Good morning and good evening. First of all, thank you all for joining this conference call. Now we will begin the conference of the fiscal year 2015, third quarter earnings results by Samsung Electronics. This conference will start with the presentation, followed by a divisional Q&A session. If you have a question, please press star one, that is star and one, on your phone during the Q&A. For cancellation, please press star two, that is star and two, on your phone. Now we shall commence the presentation on the fiscal year 2015, third quarter earnings results by Samsung Electronics.
Good morning. This is Robert Yi from Investor Relations. Thank you for joining our third quarter earnings call. With me, representing the business units are Mr. Baek Jee-ho, Senior VP of Memory Marketing, Mr. Hong Kyu-shik, he's the VP of System LSI Marketing, Park Jin-young, VP of IT Mobile Business, Jung Young-nak is the VP of Visual Display, and Lee Chang-hoon is the VP of Samsung Display, as well as Kim Sang-hyo, he's the Vice President of IR. I would like to remind you that some of the statements we'll be making today are forward-looking, based on the environment as we currently see it. All such statements are subject to certain risk and uncertainties that could cause our actual results to be materially different from those expressed in today's discussion.
Before we go into third quarter results, let me share a few points regarding Samsung Electronics' shareholder return that was just announced. We've been focused on investing in technologies and scale advantages to ensure our current and future growth. We placed highest priority in creating business structure that delivers sustainable growth. We are proud of what we have accomplished over the years, as we have strong technology leadership in many of our businesses, as well as solid financial strength to continue to build for the future. Despite annually investing more than KRW 20 billion in CapEx and KRW 12 billion in R&D during the past several years, we were able to have positive free cash flow to add to our cash balance. We have been looking for ways to use the cash to create long-term value to the company, as well as to our shareholders.
Over the several past months, we had extensive discussions internally about the best course of the action to increase the return to our shareholders and to optimize capital management. We have reached out to our shareholders and the investment community and have heard back from many of you. We would like to express our gratitude and appreciation for your frank and honest feedback on many of these issues we are about to address today. The initiatives which we have announced today are based on comprehensive review of our business and shareholder needs. The first part of our shareholder return initiative is a share buyback and cancellation of KRW 11.3 trillion, which is equivalent to $10 billion.
The company believes that the current share price and the market value of Samsung Electronics are severely undervalued, both in terms of the ability to generate earnings and also in terms of the underlying assets or the equity value of the company. Considering the severely undervalued nature of the share price, we feel that the share buyback at these levels is the correct decision. All the shares we purchase will be canceled, as canceling the shares and thus reducing the capital stock of the company will be the most effective method to returning value to existing and long-term shareholders.
Over the years, many shareholders have expressed a view that buying back and canceling preferred shares, which are traded at a discount to common shares, is more efficient use of capital, as we can buy and cancel more number of shares with the same amount of money, thus increasing the effectiveness of any future capital return to the remaining shareholders. The company shares the same view. We plan to increase the portion of preferred shares for repurchase and cancellation under this buyback program, as long as the price discount to common share is greater than 10%. We expect this will bring further increase to the future dividend per share as we can reduce higher number of shares outstanding, therefore, having positive impact on both common and preferred shareholders.
We anticipate the buyback will take next few quarters as the regulations in Korea that governs share buybacks stipulate that each share buyback authorized by the board must be completed within three months, with a specified number of shares for each class. The board today approved KRW 4.2 trillion for the first phase of this buyback program. It will start on October 30th and last for approximately three months. As of the date before the board's decision, preferred shares traded at about 22% discount to the common share. We will increase the percent of preferred shares to be repurchased to 35% of total shares to be purchased. Based on these facts, we will purchase 2,230,000 shares of common stock and 1,240,000 shares of preferred during this first phase. The second part of our shareholder return initiative is three-year shareholder return policy.
As we have explained, after detailed review, the company has decided to implement a rolling three-year shareholder return policy that will have the following components. First, the company will return 30%-50% of annual free cash flow to shareholders for the next three years. The annual shareholder return will consist of dividend and share buyback. Third, the next three years' annual shareholder return will focus primarily on dividends, with the remaining allocated capital to be utilized for share buybacks. Fourth, any shares that are to be repurchased will also be canceled. We will announce 2015 year-end dividend in January of 2016 when the board makes a decision. We hope the size and the direction of the shareholder return to be announced will be able to meet the expectations of our shareholders. We are currently reviewing the introduction and implementation of quarterly dividend policy for 2016.
We would welcome any feedback from our shareholders on this matter. In concluding, I hope that these decisions clearly show our commitment to creating shareholder value through not only business growth, but also through capital allocation decisions, which are beneficial to our shareholders. That our shareholders will share our confidence in sustained growth in our business and shareholder value. The fact remains that we are in a difficult operating environment. However, the opportunities to secure long-term growth through organic and inorganic ways also exist. We hope that our long-term shareholders will continue to trust and support our efforts as we do our best to ensure consistent and sustainable value enhancement. Now I'll go over our third quarter results. The overall revenue increased by approximately 6% compared to the previous quarter, mainly driven by semiconductor and display. The gross profit for the total company also increased by KRW 0.5 trillion.
Our SG&A expenditures remained flat, even though revenue increased, and the percent revenue decreased due to our efforts to improve efficiencies across major categories. The operating profit increased by KRW 500 billion quarter-on-quarter, and the operating margin also improved slightly. The third quarter operating profit was higher than the market expectations due to positive exchange rate impact from continued weak KRW against key currencies. For your reference, the exchange rate impact was approximately KRW 800 billion, mostly on the component businesses, which have greater U.S. dollar long positions. Other non-operating profit decreased significantly Q-on-Q due to one-off gain that we experienced on sale of investment in Samsung Techwin and Samsung General Chemical in the second quarter. The business unit representatives will discuss their business results in more detail shortly. Now I would like to make few comments on the future outlook.
In the fourth quarter, we expect earnings to decline compared to the previous quarter, as we do not expect the positive exchange rate impact to continue into the fourth quarter. In terms of the overall businesses, we expect to maintain solid earnings led by earnings and improvements of System LSI and an increase in the set business sales under strong seasonality. For our component business, we are entering into weaker seasonal demand for memory products and weak LCD supply and demand balance. However, we expect System LSI earnings to improve, led by an expansion of 14 nano foundry supply, and we also expect OLED to maintain solid earnings.
For the set business, we expect earnings to improve for the consumer electronic business by actively expanding sales under year-end seasonality, and we will strive to maintain solid earnings of IM business by expanding Galaxy Note5 sales As well as improving Galaxy S6 profitability. It is too early to form a firm outlook of global economy and the IT industry for 2016 at this time. However, our goal is to continue the growth and achieve strong profitability by enhancing business competitiveness through our efforts to improve technology leadership and reinforce software and service capacity. We expect various dynamic factors to affect the industry supply and demand conditions for the semiconductor business in 2016. We will focus on expanding high value-added memory products, increasing V-NAND technology capability, and diversifying 14 nano customer base.
For the display business, we'll focus on improving cost as LCD supply and demand condition may worsen from increasing supply. For OLED, we'll continue to expand external customer bases. For our IM business, amid slowed growth of smartphone demand, we will strive to maintain profitability by reinforcing smartphone competitiveness through product differentiation and strengthening services and software capabilities, including Samsung Pay, as well as by effectively managing costs. For our consumer electronic business, we expect TV demand to increase, led by global sporting events such as the Olympics. Few comments on capital expenditure plan. We expect the total capital expenditure in 2015 to be KRW 27 trillion, approximately 14% increase from the previous year. By business areas, capital expenditure for semiconductor will be KRW 15 trillion, the ratio of memory to System LSI of approximately 8 to 2, and for display, it will be about KRW 5.5 trillion.
The increases are mainly from reinforcing our leadership of cutting-edge technologies such as V-NAND and for enhancing cost efficiencies of LCD production capacity. During the third quarter, we spent about KRW 6 trillion on capital expenditure, KRW 3.7 trillion for semi, and KRW 1.4 trillion for display. This brings the year-to-date capital expenditure to KRW 19.2 trillion, which is approximately 72% of the annual plan. As usual, I would like to share several data points for key business areas for your reference. For DRAM, the third quarter, our bit growth was mid-teens and we experienced low teens of ASP decline. In Q4, we expect market DRAM bit growth to come in about mid-single digit, and we will grow in line with the market in Q4. For 2015, DRAM, we expect the market growth to be low to mid 20%, and our bit growth for the year will be low 30%.
For NAND Flash, in third quarter, our bit growth was low teens, and we experienced low teens of ASP decline quarter on quarter. For Q4, we expect the market NAND bit growth to be low 20%, and again, we will grow in line with the market in Q4. That will bring the 2015 total market NAND bit growth at high 30%. We believe that our NAND bit growth for the year will be over 50%. For large LCD panel business, in terms of revenue, the LCD revenue represented about low 50% of the total display panel revenue, and we experienced the ASP of low teens decline quarter on quarter. For the Q4 LCD panel business, we expect the revenue mix to remain similar level as Q3.
The LCD panel shipment in Q4, we expect to see increase of high single digit, and we are expecting also ASP increase of high single digit. For mobile business, our total handset shipment in Q3 was 105 million units and tablet sales of 8 million units. Our blended ASP in the third quarter was about a mid $180. Within the smartphone sales, the smartphone mix was about 80%. In Q4, we expect a small increase of total handset shipment. We do expect the blended ASP for the handset to increase in Q4. The smartphone mix within total handset sales will rise to about mid-80%. For TV business, in Q3, we shipped about 11 million units of LCD TV. In Q4, our TV shipment is expected to grow about the 40% range.
Now I'll turn the conference call over to gentlemen from the business units to share their views, starting with the semiconductor.
Morning. This is Baek Yoo from the memory marketing team. I'm going to present our business results for the third quarter and market outlook for the next quarter. For the third quarter, for DRAM, although set unit growth was slower than the industry forecast, average DRAM contents growth led overall demand. In particular, demand increased driven by flagship smartphone launches and solid data center demand led by cloud service expansion. We focused on reinforcing profitability and market leadership by expanding 20 nanometer migration and by actively responding to increasing demand for high value-added products such as DDR4 and LPDDR4. NAND, high-density mobile storage demand increased from new smartphone launches. SSD demand increased due to growing PC SSD adaption and expanding high-density enterprise SSD demand.
While we secured profitability by expanding sales of high-end solution products such as SSD and UFS, we reinforced core competitiveness by introducing third generation V-NAND to the market. Next, I will comment on the memory market outlook and our strategy for the fourth quarter. For DRAM, even with weak seasonality compared to previous fourth quarters, we expect continued solid demand for mobile and server, driven by increased density of embedded DRAM and accelerated conversion of new interface products, such as DDR4 and LPDDR4. We expect DDR4 demand for PC to increase led by new platform and OS products. For Samsung Electronics, we will reinforce product competitiveness by actively responding to demand for our high value-added and leading-edge products, such as eight gigabit DDR4 and LPDDR4. We will focus on profitability and continue to expand 20 nanometer process for our competitiveness.
NAND, demand for solution products is expected to increase, driven by new mobile product launches with high-density storage, and by increasing SSD adaption rate in both PC and enterprise. We will continue to secure product competitiveness by expanding third generation V-NAND supply and 10 nanometer class migration. We will strengthen our market leadership by actively responding to demand for enterprise and PC SSD and high-density mobile storage. In the fourth quarter, although economic uncertainties are expected, such as exchange rate fluctuations, we will make the best effort to maintain profitability with advanced technology and flexible product mix. Considering current global economic forecast, demand growth in 2016 is expected to be very similar to 2015. Uncertainties are expected in the supply side, especially in ramping up leading-edge technology such as 20 nanometers DRAM, 3D vertical NAND, and the finer geometry planar NAND.
We will strengthen market leadership and secure competitiveness by expanding supply of our main products, such as 20-nanometer, high-density DDR4 and LPDDR4, and 10-nanometer class NAND, along with V-NAND. Now moving on to the System LSI business. In the third quarter, under seasonality, earnings improved, driven by 14-nanometer foundry supply and solid LSI demand, such as CMOS image sensor. In the fourth quarter, despite slower seasonal demand, we expect earnings to improve from the third quarter with increase in 14-nanometer foundry supply. In 2016, we will continue to strengthen the basis for stable growth by diversifying applications, customer base, and product lineup with our industry-leading 14-nanometer process technologies. Thank you for listening.
Good morning. This is Chang-hoon Lee from the planning department of Samsung Display. For LCD panel in the third quarter, despite tough market conditions, such as decreased overall panel shipments and ASP, we brought solid results led by increasing sales and shipment area, thanks to the continued trend towards larger size panel and strong demand for UHD TV panels. However, risk factors exist in the first quarter that could bring about overall oversupply and a decline in ASP due to an increase in the industrial capacity and a decrease in demand of TV set makers from exchange rate fluctuations in the emerging markets. We will focus on cost reduction and inventory management in response to these tough market conditions of the first quarter.
For OLED panel, in the third quarter, our earnings increased Q-on-Q due to the release of new high-end smartphone panels for major customers, expansion of the customer base, and higher operation ratio. In the first quarter, although we expect competition among panel makers to intensify further due to slowing growth of the smartphone market, we will make the best effort to expand external customer base and to increase the line utilization ratio. Now, I would like to present the outlook for the display market and our core strategies in 2016. For LCD panel, while we expect overall shipment area to increase YoY, it seems that total shipment may decrease. Furthermore, we expect the industrial capacity to increase YoY. We will appropriately respond to these tough market conditions in 2016 by continuously monitoring the market condition, as well as by focusing on cost reduction and inventory management.
For OLED panel, while we expect the smartphone market growth to slow down YoY, growth will come mostly from emerging and low-end markets. Under this circumstance, we will make efforts to reinforce product lineups and expand customer base. Furthermore, we'll reinforce our market and technology leadership through technological improvement and mass production of flexible display, which is our mid- to long-term growth engine. At the same time, we'll strive to secure new growth engines by reinforcing technical development of new applications such as transparent, mirror, head-mount, and automotive display. Thank you for listening.
Good morning, everyone. I'm Jin Yung Park from the Mobile Communications business. Today, I'd like to present our third quarter business results for the IT and Mobile Communications division and our outlook for the upcoming future. In the third quarter, overall market demand for both smartphones and tablets slightly increased Q-on-Q due to typical seasonality. Our smartphone shipments gradually increased compared to the previous quarter, thanks to increased sales of new models, including the Galaxy Note5, S6 Edge+, and the Galaxy A, J series. However, revenue of the mobile communications business slightly increased, and the profit of the IM division decreased Q-on-Q due to price repositioning of the Galaxy S6 and Galaxy S6 Edge and effects of product mix. Our largest-screen previous models, Galaxy Note5 and S6 Edge+, newly released in the third quarter, are receiving positive feedback from the markets.
Accordingly, we expect shipment to exceed their predecessors. The sales volume of the Galaxy A series expanded as shipment of existing models and newly launched Galaxy A8 increased. The Galaxy A8 is showing strong sales trends, mainly in China and Southeast Asia, which are the regions with strong demand for larger-screen smartphones. Also, the Galaxy J series received favorable responses from the emerging markets. As for tablets, shipments remained at a similar level to the previous quarter. In our networks business performance improved Q-on-Q, mainly from increased LTE investments by our major overseas customers. Now, let's turn to the outlook for the fourth quarter of 2015. Market demand for both smartphones and tablets is expected to increase Q-on-Q as we enter the year-end peak season. Meanwhile, we also forecast competition in the market to intensify further.
As for our company, marketing expenses are expected to slightly increase due to seasonality. However, we will respond by increasing shipment volume of new smartphones for each price segment that were introduced in the third quarter, and by continuously increasing efficiency in our expenses. Through these efforts, we will maintain our profit at a similar level to the previous quarter. Moving on to our tablets, we expect tablet shipments to increase Q-on-Q, mainly with the Galaxy Tab S2 and A3. For our networks business performance is expected to improve with the expansion of overseas LTE business. Finally, turning to the outlook for the year 2016. Next year, smartphone and tablet market is expected to grow Y-on-Y, but its growth rate will slow down compared to the previous years.
As for our smartphones, we'll continue on with our meaningful innovations to strengthen our position in the market. Moreover, we plan to globally expand Samsung Pay, our safe and simple mobile payment that is receiving positive feedback from the markets. We believe Samsung Pay will be able to give more customers differentiated experience that only our Galaxy smartphones can provide. Also, we'll reinforce the competitiveness of our tablet and wearable devices to satisfy market needs. With intensifying competition due to market growth slowdown, there may be some difficulties with our business. However, we will respond to tough market circumstances by strengthening our premium product competitiveness while maintaining our key strategy of optimized product portfolio. With these efforts, we will do our best to expand smartphone sales and maintain solid business performance. Thank you.
Good morning. I am Young Nak Chung from the Visual Display marketing team. Let me brief you on the third quarter market conditions and the business results. In the third quarter, as seasonal peak approaches, the flat TV market demand increased Q-on-Q. However, due to continued currency depreciation in emerging markets, demand decreased compared to the same period last year. Under these market conditions, our performance improved both Q-on-Q and year-on-year, powered by the growth of premium product sales, especially of UHD and larger size TVs. Moreover, our sales proportion of UHD TV increased as we introduced affordable premium lineups, and profitability was enhanced as model mix improved. Moving on to the digital appliance business. In the third quarter, North America continued its economic growth, but due to economic recession in emerging markets, market demand decreased Q-on-Q.
Under these circumstances, our expanded premium product sales in advanced markets and the strengthened sales of region-specific innovative products. As a result, our earnings improved compared to the previous quarter. Moving on to the fourth quarter outlook. As the holiday peak season is around the corner, we are expecting a substantial increase in TV demand, mainly from North America and other advanced markets. However, due to a downturn in emerging markets caused by lower consumer confidence, we expect a decrease in global demand by a small margin versus the same period last year. Meanwhile, intense competition in the peak season is expected as TV set makers are aiming to boost sales based on the year-end promotions in order to make up for their low performance in the first half.
Under such market conditions, we'll actively seek to capture year-end seasonal opportunities by offering local friendly promotion programs and expanding affordable premium product sales. As for the digital appliance market, we will continue to push ahead with the sales growth by reinforcing the promotional activities and increasing shipment of premium products. For the 2016 outlook, following the trend of 2015, we expect to see a continued increase in UHD content and the consumer preference for the large inch TVs. In addition, due to the impact of sporting events such as the Brazil Olympics and the Euro Cup, we anticipate growth mainly in UHD and large screen TV sets. Based on our global brand positioning, we are planning to respond to a surge in demand by actively increasing sales proportion of premium product lines of SUHD, curved, and the largest size TVs.
In addition, we aim to improve profitability by optimizing lineups and enhancing efficiencies. For the digital appliance market, demand may slow down as economic recession is expected to continue, excluding the U.S. market. We will continue to introduce innovative products and influence customer-friendly marketing activities and expand B2B businesses in order to secure continuous growth momentum and profitability. Thank you for listening.
Thank you. This completes the company's presentation, and we'll turn to questions and answer session. Again, we'll provide a consecutive translations for Q&A sessions, and we'd like to ask for your patience that it may take a little longer than a normal, just one language announcements. Okay, let's take questions, please.
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 given by Young Park from Hyundai Securities. Please go ahead, sir.
First of all, thank you very much for announcing a very satisfactory shareholder return initiative. Also, I congratulate you on the very positive performance for the third quarter, despite the industry situation itself not being very favorable. My first question is about the semiconductor business, specifically about your plans of how to operate and manage your memory capacity. It seems that on the current track, your NAND flash memory capacity will probably be fully utilized by first quarter of 2016, which would mean that you will probably need new capacity on the NAND side, at least by end of 2016. Do you have any decisions or plans regarding the location of the new capacity that you will probably be needing? Also, it seems you have some extra space on Fab 17, about 30,000 sq m. Do you have any specific plans of how to use that space on Fab 17?
그래서 그런 추가 Capa에 대한 거는 지금은 당장 고려할 부분은 아니지만 만약에 그것이 필요하다고 그러면 그 부분이 어디가 될지는 아직 결정난 바가 없습니다. 중국이 될 수도 있고, 평택이 될 수도 있고, 기흥이 될 수도 있고, 화성이 될 수도 있고요. 그래서 그거는 나중에 상황에 따라서 결정할 사항이고. D램 같은 경우도 17라인은 지금 첨단 공정이 20나노로 해서 풀리 가동하고 있고요. 20나노로 들어가면서 약간의 Capacity, 잠시 부분도 있기 때문에 풀 Capacity가 얼마라고 말씀드릴 수는 없지만 지금 거의 풀 Capacity로 가고 있다고 말씀드릴 수 있겠습니다. 마찬가지로 D램도 내년에 필요로 하는 성장률은 현재 있는 Capacity에서 충분히 커버 가능하다고 생각이 듭니다.
Well, it seems you have a lot of information about the capacity as if you are one of our employees, but I think there are a few pieces of the information that I probably need to correct. Actually, on the NAND side, we are already at a full capacity. We are running at full capacity. Actually, it won't be correct to say that we have any space. Actually, we do not have any space, but I think even next year by running at our full capacity, we will be able to meet the bits that we would be requiring next year and maybe even produce a bit more extra on top of it if necessary. As of yet, in terms of additional capacity building, there are no decisions that we have made yet. All options are open.
If we do need it, if market calls for it, we could add capacity. Where it would be? It could be either 평택, China, 기흥 or 화성, that's still open. We will flexibly decide depending on the market situation next year. About the Fab 17 DRAM, it's at full capacity. It's running at 20-nanometer. Specifically how much our full capacity at Fab 17 is, I can't give you a quantity of it because there are some decreases or due to the migration process onto the 20-nanometer. I can say that we are running at full capacity at Fab 17 as well. I think that with our current capacity, we will be able to meet next year's bit requirements as well on the DRAM.
예, 말씀 잘 들었습니다. 백 전무님 말씀하시는 거 들어보니까 내년에 Capa 관련해서는 공격적이지 않으신 것 같아서요. 내년 D램, 낸드 업황 관련해서 걱정은 덜한 것 같고요. 두 번째 질문드리면, 아까 임영호 전무님께서 발표하고 주신 데이터 포인트에 따르면 스마트폰 출하량을 한 8,100만 개 정도 하신 것 같은데요. 우리 중저가 폰 출하량이 상당히 많이 증가한 것 같습니다. 그래서 중저가 폰 경쟁력 제고가 이루어진 것 같아서 다행인 것 같고요. 어떤 과정을 거쳐서 이런 경쟁력 제고가 이루어지고 출하량 증가가 이루어졌는지, 그리고 향후에도 이런 부분들이 sustainable 할 수 있을 건지에 대해서 답변 부탁드리겠습니다.
It seems hearing your answer, the company is not planning any aggressive capacity investment on the DRAM side next year, which actually alleviates some of the concerns regarding the DRAM industry outlook for next year and the impact that we have on the company's performance. My second question relates with the smartphone side of the business. During the presentation, looking at some of the numbers that were announced, it seems in the third quarter, the smartphone shipments have what were about 81 million units of shipment, this basically implies that there was a significant increase in the shipment of the mid to low-end smartphones within your product mix, which is quite positive and welcoming. I'm wondering, can you give us some more detail on what initiatives were effective in terms of enhancing the competitiveness and also increasing the shipments of your mid to low-end smartphones?
네, 답변드리겠습니다. 먼저 잘 아시다시피 중저가 라인업 같은 경우는 작년 말부터 갤럭시 A, J 시리즈로 해서 지금 경쟁력 있는 모델로 다 라인업을 재정비를 하고 있습니다. 아까 3분기 스피치 때도 말씀을 드렸지만, 이 중저가 모델들이 개별 모델들의 수익성도 지금 계속 좋아지고 있고요. 그다음에 최근에 기존에 있는 A 시리즈 같은 경우는 기존 모델하고 함께 지금 신규 모델인 A8도 도입이 돼서 판매량이 증가가 되고 있습니다. 특히 중국이나 동남아, 유럽 등에서 상대적으로 판매가 다 좋아지고 있고요. J 시리즈도 이머징 마켓에서 지금 좋은 판매를 보이고 있습니다. 이런 중저가 라인업을 재정비를 한 것이 지금 기본적으로는 부품 공용화, 그다음에 생산 수율, 그다음 비용, 이런 모든 측면에서 지금 효과가 나타나고 있다고 보고 있고요. 앞으로도 이런 옵티마이즈된 프로덕트 포트폴리오 전략은 계속 지속할 거기 때문에 그 효과는 계속 지속될 거라고 생각을 하고 있습니다.
As you know very well, we've already started to streamline our mid to low-end smartphone lineup starting from end of last year, focusing on the Galaxy A and the J series. We have during this streamlining of the lineup process, focused more on the mid to low-end models that had more competitiveness. This has not only resulted in the increase of shipments, as you have pointed out, but also the profitability of the smartphones themselves have enhanced. Especially with the A series, in addition to the existing A series products, we've introduced the A8, which has also had very positive results. The A series we're seeing is especially effective in terms of increasing in the Chinese, Southeast Asian and European markets. The J series has also done very well, especially around the emerging market segment.
It seems that in the process of streamlining, adjusting our mid to low-end product lineup, we were also able to capture the advantages such as sharing components, also enhancing the yield and also enhancing the efficiency of the cost of expenses that are spent. In terms of going forward, we plan to continue to maintain a very optimized product portfolio and capture the effects of such an efficient portfolio. [Foreign language]
[Foreign language] The following question will be presented by Nicolas Gaudois from UBS. Please go ahead, sir.
Yes, good morning, congratulations on announcing at last a comprehensive program for return to shareholders. On the business, first question is for mobile devices. It seems to us that so far the Note5 and the priced down Galaxy S6 are actually offsetting the Galaxy S6 Edge and the Edge+. Does this lead you to reconsider your mix and pricing going forward for next year for the forthcoming releases in the high end? Should we actually expect that you'll make better use of Edge displays beyond design for the third generation to come in next year? I have a follow-up for Semi. Thank you.
먼저 굉장히 포괄적인 주주환원 계획을 발표하신 것에 대해서 축하의 말씀을 드립니다. 첫 번째 질문은 무선 사업에 대한 질문인데요. 지금 현재 시장을 보면 Note 5 및 기존에 가격 조정이 된 S6가 S6 Edge 내지는 S6 Edge+보다 판매가 더 잘 되고 있는 것 같습니다. 이러한 판매 실적을 봤을 때 내년에 대한 제품의 믹스라든지 제품의 가격에서 이러한 것을 반영을 해서 생각을 바꾸실 계획이 있으신 건지 궁금합니다. 예를 들자면 Edge를 계속 유지를 하실 경우에 어떤 Edge라고 하는 디스플레이가 단지 디자인적인 측면이 아니라 그 사용성을, 예를 들자면 내년 3세대 Edge를 하신다고 하면 사용성을 크게 향상을 시킬 계획이 구체적으로 있으신지요? 네, 답변드리겠습니다. 먼저 지적하신 대로 지금 Edge 모델, 특히 S6 Edge 같은 경우는 당초 시장에서 기대했던 만큼의 판매는 못 이루었던 것 같습니다. 저희들이 판단하기에는 S6 Edge 초기 공급이 좀 문제가 있어서 초기 론칭하는 데 좀 영향을 주었다라고 생각을 하고 있고요.
말씀하신 대로 앞으로 Edge의 활용도에 대해서는 지금 계속 소비자들에게 차별화된 UX 경험을 줄 수 있도록 Edge를 활용한 UX 이런 것들은 계속 추가적으로 개발을 할 수 있도록 노력을 하고 있습니다. 내년도 플래그십 제품 전략에 대해서는 지금 이 자리에서 말씀드리기가 조금 시기적으로 이른 감이 있어서 좀 양해해 주시기를 바라고요. 말씀하신 대로 금년에 우리가 여러 플래그십 모델들을 출시를 했는데, 이런 했을 때 성과나 그다음 지적하신 미흡한 점 이런 것들을 잘 반영을 해서 내년도 제품 전략을 수립할 계획이 있습니다. As you have pointed out, the sales of the Edge, especially the S6 Edge, has not met market expectations. One factor was the disruptions that we had in terms of the initial supply of the S6 Edge, especially during the launching of it, that may have had an impact.
In terms of using the Edge as a display, we do believe that it is an opportunity to provide a differentiating user experience to the consumers. That's why we will continue to additionally exert efforts to develop a way of using the Edge display to provide such a differentiating user experience. Specifics regarding next year's flagship strategy, please understand that it is a bit too early for us to give you specific details, but we can say that because we have gone through various flagship model launches this year, we will definitely consider the achievements as well as the areas for improvements that we have learned through this year's flagship launches and reflect it for next year's product planning.
Great. Looking forward to it. On the Semi side, you indicated before in LSI that you're likely to ramp up in 2016 integrated application processes and modem, also known as ModAP SoCs. Could you update us on your progresses there and which segments you would address between the high, mid and potentially low-end next year with those SoCs? Thank you.
반도체 LSI 쪽에 대한 질문은 내년도 특히 AP와 모뎀 통합칩에 대한 램프업을 하실 계획이 있다라고 말씀을 하셨던 것 같은데, 그 부분에 대해서 좀 더 구체적으로 설명을 해주시고, 세그멘트를 하이, 미들, 로우로 한다라면 그중에서 어느 세그멘트를 내년에 SoC 쪽에서 집중을 하실 것인지 말씀해 주시기 바랍니다.
답변드리겠습니다. 일단 status부터 말씀을 드리면, mid range향은 벌써 지난 3분기부터 저희가 양산을 시작을 했고, 지금 고객사 세트에 탑재돼서 잘 풀리고 있습니다. 그래서 올해 하반기부터 내년 상반기에 걸쳐서는 전 라인업에 걸쳐서 추가 제품들이 출시될 거고요. 그래서 2016년에 저희 모바일 사업 영역 확대를 위해서 모든 segment의 시장 트렌드에 맞는 그런 경쟁력 있는 제품들을 준비해서 출시할 예정입니다.
To give you an update on the status first before I give you next year's plan. In terms of the mid-range products, actually we started mass production in third quarter. Already our mid-range products are on customer sets and are selling very well. We will continue to ship them. We've already started second half of this year and continuing on to the first half of next year. Regarding the mobile market, our basic plan next year is to introduce and offer competitive products for all segments and responding to the market trends.
Okay, thank you.
Okay, thank you. 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 한국투자증권의 유종우 님입니다.
The following question will be presented by Jong Wu from Korea Investment & Securities. Please go ahead, sir.
예, 질문 기회 주셔서 감사드립니다. 저는 설비 투자 관련돼서 간단히 질문 두 가지 드리겠는데요. 아까 반도체 쪽 Capa 계획에 대해서 말씀을 해주셨는데 저희가 올해 반도체 설비 투자 진행된 거하고 비교를 해보면 금액 기준으로 보면 내년도 설비 투자 금액이 감소할 걸로 생각이 되는데, DRAM, NAND, System LSI 통합을 해서 내년도 반도체 설비 투자 규모가 올해 대비 어떻게 될지 방향성을 말씀해 주시면 감사하겠고요. Display 쪽도 같이 질문을 드리면 지금 3분기에 OLED 외판 물량이 많이 늘어서 가동률이 올라갔다고 말씀을 해주셨습니다. 그래서 향후에 외판 물량이 좀 더 늘어날지, 그리고 늘어나게 되면 저희 Capa 계획은 어떻게 진행이 될지 그 부분에 대해서 말씀을 해주시면 감사하겠습니다.
I have two questions related with CapEx. First, you've already mentioned the capacity planning and answered the question regarding capacity planning for the semi side of the business. It seems that would indicate that perhaps the CapEx side for the semiconductor business next year may be decreasing versus the CapEx executed this year. Is it possible for you to give us a direction of the semiconductor CapEx year-on-year, next year versus this year, including DRAM, NAND, and System LSI altogether? Second question regarding the display side, you've mentioned that the increase in OLED sales have also increased the utilization of your OLED capacity in the third quarter. Is there additional ramp-up volume left over? What does this imply in terms of the capacity planning for the future?
시설 투자 관련해서는 사실 2015년을 돌이켜보면 우리가 연초에 생각했던 투자와 또 연중에 생각했던 거, 그리고 지금 생각하는 숫자가 다 틀립니다. 그만큼 현재 우리가 접하고 있는 시장 상황이 급변하고 있는 그런 상황이고, 그렇기 때문에 현재로서 2016년에 대해서 좀 더 확실하게 말씀을 드리기가 굉장히 어려운 부분이 있습니다. 어쨌든 올해 우리 반도체 부분에 투자한 부분은 일부 2016년 투자를 앞당겨서 올해 집행한 부분이 있기 때문에 그냥 개념적으로 봤을 때는 일부 감소할 가능성도 없지 않아 보이긴 하지만, 말씀드린 아까 우리 백 전무 설명하신 대로 여러 가지 지금 다양한 변수가 남아있기 때문에 정확하게 아니면 확실하게 줄이겠다라고 언급하기에는 조금 어려운 부분이 있습니다.
Well, regarding the CapEx, even looking at 2015 CapEx, actually the CapEx number that we had thought and mentioned at the start of the year and middle of the year and now they're all different. The changing of the CapEx, the actual expectations versus the actual execution, that I think in effect reflects how rapidly the market itself has changed. Considering all of that, it's difficult for us to give you any CapEx numbers for next year with amount of certainty. Also considering the fact that some of the CapEx that were executed on the semiconductor side this year were actually investments that we had originally planned for next year, but that were brought forward to 2015.
Considering that and what you have mentioned, it is difficult to completely rule out the possibility that CapEx next year on the semiconductor side may be less than what it was this year. Because there are so many variables still left in the market situation next year, as Mr. Baek had mentioned, it is difficult for us to give you any certainty. Yes, there is a possibility that it may be less.
OLED 관련해서는 두 가지 질문이 있었던 것 같습니다. 하나는 외판, 특히 내년도 외판이 어느 정도 더 늘어날 거냐에 대한 질문 하나고요. 두 번째는 그런 걸 감안했을 때 OLED 증설 계획이 어떻게 되느냐, 크게 보면 두 가지 질문인 것 같은데요. 먼저 하나 답변드리고 이어서 두 번째 답변드리겠습니다.
Your second question about the OLED business, I guess that could be divided as two questions. One is how much of sales or shipments are we expecting to increase on the outside sales side? Second is what is the implication on that on increasing capacity for OLEDs next year?
첫 번째 질문에 대해서는 저희 당사는 OLED 강점인 제품 성능은 유지하면서 LCD와 충분히 경쟁할 수 있는 수준의 원가 경쟁력을 확보해서 OLED 외부 거래선 판매 비중을 꾸준히 확대하고 있고요. 내년에는 30% 이상 외부 거래선을 공급할 계획이 있습니다.
Well, first of all, regarding OLED sales, we have achieved cost competitiveness even versus LCDs while maintaining very strong product performance. Based on this very competitive product performance, our OLED has continuously added on new outside customers. Next year, we're thinking about 30% of our OLED sales will be going to outside customers. Or more than, excuse me, 30% plus. More than 30% will be sold to outside customers.
증설에 관련해서는 지난번 이미 저희가 공식 발표드린 대로 저희가 4월부터 계획대로 A3 라인은 가동 중에 있습니다. 향후 증설에 대해서는 저희가 시장 상황을 보고 최적의 방법으로 투자를 진행할 예정이고요. 또한 기존 라인은 지속적으로 저희가 보완 투자를 통해서 생산성도 향상하고 수율도 제고해서 계속해서 경쟁력을 강화해 갈 계획입니다.
Regarding capacity increases, as we have already announced, our A3 line has been in operation since last April. Regarding any additional capacity add-ons, that we will flexibly respond depending on the market situation. While that, we will continue to invest and enhance our existing lines to enhance the productivity as well as the yield, which would also help our competitiveness.
네, 감사합니다.
다음 질문 받겠습니다.
다음으로 질문해 주실 분은 노무라 증권의 정창원 님입니다.
The following question will be provided by CW Chung from Nomura. Please go ahead, sir.
네, 감사합니다. 그동안 시장에서 기다려왔던 주주환원 기대에 화답해 주셔서 감사합니다. 아마 한국의 다른 기업들에도 좋은 모범 사례가 될 것으로 보입니다. 한 가지 더 궁금한 점은 기존에 매입하신 자사주에 관한 부분입니다. 아직도 시장에서는 삼성전자가 자사주로 Samsung SDS를 합병하는 데 사용하는 게 아닌가 하는 우려가 있습니다. 이에 대해 답을 해주시면 감사하겠고요. 다음 질문은 답변 중에 말씀드리겠습니다.
Well, first of all, thank you very much for responding to the market's request for shareholder return. I hope that this also sets a very good example for other Korean companies to follow. First question regards the shares that you already have, the treasury shares that you already have. There are still concerns in the market that Samsung Electronics is waiting to use that in order to merge with SDS. Could you make any comments regarding this market concern?
저희가 보유한 자사주에 대한 활용은 현재 구체적으로 가지고 있는 거는 없는데, Samsung SDS 합병 관련해 그쪽으로 답을 드리면 현재 삼성전자는 Samsung SDS와 지난번 6월에 말씀드린 대로 합병할 계획이 없습니다. 조금 더 컬러를 드리면, 계열사 간의 합병은 만약에 필요하다고 생각이 들 때는 해당 기업 간의 합병 시너지, 또 관련된 기업들의 주주 가치 등 전반적인 상황을 고려해서 결정할 것입니다. 그래서 다시 한번 말씀드리는 거는 삼성전자와 Samsung SDS 합병은 현재 고려하고 있지 않다고 다시 한번 말씀드리겠습니다.
First of all, we don't have any specific plans regarding the shares that we already have, the treasury shares that we already have. Regarding your comment about merger with SDS. Currently, Samsung Electronics has no plans of merging with SDS as we had announced in June. In general, regarding our position about merging with other affiliates or subsidiaries of the group, if we do think any such merger is necessary with a subsidiary, it will be decided based on a comprehensive consideration of various factors, including potential synergy effects from such mergers, as well as the shareholder values of the two companies. Once again, we are not considering any possibility of merging with SDS at this point.
네, 감사합니다. 두 번째는 3D NAND 관련해서의 질문인데요. 앞으로 로드맵이 레이어 증가는 어디까지 가능한지, 그리고 레이어 증가가 한계에 도달하면 geometry migration은 또 어떻게 진행될 건지 이 부분에 대해서 말씀해 주시면 감사하겠습니다.
The second question is about the 3D NAND roadmap. In terms of roadmap, how many layers is it possible to stack? Once we reach a limit of layering, what is your plans or thoughts regarding geometric migration?
네, 답변드리겠습니다.
좋은 질문을 해주셨는데요. 3D NAND라 그래서 무조건 고단으로 스태킹이 되고 적층이 되면 다음 솔루션이 나온다는 거는 이성적으로 말이 안 되는 얘기 같고요. 말씀하신 대로 단수가 올라가면 올라갈수록 기술의 난이도는 점점 더 증가하게 됩니다. 번역하시죠.
Well, that was a very good question. Thank you for a very good question. As you mentioned, 3D NAND, if it just scales in terms of layers, even thinking of it rationally, as the number of layers increases, the level of difficulty of the technology required to implement it would also increase.
또한 난이도라든지 투자의 금액 정도가 단수가 점점 상향으로 조정되면서 기하급수적으로 늘어나고요. 그다음에 그렇게 했을 때 생산 전환 효율성이 나오려면 기본적으로 나오는 칩의 density가 용량이 계속 커져야 됩니다. 그러려면 demand가 거기에 맞춰서 계속 고용량화 돼야 되는데, 이런 모든 점을 고려해 봤을 때 지금 현재 여러 업체에서 말하고 있는 36단, 48단 이렇게 나오는 동일 제품에도 원가의 차이는 많이 있을 걸로 예상이 됩니다.
In addition to the technical implementation, the level of difficulty itself will increase exponentially with each marginal layering. Also, the cost and the investment required to implement additional layers itself would increase exponentially with the marginal increase of layers. There is that factor. In addition to that, the efficiency in terms of production would also become that much more difficult with the increase of layers. On the other hand, there has to be in the market demand for a very high density chip for such layering itself to make any sense. Even though there are many people who are talking about 36 and 48 layers, we believe due to the differences in the implementation and the difficulties in the implementation itself, the cost of the same 36 to 48 layer product would have large differences depending on who the maker is.
또한 지금 원가 이외에도 성능이나 이런 부분도 고단으로 가면서 굉장히 기술적인 난이도가 커져서 그런 부분들에 대한 타깃 마켓이 어디냐. 저희는 애시당초부터 Enterprise SSD를 타깃으로 뒀기 때문에 상당히 기술적인 난이도가 높아야 되는 부분이고요. 다른 업체들도 그렇게 같은 타깃을 정한다면 상당히 높은 난이도를 극복해야 될 걸로 예상이 됩니다.
In addition to the cost, there's also the performance, because with more layers, the technical difficulty itself goes up and the level of technical implementation would also depend on what the target market for that product is. For our case, our 3D NAND from the very start targeted the Enterprise SSD market. If other players are targeting the same, they would also need to execute technology with a very high level of completeness.
결론적으로 너무 길게 말씀드렸는데요. 짧게 말씀드리면 고단으로 가는 것도 중요하지만, 같은 레이어 수 내에서 어떻게 하면 효율적으로 생산 효율을 높여서 원가 경쟁력을 갖고 그다음에 성능과 신뢰성을 확보하느냐, 이것이 가장 큰 문제가 되겠고, 당사는 그런 쪽에 더욱더 주력할 예정입니다.
To make the long answer short, even though, yes, the number of layers is a factor, we believe that more important to that is to securing and gaining efficient production capabilities, which would lead to a cost competitiveness as well as guaranteeing the performance and reliability that customers who use the products expect.
네, 감사합니다. 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 BNP Paribas의 유창현 님입니다.
The following question will be presented by Peter Yu from BNP Paribas. Please go ahead, sir.
예, 감사합니다. 주주 환원 정책에서 몇 가지 더 질문이 있는데요. 새로 시장에서 자사주를 매입해서 소각하는 프로그램 말씀해 주셨는데 기존 자사주를 소각할 수도 있는지 궁금하고요. 그다음에 free cash flow의 30~40% 부분을 주주 환원을 한다고 하셨는데, 배당을 좀 더 많이 한다고 하셨는데 대강 그 배당과 자사주 매입 소각 비중이 대강 어느 정도로 rough하게 생각하시는지 궁금합니다. 그다음에 반도체 질문드릴게요.
First, I have some follow-up questions regarding the shareholder return program that you've announced. You've mentioned that basically it will be a program to buy back shares and then cancel them. Is it a possibility that the existing treasury shares that you have would also be canceled? Is it a possibility? The second is, could you give us a rough breakdown of how much of the 30%-40% of free cash flow that you will be using will be used for dividend payouts versus buyback and cancellations? Because you said that both will be pursued even though the dividend would get a larger share.
저희가 시장하고 커뮤니케이션을 했을 때 자사주 매입 관련해서 시장의 요구사항은 여러 가지 이슈가 있는데요. 우선 저희가 보유한 현금의 효율적인 활용이
자사주 매입에 쓰는 것이 굉장히 중요한 팩트다. 왜냐하면 그것도 하나의 미래에 대한 투자 개념으로 시장에서 이해했기 때문에 기존에 있는 자사주 보유한 것을 소각하는 그거와는 좀 다른 효과를 더 기대하고 있습니다.
Well, first of all, when we communicated with the market regarding the best way to provide shareholder return, buyback and cancellation was a very important requirement from the market or the demand from the market for various issues, including the fact that the market believes that it is one of the way of efficiently using the cash that the company already has, that buying back and cancellation of shares in itself is another form of investing in the future of the company, and that was separate from the existing shares that we have.
법적으로 보면 저희가 보유한 자사주는 소각을 할 수는 있습니다. 하지만 현재로서는 소각하고자 하는 그런 계획은 없습니다.
In terms of legal and regulatory settings, it is technically possible for us to cancel the shares that we already have. Currently we do not have plans of doing so.
연간 free cash flow의 30에서 50% range에서 주주 환원을 하는 그 결과에 대한 믹스는 아시다시피 free cash flow라는 게 저희같이 투자가 많은 기업으로서는 정확하게 예상하고 그 숫자를 기준으로 배당과 자사주로 나누는 가이던스를 지금 드리기는 굉장히 어렵습니다.
Regarding the breakdown of the 30%-50% of the annual free cash flow that we have mentioned today, as you know, as a company and a business that has significant investment each year, it is very difficult for us to give you any guidance. Because it's difficult for us to predict how much cash flow we would have, it's again difficult to give you any guidance on how that will be broken up between dividends and buybacks.
그런 상황에서 저희가 이번에 특별 자사주 매입을 대규모 집행을 하기 때문에 앞으로 우리가 주주들에게 환원할 그러한 30에서 50%의 금액의 용도는 아까 말씀드린 대로 우선적으로 배당에, 특히 배당은 아시다시피 하방 경직성이 있기 때문에 배당을 유지하거나 소폭 증가하는 쪽으로 포커스를 하고 거기서 남은 재원은 추가적으로 자사주를 매입하는 그런 전략으로 운영할 계획입니다.
Given the fact that we will be executing a very large-scale special buyback that we announced today, the going forward free cash flow 30%-50% will be used for dividends with priority versus share buyback. Given the fact that dividends once increased, it's difficult to decrease dividends, the plan is to use the free cash flow mainly to either maintain or slightly increase dividends going forward, and what is left after that will be used for additional buyback.
반도체 질문 있다고 하셨나요?
최근 한 달 동안에 굉장히 data storage space에서 M&A나 투자 발표가 많았는데요. 지금 그래서 NAND flash 앞으로 2, 3년 장기적인 업황에 대해서 시장에서 의견이 많은 것 같습니다. 그래서 삼성에서 보시기에는 이런 Intel이나 그런 데 신규 fab 투자 증가 그런 것 때문에 NAND 쪽에서 약간 oversupply risk를 보시는지 궁금하고요. 아니면 반대로 2D NAND에는 한계가 오고, 3D NAND 전환이 시작되는 그 과정에서 오히려 산업 내 공급 shortage가 일어날 수가 있는지, 앞으로 내년부터 해가지고 2, 3년 NAND 시황을 어떤 식으로 보시는지 궁금합니다.
The second question is about the NAND industry and the market outlook in the mid to long term for the next 2-3 years. During the past month, as you have noticed, there's been a lot of M&A investment deals that were announced in the data storage side. This has triggered some concern in the market regarding the NAND market demand supply situation for the next two and three years. I'm wondering how Samsung interprets and reads these market movements that were announced. Would, for example, Intel's announcement of investing in a new fab, is that read as increasing the risk of an oversupply in the NAND market in the future? Could this actually be taken in the opposite way of this actually triggering this major transition from a 2D to a 3D NAND so that there actually may be a shortage in the industry?
I'm wondering what your outlook on the industry demand supply situation is from next year and for the next two to three years going forward.
답변드리겠습니다. 굉장히 어려운 질문을 하셨는데요. 2, 3년간의 각 플레이어들의 기술 난이도를 극복하는 정도하고, 그다음에 원가 경쟁력을 얼마나 확보하느냐에 따라서 NAND 시장은 커질 수도 있고, 줄어들지는 않겠지만 Maintain 될 수 있다고 생각합니다.
It's a very difficult question that you've asked, but I think whether the NAND market in the next two to three years, I don't think it would decrease, but whether it would be maintained at current size or whether it would increase depends on a couple of variables, including how well each player succeeds in overcoming the technical difficulties as well as how much of a cost competitiveness each player successfully gains.
지금 보면 요즘 들어와서 신규 업체들의 NAND 진입 내지는 인수합병 얘기가 많이 들리는데요. 그런 업체들에 대한 건 저희 회사가 아니기 때문에 말씀드리기는 좀 곤란하고요. 분명한 거는 거기에 Demand가 있기 때문에 투자를 하는 걸로 예상이 됩니다. 특히 SSD 관련해서 많은 분들이 문의를 하시는데 올해도 벌써 PC의 30%가 SSD를 탑재하고 있습니다. 그거는 이제 더 이상 특화된 시장이 아니라 어느 정도 HDD와의 경쟁이 된 상황이라고 볼 수 있고요. 그런 관점에서 봤을 때 시장의 규모가 더욱더 커질 가능성은 물론 이제 Cost에 달려있지만 가능성은 높다고 보여집니다.
A lot of companies have either recently announced that they would start NAND or have announced M&As related with the NAND business. We cannot comment on what other companies are doing, but in effect, the fact that they are investing and entering indicates that they are expecting demand to be there related with SSDs. We're getting a lot of questions with that. In a sense, already 30% of the PCs are loaded with SSDs, so it's no longer a niche market anymore. SSDs are one of the options that are competing with HDDs. Even though, yes, how much of a cost competitiveness it would have would be a factor, I do believe that there is a high possibility that the market itself would grow in the future.
그런 면에서 지금 현재 planar NAND의 끝단에 서서 3D NAND로 전환되는 이 시점에서, 저희는 기존에 지켜왔던 리더십을 계속 확보해가지고 그 격차를 더욱 확대할 수 있도록 최선을 다해서 노력하면, 저희 자신의 경쟁력이 시장을 확대할 수 있는 좋은 무기가 될 것으로 판단합니다.
Given the fact that we are standing here as the industry itself migrates from the edge of planar onto 3D, our basic plan and response is to not only maintain but even widen our technology leadership so that that would give us the competitiveness, which we would use as a very powerful weapon to further expand the market.
네, 감사합니다.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 한국투자증권의 이승혁 님입니다.
The following question will be presented by Seung Hyuk Lee from Korea Investment & Securities. Please go ahead, sir.
질문 기회 주셔서 감사합니다. 저는 TV 쪽 질문 간단히 2개 드리도록 하겠습니다. 첫 번째는 아까 말씀하신 것처럼 2015년 올해는 TV 수요가 예상보다 많이 부진했는데요. 내년도에는 기저 효과라든지 짝수 효과 이런 것들이 존재할 것 같은데요. Emerging 시장 수요를 중심으로 해서 내년도 TV 수요 전망을 미리 간략히 해주시면 감사드리고요. 두 번째는 최근의 데이터를 보시면 중국 TV 업체들과 지역 프라이빗 브랜드 업체들 점유율이 상당히 많이 상승하고 있는 것 같습니다. 특히 Xiaomi 같은 경우는 아주 공격적인 가격의 TV를 또 출시하는 것 같고요. 또 고가 시장에서인 미국에서도 이런 현상이 나타나고 있는데요. 저희 삼성전자는 이러한 상황을 어떻게 인식하고 계시는지, 또 향후 어떠한 전략적 차별화를 계획하고 계시는지 중국 업체들과 말씀해 주시면 감사드리겠습니다.
I have two simple questions regarding the TV business. First of all, 2015 TV demand seems to have been sluggish than what we had originally expected. Could you give us a brief outlook, what you expect to see in terms of TV demand in next year, 2016? Especially given the fact that you would have the advantage of the base effect due to the sluggish 2015 demand, as well as the fact that it's an even year, even years there usually is a strong demand for TVs. Could you give us your TV demand outlook for next year, especially focusing on the emerging markets? Second question is about the Chinese TV companies. Even the smaller private brand TV companies have recently been increasing their market share quite aggressively. Xiaomi has introduced a TV at very aggressive prices, and they're even moving now into the U.S. market.
Given this fact, I'm wondering how Samsung looks upon and understands this situation caused by the Chinese TV companies, and what is your strategy to differentiate yourself versus the Chinese makers?
첫 번째 질문에 답변드리겠습니다. '16년 시장 수요 전망은 저희가 보거나 시장조사기관에 의하면 지난 2, 3년 동안 수요가 정체되고 감소 추세였는데요. 2016년에는 2015년 比 소폭 상승할 것으로 전망이 되어지고 있습니다. 2015년에 이어서 UHD 콘텐츠 확대라든지, 사이즈가 계속 대형화 추세가 지속되기 때문에, 또 2016년에는 짝수 효과로 올림픽이라든지, 스포츠 이벤트, 유로컵 등 이런 영향으로 대형 인치나 UHD 중심으로 성장할 것으로 전망이 되어지고 있습니다. 지역별로 보면, 2015년에 환 영향으로 역성장을 한 구주 시장 중심으로 선진 시장은 소폭 상승할 것으로 보이고요. 성장 시장은 중남미, 동부 등 지역은 환율 및 경제 상황이 어려우므로 2016년에도 수요 회복이 좀 어려울 것으로 보입니다. 단, 아시아 중심으로 성장 시장은 수요가 확대돼서 소폭 아시아 중심으로 수요가 성장될 전망으로 보고 있습니다.
Regarding the demand outlook for 2016 for TVs, both our position and also the third-party market research firms are saying that given the fact that especially the TV demand has been stagnant or has been decreasing during the past two to three years, that in 2016, TV demand would slightly increase versus 2015 demand. There are various factors that explain this outlook, including the fact that there will be more UHD content, and that there will be more demand for larger models, especially as you mentioned, next year, there will be major sports events, including the Olympics and the Euro Cup, that would also drive up TV demand. We believe that there will be an increase in demand, slightly, especially focused on the UHD as well as the large-size TVs would be the focus of most of the demand.
Regarding by region, 2015, Europe TV demand actually decreased year-on-year, but we think that there will be a slight increase in these developed markets in 2016. On the emerging side, due to economic situations and exchange rates, even next year, the Latin American as well as the Eastern European markets, it will be difficult to expect much recovery of demand in 2016 from that part of the emerging market. Most of the increase in demand for emerging market for TVs will mainly be pulled by Asia, where there will be a slight increase in demand.
두 번째 질문인 중국 TV 업체 공세에 따른 당사의 대응 방안에 대해서 설명을 좀 드리도록 하겠습니다. 당사는 주요 국가에서 소비자 최선호라든지, 인지도 등 1등을 기록하고 있고요. 또 절대적인 시장 점유율을 보이고 있기 때문에, 시장 내 확고한 위상을 선점하고 있습니다. 그래서 중국 TV와 직접적인 가격 대응은 하지 않고, 저희는 다양한 라인업과 브랜드력, 제품 기술력으로 경쟁을 하고 있습니다. 말씀하신 북미 경우에는 중국 업체 MS가 소폭 상승을 한 상황인데, 들여다보면 유통 브랜드라든지, 저가 논 브랜드 업체의 MS가 좀 증가를 했고요. 전반적으로 글로벌하게 보면, 중국 주요 업체의 성장은 대부분 중국 내수나 아시아 지역 중심으로 성장을 하고 있습니다. 저희 대응은 앞으로 차별화된 저희 포인트인 압도적인 유통 커버리지라든지, 축적된 유통과의 노하우, 파트너십, 최적화된 글로벌 SCM 역량 등을 바탕으로 해서 지속적으로 제품 기술력과 브랜드 이미지 등을 통해 시장에서 대응할 계획이 있습니다.
말씀하신 샤오미의 경우에는 저희가 직접적으로 경쟁사를 말씀드리기는 적합하지 않은 것 같은데, 아시다시피 샤오미는 자사 홈페이지 기반 판매 방식으로 중간 유통을 배제하고, 경쟁력 있는 중국 OEM을 활용해서 저희가 보기에는 중국 내수 중심으로 판매하기 위해서 전략적인 가격을 채용한 것으로 보이고 있습니다. 답변을 마치도록 하겠습니다.
Regarding our response plan towards the Chinese companies that are coming on very aggressively, Samsung still has a very strong position in the major markets based on its leadership in customer preference, customer awareness, and market share. Even if the Chinese companies are entering these markets, we are not planning on responding with them by taking on a direct price competition, because we have a very strong product lineup. We have our brand competitiveness, brand awareness, as well as very strong technology leadership, and that is the way that we will be maintaining our positions. As you mentioned, in the North American markets, these Chinese companies have come up to have increased their market share slightly, but that's mainly in the very low end of the market.
Most of the market share that you've mentioned that increased by the Chinese companies are mainly in China, in the local markets of China, or maybe in some other countries in Asia. Our basic plan regarding the response to the Chinese companies is to leverage the distribution coverage that we have, as well as the strong partnership that we have with the major distributors in each local market, as well as our very cost-effective and efficient supply chain management system, and to continue to leverage our technology advantage as well as brand awareness to maintain our position. Even though we refrain from mentioning specific companies, Xiaomi, the one that you've mentioned, their basic sales is to get a TV manufactured from a Chinese OEM and to sell that directly through the Xiaomi webpage instead of going through a distribution, which would give them a cost advantage.
That basically would be a model that would mainly be intended to focus on the Chinese internal domestic market. [Foreign language]
다음으로 질문해 주실 분은 Bernstein의 Mark Newman입니다. The following question will be given by Mark Newman from Bernstein. Please go ahead, sir.
Hi. Thanks. Just reiterating, thanks a lot. A lot of appreciation from everybody on the recent announcement on shareholder returns. My first question is on the DRAM capacity. I know there was a question about this before. We're not quite clear on the answer, so if I could just re-clarify but ask a different way. You've obviously added a fair bit of DRAM capacity this year, about 40,000 in Fab 17. I think partly because of that and partly because of demand weakness this year, pricing is very weak. We're now seeing pricing has been very weak this year, and I think Samsung's also suffering a little bit from that, not as much as the others, but starting to suffer a little bit from that in terms of weak pricing.
I'm just wondering if you could specify what the bit growth plan or what the capacity and bit growth plan for DRAM will be going forward, because we are going to see a lot more bit growth from some of your competitors, especially Micron now is back into shrinking their 20 nanometers as we speak. I'm just wondering if you give a little bit more details on the strategy around DRAM capacity, and I have one follow-up on smartphones. Thanks.
아까 DRAM Capa, 일단 먼저 오늘 발표하신 주주 환원에 대해서 모두가 매우 만족해하고 감사하고 있다는 말씀 드리고 싶습니다, 다시 한번. 첫 번째 질문은 DRAM에 대한 질문인데요. 아까 DRAM 답 시간에 이미 DRAM의 Capa에 대해서 답을 하셨지만 조금 불명확한 부분이 있어서 조금 달리 방향을 바꿔서 질문을 드리도록 하겠습니다. 사실은 올해에 Fab 17에, 17라인에 한 4만 정도를 추가로 DRAM Capa를 넣으셨기 때문에 또 거기에다가 시장 수요가 약했고 이에 따라서 가격도 약세를 보였고, 물론 다른 업체보다는 삼성이 덜 영향을 받았지만 삼성 역시 이런 가격 약세에서 영향을 받고 있다는 현재의 상황을 감안을 할 때에 앞으로의 Bit 성장과 Capa 계획을 구체적으로 전망을 해주시면 좋겠습니다. 어떻게 DRAM 쪽에서 Bit 성장 측면에서 또 Capa적인 측면에서 앞으로의 계획이 어떠신 것인지 좀 구체적으로 나눠서 설명을 해주시면 좋겠고요. 더군다나 내년에는 경쟁사, Micron 등이 20나노 미세화를 다시 시작을 하면서 경쟁사에 의한 Bit 성장이 예상이 되고 있기 때문에 이러한 맥락에서 DRAM의 Capa 계획에 대해서 말씀을 해주시기 바랍니다.
네, 먼저 특정 회사의 Bit growth에 대해서는 제가 언급하기는 좀 필요할 것 같고, 할 수 없고요. 당사 같은 경우도 Capa의 기준이라는 거는 가동을 어떻게 하느냐, 즉 그때 당시의 환경과 그다음에 라인 사정, 그다음에 다른 제품들을 생산하고 있는 그런 상황 등을 고려해 봤을 때 반도체 전체적인 효율화에서 maximum 내지는 효율적인 생산을 할 수 있도록 하기 때문에 그게 구체적으로 몇 장이다, 이렇게 말씀드릴 수는 없습니다. 그러나 저희가 말씀드린 것과 같이 현재 있는 Capa를 적절히 활용 중이다, 이렇게 말씀드릴 수 있고요. 올해도 원래 Bit growth는 처음에는 20% 중반대 하다가 지금 20% 초반대로 빠졌습니다. 그게 다른 이유가 아니라 20나노 XYZ 중에 특정 부분의 수율 문제 때문에 이런 것도 있고요. 내년도에 제가 20나노라고 얘기한 거는 진짜 20나노입니다.
그러니까 업체별로 부르는 20나노의 정의가 다를 수 있지만, 진짜로 20나노라고 말씀드릴 수 있는 거는 당사의 20나노와 같은 미세 회로 선폭에 똑같은 칩 사이즈와 유사한 net die 개수가 나오는 그런 20나노를 말하는 거기 때문에 그 부분에 있어서는 상당히 수율이라든지 생산성을 향상하는 게 쉽지는 않을 걸로 예상이 됩니다.
Well, first of all, once again, I'm not in the position to comment on the bit growth expectations of other companies. In terms of capacity and bit growth, a specific bit growth from the capacity that we have, that will be determined by how we operate the entire capacity, and that would depend on the environment as well as specific line circumstances, as well as the product mix that we decide to run. That will be decided by trying to find the mix that would maximize the efficiency of the capacity that we have. It's very difficult to give you a bit growth or how we will be utilizing our capacity in terms of how many pieces that will come out. I can say that we are sufficiently utilizing the capacity that we have.
The bit growth, even this year, shifted from mid-20% to now we're down at low-20% bit growth. That's because of specific yield situations in the 20 nano X, Y, and Z lines. What we mentioned when I say 20 nano for next year, I'm referring to what could be described as truly 20 nano, because even though different companies have different definitions of what 20 nano is, I'm saying by truly 20 nano, I'm referring to the 20 nano scaling of the process as well as the chip size, as well as the number of net dies that are produced. In terms of yield, I believe that each company, it won't be easy for them or companies to reach the amount of yield or productivity that is required to meet that.
More than that, the trend of product mix is that the PC market has stagnated in growth, accounting for less than 20% of the portion in DRAM. Therefore, each supplier is in the process of shifting their product mix from PC to server or mobile. As you know, products with interfaces such as DDR4 or LPDDR4 that are used in mobile and server-type products can naturally result in a decrease in bit growth due to their chip size and longer production cycles. Next year's bit growth will be similar to this year, but there are two uncertainties. The first is the smooth ramp-up or improvement in productivity of the new process, the 20 nano. The second is how the product mix will be handled, which will affect bit growth. From a supply perspective, I personally cautiously think that around the mid-20s might be the maximum, similar to this year.
In terms of bit growth supply projections for next year, a product mix is also a factor in how much would be supplied because as you know in the overall product market, PC now accounts for less than 20%. The companies are also shifting their capacity from PC over to servers and mobile products. For example, the server and mobile products that have DDR4 or LPDDR4 interfaces, by increasing the share of those products in the product mix because of the chip size that's required to implement them, as well as the fact that they take on longer production lead times itself would naturally bring on a bit growth decrease effect if companies increase the server or mobile products in their product mix.
Next year overall, I believe that the demand trend and the supply trend will be similar to this year, but there will be two variables that would have to be considered. One is how smoothly or how well companies are able to either ramp up or increase the productivity of their 20 nano processes. The second would be the product mix of what comes out of it. My personal view is that even at maximum next year, bit growth mid-20% will probably be the maximum. That's a personal view.
Okay. Thank you very much. One quick question on smartphones. The market growth is obviously slowing down. Looks like Samsung is having a little bit more success now in the mid and low end. I've asked a similar question before. I think this is very important. The strategy of Samsung, are you going to be more focused on maintaining your market share? Do you think that maintaining market share and growing units is reasonable? Do you think in that case that margins will come down further?
Well, for us, market share and profitability, as you've heard several times, are both important. We will be focusing on both of them. We will be enhancing our profitability by expanding the sales of our high-end flagship models. Also maintain scale and market share by expanding the sales of mid to low-end products.
시간이 많이 지나갔는데 그래도 아직 질문 대기하시는 분들이 많이 계셔서 한 서너 분 정도 더 받고 11시 반 정도에 마감하는 걸로 계획하겠습니다.
Even though the conference call has been going on for some time, there are still many people waiting in the question queue. I would like to propose that we take about three or four more questions and end the call at about 11:30 local time.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 NH투자증권의 이세철 님입니다.
The following question will be given by Peter Lee from NH Investment & Securities. Please go ahead, sir.
네, NH투자증권 이세철입니다. 두 가지 질문드리겠는데요. 먼저 반도체 쪽 부분 먼저 말씀드리겠습니다. SSD 관련 질문인데요. 앞에서 비슷한 질문을 하시긴 했는데 최근 CPU 업체들과 그다음에 하드디스크 업체들이 NAND 산업에 신규 진입을 하고 있는 것 같은데요. 이로 인해서 SSD향 V-NAND 경쟁도 치열해질 것 같고, 하지만 또 말씀하신 것처럼 SSD 시장이 경쟁에 의해서 더 커질 수도 있을 것 같습니다. CPU 업체나 하드디스크 업체들이 SSD에 더 우호적으로 시장이 접근할 것으로 보여지는데요. 이에 관련해서 삼성전자의 3D NAND 현재 현황과 내년도 특히 64단이라든지 아니면 시장에서 말할 수 있는 그 이상이라든지, 이런 것들에 대한 흐름 방향성하고 향후 전략에 대해서 답변 부탁드리겠습니다. 두 번째 질문은 답변 후에 질문드리겠습니다.
First, I have a question regarding the SSD and the V-NAND business. There were similar questions and answers related with this topic, but it seems recently the CPU companies and hard disk drive companies have started to make investments or acquisitions related with the NAND business. This actually could be interpreted in two ways. In one fact, that means new competition would come into the V-NAND space. On the other hand, as you mentioned, this could imply that the SSD market
영문 주최자께서 라인이 끊겨서 재접속 안내를 드리겠습니다. 잠시만 기다려 주십시오.
We're disconnected with the host, please wait 1 minute. Please.
다시 한번 안내 말씀드리겠습니다. 영문 주최자 라인 재접속하실 때까지 잠시 기다리겠습니다.
Again, we are disconnected with the host, I would like for your understanding. Please wait 1 minute.
다시 한번 안내 말씀드리겠습니다. 주최자 라인이 재접속을 하실 때까지 잠시 기다리겠습니다.
The new investments that were announced, they are not planar NAND. These are 3D NANDs. However, the specifics of what that investment would do, for example, of what kind of products will be produced using what types of processes and technologies, and when those products will be coming to market has not been announced. On the other hand, as we have already disclosed, we started mass production of our 48 layer, what we refer to as V3 V-NAND from the third quarter of this year. We're expecting that this will probably be our main product for 2016.
Even though we will on one hand continue to increase layers and follow the roadmap next year, another important focus for us would be to continue to enhance the process of this V3 48 layer so that we are able to deliver on not only the performance as well as the reliability of the product, but also continue to increase our price competitiveness and cost competitiveness.
팩트 한 가지만 말씀드리면 지금 현존하는 V-NAND 공급 업체 중에서 당사만이 OEM 업체에 정상적으로 Call을 득하고 mass production을 시작해서 한 1, 2년 됐죠. 경험을 쌓은 업체라고 할 수 있으며 다른 쪽에 대한 부분에 대해서는 시간을 두고 좀 더 지켜봐야 할 것으로 예상이 됩니다.
One thing that I can also, as a fact, is that among the V-NAND companies, we are the only V-NAND supplier currently in the market that has successfully qualified our products and has started mass production and have already acquired one or two years of track record already. That is a fact. Regarding other new companies, I believe that time would tell, and we would need to watch. The second question regards with the display on the LCD side. Once again, the Chinese companies, including BOE, have been either investing or have been increasing their production. What is Samsung's strategy in terms of the display, to respond to these new Chinese players? It seems you've asked about the basic direction that we have regarding the next generation line and investments for a next generation line.
As we have mentioned during the past quarter, the next 10G line requires a massive amount of investment, which justifies us to go through that much more of a prudent decision-making process before we decide. We are considering various factors, including market demand, our customer situations, as well as other company situations, but it will be decided through a very prudent consideration.
The following question will be presented by Ricky Seo from HSBC. Please go ahead, sir.
Actually, as you mentioned, yes, we launched the Samsung Pay service in the U.S. market, starting from late September. The initial market response has been very favorable. The usage rates also are far exceeding our original expectations in the U.S. market. U.S. media has also given very positive feedback, especially focusing on the fact that it could be used in many more merchants and also the fact that it's very easy to use. Those were the two focuses of the positive media feedback. Also, we have completed our talks with Verizon as of last week, October 21st. Now, we will be opening a Samsung Pay service through all of the four major operators in the U.S. market.
Considering all of this, the positive initial response and the addition of Verizon, we're expecting the adoption and the usage of Samsung Pay to increase at a faster pace in the future.
그리고 System LSI 관련해서 질문 하나 드리겠는데요. 14나노 파운드리, 메인스트림 마켓에 내년에 집중적으로 포커스할 텐데 현재 파운드리 거래선 다변화 현황하고 향후에 고객 확보 전략이 있으시면 설명해 주시면 감사하겠고요. 그다음에 10나노 양산이 자사 제품이 먼저인지, 파운드리 고객이 먼저인지 내년에. 그리고 양산 시점이 내년 first half, second half 어느 시점인지 간단히 설명해 주시면 감사드리겠습니다.
My second question relates with the System LSI business. First of all, it seems the 14-nanometer Foundry will be the mainstream of the focus for the System LSI business in 2016. Can you give us some more details or current situation of your plans of diversifying your 14-nanometer Foundry business customer base? Do you have any strategies on how to obtain additional customers for the 14-nanometer Foundry business? Also, regarding the migration to a 10-nanometer mass production, if it goes mass production, would that initially be for internal use or would it be for the foundry business? Is there a time difference? If so, which one would be used for the 14-nanometer mass production first? When do you think that would be mass production of 10-nanometer next year? Mass production, would it be closer to the first half or the second half of next year?
먼저 14나노 파운드리 관련해서 먼저 말씀을 드리겠습니다. 저희는 업계 최고의 14나노 공정 기술 리더십이 있기 때문에 그걸 바탕으로 내년에도 계속 파운드리 수요가 증가할 것으로 전망이 되고요. 거래선 다변화 관련해서 지금 현황을 말씀드리면, 구체적인 이름들은 말씀드릴 수는 없지만 굉장히 다양한 고객들하고 지금 굉장히 활발하게 논의 중이고요. 특히 애플리케이션으로 봤을 때, 모바일 외에도 굉장히 다양한 그런 응용처로 가는 그런 고객들을 지금 확보 중입니다. 전략이라고 하면 지금 14나노를 저희가 세계 최초로 올해 상용화를 했지만, 그 공정을 이제 계속 진화를 해서 high performance 버전, 그다음에 low cost 버전 그런 파생 공정들을 계속 도입을 할 예정이고요. 그거를 통해서 14나노 리더십을 가지고 고객들을 유치할 예정입니다.
Regarding our 14-nanometer Foundry business, we do have the industry's top process in the 14-nanometer business, and that is the major strength that give us access to customers and will be the source of strong demand for next year we're expecting. Regarding the current situation of our plans of diversifying our foundry customer base, even though I am not privileged to give you specific names, I can say that we are in the process of talking to many customers in various applications being not only mobile, but other areas as well. We are in the process of talking and adding on these new customers for the foundry business. If there is a strategy for us to obtain customers and diversify our customer base, that would be first of all, the fact that we were the first to commercialize the 14-nanometer process this year.
We, going forward, are planning to make this into different versions. Maybe, for example, a high performance version versus a low cost version, which will give us that much more leverage in diversifying our foundry business customer base.
두 번째, 10나노 관련해서 질문하신 것에 대해서 코멘트를 드리면, 10나노는 지금 모든 게 다 계획대로 진행 중입니다. 그리고 지난번에 말씀드린 것처럼 내년 말 정도에 양산으로 조금씩 시작할 것으로 예상이 되고요. 근데 지금 이런 건 전부 다 고객 상황이라든지, 그다음에 시장 상황에 따라서 저희가 탄력적으로 대응을 할 거고요. 그다음에 제품이 자사 제품이 먼저냐, 파운드리 제품이 먼저냐 그거를 질문을 주셨는데, 저희는 어떤 경우라도 다 대응하도록 지금 준비를 하고 있습니다. 어차피 고객들 스케줄에 따라서 달라질 거지만, 어떤 상황이든지 저희는 다 대응 가능하게 준비를 하고 있습니다.
You've also asked about our 10-nanometer. If I may comment, once again, our 10-nanometer developments are all on track as planned. As we have mentioned before, we're thinking of starting mass production, small scale from closer to end of next year. That would also depend on when that would be, would depend on the market situation as well as the customer's demand when they need it. Regarding whether it will be used for our internal use or for foundry business first, that also would depend on the customer's schedules. From our end, we are prepared to respond to any sort of situation.
많은 시간이 지나갔는데요. 이제 마지막 질문 하나만 받고 끝내기로 하겠습니다.
We will take one last question before we end.
마지막으로 질문해 주실 분은 바클레이스 증권의 배승철 님입니다.
The last question will be presented by Seungcheol Bae from Barclays Securities. Please go ahead, sir.
네, 감사합니다. 우선 명쾌한 주주환원 정책 발표해 주셔서 너무 감사드리고요. 관련해서 몇 가지 질문드리겠습니다. 우선 특별 자기주식 매입을 하실 때 11.3조 원 말씀을 하셨는데요. 이 부분은 추후에 되는 중장기, 3개년 계획과는 별도의 프로그램으로 이해를 하면 될는지 사전 확인 부탁드리고요. 만약 그렇다고 한다면 오늘 4조 원 정도 매입하시는 거는 발표를 하셨는데, 나머지 7조 원은 어느 정도의 타임프레임으로 진행하실지 궁금합니다.
Well, first, thank you very much for giving us a very clear shareholder return policy. I have a couple of clarifying questions, though. Is it correct to understand that the KRW 11.3 trillion of the special buyback and cancellation program that you announced is separate from the three-year free cash flow dedication that you have mentioned? If so, from the KRW 11.3 trillion you've announced today, specifically that KRW 4 trillion will be used in the next three months. That would leave a balance of KRW 7 trillion. Can you give us an idea of what the timeframe would be in terms of executing this remaining KRW 7 trillion of the special buyback program?
우선 11.3조 특별 자사주 매입은 두 번째로 말씀드린 annual cash flow의 30~50%하고는 완전히 별개입니다. 2015년부터 17년간 적용하는 30~50%는 이 11.3조하고는 전혀 상관이 없는 수치가 되겠습니다.
To answer your first question, yes, it is correct that the KRW 11.3 trillion of special buyback and cancellation program is completely separate from the three-year program that we announced of dedicating 30%-50% of our annual free cash flow for shareholder return. That will be run over 2015, 2016, and 2017. The two programs are completely separate.
저희가 11.3조 자사주 매입 프로그램을 오늘 계획하고 발표를 했는데, 국내의 여러 가지 제도상의 이슈로 저희가 그거를 한 번에, 또한 유통 주식 수량이든지 전체적으로 밸런스를 놓고 봤을 때 한 번에 하기가 어렵다는 판단입니다. 지금으로 봐서는 한 3회 아니면 4회 정도 걸쳐서 실행을 하지 않을까라고 지금 생각은 하고 있는데, 정확한 횟수는 주가의 상승폭이라든지 그런 여러 가지를 감안해서 실행하도록 하겠습니다. 현재로서는 3회에서 4회를 넘지 않을 걸로 지금 기대하고 있습니다.
Regarding the timeframe for the KRW 11.3 trillion of buyback that we announced. As I mentioned during the presentation, due to regulatory requirements specific to Korea as well as the amount of shares available out in the market for us to buy back, we will not be able to execute the KRW 11.3 trillion of buyback in one round. We're thinking that it would probably be executed over three or four rounds. The specific number of rounds would depend on various factors, including the amount of increase our share prices experience in the future. Currently, we do not expect to have to go beyond three to four rounds of buyback to execute the complete KRW 11.3 trillion.
네, 그리고 또 참고로 말씀드리면 1회 할 때 한국 규정상은 3개월이 소요가 됩니다. 그러니까 3에서 4회라고 하면 캘린더 기준으로 보면 9개월에서 12개월 정도가 소요될 걸로 예상하고 있습니다.
To add, as we mentioned under Korean regulation, one round of buyback resolution needs to run for three months. Three to four rounds of such buybacks in terms of calendar month would be similar to nine to 12 months.