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Strategy Lcd Tv Marketing - PDF

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					Samsung Electronics Co., Ltd.




         April 21, 2008
1. Financial Highlights - Performance
  Sales
                            (Parent)                                                                                 (Consolidated)
                                                                                      120                                                                         115.2
        (Trillion KRW)                                           73.9
 80                          CAGR 9%              67.6                                100
                                                                                             (Trillion KRW)               CAGR 12%                 97.9
                                                                                                                                    88.1                                   98.5
                                    62.8                                                                         82.0                                     85.4
 60                  57.6                                 59.0           63.2          80                                                  80.6
                                           57.5                                                   64.8
         43.6
                                                                                       60
 40
                                                                                       40
 20
                                                                                       20

  0                                                                                     0
         2003        2004           2005          2006           2007                             2003           2004               2005           2006            2007
                                                          ※ FX Adjusted                                                                                   ※ FX Adjusted


  Sales by Business Unit                                                               ROE & ROA
                     (Consolidated)                                                   40%
 100%
             14%             9%                    7%                                                    34%
                             7%
                8%
                                                   27%                                30%
  75%                        22%                                                                               26%
                                                                  Others
             25%                                                                            22%
                                                                  DA                                                    21%
                                                                                                                                                                Average ROE
                                                   24%                                20%                                             19%
  50%                        26%                                  DM                              16%                         16%            15%    15%
             24%                                                                                                                                                Average ROA
                                                                  Telecom
                                                   17%                                                                                                    12%
                             11%                                  LCD
  25%                                                                                 10%
                                                                  Semi                                                                                               ROE
             29%             25%                   23%
                                                                                                                                                                     ROA
  0%
                                                                                      0%
             2003            2005                  2007
                                                                                             2003         2004           2005              2006      2007
          ※ LCD was included in Semi before ’04                                 -1-
2. Financial Highlights
                             Assets                                                     Liabilities & Equity
                        (Consolidated)                                      ($bn)              (Consolidated)
100   ($bn)                                                           100
                                                87.7 Cash
              CAGR                                                                                              7.2
                                                                                                                        Debt
 80           21.4%                      76.4   11.9   Balance         80
                                         10.0                                                           6.6             Other
                               61.5             22.9
                                                       A/R &                                                    23.1
                                                                                                                        Liabilities
 60               52.5          9.0      19.3          Inventories     60                       6.0     19.1

                                                                                        4.9
       40.4           9.1
                                13.2                                                           15.0

 40                                                                    40     4.8
                                                                                       13.3
        7.7           12.1
                                                39.8   PP & E                                                           Total
                                         36.3                                 10.7
        9.3
                                28.8                                                                    50.6
                                                                                                                57.4
                                                                                                                        Equity
 20                   22.8                                             20              34.2
                                                                                               40.4
        16.1
                                                       Other                  24.8
                                                13.1
        7.2           8.4       10.4     10.9
                                                       Assets
 0                                                                      0
        '03           '04      '05       '06    '07                          '03       '04     '05      '06     '07

                                                                                                                      (Billion $)
 (Consolidated Basis)                     ’03             ’04                 ’05               ’06               ’07
 Cash Balance*                            7.7              9.1                 9.0              10.0             11.9
 Total Equity                            24.8            34.2                 40.4              50.6             57.4
 Net Debt / Equity                       -12%            -12%                 -7%               -7%              -8%
 Return on Equity                        22%             33%                  20%               18%              15%
                                           S-
• Cash Balance = Cash + Cash equivalents + S-T Financial instruments + Marketable securities
                                                                -2-
3. Cash Flow Management

      Disciplined Capex Spending

      Solid Free Cash Flow & Sizable Shareholders’ Return

      Strategic Investment
      ( US $ Bn )                           15. 8
 16
                                                                                                                   Capex
                                                                                      13.6                 13. 7
 14                                                             13.0
                                                                                                                   Operating
 12                                  11.5                                                                          Income
                                                                       10. 8
                                                    9.9
 10                     9. 1                                                                 9. 0                  EBITDA
                                                          8.0
  8                            7.4                                             7. 5

                 6. 0                                                                               6. 3
  6       5. 6


  4

  2

  0


                 ’03                 ’04                  ’05                  ’06                  ’07
                                                                -3-
4. Global Operation & #1 Products

  Well organized global operation networks
  - Overseas : 21 Production Sites, 13 R&D Centers, 41 Sales Subsidiaries
               (53,000 employees)
  - Domestic : 6 Production Sites (85,000 employees)

  8 Global Leading Products


     DRAM              Flash           TFT LCD            FPTV
     28.0%            40.0%             23.1%             17.2%



                                                       Computer
     DDI              SRAM                 HHP
     19.1%            28.0%                             Monitor
                                           14.5%         14.7%
                                     -4-
Business Outlook

 1. Semiconductor

 2. TFT-LCD

 3. Telecommunication

 4. Digital Media
Memory : Market Outlook

 Paradigm shift from ‘05
                                                                        PMP        MP3P        SSD
  Before ’05 : DRAM (PC)
  After ’05 : DRAM, NAND and Package solutions
                                                                        Game       HHP


                                                                                                  WSTS




                                                                                          Cycle


           Windows 95               98        Me    XP                         Vista

                                                               NAND      MP3P, HHP
                                                                                                  SSD

 91   92   93   94   95   96   97   98   99   00    01   02   03   04   05    06   07     08   09
                                              -5-
DRAM : Market Outlook

 Steady growth:
 ’07~’11 CAGR, Revenue 5%↑(bit 46%↑)

 Growing Demand from diversified applications & adv. PC
 - Bit growth of major applications
   PC(48%), HHP(60%), DTV(48%)
                                                             [ DRAM CAPEX trend ]
 - New operating system and Multi Core CPU                              91%

                                                              48%
                                                  50%                              57%
                                                                                            47%


 Constraint of supply growth
                                             Supply growth
                                                                        $21B                  Capex
                                                                                            Reduction
                                                                                             > -30%
                                                             $15B
                                                 $13B                             $13B
 - Reduced Capex,
 - Retirement of 8” fab                           ’05                   ’07       ’08(E)    ’09(E)
                                                              ’06

 - Higher technology barrier
                                                             (Source : iSuppli, SEC 2008)

                                      -6-
NAND : Market Outlook

 Stable growth :                                     100%
                                                            [NAND market by application]


 ’07~’11 CAGR, Revenue 19%↑(bit 109%↑)                80%
                                                              36%
                                                                                                23%   SSD

                                                      60%
                                                                                                22%   MP3P
                                                              18%                               7%    USB
 Expansion into various mobile
                                                      40%

                                                              18%
                                                      20%
                                                                                                26%   HHP

 applications                                          0%
                                                              19%                               11%   DSC
                                                               ’07   ’08(E) ’09(E) ’10(E) ’11(E)

 - Bit growth of major applications:                                 (Source : iSuppli, SEC 2008)


  MP3P(90%), HHP(135%), SSD(604%)                   [ NAND supply growth vs CAPEX ]


 Penetration into PC area                                    240%
                                                    Supply           230%
  - SSD portion in market : ’09(13%) → ’11(23%)     growth
                                                                               $10B
                                                                                       $13B


                                                                     $8B
                                                    CAPEX                     150%
 Stabilized supply growth :                       for NAND   $6B                       120%
                                                                                                 100%

  - Fab retirement & technology difficulties                  ’05    ’06        ’07    ’08(E)     ’09(E)

                                                                           (Source : iSuppli, SEC 2008)

                                        -7-
Memory : Strategy

 Strengthen the leadership :
 Sustaining biggest profit share in industry

  - Technology leadership → Superior cost structure
  - Differentiated product mix → ASP premium


  200%         [ DRAM profit share ]                                          [ Geometry migration ]
                                                                     4Gb
                                                                     70nm      8Gb                    NAND
  150%
                                                                               60nm                   DRAM
  100%    S A B C DE                                    0%                            16Gb
                                                                      512Mb           50nm
                                                                                                32Gb
   50%                                                                90nm                      4xnm
                                                                              512Mb                     64Gb
    0%                                                                        80nm    512Mb             3xnm
                                                        -20%
                                                                                      70nm
                                                                                               1Gb
   -50%
                       ASP (YoY)                                                               5xnm
                                                                                                        1Gb
  -100%                                                                                                 4xnm
                                                        -40%

  -150%     ’04           ’05      ’06         ’07
                                                                      ’05     ’06     ’07      ’08      ’09

                   (Source : Merrill Lynch, SEC 2008)                                       (Source : SEC 2008)


                                                               -8-
LCD : Market Outlook

  LCD panel market will post                                Capex will be focused on
  double digit growth                                       7G+ Fabs to meet TV panel
  until ’10                                                 demand
  - TV Panel will take the key role
                                                                        7G+ Fab Capacity &
                                                                    LCD TV panel demand growth
                                  59% TV portion
                       57%                  (area)          (Mill. m2)                                  ($US Billion)
             55%                                                               TV Area
                                                             100                                                $100
    51%                                                                        Capa 7G+
                                 160                          80                                                $80
                       138                                                     TV Rev.
            119
    93                                      TV                60                                                $60
                                 229
            202        215                  Monitor
    194                                                       40                                                $40
                                            Note PC
            143        172       202                          20                                                $20
    113
                                                                0                                               $0
    '07      '08       '09        '10   (mil. Unit)
                                                                         '06    '07    '08      '09     '10
          (Source: DisplaySearch, ’08.Q1)                                             (DisplaySearch, ’08 Q1)


                                                      -9-
LCD : Strategy

  Biggest 7+G Fab capacities
  - For the growing 40+” LCD TV market

  Strong TV panel customer base
   → “Forward Integration” in TV segment
   Combination of strong brand power, marketing ability, competitive edge
   in LCD panel cost, and new product line-up

  Product/ Technology differentiation
 - High portion of value-added products

  Stable procurement of materials through affiliates


                                         - 10 -
Telecom : Market Outlook

 Continuous market growth driven by      [ Global Handset Market ]

 Emerging market
                                      (Unit : 100 Millions)                 14.0
                                                               13.2
                                                 4% 12.3
                                         11.3




 Strong growth of 3G & Multimedia
 segments
                                                 14%




                                           ’07         ’08      ’09          ’10



 New players’ entry into mobile                [ 3G Phone Trends ]

 contents business
                                                                      (Unit: 100 Millions)
                                           HSDPA
                                           WCDMA                              15.8
                                           Others
                                                              14.0
                                                                              2.9
                                              11.3
                                                              1.7                    47%
                                                 0.1
                                                       15%           36%

 Strengthened global big players’
                                                 1.6                          4.5
                                                              3.3




 market position
                                                 ’07           ’10             ’12


                                                 (Source: Strategy Analytics)
                           - 11 -
Telecom : Strategy

                           Outpaced market growth
                           & Improving profitability



         Developed Market                                  Emerging Market
                                                - More focused on replacement
 - More focused on high-end segment               demand for upgrade
  ∙ Portfolio expansion                          ∙   Portfolio expansion

  ∙ Enhance technology & design                  ∙ Cost competitiveness
                                     Brand
   leadership                       Spillover    ∙ Enhance distribution channel
                                                   management


        Strengthen                                                    Enhance
          Global                  Enhance R&D                         Operator
         Operation                                                    Relations
                                       - 12 -
Digital TV : Market Outlook

  Robust growth of LCD-TV :
  Emerging market, 40”+ & FHD segment

  - Emerging market leads growth                                       - Large-sized, TV and FHD
                                                                         technology to become main trends
      LCD TV Market Forecast                                              LCD TV Size & 1080p Ratio
                                                                                                    34%           38%
                                            (Unit: million)                                 30%
       Emerging                                                                      23%
       Adv anced          CAGR 18%               153                   1080p 13%                   <30"    30"s   >40"
                                     138
                                                                       100%
                            122
                   105                                                        22%    28%
                                                                       80%
                                                                                            33%     35%           37%
                                     47%         50%
       79          36%      42%
                                                                       60%
                                                                              45%
       28%                                                                           44%    43%
                                                                       40%
                                                                                                    42%           41%

       72%         64%      58%      53%         50%
                                                                       20%    33%    28%    25%     23%           21%
                                                                        0%

       2007        2008     2009     2010        2011                         2007   2008   2009    2010          2011



  Expect steady growth of PDP-TV market

                                                              - 13 -
Digital TV : Strategy

  Product Differentiation                     Strengthen market leadership
  - Design, Image quality, and etc.           - Continued M/S growth
  - Full line-up of LCD-TV & PDP- TV          - ’08 Target : 18+αmil. Units (38% ↑)


  Efficient Global SCM System                          【LCD TV Shipment】
                                                                                    Mill. Unit


 - Minimize channel inventory                        16.7
                                                                                    17.2
                                                                         16.4
   → Speedy respond to demand
 - Fast Global roll-out of new product                        13.4                  12.8


                                                     11.2     11.6       10.8
                                                                                     9.8
  Vertical Integration                               10.5
                                                              11.3       10.7


  - R&D cooperation and cost reduction               ‘05       ‘06      1H’07      2H’07


                                                       (Source : DisplaySearch ’08.1Q)

                                         - 14 -
Next Generation Growth Engines
        Strengthen Leadership                           Leap to No. 1

           Memory                                      Printers


           Displays                                   System LSI


           Mobile Communications                      Mass storage


           Digital TVs                                Air control system


                             Emerging Businesses
     Personal            Home Network            U-Health          Home Care Robot
Multimedia Devices




                                        - 15 -
Q & A

				
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