Samsung Electronics Co., Ltd. (A005930) Earnings Call Transcript & Summary

Hello, everyone. Nice to be here. It's really, really excited to be here. And -- so today, I'm going to talk about Memory Business units, vision and solutions that we have developed so far and what we have in our pipeline for the next 10 years. So the -- I'm going to talk about 3 main subjects. One is DRAM, the other one is NAND flash. And finally, I'm going to talk about CXL-based solutions. So this page shows -- I brought this foil so that I can make some context for today's talk. On the left side, you can see that we just announced 14-nano-based EUV DDR5 DRAM. Last week, I remember, we announced 14 nano-based LPDDR5X, which is a huge achievement for us because it can support up to 8.5 giga bps. And until recently, most of the low-power DDR DRAM application is mainly for mobile markets. So sometimes we call this LPDDRS mobile DRAM. But we are starting to see the server industry has very keen interest in adopting low-power DDR technologies because we are starting to see ARM-based CPUs. And a lot of different kinds of CPUs are coming online, and they are very, very interested in power reduction. And we believe that this low-power DDR-based on 14-nanometer technology is going to be a huge hit for the next 3 or 4 years. So on the right side, you can see that this is -- this article is actually not published to the industry. It is an internal editorial written by our NAND flash engineering head, and he talks about the histories of NAND flash development and the difficulties and challenges on NAND technologies. And at the same time, at the lower bottom, you can see that he's talking about 1,000-layer V-NAND. He's trying -- he's talked about 1,000 layers. And according to back of the envelope calculation, I believe, within -- by the end of 2030, I believe, we can see 1,000-layer NAND flash. And that is amazing when you think about the current mass-produced NAND flash. I joined Samsung and I started my career as a NAND flash designer. And at the time, we were talking about 8-layer V-NAND, and now we are talking about 1,000 layers, that's amazing. The main problem with 1,000 layers is actually the capacity, capability of equipment. Based on the initial calculations, 1,000 NAND flash in one equipment can produce about 10 wafers per day. So it is not economically viable at this time. But we believe that the NAND industry will figure out a solution in the future. But talking about 1,000 layers, that's amazing. And also, it's a huge challenge for NAND flash industries, NAND flash suppliers to solve in the future. I believe we can. So I'm going to talk about a little bit about EUV. I have been talking about EUV for a long, long time, actually. And this year, other supplier announced the plans of adopting EUV technologies. And as you all know, our 14-nanometer DRAM has adopted 5 layers to the DRAM process using EUV technologies. Why do we need EUV? It is not just about cost reduction. We believe that below 14-nanometer, non-EUV DRAM is not viable in terms of processing technology. So it's got to be EUV-based, anyway. So we have been working on this technology for the last 10 years. And we believe that the whole ecosystem for Samsung EUV production is almost ready, and we are now ramping up 15-nanometer using 1 layer EUV and 5-layer 14-nanometer EUV. The 14-nanometer ramping up speed is pretty good. And it's pretty fast based on our initial assumption. And we believe that this EUV technology will enable us to introduce sub-5 nanometer DRAM technology within the next, hopefully, 10 years. And if we can achieve that, that will increase the bit density of DRAM more than 3x, and it's going to be like then we can even be able to see 6, 4 gigabit monolithic DRAM in the future. That will give us huge density boost for the whole industry to enjoy. For example, another thing is that not just about processing capability, EUV also gave us -- give us -- gives us a huge boost in terms of productivity. And how can we do that? Well, using EUV, you can basically you reduce the number of steps for DRAM processing. The number of steps in the future will be reached up to 1,000 steps. But using without EUV, you cannot have economically viable DRAM products. So this is essential and productivity increase is a huge -- moment of huge impetus for us to pursue this technology relentlessly. So what can you do about -- what can we provide to the industry with this EUV technology? Well, right now, we've been able to develop 512 gigabyte DRAM module. And in the near future, I believe that we can reach up to 1 terabyte module. That's huge density. It's almost like SSD density. So with this technology, we believe that we can provide high-density modules. And that's very critical because all the CPUs coming to the market these days will eventually still keep the DRAM channels right next to the CPU, and the number of channels cannot be increased over the years. It has -- right now, it's -- some CPU is supporting up to 60-channel, sometimes 8-channel, that kind of number is the ballpark number. And if you have a limited number of DRAM DIMM channels, then the only way you can increase the density is increase density of module itself. And we believe that EUV will give us nice density boost. Right now, we are developing a 24-gigabit monolithic DRAM with 40-nanometer technology. And eventually, we can provide 32 gigabits. And with the Samsung's package technology, we can stack all those DRAMs on top of each other and then we can make huge density DRAMs. It will be very exciting. And not just our DIMM, we also can provide low-power DDR density up to 128 gigabytes. That means we can say that low-power DDR technology will be adopted by server industry from now on. And with that density, it really makes sense for them, right? And it has -- and all the CPU industries, the main concern right now is how to reduce power consumption because power is basically translated into the energy -- and also it can -- it will increase the temperature of the whole system. And without managing temperature properly, you cannot improve the performance. So power is performance. And with the LPDDR5 with that high density, we believe we can provide nice thermal profile for server application. That's why I've been talking about LPDDR5X. So EUV, that's a future technology, and Samsung has been working so hard to introduce this technology to the market. And we believe from 14-nanometer, our EUV-based NAND -- DRAM will be in full production next year. Okay. So I'm going to talk about NAND flash. This foil is a little bit complicated, but I really have to talk about these technologies because right now, you have -- we have 2 different NAND flash technologies. One is floating gate-based, the other one is a charge trap-based flash. On the lower bottom, you can see that floating gate-based NAND flash. One of the main suppliers of NAND flash is still producing that technologies. I think you know who. The technology itself can be described by its name, floating gate. Floating gate means that all the charges, electrons and holes are trapped inside, stored inside the floating gate. The floating gate is isolated from adjacent floating gates. So it is -- it can store the charges pretty nicely, can retain the charge for a long, long time, and that's perfect for TLC or even QLC technologies. And -- but most of -- I think most of the NAND flash, in the future, will be, if not now, will be based on CTF. On the left top corner, this is CTF. When you see that -- this is a cross-section of cell technologies. And you can see that a CTF, there is small -- Si3N4, that's where we are storing challenges. And the red line that is all connected together. And the charges inside those layer, that's not conducting layer, there's a [ dielectric ] layer. That's -- all the charges are stored locally in that red area. And -- but because all those -- the charge layers are connected together, a single line, that means your charges tend to dissipate horizontally, right? So that means it's really hard to have a TLC or a QLC technology because you have to retain your charge in a very -- in a very small area for a longer time. But if you charge tends to drift away, then you may lose your data, right? So, so far, the main QLC technologies has been supported by this floating gate technologies because it's easy to design a QLC so that you can have nice density boost. And on the right side, then why are we doing the CTF? Why is Samsung doing CTF, instead of floating gate? Because CTFs, you can squeeze a cell height very tightly. So you can squeeze more data in a single volume -- in the same volume of silicon itself. So in terms of big growth, that really makes sense. It's more economical. That's one of the reasons why all the NAND flash suppliers are transitioning from floating gate to CTF. Samsung has been the pioneer of these technologies, right? Okay. So this is the market share of QLC in the total NAND flash. Okay, in the QLC market, what is the market share of Samsung? Just 10%, very small compared to Samsung's more than 30% market share of NAND flash. This is pretty small, actually, right? But when we talk about CTF-based QLC, Samsung's market share is 100%. That means almost all the 100% CTF-based QLC is manufactured by Samsung. This -- I think it's -- it has a huge implication, right? We are the pioneer of CTF base, most economical technology-based QLC provider. Where are we selling? We are selling SATA-based SSD to the off-the-shelf market. And on the left side, you can see that on the consumer SATA SSD sales, we have -- we account for about 45%. Almost half of the SATA market for off-the-shelf is occupied by Samsung. But within that, SATA, QLC accounts for about 40%. So a little bit less than 20% is occupied by Samsung CTF-based QLC, and market response was pretty good, actually. When I check the field failure rate, it is on par with TLC or even MLC-based SSD. That means our quality control and manufacturing capability is superior to existing technologies. And not just this -- but as you can see, SATA market is shrinking right now. Everybody is trying to move from SATA market to NVMe market. Then what are we doing right now? Okay, this is enterprise SSD market. SSD market -- this is enterprise, like HP, Dell or Lenovo, those kinds of things, not including data centers. In that market, our QLC SSD is 1.1% market share. We are shipping actually right now to enterprise providers -- server provider with our QLC SSDs. And within that, QLC sector, our market share is close to 100%, yes. So we've been shipping this CTF-based technology, very difficult technology to make -- to have QLC capabilities because of the cell leakage issues. We've been almost sole provider of these technologies. Then why it takes -- why it's so hard? I explained to you why it's so hard compared to the floating gate. But what can we do about it? Yes. It has to be -- it has to have a software technologies. For example, ZNS QLC. This ZNS is -- it stands for Zone Name Space. And what it does is that it stores the data according to their property. So if you can do that, you can increase the lifespan of these QLC cells. And all those identical property data aggregated together, and we can apply our special formula technologies to particular data sets. By doing that, we can increase the life cycle -- lifespan and reliability of QLC. And this is one of the technologies we have to develop for QLC adoption, wide adoption by industry. And right now, we are working with one of the top NAND flash SSD suppliers to define these specifications. And we believe that this cannot be done by Samsung alone. Samsung has been expressing the value of the open innovation, and we are trying to make this QLC ecosystem, not just by hardware, but also for software with other suppliers. And this has been going on for some time. And I believe that last week, in Silicon Valley, we had OCP Global summit, and we talked about the ZNS technologies to the server industries and their hyperscalers, and the reception was enormous, enormously warm. And we believe that we can create more software technologies to make sure that this QLC SSDs widely applied to the whole industry. So what is going to be the future of this QLC. It has been known that Samsung has been a little bit -- has been reluctant to aggressively introduce this technology. And the main reason, as you can all understand that software is not ready and the whole ecosystem is not ready. And -- but we are trying very hard to make sure that this ecosystem is built before we announce these technologies. And as I said, our consumer base QLC is already in the market, and we are shipping our enterprise-grade QLC SSD to the enterprise server companies. And eventually, eventually, it will be introduced in the mobile space within the next 3 or 4 years. And the total market size of mobile is so huge. Without going to the market, QLC will be very -- if we don't go to the mobile market, eventually, then QLC will not be blossoming into the main industry. So we are working very hard to make sure that we can eventually go into mobile market. And one trend these days we can notice is that one of the high mobile provider in Cupertino is having 1 terabyte mobile storage, and other flagship mobile providers in Korea and China is trying to do that. And that means that the need for high density, high-density NAND flash storage inside the mobile is growing, although it's not as substantial this day, but it will grow every year. And because of the bill of material of mobile phone is so limited, there is no way we can put 1 terabyte or 2 terabyte TLC or MLC-based NAND flash inside the mobile sets. And eventually, that will drive the need for NAND flash supplies to come up with more economical solution. And we believe one of the economical solution for high-storage mobile market in the future will be none other than QLC-based NAND flash. So we will see. Okay. I'm going to talk about last subject. This is CXL. CXL stands for Compute Express Link. And we have been -- we started working on this technology from 2019. And the industry has formed a consortium to promote these technologies. The main idea of CXL is before all the CPU has memory controllability. So memory has to be right next to CPU on the DIMM channel, as I said a couple of slides before. But that -- even though -- as I said, even though we use EUV technologies to increase the density of DIMM module, it has limitations, right? A CPU can only access a DIMM, high-speed main memory. But these days, a lot of accelerated technologies are coming on to the market, like GPUs and smart NICs, to deal with big data analytics and AI. So the needs for accessing high-density, high-speed memory is growing rapidly. And so industry-wise, there is a consensus that, well we may have to liberate memory cells from the DIMM channel, small number of DIMM channels. What about we can put the memory in the center of the computer architecture and let all the CPUs and GPUs or any other accelerators to access that huge pool of memory directly. So that's the main reason industry has come up with the CXL interface. And we announced the prototype of the CXL memory. We call that as Expander, not module. We call it the Expander, that's a standard name for this CXL hardware. We come up -- we introduced a prototype of the CXL Memory Expander in I believe this May this year. And we are now showing a live demo to the industry last week and everybody was very excited about these 2 technologies. And having defined specification is one thing and having real product working seamlessly with the existing hardware system is another thing, it's a huge thing, and the acceptance was very, very, very good. And I believe that CXL Memory is not about hardware, as I said, it's like a QLC. You have to develop a software ecosystem to make this technology accessible to the whole industry. So before, only NAND flash industry has been very aggressive in terms of software ecosystem building. And we believe that same thing will happen for DRAM industry. As we shrink further and further, it's really hard to -- hard to guarantee the integrity of cell itself. There's huge density. For example, 1 terabyte DIMM, I don't know how many errors we can -- we can manage. So this technology is right at the -- is at the right time because each CXL Memory Expander has its own controller, like SSD in NAND flash. That means you can do a lot of, a lot of great things with software to manage the DRAM itself. So even though we go develop in the future 5-nanometer DRAM and all the cell has to be managed carefully, so that the user does not see any single errors or any other different kinds of errors. So the EUV-based high-density module combined with CXL, which has the capability of managing memory cell, is a perfect combination. So that's why we are so excited about these technologies. And one of the way to allow industry to evaluate this technology is we -- so we started to develop a software solution for this CXL, not just hardware. So we came up with, as indicated, scalable memory development kit. We developed it by ourselves. And that's open source. We provide that solution to the Linux community. And so that people can evaluate this CXL Memory Expander with our software solutions. And what does it do? It manages, okay? So we have existing DIMM channel-based conventional DIMMs and also we have the huge dense high-density CXL-based memory. And how we can manage 2 different kinds of memory resources. That's this software is providing. That software allows this heterogeneous memory environment to be working closely together so that we can provide more bandwidth and low power. And at the same time, optimize the resources of this memory system. So this is really exciting. This is a really exciting technology. So I think today's talk is about 40 minutes. I decided to present my material for about 30 minutes, so that we can have about 10 minutes left, so that I can get some questions from you. And our vision is very clear, not just providing -- not just having a high market share and introducing technology and technology after each year. We just have to come up with element technologies for the whole industry, like EUV and QLC and CXL likes solutions, memory solutions. And down -- in about 10 years, there's going to be a lot of, a lot of technical breakthrough we have to come up with. And by doing that, we can make this whole industry very healthy. And so instead of just staying as a technical leader in this industry, we have this huge obligation to provide to the whole industry, the key element solutions. And to do that, we are very focused on building ecosystem with the concept of open innovation. We will be more open, and we will share our knowledges and solutions with the whole community, so that we can have a much more sustainable and consistent technology to the market. And everyone is talking about Metaverse and VR, AR, AI. But even though memory and solution is not that fancy compared to all those new technologies, but at the bottom level, memory has to be very, very critical and solid. It has to be the ground work for the whole industry to prosper in the future. So we feel great responsibilities and great we -- we feel we -- it's not just about making money and having a big basket share. We are very, very interested in making whole industry as healthy as ever before. Thank you.

Hi, everyone. Good morning, good afternoon. My name is Shawn Han. I'm the Senior Vice President of Marketing at Samsung Foundry. I'm very pleased to share with you today to share where we are heading and how much progress we've been making during my presentation. As you can see from the screen, the title of my presentation today is Samsung Foundry's Leadership in the New Digital Era. This is a very exciting topic for all of us at Samsung Foundry. I hope that by the end of my presentation, you will have a better understanding of our company and how we will continue to establish our leadership position in the Foundry market. With that said, let me begin with a quick overview of today's agenda. My presentation today consists of 4 main parts; the first covers unexpected rise in Foundry market opportunities due to unprecedented demand; after that, I'll share Samsung Foundry business update; then I'll touch on the main topic I would like to discuss today, how Samsung Foundry is maintaining its leadership in technology, operations and service; and finally, I'll wrap up my presentation with some key takeaways. As you know, the semiconductor market has historically been driven by key volume drivers. Personal computer drove the market in the early 2000, with mobile applications on smartphones coming next. However, these days, a single application simply cannot drive the market. Right now, the Edge device and IoT applications connect virtually everything in the world to generate big data, which can be used for deep learning and accelerate detail transformation. Experts predicts that by 2030, every individual in the world will have approximately 15 connected devices, so you can imagine just how much data each of us will be generating. On top of that, a deep learning has revived AI and HPC facilitated by data centers is making AI an essential part of our lives. And all of these things will be accelerated, thanks to high-speed 5G wireless communication technology. Here, you can see a breakdown of Foundry market opportunities by applications and their respective growth rates. Firstly, mobile applications led by smartphones will continue to be the main volume driver for 5G technology. HPC is expected to have the highest growth rate with a CAGR of 17%, and IoT, specifically connected devices and automotive applications, will also show steady growth led by electric and/or autonomous cars. When we combine all of these applications, it becomes clear that Foundry market opportunities in the short to midterm are very or extremely attractive. On the right-hand side, you can see the respective growth rates of various nodes. All applications require competitive technology and the applications I just mentioned will require advanced nodes, such as FinFET and EUV-based technologies from 14-nanometer to 3-nanometer. As you may well be aware, there are not many players that can provide these advanced technologies. And the companies that can, Samsung Foundry is a key player, especially when it comes down to 7 nano and beyond. I think this makes clear just how tremendous an opportunity this is for our company. Now I'll move to the next item on today's agenda. Samsung Foundry business update. This slide covers some of the Samsung Foundry's key milestones. Samsung first entered the Foundry market in 2005, establishing an independent business unit 2017. In 2019, we announced Vision 2030. Our plan to become the #1 foundry in the world. In order to achieve this goal, we plan on investing approximately $150 billion into our non-memory semiconductor businesses. By 2030, we hope to become a true pure foundry player, a leader in terms of technology, operations and service. Throughout our history, we have made several defining moments. Silicon supply is a key component of the Foundry business, one that cannot be supported with our manufacturing facilities and competitive technology. As you can see in 2005, Samsung Foundry launched the first 12-inch S1 line. Then in 2011, with our S2 Fab in Austin, Texas, we became the first in the industry to offer high-K metal gate technology. Another Foundry industry-first was our FinFET technology, which allowed us to make a quantum leap in terms of performance and power. After that, we achieved another world first with our adoption of EUV technologies at our 7-nano F3 line. This year, we opened our S5 line in Pyeongtaek, and we'll be announcing a new fab in the U.S. very soon. What you can see in this slide is an overview of our locations in our current fabs as well as the new fabs that we plan on building in the near future. Two of our campuses, Giheung and Hwaseong, are very close to one another, about an hour drive south of Seoul. Our Pyeongtaek fab is just about 30-minute drive south of Giheung. As mentioned earlier, our S2 line is located in Austin, Texas, and we plan on building another fab in the U.S. in the near future. Together, these fabs have enabled us to nearly double our capacity from 2017 to 2021 and will allow us to triple our capacity by 2026. Now it's time to talk about today's main topic. As I explained on the business milestone slide, our goal is to become the #1 foundry in terms of technology, operations and service by 2030. Please allow me to discuss these focuses one by one, to demonstrate why we at Samsung are so confident that we can become the Foundry market leader. There are many technological offerings on our road map, including our advanced nodes, which cover 14-nanometer and beyond. First, this is our FinFET technology, which is among the most advanced in the semiconductor industry. I mentioned earlier how we introduced FinFET for the first time in the Foundry industry for 14-nanometer. After that, we maintained our leadership through continuous innovation and evolution. Innovation, in this case, means making a big jump towards full node migration, while evolution means making gradual improvements to the modern technology. As you can see from the chart, after FinFET, EUV technology came, followed by the latest innovation, GAA, gate all around. And each modern technology has been gradually improved. For example, we sometimes enhance performance or power, power reduction and eventually scalability. When we improve scalability, we changed the number before the name of the node. As of today, 3GAE is about to go into mass production and 2-nanometer and 17LPV were announced last month. As shown in the road map, 4LPP and 3GAE are the closest to mass production with 3GAP following soon. Of course, all of these others are already in volume production. Now here's a short video that can give you a better idea of what GAA is and how impressive it is as a technology. [Presentation]

Samsung Foundry has remained a strong player when it comes to CIS ISP, that stands for Image Signal Processing Chips, and DDI applications by offering the most advanced technology in the market. That includes our 28-nanometer, our latest innovation, which is based on planar transistor technology. Samsung Foundry has a long history with MCU with embedded flash and RF technology. And the latest technology is also 28-nanometer. However, as I mentioned during the opportunity slide, since HPC, the automotive sector and the smartphones with advanced cameras required the most competitive technology, the need to migrate to the next node is unavoidable. The next node, in this case, being 14-nanometer FinFET technology. In anticipation of this, Samsung Foundry has already initiated the migration from RF for 4G and 5G and has been very successful in production over the last few years. Based on that experience, another migration is ongoing with 8-nanometer RF, which is the most optimized RF technology in the FinFET era. To help address price concerns for CIS, DDI and MCU applications, we proudly announced 17LPV, a low-cost version of FinFET technology. Another important migration is embedded NVM. Since embedded flash has faced barriers with FinFET, embedded MRAM should be the best candidate to replace embedded flash. Going forward, we will integrate embedded MRAM on top of our 14-nanometer. Based on these migrations, specialty technologies will not only benefit from FinFET intrinsic excellence, but also is [ maturing ], which includes reduction in cost. At the Samsung Foundry Forum, we presented our ready-to-go total design platform. This is a turnkey infrastructure service that we provide to our customers to deliver our foundry technology, along with various offerings from SAFE. We call it SAFE partners to best support our customers' product requirements. The total design platform can support all of our customers' application needs by covering HPC, AI, mobile, automotive and IoT applications. Furthermore, we can support any type of integration technology, such as 2D, 2.5D and 3D integrations. Unlike other wafer processing foundries, Samsung has been developing heterogeneous integration technologies for quite some time. We also have proven track record of successful production that includes Wide I/O memory, HBM Series and stacked image sensors. Based on that experience, in 2020, we developed 3D X-Cube technology that was built on 7-nanometer and based on TSV. We also expanded to 2.5D and successfully produced I-Cube2 and qualified I-Cube4, which we plan to mass product -- mass produce starting in 2023. Samsung Foundry has a great deal of experience with a variety of technologies, including not just 3D TSV and 2.5D, but also 2D MCM. This wide portfolio allows Samsung to cover various HPC applications, including AI inferencing, which requires technologies that are low in cost and small in size and is used to train AI. Allow me to show you another video on 2.5D and 3D packages to help you understand what I mean. [Presentation]

The goal here is not just to make the products, but to make the products that are competitive. Samsung Foundry has compiled a strong ecosystem based on its leadership in terms of design package and process technology. SAFE enables collaboration between the partners and customers ideas are optimized with DTCO, which stands for Design Technology Co-Optimization, and offers benefits in terms of power, performance and area. There's also STCO, which is short for System Technology Co-Optimization, and enables the development of optimal system-level solutions. Samsung Foundry's 3 Is: innovation, intelligence and integration. Open the door for even greater efficiency by combining collaboration and optimization. This means that customers' products are produced with our support for each collaboration and specific service. As stated earlier, manufacturing is the essence of the Foundry business. Any technology, no matter how impressive, is useless without stable and reliable manufacturing infrastructure. Some of Samsung Foundry's greatest strength are its global reach and diverse experience. We have accumulated a great deal of operations know-how since 2014 and ramped up our volume by a factor of 3 from 2014 to 2020. We have built a synchronized production system that allows us to share the data 24/7 with fabs in the U.S. and Korea. And the proper exchange of engineering resources enables the synchronization of manpower. Some may worry about our manufacturing capabilities in the U.S. However, based on over 10 years of manufacturing know-how, we are very confident that we can enable seamless operations. Of course, it's important to remember that Samsung Foundry is not alone. We have sister organizations with which we can share our experience and expertise to maximize synergy. With 30 years of experience in high-volume manufacturing, Samsung memory is one of the largest and most trusted DRAM and NAND manufacturers in the world. It is our great advantage to have access to Samsung memory's high-volume production experiences as well as its expertise in rapid troubleshooting. In addition, we are working together with hardware experts at Mechatronics R&D center to improve equipment performance by 100% or more. Furthermore, working with the IT center, we have employed statistical analysis to help improve productivity. The IT center's AI experts helped us build predictive models to optimize manufacturing schedules at our factories. They also helped us use [ fourth ] analysis models to improve yield. These opportunities to collaborate are unique to Samsung, and we are constantly looking for ways to improve our products and solutions by working with the other Samsung experts. This is not just the leadership, but also a unique benefit. Lastly, I would like to talk about our extensive global offices and our partners' respective footprints. Our global offices and partners are equipped with state-of-the-art customer support systems to suit each region's unique business characteristics. They are continuously making progress in this area and each of our local offices and partners located in the U.S., China, Europe and Japan will provide all of our customers with unwavering support led by our dedicated regional teams. Now I'd like to wrap up with some key takeaways. After my presentation, I hope you now have a deeper understanding of how Samsung Foundry is establishing itself as the new leader in this industry. With that, here are key takeaways: first, Foundry opportunities are expanding in this new era of digital transformation; second, Samsung Foundry continues to make aggressive investment, which includes expanding our global operations to satisfy strong market demand; third, we are maintaining our firm leadership in the industry in terms of technology, operations and service; and finally, we are enabling our customers to achieve faster time to market, and we are ready to grow together in the Foundry market. And that concludes my presentation, and thank you very much for your attention.

All right. Good morning and/or afternoon, everyone. It's wonderful to see so many investors and analysts via the conference call here today. My name is Dennis Choi. I'm the Marketing VP of Mobile Display business, Samsung display in Korea. Today, I prepared several video clips for your better understanding. And it is a very great honor for me to speak to all of you at this year's investor program. Let me start with giving you the overview of the key trends in the display market following the COVID-19 pandemic. And if you don't mind, I would like to take your questions after my presentation. Okay. Can we start with this video clip? [Presentation]

Actually, this video clip was released last May at SID 2021, which was -- which is the world's largest display exhibition. It highlights the capability of the product we have been developing. As you saw in the video clip, we have been working on various foldable display for laptop, including slidable and multi-folding screens. In addition, we have been -- we have also been innovating and improved our OLED technology, developing a new solution to enhance the image quality, low power consumption and more. Most of the flagship smartphone today are equipped with OLED display and 5G connectivity. Just to take a look at your own smartphone. It's most likely using OLED display, I guess. In the future, already itself, you will be rapidly entering into the IT area becoming the standard display, not just for smartphone, but for many other computing and electronic devices. I'll give you more details in the next slide. My presentation will today cover the 3 main areas. I would like to talk about the key trends in the display and the IT market, first; and then I will explain the current status of the Samsung Display IT business; followed by the strengthened unique selling point of our OLED technologies. I'm sure a lot of you here today have been working from home following the pandemic. According to the World Economic Forum, 95% of the global working population worked in the office before the pandemic. Since the COVID-19 outbreak, over the 40% of workers have shifted to remote work. In the post-pandemic era, hybrid work between the home and office is expected to continue. According to the survey by Gartner, 82% of the executives working in the Silicon Valley said they plan to continue this hybrid working model after the pandemic. Many IT companies, such as Google and Meta, has also said they plan to have 40% to 50% of the employee work remotely. Before the pandemic, many user needed just 1 single PC at home -- work. But now in addition to the computer in the office, many people will need additional laptop or tablet to work from home remotely. Due to this kind of change, display had become a key part of the everyday life. High definition display is now necessary to check the information, stay connected and communicate with others regardless of time, space and device. Outside of work, lifestyle changed following the pandemic, have also led to the increased demand for the computing devices. Research in the U.S. has shown that average number of hours spent at home has increased by more than 2 hours due to the rise in the communicating and remote education. For many household, this change means having one shared computer at home is no longer enough. Instead of many people now require individual personal computers. The pandemic has also changed the way people spend their downtime. For example, instead of going to the gym, exercise at home is now the normal. As a result, our homes is becoming the multipurpose spaces. This change has increased the demand for the high performance display, which is around us. Consumers now need high-quality display for such as high definition, high speed, wide color gamut and et cetera, in their living space to view the content and stay connected. With the development of cloud technology, multitasking simultaneously with a different device has become the normal. We call and screen with the seamless connection between the devices. In this multi-device world, consumers are increasingly looking for the high-quality display, not just for their own smartphone, but also their laptop and monitors. The proportion of the laptop with the [indiscernible] above jumped from the 35% in 2016 to 65% in 2019. And we see this number is expected to rise up to 80% by 2026. And the B2B IT market is also changing instead of providing a separate work device, more company are allowing and encouraging their employees to use their own personal device for work. This "bring your own device" trend is gaining the popularity and has been becoming the normal. To stay competitive, many premium laptops targeting to the B2B market are now switching from the conventional display to the OLED display. As OLED technology has providing high-quality being experience, enables a thinner device and delivers more power efficient. As a result, the demand for the OLED display for IT is also expected to increase the [indiscernible] in the mid- to long term. Since the lifestyle change and work-based environment continue to change, the demand for the display is expected to increase in the mid- to long term. Actually, this year, the demand for the smartphones and TV and IT products has recurred due to the slowdown of pandemic. In particular, this year's display market is expected to be achieved with the largest growth ever. After some adjustments, both 2022 and 2023, the display market is expected to return to the trend of growth driven by the lifestyle and workplace change. Almost one of our every 2 smartphone, which is produced this year, equipped with the OLED panel. While the current adoption rate of already is less than 2% in laptop industry this year, but we have confidence this will be rapidly expanding in the near future. Let's look at the IT market in a little bit detail. Since the start of the pandemic, the demand for desktop has slowed down. But as I mentioned earlier, the demand for laptop and tablet has increased significantly because of remote work and education environment. Specifically, consumers are increasingly looking for the laptop with the performance that exceeds desktop. They expect their own laptop to deliver the immersive of being experience, portability and long battery life. Notebook with the OLED display will be the key to meet these growing consumer demand and needs. By 2025, we expected over 20% of premium laptops that cost $700 and higher will be equipped with the OLED display. Yes. In terms of a form factor change, the presence of foldable technology is another key factor that will drive the demand for the innovative display in the IT sector in the mid- to long term. We can already see this trend in the smartphone market. In early year 2000, mobile phone design began to diverge from the standard bar form factor. From clamshell to slider and the swivel phone and even device with QWERTY keyboard, there was the explosion of the creativity in mobile phone design. However, smartphone design has become stagnant over the 1 decade, as most smartphone adopted one single slate form factor. In the last 2 to 3 years, there has been an increased demand for the new smartphone design. And then the, [indiscernible] equipped the Samsung foldable display, innovated Samsung smartphone form factor and has so far been very well received. The presence of the foldable technology will bring the dramatic change in smartphone market, slidable, rollable and multiple folding smartphone were soon becoming the reality. As foldable form factor becoming more common in smartphone, the consumer gets used to them, we expected there will be the increase in demand for the foldable design in IT area as well. Let me give you a little bit detail. In recent year, maximize the portability has become a top priority in the design of the IT product. We can see the trend playing out the accelerated adoption of ARM-based SoC chips and device across the IT area. The trend powered maximize portability will drive the manufacturers in IT sector to adopt the thinner and more power-efficient display solution. Foldable display, in particular, are perfect for making the device more portable while also opening a new possibility in design within this carrying small thin, portable with a key design principle for the IT device sooner or later. The boundaries between the different types of mobile and computing device will continue to blur with this development of foldable technology. From tablet that can be transformed into the laptop to notebook with the desktop size of the monitor, foldable technology will open the new possibility for end customers to combine different device into one. And the development of slidable and rollable form factor will accelerate the kind of convergency. Samsung is committed to making this feature reality as we are developing the technology, innovation that will take our display image quality and power efficient to the next level. Okay. Now let's move on to the topic of 5G global rollout and its impact on the display market. Actually, our portal and images becoming the dominant means of the communication when 3G was introduced is a long time ago. With 4G introduction, we began to be connecting with another through the video as well. Finally, the 5G era ultra-high definition content as well as VR, AR will becoming the major feature, we communicate and connect. In the future, connectivity technology will enable the same activities as in the real world in 3D virtual space, so-called Metaverse, that looks and feels exactly like the physical world. Changes in the past and the future trend, tariffs, improvement in mobile communication technology are always accompanied by new demand for the new class of display. Currently, 300 pixel point, we call the PPI. 300 ppi are now no longer sufficient to satisfy the current needs. Instead consumers now expect their device to come with a display with 400 ppi or higher. And mobile technology continues to advance. We can expect the ultra-realistic display with the 1,000 ppi will be possible for special application in the future. In 2025, 5G penetration rate on the smartphone is expected to reach 70%. During the same period, the proportion of the smartphone with high-quality displays, such as OLED, is also expected to reach almost 60%. This means the OLEd display will be the standard for all smartphone, except to the low-cost product. Consumers, who get used to high-quality display on smartphone and TV, will also seek to buy the laptop with a high-quality display. As a result, this will lead to an increased demand for the OLED laptop. Next. Next, I will explain about the current status of Samsung Display IT business, smartphone display. Actually, we are still in the -- our major businesses from the smartphone display, but for the better in the business portfolio, we are focusing and diversify our business portfolio into especially IT area. Since entering the premium notebook market in the year 2019, which is a couple of years ago, with a higher resolution panel only, Samsung Display has been actively expanding its business, where they innovate high-quality display solution. We will continue to grow our product portfolio and expanding our penetration into the flagship consumer and the consumer market as well, and -- as well as mid-end segment and the commercial market. And this year, we are achieving a little bit over the 5 million and we have almost targeting doubling the number for next year. And we have strengthened our collaboration with other component maker and software development to ensure that OLED display becoming a new standard for laptop industry. In addition, the world's first monitor product that combines quantum dot and the self-light-emitting technology will be released next year. As this will open a new horizon in the premium monitor market through the high image quality and faster response speed, which just cannot be provided by existing monitors. In conclusion, OLED is a good solution for the small and medium-sized devices and the QD will be the answer for the large-sized devices. Yes, as you may know, all other [indiscernible] which is like in the 170 skew [indiscernible] from the major IT brands are using the OLED display nowadays. The rapid expansion of the display technology driven by the super viewing experience SDC offers. As the transformation into smartphone market shows, the image quality and the viewing experience on OLED display cannot be matched by conventional display. The superiority of OLED is now owned by everyone, from IT expert to the mid-end consumer. This is why I believe the OLED display primed for the wide adoption in the IT area. Okay. Next, I will explain about the unique selling point of OLED display in the IT market. Improvement in the middle mobile communication network has led to the growth high-resolution content and service. That drives the demand for the laptop with a high-quality, high-speed, wider color gamut -- wide color coverage display. As I mentioned earlier, notebook with OLED display now strongly popular as they are able to express the vivid color and the color continuity. Now I want to show you another video clip that explains exactly what this means. [Presentation]

Samsung OLED display can express the widest spectrum of colors, including the true black. Combined with the exceptional HDR capabilities, our display delivers truly cinematic viewing experience that are immersive, dynamic. In terms of color volume, the measurement of color expression -- conventional display covered just 74% of the DCI-P3 color gamut, which is a standard for the [indiscernible]. OLED display cover 120% of DCI-P3 color gamut. This is one of the key reasons why OLED display are getting popular among the consumers. OLED display also [ tested ] in expressing the contrast and showing details in the brighter and the darkest part of video and even moving pictures. Unlike conventional display, OLED display can control individual pixels. This enables the display to express the true black and achieve 1 million to 1 contrast ratio for super HDR viewing. Notably, our OLED display has received the [ best ] certification for their HDR capabilities. Actually 80% of the information we receive come from our vision. Following the pandemic, consumers have been spending more time on IT devices. In response to the change, Samsung is developing a new tech to make the viewing experience more comfortable. Let me show you another video clip, all explained in detail. [Presentation]

Let me talk a little bit about our USP, what we watched just in the video clip earlier. As I mentioned in the video we just saw, we made our display more comfortable on the eyes by improving the visual smoothness and responsiveness. But that's not all. We have also worked on another innovation to make our OLED display better for the end customer. Another big benefit from the OLED display is way less blue light exposure compared to the conventional display. [indiscernible] exposure to the blue light at wavelength between 380 and 500 nanometer, it can cause eye [indiscernible] this decrease the vision and even led to sleep disorder. Since we are now spending more time on the IT devices, our eyes also [ exposed ] to the more blue light. Certified by world-class certification institute, SGS, our OLED display reduced blue light emission to just 6.5%, which is when certain amount of blue light emitted by conventional panel. We will continue to reduce the blue light emission in our display through the innovation. For the people who are looking for this best way, it is the exposure to the blue light, here's a quick tip, all you need to do, just switch on the dark mode. Microsoft Windows recently started to provide the dark mode support. So some of you may already be familiar with this picture. Conventional panel use the [ backlight ] to eliminate the pixel, which means they continue to emit blue light even when dark mode is switched on. However, OLED display turned off individual pixel when they are not used, which drastically reduced the blue light emission almost at 0 level with the dark more. Earlier, I talked about the health benefit of dark mode, but this feature is also great for making our device more energy efficient. For example, watching YouTube video in dark mode on OLED display can reduce the power consumption by 67%. Since there is no backlight in OLED panel, they are much thinner and lighter than other display in the market right now. OLED display weigh about 2/3 of conventional panel and half thickness. This means they can make the laptop thinner and lighter without compromising other departments. The portability of the OLED display will only improve going forward. So to conclude, Samsung's OLED display technology is unrivaled in the display market. I strongly believe OLED will become the widely adopted in IT areas sooner or later. I would like to wrap up my presentation with one more short video clip for your better understanding. Please enjoy it. [Presentation]

Yes. Thank you very much for your attention.

Good afternoon, good evening, good morning, wherever you are. I am Patrick Chomet. I joined Samsung 5 years ago, and I will take an overview of our strategy in the mobile division. First, we see our mobile markets entering a new period of growth, I think that's very important for us. And now we signal one of the few factors for this growth. On the smartphone side, from previous year estimates, analysts from SA or IDC, provide estimates now which show a growth of about $100 billion until 2025. And this is fueled by the large scale expansion of 5G in number of markets and also innovation, obviously, our foldable will expand in the next few years. On the tablet and portable computing side, we also see a revision of the forecast with a significant opportunity. Notably, the portable computing side of things is expecting to grow beyond [ $200 ] billion mark in the next few years. And tablets are expected to sustain the momentum that we saw during the pandemic. And last, but not the least, wearables, watches and various devices continue to entertain growth double digits, above 10% regularly. So first message from us, we are very confident about the demand in all our categories. Secondly, we are out of 2 years, very strange years, very difficult years of pandemic. And profound social and consumer behavior changes for us also means opportunity for changing the landscape and reshaping of the market. I will briefly mention 3 major trends, which are relevant to the mobile division. First of all, what I call discussion, discussion of learning and discussion of working. You are very familiar with it. Most of us have been working from home or still working from home for a long time. People -- I was in the U.S. last week, actually my first business strip since 2 years. People are slowly returning to the office, but it's fair to say that no one expects a return to the previous states. As you see 54% of employees work from home and that trend will continue. I don't know what the final number will be. Students in schools and universities have learned to work remotely and the increase of online learning. You see the numbers in U.S. I also believe is expected to continue. The second hand is what we call the old video era. Video is a massive phenomenon. We are seeing explosion of usage of the category. 66% of the mobile traffic today and we expect up to 77% by 2026. Interesting behavior trends, people used to do phone calls, they now do video calls. They used to capture and post photos, they capture and post videos. Video calling is the first reason driving increase of mobile usage recently. And last and not the least, discussion of health. During the pandemic, this trend accelerated. On the casual health and fitness, you see massive growth of health and fitness increases. And I'll talk about that later. It has a great implication for us. And mid- to long term, more fundamentally, growth of remote diagnostics and remote health consulting. These changes, I believe, will change the market and represent a significant opportunity for Samsung Mobile. Our competition has changed. We are coming from a world of smartphone -- led smartphone-only competition to ecosystem competition. And we have seen a redefinition of what constitute competitiveness. It's fair to say that consumers now make choice not only on the individual device merits, but they choose to be or stay or leave 1 particular ecosystem. Ecosystem means a category of devices and services and usage that the customer feels most comfortable with. And therefore, we are strongly redefining and getting ready to compete in that environment. We call it the 2-leg strategy. The 2-leg being device innovation, which is our DNA in Samsung, associated with experienced leadership to deliver the end-to-end customer experience. I will talk about this more in the rest of the presentation. In ecosystem competition, the dynamics have changed and retention become a much bigger driver than in the past. Retention is a critical factor, as you all know. It's much easier and cheaper to retain your customer than to acquire a customer in the base management business. Some interesting numbers here. When people have a smartphone only, the retention rate on Galaxy is 60% to 70% depending on the market. We saw that number jumping from 80% to 90% when people have 2 Galaxy devices and up to 95% and above when they have 3 Galaxy devices. So that is a key metric of our business going forward. And of course, Samsung Electronics extending to a home, digital appliance and TV, you can see for us opportunity to cross-sell and grow across our categories in the wider Samsung Electronics business. I will talk about all of this in the rest of the presentation. We talked about the Galaxy ecosystem. We have a formidable competitor. We are building and we've built something which is different. We are not trying to mimic any company. We have a different ecosystem. And you will see here some of the fundamental characteristics, which underpin our Galaxy brand. Innovation and performance are the things that you expect and you know already from us. We've been leading innovation, the transformation to camera phones, transformation to smartphones, best-in-class display, large display, Note S Pen, camera, design with Foldable recently. You will accept and the market accept Samsung leadership in innovation. Performance, battery, durability, 5G, the privacy and security backed up by hardware with Knox. Performance is also a part of our DNA. The other 2 pillars I want to talk a bit more about. We are building an open ecosystem of experiences. Experiences are simply the activity that customers entertain on all our device categories. We want to make it simple and seamless and easy across any device access point. We do that in an open manner that is distinctive in our ecosystem as opposed to a closed garden with the best-in-class partners. Our partnerships with Google and Microsoft are very publicly known and recognized by the customers in the market. Also, Spotify, Netflix, our direction is to deliver to the customer the best-in-class service experiences that they choose. And last and not the least, we are hearing from our customers, especially the younger generation, the concern for the planet and sustainability, and we want to deliver our sincere message to respond to that challenge. Some examples, we have retired plastic massively from our packaging. We expect to reach 0 plastic in the packaging by 2025. We removed the charger from the smartphone boxes, and we standardized the charger across all Galaxy devices, including tablet and PC. We will start to use recyclable components in our next flagship model coming soon, and we expect to have all recycle components by 2025. So these fundamental pillars underpin a unique and, we believe, highly competitive ecosystem going forward. Over the last 3 years, to build that ecosystem competitiveness, we have worked out internally to redefine our product planning and our product management, and I will introduce this briefly. Each of the series is underpinned by a very clear direction and foundation based on customer segmentation. And across all of the product categories, we have defined 8 functional experience areas, all of them tied up by One UI, which is our unique interaction paradigm across the Galaxy ecosystem. In delivering those core experiences, we use internal services, native as well as our best-in-class partnerships. I will introduce the product categories and the experiences in the rest of this presentation. The S Series is our standard of Korean smartphone. S 21 has been rated by many reviewers as the best smartphone of the year. We operate the S lineup with 2 major customer segments, life maximizers and their Ultra. So Ultra is the ultimate stuff smartphone for those customers who want everything and the best of what technology can give. So Ultra is at the forefront of technology, innovation with a productivity edge, obviously with Space Zoom, 100 megapixel lens as well as S Pen and the most advanced performance on the computing side. S and S+ are focused on social expression with premium design, premium performance and pro-grade camera, and we really focused on the end-to-end visual experience for socially active consumers. The fundamental values of our S series are the 3 pillars, which are highlighted here, design. Our design aesthetics is centered around the camera module, which is our signature element for the brand. No compromise on the CMF and finish, no compromise on durability, and we are constantly striving for completeness of that design. Secondly, the visual experience. And to any visual experience, we've been known for best-in-class capture, photo and video, night, portrait, the Space Zoom. And we have improved recently, and I will detail that further, the end-to-end experience from capture to sharing with our best-in-class social networking partners. And last, but not the least pillar expected from us, performance. We have historically the best and brightest screen in daylight. We have a very smooth viewing experience with 120 hertz display. Intelligent battery power management, superfast charging and of course, the S Pen experience for Ultra. With the foldables, we are changing the industry. The foldables are not just hardware innovation, but we are opening up a new era for the industry, defining with innovative experiences. We pursue the same 2 segmentation categories, the Z Fold is for the life maximizers with productivity edge, obviously fueled by the biggest screen and the pen we provide with that immersive viewing experiences as well as advanced productivity capabilities with multitasking, multi-window. Obviously, this time, on our third generation, no compromise on durability, water resistance and performance. So the Z Fold is the ultimate productivity and entertainment tool. The Z Flip is incredibly successful, not only in Korea, but worldwide, defining a new fashion and lifestyle. It's around design and self-expression and unique way to express yourself in particular, with the selfie mode and the Flex Mode. This time on our third generation, again, no compromise on durability and performance. Our A Series means simply democratization. We want to bring Galaxy experience and 5G to all on the planet. We will have a full lineup of 5G devices at all price points. We will deploy our end-to-end Galaxy experiences across the Galaxy A Series and we will support with uncompromised performance on display, camera and battery. In addition, we will have durability with IP67 durability and stereo audio, stereo speaker on A Series. Tablets and book are the best work and play experiences anytime, anywhere. We've seen incredible support and enthusiasm for our tablet portfolio, S7 portfolio during the pandemic. We expect this to continue. The viewing experience is amazing with our vivid display and the sound also with the speaker. So that it is entertainment tool, it's really amazing. But also on the productivity side, powered by the pen and the keyboard, we have amazing productivity experiences with the tablet. You can now pair out your tablet with your PC and utilize it very simply as a second screen with functions such as cut and paste, drag and drop and so on. Not only that, through the ecosystem, we can share the devices, the keyboard can be shared across tablet, PC and phone. You can use the same buds. They will automatically switch. If you watch a movie to a phone, if you want to take a phone call, all of that seamlessly, we can quickly share documents and files across phone, tablet and PC with Quickshare. We define our mobile -- notebook category around the tagline, why can't laptops be more like phones? We deliver best-in-class all-day battery long mobile-powered notebook devices. I will mention later, our partnership with Microsoft and its significance. We believe that end-to-end computing capability within the Galaxy ecosystem is critical to our consumers. Those laptops are best-in-class performance wise, thanks to our partnership with Intel as well as providing seamless continuity with all other Galaxy devices. And last, but note least, going forward, we expect wearables such as the watch and the buds to be systematically attached to our smartphones. For that reason, we recently announced a partnership with Google to relaunch the wearable ecosystem with Wear OS powered by Samsung. We contributed all of our previous assets to that platform, and we've seen incredible success and growth of our wearable ecosystem in partnership with Google. We have seamless continuity of the phone and watch apps across the phone and across the watch and the smartphone. We continue to deliver the most accurate monitoring and health function, and we major on personalization and design with the Watch Studio, watch tool that we deliver to the platform. And last, but not the least, sound with buds, authentic and high-performance sound, design and comfortable fit. And again, seamless continuity. The buds can be used seamlessly across any Galaxy devices, be it the tablet or the smartphone. So I went through the devices category quickly. What I would like you to note there is the focus, which I mentioned this device category is not meant to cover 1 device, but cover the category over the next few years. Maybe the next part is less usual to you. The second pillar of our product planning is the experience design, which we span now across device categories. And all of that is powered by One UI. One UI is a user interface paradigm, which kind of ties up all of our software experiences. The 3 main direction of One UI are simplicity, focus. Focus on one [ matter ]. Over the last 3 years, we've taken drastic measures to clean up and reduce complexity and make the user experience a seamless and continuous across devices. We also introduced optimization for all type of screens, including tablet and foldable devices with Flex Mode and [indiscernible]. The second pillar is comfort. One UI 4.0 was commercially released yesterday and deployed across our S 21 devices. And our customers and reviewers already appreciate the new indicator on privacy. You will see clearly if the camera or microphone is used by any app, and that is expected and really wanted by our customers. And comfort with things such as enhanced dark mode across most of the application, I would recommend to you. I read a lot at night, and the dark mode is really something which I find very useful. The third pillar and very distinctive of our One UI experience is personalization. We see demand from our younger consumers, younger generation to be themselves, to choose and things like choosing your own wallpaper, to change the theme of your whole smartphones as well as innovation, emojis. You can even actually pair the watch face of your watch with the screen of your Flip, are all a part of this next-generation UI. So underpinned by One UI, we have defined over the last 3 years, 8 categories of functional experiences. These are the main activities that our customers execute on all devices, from onboarding and setting up the devices, to communication. You have -- we have a partnership with Google on Google Duo as well as Google Messages. Health and fitness, I mentioned the wearables. The visual experience, I will give some examples. Productivity, lifestyle, wellness and privacy. So you must see these categories as the end-to-end functional area that we now product manage systematically across devices, smartphone and others. I will take a couple of examples. Firstly, a seamless and easy onboarding is the first step that any customer takes to get into our ecosystem. There have been some resistance in the past and we've worked really hard to make it seamless. If you would, I hope, actually switch from a Galaxy device to a Galaxy device with Smart Switch, you can test that it is really convenient. But not only that, any Android device to a Galaxy device with Smart Switch is very convenient. And I just say a competitor device to a Galaxy Smart Switch, you can still carry all of your contacts and data, including WhatsApp messages now, recently announced, to your Galaxy device. We extended recently Smart Switch to tablets, but also PC to provide this simple onboarding. If you would have any Galaxy device, including the buds and the watch, they will be recognized by the smartphone, and you can connect them with a simple one-click operation. And last, but not the least, we extended that simplicity to the PC, thanks to our strong partnership with Microsoft. We can enjoy continuity, for example, here on the slide, of the Note across your phone and your PC. With the pen the Note, you can cut and paste, drag and drop across the phone, PC, we are extending that continuity also to the tablets, which can be used. I use it massively as a second screen. We talked a lot about cameras, and we've been focusing on cameras for a long time on the capture side. And it's fair to say that we have advanced technology, especially best night shots, cinematic video and so on. Recently, we paid more attention on the end-to-end customer journey. Not only we want to enable our customers to capture the best videos and photos in all conditions. But next action, edit, advanced edition tools with partners. An AI-powered photo [indiscernible] you can actually remove and erase unwanted object for your pictures, streamline and constant editing on your phone, but also on your tablet, on other devices. We also have taken a partnership with Microsoft. OneDrive is our cloud backup solution for the photos, and you can seamlessly sync your gallery with OneDrive. Last but not the least, sharing our photos and videos uncompromised on the leading social network platforms is now very simple, and we have a very, very good partnership with Instagram, for example. I talked a lot about the ecosystem expansion across the mobile devices division. But of course, we have a SmartThings platform, SmartThings is a device, a connectivity and control platform that Samsung has developed over the last 5 years. SmartThings enables you to control all the devices and appliances from the phone, but also extending to the TV and home appliance division. Not only that, you can control over 3,000 different brands, IoT and home devices via the unique SmartThings platform and the SmartThings app. In due course, we expect to extend the ecosystem to cars, thanks to our partnership with Google on Android Auto. So our Galaxy ecosystem actually is already materially making progress. I've been very encouraged by the recent launches of the Fold, the Flip, buds and Watch4. You can see some of the feedback here from the market. Our innovation with the Fold is an amazing success, especially the innovation in the Flex Mode, mutitasking, but also the personalization on the Flip, which the younger generation really, really appreciate. As I mentioned, One UI 4.0 is our fourth generation of One UI. It was released yesterday and rolling out on the S 21 devices already. We have amazingly positive success and feedback from our customers and reviewers. I would encourage you to look into it yourself. And of course, on the productivity side, you can see and I hope you use, so you can experience the benefit of the Microsoft association and seamless continuity working with the PC. It's well recognized. We still have work to do there, and we will continue to deliver the best phone to PC experience through Galaxy and Windows association. In the communication side, you will notice that usage of video has dramatically increased in the pandemic. So through our partnership with Google Duo, we saw double increase -- double usage of Duo and video calls in the United States to 30%, you can compare to the competition on video. And we continue to develop and drive this experience. And lastly, recently Interbrand, again, rated Samsung as #5 brand in the world. The Galaxy brand and mobile is a significant contributor to the overall Samsung brand. A plus 20% increase in brand value overall, underpinned, among other things, by our transition to a customer-centric, customer-led planning and management. In conclusion, we believe that the next 10 years of our business are transitioning to an ecosystem competition as opposed to smartphone-only competition. We have been preparing the hardware and software platforms and partnerships over the last 3, 5 years to be ready for this ecosystem competition. We will strive to meet evolving customer needs. We believe with the pandemic, there is an opportunity to reshape the market around the new ecosystem competition. Our fundamental values are continued innovation with the right investment in hardware, not only hardware, software and UX. The building of an open ecosystem, which is our alternative with best-in-class strategic partners, notably Google and Microsoft at platform level, but [indiscernible] And last but not the least, shifting our company to a customer-led, customer-centric product planning and product management. So I hope you found it useful, and I'm looking forward to your questions. [Presentation]

Hello. I hope you enjoyed the video we just saw. That is our vision of what 5G can be for all of us going forward. Two years ago, we met in one place, facing each other in person. And at that time, I explained our vision of what 5G could be for the world. Today, in 2 years, everything has changed in many ways. Now home is the new school. Home is the new workplace. Home is the new gym. Home is the new place for a get-together as I'm sure many of you've done over the last 2 years. And home is a new movie theater. Now the family gathers to watch everything together. Home is also the new restaurant. We gather together, we order things. In short, connectivity has become a lifeline. Over the past 2 years, the pandemic has shown how important connected is to us and how more important it will be in the future. I guess the question is, how did we do it? How did we survive the global pandemic? Of course, we have all suffered a lot. But fundamentally, if you think about it, if this happened 20 years ago, I think the situation would have been a lot worse. Simply put, I think the answer why we were able to survive was a mixture of broadband, cloud and smartphones. Broadband, in many cases, has now gone to multi mbps per household. Cloud services, which were nonexistent 20 years ago, over the last 10 years, has expanded explosively. And smartphones, a market that people dreamed about in science fiction, only started in 2005 or so, has now exploded all over the world. And with a combination of these 3 that enabled us, I think, to survive the pandemic. This pictures shows really what happened. We took our services from the global cloud server providers. We have broadband to connect to them. And then with our trusted smartphones and PCs, we had millions of apps to do things, to connect to services for entertainment, to order from restaurants, to our video conferences such as we are having today. And also social media to connect to our friends and loved ones. And now we're entering the post-pandemic age. And the only thing I can say is that all of these use cases and what applications that we've used, post-pandemic, it will accelerate. So we believe there will be 1 major difference that it will be more mobile. During the pandemic, many of us were stuck at home and not able to move around that much. And of course, we avoided moving that much on purpose. But post-pandemic, we will be moving more. That is in the nature of wireless, what it enables. Over the last 10 years, if you look at it, the mobile broadband has now greatly exceeded fixed broadband. Smartphones at 1.3 million shipments in 2021, is multiples of PC shipments. Even though in 2021, there was a renaissance in PC shipments due to the pandemic. Smartphones are still many more times than PCs. And of course, mobile data traffic has been increasing. But as I said, in the pandemic in some ways, it was sort of artificially contained. But now as people can expand in 2022 and beyond, we can expect it to expand even further. So the question is for operators, how can you handle this increase in traffic? That is for them, the major problem and it will become a bigger problem going forward. As people start using what we use in the pandemic on their phones, wherever they are, wherever they're going, whatever they're doing. If you do Zoom calls now mostly at home, or you start doing Zoom calls as you travel in the car, in the park and other places. The traffic will be generated will be much more diverse, much larger, and it will have the added difficulty of mobility. So how will operators deal with this? First, the most obvious one is more technology. And as you can see, during the last 5 years, 4G has expanded greatly, become very, very powerful. But now we're moving to 5G. And Samsung was one of the leaders of 5G, as we showed in the video, starting our research in 2009. And now we're seeing the fruits of that labor coming out in many more technologies that enable 5G and ways to handle the huge traffic. Massive MIMO, Beamforming, massive antennas, they're all technologies that we developed and are now being productized by us for our 5G products. And as I said, there will be more technology that we're bringing to 5G that will enhance the value of the hardware products we bring, Beamforming, network slicing, low latency. All of these things are things that will enhance the capacity and ability of 5G to handle traffic. And the more traffic that's generated, the more 5G that will be needed. Will that be enough? No, not just technology by itself, the technology itself requires massive amounts of spectrum, of bandwidth. 4G require tens of megahertz per carrier. The standard LTE spectrum was 20 megahertz. 5G will require hundreds of megahertz per carrier. Many operators are asking for 100 megahertz in 3.5 and 800 or more in the millimeter wave bands. And so what this picture shows is what's going to happen. If you keep on trying to build on an old city, old site, it gets more and more cramped. At some point, we have to move to a new place as we show here, showing a wonderful beach-front apartment complex in Korea. In the same way, Spectrum is moving from the low band sub-3 gigahertz bands, which were traditionally used for cellular capacity, the 700 megahertz to 2.1 gigahertz, for example, is now moving to mid-band, which is 3.5, 4.2 and 28 gigahertz and beyond. And beyond technology and bandwidth, one more thing that will be needed will be more sites will be needed. Before when you had low-band spectrum, you could cover many more areas, much larger area with 1 site, and so you needed less sites. But as you go up to the higher bands, the millimeter waves, the 3.5 gigahertz, the networks have to become more and more dense. And so this will be a third leg, a third prong in how to handle more traffic. So to repeat, you need more technology, which is today the transition from 4G to 5G. You need more spectrum going from tens of megahertz to hundreds of megahertz, which means moving from the 700, 800, 1,800 megahertz to the 3.5 gigahertz and the 28 gigahertz range. And third, you will need more sites to make a denser network to enable the networks of the operators to handle all of this traffic. Now if we do all of these previous things, the biggest problem for operators is costs will increase. New technology is, in many cases, expensive. Buying Spectrum is expensive. The recent C-band auctions in the U.S. raised over $80 billion. Operators have spent tens of billions dollars buying Spectrum. And then building more sites is even more expensive. And then added to this, as you have more sites, more technology, more spectrum, operationally, it becomes more complex for operators to run their network and the OpEx can increase as well. So while revenue doesn't seem to be increasing, the cost will increase significantly for operators. So how do they handle this problem? How can they manage their costs? How can they raise the revenue? That will be the central problem that all operators will be facing in the coming years. So what is the answer? How will operators answer to this problem? What do we think is the answer from a vendor perspective? I think the answer comes from something that Marc Andreessen the famous said. He said, "Software is eating up the world." And by that, he said, what was made in hardware was being changed to software for many features and many functions in the world. He said this around, I think, 10 years ago. For networks, this means virtualization. Virtualization is a hard word, but network techies love this word and this is what's happening today. And so let me explain what virtualization is. In a simple way, you could say before, as you can see on the left, where I show facsimile, telex machine, et cetera. Different functions require different hardware. Use a phone, use a facsimile, to telex, you need a camera. Today, all of these different functions are just different software applications on 1 hardware platform, a smartphone. Virtualization, you can think of it that way, is moving all the features of a hardware into software. So what does virtualization mean in a network? Well, previously, when we had different functions, we had different hardware. We would have electronic switches. We would have paging amp systems, we have mobile wireless systems like CDMA, WCDMA. We had the core base band. And each of them were wonderful gray boxes that were made by wonderful engineers with a lot of sweat and tears. I myself have worked on this, and this was an extremely enjoyable part of my life, I would say. But today, if you look at advanced networks, what has become network functions is what is shown on the right. You just have banks and banks of servers. And it implements many different functions, but all of them are different software applications. So today, routers, firewalls, push-to-talk applications, IMS are implemented in cloud. The mobile core is implemented in cloud and the mobile RAN is moving into the cloud. So when this division becomes fully implemented in all operators, that is when you can say the phone network is virtualized. Now why am I talking about this? Because we believe that is how the mobile network will evolve. If you think about it, from 2G to 3G to 4G to 5G and beyond, in many cases, you can say, the sell side, the network has become simpler and simpler. In old days when 2G first came out, you would have simple antennas at the top of the tower. And as I show here, you would have a heavy and bulky cabinet at the bottom, which contain all the electronics, radios, controllers, et cetera all together. As you went to 3G and 4G, remote radios and smaller baseband units were made, so you could put radios on the top, near the antennas and you had base stands at the bottom for a more flexible and easily deployable architecture. As we're going to 5G, what's happening is the antenna and radios are becoming one and the baseband unit is becoming a software application for -- to make it more of an agile and scalable network. So as you can see, the trend going from 2G to 3G, 4G to 5G. In some way, there's more disaggregation, more flexibility, and I'll be talking about it more in a bit. Basically, this is going to a virtualized RAN. So what is a virtualized RAN? Well, as I said before, it is implementing what was at the base station in software on top of generic servers. And what it aims to do is to bring telco quality and cloud agility together into 1 box. So by telco quality, I'm saying for operators, they need to -- even if they move to a new implementation of their RAN, it has to be reliable and resilient. There has to be high performance, proven in the field and robust and resilient solutions need to be there. At the same time, they want cloud agility, scalable and flexible for new service adoption. And this is what they want in the future. And this is something that everyone is talking about today, virtualized RAN, but this is what we are delivering today. And it's not in the future, but it is today. If we deliver that, so that they can handle the OpEx and the cost. What about increasing revenue? Well, if you think back, how did the mobile network evolution occur? And how did operators increase their revenue? Two things. They added more features so you can do more things and they added more users. And between those 2 things, as it became more useful and more users were there, revenue was generated. So if you look here, for example, you can see on the chart that the revenue increased from around $356 billion worldwide for mobile operators to more than $1 trillion in 2020. But at the same time, the user subscriptions increased from maybe 700 million to 9 billion in subscriptions. And at the same time, the features, the things, the capability of phones has increased dramatically. Starting from simple phones that can do text, to things that can do Internet browsing and things that can do much more today. So basically, the answer is really more services, more is equal more revenue. And going forward into 5G, for operators, it will be more cloud, which will enable this. Because as you go to cloud and vRAN and virtualization, they will have to add infrastructure to enable the cloud, the virtualization, the vRAN. But once you have the cloud, it will enable the ability to add cloud-enabled services, such as Mobile Edge Computing, MEC and network slicing. By that, what do we mean. Mobile Edge Computing enables real-time services by gathering data and compute power closer to the users. So you can do things such as video analytics and AI powered facial recognition, cloud game streaming, drone applications, et cetera. Another one is how do you enhance the service that the operator networks can give, so that it can offer more services. Well, one was today, there's a smartphone and that does offer a lot of services. But for a mobile network operator, it is really only a consumer product. They only have consumers to sell it to. So how can they expand their market? It's a technological network slicing. And with network slicing, you're able to cut up a virtual -- multiple virtual networks from a single operator network. And so depending on the use case, cloud gaming, smart factory, or remote surgery, autonomous driving, et cetera. You can create a network for high bandwidth users, low-power massive connection users or time-critical users and connect them to different applications. Effectively, you are taking one network and sizing it up into multiple networks for multiple users. And this will generate multiple revenue streams. And vRAN is a key enabler for network slicing. As we said, all of these technologies will require cloud services and cloud technology, and vRAN is the way the cloud is introduced into a mobile network. So how to control TCO and increase revenue? The answer we think is vRAN and the cloud. With vRAN, you can control the CapEx and OpEx, and you can also increase revenue with the new services, cloud, MEC and network slicing. And that is why Samsung today is placing a big bet on vRAN. 2 years ago, I talked about 5G. We're now going to do vRAN as the other pillar for our growth. Two transitions are going on today, 5G and virtualization. 2 opportunities, 5G and virtualization for Samsung. So we will be riding the wave of 5G and virtualization to the next stage of our growth. I talked about this last year or 2 years ago, how we had gone from 2009 5G research to FWA, to commercial trials and now commercial launch in 2018 and '19. And now we're going to virtualized RAN with Massive MIMO in 2020. This has all been based on the fact that we have strong leadership in the standards and patent bodies. And this is based all on our intellectual property and our ability to develop massive amounts of R&D resources. And we've already deployed over 4 million 5G-ready radios globally. And we're delivering advanced capabilities and performance to customers. And what's behind our growth? Really, as I said before, it's 3 things: chips, hardware and software. Samsung has traditionally always been strong in chips and hardware, but software is also an area where we are now putting a lot of focus. So first of all, chips and hardware. What are we doing there to our business? Our view of the network is very simple. You first looked at what cannot be virtualized. If we believe virtualization is the trend for networks, the one thing that still will never be virtualized, will never be written as just pure software will be the physical antennas and radios at the end. So as I show here, in 5G and beyond, we believe no matter how much you minimize hardware, the radio and the antennas at the end will always be there and they're going to be the ones that will be needed to be optimized. And the way you optimize them is with chips. The key is chips. How can you make them smaller, more powerful will enable you to create better radios and better antennas going forward. And so at the heart of our 5G solutions is the chipset. And Samsung being a chip company, has always been strong in semiconductors. But with networks recently with the 5G evolution, we are putting even more emphasis on chips for higher bandwidth, cutting-edge technology, increased power efficiency and product size reduction. We have over 20 years of expertise in chipsets, and we have over 200,000 5G SoCs in the field already today. Our product innovation is based on our in-house chipsets. In 2017, '18, we created the first 5G modem and RFICs. We expanded in 2019/'20 to a family of second-generation modems, transmitter ICs and Massive MIMO ICs. In 2021, we're expanding that further to increase second and third-generation chipsets for the modem, RFICs and also interface ICs, et cetera. And as with each wave of extra chipsets, we're increasing the capacity, reducing the power consumption and extending the coverage of our products. This will be a key differentiating factor of Samsung products going forward. We believe it's one of those things that makes it harder and harder for our competitors to catch up. We will offer a complete solution for any deployment scenario. Millimeter waves, mid-band, low band that can offer video hotspots, wireless backhaul, autonomous cars, et cetera. These are all products that are using extensively our chipset today. The Massive MIMO radio, for example, is a pivotal player in 5G, and this has been one of our key technology breakthroughs. How to solve their challenges in 5G was a big issue. And the way we did that was with Massive MIMO, we used what's called multi-user MIMO, beamforming and integrated solutions, so that you could create smaller and better performing radio products. And now what's behind our growth? What was the third pillar that I talked about? Software. And this is where we're putting, as I said, a big bet on virtualized RAN. Because if you think about it, as I said earlier, what can be virtualized in the network. And if you think about it, if you take away the radio under Massive MIMO units, et cetera, then whatever is in the baseband can actually be virtualized. And for that, the key is software. Virtualization already was introduced into a network architecture from 7, 8 years ago. It was -- it started in the mobile core, and which in some ways was the easiest one to move over because it was -- basically a lot of it was servers anyway. And so it was a relatively easy move comparatively. And we were the first to virtualize a core -- virtualized core in 2015, and we have been extensively deploying it throughout the world. And now with RAN, we'll be extending our virtualization across the globe. We have the biggest vRAN commercial deployments, agreements already with global Tier 1 carriers. In the U.S., we have the first wide-scale commercial vRAN deployment ongoing with #1 operator in the U.S. And in Europe, we have just announced the first wide scale commercial agreement with the operator Vodafone in the U.K. And in Asia, we have just brought the industry-leading vRAN solutions through KDDI in Japan. As you can see, we are building a vRAN customer portfolio across the world in all the major markets, the U.S., Europe, and Asia. No other vendor is anywhere near us in this scale or breadth. And one of the reasons why we are so successful is because operators are looking for a goldilocks combination. They want innovation, but they also want a vendor who can offer reliability. And so yes, there are a lot of vRAN start-ups. They might offer innovation, both for operators, do they offer reliability? And then there are the other big companies, our competitors who offer reliability both who might not be as innovative. As I said many times, goldilocks, we are offering an innovative solution with reliability. And that has been the key to our wins across the world. So in 2022, what we say, we say vRAN is eating up the world. So as it is a best-in-class Samsung's fully virtualized RAN, gives the operators a full radio network, which has all the massive technology of massive MIMO, DSS, et cetera, for 5G. But also cloud-native architecture, multi-technology and other -- and the higher capacities that cell capacities and flexibility that cloud can enable. Then what we'll feel on next growth? As I said, it will be 5G and vRAN. But if you think about it, what happens after that? Well, actually, if you take those 2 together, we think there is a fourth leg, a fourth pillar that we can rely on. And that is intelligence. That is another area where we think we are putting a lot of effort that are differentiating ourselves from our competitors. Network automation is one of those things that has been something that all operators have been looking for, for many years. Analysis, optimization and monitoring. How can you make that virtuous circle go round and round. Previously, it was hard to do. But now as it becomes more and more software, the more and more easy it will become, especially in the cloud, which is always built on this sort of 0 touch automation and a virtuous cycle of analysis optimization monitoring. And by this, operators can save the operational costs, reduce human error, enhance performance and enable fast deployment. Another key part will be harnessing AI for future networks. AI and 5G are made for each other. AI needs massive amounts of data to process and to come back. And that is what 5G enables. It will enable network intelligence, higher energy efficiency, ability to maximize user experience as you can optimize the network, create algorithms on the fly. So if you take this into account, recently Samsung said that we would invest more than $200 billion in 4 main areas. And they were shown on the left here on the chart, semiconductors, telecommunications, AI robotics and biopharmaceuticals. And this will fuel Samsung's post-pandemic growth. Well, telecommunications obviously is something Samsung Networks is heavily invested in. And as you're saying, this is where a lot of our investment will be going as a Samsung group. But if you think about it and think about what I've just discussed, 2 other pillars that we're putting a lot of effort will also be helping our next-generation telecommunications efforts. One is semiconductor. As I said, chips will be the bread and butter of telecom products going forward. And AI, which, as I said, will be the fourth leg, pillar of our growth. And so in many ways, this $200 billion investment will be fueling, we believe, the next-generation telecom growth and Samsung networks. So Samsung networks, as we're saying, we'll take another leap forward with 5G and beyond based on our chipsets, innovative products, industry-leading software and the network intelligence capabilities we will bring. Thank you.