Morning and good evening. First of all, thank you all for joining this conference call. Now we'll begin the conference of the fiscal year 2018 first quarter earnings results by Samsung Electronics. This conference will start with a presentation, followed by a division 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 fiscal year 2018 first quarter earnings results by Samsung Electronics.
Morning. This is Robert Lee from Investor Relations. With me representing each business units are Jun Woong Cha, Senior VP of Memory, Ho-Uk Park, VP of System LSI, Sanghyun Lee, VP of Foundry Marketing, KwanYoung Choi, VP of Samsung Display, Youngtae Lee, VP of IT and Mobile, Sung-Hyuk Cho, VP of Visual Display Business, as well as Sang-Hyo Kim and Taeyoo Kang, both from the IR. I would like to remind you that some of the statements we'll be making today are forward-looking, based on the environment as we currently see. All such statements are subject to certain risks and uncertainties that may cause our actual results to be materially different from those expressed in today's discussion. Before we go over the results, I will address the first quarter dividend and stock split.
The board of directors today approved a first quarter dividend of KRW 17,700 per share for both common and preferred stock. As a part of our shareholder return policy for 2018-2020 that we announced last October, we set the minimum annual dividend of KRW 9.6 trillion in each of the three years covered by the policy. Accordingly, the quarterly dividend for the first quarter to be paid in May is KRW 2.4 trillion, one-fourth of the annual total. Regarding the stock split, the original shares will be suspended from trading for three business days over April 30th-May 3rd. The new shares will start trading from May 4th. Now I would like to walk you through our first quarter results.
In the first quarter, total revenue rose roughly 20% year-over-year to KRW 60.6 trillion, thanks to the strong performance by the memory business and an increase in sales of flagship products in the mobile business. Gross profit increased approximately KRW 6.3 trillion year-over-year to KRW 28.7 trillion, and gross margin improved three percentage point over the same period. SG&A expenses grew slightly year-over-year. As a percent of revenue, it declined 3.2 percentage point. Operating profit set a new high, increasing KRW 5.7 trillion year-over-year to KRW 15.6 trillion, driven by a significant profitability improvements in the semiconductor business and the early global launch of the Galaxy S9. Operating margin rose 6.2 percentage point year-over-year to 25.8%.
In the first quarter, a strengthening of Korean won against the US dollar negatively impacted operating profit quarter-over-quarter by approximately KRW 600 billion, with the effects felt most by the component business. In the semiconductor business, earnings increased significantly year-over-year, thanks to favorable memory market conditions driven by a strong demand for server and graphic memory, as well as earnings improvements in both the System LSI and foundry businesses, led by increasing demand for chips used in flagship smartphones and cryptocurrency mining. For the display business, profitability weakened due to decreased flexible OLED demand and intensifying competition from LTPS LCD on our rigid OLED. In the LCD market, an imbalance between supply-demand caused by increased production capacity at competitors further weighed on profitability.
For the IM division, earnings in the mobile business grew considerably as sales of flagship products increased due to the early launch of the Galaxy S9 and a solid performance by the Galaxy S8. In the consumer electronics business, despite growing sales of premium products, including ultra-large size and UHD TVs, earnings in the TV business edged down year-over-year as we reshaped our lineups by removing certain models in the mid to low segments. In the home appliance business, profitability declined slightly due mainly from rising raw material prices. Next, I would like to share our business outlook. For the second quarter, we expect the memory business to stay strong, but generating company's total earnings growth will be quite challenging due to weakness in the display business and decline in profitability in the mobile business caused by weak demand in high-end segment.
Regarding the component business, we expect demand for server mobile DRAM to remain Demand for high-density storage to grow as the price of NAND softens. For the System LSI and foundry business, we forecast that the supply of 10-nano application processors and cryptocurrency mining chips will expand, but earnings may decrease quarter-over-quarter due to a slow demand for smartphone components. The OLED business will focus on securing profitability by reducing costs and boosting yield amid weak demand for flexible products. In the LCD business, oversupply is expected to persist even as major sporting events boost demand. Moving on to the set business, profitability in the mobile business is expected to decline quarter-over-quarter due to stagnant sales of flagship models amid weak demand and an increase in marketing expenses to address the situation.
In the consumer electronics business, we expect earnings to improve in the second quarter, led by expanding sales of new models, including those of our QLED TV lineups and strong seasonality in the air conditioner market. In the second half of 2018, we expect earnings to grow over the first half, mainly driven by the component business, with increasing OLED panel sales and strong DRAM demand. For the set business, we will strive to sustain profitability by solidifying our market leadership with greater sales of premium products amid softer demand and intense competition in the high-end segment. In the mid to long term, as new areas like artificial intelligence, automotive technology, and 5G transform the IT landscape, we expect to see rising demand in the component business and widening opportunities for the set business as digital devices show increase in connectivity.
We will strive to strengthen our business capabilities by delivering differentiated technology in the component business and solidifying our leadership in cutting-edge technologies like artificial intelligence and 5G to name a few. Now I would like to turn to capital expenditure. Total CapEx in the first quarter was KRW 8.6 trillion, including KRW 7.2 trillion for the semiconductor business and KRW 0.8 trillion for the display business. Although our plan for 2018 has yet to be finalized, we expect CapEx to decline year-over-year, considering that it rose substantially in 2017 due to our efforts to respond to market growth and emerging technologies, which included expanding production capacity of flexible OLED panels. Before we move on to presentations from each business unit, I would like to share several data points in key business areas. For DRAM, our bit growth in Q1 declined low single digits, while ASP increased mid-single digits.
For the second quarter, we expect DRAM market bit growth to be high single digits. Our bit growth will be similar to the market growth. For 2018, we expect the market DRAM bit growth to be roughly 20%. We will grow in line with the market. For NAND Flash, in Q1, our bit growth declined mid-single digits, while our ASP declined low single digits. For the second quarter, we expect market NAND bit growth to be low teens. Our bit growth will be similar to that of the market. For 2018, for the year, we expect the NAND market bit growth to be roughly 40%. Again, we will grow in line with the market. For display business, the mix of OLED panel sales was roughly mid-70% of total revenue.
For the wireless business, the total sales of handsets in Q1 was 86 million units and tablet 5 million units. Blended ASP for our total handsets was mid-$ 250s. Of the total handset sales, the smartphone mix was low 90%. For the second quarter, we expect the handset sales to decline quarter-over-quarter, while tablet sales will be similar to that of the Q1. In blended ASP for our handsets, we will see small increase quarter-over-quarter, and the mix of the smartphone within total handsets will remain at low 90s. For TV business, our LCD TV sales in Q1 declined high 20% quarter-over-quarter, while in the second quarter, we expect the TV shipment to decline mid-single digit. For the year, for 2018, our TV sales unit is expected to be similar to that of 2017.
Now I will turn the conference call over to the gentleman from each business unit, starting with memory.
Good morning. This is Sewon Chung from the memory marketing team. In the first quarter, in spite of weak seasonality, thanks to strong demand, mainly for server, a solid market environment continued. For NAND , although demand for mobile slowed down due to overall low seasonality, along with some weakness in smartphone. Stable demand continued as expansion of cloud infrastructure and high density trend for solution product continued. For the supply side, supply has been gradually increased as the suppliers began mass production of 64-layer products. However, supply increase was disproportionate due to delays in qualification of some applications. As a result, more supply increase was made in the channel market than OEM.
We have garnered solid earning growth by concentrating on sales of high-density mobile storage and value-added solutions, such as SSD over two terabytes for data center and over eight terabytes for enterprise, with a stable 64-layer V-NAND ramp-up at Pyeongtaek. For DRAM, despite with seasonal effects, strong demand continued, thanks to increasing demand from server and graphics. Server demand remained strong due to continuous expansion of data center infrastructure and high-density trend because of fast adaption of new CPUs. Demand from mobile also increased steadily, along with content growth in all segments. PC demand was decent enough, showing general seasonal pattern. For graphic, in spite of game console set deals decreased, total demand increased, thanks to strong demand from graphics card and cryptocurrency mining.
Although shipments decreased against the previous quarters due to the transition of line 11 capacity to CIS, we continuously improve our earnings by concentrating on high-value added product markets, such as high-density server DRAM over 32 gigabytes, HBM2, and UMCP based on low power LPDDR4X. Next, let me comment on the memory market outlook. In the second quarter, along with continuous strong demand for server, overall demand is expected to be strong, with increased demand from mobile expected. On end, with price being certain, total demand, mainly for high-density storage, is expected to increase. For server, data center will remain to be a main driver for strong SSD demand. On top of this, in enterprise market, strong demand for high-density SSD over eight terabytes will continue as well, especially from large OEM and companies. For mobile, as high-density trend, mainly for high-end smartphone continue, overall demand will be strong.
While closely monitoring each application market status, we will continue to increase high-density server SSD supply and to drive more e-storage strategies based on our solution products' competitiveness and stable suitability of 64-layer V-NAND. For DRAM, strong server demand is anticipated to continue because expansion of data center is now taking its place, not only in the U.S., but also in the Chinese market. Moreover, high-density DRAM portion will also increase with the fast spread of new CPU. For mobile, thanks to expansion of the high-spec gaming smartphone market and spreading dual camera adaption to the volume segment, mobile demand driven by content growth is expected to remain solid. While we will concentrate on strengthening cost competitiveness by expediting qualification process of 1y nanometer and continuously expanding 1x nanometer products. We will also continue to deploy a flexible product mix strategy according to individual application market conditions.
Next, I will comment on the second half of the 2018 market outlook and our strategy. On end, solid demand, mainly for server and mobile, will be maintained in the second half of 2018. As condition of certain price continues, the trend of SSD replacing HDD will be accelerated, and storage size will get bigger from all smartphone segments, resulting in demand increase both from server and mobile market. For the supply side, due to expansion of supplies transition toward the 64 layer, tight market condition will be moderated and supply and demand status for each application may differ, depending on the level of supply increase and qualification status. We are focusing on mass production and expanding conversion of 64 layer mainly at Pyeongtaek Campus.
At the same time, we will focus on strengthening our product competitiveness and cost leadership via flexible investment according to market condition and introducing and ramping up the next generation products in a timely manner. For DRAM, demand from all application will increase. As data center companies continuously invest in infrastructure because of exponential increase of regular and irregular data, strong server DRAM demand will continue. Moreover, in analyzing this data in real time using AI and machine learning, high-performance HBM demand is also expected to grow. For graphics, console demand and VGA card for cryptocurrency mining demand are anticipated to be strong consistently. Mobile demand is also expected to grow as content per box increases for their product differentiation, especially for flagship and high-end model, which support high-performance mobile games and on-device AI in accordance with the trend for high performance and high-density memory.
On the other hand, in spite of industry effort to increase the supply, extending big growth is more likely to be limited due to space constraint and increase in technology difficulty. Therefore, DRAM market is remained to be tight continuously. To cope with this market circumstance, we will adhere to our policy of flexible supply and investment in accordance with market condition. Also we'll strengthen our cost competitiveness via expanding sub 1x-nanometer class technology migration. At the same time, we will also solidify our position in value-added market to the future extent by focusing on sales of our high-density server DRAM and differentiate the products such as HBM2, LPDDR4X and creating new solution market with UMCP products. Thank you.
Morning, this is Patrick from the System LSI business. The first quarter of this year, on a quarter-over-quarter basis, mobile DDI earnings declined due to the slow OLED dependent demand. Overall earnings increased amid strong demand for the mobile processors and image sensors led by the launch of this year's premium smartphones. In the second quarter, we expect earnings to remain flat quarter-over-quarter due to slowing growth in demand for the premium smartphone components. Nevertheless, we will try to continue favorable earnings by focusing on the stable supply of mobile processors and image sensors for flagship models. In 2018, we expect the demand for the image sensors to grow as many smartphone makers are projected to increase adoption of the dual camera and the three-step fast reader sensors.
In addition, we believe we will continue to post solid earnings backed by sustained growth of the mobile processor sales. Also, in 2018, we plan to expand our solution offerings from mobile to include areas such as IoT, VR, and automotives. We will collaborate closely with our customers and ecosystem partners. Thank you.
Morning, this is Ryan Sanghyun Lee from the Foundry Business. In the first quarter, despite slowing demand for mobile chips and weak seasonality, total earnings grew quarter-over-quarter due to increased demand for high-performance computer chipsets. We broke ground for the EUV line in Hwaseong to address future demand for 7-nano and below semiconductors, and expanded our foundry ecosystem by launching SAFE, the Samsung Advanced Foundry Ecosystem program. In the second quarter, demand for high-performance computing chipsets is expected to remain solid. Accordingly, we will expand supply of HPC and 10-nano mobile products to continuously generate favorable earnings. Also, we plan to actively promote FD-SOI and 8-inch processes, aiming to increase both the number of customers and applications that use related products.
For 2018, despite slowing demand for mobile chipsets, we are targeting generating favorable earnings once again, thanks to our efforts to diversify our customer and application bases. In addition, we will continue to offer derivative processes, including those for 8-nano and 11-nano chips, to satisfy the needs of our customers, while also laying the foundation for mid to long-term growth and technological process leadership via EUV 7-nano risk production. The Foundry Business Unit was launched as an independent business unit in May last year and is pursuing pure-play foundry business. In 2018, we expect to achieve over $10 billion sales, including the sales from the System LSI Business, and maintain the strong 2nd place in the foundry market. We will strive to maintain this growth in the future. Thank you.
Morning, this is Gojung Choi from the planning department of Samsung Display. In the first quarter, total earnings in the display business decreased quarter-over-quarter because of weakened profitability of OLED division panels. For the OLED business, earnings decreased quarter-over-quarter due to a slowdown in demand from major customers and intensified competition with LTPS LCD. As weak demand seems likely to persist throughout the second quarter, the OLED business will work to strengthen competitiveness and expand our customer base by reducing cost and improving production efficiency. On the other hand, with decreasing demand, the LCD business kept its profit at a similar level quarter-over-quarter by reducing cost and expanding our value-added portion of sales, such as UHD and large-sized products. In the second quarter, the supply and demand dynamics in the LCD industry are likely to remain unfavorable due to continuous expansion of capacity.
We will strive to secure our profitability by developing value-added and differentiated products and strengthening activities to reduce costs. Now, I would like to present our outlook for the second half of 2018. For the OLED business, we expect OLED panels for smartphone to see a rebound in demand, and in particular, flexible OLED panels to strengthen their market position in the high-end segment. Under these circumstances, we will make efforts to increase our market share by expanding our customer base and developing products with new technology. At the same time, we'll work to diversify our business portfolio into new product categories such as IT. For the LCD business, we're still facing increasing uncertainties caused by fierce competition with Chinese manufacturers.
We'll improve our fundamentals on a qualitative basis by reinforcing our strategic partnership with our major customers and increasing differentiation of our value-added products such as quantum dot and 8K resolution TVs. Thanks.
Good morning, everyone. I'm Kyuntae Lee from the mobile communication business. I would like to present the IM division's first quarter results and outlook for the second quarter and second half of this year. For the mobile communication business, market demand for smartphone and tablet decreased QOQ as we move into seasonally weak period. Our smartphone shipment increased QOQ, thanks to the early release of the Galaxy S9 and S9 Plus, and solid sales of existing models like Galaxy S8. Our revenue and operating profit grew considerably both QOQ and YOY due to an increase in sales driven mainly by premium models. On March 16th, we launched the Galaxy S9 and S9 Plus equipped with advanced camera features such as super slow motion, dual aperture mode, and AR emoji, while their Infinity D isplay and premium sound quality provide a rich and immersive multimedia experience.
The popularity of the Galaxy S9 Plus with its dual camera helped improve the Plus model portion of Galaxy sales, while the sales portion of Galaxy models with higher memory capacity also increased. These factors significantly contributed to the solid first quarter earnings. Regarding the network business, revenue and profit both improved QOQ, led by investment in LTE by major overseas partners and expanded offerings of new solutions for network optimization. I will now present our second quarter outlook. Under continued weak seasonality, we expect overall demand for smartphone to increase slightly QOQ due to the launching of new smartphone models in the market. Our smartphone shipment, however, are likely to decline QOQ as we discontinued production of all mid-range models. We also expect our earnings to decrease QOQ due to the slowdown in our flagship model sales and increased marketing expenses result from sluggish demand for premium market.
We will give our best effort to maintain a sales trend of the Galaxy S9 and S9 Plus by extending experiential marketing, strengthening the cooperation with our business partners, and utilizing promotional programs like trade-in. For the network business, we expect earnings to grow QOQ on supplying LTE commercial network to North America and expanding offering of network solutions for 5G commercialization in advanced market. Finally, I share our outlook for the second half of 2018. We aim to strengthen our sales performance in the premium markets by launching new flagship model in second half and maintaining long-tail sales of the Galaxy S9 Plus, and last year's flagship models. For the mid-range segment, we are planning to extend the sales and increase contribution to overall performance by continuing to improve line -up efficiency with the new model designed for target market, while also selling both offline and online channel.
Moreover, we will reinforce our service business by extending our Bixby 2.0 base open ecosystem to provide the customers with a smarter and more convenient multi-device experiences using our various devices and services. As for the network business, we will extend the LTE business by attracting new business partners and lead the world's first commercialization of 5G successfully. Thank you.
Good morning. I'm Sung-Hyuk Cho, Vice President of Visual Display Sales and Marketing team at Samsung Electronics. Let me start with the current market conditions and our results for 2018 Q1. The TV market in Q1 has decreased from last quarter due to the slow season following the year-end holiday. The market has grown year-over-year due to increased demand in CIS, Middle East, and Latin America. Samsung's result was slightly down year-over-year in the course of sales mix restructuring with a defocus on entry lineup. However, Samsung has been improving the product mix by expanding QLED and ultra large screen sales and accelerating the transition into UHD. Samsung continues to record a high market share following last quarter in the premium segment, including $ 2,500 and above segment, backed by a full expansion of the flagship premium QLED and ultra large screen TV sales.
This way, Samsung further solidified leadership in the premium TV market. The digital appliance market in Q1 has shown a moderate growth due to increased demand in both developed and emerging economies. Samsung continues to show sales growth year-over-year due to strong sales in premium products like the FlexWash washing machine, Cube air purifier, and system air conditioner. Samsung's results are slightly down year-over-year because of the increase in raw material price and operating cost of new factory in North America. I'll share the market prospects for Q2 and the whole year of 2018. For Q2, the TV market demand is projected to grow year-over-year, mainly driven by the global sports event and the demand growth in emerging markets.
Samsung will focus on improving year-over-year result by fully extending new model sales, as well as driving sales during the soccer event. We have a big improvement in our new lineup this year, innovative new features, and extended lines in premium that's gaining great attractions from the customers. As for QLED, the picture quality has greatly improved with the enhanced color and black expressions. QLED continues to receive positive reviews for new features like Ambient Mode, which enables TV screen to be perfectly blended into home interior when it's off, while showing useful information such as news or weather. One Invisible Connection, which includes not only data transmissions but also power supply, is also well received by the customers. In addition, Samsung extended the ultra large screen lineup of 75-inch and above from entry to premium segment to provide more options for consumers.
With these newly upgraded lineups, Samsung will accelerate new model sales and improve result in Q2. As for digital appliance business, for Q2, Samsung will increase air conditioner sales during the peak season and accelerate business growth by expanding premium lineup like the QuickDrive washing machine and the POWERstick PRO vacuum cleaner. The 2018 TV market is projected to slightly grow thanks to a global sports event, sales, and demand growth in the emerging market. This year, Samsung prepared a solid foundation for growth by strengthening and extending the QLED and ultra large screen lineup. New features like Ambient Mode and One Invisible Connection will provide a whole new customer experience in lifestyle which TV sets have never tried before.
With this addition of Samsung's launch of 8K and MicroLED in second half, Samsung will solidify premium leadership with innovative products and focusing on ensuring sustainable and profitable growth in the mid to long term. As for the digital appliance business, Samsung will continue to strengthen premium sales in developed market, reinforce the B2B business for built-in appliance, system air conditioner, and expand the online business. Thank you.
Thank you. This completes our part of the presentation. We'll move on to our Q&A sessions.
지금부터 질의응답을 시작하겠습니다. 질문을 하실 분은 전화기 버튼의 별표와 1번을 눌러주십시오. 질문을 취소하시려면 별표와 2번을 눌러주시면 됩니다.
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 the number star one. For cancellation, please press star two, that is star and two on your phone.
다음으로 질문해 주실 분은 씨티그룹글로벌마켓증권의 이세철 님입니다.
The first question will presented by Mr. Peter Lee from Citigroup Global Markets Securities. Please go ahead, sir.
네, 씨티그룹 이세철입니다. 먼저 좋은 실적 축하드립니다. 저는 메모리 쪽하고 System LSI 쪽 질문드리겠는데요. 먼저 메모리 수급 전망에 대해서 질문드리고자 합니다. 현재 전반적으로 메모리 업황이 양호하지만 업계 D램 증설 영향으로 하반기 이후 수급이 약해질 거라는 우려가 지속 제기되고 있는데요. 낸드 경우도 업계의 3D 낸드 공급 확대에 따라서 수급 전망이 불확실해 보입니다. 하반기 이후 D램과 낸드의 수급 전망에 대해서 설명 부탁드리겠습니다. 그리고 두 번째 질문은 System LSI 관련인데요. 최근 미국의 중국 ZTE 무역 제재 등으로 볼 때 향후 중국 업체들의 미국 반도체 수입에 차질이 생길 것이라는 전망들이 있습니다. 이에 대해서 반사 수혜로 System LSI 사업부의 중국 내 AP 및 이미지 센서의 판매 확대 가능성이 있는지 문의드리겠습니다.
I have two questions. The first question is about the second half memory demand supply situation outlook that you have. That will be for both DRAM and NAND. Even though currently the supply and demand situation is overall fair at the industry level, there is more capacity being brought on the DRAM side. Some are expecting that the supply demand situation may become a bit looser in the second half. Likewise for NAND with increased supply of 3D NANDs. What do you think will be the supply and demand situation for both DRAM and NAND in the second half? Second question is the System LSI question. Recently, as a part of the trade sanctions regarding ZTE, some are saying that it may be difficult in the future for Chinese companies to import semiconductors from the U.S.
Does the System LSI division believe that may actually be a positive for its business in selling APs or system or image sensors to Chinese companies?
하반기 이후의 D램 공급 과잉 우려와 관해서는 서버를 중심으로 한 수요 강세와 함께 공급 측면에서 기술 난이도가 증가함에 따라서 세대 전환에 따른 빗 증가 효과가 제한적인 점을 고려할 때, 현재 공급 부족 현상이 일부 완화는 되긴 하겠지만 여전히 타이트한 수급 상황이 지속될 가능성이 높다고 생각합니다. 또한 당사는 기존에 말씀드렸던 바와 같이 건전한 메모리 시장을 지향하는 기조 아래에서 외형적인 마켓셰어 성장이 아닌 지속 가능한 수익성을 목표로 시장 상황에 맞는 탄력적인 Capa 운영을 계속할 예정입니다.
Regarding the second half outlook for the DRAM supply situation, even though there is increased supply, given the very strong demand that's driven especially from the server side as well as the increased technical difficulties, we think that there will be a limit to the bit growth in the DRAM industry in the second half. Even though the supply situation may loosen a bit from the current situation, it would still remain tight according to our outlook. As we have always said, the company focuses on maintaining a sound and healthy memory market. We try to avoid competing over market share and focus more on maintaining sustainable profitability and maintaining our capacity flexibly to achieve those aims.
낸드의 경우는 가격이 안정화됨에 따라서 서버와 모바일의 수요가 견조하게 증가하겠고, 업계의 3D 낸드 공급이 증가함에 따라서 현재의 타이트한 수급은 완화될 것으로 예상합니다. 다만 각 업체들의 응용체별 qualification 확보 여부 및 시점과 이에 따른 업체별 공급 상황에 따라 응용체별 수급은 상이할 걸로 예상하고 있습니다.
Regarding the second half NAND situation, NAND prices have stabilized, but that has actually created more demand from both the server and mobile applications. Even though 3D NAND supply increased and that would ease the tight supply situation a bit, we think that the supply and demand situation in the second half for NAND would depend per application, depending on each company's qualification timing and whether qualification comes through.
System LSI 부분 답변드리겠습니다. 해당 이슈에 대해선 최종 결과 결론이 어떻게 도달하는지에 따라 갖고 시장 영향이 달라지기 때문에 당사는 신중하게 추이를 지켜보며 대응 방향을 수립할 예정입니다.
From the second question, the System LSI question, we are actually watching very carefully how the actual conclusion is reached, because depending on the actual final conclusion, the impact on the market would differ. We are carefully watching and preparing for different conclusions.
SOC 사업의 경우 고객의 요청이 있고 환경과 여건의 제약이 없다면 적극 대응할 예정이고, 문의하신 이미지 센서의 경우 미국산 반도체 부품에 해당하지 않는다고 보고 있고, 또한 이미 중국 스마트폰 업체는 다수의 SOC Supplier들과 협력 관계에 있으므로 당사 이미지센서 사업에 미치는 영향은 크지 않을 것으로 생각됩니다.
If it's a SOC related business opportunity, we will, of course, actively respond to those opportunities. Regarding image sensors, we actually think that that's not affected by the scope of the current discussion over the trade sanctions. We have a very tight relationship with many of the SOC suppliers, we are not expecting any impact on our image sensor business.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 UBS의 Nicolas Gaudois입니다.
The next questions will be presented by Mr. Nicolas Gaudois from UBS. Please go ahead, sir.
Hi. Good morning. Thanks for taking my questions. The first one is on the display side. You have installed new capacity in the L7-1 building, i.e., the fab called A4. When do you actually expect to start mass production? Can you also redirect some of underutilized space in the A3 fab to Chinese smartphone vendors as well? Second question is back to semi. You're currently ramping up DRAM capacity in Pyeongtaek. There are also discussions about possible capacity conversion in line 13 from DRAM to image sensors. Overall, could you bring some light on the current status, i.e., when would that conversion start? How long would it take? What is the net impact on total DRAM wafer capacity of all of these versus the incremental CMOS sensors capacity you would deploy? Thank you.
두 가지 질문이 있습니다. 첫 번째 질문은 디스플레이에 대한 질문인데요. L7-1 신규 Capa, 즉 A4 Fab에 신규 Capa 투자를 하셨는데 양산 시기는 언제로 예상을 하고 계시는지와 반면에 지금 가동률이 상대적으로 낮은 A3를 중국향 스마트폰 업체 쪽으로 Capa를 전환을 하실 계획은 없으신지, 그게 가능한지 궁금합니다. 두 번째는 반도체 DRAM과 관련이 된 질문인데요. 지금 평택에 대한 ramp up을 진행을 하고 계시는데, 이와 관련해서 L13을 DRAM에서 이미지 센서로 Capa 전환을 할 수 있다라는 이야기가 나오고 있습니다. 만약에 L13 DRAM Capa를 이미지 센서로 전환을 하신다면 전환 시기는 어느 시점쯤이 될 것이고, 그 전환 과정은 얼마나 걸릴 것이며, 이렇게 했을 경우에 그것이 DRAM wafer Capa에 주는 영향 대비, 또 CMOS Capa에 주는 영향은 어느 정도라고 예상을 하면 될까요?
네, 먼저 디스플레이 부분 답변드리겠습니다. 첫 번째 질문이 7-1라인, A4라인이라고 불리는 이 라인 가동일에 대해서 질문하셨는데, 현재 A4라인은 저희가 고객과 협의된 일정에 따라서 가동을 준비하고 있고 가동할 예정입니다. 그리고 두 번째, 현재 A3라인의 Capa를 중국 고객으로 활용할 수 있는지에 대한 질문에 대해서는, 일단 이건 특정 고객과 관련된 질문이기 때문에 저희가 구체적인 라인 정보에 대한 답변이 어려운 점은 이해해 주시기를 부탁드립니다. 대신 당사는 가동률 저하 영향을 최소화하기 위해서 노력 중이고, 현재 보유 중인 리소스의 효율적인 활용을 위해 최선을 다할 예정입니다.
To answer your first question regarding the 7-1 line, the A4 fab, that is being prepared according to the schedule that we have consulted and agreed with the customer, we will be operating on schedule. Regarding the utilization of the A3 capacity to supply to Chinese customers, that question would pertain to a specific customer, we would not be able to answer that. However, as we have always mentioned, we are doing our best to minimize the impact of the decreased utilization, we will maximize the leverage the resources that we have on hand as much as possible.
메모리 관련해서 답변드리겠습니다. 당사의 전반적인 Capa 운영 전략이나 올해 증설 계획 등에 대해서는 기존 대비 변동 사항이 없다고 보시면 될 것 같습니다. 기본적으로 화성 캠퍼스는 DRAM을 중심으로, 평택 캠퍼스는 V-NAND를 중심으로 운영할 예정이고, 아시다시피 올 하반기부터 평택 상층부의 일부 Capa를 활용해서 10나노급 DRAM 제품을 생산할 예정입니다. 평택에서의 DRAM 생산은 기존 계획과 동일하게 11라인 일부 Capa에 CIS 전환하고 공정 전환 과정에서 발생하는 비트 로스를 보완하는 수준에서 진행될 계획입니다.
For full year, our capacity operation strategy as well as plans have not changed. We will maintain the plan that we have started out with. The focus of the Hwaseong campus will be for DRAM, Pyeongtaek for V-NAND. From the second half, we are planning to use the capacity available at the upper floor of Pyeongtaek to do DRAM, the amount of production will be at a level to compensate that offset the bit loss that comes from conversion of some of the line 11 capacity to CMOS and other bit losses that happened during the process migration process.
이미지 센서 전환에 대한 언론 보도와 관련해서는 11라인의 일부 Capa를 CIS로 전환하는 것 외에 13라인 등에서 추가적인 이미지 센서 Capa 전환은 결정된 바가 없습니다.
There were some media reports of possibilities of us further converting our DRAM capacity to image sensors. However, other than the conversion of line 11 to CIS, we do not have additional plans, for example, of converting line 13.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 한국투자증권의 유종우 님입니다.
The next question will be presented by Mr. Yoo Jong-woo from Korea Investment & Securities. Please go ahead, sir.
예, 질문 두 가지 드리겠습니다. 우선 스마트폰 관련된 부분인데요. 2분기 Galaxy S9 sell through 전망하고 그다음에 하반기 전망, 그리고 마케팅 비용이 1분기 대비해서 많이 증가할 걸로 언급을 하셨는데, 관련 수익성 전망이 어느 정도까지 내려갈지 말씀해 주시면 감사하겠습니다. 그리고 두 번째는 메모리 관련된 질문인데요. 미세공정이 계속 어려워지고 있습니다. DRAM, NAND 다 마찬가지인데, 저희 DRAM 1y-nm 양산 현황하고 그다음에 V-NAND 차세대 5세대 양산 가능 시점에 대해서 좀 더 구체적으로 말씀해 주시면 감사하겠습니다.
I have two questions. The first question is for the mobile division regarding smartphones. What is your outlook for the sell through for the S9 in the second quarter, as well as the second half outlook? Also, during the speech, you mentioned that you're expecting to have a significant increase of marketing expenses in the second quarter versus the first quarter. How much impact do you expect that to have on your profitability in Q2? Regarding memory, we do know that we're approaching the areas of processes where it's becoming technically very difficult to migrate. Can you give us an update on your 1y mass production preparations? Excuse me, 1y mass production update as well as migration on NAND as well.
네, 먼저 S9 전망 관련해서 말씀을 드리겠습니다. 최근 시장에서의 프리미엄 스마트폰 수요가 위축되고 있어서 저희들 플래그십 모델의 판매 둔화가 예상이 되고 있습니다. 이에 따라서 2분기에 좀 더 적극적인 마케팅 활동을 통해서 해결하고자 준비하고 있습니다. 매장 단위의 체험형 마케팅을 확대 운영을 해서 S9이나 S9+의 주요 차별화 요소인 AR 이모지, 그다음에 슈퍼 슬로모션, 저조도 촬영 성능 등을 직접 체험하게 해서 소비자들이 당사 제품을 선택할 수 있는 기회를 늘리고자 합니다.
Regarding your first question about the outlook for the S9 sales, recently, we've seen an overall sluggishness in premium smartphone demand overall in the market. In order to counter the expected leveling off of our premium segment sales, we are planning active marketing in the second quarter, especially focusing on providing more experience type marketing opportunities at the store, so that consumers can actually feel and experience the differentiating features of S9 and S9+, such as AR Emoji, Super Slow-mo, and low-light photo taking, so that they have the opportunity to experience and choose.
이와 함께 거래선과의 협업도 강화하도록 하겠습니다. 트레이드 인 프로그램 운영 기간하고 그다음에 여러 가지 실시 채널을 좀 늘리고, 소비자들이 초기 구매 부담을 완화시킬 수 있는 다양한 금융 프로그램을 확대 시행하도록 해서 꾸준하게 실판매를 이끌어낼 수 있도록 하겠습니다.
We will strengthen collaboration with business partners and expand periods as well as channels that offer trade-in programs in order to lower the initial burden of consumers with practical financing programs to generate active sales.
하반기에도 플래그십 신모델 출시와 함께 Galaxy S9하고 S9+를 포함한 기존 플래그십 모델들을 롱테일 판매를 할 수 있도록 그렇게 판매 마케팅 활동을 강화하도록 하겠습니다.
For the second half, the focus of our sales as well as marketing activity would be to successfully launch our new flagship in the second half, as well as maintain an active long-tail sales of existing models, including S9 and S9+.
하지만 서피치에서도 말씀드렸던 바와 같이, 2분기에는 1분기 대비 마케팅 비용이 증가해서 전반적으로 실적은 하락할 것으로 예상이 되고 있습니다.
As we mentioned during the speech, because of the increased marketing in the second quarter versus first quarter, earnings will decrease versus first quarter.
메모리 답변드리겠습니다. 먼저 DRAM D1Y 나노 공정 전환 현황에 대해서 우선 말씀드리겠습니다. D1Y 나노 공정 전환은 기존에 언급드린 바와 같이 연내 양산을 목표로 예정대로 진행되고 있습니다. D1Y 나노 공정은 D1X 나노 공정 때와 유사한 수준으로 안정적인 램프업이 이루어지고 있고, 19년 내에 빅 크로스오버가 예상이 됩니다. 응용별로 본격적인 양산 시점에는 차이가 있겠지만, 2분기 PC를 시작으로 계획에 따라 서버와 모바일 제품으로 확대될 예정입니다.
Regarding the DRAM D1Y nano, we are currently focusing on the D1Y nano with a target of mass production within the year. The current process is going smoothly as we had done in the D1X nano, and we're expecting a big crossover to occur within 2019. The actual timing of pilot production would differ, but we're expecting second quarter PC, and then to move on to other applications such as server and mobile.
NAND의 경우는 5세대 V-NAND는 2018년 연내 양산을 목표로 ramp-up 중이고, 올해에는 저희들이 양산 중인 4세대 V-NAND 비중 확대에 주력할 계획입니다.
Regarding the NAND migration, our target is to have the mass production of 5G V-NAND within 2018, but this year our focus will be expanding the 4G V-NAND that's currently in production.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 KB증권의 김동원 님입니다.
The next questions will be presented by Mr. Kim Dong-w on from KB Securities. Please go ahead, sir.
네, 질문 기회 감사드립니다. 저는 디스플레이와 가전 부분에 질문드리겠습니다. 먼저 대형 패널 분야에서 QLED와 MicroLED, QD-OLED 등 다양한 기술 접목이 시도되고 있는 것 같습니다. 앞으로 우리 삼성 디스플레이가 생각하시는 차세대 대형 TV 패널 방향에 대해서 여쭤보고 싶습니다. 두 번째로는 최근에 OLED TV가 하이엔드 부문에서 지배력이 확대되고 있는 것으로 보입니다. 향후 프리미엄 TV 부문에서 삼성전자 VD만의 차별화 제품 전략에 대해서 말씀 부탁드리고요. 현재 MicroLED TV가 146인치 초대형만 출시를 하셨는데 향후 65나 75인치 같은 일반 사이즈도 준비하고 계신지 말씀 부탁드립니다. 이상입니다.
I have a question regarding first the display and then the CE business. In the display side, in the large panel sizes, there are various competing technologies that are being used, QLED, MicroLED and other technologies. Can you give us your technology strategy in terms of the next generation large size panels? Second question is about the high-end TV segment where it seems OLED is taking on a larger share of the high-end large size TV market. I would like to ask, what is the differentiating strategy of Samsung Electronics VD division? Regarding that, you've introduced the 146-inch MicroLED screen size. Do you have plans of introducing smaller sizes, for example, a 65 or 75-inch MicroLED?
네, 먼저 디스플레이 부분 답변드리겠습니다. 차세대 대형 디스플레이 패널 전략에 대해서 질문을 하셨는데요. 일단은 고도화되는 대형 TV에 대한 고객 니즈 대응을 위해서 퀀텀닷 기술과 그리고 8K 기술 등을 중심으로 기술 개발을 준비하고 있습니다. 고객사와 긴밀히 협조해서 계획에 맞춰 제품화가 가능하도록 제품 완성도를 높여갈 계획입니다. 그리고 MicroLED 등을 포함해서 많은 다양한 차세대 디스플레이 기술에 대해서도 많은 관심을 가지고 지켜보고 있습니다. 시장 수요에 실기하지 않도록 노력하도록 하겠습니다.
Regarding your first question about our strategy for the next generation large size display technology, we are actively meeting the needs of the high-end large size TV customers. Our technology development focus is on quantum dot as well as 8K. In order to meet these needs, we are closely cooperating with our customers in order to deliver a product that meets high standards of completeness. Also, we are at the same time closely watching the developments of the next generation display technology, including MicroLED, but other technologies as well, and we will be fully prepared so that we do not miss any opportunities in the display technology evolution.
네, TV 쪽은 제가 말씀드리겠습니다. 먼저 첫 번째 질문이 저희 하이엔드 시장에서 제품 차별화를 어떻게 할 것이냐에 대한 질문인데요. 그에 대해서 먼저 답변을 드리겠습니다.
I will answer the second question, which was about our TV business, especially the first question was what is our strategy of differentiating our TVs, especially in the high-end segment.
당사는 QLED랑 초대형 제품 판매 확대를 통해서 현재 프리미엄 시장에서 리더십을 계속 유지를 하고 있고요. 프리미엄 시장이라고 할 수 있는, 예를 들어서 $2,500 이상 시장에서도 당사는 40% 이상 수준의 MS로 지속 1위를 지금 지켜오고 있습니다. 그리고 전년 동기 대비 지금 빠르게 성장하고 있는 75인치 이상 초대형 시장에서도 현재 50% 후반대의 마켓셰어를 유지하면서 TV 시장 대형화를 주도해 나가고 있습니다.
Actually, in the ultra large size TV segment, we have been maintaining the leadership in the premium segment, especially with our QLED and ultra large size TVs. We have market share of +40%, number one in the $2,500-plus market segment. Also, we are noticing that there's a strong growth happening in the ultra large size market at 75-inch-plus. There's strong growth on a year-over-year basis. Here we are maintaining market share of the upper or high 50% ranges with our large size TV offerings.
금년에도 당사는 QLED랑 이런 초대형 제품 중심으로 계속 차별화된 기능이랑 라인업을 제공하고자 합니다. QLED 신모델의 경우에는 제 스피치에서 말씀드린 것처럼 블랙감이랑 컬러감을 대폭 개선해서 최고의 화질을 구현하였고, 라인업도 전년 대비 대폭 강화하고 그다음에 확대되었습니다. 또한 Ambient Mode, One Invisible Connection 같은 기존 TV에 없던 차별화된 기능을 통해서 TV의 라이프스타일 고객 가치를 더 높여 나가고자 합니다. 그리고 75인치 이상 초대형 제품도 전 세그먼트로 라인업을 확대해서 생생한 영상을 초대형 화면으로 즐기고자 하는 소비자 니즈를 만족시키고, 그래서 초대형 equal 삼성이라는 인식을 더욱 공고히 해서 프리미엄 시장에서 저희 리더십을 계속 강화하고자 합니다.
We will continue to focus on the QLED as well as the ultra large size segment in our TV strategies. Also expand and strengthen our lineup as well as offer differentiating features, in the ultra large size TV as well as QLED TV segment. For example, the new QLED TV model that we have launched this year not only has the best picture quality, both in terms of black expression as well as color expression, but we've also expanded the lineup, made the lineup even stronger. Also, we have added some differentiating features, including Ambient Mode as well as One Invisible Connection that actually enhances the lifestyle value of a TV within the home setting. Also, we will continue to focus on the 75-inch-plus ultra large segment.
We will be expanding this to the entire lineup, so that people who want to enjoy high picture quality, but also in ultra large screen sizes, would choose Samsung and would equate ultra large size as meaning a Samsung TV to maintain the leadership that we have in the premium TV segment.
두 번째, MicroLED에 대한 질문을 주셨는데요. 저희는 지금 MicroLED를 금년 하반기 판매를 시작할 계획입니다. 그래서 우선 미디어룸은 물론이고 그다음에 뮤지엄, 보드룸, 호텔 등과 같은 프리미엄 인도어 시장을 우선 개척할 예정입니다. 그리고 MicroLED가 사실 사이즈의 한계는 없지만 당분간은 초대형에 집중할 계획입니다. 그리고 대형은 현재 저희가 갖고 있는 QLED 라인업을 통해서 MicroLED 플러스 QLED 이러한 투 트랙으로 대응할 계획입니다.
You've also asked about whether we have plans of developing different sized MicroLED TVs. We are planning to start sales of MicroLED displays from the second half of this year. We will start from in-house, excuse me, indoor premium applications such as media rooms, museums, boardrooms, or high-end hotels. Our basic strategy is that we will use MicroLEDs for the ultra large size segment, whereas we will focus on the QLEDs for the large size segments.
네, 감사합니다. 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 NH투자증권의 도현우 님입니다.
The next questions will be presented by Mr. Do Hyun-woo from NH Investment & Securities. Please go ahead, sir.
안녕하세요. NH투자증권 도현우입니다. 삼성전자 스마트폰이 그동안 Android 진영 내에서는 하이엔드 세그먼트에서 독보적인 위치를 차지하고 있었습니다. 그런데 최근 상황을 보면 Huawei 같은 중국 업체들의 제품 퀄리티가 크게 올라오고 있고요. 트리플 카메라라든지 under glass fingerprint sensor 같은 일부 기능에서는 오히려 최초의 위치가 약간 역전되는 것 같기도 합니다. 그래서 회사가 과거 차지하던 하이엔드에서의 위치가 위협을 많이 받고 있는데 하반기 Galaxy Note9 같은 신제품이 중요할 것 같습니다. 차별화 전략이 필요할 것 같은데 설명을 좀 부탁드립니다.
Yes. My question is about your second half high-end smartphone strategy. Samsung has always been considered the dominant player in the high-end segment, especially on the Android OS smartphones. Recently we have seen many Chinese companies, including Huawei, come out with high quality as well as very cutting-edge feature smartphones on the high-end side. For example, triple cameras or on-display fingerprint sensors are being introduced by these Chinese companies. It seems these are threats to your position in the high-end Android segment, that is why I think what you will introduce in your second half, the Note9, would have a critical meaning in terms of keeping your position in the high-end. How are you planning to differentiate yourselves in the high-end premium segment in the second half?
노트 시리즈의 어떤 차별화 전략에 대한 질문에 답변을 드리도록 하겠습니다. 저희들은 그동안 엣지 디자인, 그다음에 홍채 인식, 인피니트 디스플레이 등 고객 니즈 기반의 차별화된 가치를 꾸준히 선보여 왔습니다. 그리고 카메라 화질, 메모리 슬롯, 방수, 방진, 무선 충전 등과 같이 고객이 실질적으로 가치를 느낄 수 있는 부분들을 지속적으로 강화해 왔습니다. 특히 노트 시리즈의 경우에는 S펜을 활용한 생산성 관련 기능을 적극적으로 이용하고 있는 로열 고객층이 형성되어 있습니다. 그래서 노트9 고객들이 자주 사용하는 기본 기능은 당연히 계속 고도화시켜야 될 것이고, 그다음에 노트만이 가지고 있는 고유한 가치인 S펜에 대해서도 지속 발전시켜서 새로운 경험을 꾸준히 제공하도록 하겠습니다.
Yes. As you have mentioned, we have been introducing cutting-edge new features to the high-end segment of the smartphone market, including the edge display, iris recognition, infinity display, as well as cutting-edge cameras, dust proofing, waterproofing, wireless charging. All of these new features have added to values that customers actually appreciate. We will continue to do that. Regarding what we are preparing for the Note 9, the second half, as you know, the Note series has a very strong and loyal following, especially around people who appreciate the S Pen and the productivity that they gain by that interface. That is why we will continue to strengthen and enhance the basic features of the Note series. At the same time, develop new value and new experiences through the S Pen interface.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 대신증권의 김경민 님입니다.
The next questions will be presented by Ms. Claire Kyungmin Kim from Daishin Securities. Please go ahead, ma'am.
질문 기회 주셔서 감사드립니다. IM 부문 관련해서 한 가지 질문 여쭙겠습니다. 1분기 실적에 일회성으로 로열티 청구금이 환입이 되었는지, 그 이익의 발생 여부하고요. 만약 발생했다면 그 규모와 향후에 추가적으로 이러한 이익 발생 영향이 계속될지 말씀 부탁드리겠습니다. 이상입니다.
Yes. I have one question regarding the results of the IM division in the first quarter. Were there any one-off reversals of provisioning related with royalty payments that were reflected in your first quarter results? If so, what would be the size of that one-off? Also would there be any impact to future ongoing earnings?
1월 말 당사와 Qualcomm이 발표한 cross-license 계약 내용과 관련된 질문으로 이해가 됩니다. 관련해서 말씀을 드리면, 당사와 Qualcomm은 사업 협력 강화를 위해서 모바일 기기에 대한 cross-license 계약을 수정했습니다. 또한 장기적인 관점에서 양사 모두 win-win 할 수 있는 사업 협력을 지금 기대를 하고 있습니다, 이를 통해서. 금액 및 구체적인 내용에 대해서는 계약상 비밀 유지 의무로 인해 밝히기 어려운 점 이해해 주시기를 바라고, 향후 매출에 적용되는 건으로 일회성 충당금 환입은 없다고 말씀을 드릴 수 있겠습니다.
I'm assuming you're referring to the cross licensing agreement with Qualcomm, that was announced at the end of January. The two companies amended the cross licensing agreement on mobile devices to strengthen cooperation, we're looking forward to this opening the new chapter for long-term win-win business collaboration between the two companies. However, due to the confidentiality clause of the agreement, details cannot be disclosed, the effect will be limited to future revenue, there was no one-off reversal of provisioning.
네, 이제 두 분 질문 더 받고 conference call 마치도록 하겠습니다.
We will take two more questions.
다음으로 질문해 주실 분은 Daiwa Capital Markets의 S.K. Kim입니다.
The next questions will be presented by Mr. S.K. Kim from Daiwa Capital Markets. Please go ahead, sir.
예, 질문 기회 주셔서 감사합니다. 다이와증권 김성규입니다. 저는 IM 쪽과 Foundry 쪽 두 가지 질문이 있습니다. IM 관련해서는 아까도 고가 스마트폰 수요 정체에 대해서 말씀하셨는데요. 최근 플래그십 스마트폰의 수요랑 판매가 둔화됨에 따라서 새로운 foldable device 도입에 대한 기대감이 증가하고 있는 것 같은데요. 지난번에도 말씀을 해주셨지만, 조금 디스플레이나 배터리 등 하드웨어 측면과 또 소프트웨어 측면에서 준비 현황에 대해서 조금 구체적으로 말씀해 주시면 감사하겠고요. 출시 시점에 대해서도 언급해 주시면 감사하겠습니다. 두 번째는 Foundry 관련해서 가상화폐 수요에 대해서 지난주에 대만에 있는 경쟁사의 경우에는 2분기에 수요가 좀 불확실성하다고 언급한 바가 있는데요. 당사 Foundry 사업 입장에서는 2분기 수요 현황과 하반기 전망에 대해서 어떻게 보고 계시는지 말씀해 주시면 감사하겠습니다. 이상입니다.
I have two questions. The first question is for the IM division. As you know, the demand for the high-end smartphones are becoming stagnant, and this is resulting in sluggish sales as well as demand for these flagship models. I think that is actually increasing the market expectations for the next form factor, the foldable phone. You've been asked this question before, but can you give us a bit more update in detail of not only the hardware side, displays, as well as batteries to launch a foldable phone, as well as the software preparation update? Could you be able to give us a bit more detail as to the time when the market can expect to see this new form factor? Second question is for the Foundry business. You've mentioned the demand related with cryptocurrency mining.
Last week, a Taiwanese competitor mentioned that they're expecting demand related with cryptocurrency to become uncertain in the second quarter. We would like to see your view from your side. What do you see in terms of cryptocurrency related Foundry demand in second quarter, as well as outlook in the second half?
네, 먼저 foldable device에 대해서 말씀을 드리겠습니다. foldable device는 저희들이 몇 년간 상용화를 위해서 연구개발을 지속해 오고 있고, 제품 완성도를 높이는 단계로 하드웨어, 소프트웨어 포함해서 다양한 분야의 업체와 협업을 진행하고 있습니다.
Regarding the foldable phone, we have been continuing our R&D efforts for several years to commercialize the foldable smartphone, currently we're focused on collaborating with companies in various fields to enhance the level of completeness of the product.
단순히 세계 최초 출시라는 거에 집중하기보다는 고객들에게 진정한 가치를 전달할 수 있도록 제품 완성도를 끌어올리는 데 집중하고 있습니다.
Rather than focusing on just the title of being the world's first, we are focusing on delivering a truly well-made product that offers real value to the consumers.
foldable을 구현에 필요한 부품의 성능과 특히 내구성을 더욱 안정화해야 되고, 그리고 새로운 form factor가 만들어지면 이에 따라 다양한 use case를 발굴하는 그런 충분한 준비가 되면 상용화 시점도 별도로 공개를 하도록 하겠습니다.
Before we can announce a timing of when a foldable phone will be commercialized, we want to see the components' performance as well as durability to be further enhanced and stabilized. We want to see various use cases to justify the new form factor to be prepared.
다음으로 Foundry 가상화폐 관련 답변드리겠습니다. 가상화폐 채굴 관련해서는 고객들의 문의가 지속되고 있으며 실제 주문 생산으로 연결되고 있고, 올해 실적 성장에 견인하는 역할을 할 것으로 전망을 하고 있습니다.
Regarding demands related with cryptocurrency mining, actually inquiries related with cryptocurrency mining applications are continuing to come in from customers, and many of these inquiries are leading to actual order and production, and we're expecting cryptocurrency-related demand to contribute to overall earnings this year.
당사는 고객의 제품 경쟁력 강화를 위해서 경쟁력 있는 선단 공정을 제공하고 저전력에 특화된 인프라 제공을 지속하고 있습니다.
Especially, we're focusing on providing the cutting-edge process as well as low power platforms so that our customers can produce products that offer greatest value.
장기적으로는 가상화폐 채굴 시장을 예측하기는 어렵습니다만, blockchain 기술의 진화 등으로 인해 가상화폐를 넘어 관련 시장은 계속 창출될 것으로 예상하고 있습니다.
Even though, yes, cryptocurrency is a market that's very difficult to project in the long term, we believe given the potential of the blockchain technology, in the long term, blockchains will go beyond just cryptocurrency and spread to different applications.
감사합니다. 이제 마지막 질문 받도록 하겠습니다.
We'll take the last question.
마지막으로 질문해 주실 분은 삼성증권의 황민성 님입니다.
The last question will be presented by Mr. 황민성 from Samsung Securities. Please go ahead, sir.
질문 기회 감사드립니다. conference call에서 수요 관련 말씀해 주신 걸 종합을 해보면 모바일은 좀 부진하고요, 서버는 강세가 지속된다 이렇게 볼 수가 있는데 이전에 보셨던 수요 예상치에서 예를 들면 DRAM은 20%, NAND는 40%를 기준으로 한다면 지금 변화되는 부분은 어떤 방향으로 어느 정도 변화되고 있는지 조금 더 설명을 부탁드립니다.
To put everything together that was mentioned related with demand during this conference call, it seems while overall you're expecting demand from mobile applications to be weak, the server-related demands will continue to remain strong this year. Can you give us an update to your views before on your demand? Because I think before we were assuming DRAM demand will grow by about 20%, NAND by about 40%. Given the changes that you've seen up till this year, how would that change, how much and in which direction?
메모리 수요에 대해서 전반적으로 다시 한번 설명을 드리겠습니다. 먼저 DRAM 수요 전망에 대해서 말씀드리면, 당사는 시장과 온라인 된 20% 수준의 수요 증가를 예상하고 있고 서버와 모바일 중심으로 전 응용처에서 견조한 수요 증가를 예상하고 있습니다.
To recap the overall demand outlook that we have for memory. For DRAM demand, we share the same view with the market that the DRAM demand will grow around 20%, and we actually think that demand will come strong from both the server and mobile side.
서버의 경우에는 hyperscale 업체들의 신규 데이터센터 건설 계획이 연이어 발표되고 있고, 해당 업체들의 부지 매입, 해저 광통신 투자 등을 고려하면 아직 공식화되지 않은 신규 건설도 추가될 가능성이 있어서 서버 DRAM 수요는 지속 유입될 것으로 보입니다. 탑재량 측면에서는 hyperscale 업체들의 서비스 용량이 상향되고 있고 AI, machine learning, in-memory database 등 B2B향 cloud solution 서비스로 확대되면서 64GB 이상 고용량 DRAM 채용이 계속되고 있고, 이러한 서비스를 real-time으로 처리하는 과정에서 고성능 HBM 수요 또한 증가될 것으로 저희는 예상하고 있습니다.
The reason why we're expecting strong demand to continue from the server side is that, as you referred, hyperscale companies have continuously announced their plan for new data centers. Also considering how they are buying new land as well as securing new submarine optical cables, we're expecting that there may be additional new construction announcements to come down the road. Therefore, based on those, we expect demand from the server side will continue to remain strong. Especially these hyperscale companies have been increasing the type of services that they offer, the level of services increasing. We're also seeing an increase of the content because of AI, machine learning, on-device AI support, also the increase of cloud. All of this has led to the increased adoption of 64 GB DRAM.
Also, in order to process all this data on a real-time basis, we're also seeing stronger demand on the HBM side as well.
Mobile case, demand decreased slightly last quarter due to the seasonal off-season, but it was a temporary adjustment to the average level. In the second half, we expect memory demand to recover again as new product launches and high capacity adoption by Chinese companies take effect.
Even for the mobile applications, even though demand was weak in first quarter, that was due to seasonality, and that seasonality was not beyond what we usually see in other usual years. Rather, looking forward to the second half, there are new mobile products planned to be launched. Chinese handset makers are increasing their content, we expect second half mobile-related memory demand to also remain strong.
If you look at it year-on-year, mobile set growth will slow down, but as new applications such as high-end gaming spread, we expect the capacity usage of all segments, especially the high end, to continue to increase, which will drive overall mobile demand.
Looking forward to the full year 2018, even though mobile set growth may decline, overall DRAM demand from the mobile side we're expecting will increase as there's greater content, DRAM content, especially from the high-end side of the segment, as more and more smartphone users use their phones for applications such as game applications that require higher specifications and more memory.
In the case of NAND, we expect a solid increase in server and mobile demand along with price stability in the second half. We expect a 40% year-on-year increase in bit, which is the market forecast level.
On the NAND side, we are expecting NAND prices to stabilize in the second half, but this will drive greater demand from both server and mobile. We're expecting market bit growth for NAND to be in the 40% range.
In the case of SSDs, we expect greater demand for all-flash arrays to replace HDDs from OEMs due to the reduction in BOM costs. SSD demand is also expected to continue to increase in data centers to manage data more quickly and stably.
For SSD demand, we're expecting actually greater demand from OEMs. That's because with the lower BOM cost, more OEMs will go for an all-flash array that will substitute the SSDs. That conversion, we think, will accelerate. Also, on the data center side, there will be a greater preference for SSDs that can process data more stably and quickly.
Mobile storage is a trend in which smartphone manufacturers are using large-capacity storage as a differentiation point. We expect that memory demand for 64 GB, 128 GB or more will become full-fledged. In fact, this storage high capacity is becoming a reality, focusing on Chinese smartphone manufacturers.
On the mobile storage side, actually smartphone makers have started to use a large capacity storage as a differentiating point of their end device. We're actually seeing demand for 64 gig as well as 128 gig storage. Also, the Chinese smartphone makers have actually been starting to offer an e-storage as a main feature to their phones