Good 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 2016 third quarter earnings results by Samsung Electronics. This conference will start with a presentation, followed by a divisional Q&A session. If you have a question, please press star one, that is star and one on your phone during the Q&A. For cancellation, please press star two, that is star and two on your phone. Now we shall commence the presentation on the fiscal year 2016 third quarter earnings results by Samsung Electronics.
Good morning. This is Robert Yi. Thanks for joining our third quarter earnings call. With me representing business units are Mr. Chun SeWon, he's the Senior VP of Memory Marketing. Mr. Hur Gok, he's the VP of System LSI. Mr. [Ichamon], Vice President of Samsung Display. Mr. Lee KyeongTae, he's the Vice President of IT and Mobile Business. Mr. Yoon, he's the Senior VP of Visual Display Business. As well as we have Mr. Kim Ite, he's a VP of IR Group. Before I start, 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 it. All such statements are subject to certain risks and uncertainties that could cause our actual results to be materially different from those expressed in today's discussion. With that, let's start the third quarter results analysis.
In the third quarter, the total revenue was KRW 47.8 trillion, a 7.5% year-on-year decline. This decrease was mainly due to the Note 7 issue, despite the increase of sales in the memory and OLED businesses. The gross profit for the quarter was KRW 18.4 trillion, about KRW 1.7 trillion year-on-year decrease. The gross profit margin as a percent of sale held steady due to higher gross profits from the sales expansion of premium products in the OLED and consumer electronics businesses. Our SG&A expenditures increased year-on-year, mainly due to the recall cost related to Note 7. The operating profit decreased by KRW 2.2 trillion year-on-year to KRW 5.2 trillion. The operating profit margin declined by 3.4 percentage point to 10.9%. The earnings of the component business decreased marginally year-on-year, due to price correction of DRAM during the first half of this year.
However, on a quarter-on-quarter basis, its operating profit increased due to sales expansion of high-end products such as SSD, flexible OLED, under the stabilized ASP environment. In the SET business, earnings decline in the IM division due to the loss resulting from the Note 7 issue. The consumer electronics business continued to grow year-on-year driven by the sales growth of SUHD TVs and premium home appliance products. In this quarter, strengthening of the Korean won against major currencies such as US dollar and EUR, had a negative impact on the operating profit quarter-on-quarter. We figure it's approximately KRW 700 billion effect, mostly on the component business. Our non-operating profit was KRW 540 billion, mainly from the sales of various investments, including investments in ASML. I would like to address the business outlook. In the fourth quarter, we expect the overall earnings to improve year-on-year.
The mobile business is expected to recover its earnings to the similar level as 4Q last year, through solid Galaxy S7 sales, while earnings in the component business is projected to improve year-on-year. For the semiconductor business, we expect the earnings to improve due to the sales expansion of the V-NAND-based SSD. For the display business, we expect the earnings to improve also from LCD business recovery year-on-year. However, its quarter-on-quarter earnings will decline due to the reduction of flexible OLED panel shipments from discontinuation of the Galaxy Note7. For 2017, we will focus on solid earnings growth through the normalization of mobile business while improving earnings from the component businesses with expansion of OLED panels as well as V-NAND products. Regarding our memory business, we expect the earnings in NAND business will increase significantly year-on-year, led by the supply expansion of the highly profitable V-NAND.
We will strengthen our technology leadership by expanding 64-layer V-NAND as well as 1X nanometer DRAM. Also in System LSI business, we will enhance profitability by maintaining a high utilization rate for the 14 nano and above capacities while expanding the leadership position in the 10 nano process technology. For the OLED business, we expect to achieve significant earnings improvements year-on-year. We plan to expand the supply of high-end flexible OLED panels to external customers based on unrivaled technology, leadership, and capacity. With regard to the IM business, our top priority will be regaining consumers' confidence in expanding sales of the new flagship products with a differentiated design and innovative features. Also, we will further strengthen our competitiveness through continuously enhancing solution capabilities such as Knox, Samsung Pay, cloud systems, and artificial intelligence.
For the TV business, we will continue to solidify our leadership in the premium market based on quantum dot technology. Regarding the home appliance business, we will focus on improving earnings by expanding sales of premium products and strengthening the B2B business. Now I would like to comment on our capital expenditure plan. We expect the total capacity expenditure for this year to be at a record high of over KRW 27 trillion. In particular, we are focusing on investments in OLED business with a significant demand increase in 2017 and a strong demand for V-NAND. The CapEx for the semiconductor business will reach KRW 13.2 trillion, with about eight to two split between memory and System LSI. For the display business, the expenditure is expected to reach close to KRW 11 trillion, which is more than double from that of the last year.
During the third quarter, we invested KRW 6 trillion in CapEx, including KRW 3 trillion for the semiconductor and KRW 2.5 trillion for the display division. This brings the cumulative capital expenditure at the end of the third quarter at (KRW 14.7 trillion). We've completed the $10 billion special buyback and cancellation program last month as planned. We invested approximately KRW 11.4 trillion during the 4 phases, and we were able to repurchase and cancel 6.6 million common shares and 2.3 million preferred shares. Currently, we are reviewing the overall shareholder return policy, including how we will utilize the remaining allocated capital from last year's free cash flow. At this point, we are leaning toward using the allocated capital from unused portion from 2015 for share buybacks and cancellation. However, we will update you on the details of overall shareholder return policy by end of November.
Before the presentation of each business unit, I would like to share with you several data points relating to the key business areas. In the semiconductor DRAM for the third quarter, our bit growth came in around mid-20% growth, while we saw ASP decline of mid-single digit. For the fourth quarter, we expect the market DRAM bit growth to be low-single digit, and we expect our bit growth to be flat QOQ. This will bring 2016 annual market bit growth at high-20%, and our bit growth should be in mid-30%. For NAND Flash, in the third quarter, our bit growth came in at low-20%, and we saw ASP decline of low-single digit. In Q4, we expect the market NAND bit growth to be about 10%, and our bit growth will be mid-teens in Q4.
This brings the total year-over-year bit growth of NAND Flash about mid-40%. For handset business, total sales of handsets in the third quarter was about 89 million units, and we also had 6.5 million tablet sales. The blended ASP in the third quarter came in at high 180s with a mix of smartphone within the total handset shipment at about mid-80%. Q4, we expect our shipment of handsets to be similar to that of the third quarter, and we expect to see an increase of tablet sales in Q4. Blended ASP for our handsets in Q4, we expect it to decline slightly. The mix of the smartphone within handset will remain at about mid-80%.
For TV business, sales of our LCD TV in Q3 was roughly 11 million units. Now I'll turn the call over to gentleman from the business units to present their specific outlooks and the results and the outlook. Thank you.
Good morning. This is SeWon Chun from the memory marketing team. In the third quarter, the demand for memory increased remarkably due to seasonality and new smartphone launches. The memory division achieved outstanding earnings growth by actively responding to increased demand for high-density mobile server products, including V-NAND. Front-end, the supply shortage has intensified due to continued strong demand for mobile storage and SSD. Demand for mobile storage, such as EMCP and eMMC, surged due to expanded adoption of high-density products over 64 GB through solid demand from Chinese smartphone makers. For server SSD, where demand is concentrated on Samsung products, demand for high density over 8 TB increased due to the expanding transition of 10 and 15K RPM HDD to enterprise SSD.
We focused on addressing the demand for mobile storage over 64 GB and high-density enterprise SSD, such as 8 TB and 16 TB, as well as on expanding supply of PC NVMe over 256 GB. We achieved outstanding improvement in profit by continuing migration to 3rd generation V-NAND, which is continuously securing profitability. For DRAM, mobile demand remains strong, driven by expanded adoption of high-density mobile DRAM due to smartphones with higher specifications. High-density server demand for data center also increased, led by increased adoption of the Broadwell platform. For PC, following the previous quarter, price continued to increase under strong seasonal demand. Demand for 20nm products increased due to the supply and demand imbalance for some applications. We focused on responding to this increased demand by improving process efficiencies and utilizing available resources.
By doing so, we achieved outstanding improvement in earnings compared to the previous quarter, with shipment exceeding our initial forecast. Next, I will comment on the memory market outlook and our strategy for the fourth quarter. NAND demand will continue to remain strong, driven by increasing mobile contents and server SSD adoption. Supply and demand conditions will be tight as the strong demand will continue for SSD in all segments, driven by the launch of all-flash array systems equipped with products over 8 TB. Also, increasing demand for high-density products over 256 GB will contribute to this result, led by accelerated increase of PC SSD attach ratio and expansion of high-density NVMe adoption. For DRAM, although there will be some impact for low year-end seasonal demand, the overall market situation is expected to be favorable.
This is because of demand for mobile remaining solid, thanks to new smartphone launches, continuous strength in 32 GB and 64 GB server DRAM demand, led by expanded transition to Broadwell platform, and increased 8 GB attach ratio for PCs. We will focus on improving earnings by focusing on a profit-focused product mix based on our unrivaled competitiveness of V-NAND and 20nm DRAM. Next, I will comment on our strategy for 2017. NAND overall demand will increase due to content growth in all applications. Especially, adoption of high-density mobile storage over 64 GB is expected to increase due to higher specifications of smartphones, such as dual camera. Demand for server SSD will remain strong due to an increasing portion of high-density data center products and expanding adoption of all-flash array in enterprise.
Also, as SSD adoption in PC continue to increase, its attach ratio for notebook is expected to exceed 50%. Although demand is expected to remain solid in 2017, the industry's 3D NAND ramp-up status will be a key variable for supply and demand. We are focusing on investing in V-NAND in order to actively respond to the growth demand for high-density storage, which has growth potential, and we will concentrate on premium markets such as high-performance server SSD. Also, in addition to highly profitable 48-layer V-NAND, we will strengthen technology leadership and secure differentiated profitability by focusing on 64-layer process migration. For DRAM, supply and demand is expected to be balanced, led by solid growth of demand. We project increasing adoption of mobile DRAM over 6 GB and strong demand for high-density server DRAM due to new server platform launches and expansion of cloud services.
In terms of supply and demand, we expect some uncertainties will remain in the first half, such as industry supply expansion due to process migration. We will focus on maximizing profit through maintaining the basis of investment and supply management, taking into account the market situation. We will strengthen our product and market leadership by supplying high performance, low power, high density products and by continuing cost reduction through 1x nm ramp-up. Moving on to the System LSI business. In the third quarter, we have achieved solid earnings due to strong 14 nanometer foundry demand, expanded shipment of mid to low-range SoCs, and consistently increasing sales of image sensors in China. In the fourth quarter, we expect the demand to remain solid, mainly for LSI products, despite the seasonal component inventory adjustment in the market.
We have started the industry's first mass production of 10 nanometer logic process and will commence shipment within the year. We will work tirelessly to maintain our leadership in the cutting-edge process technology. In 2017, we will begin mass production of 10 nanometer products in full scale, diversify 14 nano products, customers, and applications, and further differentiate the key technologies for LSI products such as image sensors and OLED DDIs. By doing so, we will strive to ensure our continuous growth. Thank you.
Good morning. This is Chang Lee from the planning department of Samsung Display. During the third quarter, total earnings for the display business improved significantly QOQ. This was driven by increased earnings from OLED panels, as well as increased shipments in large size LCD TV. For the OLED business, third quarter earnings improved sharply QOQ, with increased shipments of high-end products such as flexible display, based on the strong demand for flagship smartphone. For the LCD business, our third quarter earnings turned a profit on the stabilized ASPs led by favorable supply-demand situation. We have strengthened profitability with improved yield and continued cost reduction, as well as expanded value-added products, especially from the large size UHDs. In the fourth quarter, on the strong seasonality of the smartphone market, we expect OLED demand to rise constantly as major set makers pursue product differentiation in the form of hardware specification.
Under these circumstances, we expect to produce solid results through actively addressing demands of flagship products, as well as enhancing product mix. In the fourth quarter, UHD TV market growth and size migration towards larger screens are expected to continue under stable panel pricing. In preparation for these market conditions, we will make the best efforts to improve sales and profits by focusing on cost reduction and yield improvement, as well as expansion of value-added products such as ultra-large size, high resolution, and curved panels. I would like to present the outlook for the display market and our core strategies for 2017. For the OLED business, we'll strive to achieve a significant improvement of earnings YOY through expanding supply of the flexible display to address major smartphone customer demands.
Although we expect competition to intensify in the LCD industry under the capacity expansion, we also expect that the market for premium TV panels, such as UHD and ultra-large size TV panels, will continue to grow. Under these circumstances, we will make best efforts Strengthen profitability by improving competitiveness of value-added products, focusing on UHDs and larger sized TVs, as well as expanding a portion of differentiated products, such as frameless and curved TVs. Thanks for listening.
Good morning, everyone. I'm Kim Taeyu from the IT and Mobile Communication Business. I would like to present our third quarter business results and the future outlook for the IM business. Our earnings for the mobile communication business declined significantly Q on Q due to the Galaxy Note7 issues. Due to the strong sales of our existing models, including the Galaxy S7 and S7 edge, our smartphone shipments have only slightly decreased Q on Q. For the network business, our operating profit improved from the previous quarter, mainly because of supply expansion of product for new frequency bands to our major partners. Let me move on to the outlook of the fourth quarter. Market demand for both smartphone and tablet is expected to increase Q on Q as we enter the year-end peak season.
As for the mobile communication business, we will push forward to achieve the business earnings at a similar level to the same period in the previous year by focusing on the sales of the Galaxy S7 and S7 edge, which have shown continuous demand and stable profitability. We will aim to increase our smartphone shipment Q on Q with the newly introducing models in the mid to low-end segment. As for the network business, we will focus on improving our business performance by leveraging the LTE expansion in the emerging markets and extending supply of product for new frequency band. I would like to address the outlook for the year 2017. We are expecting some difficulties until the first quarter of 2017, but we will achieve a business turnaround with the release of our new flagship smartphone. We will continue our differentiation in hardware, including design and camera.
In terms of software and services, we will expand the service coverage and available models for the Samsung Pay and Cloud, while introducing artificial intelligence-related service to provide new values to our customers. With these efforts, we will do our best to regain trust from our dear customers and get our business back on track as soon as possible. Thank you for listening.
Morning, I'm Yoon Lee from Visual Display Sales and Marketing team. For the TV business in the third quarter, global TV demand decreased compared to the same period last year due to economic slowdown in major emerging markets, including Latin America. Under such market conditions, our performance improved year-on-year by enhancing promotional activities in various local markets, preparing for the upcoming peak season, and by expanding the sales of premium products such as SUHD and curved TV. In particular, significant sales increase in North America and positive outcome from Latin America also contributed to such improvement in the third quarter. Our efforts in Latin America started to show tangible results as we have increased operational efficiency and strengthened proactive cooperation with our channel partners since last year.
For the digital appliance business in the third quarter, although demand in North American market continued growth momentum, global market demand declined year-on-year due to the slow market growth in China, the impact from continued economic downturn from emerging markets. Despite these circumstances, earnings improved compared to the previous year, led by increasing sales of premium innovative products such as WindFree™ air conditioner and Chef Collection kitchen appliances. Especially, strong sales in Korea and Southwest Asia market greatly contributed to the earning growth. For the TV market in the fourth quarter, as year-end peak season is around the corner, we expect to see an increase in demand quarter-on-quarter. Due to the continued economic recession in Latin America, we forecast a decrease in global TV demand year-on-year.
In response, we will maintain solid performance and set a new record for the 11th consecutive year global number one position by expanding the sales of strategic products based on accumulated expertise in seasonal promotion activities. As for the digital appliance business, in order to prepare for the upcoming year-end peak season, we will strengthen our existing partnership to maximize opportunities and increase sales for our premium products, largely in the North American markets. At the same time, we will expand investment in B2B business and reinforce our online marketing to actively create new market opportunities and increase sales.
For the TV business in 2017, we will set up a foundation for sustainable growth and process strategy that encompasses existing sales opportunity and new demand by launching innovative products based on quantum dots, the core material for the next generation of TV display, and by expanding premium lineups in UHD and large screen TV. In order to ensure continued growth and improve profitability in 2017, we will diversify our sales structure to focus on high value-added B2B products such as gaming monitor, LED, and outdoor signage, and we'll expand sales through online channel, which is currently showing growth. As for the digital appliance business in 2017, we will continue to produce innovative premium products, as well as products that uniquely reflect different lifestyles of local consumers in order to improve our performance and capitalize on new demand in the market. Thank you.
Yeah. Thank you. This will complete the part of the presentation by the management. Now we'll move on to questions and answer session. As we have done in the past, we will do the consecutive interpretation for this session. Please understand that this may take a little longer, but this is the best way to get the most accurate information delivered to you. Again, I would like to ask you to refrain from asking questions that were already asked from other individuals and ones that involving data points, which I provided as part of the presentation. Okay? Let's get the Q&A going.
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 questions will be provided by Ms. Claire Kyung Min Kim from Daishin Securities. Please go ahead, ma'am.
My first question is about the CapEx plans for next year. This year, you focus your CapEx plans, especially around the 3D NAND capacity in Hwaseong. Looking towards next year, what will be the size and timing of the CapEx investments for Pyeongtaek? Also, what are your plans next year for operation of the Hwaseong capacity, and what are your plans about CapEx investments with DRAM next year? Next year, DRAM bit growth is expected to be in the 20% range. Within that context, what will be your investment in DRAM cap capacity? First, to answer the question regarding CapEx for V-NAND, we are expecting that next year, the demand concentration will continue upon us in terms of the high density, high performance SSD, as well as high capacity mobile storage. We will continue to actively pursue investments, expansion of capacity in V-NAND.
Also regarding our Pyeongtaek campus, I think this is the first time we're officially mentioning of our plans there, but our schedule at Pyeongtaek is to start mass production at Pyeongtaek of NAND from mid-2017. According to that schedule, our plan is to complete the fab construction before the end of this year. Regarding line 17, our schedule there is to start mass production within the first half of next year, and we're currently in the process of bringing in the equipment to hit that schedule. Of course, the actual production and supply will be flexibly managed depending on how the market situation as well as customer demand folds out next year. That would also have impact on the bit growth of our supply or our shipments next year.
그리고 2017년 DRAM의 bit 성장률 관련해서는 현시점에서 구체적인 숫자를 말씀드리기는 어렵지만 올해 DRAM 증설이 없었던 점을 감안해 보신다면 당사 성장률도 둔화될 것으로 예상되고, 시장 성장 수준을 따라갈 것으로 생각합니다. 다시 한번 말씀드리지만, 저희는 지속적으로 마켓 쉐어 확대가 아닌 수익 극대화에 주력하고 있으며 따라서 투자나 공급 모두 시황 및 수급 상황을 고려하여 운영할 계획이고, 미세공정 전환에 더욱 집중하여 제품 경쟁력 강화를 지속 추진하겠습니다.
Regarding the DRAM, it's difficult for us to talk about exact DRAM bit growth that we're expecting from our sides next year. Given the fact that we haven't done much investments in DRAM this year, we are expecting our growth rates to come down and be in line with market bit growth in DRAM next year. Once again, as we have always mentioned, regarding DRAM, our focus is not to increase our market share, but to maximize our profits. Our investments as well as production will also be flexibly managed according to how the market unfolds.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 NH투자증권의 이세철 님입니다.
The next question will be presented by Mr. Peter Se-cheol Lee f rom NH Investment Securities. Please go ahead, sir.
NH투자증권입니다. 앞에 질문 관련해서 추가적으로 반도체 관련 질문드리겠는데요. 스피치에서 수급 전망에 대해서 설명해 주셨는데, 특히 '17년 수급 전망 중에 상반기 불확실성이 있다고 언급을 하셨는데요. 어떤 이유가 있는지 추가적으로 설명 좀 부탁드리겠습니다.
I have a follow-up question to the previous question, which is about semiconductor memory market outlook for next year. You did mention about the demand and supply outlook for next year during the speech. I'm particularly noticing that you've mentioned uncertainties in demand and supply situation possible in the first half. Can you give us some details of why you're expecting uncertainty?
불확실성이라고 말씀드린 부분을 좀 더 자세히 설명드리겠습니다. 스피치에서 말씀드린 바와 같이 '17년 수급은 전반적으로 견조할 것으로 예상하고 있습니다만, 올해 주요 응용처들의 채용량 증가가 예상 대비 크게 높아지면서 수요 강세를 보였기 때문에 내년 수요 증가세는 일부 둔화될 것으로 예상하고 있습니다. 특히 스마트폰이라든가 서버 같은 주요 응용처의 콘텐츠 증가가 예상 대비 둔화될 수 있는 가능성을 리스크로 생각하고 있습니다.
To give you some details of why we expect possible uncertainties in the first half of next year is that overall, as we mentioned during the speech, overall demand next year in 2017, we're expecting that to remain very strong. Given the fact that this year, specific applications have increased their adoption more than what we had expected relative to this year, next year, the increase rates may be relatively slower. That is why it's particularly related with smartphone or server adoption. We think that that is a potential risk versus a high adoption growth rates this year.
결론적으로 '17년은 균형적인 수급 하에 건전한 성장이 예상되지만 앞에서 말씀드린 수요 감소하고 공급 증가에 따른 수급 불균형의 리스크도 동시에 같이 상존하고 있다고 생각합니다. 당사는 이에 수요 공급의 불확실성을 고려한 시나리오별 전략을 수립해서 어떠한 경우에도 차별화되는 제품 경쟁력을 바탕으로 수익성 중심의 제품 믹스 운영에 더욱 주력해서 지속적인 실적 개선을 추진하겠습니다.
overall, looking upon next year, we do expect that the market will have a balanced supply and demand situation and will continue to record sound growth. We also think that there are uncertainties possible in demand and supply situations. In response to that, we have prepared scenarios depending on different demand supply situations. We will implement the right scenarios depending on the market situation. We will focus on leveraging our competitive products and also manage our product mix based on profitability.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 CIMB증권의 이도훈 님입니다.
The next question will be presented by Mr. Dohun Lee from CIMB. Please go ahead, sir.
네, 질문 기회 감사드립니다. IM 부분 질문드리겠는데요. 회사에서 최근 보도자료를 통해서 Galaxy Note7 판매 중단으로 인한 기회손실이 한 4분기에는 2조 중반, 내년 1분기에는 1조 정도라고 밝혀주셨는데 회사가 구체적으로 어떠한 가설과 전망을 근거로 하시는지 무선 사업과 다른 부품 영역으로 나눠서 좀 구체적으로 알려주시면 감사하겠고요. 추가적으로 Galaxy Note7 교체 수요 중 국내 경우에 상당 부분 삼성의 Galaxy S7과 Galaxy S7 edge 모델로 대체되고 있다는 언론 보도가 있었는데, 혹시 이런 부분이 회사가 밝힌 기회손실 규모를 어느 정도 줄여줄 수 있을 것으로 보시는지 말씀해 주시면 감사하겠습니다.
I have two questions related with the IM Division. First of all, recently through press releases, the company had stated that the opportunity loss due to the discontinuation of Note 7 would be around the range of mid 2 trillion KRW in the fourth quarter and an additional mid 1 trillion KRW next first quarter. Could you explain what were the outlook as well as assumptions that were behind such projections? Also, can you divide that into direct impact on the IM Division versus the impact on other business divisions that you have? Second is, there were recently reports by the media saying that a large part of the Note 7 replacement demand is, or Note 7s are being replaced by S7 or S7 edge. Do you think that this would possibly reduce the opportunity loss that you have projected previously?
Before we answer Note 7 related questions, I would like to inform you that Mr. Shin Jong Kyun, President, IM Division, is going to make a special report during the extraordinary shareholders meeting. He wants to share the steps that were taken to investigate the cause of the Note 7 issue. He will also conduct Q&A sessions within that EGM to address shareholders concerns. Because of this, we will not cover any Note 7 issues except the financial aspects, which is the question that was just raised. The content of Mr. Shin's report will be shared with everyone as soon as it becomes available, which I assume to be within the next couple of hours. I appreciate your understanding and cooperation.
4분기 2조 중반대에 저희가 시장에 발표한 실기 cost의 대부분은 IM 관련된 내용이고요. 한 5천억 정도 언저리가 부품 관련된 실기 영향으로 생각됩니다.
To give further answer to your question, within around mid KRW 2 trillion range of opportunity loss that we announced to the market that we expect in the fourth quarter, most of it is IM directly related. Perhaps around close to KRW 500 billion is related with the component business.
제가 이렇게 시장에서 분석한 자료들을 봤을 때, 2조 정도 규모에 되는 계산을 추정하는 숫자들이 그렇게 많지 않은 것 같은데, 제가 볼 때는 아마 시장에서 추정하는, 뭐랄까, 이익의 기준이 조금 다르지 않나라는 생각은 들고요. 저희 입장에서는 실기가 발생하지, 매출이 발생하지 않더라도 많은 고정 비용은 실제적으로 발생하기 때문에, 이 실기에 따른 손익 영향은 공헌이익률로 봐야 되지 않나라는 기준으로 저희가 산정해서 시장에 공유했습니다.
I've also been looking at the analysis that's been produced by the market. I don't see many of them presuming an opportunity loss around the KRW 2 trillion ranges. Perhaps this is because a different definition of earnings are being used by the market than what we are using. We believe that even if the revenue is not incurred because we still need to pay considerable amount of fixed costs, that the standard to be used here is the contribution margin.
네, IM부문 이경태 상무입니다. 두 번째 질문은 제가 말씀드리겠습니다. 현재 노트7 단종을 하고 나서 S7이나 다른 제품으로 지금 판매를 늘리고 있습니다. 특히 이제 S7의 경우에는 3분기에도 견조한 판매세를 유지했고, 연간 판매도 전작 대비로는 크게 상회할 것으로 그렇게 전망이 되고 있습니다. 이는 갤럭시 S 시리즈 중에는 당해년도 출시 판매 기준으로는 최대 판매량을 달성할 수 있을 것으로도 기대를 하고 있습니다. 또한 중저가에 해당되는 갤럭시 A하고 J 시리즈도 3분기 판매량이 전분기 대비해서 오히려 증가를 하고 있어서 아까 질문 주신 대로 다른 대체 모델들이 노트7의 이슈 부분들을 많이 할 수 있을 거라고 그렇게 기대를 하고 있습니다.
To answer the second part of your question, I'm KyeongTae Lee of the IM division. Regarding your second part question of many of the Note7s being replaced with S7s. In the third quarter, actually, we've seen our S7 sales to maintain a strong sales. We think that the S7 will be able to greatly surpass the previous Galaxy S series in terms of full year sales. Actually, in all of our Galaxy S series, the S7 probably will be recording the highest sales in the launch year. Also, in the mid to low range, our Galaxy A and J series sales have actually increased quarter-on-quarter. We are seeing these other substitute models taking on the Note7 space.
다음 질문 받겠습니다.
다음으로 질문해 주실 분은 노무라증권의 정창원 님입니다.
The next question will be presented by Mr. Jung Changwon from Nomura Securities. Please go ahead, sir.
네, 감사합니다. 지난달에 Elliott이 주주 제안을 여러 가지를 했습니다. 특별배당, 지배구조 변환 등 여러 가지 제안을 했었는데요. 혹시 회사에 어떤 반응이 있으신지, 그리고 좀 전에 11월 정도에 주주 환원에 대해서 발표를 하시겠다는 말씀하셨는데, 기존에 작년 말에 제안했던 것과는 또 차원이 다른 어떤 다른 내용들이 포함될 가능성이 있는지 등등에 대해서 좀 답변을 해주시면 감사하겠습니다.
I have a question about last month, Elliott made several proposals as a shareholder, including special dividends and changing of the company's governance structure. Does the company have any responses to offer on that? Also, during the speech, you mentioned that the shareholder return plan will be announced around mid-November. Is there any possibility that we'll see different elements than what we saw last year?
네, 말씀하신 그런 제안 사항들에 대해서는 지금 이사회와 경영진이 신중히 검토하고 있습니다. 특별히 주주 환원 관련된 부분만이 아니라 제안한 모든 사항에 대해서 검토하고 있고, 말씀하신 대로 주주 환원 정책이라는 것은 저희는 한 번 하고 끝나는 게 아니고 지속적으로 개선해야 된다고 생각하는 부분이 있기 때문에 이런 부분을 포함해서 전반적으로 검토를 하고, 말씀드린 대로 주주 환원을 포함해서 전반적인 제안 사항들에 대한 방향성을 11월 안에 정리해가지고 시장과 communicate 할 수 있도록 지금 준비 중에 있습니다.
Regarding the proposal, the BOD, the board meeting, as well as the management team is very carefully considering and reviewing the proposals, not only about the shareholder return, but also all aspects of the proposal that was made. We believe that shareholder return is not a one-time event, that we need to continuously improve our shareholder return, therefore, from that context, we are considering the proposal. As we mentioned, we will be finalizing the plan regarding not only shareholder return, but the overall aspects of the proposal, plan to communicate the plan within November with the market.
한 가지만, 지금 말씀하신 내용의 번역한 내용에 대해 수정을 하면, 방향성을 정리하기 때문에 저희가 11월에 제공할 수 있는 것은 어떤 확정적인 그런 안은 아닙니다.
To correct the translation, what we will be communicating will be the direction of our not only shareholder return, but the overall proposal, therefore, what we will be communicating within November would not be the finalized plan.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 Bank of America Merrill Lynch의 Mr. Simon Woo입니다.
The next question will be presented by Mr. Simon Woo from Bank of America Merrill Lynch. Please go ahead, sir.
네, 저는 LSI 비메모리 반도체 관련해서 질문드리겠습니다. 최근에 10나노 양산도 발표를 하셨고, 또 우리가 차세대 성장 모멘텀으로 여러 가지 AI라든지 IoT라든지 관련된 비메모리 쪽 전략들이 좀 더 눈에 띄는 것 같습니다. 좋은 현상인 것 같은데요. 근데 최근에 이렇게 전반적인 테크 트렌드를 보면 10나노라든지, 7나노, 즉 차세대에 굉장히 비싼 이 테크놀로지를 필요로 하는 그런 제품의 군들이 점점 줄어드는 게 아닌가, 그런 생각이 많이 들거든요. 그래서 우리가 추구하는 이 10나노가 과연 하이 퍼포먼스를 추구하는 거지만 어느 어플리케이션에 활용이 좀 더 많이 될 수 있는지, 즉 10나노가 진짜 원가 경쟁력이 바로 14나노 대비 확보될 수 있는지도 좀 의구심이 들거든요. 그래서 저의 질문은 10나노 또는 7나노가 구체적으로 어느 제품에 확실하게 사용될 수 있고, 어느 시점 가면 기존의 14나노 대비 원가 경쟁력이, 칩당 원가 경쟁력을 보일 수 있는지 답변해 주시면 감사하겠습니다.
My question is related with the LSI non-memory division. I also welcome how we're hearing more about areas such as AI or IoT as a part of the business plan, which is related with the non-memory side of the business. However, looking at the overall tech trend, I do notice that actually the products that would need the relatively expensive technology, such as 7 or 10 nano, is decreasing overall in the overall tech trend. My question against that backdrop is, what are the specific applications that would need such high performance 10 nano or 7 nano technology. When do you think the 10 nano or 7 nano technology will per chip become cost competitive versus the 14 nano?
질문하신 내용에 답변드리겠습니다. System LSI의 선단 공정, 즉 최첨단 공정은 말씀하신 대로 상당히 원가가 많이 드는 공정입니다. 따라서 ROI 측면으로 봤을 때 충분한 ROI를 뽑을 수 있는 그런 프리미엄 제품, 즉 고부가가치 SoC 제품 등에 최우선적으로 사용이 됩니다. 그 후에 yield ramp up되고 저희가 fab에서 충분히 cost effective한 solution을 제공할 수 있는 생산성이 도달했을 때 보편화된 제품으로 migration 되게 됩니다. 현재 14나노가 저희가 작년부터 양산을 시작해서 올해 2년 차가 되고, 내년에는 3년 차가 되는데, 14나노 제품은 초기에 프리미엄 제품에 적용이 됐다가 작년 중반부터 서서히 보급형 제품에 파생이 됐고, 올해도 역시 보급형 제품에 더 많은 제품 수가 증가되고 있습니다. 10나노도 역시 이러한 트렌드로 움직일 것이라고 예상하고 있습니다.
In the case of cutting edge process technology for the System LSI, the cutting edge technology, as you mentioned, is a relatively high-cost process. What usually happens is that the first productions are used for the premium applications where we can still guarantee sufficient ROI. For example, the high value SoCs are where the first cutting edge process technology are used. As the yield ramps up and the fab is able to produce more cost efficiently, then the supply migrates to other mass applications. An example would be our 14 nano process, which we started mass production last year. We're in year two. Next year will be year three. Initially, the 14 nano was used for the premium products and started to go for the more mass applications from mid last year.
This year we're seeing an increase of more mass applications taking on our 14 nano products. We think that the same migration process will happen to our 10 nano technology.
7나노에 대한 질문은 올해 계속 나오는데요. 저희 입장은 기존과 똑같습니다. 7나노 readiness는 되어 있고, 경제성과 ROI, 그리고 어떠한 제품을 채택할 것인가가 의사결정이 되면 전사적으로 전략적으로 추진할 예정입니다. 이상입니다.
Also regarding 7 nano, which you mentioned, as we have always mentioned previously, we are ready to go 7 nano. The decision is the economics, the ROI, and also whether their products or what products would be taking on 7 nano. Once those business decisions are made, we are technically ready.
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.
Yes. Hi, good morning. Thanks for taking my question. The first one relates to DRAM. You just indicated you intend to grow next year more or less in line with the market. At the same time, considering that supply is still tight, are there any parameters that you would consider to potentially add any wafer capacity in DRAM next year? And if so, when could you actually do that within either the Pyeongtaek site or Line 17? Thank you.
DRAM 관련 질문이 있습니다. 앞서서 답변을 통해서 내년 DRAM의 성장은 시장 수준을 계획을 하고 있다라고 말씀을 하셨지만 공급이 타이트한 것을 감안을 했을 때에 어떤 parameter들이 나오면 잠재적으로 DRAM capa를 내년에 추가를 하실 수도 있는지요? 그리고 평택이든 17라인이든 만약에 capa를 추가하기로 하신다면 언제 추가가 가능한가요?
지속적으로 DRAM에 대해서 말씀드리지만 저희는 DRAM은 공정 전환 중심으로 비트 증가에 주력하고 있습니다. 현재 추가 증설 계획은 없으나 앞서 말씀드린 대로 시황에 따라서 신속 유연하게 대응한다는 투자 원칙에 따라서 지속 검토해 나갈 계획입니다.
Regarding the DRAM, once again, our bit growth will be focused more on process migration. As we have mentioned, we will be focusing on quickly and flexibly responding to the market environment as it unfolds.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 Goldman Sachs의 Marcus Shin입니다.
The next question will be presented by Mr. Marcus Shin from Goldman Sachs. Please go ahead, sir.
네, 질문 기회 주셔서 감사드립니다. 저는 IM 부분에 대해서 추가적으로 질문해 보고 싶은데요. 노트 7 단종 이후에 S7이랑 S7 Edge 등 판매 모양이 좀 어떤지 궁금하고요. 일부에서는 지금 Galaxy S8의 조기 출시를 예상하기도 하는데 관련해서 어떤 계획 갖고 계신지 말씀 부탁드리겠습니다. 감사합니다.
I have two questions related with the IM. One is that, what are you noticing in terms of sales trends for the Galaxy S7 and the Galaxy S7 edge since the discontinuation of Galaxy Note7? Also, some are talking about a possible early launch of the Galaxy S8. What are your plans regarding that? Regarding the Galaxy Note7, we don't see any impact of the Galaxy Note7 discontinuation on our other product demands. As I previously mentioned, the Galaxy S7 sales trends remain as strong in the third quarter, on a full year basis, it will greatly surpass the sales of its previous model. The sales on our mid to low-end models are also strong. The second question about the early release, possibly that's been talked about of the next flagship model, the Galaxy S8.
It's difficult for us to talk about a model that we have not yet launched, our basic approach is that we will launch it after a thorough verification and once safety is guaranteed.
J.J. Park. The next questions will be presented by Mr. J.J. Park from JPMorgan. Please go ahead, sir.
(Dr. Bisnis), first of all, the new technologies for DRAM, that'll be 1x nm, for NAND, that will be 64-layer. These new technologies, how much in terms of cost as well as productivity improvements do you expect versus existing technology, can you quantify that change or difference? The second question regarding the System LSI side is, currently, how much of a yield are you seeing on your 10nm production? During the previous last quarter's conference call, you mentioned that you're planning to use EUV technology for the 7nm. I guess since then, the industry trend is to not use EUV for 7nm, I'm wondering if you've changed your strategy as well. It's difficult for us to talk about specific costs or productivity on products that are not yet even in mass production.
For DRAM, the 1x nm went into mass production in the third quarter, and we're in the process of ramping that up. For the NAND, the 64 layer, the target is to start mass production during the fourth quarter, and to start to ramp that up during the first half of next year. Regarding the System LSI, we cannot give you the exact internal yield that we're seeing on the 10nm, but I can say that the yield is according to our plan, what we had expected and planned for. The current plan is to have that commercially adopted on the flagship model next year. The 7nm, we still plan to use EUV, and we're going to maximize the advantage of the EUV technology so that we have improvements in terms of performance, power, as well as scalability, which are the key features of semiconductors.
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 기회 주셔서 감사합니다. 저는 OLED 투자와 관련해서 좀 여쭤보려고 하는데요. 말씀하신 것처럼 지금 중소형 OLED 패널에 대한 수요가 스마트폰 업체들 중심으로 해서 굉장히 크게 증가하고 있는 것 같은데, 저희가 지금 진행 중인 Capa 증설 이외에도 추가적인 Capa 확충이 필요할 것 같습니다. 그런데 상대적으로 공간은 좀 부족해 보이거든요. 그래서 추가적인 OLED Capa 투자 계획하고 그다음에 공간 확보 계획은 어떻게 되시는지 말씀해 주시면 감사하겠습니다.
I have a question related with OLED related investments. As you mentioned, the demand especially for the mid and small size OLED panels are increasing quite significantly, especially driven by the smartphone makers. In that context, I'm expecting that you will probably need additional investments in OLED capacity in addition to what you're currently investing in. Can you give us your plans of additional OLED investments as well as in terms of your space plans? Because I see that you may have not enough space for the additional expansions necessary.
저희는 앞으로 OLED 패널에 대한 시장 수요가 앞으로도 꾸준히 증가하고, 특히 플렉서블 제품 중심으로 시장이 성장할 것으로 전망하고 있습니다.
Our outlook in terms of market demand is that market demand for OLED panels will continue to increase, especially around flexible panels.
그래서 이러한 시장 수요를 대응하기 위해서 적기에 선제적인 투자를 진행해서 현재 경쟁 우위를 계속 더 강화해 나갈 예정입니다.
Our approach to investment is to make timely and preemptive investments so that we are able to maintain our competitive advantage.
리소스 관련해서는 저희가 시장하고 또 고객 니즈에 따라서 저희 보유하고 있는 리소스를 전략적으로 운영해서 대응해 나가도록 하겠습니다.
We plan to strategically utilize the resources that we currently have to respond effectively to market and customer needs.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 미래에셋대우증권의 도현우 님입니다.
The next questions will be presented by Mr. Do Hyun Woo from Mirae Asset Daewoo. Please go ahead, sir.
안녕하세요. 미래에셋대우증권 도현우입니다. CE 부문 질문 좀 드리겠는데요. 최근에 CE 부문 이익이 과거보다 레벨업이 많이 된 것 같습니다. 여러 요인이 있겠지만 고부가가치 제품인 퀀텀닷 TV 판매가 잘 되는 것도 이유인 것 같습니다. 퀀텀닷 TV 판매 동향이 최근에 어떻게 되고 있는지, 그리고 내년 판매 목표는 어떤지 궁금합니다. 그리고 CE 부문 이익 증가가 일시적이다라고 보고 있는지, 아니면 구조적인 개선이라고 보는지가 궁금합니다.
I have a question related with the CE business. Recently, the CE business's earnings has, I think, moved up to the next level. I think a main factor behind that is the strong sales of high value add products, especially the Quantum Dot TV. In that context, my first question is, what are the recent sales trends you're seeing of the Quantum Dot TV, and what are your sales targets, for example, next year? Second is, do you think that this enhancement of earnings for the CE division is temporary, or do you think this is more of a structural nature?
첫 번째, 퀀텀닷 판매 동향에 대해서 말씀을 드리겠습니다. 아시다시피 퀀텀닷에 기반한 SUHD TV는 저희 최고 라인업으로 3분기 판매량은 전년 대비 한 60% 성장을 했고, 연말 성수기가 되면서 4분기 판매량은 더 늘어나서 연간 판매량은 전년 대비 한 2배 수준으로 늘어날 것으로 전망이 됩니다.
Regarding the sales trends of the Quantum Dot TV, the SUHD TV that's based on the quantum dot technology is having the top-tier lineup, third quarter sales of the SUHD TVs increased 60% year-over-year. We think that there will be additional growth in the fourth quarter, which is a peak season. On a full year basis, we're expecting the sales to double versus the sales last year.
퀀텀닷은 밝기, 컬러, 내구성 등 측면에서 보면 기존 디스플레이의 여러 가지 한계를 극복한 차세대 TV의 핵심 소재로 많이 떠오르고 있고요. 현재 차년도 판매 목표는 수립 중에 있어서 구체적인 숫자를 언급하기는 좀 어렵겠지만, 당사는 17년에도 퀀텀닷 기반의 제품 혁신을 통해서 프리미엄 시장의 리더십을 지속 유지해 나가도록 할 예정입니다.
As you know, the quantum dot technology is considered the next generation display technology that overcomes many of the limitations of the existing TV technology in terms of brightness, color reproduction, and durability. We are still in the process of working out our business plans for next year, it's difficult for us to share our sales targets for next year now. Our basic approach is that we will continue to innovate our product based on the quantum dot technology and maintain our market leadership in the premium segment.
두 번째 주신 질문, 과연 지금의 실적 개선이 지속 가능한지 여부는 이렇게 말씀드리겠습니다. 최근 시장 기대 이상의 실적 호조가 지속되고 있는 것은 세 가지 이유가 있다 봅니다. 첫 번째는 Quantum Dot TV 같은 프리미엄 중심의 제품 믹스의 개선이 상당히 있었고요. 그다음에 지역별로 핵심 유통과의 협업 체제가 강화되고, 올해는 환 변동 때문에 상당히 이슈가 많았는데 이러한 외부 리스크에 대한 선행 관리 등이 복합적으로 작용을 해서 성과를 나타내고 있는 것으로 판단이 됩니다. 4분기에는 전년비 시장 역성장이 지속되고 있고, TV 패널가 상승 등 잠재 위협 요소들이 있지만, 당사는 차별되는 사용자 경험을 제공하는 혁신 제품을 바탕으로 연말 성수기 준비를 잘 해서 수익성을 확보하도록 하겠습니다.
Your second part of the question was whether the earnings improvement enhancements are sustainable. We have analyzed that there are three major factors that explains why we have been surpassing market expectations in terms of our earnings performance. One is the premium product lineup, the improvement of our product mix, represented by the Quantum Dot TV. The second is that in many key regions, we have strengthened our relationship with major key distributors in the region, that has also helped. The third is that we've actually been able to preemptively manage many of the external risk, including foreign exchange volatility this year, this has all helped improve our earnings. Looking towards the fourth quarter, there are some risks. For example, the overall market is contracting or decreasing in terms of sale size in all regions. Also, the panel prices are tending to go up.
Despite that backdrop, we will continue to provide a differentiating user experience through our premium products and continue this trend of good performance next year.
네, 감사합니다. 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 도이치증권의 한승훈 님입니다.
The next question will be presented by Mr. Han Sung Hoon from Deutsche Securities. Please go ahead, sir.
네, 질문 기회 주셔서 감사합니다. 도이치증권의 한승훈입니다. 올해 6월 보시면 삼성전자는 클라우드 업체 M&A를 발표를 했었고, 미래 콘텐츠나 소프트웨어 경쟁력 제고에 적극 활용할 거라고 말씀을 해주셨는데요. 혹시 이것에 대한 현재까지의 진행 상황과 내년 스마트폰에서 어떤 신규 차별화된 서비스를 저희가 기대할 수 있는지에 대한 설명을 좀 부탁드리겠습니다. 감사합니다.
I have a question about the service side. This year, Samsung acquired a cloud company and mentioned that company's capabilities will be leveraged in order to further develop future software as well as content. Could you give us an update on how that preparation is coming along? Can we expect to see some new and differentiating features on the next year new smartphones?
네, 클라우드 업체 인수 이후의 진행 경과하고 전략 방향에 대해서 말씀드리겠습니다. 올해 상반기 인수했던 Joyent 사의 역량을 활용해서 저희들이 자체 클라우드 인프라를 지금 구축 중에 있습니다. 글로벌로 진행되고 있고, 이를 통해서 더욱 효율적인 클라우드 서비스를 제공할 것으로 기대를 하고 있습니다. 또한 핸드폰뿐만 아니고 태블릿, 웨어러블 등 당사 기기간 connectivity를 더 확장하고, 콘텐츠 분석 등을 통한 심리적 경험을 지속적으로 제공할 수 있도록 준비를 하고 있습니다. 그리고 이에 더해서 향후에 진행될 IoT와 관련된 부분들하고 기기간 연동을 확대를 해가지고 보다 차별화된 서비스를 제공할 수 있도록 하겠습니다.
Yes, we acquired Joyent during the first half of this year, and we are currently in the process of building out our own cloud infrastructure globally. We believe that this will be able to provide a more efficient cloud service in the future, where we will also expand the connectivity between our multiple devices. Not only the handset, but tablets and wearables, and also leverage the content to provide a seamless experience to the users across different devices. This will also in the future be expanded to connect with IoT as well as further connectivity between devices. We plan to leverage this to provide a differentiating service experience.
네, 좋은 질문 감사합니다. 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 BNP Paribas의 Peter Yoo입니다.
The next questions will be presented by Mr. Peter Yoo from BNP Paribas. Please go ahead, sir.
네, 안녕하세요. 저도 모바일 쪽에서 솔루션 쪽으로 추가 질문을 드리고 싶습니다. 앞서 발표하실 때 2017년 모바일 전략 중에 AI를 도입하는 걸 말씀해 주셨는데요. 이게 내년 삼성 갤럭시 폰의 주요 차별화 포인트가 될 수 있는 서비스인지 좀 궁금하고요. 여기 역시 최근에 인수한 Viv 사 솔루션을 채용할 것 같은데, 원래 Viv에서 얘기하듯이 이게 완전 오픈 플랫폼을 운영하실 건지, 아니면 삼성 제품에만 운영하실 건지 좀 궁금하고요. 이게 만약 삼성 제품에만 작용되는
그럼 third party vendor나 developer ecosystem을 어떻게 구축해 나가실 것인지, 이 AI 관련해서 말씀 주시면 감사하겠습니다.
I have an additional question related with the solutions for the mobile business. During the speech, you mentioned plans of adopting AI-based services for the mobile side in 2017. Can we expect this to be a major differentiating point for the handsets that you'll be launching next year? I'm assuming that also the capabilities that you've acquired through the acquisition of Viv will be used to do this. This AI platform, are you planning to run this, operate this as a complete open platform that is open also to non-Samsung devices? Or would it be limited to Samsung products? If it's the second, that is it's limited to Samsung products, what are your plans in terms of attracting third-party vendors to join the platform or creating an ecosystem?
인공지능 서비스 관련해서 말씀드리겠습니다. 아주 구체적인 일정이나 이런 부분들은 말씀드리기 어렵겠지만, 전체적으로 준비하고 있는 방향에 대해서 말씀드리겠습니다. 최근 모바일 환경에서 서비스가 기존 앱 서비스 중심에서 음성 인식을 통한 빅데이터 분석 이런 인공지능을 지원하는 서비스로 크게 빠르게 바뀌고 있습니다. 저희들이 최근에 인수한 Viv Labs사는 자연어 기반의 인공지능 플랫폼을 보유한 회사가 됩니다. 이 플랫폼은 결국 외부 서비스 제공자들이 자유롭게 각자의 서비스를 저희들 서비스에 쉽게 붙일 수 있는 그런 장점을 지니고 있습니다. 이렇게 되면 저희들이 향후에 하려고 하는 intelligence 서비스 관련해서 개방형의 생태계를 구축하는데 용이하게 할 수 있을 거로 저희들은 기대를 하고 있습니다. Viv Labs사 인수로 이러한 인공지능 서비스 관련한 개방형 생태계를 구축할 수 있는 아주 중요한, 주요한 핵심 역량을 저희들이 확보하게 되었다고 말씀드릴 수 있겠습니다. 이를 바탕으로 해서 저희들이 스마트폰 외에 태블릿, TV, 그다음에 가전제품 등 삼성전자가 보유하고 있는 모든 기기, 그리고 여러 가지 서비스들을 인공지능 대화형 인터페이스로 연결을 하고자 합니다.
이를 통해 가지고 아주 다양한 서비스, 그리고 삼성전자에서 만들 그런 디바이스의 차별화 포인트로 그렇게 저희들이 활용할 계획이 있습니다.
Regarding the AI service, if I can share some of the direction that we're preparing that for, we have noticed that in the mobile space, there's a very rapid shift of the services from app-based to more voice recognition-based big data analysis, AI supporting services. Viv Labs, the company that we acquired, has a platform that is natural language-based AI. It also is a platform where external third-party service providers can easily connect their services onto that platform. We believe that this will help us create an open ecosystem for our intelligence-based services in the future. Through the acquisition of Viv, we have been able to secure a key capability in creating a very vibrant open AI ecosystem. We will be connecting not only our smartphones and tablets, but also TVs and other home appliances.
This will be to create an AI conversational interface to provide various services to the devices. This will be a differentiating point, and we will leverage this as a differentiating point for our Samsung devices.
네, 감사합니다. 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 Susquehanna International Group의 Mehdi Hosseini입니다.
The next question will be presented by Mr. Mehdi Hosseini from Susquehanna International Group. Please go ahead, sir.
Yes, thanks for taking my question. I actually have two clarifications. Earlier, you said there is some uncertainty regarding the DRAM environment looking into the first half of 2017. Can you please elaborate on it? There is a process migration to 20nm, Samsung is migrating to 1X, I'm not sure if anybody is adding wafer capacity. What exactly did you mean by uncertain environment as relates to DRAM? My follow-up question has to do with display. You mentioned flexible OLED, but I think you're referencing curved edges. In that context, when should we expect Samsung to finally introduce a true flexible display? Thank you.
두 가지 확인 질문이 있습니다. 후속 질문이 있는데요. 첫 번째, 앞서서 DRAM의 경우 상반기에 불확실성이 상존할 수 있다고 말씀을 하셨는데 그걸 구체적으로 왜 그렇게 생각을 하시는지 설명을 해주시면 좋겠습니다. 왜냐하면 다른 업체들은 지금 20nm로 공정 전환 중에 있고, 삼성은 1x nm로 공정 전환 중에 있지만, wafer capa를 또 추가를 한 회사는 없는 상황에서, 그럼에도 불구하고 내년도에 불확실성을 예상을 하신다는 것은 무슨 의미인지 설명을 해주시면 좋겠고요. 디스플레이에 대한 추가 질문은 앞서서 flexible OLED를 말씀을 하셨지만 사실은 그거는 edged가 curved 되어 있는 디스플레이이고, 진정한 의미의 flexible display는 언제쯤 생산이 가능할 거라고 생각하십니까?
저희가 말씀드린 불확실성이라고 하는 것은 올해 같은 경우, 아까도 말씀드렸지만 스마트폰이라든가 서버 같은 것의 기가바이트 퍼 시스템이 상당히 많이 증가했었습니다. 그런데 내년에 과연 이렇게 계속 지속적으로 스마트폰과 서버 응용처에서 지속적으로 콘텐츠 증가가 급격하게 일어날 수 있을지라는 부분이 수요 측면에서 저희들이 리스크라고 보고 있고, 둔화됐을 경우에 수요가 감소할 가능성이 있기 때문에 리스크라고 말씀드린 거고. 공급 측면에서는 지금 저희도 그렇지만 프로세스 선단 공정 마이그레이션을 통해서 비트를 늘리는 작업을 하고 있기 때문에 만약에 다른 선단 공정의 램프업이라든가 이런 부분들이 계획대로 되지 않았을 때 공급 측면에서 이슈가 있을 수 있다는 말씀을 드린 겁니다.
To give you more detail about-
또는 그런 부분이 하나가 있고, 또한 그러한 선단 공정이 굉장히 마이그레이션이 잘 돼가지고 굉장히 공급이 증가할 수 있는 가능성이 있다는 겁니다.
Regarding the uncertainty that we have mentioned before, the uncertainty or the risk that we potentially see next year in terms of the demand side is, first of all, that as you know, the gigabyte per system this year for smartphones and servers have both grown very strong, higher than what we had expected. The risk on the demand side is the potential of the demand growth, not sustaining what we saw this year. If, for example, the demand growth levels off next year versus this year, that could potentially make the demand softer next year. That is the risk that we're seeing on the demand side. On the supply side, as you mentioned, most of the bit growth is being driven by process migration, migrating to the cutting edge processes.
On that end, on the supply side, the risk would be perhaps the ramp up plans not going as scheduled, having a negative impact on supply or the reverse, whether the ramp up goes better than expected, the cutting edge process migration goes better than expected, that would have an upside on supply.
결론적으로 말씀드리면 어쨌든 간에 수요 공급에는 항상 불확실성이 있고 리스크가 있고 그렇기 때문에 그런 것들을 다 고려해서 당사 같은 경우는 차별화된 제품과 아까 말씀드린 것처럼 그런 경쟁력을 바탕으로 해서 수익성 중심의 제품 믹스 운영에 더욱더 주력해서 좋은 실적을 내도록 하겠습니다.
Any demand supply outlook has pertains risks and uncertainties. Despite these risks and uncertainties that we potentially see next year, we will focus on leveraging our differentiated products, leveraging our competitiveness versus the competitors to focus on operating a product mix that is profitability oriented.
플렉서블 디스플레이 관련해서 저희는 고객 수에 맞춰서 현재 curved flexible 제품뿐 아니라 말씀하신 true flexible 제품을 비롯한 다양한 어플리케이션을 준비하고 있습니다.
The second question about the flexible display. In addition to the curved flexible, curved edge, we are also preparing various applications including the true flexible to meet the customer demands.
시점에 관해서는 저희가 시장과 소비자가 바라는 제품으로 완성도를 지속적으로 높여가고 있고요. 또 다양한 가능성을 염두에 두고 사업을 진행해 나갈 계획입니다.
In terms of timing, we are continuously working to raise the level of perfection to meet market as well as consumer demands. We will continue to do that.
네, 다음 질문 받겠습니다. 이제 시간이 많이 경과됐는데 앞으로 두세 개만 더 받고 마감하도록 하겠습니다.
다음으로 질문해 주실 분은 하이투자증권의 송명섭 님입니다.
The next question will be presented by Mr. Song Myung-sup from HI Investment & Securities. Please go ahead, sir.
네, 하이투자증권 송명섭입니다. 지금 방금 질문 내용과 좀 연관이 있는데요. 내년 반도체, 특히 D램의 업황의 불확실성 관련해서 아마 상반기를 말씀을 하신 것 같은데 최근에 보면 PC 재고와 관련해서 인텔의 언급도 있었고요. 그다음에 레노버가 재고가 굉장히 많다, 그런 보도도 있었습니다. 그리고 스마트폰 쪽에서도 중국 업체들이 경쟁적으로 생산을 늘리는 그런 모습도 있고, 그다음에 이번에 노트7 단종에 따라서 애플, 또 중국 업체들 이런 경쟁사들이 하이엔드 스마트폰 생산량을 늘린다, 이런 보도들도 있는데요. 이렇게 지금 생산들이 약간 과잉으로 나오면서 이게 내년 1분기에 혹시 과잉 생산에 따른 재고의 재정리, 그런 수요 측면에서의 우려는 시장에 지금 어느 정도 있는 걸로 보여지는데 그거에 관련해서는 어떻게 생각하시는지 질문 드리고 싶습니다.
My question is related to the previous question about the DRAM demand supply outlook next year. While mentioning the potential uncertainties next year, you mentioned also first half of next year. In that context, I think what the market is concerned about in terms of demand next year is the fact that recently Intel made comments about its PC inventory, that there is a talk that Lenovo also has a huge amount of inventory. Also, on the smartphone side, the Chinese smartphone makers have been competing to increase their production against each other. Also, with the absence of the Note 7, we're hearing that Apple or other Chinese makers are also planning to increase their high-end handset production. This may all end up being an overproduction now, which will end up eventually leading to perhaps an inventory adjustment next first quarter.
I think that is the concern that the market has in terms of potential demand risk. What is your views about this?
질문에 답변드리겠습니다. 아까도 똑같이 말씀드린 것처럼 수요 측면에서는 기가바이트 퍼 시스템이 이제까지 메모리 성장을 이끌어 왔는데, 지금 우리가 불확실성이라고 말한 부분은 그러한 기가바이트 퍼 콘텐츠가 지속적으로 이어질 수 있느냐가 가장 키 섹터라고 말씀을 드렸고, 그거에 따라서 수요 변동이 있을 수 있다고 아까도 말씀드렸고, 또한 공급 측면에서도 선단 공정의 마이그레이션하고 램프업이 얼마큼 되느냐에 따라서 수급은 변동된다고 말씀드렸습니다. 저희들은 그런 상황을 지금 예의주시하고 있기 때문에, 당사 입장에서는 그러한 불확실적인 것에 대한 시나리오별 전략을 우리가 지금 수립하고 있고, 어떠한 상황이 발생하더라도 저희 제품 자체가 차별화되는 제품들이 많이 있기 때문에 그런 걸로 해서 수익성 중심으로 믹스를 잘 해가지고 좋은 실적을 내도록 한다는 것이 아까 말씀드린 것의 핵심이었습니다.
I think once again, we have to repeat what we had said before, that in terms of the demand and supply outlook next year, the main risk that we are looking on the demand side is the possibility that the huge growth in gigabit per system that we saw this year may perhaps not be sustained next year. That is the risk that we're seeing on the demand side. On the supply side, as I previously mentioned, the demand supply balance will be affected depending on how the cutting edge process migration or ramp up takes place. We are very carefully watching the demand and supply side. We are in the process of establishing scenario-based strategies to respond to whatever situation unfolds.
Given the fact that we have many products that are differentiated by themselves, we will be able to maintain a very profit-oriented product mix next year to respond to whatever demand and supply situation.
그러면 SET 과잉 생산은 없다는 걸로 이해하신다고 제가 판단해도 될까요?
Would it be correct for me to understand that you don't see an oversupply on the application side?
지속적으로 말씀드리지만 DRAM은 저희가 수익성 위주로 진행을 하고, market share를 증가하는 방향으로 하지 않는다는 건 여러 차례 말씀드렸기 때문에 저희들은 그렇게 시장 성장 수준으로 DRAM은 진행할 것이다, 이렇게 이해하시면 되겠습니다.
아니요. 그렇게 여쭤본 게 아니고요. 현재 PC라든지 스마트폰 같은 세트들이 과잉 생산되고 있다고 그렇게 생각하지 않으시냐는 거죠.
제가 생각하기에는 지금 스마트폰이라든가 그리고 PC 같은 것이 과잉 생산된다고 보지 않습니다.
To the question of whether we think that there are overproduction on the set side, smartphones or PCs, we don't think there is an overproduction. Once again, in terms of our DRAM business, a basic approach that we will be more profitability-oriented than market share-oriented. We plan to next year, at this point, expect to grow at market level.
네, 감사합니다. 다음 질문 받을게요.
다음으로 질문해 주실 분은 Sanford C. Bernstein의 Ike Jo입니다.
The next questions will be presented by Mr. Ike Jo from Sanford C. Bernstein. Please go ahead, sir.
Hi, this is actually Mark Newman from Bernstein. Thanks for taking my question. I wanted to clarify a little bit on some of the capacity ramping comments you made. First of all, on DRAM, Samsung is going to have about mid-30% bit growth this year, which is quite a lot higher than what was previously guided. First question is perhaps could you clarify exactly how the capacity or how the bit growth was significantly higher than the, I think, low 20s that was previously guided for this year? Moving forward to 2017 for DRAM, there was a comment earlier about line 17 ramping. I just want to clarify if that was the additional space of line 17 ramping for DRAM, or was that a NAND specific comment? Final question related to that is, any specific capacity numbers you could give us?
I know you had mentioned very much depending on demand, but perhaps you could put some ranges around the potential capacity additions that we should expect in NAND flash next year, and also for DRAM, if any. Thanks very much.
몇 가지 질문입니다. 일단은 첫 번째 DRAM의 경우에는 원래 올해 연간 가이던스를 주셨을 때는 회사의 Bit Growth가 20% 초반이 될 것으로 예상을 하셨는데, 올해 지금 보면 연간 한 30% 중반의 Bit Growth가 예상이 되는데 Capa나 Bit Growth적인 측면에서 어떻게 가이던스보다 더 높은 Bit Growth를 달성을 하셨는지, 그거를 분석을 해서 말씀을 해주시면 좋겠고요. 그다음에 내년도 DRAM의 경우에 17라인 램퍼버라고 말씀을 하셨는데 그거는 17라인 공간을 DRAM을 위해서 쓰신다는 건지, 아니면 NAND용으로 17라인을 쓰신다는 건지 확인을 해주시면 감사하겠습니다. 그다음에 Capa의 경우에는 구체적인 수치를 주시기가 어렵긴 하겠지만, 그리고 기본적인 원칙은 시황에 따라서 운용을 하시겠다고는 하셨지만, 그럼에도 불구하고 내년도 NAND의 추가 Capa를 어느 정도 범위를 말씀을 해주실 수 있는지, 그리고 DRAM의 경우에도 내년도 Capa 추가 계획이 있으시다면 그것도 범위를 말씀해 주실 수 있으면 좋겠습니다.
우선 저희 쪽에 D-RAM Bit Growth가 많았던 부분은 일단 수요 관점에서 보면 계절적 성수기 영향도 있었고, 그리고 저희들이 갖고 있는 고용량 D-RAM이 있었습니다. 그래서 그런 부분들이 저희들한테 수요가 많이 온 부분이 있습니다. 두 번째로 말씀드리면 응용처별로 D-RAM에서 수급 불균형이 일어나서 20나노 D-RAM의 수요가 당사에게 크게 집중되었기 때문에 우리가 Bit이 많이 늘어났던 건 맞습니다.
Regarding the DRAM bit growth, one factor was that there was a seasonality. It was a peak season, that's one effect on the demand side. Also, there was a high concentration of demand for high density DRAMs that came to us. That was another reason behind our DRAM bit growth. There was a demand supply imbalance in specific applications, a lot of that demand came towards our 20 nano DRAM, that helped us achieve the higher bit growth.
그래서 이러한 수요에 대응하기 위해서 저희들은 생산 효율화하고 적절한 재고 운용 등을 통해서 생산 극대화에 주력했고, 이에 따라서 기존 예상을 상회하는 출하량을 달성했습니다.
In response to such concentrated demand, we improved the efficiency of our production also managed our inventory quite effectively, that is how we were able to achieve higher bit growth than previously guided.
그리고 Capa 운영 관련해서는 저희가 구체적으로 지금 질문하신 거에 대해서 언급할 수는 없고, 수급 상황에 따라서 저희들이 검토하고 있다는 걸 다시 한번 말씀드립니다.
Once again, regarding the capacity plans, it's difficult for us to talk about the ranges that you've asked for. Our position is that we will be managing the capacity depending on the demand and supply situation unfolding.
네, 이제 마지막 질문 받고 끝내겠습니다.
마지막으로 질문해 주실 분은 메리츠증권의 김선우 님입니다.
The last question will be provided by Mr. Kim Sun-woo from Meritz Securities. Please go ahead, sir.
예, 기회 주셔서 감사합니다. 메리츠의 김선우입니다. 아까 나왔던 질문에 대한 팔로우업 질문인데요. bendable display 관련입니다. 아까 시기에 대해서는 어느 정도 가능성을 열어두고 대답을 마무리하셨었는데요. 최근에 중국 및 선도 업체들로 발생하고 있는 견조한 수요가 curved display에 집중된다는 것을 감안시, 이 단순한 심미적 가치, 즉 디자인에서 오는 가치만으로도 이렇게 뜨거운 제품이 나올 수 있다. 즉, bendable로 가면 엄청난 제품이 나올 수 있다는 기대감을 숨길 수가 없어서 이렇게 질문을 다시 드립니다. 저희의 기술력이 어느 수준인지가 조금 궁금하고요. 즉, 제가 판단하기로는 bendable display를 출시해서 시제품을 낼 수는 있을 것 같습니다만, 아마도 좀 더 기다리는 이유 중 하나는 이 제품이 소비자들에게 차별화된 소비 경험을 제공하고, 그에 따라서 평가 상승 및 수입 증대를 노리는 획기적 제품이 되어야만 하기 때문이라고 생각하고 있습니다.
물론 최근에 노트7 품질 문제 때문에 좀 더 품질 그리고 또 수율에 좀 더 관심을 두시겠지만, 지금 저희가 결국 기술 과시 수준의 제품이 아닌 진짜 차별화된 소비 경험을 줄 수 있는 제품을 내년에 기대해도 되는지, 아니면 혹시 그거는 17년 이후의 스토리로 생각을 해야 될지 그것 좀 고견이 있으면 공유 좀 부탁드립니다. 감사합니다.
The question I have is a follow up to the bendable display question. I think in the answer to the previous question, you left the issue of timing opened, given the fact that even the curved edge display, which only provides mainly aesthetic value, is being in huge demand by the Chinese makers and other leading makers. I would expect that if you are able to supply a bendable, a true flexible display that would bring about very explosive, significant expectations or responses from the market. In that context, where are you in terms of technology at this point?
Is it correct for me to assume that you are technically capable of producing something on a pilot basis, but you're waiting for other elements to come into play so that you would be able to provide a differentiated consumer experience on the end device level, which will drive up, for example, ASPs as well as demand? I do understand that, especially given the recent Note 7 experience, the company may focus more on quality or yield rather than trying to show off its technology prowess. Given all of that, could we expect something of a bendable or truly flexible display-based product next year? We have to wait after, or will we have to wait more?
If I take that question from the IM business side, regarding bendable or foldable displays, it is a new form factor, and we are focused on finding the optimized user experience for this form factor. The timing of commercialization will depend mainly on whether we have the optimized user experience, where the consumers can actually feel a differentiated value through this new form factor. Also, in terms of hardware, for a smartphone, not only the display has to be bendable and foldable, but other parts of the device, such as battery or cases and other material, also have to be compliant. That is also a factor in determining the commercialization time point. In terms of the form factor, we are focused on optimizing the usability and also whether we are able to provide a differentiated new user experience that the customers will find satisfactory.
Given all of that, more time is necessary before we launch the product. Thank you very much. This ends the conference call.