Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue increased by 3% from the previous quarter, reaching KRW74.1 trillion.
- Gross profit rose to KRW29.8 trillion, driven by strong demand for high-value memory products like DDR5 and HBM.
- Operating profit surged by KRW3.8 trillion sequentially to KRW10.4 trillion, with an operating profit margin expansion to 14.1%.
- The DS Division experienced a 23% revenue growth, thanks to the recovery of the Memory business.
- Displays revenue increased by 42% due to robust OLED sales.
Negative Points
- The MX division's revenue decreased by 19% due to weak seasonal demand for smartphones.
- SG&A expenses reached KRW19.3 trillion, despite efficient advertising and promotion expenditure management.
- Persistent cost pressures from rising component prices affected the profitability of finished product businesses.
- CapEx in the second quarter increased by KRW0.8 trillion sequentially to KRW12.1 trillion, indicating higher investment costs.
- The company faces ongoing challenges with the union strike, although it has not yet impacted production.
Q & A Highlights
Q: Have there been any managerial issues related to the strike such as cutbacks in production?
A: We are continuing to communicate sincerely with the union in order to bring the strike to an early end. Despite the strike, we have had no issues in responding to customer demand, and we will do all we can within the law to ensure there are no business setbacks or production delays in the future. - Jaejune Kim, Executive Vice President, Memory
Q: Could you provide more details about Q2 memory performance and the outlook for Q3?
A: In Q2, the memory market saw strong GenAI-driven growth with solid demand for server applications. We maintained sales operations centered around profitability, expanding the share of high value-added products. ASP increased due to improved portfolio and rising market pricing. For Q3, we expect favorable business conditions to continue with an overall uptrend in market pricing. - Jaejune Kim, Executive Vice President, Memory
Q: Could you give us a status update on the second-generation 3-nano processors and your sub-2-nano roadmap?
A: Our first-generation 3-nano GAA process is in stable mass production. The second-generation 3-nano GAA is scheduled for full-scale production in the second half of the year. For sub-2-nano, we plan to start mass production of our first 2-nano process in 2025 and prepare a 2-nano process with further PAA management by 2026. - Taejoong Song, Vice President, Foundry
Q: What is the current status of your HBM business and future plans?
A: We are expanding mass production supply of HBM3 to all major GPU customers. For HBM3E, we are preparing for early ramp-up and plan to expand supply in the second half. HBM4 is on track for market launch in the second half of 2025. We are also developing custom HBM products optimized for customer needs. - Jaejune Kim, Executive Vice President, Memory
Q: How do you intend to maintain your market leadership in the OLED market?
A: We are focusing on technology development across all areas, including materials, electronics, and structure. By leveraging our differentiated technologies in power consumption, design, and cost competitiveness, we will solidify our leadership in the smartphone OLED market. - Charles Hur, Executive Vice President, Samsung Display Corp
Q: What are your plans for expanding HBM supply in 2024 and 2025?
A: We plan to expand HBM bit supply to around four times that of last year in 2024 and double the level of this year in 2025. We are also in discussions with customers for additional production volume for 2025. - Jaejune Kim, Executive Vice President, Memory
Q: What is the current status of your SSD business and how do you intend to respond to rising demand?
A: We were the first in the industry to start mass production supply of Gen5 SSD. We are expanding our supply capacity by shifting our product mix around server applications. We expect server SSD revenue to grow sharply in the second half of the year. - Jaejune Kim, Executive Vice President, Memory
Q: How do you plan to offset the impact of rising memory prices on smartphone margins?
A: We are working to ensure solid profitability by improving efficiencies across processes and focusing on premium products to grow revenue. We plan to expand smartphone sales, particularly flagship devices, and enhance our presence in the premium market with new models. - Daniel Araujo, Vice President, Mobile eXperience
Q: How do major sports events affect TV demand and what is your forecast for the second half of the year?
A: Major sports events have increased TV demand, especially for QLED, OLED, and large TVs. We expect TV market demand to recover further in the second half and will enhance product competitiveness and sales strategies to capture peak season demand. - KL Roh, Vice President, Visual Display
Q: What is your CapEx plan and supply strategy for memory given the current market conditions?
A: We will continue to manage our investments flexibly, focusing on real demand. We are accelerating the migration of legacy lines to respond to rising demand for advanced processes. We will continue to execute investments to secure more space and respond to mid- to long-term demand. - Jaejune Kim, Executive Vice President, Memory
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
