Now we shall commence the presentation on the fiscal year 2017 first quarter earnings results by Samsung Electronics.
Morning, this is Robert Yi from Investor Relations. Before we announce our fourth quarter results, I would like to invite Mr. Roh Hee- Chan to share his thoughts as the new CFO and provide updates on the progress of our Shareholder Value Enhancement Program. I would like to turn it over to our new CFO.
Thank you, Bob. This is Hee- Chan Roh. I am very honored and privileged to introduce myself as your new CFO of Samsung Electronics to our shareholders and investor communities. Samsung Electronics has remained focused on driving forward innovation and establishing effective investment strategies amidst the rapidly changing IT industry. As a result, we secured global leaderships on many product categories, which enabled the company to generate solid results on a continuous basis and build a sound and strong capital structure. We have also worked hard to enhancing shareholder value through our strong Shareholder Return Program and improved corporate governance. As your CFO, I am committed to continuing our growth momentum, enhancing our sound financial structure, and delivering higher value to our shareholders. I will update the progress on our Shareholder Return Program.
We have completed the Share Repurchase Program for 2017 that we announced in our first quarter 2016 earnings call. During the program's 4 phases, we invested approximately KRW 9.2 trillion to repurchase and cancel 3.3 million common shares and 826,000 preferred shares. As for 2017 dividend, as you know, we announced in last October KRW 4.8 trillion annual dividend, which represented a 20% increase of 2016. Under the dividend-focused return strategy that we adopted for 2018 to 2020 Shareholder Return Program, the board decided to allocate all of 50% of free cash flow to the 2017 annual dividend. This brought 2017 annual dividends to KRW 5.8 trillion, 46% year-over-year increase. Today, the board approved a year-end dividend of KRW 21,500 per common share and KRW 21,550 per preferred share.
With the approval of the above-mentioned year-end dividend at the upcoming meeting of shareholders, we will complete the three-year shareholder return program covering through 2017. Last October, the company announced a three-year shareholder return policy covering 2018 to 2020, with the aim to bring higher clarity and predictability of our shareholder returns. To recap, we will allocate at least 50% of free cash flow to shareholder returns for the three-year period and will pay out KRW 9.6 trillion in dividends each year. We will faithfully carry out these promises. We will also continuously invest in key businesses and develop new growth drivers in order to continuously bring strong results and enhance shareholder value. As another step in enhancing shareholder value, the board of directors approved 50-for-one stock split today.
There have been numerous requests for a stock split based on an argument that a high price of Samsung Electronics shares was a hindrance to certain potential investors. The requests increased in frequency as the price of our shares rose significantly during 2017 based on our earnings growth and enhanced shareholder return program. The board believes a stock split will make Samsung Electronics more accessible to a wide range of investors and that they can share the significantly increased dividends from 2018. We also expect the split to add liquidity and marketability to our stock, which could contribute to enhancing our corporate value in the long term. The company's management and board of directors will work tirelessly to make the company more competitive and profitable. Last but not least, we remain committed to increasing shareholder value through enhancing shareholder returns. Thank you.
Thank you, Mr. Roh. We will go over the fourth quarter results as scheduled. With me, representing each of the business units are Mr. Chun SeWon, Senior Vice President of Memory Marketing, Mr. Hur Gook, Vice President of System LSI Marketing, Mr. Lee Sang-Hyun, Vice President of Foundry Marketing Team, and Choi Kwang-Hyung, Vice President of Samsung Display, Lee Kyeong-tae, Vice President of IT and Mobile Business, and Cho Sung-kyuk, Vice President of Visual Display Business, as well as Mr. Kim Sang-kyo and Kwak Tae-gyu from the IR group. I would like 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 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.
In 2017, we achieved record high earnings, mainly on contributions from the component business. Demand for high value-added server memory stayed strong, and our preemptive and strategic investments to prepare for new technology and market growth started to contribute to the results. In the fourth quarter, total revenue grew 24% year-over-year and slightly QOQ to KRW 66 trillion, driven by robust memory market conditions and an increase in shipments of flexible OLED panels. Gross profit increased approximately KRW 7.8 trillion year-on-year to KRW 30.2 trillion, and gross margin improved 3.8 percentage point. SG&A expenses grew KRW 1.9 trillion year-on-year due to the consolidation of HARMAN's results and increase in R&D costs, as well as advertising and promotional expenses. However, as a percent of revenue, SG&A expenses declined 1.9 percentage point year-on-year.
Operating profit came in at KRW 15.1 trillion, an increase of KRW 5.9 trillion year-over-year, driven by significant increase in profitability at the Semiconductor Business. Operating margin improved almost six percentage point year-over-year to 23%. The strengthening of the Korean won against major currencies limited our earnings growth by reducing our operating profit by approximately KRW 660 billion quarter-over-quarter, with the impact mostly on the Component Business. In addition, special incentives distributed to the employees of the Semiconductor Division during the quarter lowered the fourth quarter profit. I would like to briefly review operating profits by business units. In the Semiconductor Business, earnings improved year-on-year as memory ASP continued to rise and supply and demand conditions remained tight on the back of a strong demand that centered on server memory products.
Regarding the Display Business, earnings increased on the OLED Business due to rising sales of flexible products for premium smartphones, but earnings decreased in the LCD Business as demand remained slow. In the IM Business, earnings in the Mobile Business rose slightly year-over-year as we increased our flagship portion of smartphone sales. Total smartphone shipments, however, edged down, the decrease mostly coming from the lineup optimization of low-end models. In the Network Business, customers' LTE investments concentrated in the first half, resulting in the year-over-year earnings decline seen in the second half. As a result, total IM earnings decreased slightly. In the CE Business, despite rising sales of premium products such as ultra large-sized and QLED TVs, earnings in the TV Business edged down year-over-year due to a dip in the market demand.
In the Home Appliance Business, however, earnings grew on the back of strong sales of premium products, including our FlexWash line. Next, I would like to address our business outlook. In the first quarter, we expect to experience weak seasonal demand and an additional negative impact on profitability related to exchange rate fluctuations. Regarding the Component Business, we expect demand for server DRAM to remain strong, mainly driven by data center needs. Overall DRAM shipments to slow down due to conversion of line 11. For the Display Business, on the weak seasonality of the smartphone market, intensified competitions with the LTPS LCD, and the potential decline in panel demand could weigh on OLED profitability. In the Set Business, we expect the Mobile Business to improve its earnings, led by an increase in sales of flagship products with the launch of Galaxy S9.
The CE Business will focus on securing profitability under weak seasonality. In 2018, we expect our earnings growth momentum to continue driven by Component Business, as the Memory Business is expected to deliver strong results. In the Set Business, we'll strive to maintain solid earnings by focusing more on securing profitability as opposed to volume growth through further differentiating our premium products. In the mid to long term, we expect our Component Business to see demand expand from new applications. For the Set Business, we also expect increasing opportunities, mainly related to software and connectivity. We will address this industry trend through implementing our strategy to connect devices and services based on artificial intelligence and IoT platforms. In Semiconductors, demand for high-density memory for cloud and server, as well as for chipsets required for automotive electronics and artificial intelligence, are expected to rise.
We'll reinforce our technology competitiveness based on cutting-edge process and TSV and other next-generation packaging-based solutions. The OLED business will strengthen its competitive edge in the premium category with the release of foldable panels and focus on expanding new applications in areas such as IT, automotive electronics, capitalizing on our technology and cost competitiveness. Regarding the mobile business, we'll continue our efforts to differentiate smartphones by adopting cutting-edge technologies, such as foldable OLED panels. At the same time, we will drive forward new businesses related to AI or IoT by strengthening the ecosystem based on Bixby and building on our 5G technology. The consumer electronic business will bolster our leadership in the TV market by applying new technologies such as 8K MICRO LED. Also, we'll improve the connectivity and usability of home appliances by expanding the application of Bixby.
We'll do our best to create new business opportunities through our preemptive and strategic decisions based on paradigm shift in the IT industry, as well as remaining focused on increasing competitiveness of our existing businesses. Now, I would like to comment on our capital expenditures. Total CapEx for 2017 was KRW 43.4 trillion, KRW 27.3 trillion for Semi and KRW 13.5 trillion for Display. The total was up significantly year-over-year as we invested in Pyeongtaek Fab to expand capacity to address rising demand for vertical NAND, facilitate migration of DRAM processes, and build new wafer capacity to mitigate the capacity loss resulting from migration. We also increased our 10 nano capacity to address demand for cutting-edge process technology for our foundry business and invested on expanding capacity for flexible OLED panels to respond to growing demand.
Although our capital expenditure plan for 2018 has not yet been finalized, we expect the total amount to decrease on year-over-year basis. Before the presentation of each business units, as I do each quarter, I would like to share several data points for each of the key business areas. In the fourth quarter, our DRAM bit growth came in low single-digit, and we saw our ASP increase about 10%. In the first quarter, we expect the market DRAM bit growth to decline low single-digit, and our bit growth will come in similar to that of the market. For 2018, at this point, we expect the DRAM market bit growth to be about 20%, and our bit growth will also come in similar level.
For NAND, in the Q4, our bit growth came in at about 10% growth, and we saw ASP increase of low single-digit. In Q1, we expect to see flat market bit growth for NAND, also our bit growth will be similar level. For 2018, for the year, we expect the NAND market growth to be about 40%. Again, our bit growth will be similar in line with the market. For our display, the revenue mix of the total display, about high 70% was from the OLED business. For our mobile business, in Q4, we shipped 86 million handsets 7 million tablets, and the blended ASP for Q4 was high $210 range. The mix of the smartphone within the total handset was mid-80%. In Q1, we expect both the total handsets and tablet to decline quarter-on-quarter slightly.
For blended ASP in Q1, we expect to see an increase. The mix of the smartphone within our total handset in Q1 will rise to high 80%. For our TV business, in Q4, our shipment or sale of the TV was mid-30% range. In Q1, we expect to see 20% range decline in volume. Now I'll turn the conference call over to the gentleman from our business unit.
Good morning. This is Sewon Jeon from the memory marketing team. In the fourth quarter, as the overall industry supply remained restricted due to increasing seasonal IT demand, a friendly market environment continued. On one end, as peak mobile seasonality and the trend for higher density mobile products continued and growth for server SSD also remains solid. Overall end demand was very healthy. For the supply side, in spite of the industry mass production of 64-layer product ramping up, for certain customers and applications, overall qualification status varies according to each customer and application. As a result, the increase in market supply has been limited. We have strengthened profitability and garnered solid earnings growth by timely responding to newly launched mobile models and higher density trend, while concentrating on value-added, high-density SSD market via stable 64-layer leading-edge ramp-up at Pyeongtaek Campus.
For DRAM, due to peak seasonality, demand from all applications increased compared with the previous quarter. Demand from server remained solid due to cloud service expansion, build demand for new data centers, and a higher density trend for new CPU platform launches. Demand from mobile also remains strong, thanks to increasing set numbers and content growth, mainly from new flagship model launches. In addition, under continuous peak seasonality, demand from PC and consumer market also remains solid. In spite of the seasonal decrease of demand from gaming console, graphic demand continued to be strong, thanks to an increase of GDDR5 demand for high-specification gaming PC and high-performance products for cryptocurrency mining. We continuously improve our earnings by satisfying demand for differentiated products, such as high-density server DRAM over 64 GB and low-power LPDDR4X and HBM through expanding supply of D1X-nanometer products and elastically managing product mix.
Next, I will comment on the memory market outlook. In the first quarter, even though there might be low seasonal effects, overall supply and demand is expected to remain solid due to impact of continuously strong demand, mainly from server and industry supply constraints. On one end, in spite of off-seasonality, server SSD demand of major cloud providers, especially large companies, continue to be strong and high density trend mainly for flagship and high-end smartphone continues. Overall demand is expected to be maintained at the level of the previous quarter. As for supply, in spite of expansion of suppliers' production of 64-layer, supply growth is expected to be limited due to reduction of existing plant capacity. While we will accelerate 64-layer transition, we will also strengthen product differentiation via competitiveness of our solution product based on 3D NAND.
For DRAM, strong server demand, including replacement demand from data center and PC demand for securing inventory, will offset slow seasonality. For mobile, although set build will decrease under traditional low season effect, demand decrease will be lower than that of previous year, thanks to not only higher density trend, mainly from high-end, but also content growth from low-end. For the consumer side, strong demand, mainly from set-top box for 4K UHD is anticipated. For graphic demand, despite a decreasing demand for console due to low seasonality, VGA card for gaming and cryptocurrency mining demand is anticipated to be strong. We will continue to deploy a flexible product mix strategy according to individual application market conditions. Moreover, we will concentrate on strengthening cost competitiveness by continuously spending 1x-nm process transition.
In the 1st quarter, slight shipment slowdown will be inevitable due to reduction in capacity caused by transition to CIS in line 11 and reduction in the number of days of operation. Next, let me comment on 2018 market outlook and our strategy. On NAND, as demand is expected to remain strong, stable market conditions will continue in 2018. Thanks to increasing adoption of high density and high performance SSD for data center and all- flash array for enterprise, SSD will be used in more wide area, replacing HDD. In addition, high performance and high density trend for mobile NAND are expected to continue as need for high resolution become greater and the number of high capacity content, such as video clip, generated and shared in mobile device increase.
As for the supply side, due to expansion of suppliers' production of 64-layer, supply shortage in previous year will partially be moderated. We think it is more likely that supply expansion may be limited in short-term period because customers' qualification process takes time. We are focusing on mass production of 3D NAND, mainly at Pyeongtaek campus. At the same time, we will focus on strengthening our technology competitiveness and maximizing profitability. We are introducing and ramping up the next generation product after 64-layer product in right timing. For DRAM, due to expansion of cloud infrastructure and increase in demand for real time data analysis using AI, machine learning, demand for high density and high-performance product is increasing. As a result, overall demand is expected to be solid, especially for server DRAM.
Mobile demand is also expected to grow as content per box increase due to increase in software requirement for high performance mobile games and on-device AI and to upgrade in hardware specification such as dual camera, 3D sensors, and full screen display. On the other hand, in spite of industry's effort to expand the supply, extending bit growth will be limited due to increasing the technological difficulty and limited clean room for expansion. Therefore, solid supply-demand conditions are expected to continue. We will maintain a profit first rather than market share policy, while strengthening cost competitiveness through expediting final process technology migration, 10-nanometer class at a proper time. We will also strengthen our market leadership by focusing on sales of our high-density server DRAM and differentiated product such as HBM2, LPDDR4X and on development of uMCP solutions. Thank you.
Moving on to the System LSI business. Good morning, this is Pan Hur from System LSI Marketing. In the first quarter, the earning has deteriorated as the sales of mobile processors and image sensors decreased due to the weak seasonality. In the first quarter, we will improve the earning by ramping up mass production of mobile processors for the premium phones and by expanding the sales in highly valued 3-stack fast readout sensors. In 2018, as many smartphone vendors are expected to increase the adoption of a dual camera, as well as 3-stack fast readout sensors, the demand for the image sensors are expected to grow accordingly. In addition, we will continue to post strong earnings through the sustained growth of the mobile processor sales.
By utilizing our technological leadership in mobile devices, we will expand our solution offerings to various applications, including IoT, VR, and automotive, and collaborate closely with our customers and ecosystem partners. Moving on to the foundry business. In the fourth quarter, the earning decreased due to the weak seasonality, which resulted as a slowdown of major customer sales. The sales in China has increased significantly as we have secured diverse Chinese customers to establish the milestone for our long-term growth. In the first quarter, the earnings are expected to increase with the ramping up of second generation 10-nanometer process products for this year's flagship smartphones and growing demand for those cryptocurrency mining chips. In 2018, we will continue to provide the derivative processes, including 8 and 11-nanometer, to satisfy customers' needs and lead the technological process leadership with a risk production of 7-nanometer.
In addition, we will actively address the market demand by increasing the mass production capability through ramping up the new S3 and 4 lines for various products, including mobile processors and image sensors.
We will lay the foundations for mid to long-term growth by securing orders of diverse applications, including HPC, consumer, network, and automotive. Thank you.
Before we go over the display section, I'd like to make one correction on the data points that I provided. I said that Q1 2018, that we expect to see our total handset volume to decline. As a correction, we do expect to see our handset shipment to increase slightly quarter-on-quarter. Thank you.
Good morning. This is Kwon Young Choi from the planning department of Samsung Display. During the fourth quarter, the total earnings for the display business grew quarter-over-quarter, driven by an increase in supply of OLED panels, despite a decrease in revenue of LCD panels due to lower ASPs. OLED business, our fourth quarter earnings improved quarter-over-quarter on increased shipments of OLED panels for flagship smartphones. On the other hand, earnings for the LCD business declined quarter-over-quarter in the fourth quarter based on shipments, alongside continued ASP declines of LCD panels under weak seasonality. Looking ahead to the first quarter of 2018, we are concerned about the decline in profitability under weak seasonality of smartphone industry, as well as intensified competition with LTPS LCD and slowdown in demand for OLED panels.
Under these circumstances, we plan to focus on securing profitability by increasing our flagship product portion of sales, expanding our customer base, as well as enhancing predictability on flexible OLED panels. For the LCD business in the first quarter, while we are concerned about a decline in demand under weak seasonality, we expect utilization to be stable due to increased demand for large-sized and high-resolution TVs led by a major sports event in the first quarter. In response to these market conditions, we'll try to improve our profitability by focusing on reducing cost, increasing yield, and expanding our variegated portion of products, such as ultra-high definition in large size and quantum dot products. Now, I would like to present our outlook for the display market and core strategies for 2018.
For the OLED business, we expect OLED to become a mainstream panel in the smartphone industry, and in particular, to strengthen its market portion in the high-end product category. Under these circumstances, we'll focus on increasing market share through actively addressing customers' demand with continued efforts to strengthen technological differentiation from LTPS LCDs. At the same time, we will strive to secure new growth engines by reinforcing our competitiveness in new applications. For the LCD business, we are concerned about increasing uncertainties caused by both intensified competition in the industry and the capacity expansion by Chinese manufacturers. In preparation for such market conditions, we will make every effort to meet the need of large size and high-resolution TV markets, as well as to reinforce our market leadership by offering differentiated products based on advanced technologies.
At the same time, we will strive to improve the fundamentals of display divisions, not just through qualitative growth, but also based on qualitative improvement, by reinforcing strategic partnership with major customers and expanding our variegated portion of products. Thank you.
Good morning, everyone. I'm Kyungken Lee from the mobile communication business. I would like to present our fourth quarter results and share our outlook for the IM division. In the fourth quarter, demand for smartphone and tablet increased QOQ under year-end seasonality. Our smartphone shipments decreased QOQ, mainly due to the base effect of strong sales of mass smartphone, including the Galaxy J series, in the previous quarter. Conversely, the portion of premium smartphone increased due to solid sales of flagship models, such as the Galaxy S8 and Galaxy Note8. Operating profit, however, declined QOQ as marketing cost increased under strong seasonality. As for the network business, our revenue and profit in second half of 2017 decreased as LTE investment from our major overseas partners conducted in the first half. Next, I will share our outlook for the first quarter of 2018.
In the first quarter, we expect demand for smartphone tablets to decrease QOQ due to typical seasonality. We will minimize the impact of off-peak season and strengthen our premium leadership with the sales of newly launched Galaxy A8 and A8 Plus, and the introduction of the Galaxy S9. The newly launched Galaxy A8 and A8 Plus were well received by our millennial customers for providing a rich multimedia experience, including front dual camera. We will ensure that we translate the positive response into a solid business performance. The new Galaxy S9 will be released at MWC next month, and we will strive to maximize initial launch impact. Through these efforts, we expect our smartphone shipment to increase slightly Q on Q, and both sales and operating profit to increase due to the rise in ASP.
As for the network business, we will strengthen our business fundamentals by supplying LTE-based station mainly to the U.S. Now let me move on to our outlook for 2018. We expect the demand for smartphones to continue to grow, backed by solid replacement demand for premium models. Meanwhile, our business is likely to face growing challenges due to rising uncertainty in the global business environment, severe competition, and material cost burden. We will increase the revenue contribution of premium smartphones by launching enhanced flagship models and increasing long-term sales of existing flagship models. To extend the sales of premium smartphones, we will strengthen our product competitiveness by differentiating our core features and services, such as the camera and Bixby, and reinforce the seller programs and experiential stores. We will continue to optimize the low-end to mid-range smartphone lineup, and improve productivity also.
By doing so, we will achieve qualitative growth of our smartphone business. For the network business, we will extend the supply of 5G-ready network solutions into the major markets, including South Korea, the U.S., and Japan. Lastly, I would like to share our mid to long-term outlook. To strengthen our leadership in the premium market, we will continue to pursue meaningful innovation by utilizing next generation parts and new technologies based on our competencies and experience in the mobile business. Furthermore, we will secure competencies in new business to ensure sustainable growth. We have a well-used period of technological transitions, which includes network evolution and the product changes from feature phone to smartphones as an opportunity to grow. In this path to 5G era, which will drive future changes, we will lead world-first commercialization of 5G and take a global leadership position.
Moreover, we will continue to foster our services and new businesses such as Bixby and IoT based on our mid to long-term roadmap. We will provide multi-device experiences under one Samsung strategy so that consumer can use our various devices more easily and conveniently. Thank you.
Good morning. I'm Song Yuk Cho, Vice President of Visual Display Sales and Marketing team. Let me start with the current market conditions and our results for 2017, fourth quarter. The TV market in fourth quarter has grown by double digits from last quarter with the year-end holiday season. However, the market is projected to decrease year-over-year because of declining demand in North America, China, and Middle East. Samsung's result was slightly down year-over-year due to sales decrease from defocusing on entry lineup and declining selling price from heavy competition. However, our performance has improved from last quarter by driving sales of premium products during the year-end holiday season. Samsung has further solidified leadership in the premium market by expanding the QLED and ultra-large screen TV sales and achieved market share growth in the premium market segment.
The digital appliance market in 2017, fourth quarter, has shown a moderate growth from last year due to the continued growth of the North American market and the recovery of European and CIS economies. We continue to show sales growth year-over-year and have achieved high sales in advanced markets like North America and Europe. We especially have strong sales in premium products like the Flex washing machine and the Dual Cook oven. However, our results show limited improvements because of the increase in raw material cost and investment in the North American B2B market. Next, I'll share the market outlook for the first quarter and then whole year of 2018. For first quarter, the TV market demand is projected to decrease both year-over-year and quarter-over-quarter because of a slow season following the year-end holiday season and a decline in market demand.
Samsung will further establish premium leadership in the TV market by reforming our sales structure with an emphasis on high-value products, like the ultra large screen and QLED TV. We'll also launch our new models all year in the first quarter to concentrate on improving our results. For the digital appliances business, Samsung will accelerate growth by expanding the premium lineup, which includes the Family Hub 3.0 Refrigerator and the QuickDrive washing machine, and reinforcing marketing activities. As for the 2018 TV market, the ultra large screen and premium markets are expected to continue growing with momentum created from sports events such as the World Cup and the Winter Olympic Games. As the premium market continues to rise, Samsung will strengthen its new lineup, which includes ultra large screen, QLED, as well as 8K TV, and expand marketing activities for better performance.
Samsung TV will provide new experiences and values by introducing Bixby and SmartThings, which will further enhance connectivity between Samsung products and offer seamless user experiences. With these efforts, we will continue to be at the forefront of the product innovation as the market leader and lay a foundation for sustained growth. As for the digital appliance business, Samsung will further strengthen the B2B business, which includes built-in home appliances and system air conditioners. We will expand distribution channels, including online channels, and continue to build up the future growth engine. Thank you.
Thank you, gentlemen. This completes the management's presentation. Let's start Q&A session.
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 the number star one. For cancellation, please press star two, that is star and two on your phone. The first question will be presented by Mr. Yu Jong-woo from Korea Investment & Securities. Please go ahead, sir.
Yeah.
I have two questions. The first question is a semiconductor question about NAND demand. Today, during the presentation, it sounded like you have a very positive outlook on the NAND demand, but I think overall the market has some concerns, not only about the supply and demand situation, but also the impact that may have on further price erosions. Can you give us a bit more detail of the grounds for your positive view for NAND demand this year? Especially, what is your outlook on supply and demand, and what do you think would be the pricing related impact of that? Second question is about the stock split that you've announced today, the 50 to one stock split. Can you give us details of when that will happen and, for example, when will the stock first trade after being split 50 to one?
First, to answer your question about the NAND demand or supply situation. First of all, the first half of 2018 is a seasonally weak or low period. Therefore, the sound demand and supply situation may temporarily ease during the first half. We also think that there is a lot of demand for NAND, especially from the mid to low-end mobile side and also other applications that are more price sensitive or price elastic. That will drive up demand for NAND as prices may ease. Therefore, for the full year, we're expecting the demand and supply situation to remain sound. Also, there are some concerns that there will be more supply as other companies ramp up their 64-layer 3D NAND. Number one, it will take some time for them to qualify, for example, to servers and other applications.
Also, the increase in supply may not happen immediately.
그리고 향후 가격 추이와 이에 따른 수요 영향성에 대해서 질문을 주셨는데, 우선 가격은 시장의 수급 상황에 의해서 결정되는 것이고, 구체적인 전망치를 저희가 제시하기는 어렵습니다. 다만 앞서 말씀드린 것과 같이 고용량 콘텐츠 증가에 따라서 스마트폰의 고용량화가 더욱 중요해지고 있고, 데이터센터의 경우에도 처리해야 하는 데이터의 양이 급격하게 증가하면서 고용량 SSD 채용 확대가 더욱 확대될 것으로 예상되기 때문에 전반적으로 수요의 fundamental은 지속 견조할 것으로 전망하고 있습니다.
About the price trends, because price is determined by the market supply and demand situation, it's difficult for us to give you an outlook on where prices would be in the future. Given the fact that there is content increase in smartphones and also in data centers as the amount of data that has to be processed increases significantly, there will be more SSD adoption. Therefore, given all of this, we expect the demand-side fundamentals to remain strong.
네, 그 F1에 대해서 질문하셨는데, 어쨌든 지금 현재 예정된 3월 하반기 주주총회에서 액면 분할 관련된 정관 변경이 필요합니다. 그래서 우선 현재로서는 예정된 거는 3월 23일로 알고 있는데요. 그 일정이 중요한 것 같고, 그다음에 새로 액면 분할된 주식과 지금 거래 중인 주식을 교환하는 그런 절차도 필요하고 해서 현재 예상으로는 5월 중순쯤 분할된 주식으로 거래가 가능할 것으로 보입니다.
To take your second question about the scheduling and the timeline for the stock split. The first procedure would be the general meeting of shareholders, which currently is scheduled for March 23rd. The articles of incorporation, a change of the articles of incorporation, would have to be approved at our general meeting of shareholders. That's one step. Following, there will be a swap or an exchange of old stock with the new split stock. According to that timeline, we're expecting that perhaps the split stocks would start trading around mid-May.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 Citigroup의 Peter Lee입니다.
The next questions will be presented by Mr. Peter Lee from Citigroup. Please go ahead, sir.
네, Citigroup 이세철입니다. 저도 반도체 관련해서 전세환 전무님께 질문드리겠는데요. 아까 NAND 쪽 말씀하셨는데 저는 DRAM 쪽 질문드리겠습니다. 마찬가지로 DRAM 쪽도 스마트폰 관련해서 수요둔화 우려들이 많은 상황인데요. 관련해서 향후 DRAM 수요 쪽하고, 그리고 '18년 DRAM 수급 전망에 대해서 답변 부탁드리겠습니다.
I have a question on semiconductors, this time is on DRAM. On DRAM, there's also concern in the market of especially demand slowdown from smartphones. Can you give us the demand outlook and overall demand and supply outlook for 2018?
DRAM 수요는 데이터센터 인프라 확대가 계속되고 있고, 신규 CPU 플랫폼이 확산되면서 머신러닝 등 이런 여러 가지 영향으로 서버를 중심으로 수요 증가 추세가 지속될 것으로 보입니다. 모바일 같은 경우에 작년에 DRAM 가격 상승에 따라서 일부 중저가 스마트폰이 BOM 부담으로 수요 영향을 약간 줄 수는 있겠지만, 전반적으로 듀얼 카메라, 풀스크린 디스플레이가 확산되고, 특히 중요한 건 고사양 모바일 게임이 스마트폰에서 이루어지고, on-device AI 등의 소프트웨어 요구사항이 증가돼서 합자량 위주의 견조한 성장세를 저희는 예상하고 있습니다. 공급 측면에서는 업계의 지속적인 공급 확대 노력에도 불구하고 10나노대 제품의 공정 난이도 증가와 더불어서 증설을 위한 클린룸 제약 등으로 기지 성장은 제한적일 것으로 판단됩니다. 이로 인해 연간 수급은 전반적으로 견조한 상황이 지속될 것으로 생각됩니다.
Regarding the DRAM, the strong driver of DRAM demand will remain as servers, especially as data center infrastructures continue to expand. The rollout of the new CPUs, that's also driving more demand for DRAM because of other applications such as machine learning. That is all driving demand for DRAM, especially from the server side. On the mobile side, there was some burden of the BOM side, the material cost side, especially in the mass segment of mobiles. As more and more mobile phones adopt dual cameras and full screens, this would require more content. Especially the high performance mobile games that are becoming more popular will also require more content as well as on-device AI. These will all increase the content on mobile phones, which will keep demand from mobile applications strong as well.
Even though the industry has been working very hard to increase supply, there are difficulties because of the 10-nano class technology being very difficult. There are limits in terms of the clean rooms that are available, therefore, given all of these factors on the demand and supply side, we expect that for DRAM full year, the demand and supply situation will remain sound.
예, 감사합니다. 다음 질문 받겠습니다. 다음으로 질문해 주실 분은 JP Morgan의 JJ Park입니다.
The next question will be presented by Mr. J.J. Park from JPMorgan. Please go ahead, sir.
예, 질문에 감사드립니다. 휴대폰 쪽이랑 디스플레이 패널 쪽 두 가지 질문이 있는데요. 휴대폰 쪽에 부품가격 강세가 작년부터 쭉 이어진 것 같은데, 특히 중저가 스마트폰 쪽에 BOM cost 부담이 큰 걸로 보이는데 IM 사업부 전체적으로 수익성 유지 방안과 혹시 BOM cost 때문에 제품 가격을 올릴 여지가 있는지 답변 부탁드리고요. 또 최근에 인도 쪽에서 중국 업체가 마켓셰어를 많이 확보한 것 같은데 대응 방안이 어떤 게 있는지 말씀해 주시면 감사드리겠습니다.
I have two questions. The first question is on the mobile side. The component prices have remained strong since last year, that has increased the BOM cost burden on smartphones. My number one question is, what is your plans of maintaining the profitability of the overall IM Division? Also, is there a room, for example, increasing the prices of your handsets? Recently in China, it seems a Chinese company has been increasing quite a lot of market share. Can you share with us your plans of how to respond to this?
네, 먼저 중저가 쪽 관련해서 답변을 드리겠습니다. 저희들이 프리미엄 제품 판매 확대와 병행해서 중저가 쪽에 나름대로 준비를 하고 있습니다. 근데 올해는 feature phone에서 smartphone으로, 그다음에 entry seg에서 mid seg으로 upselling하는 걸 통해서 전반적인 제품 mix를 개선하는 쪽으로 저희들이 노력할 예정이고요. 결국 이걸 통해 가지고 ASP를 상승시키는 질적 성장 효과를 계획을 하고 있습니다. 또한 flagship에서 검증된 실생활에 유용한 기능들 중심으로 중저가 제품의 확대를 해서 중저가 제품의 경쟁력을 강화할 계획에 있고, 이와 동시에 꾸준하게 저희들이 진행을 하고 있는 lineup 효율화하는 거, 그다음에 부품 표준화하는 거, 그다음에 생산성 향상 이걸 통해 가지고 수익성 개선 노력도 지속적으로 추진하고자 합니다.
This year, while continuing to expand sales of our premium products, we are also preparing various initiatives on the mass segment side. First of all, we will improve the overall product mix by actively driving upsell from feature phones to smartphones and from entry level to mid-end segments. Through this, we anticipate the effect of qualitative growth equivalent, resulting in ASP increase. We will roll out useful functions that are already proven on flagship models to mass segments to enhance the competitiveness of our mass products. We will continue the efforts for profitability, such as streamlining the product lineup, increasing common parts, and enhancing productivity.
인도 시장에 대해서는 저희들은 굉장히 다양한 lineup을 보유하고 있습니다. 그래서 인도 시장에 최적화된 lineup을 적용을 해서 중국 업체 공세에 적극적으로 대응할 계획에 있습니다. 또한 저희들이 전통적으로 강한 통신사나 유통과의 협업, 그리고 세분화된 타겟 소비자 마케팅, 그리고 소비자 접점에 있는 매장에서의 체험, 경험들에 대한 준비를 잘 해서 저희들의 프리미엄 브랜드 이미지를 지속, 유지하고 이를 통해서 점유율과 수익성을 확보하도록 그렇게 하겠습니다.
Regarding India, we have quite a wide lineup and of this lineup we will pick the lineup that is optimized towards the Indian market. Also, while maintaining the premium brand leadership through collaboration with operators as well as distribution, we will also have very targeted customer segment marketing and also focus on providing more experience type retail spaces to Indian consumers so that we are able to gain market share as well as profitability.
두 번째 질문은 비슷한 맥락인데요. 스마트폰 회사들이 BOM cost pressure 때문에 OLED 패널 채택률이 생각보다 좀 낮아질 수도 있을 것 같은데, 혹시 계속적으로 OLED penetration rate을 올리기 위해서 rigid도 그렇고, flexible도 그렇고 가격을 조금 낮출 의향이 있으신지 궁금합니다. 감사합니다.
The second question to the DP side is actually connected. Given the high BOM cost burden on handset makers, some are saying that this has resulted in lower than expected penetration of OLED panels on handsets. In order to increase the OLED panel adoption on smartphones, do you have plans of, for example, adjusting the prices for whether rigid or flexible OLEDs? Regarding the OLED panels, there has been competition always from the LTPS LCD side, but compared to the LTPS LCD, OLED has advantages in terms of resolution, color, real black, as well as in terms of power consumption. Therefore, given the inherent advantages of the OLED panel, we believe that we will be able to continue penetration and market share. In order to provide more cost competitiveness, we will continue to enhance our operational efficiency as well as our cost saving efforts.
We will continue to drive our efforts to add new customers, not only in China but also in other parts of the world, so that overall our customer portfolio becomes more diverse.
The next questions will be presented by Mr. Kim Dong Won from KB Securities. Please go ahead, sir.
I have two questions. The first question is to the DP side. Due to the lower than expected demand for the recent flagship launch by the North American strategic customer, market is expecting your flexible OLED shipment in the first half to decrease. What is your strategy in responding to this decrease in shipment? Second question is to the CE side, the TV business. It seems, especially in the high-end TV segment, OLED TVs are increasing market share faster than expected. We would like to ask, what is your plans of responding and differentiating to OLED TVs using your QLED? Regarding your first question, I'm sure you will understand it's difficult for us to mention specifically to a customer.
As we mentioned before in the previous Q&A session, we have been increasing and adding new customers, not only in China but in other parts of the world, in order to secure a stable and diversified customer portfolio. We believe that with that portfolio, our overall business structure will not be impacted by temporary changes in demand. In addition, when it comes to the OLED business, rather than temporary increase or decrease of demand, what's important is the fact that OLED has become the mainstream display, especially it is the display that defines high-end smartphones, and therefore it will continue to be used on the high-end segment.
Flexible display를 세계 최초로 만들어냈듯이 끊임없는 기술 개발을 하고 있고, 이를 통해서 제품 차별화 그리고 다양한 애플리케이션 확대 등을 추진을 하고 있습니다. 그래서 단기적으로는 저희가 수율, 생산성 향상을 통해서 현재의 경쟁사와의 경쟁, 그리고 현재 불확실한 마켓 상황을 극복하기 위해서 많은 노력을 하고 있습니다. 특히 효율적인 라인 운영에 집중을 하고 있고, 이를 통해서 생산성, 그리고 기본적으로 수익성을 확보하도록 노력을 하고 있습니다.
We were the first to develop the flexible OLED, we are following this up with continuous technology development. We will not only continue to launch differentiating products, but also use this to pioneer new applications for OLEDs. Also, internally, we're continuing our focus on improving our yield as well as productivity. Based on this operational efficiency, we will respond to competitors as well as the uncertainties in the market situation. By efficiently operating our lines, we will gain not only better productivity, but also profitability.
TV 관련 질문은 제가 답변드리겠습니다. 저희 당사 QLED TV는 작년 1분기에 출시되어서 지금 전 세계 주요 시장에서 인지도가 빠르게 상승하고 있고, 판매량도 굉장히 빠르게 확대되고 있습니다. 저희가 이에 힘입어서 프리미엄 시장에서 당사가 지금 현재 확고한 리더십을 유지하고 있습니다. 업계에서는 현재 QLED의 기술과 시장을 확대하려는 다양한 움직임이 있습니다. 하나 예로 들어드리면, 작년 상반기 중국 전자상회 주관으로 QLED 포럼이 개최되었고, 여기에 당사뿐만 아니라 TCL, Hisense 같은 주요 TV 업체랑 그다음에 학계 전문가들, 그리고 주요 유통업체들도 참석해서 QLED 발전 방향을 저희와 함께 협의를 한 바도 있습니다. 올해는 당사의 QLED 라인업도 대폭 강화를 하고, 또 다양한 글로벌 마케팅 활동을 전개하여서 QLED 판매를 더욱 확대해 나갈 계획입니다.
The QLED TV was launched in first quarter of 2017, since its launch, it has been gaining not only wide recognition globally, but also its sales volume has been increasing quite rapidly. Based on this, we have been able to not only maintain but strengthen our leadership in the premium TV segment. The industry also has various initiatives to further roll out and increase the adoption of QLED TVs. For example, in the first half of last year, we had the QLED forum in China, which was attended not only by us, but TCL, Hisense, other TV companies, as well as members of the academia. Retailers also participated in the QLED forum in China in order to spread more adoption of QLED TVs. This year, our focus will be on expanding the QLED TV lineup. We will have a stronger lineup.
We will focus on more active marketing globally in order to increase the sales of QLED TV.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 삼성증권의 황민성 님입니다.
The next questions will be presented by Mr. Hwang Minsung from Samsung Securities. Please go ahead, sir.
네, 질문 기회 감사드립니다. 아까 AI 칩도 확대하겠다라는 말씀을 하셨었는데요. 이에 관련해서 삼성이 앞으로 AI나 머신러닝 관련해서 Exynos AP의 전략을 어떻게 바꿔 가실지가 궁금하고요. 두 번째는 올해 DRAM 비트 성장을 20% 시장 수준으로 말씀을 하셨는데, 이전에 말씀하시던 high teen보다는 약간 올라간 것 같습니다. 공급적인 면에서 평택 Capa가 올해 연말 기준으로 output이 어느 정도로 예상을 하신 건지, 그리고 새로 시작을 지금 웨이퍼가 투입되고 있는 1Y 공정은 연말에는 어느 정도까지 확대한 것을 기준으로 하신 건지가 궁금합니다.
I have two questions. First question is about the AI chip. You've mentioned of expanding the AI chip. In that context, what is your strategy going forward for the Exynos AP for AI as well as machine learning? Second question is about the DRAM business. In the previous presentation, you provided your DRAM bit growth for 2018 to be 20% growth, that being market level, which I noticed is a bit higher than the previous forecast that you mentioned, which used to be in the high teens. I'm wondering whether this counts in some of the capacity that you're seeing visibly this year. So for example, at the end of 2018, that's this year, what is the output that you're expecting from Pyeongtaek that went into this 20% bit growth for 2018? I also have heard that the wafers are starting to go in for the 1Y process.
How much of an output are you expecting from that, too, that went into the 20% bit growth projection?
먼저 System LSI AI 관련해서 답변드리겠습니다. 현재 모바일 시장에서 요구되는 딥러닝과 같은 AI 관련 영역은 아직 초기 단계로 올해는 얼굴, 사물 인식, 증강현실, 지능형 이미지 처리 기술을 아주 기본적인 기능을 제공하고 있는 상황입니다. 하지만 2019년 이후에는 고성능 AI 기술이 모바일뿐만 아니라
Consumer, automotive 등으로 빠르게 확산될 것으로 예상하고 있습니다.
Regarding the AI, currently, what is required by these AI applications, especially on the mobile and deep learning side, is still very initial, face recognition, object recognition, or some intelligent image processing is the current requirements that would stay this year. I think from next year, actually, there will be demand for high performance AI technology, not only on the mobile, but also in consumer as well as automotive applications.
삼성전자 System LSI 사업부는 이런 시장 환경에 대응하기 위해서 준비를 해왔고, 올해는 얼굴 인식 및 지능형 이미지 처리 기술 등이 탑재된 Exynos Processor를 시작으로 향후 automotive, consumer, mobile 등에 필요한 NPU, Neural Processing Unit으로 성능을 강화한 제품을 출시할 예정입니다.
The System LSI division has been preparing for this market environment. This year we will be launching an Exynos processor that is capable of face recognition and intelligent image processing. Further down the road, we'll prepare this in an NPU, a Neural Processing Unit, a form that would support, for example, automotive, consumer, as well as mobile applications.
이러한 지능형 Exynos Processor는 프리미엄급 뿐만 아니라 보급형 하이엔드까지 SoC 라인업을 강화하여 다가오는 시장에 적극적으로 대응할 예정입니다. 이상입니다.
Also, in terms of our strategy, we'll prepare actually a very wide SoC lineup to respond not only to the premium, but also to the mass segments with our intelligent Exynos processors.
DRAM 관련한 질문 답변드리겠습니다. 아까 speech에서도 말씀드렸고 질문에 대해서도 말씀드렸지만, DRAM 수요는 지금 견조한 상황입니다. 그래서 지난 IR session에서도 말씀드린 것처럼 저희들이 line 11 일부 Capa를 CIS로 전환하는 과정에서 생겼던 Capa loss라든가, 그리고 수요 증가에 대해서 저희들이 1x-nm의 수율 증가 이런 부분을 전반적으로 노력을 하고 있고, 지난번하고 동일하게 Pyeongtaek이라든가 이런 부분들은 현재 시황에 맞게 저희들이 탄력적으로 투자를 해서 DRAM 비트 수요를 대응하려고 노력하고 있는 상황입니다.
Regarding the second question about the DRAM, as we mentioned during the presentation as well as the Q&A, our outlook on DRAM demand is that it will remain sound. Even though there was some capacity loss in the process of converting line 11 to CIS, we are continuing, for example, to increase the yield on our 1x nano processes. Regarding Pyeongtaek capacity, as we have previously mentioned, we will invest flexibly into the Pyeongtaek capacity in order to meet the bit demand, depending on the market situation.
1Y nano 관련해서는 지난번 발표한 것과 같이 2017년 11월에 양산에 저희가 성공했고, 2019년에 1x nano화하고 bit crossover를 목표로 현재 ramping up 중에 있습니다. DRAM 전체, 지난 IR 세션 말씀드렸지만, 제품별 시황하고 10나노급 공정 전환 상황을 전체적으로 고려해서 탄력적으로 Capa를 운영할 생각을 하고 있습니다.
Regarding 1x nano, as we mentioned, we succeeded in mass production in November last year in 2017. Currently we are ramping up with the target of doing a bit crossover with 1x nano in 2019. Regarding capacity, we will manage the capacity depending on the market situation as well as the overall situation in the 1 nano class technology.
네, 감사합니다. 다음 질문 받을게요.
다음으로 질문해 주실 분은 UBS의 Nicolas Gaudois입니다.
The next questions will be presented by Mr. Nicolas Gaudois from UBS. Please go ahead, sir. Mr. Nicolas Gaudois, please go ahead with your questions.
Yes. Hi, good morning. Thanks for taking my questions. The first question relates to DRAM, once again, you remain positive on the outlook for server DRAM into 2018. Maybe if you could help us a little bit, estimating what was eventually the bit demand growth in server DRAM for the market in 2017. What is your expectation for 2018? How do you see the segmentation between data center and traditional enterprise in this segment evolving? On top of that, what are the typical differences in DRAM densities you observe currently between these two segments? The second question relates to RGB OLED. Obviously you alluded to some uncertainty on demand that you will effectively address through your customer mix. In the context of your comments early on foldable products coming in, what are your plans regarding the A5 fab?
Is it more likely than not that you would effectively deploy capacity there in 2019? Thank you.
두 가지 질문이 있습니다. 첫 번째는 DRAM에 대한 질문인데요. DRAM 서버, 특히 서버 DRAM에 대한 수요는 올해도 긍정적으로 전망을 하시고 계신 것 같은데, 그런 맥락에서 작년도 2017년에 서버 DRAM bit growth가 얼마였다라고 추산을 하고 계신지와 그렇다면 올해는 서버 DRAM의 bit growth를 얼마로 예상을 하고 계시는지 말씀해 주시면 좋겠고, 서버 DRAM의 비중을 그러면 데이터센터용과 엔터프라이즈용으로 나누어서
비중이 지금은 얼마이고, 앞으로 그 비중이 변화할 거로 예상을 하시는지, 특히 데이터센터용 서버와 엔터프라이즈용 서버의 DRAM 탑재량의 차이가 있기 때문에 그거를 감안을 했을 때 앞으로 이 두 서버 세그먼트 간의 비중 차이가 어떻게 될 거라고 생각하시는지 말씀해 주시면 좋겠고요. 두 번째는 Flexible OLED 관련 질문인데, 지금 Flexible OLED의 시황에 대해서는 그러면 앞으로 고객 세그먼트를 더욱 확대를 하는 것으로 대응을 하시겠다는 뜻으로 말씀하셨던 것 같은데요. 그렇다면 아까 발표 중에 Foldable의 도입 가능성을 말씀을 하셨는데, 그렇다면 그게 새로운 팹을 올해 중으로 생산에 넣으시겠다는 뜻으로 받아들이면 될까요?
DRAM 답변드리겠습니다. 서버 시장의 Bit Growth 전망에 대해서 먼저 말씀드리겠습니다. 2017년, 2018년 서버향 Bit 성장률은 연간 약 30~40% 수준으로 예상하고 있습니다. 서버의 경우 메모리는 고객들에게 양질의 서비스를 제공하기 위한 필수적인 부품이고, 가격에 대한 탄력성이 기타 응용에 비해서 상대적으로 좀 낮습니다. 특히 최근 들어 서버 업체들 간의 경쟁이 치열해짐에 따라서 고용량 메모리에 기반한 차별화된 서비스가 중시되고 있고, 전반적인 공급 부족 상황에서 안정적 메모리 확보가 중요해짐에 따라서 현재와 같은 수요 강세 역시 지속될 것으로 판단됩니다.
Regarding your first question about the server DRAM bit growth. In 2017, we estimate that the server DRAM bit growth was around 30%-40%. As you know, in servers, memory is a very essential component in order to provide high-quality service and therefore, compared to other applications in the server segment, price elasticity is relatively low. Also, given the fact that high-density memory is critical to provide a service for servers, we expect the demand for DRAM on the server segment to remain strong.
최근 자체 서버를 운영하던 일부 닷컴 업체들이 Public Cloud 서비스를 사용하기 시작하면서 Traditional 서버 set 성장세는 둔화되는 측면이 있습니다. 이는 수요가 없어지는 것이 아니고 Public Cloud의 수요로 전환이라고 볼 수 있습니다. 또한 이러한 상황에 대응하기 위해 기존 Traditional 서버 업체는 Hyper Converged System과 같은 고용량 고부가가치 서버에 집중하고 있습니다. 이로 인해서 데이터센터 업체뿐만 아니라 Traditional 서버 업체향 수요 역시 탑재량 증가 중심으로 지속 성장하고 있는 상황입니다.
Some of the dot-com companies that used to operate their own servers have converted to the Public Cloud, this has resulted in demand for traditional servers decreasing. Actually this isn't a decrease in itself, actually a shift of demand from traditional servers to Public Cloud supporting servers. Also, this has left traditional server makers to actually focus more on the very high-end, the high-capacity servers such as hyper-converged servers, this is driving increase in content for both a data center as well as traditional servers.
네, OLED 질문에 답변드리겠습니다. 먼저 Foldable에 대해서 질문하셨는데, 일단 당사는 고객 수요에 맞춰서 Foldable을 필요한 다양한 Foldable뿐만 아니라 다양한 애플리케이션을 준비하고 있습니다. 이를 위해서 지속적인 연구 개발을 하고 있고, 결국 시장과 소비자가 원하는 수준으로 제품의 완성도를 높이는 것이 가장 중요하다고 판단을 하고 있습니다. 그래서 저희는 저희 전략 고객들과 협업을 해서 지금 시장이 원하는, 그리고 고객이 원하는 수준으로 제품의 완성도를 높일 수 있도록 노력을 하고 있고, 양산 시점을 맞출 수 있도록 노력을 하고 있습니다.
Regarding the foldable OLED question, our position has always been to prepare our technologies to meet the customer demand when ready. Therefore we have continued our R&D and development efforts regarding foldable display solutions. Our focus is on delivering the level of execution and the completeness that would satisfy not only market, but also the consumers' level of expectation. Therefore currently we are in close collaboration with our strategic customers in order to deliver the solutions that will meet the consumers as well as market demand.
그리고 질문하셨던 신규 단지에 대해서는 지금 급변하는 시장 상황과 그리고 앞으로 발생할 수 있는 신기술에 대응하기 위해서 저희가 선제적으로 단지 조성을 준비를 하고 있습니다. 그러나 일단 가동 시기나 추가로 저희가 생산할 제품 그리고 Capacity에 대해서는 아직 구체적으로 결정된 바는 없습니다.
Regarding the new fab, we have actually started to do the preparation work, the groundwork for the new fab on a preemptive basis to prepare for uncertain market situation as well as expected new demand. However, we have just started to do the preparations the exact timing of when it would operate or how much capacity will be delivered from the new fab has not yet been decided.
네, 감사합니다. 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 Daewoo Capital Market의 Mr. SK Kim입니다.
The next question will be presented by Mr. SK Kim from Daewoo Capital Market. Please go ahead, sir.
예, 질문 기회 주셔서 감사합니다. 저는 IM 쪽에 질문이 있는데요. 플래그십 스마트폰의 고사양화가 지속되고 메모리나 MLCC나 부품 가격의 인상이 예상돼서 스마트폰 가격 인상도 불가피할 것으로 보이는데요. 이에 따라서 고가 스마트폰에 대한 수요도 둔화될 것으로 우려가 되고 있는데, 삼성전자는 어떻게 대응하실 계획이신지 궁금합니다. 그리고 아까 디스플레이 쪽에서 말씀하신 대로 OLED가 하이엔드 시장의 메인스트림이 됨으로써 경쟁사들의 OLED 탑재가 확대됨에 따라서 차별화도 점차 어려워질 것 같은데요. 이에 대한 대응 방안도 같이 말씀 부탁드리겠습니다. 감사합니다.
I have two questions for the IM business. First of all, I think one of the concerns in the market is that especially as the smartphones become more and more high specification, especially around the flagship, the high end. At the same time, prices for components, MLCCs as well as memory prices are going up. This would inevitably increase prices of smartphones, which may result in decrease of demand. That's the scenario that the market is concerned of. I'm wondering how you are planning to respond to this series of events. Second question is actually linked to the OLED, Q&A that we had from the DP side.
As the OLED mentioned, OLED display is becoming a mainstream display on the high-end handsets. More and more Samsung's competitors are starting to use OLED on their handsets, which is diminishing the differentiating power that you used to have by having OLED displays on your handsets. I'm wondering how you plan to continue to differentiate, even though OLEDs are becoming more mainstream in the high-end segment.
먼저 고가 수요 관련해서 답변을 드리겠습니다. 하이엔드 시장은 중고가 세대 교체 수요 중심으로 성장은 지속할 것으로 저희들도 보고 있고, 시장도 보고 있습니다. 다만 최근에 $1,000 이상 스마트폰에 대한 소비자 가격 저항도 일부 존재하는 것으로 일단 확인이 되었고, 이에 대한 저희들도 좀 준비는 해야 될 것 같습니다. 그래서 당사는 어쨌든 차별화된 플래그십 신모델 제품 출시, 그리고 기존 플래그십에 대한 롱테일 판매를 병행해서 좀 더 프리미엄 제품에 대한 판매 확대에 집중을 할 예정에 있습니다. 이를 위해서는 사업자하고 유통하고 협력을 하는 다양한 sell-out 프로그램을 강화도 하고, 그다음에 체험형 매장을 확대를 하는 것과 같은 적극적인 마케팅 활동을 전개할 계획에 있습니다.
Regarding your first question about the high-end smartphone segment. The high-end smartphone segment is expected to continue growth, especially driven by replacement demand from mid-high segment users. However, it appears that there is some consumer resistance for smartphones that are above the $1,000 mark. Therefore we need to prepare for that. We will focus on expanding the premium product sales by launching new and differentiated flagship models, while at the same time maintaining the long tail sales of existing flagship models. We will also support this with stronger sell-out programs, for example, in collaboration with operators or distribution, and conduct active marketing activities, especially around experience spaces.
두 번째, 경쟁사의 OLED 탑재 확대와 관련해서 답변을 드리겠습니다. 당사는 오랜 기간 축적해온 flexible OLED 관련 기술력, 그리고 이걸 바탕으로 해서 edge 디자인부터 Infinity Display 까지 굉장히 차별화된, 그리고 완성도 높은 그런 디자인들을 시장에 선보여 왔습니다. 이러한 OLED 관련 경쟁력뿐만 아니라 Samsung Pay나 Samsung Pass, Bixby 등 다양한 서비스, 그리고 Gear S, Gear VR과 같은 다양한 companion device들을 통해서 소비자들한테, 사용자들한테 새로운 경험을 제공을 하고 있습니다. 앞으로도 차세대 부품과 신기술 기반의 제품 혁신, 그리고 AI, IoT, 헬스 등과 같은 분야의 서비스 차별화, 이런 부분들을 통해서 시장의 리더십을 공고히 하도록 하겠습니다.
Regarding your second question of how we will respond to competitors adopting OLEDs. Well, in terms of OLED display itself, already from several years ago, we have been leading the market by offering differentiated and well-executed designs using OLEDs, starting from the edge to the infinity display based on our flexible OLED technology and experience. That's one strength. On top of that, we offer new and rich experiences through useful services such as Samsung Pay or Samsung Pass, Bixby, as well as companion devices such as the Gear S or Gear VR and IconX. That is another point of differentiation. In the future, we will strengthen our leadership in the market by providing differentiated services such as AI, IoT, health, while continuing product innovation based on our next generation components and new technologies.
네, 감사합니다. 시간이 많이 갔는데 이제 남은 시간이 얼마 없어요. 그래서 두 분만 질문 더 받고 콘퍼런스 콜을 마치기로 하겠습니다.
Given the limited amount of time, we will take questions from two more attendants before closing the session.
다음으로 질문해 주실 분은 노무라증권의 정창원 님입니다.
The next questions will be presented by Mr. 정창원 from Nomura Securities. Please go ahead, sir.
최근 기술 난이도 증가로 인해서 업계 전반적으로 원가 절감이 갈수록 어려워지고 있는 것 같습니다. 이에 대해서 삼성전자 대응 전략이 어떻게 되는지 궁금하고요. 또 혹시 차세대 메모리가 이런 문제들을 해결을 해줄 수 있는지, 그리고 삼성의 진행 상황에 대해서도 말씀해 주시면 감사하겠습니다.
It seems that overall, because the industry is now in the territory of very high and sophisticated technologies, it's becoming more and more difficult to achieve cost savings. I'm wondering how Samsung Electronics plans to respond to this situation. Also, do you think the next generation memory could be a solution to this issue? In that context, could you give us an update on your development efforts on the next generation memory?
당사는 전략적인 대규모 선제 투자를 통해서 업계 최고 수준의 규모의 경제를 확보한 상황입니다. 또한 미세 공정 및 3D NAND 관련 기술 노하우를 지속 강화해 왔고, 이를 통해 경쟁사와는 차별화되는 원가 구조 및 수익성을 지속 강화해 오고 있습니다. 당사는 향후에도 10나노급 DRAM하고 고단 3D NAND 등 첨단 공정 도입을 앞장서서 할 것이고, 이를 통해 현재 수준의 생산성 향상을 확보하고, 더 나아가 중기적으로는 안정적인 원가 절감에 주력해서 원가 우위를 지속 확보해 나가겠습니다.
We have already achieved differentiating advantages in terms of productivity and cost by preemptively investing a large scale strategic in our technology. We will continue to do this. Leveraging our process technology as well as 3D NAND technology, we will continue to achieve cost as well as productivity advantages compared to the competition. Also, we will continue this leadership to go further in the 10 nano class DRAM as well as higher stack 3D NAND developments so that we are able to maintain productivity as well as cost advantages going forward.
차세대 메모리의 경우는 저희는 상당히 오랜 기간 동안에 다양한 차세대 제품의 연구 개발을 진행해 오고 있고, 고객사 등 업계의 다양한 기업들과 함께 이에 대해 지속적으로 논의를 하고 있는 중입니다. 다만 기존 메모리 제품의 미세화가 지속되고 있고, 이에 따른 원가 인하가 지속될 것으로 예상돼서 차세대 메모리는 당분간 니치 시장에서 제한적으로 사용될 것으로 저희는 생각하고 있습니다.
Regarding the next generation memory, we have been working on next generation memory for quite a long time. We have been looking into various different options. We have been talking to customers as well as other industry partners on next generation memory solutions. Given the fact that the existing processes, the existing memory, actually has additional room for scaling and additional room for cost reduction, we think that for the time being, next generation memory solutions will only remain in the niche market.
네, 감사합니다. 이제 마지막 질문 받겠습니다.
마지막으로 질문해 주실 분은 대신증권의 김경민 님입니다.
The last questions will be presented by Ms. Claire Kyungmin Kim from Daishin Securities. Please go ahead, ma'am.
질문 기회 주셔서 감사드립니다. 두 가지 여쭙겠습니다. 첫 번째 질문은 Foundry 관련된 것인데요. 최근에 가상화폐칩 수요가 큰 것으로 알려져 있고요. 저희 삼성전자 Foundry에서도 특히 첨단 공정에서 가상화폐 쪽에 어떤 영향이 있는지 궁금하고요. 향후 이러한 cryptocurrency 향의 수요 전망에 대해서 여쭙고 싶습니다. 두 번째 질문은 디스플레이 쪽에서 현재 국내 회사 그리고 중국 경쟁사들이 flexible OLED 양산을 준비하고 있는데, 이러한 진입 경쟁에 대해서 어떻게 대응하실 건지, 전략에 대해서 말씀 부탁드리겠습니다.
I have two questions. The first question is for the Foundry business. It seems that there has been demand from the cryptocurrency mining side especially. I would like to ask what was the impact on especially the cutting edge process side of your Foundry business? Going forward, what is your outlook on the demand being generated from cryptocurrency mining? Second question is to the DT side. We have been hearing that a Korean competitor as well as a Chinese company is preparing to go mass production with their flexible OLED. How will you respond to the entrance of these new competitors?
Foundry에서 가상화폐에 대해서 답변드리겠습니다. 최근에 가상화폐 채굴 시장의 폭발적인 성장으로 업체들의 가상화폐 관련 주문이 크게 증가하는 것은 사실입니다. 특히 당사의 14나노 미터, 10나노 미터 공정은 가상화폐 특성에 맞는 공정과 설계 인프라를 제공하고 있으며, 특히 고무적인 것은 전력과 성능의 우위를 시장에서 보여주고 있다는 것입니다.
Regarding your first question, there has actually been an explosive growth in cryptocurrency-related demand, and that has resulted in our orders also increasing significantly from such cryptocurrency mining-related customers. Especially, it seems, our 14-nano and 10-nano processes not only have the right process but also the design infrastructure needed to support their cryptocurrency applications. What is more encouraging is actually our process technology has proven to have an advantage in serving the cryptocurrency demand.
네, 14나노, 10나노 외에도 8나노 등 신규 노드에 대한 가상화폐 고객들의 문의가 이어지고 있으며
올해 당사 파운드리 이용 고객들의 시장 점유율이 급속하게 상승할 것으로 예상하고 있습니다. 가상화폐뿐만 아니라 다양한 응용 분야 신규 고객의 증가로 올해 파운드리 전체 매출의 견조한 성장 및 특히 파운드리 시장에서 강력한 2위 달성을 예상하고 있습니다.
In addition to the 14-nano and 10-nano technologies, we're also receiving a lot of inquiries regarding new nodes such as 8-nano from such customers. We believe that our foundry customers will be increasing their market share in the cryptocurrency segment. In addition to cryptocurrency, we expect our supplies to penetrate into further applications. Driven by this, we expect that the foundry business will achieve a sound growth and a very strong number 2 position.
네, 디스플레이 설명드리겠습니다. 아까 질문하신 경쟁 환경에 대해서는 당사는 지금까지 축적해 온 중소형 OLED의 그런 기술 우위, 그리고 사업적인 리더십을 확고히 하도록 최선의 노력을 다하고 있습니다. 가장 중요한 것이 기술 차별화라고 생각을 하고 있고, 그래서 끊임없는 기술 혁신을 위해 노력을 하고 있습니다. 이를 통해서 시장의 주도권을 강화하도록 할 예정입니다. 특히, 수율이라든지 생산량 상의 경쟁사와의 격차를 더욱 확대해 나가도록 노력하겠습니다.
Regarding your second question about the display and how we plan to respond to the new competitors in the OLED market, we believe that the focus lies in the fact that we have accumulated technology leadership as well as business leadership in the mid-to-small-size OLED segment. We will leverage that. Also, we think the key lies in, number 1, gaining the technology differentiation. We will continue to innovate our technologies and use that innovative technology to maintain our market leadership, but also focus on improving our yield as well as productivity and to widen the gap in terms of productivity versus the new entrants.