Morning, good evening. First of all, thank you all for joining this conference call. Now we will begin the conference of the fiscal year 2015 first 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 2015 first quarter earnings results by Samsung Electronics.
Good morning. This is Robert Yi. Thank you for joining our first quarter 2015 earnings call. We have today six gentlemen, five from business units and one from IR joining us. First, Baek Jae-ho is Senior VP of Memory Marketing. Hong Kyu-sik is VP of System LSI. Park Jinyoung, VP of IT and Mobile Business. [Chung Young-nak] is the VP of Visual Display, and Lee Chang-hoon, VP of Samsung Display. We also have Mr. Sang-Hyo Kim, he's the VP 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 risks and uncertainties that could cause our actual results to be materially different from those expressed in today's discussion.
Before going over the first quarter financial results, I would like to spend a few minutes to talk about strategies that we have for 2015. Samsung Electronics has been focused on technology and product innovations to respond to rapid changes in the IT industry. We believe that 2015 will be an important year as we strive to lead the changes in innovations. For the component business, we expect to secure a strong foundation for future growth by strengthening our technology leadership and in certain products, widen the technology gap with competitors. For DRAM, 2015 will be a transitional year, moving from DDR3 to DDR4. We expect to maintain high profitability by successfully expanding 20 nano process and by increasing high value-added product sales mix.
For NAND flash in 2015, we expect the industry to get close to the technology limit on planar NAND flash, we expect a transition to vertical NAND to begin in earnest next year. Against this backdrop, we expect to take the lead in technology changes in the NAND business based on our production experiences and technology leadership in vertical NAND that are more than one year ahead of our competitors. For System LSI business, 2015 will be the year for us to take a step forward to move from a follower to a first mover in terms of technology as we are the first to commercialize 14 nano application process in the industry. We fully expect a strong turnaround, we look to secure the foundation for future growth in this business area.
For the OLED business, while we expand the market and improve the profitability of glass-based products with the volume increase of mid-range and lineups based on cost competitiveness, we will secure the mid to long-term growth engine by actively mass producing flexible displays. Our mobile business slowed in 2014 after achieving rapid growth for the past few years. In 2015, we are striving to regain the growth momentum with innovative designs using flexible displays and wireless charging, as well as strengthening mobile service platform such as Samsung Pay. All in all, we expect 2015 to be an year for us to lay down the foundations for leadership in new technologies for the future. Now I'll go over our first quarter results briefly.
During the first quarter, despite the weak seasonality of the IT business and unstable macroeconomic factors, including weak euro and emerging market currencies and financial crisis in Greece, the overall earnings improved compared to the previous quarter from a solid earnings of component businesses driven by the launch of Galaxy S6 and by improved earnings of the mobile business. The revenue declined by approximately 11% QOQ due to a weak seasonality. The gross profit declined KRW 700 billion quarter on quarter, but the gross profit ratio to sales improved by approximately three percentage points. Our SG&A expenditures decreased by KRW 1.4 trillion quarter on quarter due to decreased advertising and promotion expenses from seasonal factors, as well as efficient management of these expenses. The overall operating profit increased by KRW 700 billion quarter on quarter, as the operating profit of all businesses, excluding the Consumer Electronics division, improved.
Of course, the operating profit as a percent of revenue also improved. We estimate that weak euro and emerging market currencies in first quarter negatively impacted the operating profit by approximately KRW 800 billion. The set business, including the TV, bore the brunt of such effect. The non-operating profit for the quarter was KRW 240 billion, reflecting KRW 60 billion of equity gain and KRW 130 billion in income from financial activities, including interest. The business unit representatives will discuss their business results in more detail shortly. I would like to spend a few minutes on the outlook as we see for 2015. In the second quarter, we expect the overall earnings to improve compared to the previous quarter as Galaxy S6 sales expand.
For the component business, amid solid memory earnings, we expect earnings improvement to come from the System LSI business due to an increase in application process sales for Galaxy S6. For the IM business, we expect solid improvement in earnings, driven by increased sales of Galaxy S6. However, we also expect marketing expenses to increase quarter on quarter due to new products marketing. The Consumer Electronics business will also recover earnings in second quarter, led by launches of new TV products and by strong seasonality for our air conditioner products. In the second half of this year, for the set business, despite strong seasonality, we expect the competitions to toughen. In addition, we cannot ignore a risk of weaker demand due to weak euro and emerging market currencies. For the component business, we generally expect stable supply and demand conditions.
However, there could be a negative impact from a weak demand of said products in certain geographies affected by weak currencies. We also have to address a possibility of increase in LCD panel supply in second half. Accordingly, this year, the IT industry's typical pattern of being weak in the first half and strong in the second half may not be as strong compared to the average year. I would like to comment now on the capital expenditure plan. During the first quarter, we executed KRW 7.2 trillion in capital expenditure, including KRW 4.4 trillion for semiconductor and KRW 500 billion for display. As for our 2015 capital expenditure plan, at this point, we expect the total amount to remain at a similar level to that of 2014. I also need to mention that there's a strong possibility that it may increase.
We will adjust the capital expenditure amount depending on macroeconomic conditions as well as each business's market conditions for the remainder of the year. For your reference, I would like to share several data points by key business areas. Starting with the semiconductor. For DRAM in Q1 this year, our bit growth came in low single digit increase, while ASP declined mid-single digit. For second quarter, for DRAM, we expect the market bit growth to be mid-single digit, and we will outgrow the market. For 2015, we expect the market DRAM bit growth to be mid-20%, and our bit growth will again outgrow that of the market. For NAND Flash, first quarter, our bit growth was approximately 10%, and we saw mid-single digit price decline. In second quarter, we expect the market NAND bit growth to be low teens, and we will outgrow the market.
For 2015, as a year, NAND bit growth for the market, we expect high 30%, and we believe that we will again outgrow that of the market growth. Our large panel LCD display panels, in Q1, we saw about 10% volume decline with about mid-single digit ASP decline. For second quarter, we expect our large LCD panel shipment to increase low single digit. While for the year, we expect the shipment to remain similar level as 2014. For your reference, within the DP business, our LCD sales was about high 50%, and rest coming from OLED business. For our mobile business, in Q1, our total handset sales was 99 million units, and tablet sales was about 9 million units. Of the 99 million handsets we sold, about mid 80% represents smartphones. Our ASP for the first quarter for handset was approximately $200.
For second quarter, we expect our shipment of handsets and tablet to remain similar quarter-on-quarter. The mix of the smartphone within our handset will remain similar as well. We do expect the ASP to increase from the product mix improvements. For our LCD TV, in Q1, we sold about 9.8 million units, and in second quarter, we expect low teens of volume increase. For the year in total, for TV business, we expect about low teens of the unit sales increase. Now I will turn the conference call over to the gentleman from the business units, starting with semiconductor.
Morning, this is Jae-ho Baek from the memory marketing team. I am going to present our business results for the first quarter and market outlook for 2015. For the first quarter for DRAM, mobile demand remained solid, mainly due to flagship smartphone launches. Server demand for data center continued to be strong in spite of weak seasonality. We actively responded to demand of each application while continuously reinforcing cost competitiveness by expanding 20 nanometer migration. We focused on securing profitability by providing leading-edge products such as DDR4 and LPDDR4. For NAND, overall demand remained stable, driven by increasing density of smartphone storage and launches of SSD-adapted higher-end notebooks. We continue to secure cost competitiveness and increase the sales of solution products such as SSD and UFS. Next, I will comment on the memory market outlook and our strategy for 2015.
In 2015, we expect strong server demand led by expansion of new server platform and increase of enterprise SSD adoption rate. Mobile demand is expected to grow due to higher specification of low-end and also high-end smartphones. For Samsung Electronics, for DRAM, we will continue to reduce costs by accelerating 20 nanometer migration. We will secure profitability by having flexible product mix. We will increase sales of new interface products such as 20 nanometer DDR4 and LPDDR4 with our leading-edge technology. For NAND, we will reinforce our competitiveness with 10 nanometer class migration. We will expand 3D NAND-based SSD to all SSD segments and new interface mobile storage such as UFS. Now, moving on to the System LSI business. In the first quarter, revenue decreased quarter-on-quarter under weak seasonality, while profitability improved, led by 14 nanometer ramp-up and increased utilization.
In the second quarter, we expect earnings to improve as supply of 14 nanometer mobile AP and LSI products such as CIS and DDI increase for new flagship smartphones. In 2015, we expect a turnaround for System LSI through stable production of 14 nanometer products and sales expansion of high value-added LSI products such as high-resolution CMOS image sensor and OLED DDI. We will continue to diversify foundry customers and strengthen competitiveness of leading-edge process and LSI products for long-term growth. Thank you for listening.
Morning. This is Lee Chang-won from the planning department of Samsung Display. For LCD panel in the first quarter, although our shipment decreased QoQ due to weak demand TV panels on the weak seasonality, we brought a solid result led by strong demand for premium TV panels such as UHD TV. In the second quarter, we expect our earnings to improve QoQ, led by increasing shipments of strategic products such as UHD, curved, and ultra-large-sized TV panels over 60 inch for responding to demand increase from China Labor Day and new product of customers. In the second half, it seems that the market supply and demand condition will remain tight, thanks to increasing demand for premium TV panels such as UHD and ultra-large-sized TV panels.
Risk factors exist in the second half that could influence the supply and demand conditions, such as an increase in industrial capacity and demand decrease of TV set makers due to exchange rate fluctuation. Under these market conditions, we will focus on addressing demand for UHD TV panels, which is expected to grow continuously by expanding mass market lineups for UHD as well as by increasing shipments of premium products such as curved and ultra large-sized panels. In particular, we will appropriately respond to market changes by enhancing mass-market lineups based on cost efficiency and by focusing mainly on profitable product mix to address risk factors in the second half. For OLED panel, in the first quarter, our earnings increased QOQ due to higher shipments of new high-end smartphone panels.
Although we will strive to increase our sales by addressing demand for new high-end OLED panels in the second quarter, profit growth would be limited due to an increase in cost from operation of the new A3 line. Looking ahead in the second half, we plan to focus on improving earnings. We expect competition among panel makers to intensify further due to slowing growth of the smartphone market. Under these circumstances, we will make the best effort to improve profitability by intensifying product lineups from mid to low-end market by expanding customer base, in addition to addressing demand for new high-end smartphone panels. In particular, we will reinforce our market and technology leadership through mass production of flexible display, which is our mid to long-term growth engine. Thank you.
Good morning, everyone. I'm Jinyoung Park from the mobile communications business. Today, I'd like to present our business results and outlook for the IT and mobile communications division. In the first quarter, market demand for smartphones and tablets decreased Q on Q, in line with the typical market seasonality. In terms of our business, smartphone shipments increased compared to the last quarter. Revenue for the mobile communications business slightly decreased Q on Q due to decreased sales of tablets and feature phones. On the other hand, our earnings increased compared to the last quarter as a result of decreased marketing expenses and increased sales of newly introduced mid-range smartphones. Taking a deeper dive into our smartphones business, our new mid-range models, including Galaxy A series, showed strong sales in the first quarter. Moreover, we enhanced our premium lineup with the Galaxy S6 and S6 Edge.
Recently, shipments increased mainly in Southeast Asia and the Middle East. Regarding our tablet business, shipments declined in the first quarter as a result of market slowdown and the typical effects of seasonality. As for our networks business, revenue decreased from the previous quarter, mainly due to a delay in LTE networks investments by major overseas customers. Now, let's turn to the second quarter outlook. Market demand for smartphones and tablets is expected to remain at a similar level to the previous quarter. For smartphones, as the global launch of the Galaxy S6 and S6 Edge, we forecast our marketing expenditure to increase Q on Q. Nonetheless, we expect that our business performance will improve with increase of our high-end shipments. Total smartphone shipments are forecasted to remain at a similar level to the previous quarter due to a possible decrease in sales of mid to low-end models.
The Galaxy S6 and S6 Edge have been receiving the utmost attention and positive feedback from the market since their release on April 10th. It's so difficult to predict shipment volume of these devices at this point, as we are still in the early stage of sales. However, based on the promising initial responses, we expected that the Galaxy S6 and S6 Edge will all perform the Galaxy S5 in sales. As for our tablets, we will actively respond to market demand with competitive products such as the newly introduced Galaxy Tab A. Galaxy Tab A is notably differentiated products as this product capabilities has been enhanced through adoption of slim design and S Pen. Finally, we will move on to the outlook for the year 2015.
Market demand for smartphone is expected to continue to increase compared to the last year due to global expansion of LTE services and growth in emerging markets. Tablet market growth is expected to slow down. In 2015, we will continue to do our best to increase our smartphone sales with our competitive product lineup. We plan to solidify our leadership in the premium market with differentiated and innovative products, while also actively responding to the growing mass markets. For our tablets, we will optimize our product portfolio by focusing on the premium and mass markets. At the same time, we will enhance our product competitiveness. We will increase the overall operational efficiency across all business areas, including R&D and marketing, to improve profitability.
Severe competition in the mass markets and a possible decrease in demand due to the effects of foreign exchange rate in specific regions leaves some uncertainties for our business performance. As for our network business, we will actively expand into new markets with our experience and know-how in the LTE business. Thank you.
Good morning. I'm David Jung from Visual Display Sales and Marketing. With the fourth quarter being a traditionally slow season, and due to the foreign exchange rates in Europe, Russia, and Brazil, the flat TV market demand slowed down. These regions account for a high percentage of our sales. Thus, as we adjusted average selling price to address a foreign exchange rate, it significantly impacted our company. In addition, an increase in material cost due to strong USD 1 exchange rate also contributed to a decline in earnings. We are still maintaining our solid number one position in market share of the rapidly growing UHDTV, consumer brand awareness, and the brand preference index. For the digital appliance business, market demand decreased slightly year-over-year with the economic stagnation in the European market and the reduced demand in some emerging markets.
Even so, our company's sales and profit increased year-on-year, thanks to the growing sales of premium products. In second quarter, as the weak trend of major currencies is expected to continue, the flat TV market growth is likely to remain the same as the last quarter due to lower market demand. However, the growth of UHDTV market expected to continue. Against this backdrop, we are planning to increase sales of the top-of-the-line SUHD TV based on largely extended UHDTV lineup to gain a bigger ground in the premium TV market and to actively improve profit. In particular, the recently introduced premium product, SUHD TV, integrates our best technologies, offering ultimate picture quality experience in all aspects, including color, brightness, and contrast. Also, by featuring an eco-friendly, cadmium-free technology, which is harmless to humans, it is being recognized as the new frontier of the premium TV market.
Also, we will continue to expand and introduce regional models that meet the needs of regional consumers and solidify our leadership in the global TV market. Lastly, by applying the open-source platform, Tizen, we will offer easy convergence with the other devices, simple usability, and customized content and services to strengthen our leadership in software. For the digital appliances market demand in the second quarter, economic recovery in North America is expected to continue, but economic slowdown in emerging markets, including Russia and Latin America, because of falling oil prices and currency depreciation. Accordingly, I will actively prepare for the peak season for air conditioner sales, while moving forward to improve our results by expanding our premium product sales, such as Chef Collection and Activ DualWash.
We'll also globally expand the Samsung Open House, the exclusive experience zone for showcasing digital appliances, and actively enhancing our retail marketing and sales management in order to build up our brand power in digital appliance business. Thank you.
Okay. This concludes our presentation. I will turn the conference call over for Q&A. Before, again, we start the Q&A, I just want to get your understanding that we'll do the consecutive translation for Q&A session to make sure that we can communicate clearly what our views on many of the questions are. I know it will take a little longer, but we certainly hope that this quarter, we can finish the Q&A in one hour. Last quarter, it lasted about an hour and a half, and I heard a lot of complaints, so let's see if we can keep it down to one hour. First question, 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 provided by Nicolas Gaudois from UBS. Please go ahead, sir.
Good morning. I've got two questions. First one is on the mobile side. Obviously, the Galaxy S6 has been out now for just below 20 days. Maybe if you could give us a bit more color on the feedback you've been gathering so far for sell-through by regions, and also on preferences between the GS6 and the GS6 Edge, as well as NAND flash content. Maybe come back within that on the comment you just made on volumes likely being better than the Galaxy S5. I guess the hurdle here is not very high. How would you think about it versus the Galaxy S3 and S4? Thank you.
초기 시장 반응을 평가하기는 어렵지만 앞서 스피치에서 말씀드린 것처럼 S5보다는 많이 판매가 되고 있고, 또한 S6 Edge의 공급이 빠르게 개선되고 있기 때문에 총 라이프 사이클로 보면 S 시리즈 중에서는 베스트셀러 모델이 될 걸로 전망을 합니다. 또한 각 지역별로도 보면 S5 대비는 다 높은 수준의 판매를 보이고 있습니다.
To give you an update on the initial response of the sales of S6, the S6 sales are going very well as we had originally expected. In the case of S6 Edge, the market demand actually surpassed our original expectations, currently the S6 Edge supply is a bit tight. You've also asked to compare the S6 initial sales to S4 and S3. First of all, I would like to comment that it is a bit difficult to directly compare S4, S3 with the S6 sales, given various factors, including that there was a difference in the number of countries that were included in the initial launch, as well as difference in timing, also the fact that because of the tight supply situation on the S6 Edge, it's difficult to assess the market response.
Given all of these limitations, as I mentioned in the presentation, it is selling better than the S5, we are expecting the S6 Edge supply situation to quickly be resolved. Given all of these factors, we are expecting, we are hoping that this would be the best selling among all of the Galaxy S series that we have launched so far. In terms of region, in all of the regions, also the S6 is selling better than the S5.
Great. As a follow-up on semis, you must be at a stage now where you would define your investments for Line 17 for the second half of the year. We expect that you've concluded module 1 of phase 1 with DRAM up to 40,000 wafers per month of capacity installed equipment-wise already. What are your updated thoughts on module 2, whether you'll dedicate this to DRAM or not, and whether this will happen in H2 2015, or whether you are actually temporizing your decision considering overall supply and demand factors for DRAM. Thank you.
그다음에 반도체 투자와 관련해서 사실 이제 하반기 Line 17 관련 투자 결정들을 정리를 하실 시점이라고 생각을 합니다. 1단계 내지는 module 1은 D-RAM을 중심으로 해서 한 14,000 정도의 Capa가 장비가 들어간 것으로 알고 있는데, module 2는 어떻게 D-RAM 전용으로 하실 계획이신지 아닌지 궁금하고요. 또 이것을 15년 하반기를 기준으로 생각을 하시는 건지, 아니면 시장 상황 등에 따라서 그것을 바꾸실 생각이 있으신 건가요?
라인 17 관련해서는 지난번 IR 질의응답 시간에도 나왔었는데 저희가 생각하는 것보다 질문하신 분들이 상상을 많이 하시고, 정보가 좀 잘못된 것 같습니다. 저희는 처음부터 시종일관 현재 있는 Capa 그대로 투자를 집행했고, 아직까지는 거기에 대해 추가적인 투자 집행 여부에 대해서 결정된 바 없습니다. 처음 실행 계획 그대로 그냥 움직인다고 보면 되겠습니다.
Well, I think we had a question about Line 17 in the past conference call as well. I get the impression that the market seems to be adding a lot more imagination than what we answer. There's some misinformation included in what's all being speculated and imagined by the market. Once again, as we have always consistently maintained, our CapEx investment regarding Line 17 is following as our original plan, including the capacity. We have made no decisions in terms of adding or increasing the investment regarding Line 17. The Line 17 investment is following the original schedule that we had planned out.
Okay. Thank you very much.
네, 다음 질문 받겠습니다.
[Foreign language] The second question will be presented by J.J. Park from J.P. Morgan. Please go ahead, sir.
네, 질문 기회 주셔서 감사드립니다. 두 가지 질문이 있습니다. 반도체 쪽에 Galaxy S6가 잘 팔리면 14나노 Capa가 많이 필요할 것 같은데요. 기존에 가이던스 주신 거는 전체 System LSI Capa 중에 30%라고 말씀하셨는데 혹시 이 비중이 증가되는지 궁금하고요. 그리고 이 14나노 중에서 captive와 non-captive 비중이 올해 전체로 어느 정도 될지 궁금합니다. 그다음에 IM에 관련돼서 두 번째 질문드리겠습니다.
Thank you. I have two questions. The first question is for the semiconductor side. Assuming that the Galaxy S6 will sell very well, that will probably mean that you would need more 14 nano capacity. I think the previous guidance that was provided by the company was that 14 nano would account for about 30% of total System LSI capacity. Do you have any plans, or do you expect that share of 14 nano in System LSI capacity to increase? The second question regarding semiconductors is, can you give us a breakdown of the captive versus the non-captive of your 14 nano capacity this year?
지금 14나노 Capa에 대해서 말씀을 드리겠습니다. 지난번에 밝혀드린 것처럼 올해 연말 기준으로 전체 12인치 Capa에서 14나노가 차지하는 비중이 한 30% 정도 될 거라고 말씀을 드린 적이 있습니다. 그거는 지금 상황으로서는 변하지 않을 것 같이 전망이 됩니다.
To answer your first question, yes, we did provide that as of end of this year, we're expecting 14 nano capacity to account for about 30% of our total 12-inch capacity. As of current, we do not see any reason for that to change.
그다음에 두 번째로 질문하신 14나노 중에서 captive 비중을 질문을 하셨는데요. 지난번에도 저희 일단 전체적인 사업부 매출 중에서 captive 비중에 대해서 말씀을 드렸는데, 14나노도 그거보다는 조금 높은 정도로 지금 예상이 됩니다.
Regarding your second question about the share of the captive demand in our 14 nano business, I think last conference call, we gave you the share of the captive in our total business unit sales. Compared to our total business unit sale, probably the captive share in our 14 nano is a bit higher.
감사합니다. 두 번째 질문은 말씀하신 대로 Galaxy S6 Edge가 예상보다 많이 팔린다고 말씀하시고, 이쪽에 약간 supply tightness가 있다고 말씀하셨는데요. 언제쯤이면 이 flexible display 관련돼서 수급 상황이 해소될 걸로 보시는지요?
The second question related with the IM business is about the Galaxy S6 Edge. As you've mentioned that it's selling better than originally expected and also there is a tight supply situation there. About when do you expect the supply situation for the flexible display to be resolved?
앞서 말씀드린 대로 지금 Edge에 대한 공급은 빠르게 개선이 되고 있고요. 저희들이 생각하기에는 2분기 중에는 개선될 걸로 생각을 하고 있습니다.
As I previously mentioned, the supply situation for the S6 Edge is quickly being improved, we're expecting that the situation will be resolved during the second quarter.
네, 감사합니다.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 한국투자증권의 이승혁 님입니다.
The following question will be given by Seung-Hyuk Lee from Korea Investment & Securities. Please go ahead, sir.
네, 안녕하십니까? 한국투자증권 이승혁입니다. 저는 TV 관련해서 질문 한 가지만 드리도록 하겠습니다. 1분기에 TV 부분이 저희가 생각할 때 처음으로 적자를 시현한 것 같은데요. 이에 따라서 환율에 어려움을 겪는 지역들에서 판가를 일부 상쇄한 걸로 저희가 알고 있습니다. 향후 수익성 낮은 모델이나 인치 TV들에 대해서 비중을 축소하는 계획은 없으신지, 또 향후에는 점유보다는 수익성 개선에 좀 더 초점을 맞출 것인지, 전략 변화에 대해서 저희가 궁금합니다.
Yes, I have one question about the TV business. If I recall correctly, I think the first quarter was the first time your TV business has recorded a loss. We've also heard that due to exchange rate movements in certain regions, the ASP for your product had to be raised in certain regions. My question is about what is your strategy going forward given the situation? Do you have any plans of, for example, decreasing the share of the less profitable models or in terms of in size or models that are not as profitable? Are you going to be shifting your strategic focus from a market share focus to more of a profitability focus? Overall, how are you planning to respond to this market situation?
질문에 답변드리도록 하겠습니다. 앞서 말씀드린 바와 같이 1분기에는 구주, 러시아, 브라질 등에서 환율 악재가 굉장히 심했고, 이에 대한 대응으로 판가 인상을 추진을 했습니다. 그럼으로써 판매가 좀 둔화가 되었고, 또한 원달러 강세에 따른 재료비 부담이 증가했습니다. 외부적인 영향이 가장 크게 작용을 하였습니다. 특히 동지역에서 시장 대비 당사 매출 비중이 상대적으로 높아서 환율 영향에 노출이 더욱 크게 나타났습니다. 당사는 시장 상황별 판가 조정, 라인업 재편 등 적시 대응을 하고 있으며, 새롭게 선보인 SUHD TV 등 프리미엄 신제품에 대한 시장 반응이 기대 이상으로 좋게 나면서 이미 3월부터 구주 지역이라든지, 러시아 등 지역에서 실적이 회복되고 있는 중입니다.
Yes. First of all, to explain a bit more of the performance in the first quarter, as you mentioned, due to the depreciation of the currencies in Europe, Russia, and Brazil, we had to increase our ASP in these areas, which has resulted in slowing down of sales in these areas. The strong dollar has had an impact in terms of increasing our cost structure. It happens that these areas, Europe, Russia, and Brazil, are places where we have a relatively higher market share compared to other regions. The impact of the exchange rate has been more marked. In terms of response, we have already been responding quite appropriately by, for example, adjusting the sales prices as well as adjusting the lineup. Given the market situation as it unfolds.
The new launched premium, the SUHD TV, has been bringing about a very positive market response, and already we have seen improvement in our performance in Europe and in the Russian or CIS region, starting from already in March. The next question will be provided by Do-yeon Park from Hyundai Securities. Please go ahead. I have some questions regarding the semiconductor business. First is that our information is that you've already completed the development of the 18 nano DRAM technology. What is your plan in terms of application of this technology in the second half? How much do you think you can produce in the second half using the 18 nano DRAM technology? What is the amount of efficiency that you're expecting to gain versus 20 nano?
It seems you have even better information than I have. To comment on our 18 nano technology, I think still it is too early in terms of the phase of the technology to talk about mass production, because I think currently, the more immediate focus is on converting the true 20 nano processes. Even though our R&D center is working very hard to push forward on the 18 nano, I don't think that we will be expecting to see any sampling or mass production with the 18 nano within this year. I think it will be in the better interest of the company and the investors that we immediately focus on spreading and also improving the yield and improving the mass production situation of our 20 nano technology. Actually to correct, I never actually specifically mentioned 18 nano.
I have two questions regarding the 14 nano FinFET. There are rumors, I've heard market rumors that even though the production is going well, the yield on the 14 nano FinFET is low. I think you could dispel such rumors by telling us the 14 nano FinFET yield in Korea. When do you expect GlobalFoundries to start producing products that use 14 nano FinFET? To answer your first question about the yield, our 14 nano process, as you know, we successfully developed 14 nano FinFET for mobile applications. We started mass production of 14 nano FinFET for mobile applications for the first time in the world. It is continuing its ramp-up and mass production, and the capacity and the yield of our 14 nano FinFET process is on track as originally planned, and we're not expecting any unexpected impact from it.
In terms of the GlobalFoundries and their mass production plan, I don't think it's appropriate for us to talk about the business plans of other companies. The following question will be presented by Sundeep Bajikar from Jefferies. Please go ahead, sir.
Good morning. Thanks for taking my questions. I have one question on System LSI, another on Samsung service platform. The first one, can you give us an update on customer progress both for 14 nanometer FinFET as well as 28 nanometer FDSOI? What portion of your first quarter System LSI revenues were generated from 14 nanometers, and what portion of full year 2015 System LSI revenues do you think would be contributed by 14 nanometers?
You've asked about the 14 nano FinFET as well as the 28 nano FDSOI. Regarding specific customers and customer progress, it's a bit difficult and sensitive topic for us to go into, but you've also asked about the share in revenue. 14 nano is still in ramp-up in the first quarter, so as a first quarter, it does not account for a large portion of the System LSI revenue. Looking towards the full year, as we had mentioned, since 14 nano does account, we're expecting it to account for about 30% of our 12-inch capacity. On a full year basis, I think that would also be in line in terms of the 14 nano revenue share in the System LSI total revenue.
Great. Thank you. That's helpful. Different question. If you could give us an update on Samsung Pay in terms of whether Samsung has signed up additional banks or credit card issuers or merchants to support Samsung Pay since the original announcement, and whether we should expect future Samsung smartwatches to support Samsung Pay as well.
Regarding your question about Samsung Pay, we are expecting the overall mobile pay market to rapidly grow. In response to this anticipation of fast growth, we have been preparing the Samsung Pay service. As you know, one of the advantages of Samsung Pay is that it can also be used on a magnetic strip method, which means that it will provide very high accessibility in the existing credit card merchant base to the consumers. This high accessibility is a very strong advantage of Samsung Pay. Also, in terms of security, we have prepared a triple security approach where we use not only a credit card encryption, but also fingerprint and a Knox system to provide a very secure and safe platform. In terms of our plans, we are planning to launch Samsung Pay in Korea and in the U.S. during the second half of this year.
We are currently considering the rollout to other countries going forward. About whether it will be applied to the future smartwatches, because that does touch upon the specific specs of our future products, I hope that you will be able to gain more information about that when we launch our next smartwatch.
Thank you very much.
다음 질문 받겠습니다.
다음으로 질문해 주실 분은 CLSA의 Matt Evans입니다. The next question will be given by Matthew Evans from CLSA. Please go ahead, sir.
Hi, thanks for taking my call. There have been some reports in the last week or so that about one in three consumers who pre-ordered the Galaxy S6 in Korea didn't actually buy the product in the end. We've heard some similar reports out of Taiwan. Could you clarify exactly what this means? Perhaps it's related to the definition of what a pre-order is, perhaps in some markets versus others or some confusion there anyway. Secondly, can I assume that the talk about the seasonality this year being perhaps not so back-end weighted as usual does not apply to semiconductors? It seems that you're talking more there about display panels and TVs and mobile, but I just want to confirm that.
두 가지 질문이 있습니다. 지난주 언론 보도에 S6 선구매를 한 고객 중 6명 중 1명이 결국은 구매를 하지 않았다는 보도가 나오고 있고, 한국의 경우 그렇다는 보도와 대만의 경우에도 선 주문 내지는 선구매를 한 소비자 6명 중 1명이 실제로는 구매를 하지 않았다는 보도가 나왔는데, 그것의 의미가 뭔지 설명해 주시면 좋겠고요. 그걸 어떻게 해석을 해야 되는지. 한편 이게 선구매 내지는 예약 판매 정의들이 나라마다 달라서 생기는 혼동일 수도 있는 것 같은데 그 부분을 조금 설명을 해주시면 좋겠고요. 그다음에 사업 전반 계절성 전망에 대해서 올해가 전형적인 상반기가 조금 비수기이고 하반기가 성수기인 그 패턴이 전형적으로 나타나는 것보다는 조금 약할 수도 있다고 말씀을 하셨는데, 그게 반도체에는 해당 사항이 별로 없을 것 같다고 저희는 보고 주로 DP나 TV나 모바일 쪽 말씀이신 것 같은데 그렇게 보는 게 맞는지 말씀을 해주시기 바랍니다.
먼저 pre-order에 대해서 말씀을 하셨는데 거기에 대해서 답변을 드리겠습니다. 말씀하신 대로 pre-order의 정의라는 게 지금 언론 매체상에서 각기 다른 정의 내지는 해석으로 지금 많은 보도가 되고 있는 것 같습니다. 그래서 말씀하신 대로 각 지역별, 국가별, 그다음 사업자별로 pre-order 하는 실제 상황도 다르고 내용도 다르기 때문에, 정형화해서 pre-order의 definition은 이거고 이걸로 생각하시면 됩니다라고 말씀드리기가 상당히 어려운 상황입니다. 그리고 앞서 말씀드린 대로 대부분의 국가에서 이미 다 공급을 하고 있기 때문에 pre-order에 대한 definition을 저희들이 딱 어떻다고 말씀드리기가 좀 곤란한 상황입니다.
You've asked about the pre-order. It is true that some media have been mixing different definitions of pre-order in their reports. In reality, actually, the definition of a pre-order is different across regions or countries or even by carriers. Given this reality, it is very difficult for us to, for example, propose a single definition of what a pre-order is and how to interpret that, especially given the fact that already the product has been launched in most of these countries.
두 번째 질문. 추가로 말씀하신 한국 판매 상황에 대해서도 추가로 말씀을 드리면, 앞서 말씀드린 대로 현재까지 판매 상황을 보면 S5보다는 더 많이 판매가 되고 있고요. 초기 판매 상황은 양호한 것으로 그렇게 평가하고 있습니다.
To give you an update on how we see the Korean sales situation, it is, as we mentioned, selling more than the S5. Currently we're thinking that it's selling quite well.
매시 질문한 두 번째 질문, seasonality에 대해서는 전반적으로 저희가 보는 시각도 반도체는 당연히 지금 현재로써도 하반기가 더 강할 것으로 보고 있고, 앞에서 말씀드린 대로 환율의 영향에 따라서 세트의 수요가 가격 인상이나 이런 부분에 따라서 감소할 수 있는 리스크를 감안했을 때, 하반기에 약세가 만약에 온다고 하면 상대적으로 그 부분은 아마 세트 쪽에 집중될 것으로 예상됩니다.
Regarding your second question about seasonality. Yes, we also agree that for semiconductor, the second half would actually be stronger. The reason why we thought that the seasonality may not be as distinct this year is because of the set business and the impact that the exchange rate may have on the set business. Due to the exchange rate, we may have to raise prices on the set business, which does present the risk of demand for sets being weaker. If this falls on the second half, we may have a relatively weaker second half for the set business.
다음 질문 받겠습니다.
Thank you.
네, 매사.
[Foreign language] The following question will be given by Sam [Stoll] from Bank of America Merrill Lynch. Please go ahead, sir.
Bank of America의 Simon Woo입니다. 첫 번째 질문은 디스플레이 관련해서 만약에 경쟁업체가 10세대 LCD 팹을 건설하고 또 OLED 쪽으로 투자를 확대한다면, 이에 대한 저희의 전략도 똑같이 10세대 LCD 팹을 짓고 또 OLED TV 쪽으로도 팹을 지으면서 대응하셔야 되는 건지, 아니면 그거와 무관하게 저희들은 좀 더 소극적으로 디스플레이 쪽을 대처하실 건지 답변 주시면 감사하고, 두 번째 질문 올리겠습니다.
My first question is about the display business. I'm assuming a scenario where one of your competitors decide to invest in a 10G LCD Fab and also increase its investment in OLED. If a competitor comes with these moves, what will be your strategy in terms of responding? Would you respond head on, also invest in a 10G LCD and invest in an OLED TV Fab? Would you rather maintain a more passive stance?
질문이 LCD 초대형 라인 투자에 대한 거하고 그다음에 OLED TV에 대한 우리의 방향에 대해서 여쭤보는 두 가지 질문인 것 같습니다. 일단 LCD 초대형 라인에 대해서는 저희가 지금 수요에 따라서 다양하게 검토하고 있습니다. 그래서 이게 투자비용이 굉장히 큰 거기 때문에 향후에 초대형 제품 성장이라든지, 시장 상황을 면밀하게 검토한 후에 투자에 대해서 판단할 예정입니다. OLED TV에 대해서는 저희가 그동안 말씀드린 것처럼 저희는 지금 지속적으로 여러 가지 다양한 기술을 개발해 오고 있습니다. 지금 아직 OLED TV가 원가 경쟁력 측면에서 많이 부족하기 때문에 향후에 원가 경쟁력이 있는 최적의 양산 공법을 확보하고, 그 이후에 고객하고 협의해서 시장 니즈에 대응해 나갈 계획입니다. 감사합니다.
I think your question can be boiled down into our investment plans regarding the ultra large LCD panel line and our strategic direction regarding our OLED TVs. First, regarding the ultra large size LCD production line investment. It is quite a large size investment. We are considering various different plans in terms of the investment, and we will decide depending on how the demand unfolds, as well as how the ultra large size industry grows and how the market situation develops. We are studying these very closely as we continue to review different investment plans regarding the large size LCD line. About the second question about our OLED TV, as we have previously also mentioned, we have been continuously been developing various technologies. As of yet, the OLED TV still lacks significantly in terms of cost competitiveness.
We are currently focusing on developing an optimal mass production engineering technology and will decide how we will go forward by looking at the market needs for OLED TV and also by talking with our customers.
네, 감사드리고요. 마지막 질문은 연말에 14나노 전체 Capa가 전체 LSI 12인치 중에서 30%로 갔을 때 이미 비수기가 올 것 같습니다. 그리고 Galaxy S6 디맨드도 내부 AP 디맨드도 마무리 단계에 있을 때 과연 이 급격하게 늘어난 Capa를 잘 가동하시려면 외부 고객, non-captive customer가 있어야 될 것 같은데 잘 준비되고 계신지 질문드리고 마치겠습니다. 감사합니다.
My other question is about your 14 nano capacity. You're expecting that 14 nano to account for about 30% of your 12 inch capacity at the end of this year. By that time, by the end of this year, I'm assuming we will be entering the slow season. Also, the demand that's being generated from S6, the APs for that, the captive APs, I'm assuming by the end of this year will be drawing down, which means to effectively use the 14 nano capacity that you will have by the end of this year, you should be successfully developing non-captive customers at this point. I'm wondering if that is going on very smoothly.
네, 그 부분에 대해서 답변드리겠습니다. 저희 14나노 공정이 지금 전 세계적으로 굉장히 앞서 있기 때문에 마켓에서 굉장히 니드가 많고요. 굉장히 수요 요구도 많습니다. 그래서 저희가 굉장히 다양한 고객군과 다양한 응용처를 지금 계획대로 잘 확보가 되고 있고요. 그런 면에서 저희 Capa 운영하는 데는 전혀 문제가 없으리라고 보고 있습니다.
Regarding our 14 nano, because we are so much ahead of our competitors globally on our 14 nano, we have continuously been receiving various inquiries, requests, and demands from actually a large variety of customer groups and applications. In terms of customers, we are adding on according to our plan, and we have no concern on the customer side regarding the 14 nano capacity.
네, 감사합니다.
네, 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 Bernstein의 Mark Newman입니다. The following question will be presented by Mark Newman from Bernstein. Please go ahead, sir.
Hi. Yeah, thanks for taking my question. First of all, I just like to thank you for the letter and I think the outline, Bob, you gave at the beginning of the call was actually very helpful and I think actually covers a lot of the questions. My question actually is about the handset division. There's been a lot of focus, obviously, on this call around S6 and S6 Edge. I actually want to talk a little bit more about the mid-end and low-end handsets. The handset unit, smartphone units seem to be improving a bit. If we look at what's happening, the high-end smartphone strategy around S6, focusing on differentiation seems to be paying dividends, seems to be working with some improvement there.
The mid-end and low-end, it may be a little bit better than Q3, Q4 last year, but with your guidance for Q2, it's implying low-end and mid-end actually down, despite seasonality improving. I'm wondering why you're not being more aggressive on pricing in the mid and low-end. We have heard from our checks that the mid and low-end phones, some of the pricing is not competitive with some of the competitors still. I'm just curious why Samsung is not being more aggressive on pricing, perhaps to go more after share. Thanks very much.
먼저 아까 전자 발표 때 해주셨던 여러 가지 전망 정리가 저희가 갖고 있었던 질문에 답하는 데 굉장히 많은 도움이 되었던 것 같아서 감사하다는 말씀 드리고 싶고요. 질문은 휴대폰에 대한 질문입니다. 이번 콜은 주로 Galaxy S6나 Galaxy S6 Edge를 위주로 질문을 하고 답이 이루어졌던 것 같은데 제 질문은 중저가 휴대폰 관련한 질문입니다. 지금 보면 스마트폰 물량은 개선이 되고 있고 또 Galaxy S6를 중심으로 한 하이엔드 쪽의 차별화 전략이 실제로 효과가 있어서 성과 개선으로 가시적으로 이어지고 있는 것 같은데요. 반면에 중저가 같은 경우에는 물론 작년 3, 4분기에 비해서는 조금 좋아졌지만 오히려 아까 2분기 가이던스 말씀하시는 걸로 봐서는 중저가가 계절적으로는 2분기가 개선이 됨에도 불구하고 조금 내려갈 수 있다고 암시를 하시는 것 같아서 궁금한 점은 삼성이 중저가 쪽에서 pricing을 좀 더 공격적으로 안 하시는 이유가 무엇인지 궁금합니다. 저희가 듣기로는 아직도 중저가가 경쟁사 중저가 대비 가격 경쟁력이 삼성의 경우 없다고 듣고 있는데, 점유율을 위해서 중저가 쪽 pricing을 공격적으로 안 하시는 이유가 뭔가요?
전반적인 저희들 중저가 전략에 대해서 문의를 하셨고요. 거기에 대한 답변을 드리겠습니다. 우선 지적하신 대로 저희들 지난 4분기 이후에 새롭게 저희들 중저가 라인업을 다 바꿨고요. 거기에 따라서 새로 출시한 신모델들, Samsung Galaxy A 시리즈, Samsung Galaxy E 시리즈, Samsung Galaxy Grand Prime, Samsung Galaxy Core Prime 이런 신모델들의 지난 4분기 이후에 1분기에 판매가 굉장히 확대가 되었고요. 이런 판매 트렌드는 2분기에도 큰 변화가 없을 걸로 전망을 합니다. 앞서 제가 스피치에서 말씀드린 내용은 저희들이 작년 4분기 이후에 큰 제품 라인업 전략 하에 줄이기로 했던 예전 모델들, 거의 EOL 단계에 있는 모델들이 2분기에는 long tail로 가면서 물량이 줄어 그런 부분들에 대한 언급을 했던 것들이고요. 저희들 큰 제품 전략상 중저가의 메인 모델들의 판매 상황은 큰 변화 없이 2분기에도 판매될 거라는 말씀을 드리고요. 그다음에 좀 더 aggressive하게 전략을 구사하지 않느냐라는 말씀을 하셨는데, 그 또한 pricing을 포함을 해서 각 emerging 시장에 성장하는 시장에 대해서는 저희들이 적극적으로 대응을 할 계획이 있습니다.
Regarding our mid to low-end strategy, as you know, we have completely changed our mid to low-end lineup as of fourth quarter of last year. We've launched the new Galaxy A, E, Prime, and Core, and the sales of these new mid to low, the mass lineup, has been expanding during the first quarter. We think that this expansionary trend will not see much change and will continue into the second quarter. During the presentation, what I mentioned was more of the old models in the mass market line that are being phased out and will be approaching the long tail end of their life cycle as we go into the second quarter. They will have a decrease, but overall, in the new or the main mid to low price range models, we do not expect any trend changes in the second quarter versus first quarter.
About your question of why we are not aggressive in terms of pricing in this mid to low-end market, actually, we are planning to actively respond, including pricing, in the emerging as well as growth market.
Thanks very much.
오케이. 다음 질문 받겠습니다.
다음으로 질문해 주실 분은 NH투자증권의 이세철 님입니다.
The next question will be provided by Peter Lee from NH Investment & Securities. Please go ahead, sir.
네, NH투자증권 이세철입니다. 두 가지 질문드리겠는데요. 먼저 시스템 반도체 쪽 질문드리겠습니다. 이번에 S6의 baseband chip이 자체 processor가 들어간 것으로 보여지는데요. 상당히 인상적인 것 같습니다. 향후 모듈 AP와 같이 AP one chip화 방향성은 어떻게 전개될 건지 답변 부탁드리고요. 두 번째 질문은 답변 듣고 질문드리겠습니다.
My question is about your semiconductor. It's very impressive how you've used your own processor for the baseband chip for the S6. Going forward, what is your plan or strategy in terms of a one chip solution, including mobile APs?
최근 모바일 환경에서 one chip은 특히 mid나 low-end 쪽 대응하는데 굉장히 중요한 그런 제품군이고요. 그래서 지금 저희 2013년에 벌써 one chip을 이미 출시한 적이 있고요. 그 이후로도 계속 지금 라인업을 갖춰가고 있습니다. 지금도 라인업 계속 강화하고, 그다음에 one chip에 대한 역량 강화하는 거에 주력을 하고 있습니다.
Well, especially given the current mobile environment, one chip is a very important product group, especially responding to the mid to low-end mobile segment. We've already launched our first one chip solution in 2013, have continued to expand and strengthen our one chip lineup. Our current focus is to continue build a very competitive and strong one chip lineup as well as enhance our capabilities.
네, 두 번째 질문은 NAND 쪽인데요. 하반기 같은 경우는 3D NAND가 본격화될 것으로 보여지는데, 특히 거의 모든 NAND 업체들이 지금 3D NAND 쪽을 하반기부터 내년도 집중해서 진행할 것으로 보여지는데요. 현재 당사 3D NAND 진행 현황 및 향후 48단 적용에 대한 시점에 대한 부분 답변 부탁드리겠습니다.
The second question is about the NAND market. It seems the 3D NAND will be developing in earnest in the second half. It seems almost all of the NAND companies are saying that they would do 3D either second half this year or next year. What is your progress in terms of the 3D NAND side, and what is your schedule in terms of the 38 layer?
48단입니다.
Excuse me, 48 layers.
질문 주셔서 감사합니다. 1년 전에 저희가 V-NAND 발표했을 때랑은 상황이 많이 달라진 것 같네요. 그때는 경쟁사들이 별로 없었는데. 경쟁사 얘기는 차치하더라도 저희는 내부적으로 1년 사이에 그동안 자체 roadmap 계획에 의해서 착실히 제품을 개발했고, 아마 하반기부터 되면 본격적으로 거래선 퀄이 다 완료돼서 Enterprise SSD는 물론이고, PC, Client SSD도 대부분의 경우 V-NAND로만 생산을 할 겁니다. 그렇게 되면 개수가 많이 늘어나니까 고정비도 많이 절감이 될 거고. 그래서 앞으로 저희는 V-NAND라는 자체 component보다는 그걸 활용한 solution 제품을 여하히 어떻게 잘 만드느냐가 중요했었기 때문에 지금 현재 거래선 승인 단계가 순조롭게 진행되고 있어서 아마 하반기 이후에 많은 도움이 될 것 같고요. 그다음에 말씀하신 48단은 저희 코드로 V3라고 합니다. V3, 몇 단인지는 정확히 밝히지 않았습니다만 V3 제품은 하반기에 나와가지고 조만간 이것도 역시 주력 제품으로서 기여가 될 걸로 예상이 됩니다.
네, 감사합니다.
About the V-NAND market. Looking back, it seems the V-NAND market itself has changed quite a lot during the past year. There are more competitors in the space than a year ago. Aside from the competition, we've also been continuously developing our V-NAND according to our own plans and schedules, and roadmaps. The qualifications have continued with the customers, and we're expecting that soon, not only the enterprise SSDs, but also the PC, that is client SSDs, would also be produced only on V-NAND, which would increase volume and which would decrease our fixed cost burden. I think going forward, our approach towards our V-NAND business is focused more on developing and improving the solutions that use V-NAND rather than focusing on the V-NAND itself.
Our qualifications with our customers currently are moving ahead very smoothly, which will help us in terms of our V-NAND business in the second half. Regarding the 48 layer question that you had, that would be equivalent to what we internally call the V3, which we plan to introduce in the second half and will become one of the main products in our product lineup.
Just one correction, I think on the translation, Mr. Baek did not say that there are more competitions now. He said there are a lot more talks in the market now. We do not see anyone in the V-NAND market until sometime next year. [Foreign language]
다음으로 질문해 주실 분은 삼성증권의 Hwang Min-seong 님입니다. The following question will be given by Hwang Min-seong from Samsung Securities. Please go ahead, sir.
질문 기회 감사드립니다. 아까 S6 판매에 대해서 말씀해 주실 때 출시 국가가 다르지만 S5보다 좋다고 하셨는데요. 이게 sell in 기준인지 아니면 sell through 기준인지 부탁드리고요. 제가 알고 있기로는 작년에는 초기 출시국이 약 70개였는데 이번에는 20개국으로 줄었는데 그럼에도 판매가 만약에 sell through로 좋다고 하면 이게 absolute 물량이 좋다고 하는 건지, 아니면 판매 속도가 좋다고 하는 건지를 좀 clarify 부탁드립니다.
I have some follow-up questions regarding the S6 sales trends that you're seeing. You've mentioned that the number of countries that the S6 was launched is different from the previous series launches, but still that the sales of S6 is better than S5. Is that on a sell in basis or a sell through basis? If that's on a sell through basis, I think my recollection is that the previous launch was in 70 countries, the S6 launch was in 20 countries. We're talking about a smaller country footprint. If on a sell through basis, if S6, you're saying is selling better than the S5, is that in terms of quantity, that shipment volume, or is that more in terms of the speed of how the S6 is selling?
아까 제가 말씀드린 S6의 판매 상황들은 지금 sell through, sell in 공히 다 말씀을 드린 거고요. 그다음에 판매가 좋다는 얘기가 volume based냐, 어떻게 물어보신 거는 현재 volume based로 말씀을 드린 겁니다.
Regarding the S6 sales that I was referring to previously, that applies to both sell in basis as well as sell through basis. In terms of the sales being better than S5, that is on a volume basis.
반도체 질문 하나 드리겠습니다. 작년에 로직 팹을 전용해서 메모리로 활용하신 부분이 있는데요. 지금은 메모리 팹에 로직 팹에 DRAM이나 NAND 등의 생산이 남아있는지, 아니면 완전히 다 없어졌는지 궁금하고요. 반도체 올해 투자에 대해서 말씀해 주시면 고맙겠습니다.
The second question is about the semiconductor business. Last year, I recall that you had used some of your logic fab capacity to produce memory. Is there any DRAM or NAND still left in that logic fab, or is that already all gone? Could you give us a bit more detail about the semiconductor investment plans this year?
말씀드리면 작년에 제가 반도체 전체의 시너지 효과를 내서 활용했다 그랬는데, 그게 System LSI나 이쪽에 있는 팹을 다 이용한 것이 아니라 반도체 공정 중에 보면 bottleneck 공정이 한두 개 있지 않겠습니까? 그런 부분들을 identical하게 똑같지는 않더라도 비슷한 공정이 있으면 그걸 잽싸게 차를 이용해서라든지 이렇게 움직여가지고 거기서 그 공정을 해갖고 오고 이런 식으로 했기 때문에 지금도 필요한 bottleneck 공정들은 그런 식으로 해서 처리할 수 있다고 생각하고요. 그게 어떻게 보면 idle gap을 조금이라도 없앨 수 있는 방법이 아니겠냐. 반도체 전체 총괄로 가지고 있는 당사만의 장점이 아니겠냐, 그렇게 생각이 됩니다.
Last year, actually what happened was in order to create a maximum synergy effect in the entire semiconductor business unit, we, as you mentioned, used part of the logic fab. Rather than using the entire System LSI fab, what happened were if there were certain bottleneck process steps and we could find not identical, but similar enough capacity somewhere else, then we would, for example, use vehicles to move around the production so that we could remove the bottleneck somewhat. Actually doing this, that is using other capacity to clear up certain bottleneck process steps is an approach that we can still use. This would also decrease the idle capacity. It's an advantage that Samsung can leverage as a semiconductor business.
투자 관련해서는 제가 오늘 말씀드릴 게 별로 없을 것 같고요. 지금 현재 서두에 말씀드렸듯이 이 점만 계속
작년 기준으로 보면 저희가 메모리에 한 10조 정도 투자를 했고, 아마 DRAM하고 NAND 믹스가 한 7:3 정도로 저희가 한 것 같은데요. 올해도 지난 4분기 실적발표 컨퍼런스콜에서 말씀드렸지만 작년 수준으로 지금 고민은 하고 있는데 상황에 따라서 이 금액이 올라갈 가능성은 충분히 여지가 있다고 보고요. 믹스 변화도 사실 시황에 따라서 우리 하반기에 기대되는 여러 가지 신제품에 대한 효과를 감안해서 믹스 변화도 현재로서는
Regarding the investment on the semiconductor side, as we mentioned last year, to give you last year's investments, it was about KRW 10 trillion on the memory total, about a 7 to 3 mix between DRAM and NAND. Currently, we're seeing that the investment won't be very different from last year, but we are still looking into our semiconductor investment plans this year because there are, I think, sufficient possibility that it may be higher than last year. Also the mix could also change versus last year's investment, depending on how the market situation unfolds, as well as the impact that we're anticipating from the new product launches in the second half. The mix could also be flexible. I think we have two more questions waiting in queue before we end the conference call. The next question will be presented by Mehdi Hosseini from SIG. Please go ahead, sir.
Please go ahead, Mr. Hosseini.
Okay, maybe we should move on.
The following question will be presented by Henry Kim from Citig roup. Please go ahead, sir. I have several questions about the semiconductor business. First of all, my question is, have you decided, in terms of the phase 2 for your S3 Line 17, whether it will be DRAM memory or a System LSI? There was a similar question before, but I think this is a slightly different approach to that question. My question is have you decided about phase 2? If so, could you give us some direction about what you've decided? The second question is, could you give us your roadmap in terms of your LSI 10 nano mass production plans? The third question is regarding what you're planning to do with your 2D, that's planar NAND capacity. You've alluded that the 2D NAND seems to be approaching its migration limits.
If so, what are your plans on using your current 2D NAND fab? Will you be changing it to a 3D NAND fab, or will you keep it in order to address the remaining low density applications? To take the first two questions. First of all, regarding S3, the Line 17 phase 2, System LSI is planning to use it as originally planned. To give you an update on the progress, the building is expected to be completed within this year. In terms of filling the building as well as the ramp-up, that would be decided flexibly depending on the customer demand. About the mass production of the 10 nano, the development of the 10 nano is going forward smoothly according to plan. The mass production plans are also moving according to plan. We're expecting to go into mass production end of next year, 2016.
I think our experience in successfully mass producing and ramping up our 14 nano FinFET will be leveraged very effectively, that preparation for the mass production for the 10 nano would also be achieved very smoothly and quickly.
2D NAND 관련해서 물어보셨는데요. 제 기억에는 저희가 2D NAND의 한계에 봉착했다는 말씀은 드린 적이 없는 것 같습니다. Industry는 그런 얘기가 나왔을지 모르지만, 현재까지도 저희는 올해도 10나노급의 첨단 제품을 도입하기 위해서 노력하고 있고요. 내년도에도, 후년도에도 노력은 계속할 겁니다. 그래서 아까 3D NAND로 간 부분은 SSD 분야고, 나머지 올해의 가장 큰 특징이 모바일 핸드셋, 스마트폰의 스토리지 용량이 많이 고용량화 됐는데, 그런 부분들은 V-NAND로 하기에는 어떻게 보면 고용량은 됐지만 용량이 그렇게 큰 고용량은 아닙니다. V-NAND가 단위가 되는 기본 유닛이 48단, industry에서 말하는 걸 보면 256기가비트니까 그렇게 따지면 이게 32GB 이렇게 나거든요, 칩 하나로. 그러니까 그렇게 되는 건 너무 용량이 큰 거고. 다른 어플리케이션에서 지금 쓰고 있는 컨슈머라든지, 스마트폰의 스토리지에 들어가는 용도는 planar NAND가 필요하다는 부분이 반드시 있겠습니다. 그래서 그런 양쪽의 고용량, 고집적, 고신뢰성은 V-NAND로 가고, 나머지 분야에서 컨슈머용처럼 planar로 가는 양쪽의 two pass를 같이 슈링크 하면서 계속 진행할 예정입니다.
Well, to clarify, I don't think we've ever mentioned that Samsung Electronics, that we have reached the scaling limit or migration limit of 2D planar NAND. The industry may have, but I don't think we've ever actually mentioned that we have, because we are continuing to migrate on our 2D planar NAND. We're going into 10 nano in the 2D NAND space as well. This will be coming on next year and the year after. We have our roadmap continues on the 2D planar NAND next year and the year after. On the 3D NAND side, the SSD is the key application. On the 2D, we have to think about the demand from the handsets, the smartphone, mobile side. The handsets and the smartphones are now demanding more storage. That's going towards higher capacity and higher density.
On the other hand, even though the V-NAND may address the capacity and density issues, because that will be 256 gigabits or 32 gigabytes. That will be one application, but still there are consumer electronic products that would not need that much density or capacity, and that would still be, we believe, better addressed by the planar NAND approach down the road. Our basic approach to the NAND business is that we have two lines. One will be the high density, high capacity, the higher reliability applications being addressed by the V-NAND side. Our planners would go towards the applications, the consumer applications that do not need that much density or capacity or reliability.