit growth should slightly outperform the market. For display, in the fourth quarter, the OLED portion of revenue was in the mid-90s%, OLED sales volume increased by a high single-digit%. For mobile in the October quarter, shipments were approximately 58 million units for smartphones and 8 million units for tablets. Smartphone ASP was $240. For the first quarter of this year, we expect smartphone shipments and ASP to rise, shipments of tablets to decline. For TVs, sales volume of LCD TVs in the fourth quarter increased in the high teens%. For the current quarter, we expect sales volume to contract in the low to mid-teens%. I will now move on to the Q&A session.
First, we will start taking questions from the conference call.
Now Q&A session will begin. Please press star one, that is star and one if you have any questions. Questions will be taken according to the order you have pressed star and number one. For cancellation, please press star two, that is star and two on your phone. The first question will be presented by Sung-Kyu Kim from Daiwa Capital Markets. Please go ahead with your question.
My first question is about the memory business. There is quite a lot of concern in the market about memory demand. I think the expectation is that the shipments at the set level will remain weak.
However, I think one upside that we can look forward to is that perhaps the significant drop in prices that has been continuing since H2 of last year may continue to drive increase in content per box. In that context, could you share with us your outlook in content per box increase by application? Second question is about the digital appliance side. Overall logistics as well as raw material prices have been coming down and stabilizing. What kind of impact do you think that would have on your digital appliance profitability this year? In connection with that, what kind of strategy is the company planning to secure better profitability in its DA business?
To answer your question about content per box by application, it is true that we are also observing a trend of increasing content per box, mainly driven by price elasticity, especially around consumer devices such as smartphones and PCs. Especially in the case of mobile, we expect this increase in content, memory content to continue, driven by price elasticity. We're actually seeing an increase of competition around memory specifications, especially around the high-end smartphones. With all of that considered, we are currently expecting that this year memory content growth rate will be around 10% year-over-year for DRAMs and around high teen growth for NAND. On the other hand, for the server side, the upside from price elasticity will be relatively more limited.
However, what we can look forward to on the server is the demand that will happen from the conversion, the switching over to the new platform. The new platform that will be launched this year has more number of cores, therefore, we think that the rate of high density memory adoption will increase by around 20% year-over-year for both DRAM and NAND. Also at the same time, we think that the adoption of DDR or migration to DDR5 will happen at the same time. Especially this conversion to DDR5, there are things to keep in mind. For example, because of the chip size penalty, bit productivity decrease is expected.
Also because this is an initial new product, market inventory levels are currently low. Initially, we can expect there to be build demand and on top of that, demand to secure initial inventory. Actual purchasing demand may pick up faster than expected. To answer your question about the digital appliance and impact of logistics cost and raw material prices, as you mentioned, raw material prices overall have been on a declining trend since H2 of last year. With the increase in raw material demand tied to China's reopening and also expectations of a possible recovery of global economic sentiment, raw material prices recently have been rebounding. Considering that the amount of decrease we can expect may not be as large as expected.
Ocean freight has definitely been decreasing since H2 of last year. Still compared to pre-COVID levels, it is relatively high. While these factors would have a positive impact on profitability this year, overall situation remains fluid. It is too early for us to make any definitive calls. That is why the focus of our profitability strategy is, number 1, minimizing the impact of any market volatility and changes by strengthening our production hub competitiveness for better cost savings and also to leverage the long-term supply contracts that we enter with raw material companies at attractive terms. Also, on the sales side, we're focusing on expanding our premium sales, such as the Bespoke Infinite Line, and also expanding our B2B and online channel sales.
The next question will be presented by Doyoun Choe from SK Securities. Please go ahead with your question.
I only have one question, and that's about your memory supply plan, which I'm sure many people on the call are interested about. Given the fact that market environment is worsening and continuing to stay weak, does the company have any plans of reducing or delaying its equipment investment plans? Or any plans of reducing its production through line adjustments or adjustment of its utilization rate?
Yes. I'll answer that question about our investment and production plans for this year in connection with this year's market situation. As you mentioned with recent inflation, higher interest rates, consumer sentiment remains soft.
Also, due to concerns of a weak economy going forward, even businesses, companies are placing top priority on maintaining their financial soundness, and this has resulted in a prolonged inventory adjustment cycle by customers that started from H2 of last year. While this situation is not immediately favorable for our business performance, on the flip side, this is a great opportunity for us to prepare for the future. Our CapEx approach this year is to continue to make the infrastructure investments that are necessary to respond to mid to long-term demand, and to secure the essential clean rooms that we would need to do that. In conclusion, this year's CapEx plan is expected to be similar to previous year.
또한 공정 기술 경쟁력 강화와 조기 안정화를 위해서 엔지니어링 런 비중을 확대 중이며, 이에 따라 CapEx 내에서 R&D 항목의 비중도 이전 대비 증가할 것으로 예상됩니다.
At the same time, in order to secure best quality and also line operation optimization, we have strengthened our production line maintenance efforts and are going through some equipment layout adjustments, which we are efficiently pursuing the migration to future cutting edge nodes. Also in order to increase our process technology competitiveness and also to stabilize our process technology early on, we have been increasing the share of engineering runs. As a result of that, within our total CapEx, the R&D related portion is expected to increase versus previous years.
이런 과정에서 단기 구간 의미 있는 규모의 빚 영향은 불가피할 것으로 예상됩니다. 장기적으로는 당사의 시장 대응 경쟁력을 제고하기 위해 꼭 필요한 활동이기 때문에 미래 성장을 위한 준비 차원에서 실행 속도를 높여 진행할 계획입니다. 마지막으로 지정학적 이슈 등 시장 불확실성은 상존할 것으로 예상되기 때문에 지속적으로 단기 및 중장기 시장 수요의 변화를 예의주시해 나갈 예정입니다.
In the process of carrying out these initiatives, we think that impact on our EBIT at a meaningful scale in the near term would be inevitable. However, if you look at the long term, these are all essential activities that are necessary to enhance our competitiveness and responsiveness to the market, and that's why we will be carrying these activities out at a brisk pace as part of our preparations for future growth. Lastly, market uncertainty, including geopolitical issues, is a given, and therefore, we will continue to carefully monitor any changes in the mid to short term or mid to long term market demand.
네, 답변 감사합니다. 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 KB증권의 김동원 님입니다. The next question will be presented by Dong Won Kim from KB Securities. Please go ahead with your question.
예, 안녕하십니까? KB증권 김동원입니다. 질문 기회 감사드립니다. 저는 디스플레이 부문 한 가지 질문드리겠습니다. 최근 스마트폰용 OLED 시장 내 경쟁 심화로, 아, 향후 삼성 디스플레이 OLED 점유율 축소에 대한, 아, 우려가 있는 것 같습니다. 이에 대한 회사 측의 전략에 대해 말씀 부탁드립니다. 이상입니다.
My 1 question is about the display side, the smartphone OLED display. With market competition becoming more intense in that segment, there are concerns in the market that Samsung Display's market share in the mobile OLED segment may decrease. Can you share with us your strategy on how to respond to this intensive market competition?
네, 답변드리겠습니다. 저희 SDC의 상당 부분에 그 매출과 이익을 차지하고 있는 스마트폰에서의 경쟁에 대한 경쟁 심화에 대한 우려가 있다는 건 분명히 저희는 인지를 하고 있습니다. 최근 들어서 경기 침체라든지 중국 시장 부진 등으로 스마트폰 수요가 약한 상황에서 경쟁 업체들이 지속적으로 가동률을 높이고 있는 상황으로 경쟁이 점점 심화될 상황이란 점은 당사도 충분히 우려를 하고 있습니다. 사실상 이런 경쟁사들의 CapEx는 이미 시장 수요를 넘어선 지는 상당히 오래된 일이고, 언제든지 이런 경쟁 과열의 위험은 상존해왔던 것조차도 사실입니다.
To answer your question about our smartphone OLED, which does account for a large share of our both revenue and profitability. The company has always already been aware of the possibility of competition becoming more intense in the mobile OLED market. While on one side, the smartphone device demand is weak with economic recession, and Chinese market demand remaining sluggish. The competitors in the OLED supply side have been increasing their utilization. Actually, because the competitor's capacity has surpassed market demand some time ago, the risk of overheated competition in this segment has always existed.
최근 몇 년간 당사가 이러한 경쟁 환경에서 상대적으로 잘 대응해 왔다고 생각하고요. 이러한 저희 경쟁 요인에는 몇 가지 요인이 있다고 이해하고 있습니다. 아시는 것처럼 스마트폰은 IT나 TV와 달리 기술의 변화가 굉장히 심하고 소비자들의 교체 주기가 상대적으로 짧은 제품으로써 적기에 개발 역량, 저희 Time to market이 상당히 중요한 경쟁 요인이라고 저희는 이해하고 있습니다. 이런 점에서 당사는 10년 이상의 그런 대량생산 경험을 갖추고 있고요. 이러한 경쟁 우위를 토대로 경쟁사보다 빠르게 우월한 특성을 가진 제품을 지속적으로 출시해 왔고 이러한 경쟁 우위는 올해도 지속될 것으로 일단 전망을 하고 있습니다. 그러나 최근 들어서 우리 고객 주요 고객사들의 그런 차별화 기술 요구가 차츰 줄어드는 상황은 분명히 우려할 부분이라고 판단하고 있고요.
이에 대한 대응을 위해서 저희는, UPC라고 불리는 Under Panel Camera, 그다음에 narrow bezel , 그다음에 저소비전력 등 소비자에 어필할 수 있는 신기술을.
Despite this very intensive and difficult and competitive environment, we have been able to respond very effectively during the recent several years, and I think that's explained by several factors. The most important being our development capability, especially our time to market capability, which is critical in the smartphone market, which has a shorter replacement cycle versus other IT or TV devices, for example. We have more than 10 years of mass production experience and leveraging that we have been able to continuously be the first to market with products that have more superior characteristics. We think that this edge that we have in competition will remain effective this year. One thing we are watching carefully is how customers are demanding for differentiating technology.
In order to keep that demand for differentiating technology strong, we are actively preparing new technologies such as UPC, the Under Panel Camera, or extreme narrow bezels or ultra lower power displays that actually appeal to consumers. We'll continue to very carefully and closely cooperate with our handset OEMs.
The next question will be presented by Jungj un Park from J.P. Morgan. Please go ahead with your question.
Yeah.
I have a question about the mobile side. If our information is correct, the new flagship that will be launched this year would be using a third-party AP, the Exynos would not be used on the flagship that to be un-launched this year. On the other hand, we're also hearing news that an application solution development team has been created under the MX division. Can you just clarify what that implies in terms of where the AP development effort will happen going forward within Samsung Electronics? Would it belong under MX, or would these AP solution development belong under System LSI? I think also what we can read from that is that the Exynos then would mainly be used on the volume zone.
Would it be possible to share with us what kind of % within the volume zone the Exynos would have as a share?
Sure. For each of our products, we select AP chipsets with the most appropriate price and performance for that product. Going forward, we will continue to maintain an open stance on procurement based, of course, on the competitiveness of each AP. We release every product only after undergoing thorough verification, and all APs are optimized for each device in order to give customers an exceptional user experience and performance. In the future, we will continue to select the best AP for each model after considering factors like market demand, release timing, and regional needs. The AP is a highly important component that determines product performance as well as the customer experience.
Taking that into account, in December of last year, we set up the AP solution R&D team, who is in charge of AP optimization and next generation advanced research. This AP solution R&D team will work on developing AP solutions that are more optimized for Galaxy products in collaboration with our chipset partners. Through this, we will continue to strengthen not only our product competitiveness, but also Galaxy's differentiated user experience.
네, 답변 감사합니다. 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 한국투자증권의 최민숙 님입니다. The next question will be presented by Minsuk Choi from Korea Investment and Securities. Please go ahead with your question.
안녕하세요. Minsuk Choi, Korea Investment & Securities. 질문 기회 주셔서 감사합니다. 저는 메모리하고 파운드리 한 가지 질문드리겠습니다. 첫 번째로, 메모리 관련해서 미국의 중국 제재가 점차 심화되고 있는데요. 지금 현재는 시안 공장에 대해서 Samsung으로부터 1년 유예를 받은 상황인데, 향후에 이런 강화되는 와중에 향후 시안 및 중국 내 생산 시설 운영 계획이나 장기적인 전략에 대해서 말씀을 해주시면 감사하겠고요. 혹시라도 미국 내 이미 확보하고 계시는 테일러 부지라든지 이런 곳에 메모리 생산 시설을 구축을 하실 계획이 있으신지 여쭤보고 싶습니다. 두 번째 파운드리는, 3nm 2nd generation 공정 개발하고 테일러 셋 건설이 이제 향후 파운드리 미래 경쟁력 확보에 중요할 것으로 여겨지는데요. 앞서 이제 간략히 언급은 해 주셨습니다만 현재 3nm GAA 2nd generation 개발 현황과 수주 전망, 현재까지 수주 현황 테일러 셋 건설 진행 상황에 대해서 좀 더 구체적으로 공유해 주시면 감사하겠습니다.
My first question is about the memory business, especially the Xi'an fab. The U.S. government is continuing to heighten its sanctions against China. In that context, even though the company received a one-year grace period from the Department of Commerce for the Xi'an fab, can you share with us what the company plans to do in terms of how to operate the Xi'an fab going forward on a longer term basis? What kind of impact do you expect? Looking from outside, you also have, for example, a base in Taylor, even though that is a foundry. Would the company be considering any plans of establishing memory capacity at sites within the U.S. such as Taylor, in response to that? Second question is about the foundry business.
I think looking at the foundry, two key items going forward for you would be the development of your 3nm 2nd generation GAA and also the new fab in Taylor that's being built. Can you give us updates on both, the 2nd generation 3nm development status, order win status, as well as an update on Taylor?
예, 먼저 메모리부터 답변드리겠습니다. uh, 시안 팹 운영 관련해서는, 어, 당사가 중국의 팹을 안정적으로 운영하기까지, 어, 굉장히 오랜 시간이 이미 소요되었고, 또 이미 많은 투자가 이루어진 만큼, 어, 매우 신중한 검토가 필요한 사안이라고 생각합니다. Uh, 당사는, 어, 중장기 시장 및, 어, 글로벌 거래선 수요, uh, 경제성 및 수익성 등, uh, 다방면의 이제 검토를 통해 최적의 고객 대응을 하-한다라는 원칙을, 어, 기준으로, um, 미래 준비를 노력하고 있습니다.
To answer your question about Xi'an, as you know, we have put in quite a lot of time, effort, and investment, to bring the Xi'an fab into a level of stable operation. In terms of deciding our plans going forward, we need to be carefully considering various factors, including little long-term market outlook, global customer demand, economics and profitability. Our focus is on finding the plan that would enable us to provide optimized customer response.
Uh, 그리고, uh, 미국 테일러 시의 메모리 생산 시설 구축 관련한 질문과 관련해서는, uh, 단기적으로 본다면, uh, 현재 파운드리 중심으로 계획이 수립되어 있기 때문에, uh, 지금 시점에서 명확한 답변은 어려울 것 같습니다. Uh, 다만, uh, 국내외를 망라한 신규 생산 거점을 확보하는 것에 대해서, uh, 다양한 조건과, uh, 가능성을 열어놓고, uh, 여러 사항을 고려해서 검토해 나갈 예정이라는 점을 말씀드리고 싶습니다.
You've also asked about whether we're considering memory capacity in places such as Taylor. In the near term, the plan that we have for Taylor is around foundry capacity, and so I'm not able to give you a clear answer on that specific question at this point. Now that said, regarding securing any new production bases, whether it is in Korea or overseas, we're planning to take into account various factors, with open possibilities and under various conditions.
파운드리에 관해서는 최민숙 님이 두 가지를 질문해 주셨습니다. 삼 나노 GAA 이 세대 개발 수주와 미국 테일러 팹 건설에 관해 질문을 주셨습니다. 먼저 말씀하신 삼 나노 이 세대 공정은 이십사 년 예정대로 양산할, uh, 예정입니다.
To answer your question, first of all, our 3 nano GAA second generation, to give you an update on the development, we're currently on schedule, with targeted mass production in 2024.
수주와 관련해서는 현재 다수의 모바일 HPC 고객들이 관심을 보이고 있습니다. 저 먼저 당사의 GAA 기술인 MBCFET에 관해서 설명드리겠습니다.
Also, you've asked about the order situation. Currently we are in collaboration. We're talking to a large number of mobile as well as HPC customers. They are showing quite a lot of interest. I think a best way for me to explain our second generation GAA 3 nano is to explain the technology, the MBC FET technology.
MBCFET은 종전 기술인 FinFET보다 성능이 좋고 전력 소모가 적고 특히 설계적 유연성을 주는 장점이 있습니다.
The MBCFET technology has various advantages versus FinFET in terms of performance, power efficiency, and also design flexibility.
그래서 특별히 고객의 관심이 높고, 당사는 세계 최초로 삼 나노 1세대 공정에서 MBC FET을 적용했습니다.
That is why customers are highly interested in this new technology, and we also have a track record of mass producing this generation, Gen 1 3-nano with MBCFET technology first in the world.
당사는 현재 일세대 공정을 안정적인 수율로 양산하고 있습니다.
Our Gen 1, 3 nano MBCFET technology is currently in mass production at stable yield.
그리고 이세대 공정은 일세대와 대비하여 면적, 성능, 전력 효율이 더욱 개선되었고, 일세대 양산 경험을 기초로 빠르게 개발하고 있습니다.
Our second generation technology will offer gains in terms of size, performance, power efficiency, and our development is actually making quite good pace based on our mass production experience of gen 1.
두 번째 질문해 주신 미국 Taylor Fab에 관하여 말씀드리면, 어, 당초 계획대로 이십사년 하반기에 사 나노 양산을 할 예정입니다.
Regarding the update on Taylor, we are on schedule for 4 nano mass production during H2 of 2024 in Taylor.
이상입니다.
네, 답변 감사합니다. 그럼 시간 관계상 질문 하나만 더 받도록 하겠습니다.
마지막으로 질문해 주실 분은 Citi 그룹 의 이세철 님입니다. The last question will be presented by Peter Lee from Citigroup . Please go ahead with your question.
네, 안녕하세요. 어, Citi 그룹 이세철입니다. 어, 저는 메모리하고 디스플레이 쪽 질문드리겠는데요. 어, 첫 번째 질문은 최근 GPT 관련해서 시장에서 관심도가 많아지고 있습니다. 그래서 메모리 수요 관련해서 그 ChatGPT와 같은 인공지능 기반, 어, 자연어 처리 기술이 대두되고 있는 부분이, 어, 저희 메모리 수요에 어떤 영향이 있을지에 대해서 질문드리겠고요. 어, 두 번째 질문은 디스플레이 쪽인데요. 어, 삼성 디스플레이가 최근 작년 사, 어, 실적 발표 때 IP, 지적재산권을 강화하겠다고 하셨는데 현재 진행 현황하고 그리고 가시적인, 가시, 가시적인 성과가 있는지에 대해서 문의 부탁드립니다.
my first question is about memory. Actually the impact to memory demand that we can expect from the increase of various AI technology, especially ChatGPT recently is attracting a lot of attention. If there's a wider adoption of ChatGPT and other AI-based natural language processing technology in the market, what kind of implications do you think that would have on overall memory demand? Second question is about the display side. I think last year during occasions including the earnings conference call, you mentioned that Samsung Display will be strengthening its IP. Can you give us any updates? Were there any visible achievements since then?
메모리 먼저 답변드리겠습니다. 결론부터 말씀드리자면, 질문 주신 것과 같은 자연어 기반 대화형 AI 서비스가 미래 메모리 수요에 긍정적 영향이 있을 것으로 저희도 기대하고 있습니다. 특히, 이러한 서비스의 출시는 대규모 language 모델이 상용화 단계에 왔음을 보여줬다는 데에서 큰 의의가 있다고 생각합니다.
Uh, to answer your question about, uh, impact on, uh, memory demand by these AI natural language processing technology, uh, we also agree that the increase of these natural language-based, uh, conversation style AI services would have a positive impact on future memory demand. Uh, I think especially meaningful with, uh, the, the, uh, the adoption of ChatGPT is that now these large scale language models have finally reached a level where it can be now commercially used.
어, AI 기술에 기반한, 어, 이러한 모델들의 학습과 추론을 위해서는, 어, 대량 연산이 가능한, 어, 고성능 프로세서와 함께, 어, 이를 지원하는 고성능, 어, 고용량, 아, 메모리의 조합이 필수적입니다. 아, 이에 대규모 language 모델 AI 기반 서비스가, 어, 확장됨에 따라 하드웨어 수요 증가도, 어, 예상됩니다.
In order for these AI-based models to train and also infer, there needs to be, number one, high performance processors that can actually do large scale computation. Combined with this processor, you need high performance, high density memory to support that. We think that with the wider adoption of large scale language model AI-based services, there will also be an increase in hardware demand.
어, 특히, 어, GPU와 AI accelerator에 직접, 어, 데이터를 제공하는, 어, 고성능 HBM과, 어, AI 학습 데이터 처리를 위해서 이를 지원하는 CPU량, 어, 원, 어, 백이십팔 기가바이트 이상, 어, 고용량 서버 DRAM의, 어, 장기적 수요 증가를 기대하고 있고요.
More specifically, the areas within the memory that we can expect there to be long-term demand growth would be the high performance HBM that provides data directly to GPUs and AI accelerators, as well as the high density server DRAM, such as the 128 gigabyte and plus, that would support the CPUs that process the AI learning data. That is why we are planning to actively capture the increase in demand related with AI services by developing high performance, high density memory products. To answer your question about the efforts to strengthen our IP, intellectual property at Samsung Display level, Samsung Display considers this widely practiced patent infringement within the display industry is a serious problem.
Since last year, through various channels, including, for example, IR events, we have mentioned that the company is preparing various response strategies. Within the smartphone ecosystem, it's very important that technology is used fairly and that its value is protected. However, what we are seeing, for example, out in the market is quite concerning. For example, the Diamond Pixel, which is one of our signature technology patents, we're finding products being sold online that blatantly infringed upon this technology. When we looked into the details, it was even unclear where this product was being manufactured. That is why we filed a complaint against a total of 17 US component wholesalers against the US International Trade Commission. This is the start, and we will continue to actively fight to protect our intellectual property.
Finally, we will answer questions that were submitted online in advance. We have been accepting questions via our website in advance of an earnings release as part of our efforts to strengthen communication with individual investors and enhance understanding of the company. We received a wide variety of questions again this quarter. I believe a majority of the submitted questions were sufficiently answered during the Q&A session, but we will answer one more question on a topic that garnered a high level of interest from our shareholders, but were not addressed during the Q&A session. The question is as follows: What are the major innovation points of the new S series product in terms of performance and design, and what are the marketing strategies to boost sale? This question will be answered by VP Daniel Araujo, representing the Mobile Experience division.
Sure. The S23 series, which will be unveiled at Samsung Galaxy Unpacked tomorrow, or the day after, is a product that combines the best in features and performance, and we believe will establish a new standard for smartphones that consumers can trust and use for a long time. In order to solidify best in the industry positioning, we'll focus on appealing to consumers with the best camera and gaming performance centered on the ultra model, which inherits the user experience of the Galaxy Note. We will also continue to carry out privacy campaigns, make ESG advances, like applying more eco-friendly materials to our products. We're also strengthening marketing of the Galaxy's unique experience, especially via the social channels that are linked to our customers' daily lives.
Considering that many consumers' disposable income is decreasing during this difficult time, we plan to expand programs like Samsung Trade-in that reduce the purchase burden of our products. With all this thorough preparation, from securing sufficient volume for our product launch, all the way to the go-to-market strategy, we'll strive to expand sales of flagship products.
I would like to thank everybody who shared their valuable opinion, and we will be sure to refer to them in our decision-making process. That completes our conference call for this quarter. We wish all of you and those close to you stay strong and in good health. Thank you very much.