Don-Sang Kim - CFO, Senior VP & Standing Director Stephen Ko - Head, TV Marketing Heeyeon Kim - Head, IR and VP.

Jong Woo Yoo - Korea Investment & Securities Co. Kyung Min Kim - Daishin Securities Co. Ltd. Jeongu Ko - NH Investment & Securities Co. Nicolas Gaudois - UBS Investment Bank S. K. Kim - Daiwa Securities Co. Ltd. Robert Stone - Cowen and Company Dong-je Woo - Bank of America Merrill Lynch.

Ladies and gentlemen, welcome to LG Display's Second Quarter of 2017 Earnings Release Conference Call. We will begin with the presentation followed by a Q&A session. [Operator Instructions]. Now we will start the presentation. I hand over to the speaker. Ma'am, please begin..

Good morning. Thank you for joining LG Display's Q2 2017 Earnings Conference Call. I am Heeyeon Kim, Head of IR. On behalf of the company, I would like to thank all of you for joining us today. Let me first introduce the executives present here today with us.

First, we have our CFO, Sang Don Kim of LG Display; Young Kwon Song, Senior VP of Strategy and Marketing Group; DuckYong Kim, Head of Corporate Business Management Division; Matthew Kim, Head of Market Intelligence; Stephen Ko, Head of TV Marketing; Jae Yong Kwon [ph], leader of IT Marketing Division; and Kijun Jin [ph], leader of Mobile Marketing Division.

Today's earnings presentation will last around 1 hour in both Korean and English. There will be a presentation on the company's financial performance for the second quarter of 2017 as well as market outlook, to be followed by a Q&A session. Please refer to our website and attachment to our disclosures for more detail regarding Q2 results.

For those of you joining us via the webcast, please refer to the references on the widget at the bottom-left corner. And before we begin the presentation, please take a moment to read the disclaimer.

And also, please note that today's results are based on consolidated K-IFRS standards prepared for your benefit and have not yet been audited by an outside auditor. With that said, our CFO, Sang Don Kim, will now start with the presentations on the Q2 2017 earnings result..

Good morning and afternoon and evening for those calling in from abroad. This is Sang Don Kim, CFO of LG Display. I would like to thank our shareholders, analysts and investors for joining LG Display's Q2 2017 Earnings Release Conference Call.

Today's call will comprise of earnings presentation and a detailed elaboration on LGD's investment strategy, the disclosure of which was made yesterday. I will begin now with Q2 results. Q2 revenue was down 6% Q-on-Q to KRW6,628.9 billion on seasonality with decline in shipments for small to mid-panels and strong won impact.

But it was up 13% year-over-year. Although efforts continued to bolster profitability by expanding the share of differentiated products, i.e., large-sized UHD TVs and high-end IT products, due to low seasonality leading to a fall in small to mid-sized shipments as well as the FX impact, operating income was down Q-on-Q, coming in at KRW804.3 billion.

Area shipment inched up slightly Q-on-Q on capacity increase led by the recovery of number of operational days. ASP remained stable around large-sized panels, but driven by smaller share of small to mid-panels, blended ASP fell 6% Q-on-Q. Next is on the product mix.

TV saw 3 percentage points expansion Q-on-Q from the revenue mix on greater sales of high value-added products like UHD and OLED TV. Mobile, however, saw a decline of 4 percentage points Q-on-Q on lower shipment from low seasonality. In terms of the financial update, inventory was KRW2,343.4 billion, flat Q-on-Q.

And thanks to sustained profit-making, financial indicators continue to be sound with debt-to-equity ratio at 82%, current ratio at 147% and net debt ratio at 17%, which is a slight improvement. Cash as at the end of the quarter recorded KRW2,601.6 billion, an increase of KRW298.6 billion Q-on-Q. Next is on market outlook for the second half of 2017.

In the first half of the year, TV demand was lower than expected due to set price hikes and the base effect leading to a decline in panel purchases by sluggish set companies, and there were price adjustments in certain sizes.

But as migration to larger TVs brings sustained adjustments in panel unit supply, we expect there to be no structural changes in terms of demand-supply dynamics. Therefore, we expect ASP decline to be limited. However, if TV sell-through continues to be sluggish, there may be price adjustments to a certain extent, but we expect it to be mild.

Next is on the company's Q3 guidance. Area shipment is expected to rise low to mid-single digit Q-on-Q with some increases in capacity in the third quarter. From the second half of the year, there would be a phased expansion of OLED capacity. Accordingly, fixed cost and initial ramp-up stabilization cost may increase.

But through efforts to maximize profitability around differentiated LCD products and broadening of the product mix with the takeoff of the OLED business and cost enhancements, we will endeavor to secure a solid bottom line.

I know the market has been very keen on the company's investment plans, and we have thought long and hard about different options relating to future OLED investment direction and deployment plan for the benefit of the future growth. To capture the right opportunity, timeliness and OLED investment is important.

But we are also aware that CapEx per unit is higher than LCD and that total CapEx amount is also quite significant. So it took us some time to go through rigorous risk checks and thorough review. And now we have decided that this is the opportune time to make the investment decision, and the background to such a decision is as follows.

New OLED TV products launched this year such as the Wallpaper and CSO were very well received. New customers and markets like the signage market are expanding. And consumer demand for -- customer demand for OLED and mobile and auto is also growing by a large margin.

And our OLED products saw a sufficient improvement in efficiency and production stability, giving us the confidence on expanding capacity and its operations.

Our basic OLED strategy is to build it as a foundation for future of displays starting with TV, mobile and then to auto, commercial and take it to many new application areas, utilizing OLED on many fronts.

In so doing, we will make use of various deposition methods and process technologies for diversified applications, creating synergies and pioneering into new solutions. Now on the details of the investment decision. Through this investment, our plan is to build an OLED hub centered around P10, which is currently under construction in Paju City.

P10 plant will have a focus on Gen 10.5 OLED and Gen 6 plastic OLED. First on Gen 10.5 OLED, we decided to make this decision in light of the fact that demand for OLED TVs is growing rapidly. And hence, we need to equip ourselves ahead of time for higher mass production efficiency for ultra large OLED TVs.

However, since we are the first in the industry to attempt to add this, there will need to be thorough validation on technology, production methods, among others, from different angles. In Phase 1, we will validate stability of Gen 10.5 backplane technology. Industry standardization is yet to take place for Gen 10.5.

And as area is 2x bigger than Gen 8, it is necessary to secure mass production technology for the largest fab within the industry. Under Phase 2, we plan to validate mass production and mother glass production stability for oxide backplanes.

Once mass production stability is achieved for the backplane and technical validation is complete for deposition, OLED TV production will then come under full swing. On top of advanced investments into Gen 10.5 OLED, we plan to expand production scale from proven production lines so as to respond rapidly and proactively to ever-expanding OLED demand.

So we decided to add 60K capacity to OLED production line in Guangzhou, China cluster, where 8.5 gen panels are produced with the highest efficiency and cost competitiveness. Through such arrangements, we plan to bolster product efficiency as well as cost competitiveness.

This is a decision made in consideration of China's potential value as a future market and logistical value vis-à-vis customers' production sites. Gen 6 plastic OLED continues to see rise in customer demand, so we decided to invest for 30K capacity additions.

On top of E5 and E6, whose preparation for operation is ongoing as planned, we will have 65K production capacity based on Gen 6, through which we will increase production volume and enhance cost competitiveness.

In terms of the size of CapEx, domestic CapEx for large-sized OLED will be approximately KRW5 trillion, including advanced investments into Paju's Gen 10.5 facility as well as certain facilities for E42 and P10. For Guangzhou, China, Gen 8.5 OLED 60K expansion, there will be KRW5 trillion investment jointly with the Guangzhou local government.

For Gen 6 plastic OLED, we plan to invest KRW5 trillion for E6 30K capacity additions. Including E5 and E6 line investment, which is ongoing as we speak, total investment into plastic OLED is around KRW10 trillion level. As this investment is quite sizable, financing was an important matter.

Our investment principle is to invest within the cash flow generated from operational activities, but timeliness is a critical element in this investment. The company believes that this investment needs to be done in advance to tap into future growth potentials.

So in line with the size of the operational cash flow and investment timing, we plan to do debt financing on a needs basis to the extent necessary. Also, we plan to finance certain portions through strategic partnerships such as customer commitments, and China investment will be in the form of a joint venture with the Guangzhou government.

Having said that, strategic partnership is to strengthen the relationships with customers and to reduce uncertainties on the demand side rather than securing of funds.

Lastly, I would like to reiterate and give my commitment that we have thought long and hard and made thorough preparations so that this OLED investment can be utilized as a basis for future growth leading us to leap forward..

That brings us to the end of the earnings presentation for Q2 2017. We will now take questions. Operator, please commence with the Q&A session..

[Operator Instructions]. Our first question is -- yes, please ask your question..

I would like to ask 2 questions. The CFO has given us a very thorough explanation. But I think the market is more concerned about your main business because your main is still the LCD panel business. There is issues and fear relating to falling of the LCD panel prices.

So can you provide more detail as to what the strategies that you are currently envisioning to employ for your LCD panel strategy? Also, you could maybe talk about for different TV specs as well. You also displayed a very aggressive OLED-related investment plan.

I think the market is more thinking hard about the small to mid-sizes rather than the large-sized OLED. I would like to understand what LGD's investment strategy is and your plans to actually use up the capacity that you will be building going forward..

I am Stephen Ko. I'm the head of the TV Marketing. If you look at the market backdrop for LCD this year, there is a limit in terms of the growth based on the number of units. However, we see a sustained growth in terms of area. And the company is responding to this trend with an appropriate mix strategy and customer strategy.

Now traditionally, the month of June and July is a slow off-season. But as we are now starting to enter the third quarter, which is considered a very high season, we believe that we will operate within a quite stable framework in terms of supply-and-demand dynamics..

I'm the CFO responding to your second question. I would think that the key gist of the question had to relate to our investment on PO, our potential future profitability from plastic OLED and the type of customer commitment that we had gained.

Now as I reiterated on many occasions, when it comes to P-OLED, this is a business that requires significant amount of investment. And also, there's a high level of uncertainty in terms of the demand. So as a follow-up, it is very important as a company to be very prudent in coming up with approach -- coming up with approaches for this business.

So we've basically reviewed the opportunities based on a number of important principles. First has to do with our capacity to bring about investment efficiency; and secondly, our internal resources; and thirdly, potential cooperation with customers.

And after a thorough review, based on the premise of customer commitments, we've made a decision to make capacity addition investment of 30K. And under our capacity, we felt that it will be important for us to very rapidly ramp up. And hence, based on those reviews, we've made the decision.

Our company does not have an experience on a large-scale mass production for P-OLED and relevant preparations. So for us, it is very important to actually achieve early setup, testing and mass production based on the additional 30K capacity additions that we're making on E5 and E6 line, which is going to total 60K sheets capacity..

Our next question is from Korea Investment..

[Foreign Language].

[Foreign Language].

I believe that question got broken also in the midst. So let me respond to what I heard for the time being. I think the question has to do with our investment strategy for large-sized OLED panels to 10.5 generation. I think there's a bit of a gap in the way the market understands.

Basically, our strategy is to make investments into 10.5G OLED, and that has been set as our investment strategy..

So I wanted to ask a question relating to the 10.5 generation capacity for the company after you actually set up this capacity, what will be your plan or direction in terms of operating this fab?.

Yes, to continue to answer your question. As you know, as we operated 8.5 generation OLED, we had to go through significant amount of trial and errors. There were a lot of challenges, including issues relating to oxide uniformity and also stabilizing the deposition process for OLED.

So there were many issues that we had to deal with and which we overcame. Thanks to which, we were able to attain a stable mass production. And as you would recall, at the very onset for 8.5 generation, we began with a half-cut glass.

But after going through 3 years of different trial and errors, we were able to increase and enhance even the mass production yield for the mother glass. And also, on top of that, in terms of the oxide uniformity issue for 8.5 gen, we had to haggle with this issue for around 4 to 5 years.

So if you compare this to 10.5 generation, the mother glass size is actually 2x bigger. Hence, it truly requires an extensive experience in order to bring about a stable mass production for this generation of product.

So what we are saying is that we are being very preemptive and making such advanced preparations for a successful mass production of 10.5G in the future.

So as I mentioned in my presentation and I've laid forward our technological road map, under the first stage, what's most important for us is to gain a mass production technology for 10.5 generation mother glass. The second part is that we need to stabilize the technology for oxide backplanes.

And in order to minimize the trial and errors that we had gone through in the past, we need to validate mass production. And the last stage, because for depositions, there are multiple number of solutions and technologies that can be adopted.

We will make a decision and select accordingly after looking at the economics, the productivity and efficiency aspect.

So all in all, the investment into 10.5 generation OLED is not for the purpose of expanding the mass production of the LCD but in order to prepare ourselves and make advance investment so that we can conduct validations and verifications on the technical front so that later, we can achieve a success in the ultra large-sized OLED products.

And of course, we will go into producing OLED only after we attain stabilization on the backplane side. But of course, in that process, if we identify certain market demand, then on a temporary basis, we could use LCD production..

Our next question is from Daishin Securities..

I have a question relating to your CapEx investments at Guangzhou, China. You've mentioned that the capacity will be around 60,000 sheets per month. So I would like to understand that come the second half of the year that if you compare the capacity to Gen 8 facility at Paju, your OLED capacity, I think the size of the capacity will be quite similar.

And once Guangzhou fab is prepared to go into the mass production and based on the assumption that the OLED TV panels do not decline, I would think that in 2 years' time, the revenue figure could actually double.

Can you confirm whether that calculation is correct? And in terms of EBITDA, if you were to compare with the Paju plant, how faster with the Guangzhou fab will reach breakeven point?.

Let me provide some background explanation on our OLED investment for Guangzhou, China. Basically, our strategic direction is clear that we will very aggressively change our business structure driven by OLED.

In light of the fact that we now have confidence in the ability to bring forward the mass production of OLED product and also in light of the fact that the customers have very positive perception, we felt that this was a right timing for us to start to prepare for increasing the economy of scale.

So through the cost competitiveness, we were thinking how best ways to further improve our business profitability and speed up our mass production process.

And we felt that China's Guangzhou plant, where the infrastructure is already there since we have the LCD fab for 8.5G, we felt that, that will be a right place for us to make additional investment so that we could actually expand on the investment to have a similar level of such capacity as Korea's 8.5 generation fab.

And we felt that this would clearly bring us economic benefits. Now according to our internal forecast, we believe that by 2018, for large-sized OLED TVs, there will be a demand volume of 2.5 million, and by 2020, more than 6 million.

And of course, the top line will grow more than doublefold, and we believe that our Guangzhou fab is going to help to improve the profitability. And based on this belief and judgment, we have decided to go ahead with the investment..

Our next question is from NH Investment..

I have two questions. First, I would like to understand any changes on your material cost side for the large-sized OLED panel. It seems that if you look at your large-sized OLED, the specification is -- spec is increasing and also a number of colors that are being added is also increasing and overall performance is improving.

So what is the trend like for the cell material? I would like to understand the cost line item.

And for 10.5 generation large-sized OLED, do you -- are you also considering applying the inkjet method?.

Now with the China's Guangzhou fab, the number of volume is going to increase. And of course, in the process of preparing for OLED 10.5 generation, in terms of bettering productivity and achieving economy of scale, we believe that obviously, this is going to lead to a better cost competitiveness, including the material cost competitiveness.

And in terms of the inkjet method, yes, we are definitely reviewing the feasibility of the inkjet technology, and we are studying this in very -- in detail..

Our next question is from UBS..

First one is a clarification on your Gen 8.5 OLED investment in China. Is that effectively all new lines? Or would part of that over totality of risk be conversion from LCD to OLED that you've been doing basically so far in Korea? That's my first question. I have a follow-up..

Now to respond to that question, our investment into the Guangzhou 8.5 generation is not a conversion. It is an investment into a new fab. Having said that, we already have an LCD fab in Guangzhou, so there is a certain infrastructure that could be used, also some logistics-related infrastructure.

So by making a little bit of additions, such infrastructure can be shared across the board. So once again, it is a fresh new investment into a new fab, but there is opportunity for us to jointly utilize the infrastructure that is already there..

That's clear. Then on the Gen 8 -- 6 RGB OLED investments. So you talked about customers' commitments in form of strategic alignment, basically.

Is that basically prepayments and commitment to volume corridor, I guess, more of a fixed amount of panel shipments? Or are you still discussing possible co-investments into those fabs, which potentially would allow you to ramp up more than the incremental 30,000 sheets per month you just mentioned?.

Let me begin by saying that when it comes to our P-OLED products and our investment decision approach from the company's perspective, it was very important for us since there are certain risks that are involved to come up with some methods to go around those, hedge those risks.

That was a very important point that we had to keep in mind based on which we had gone about making the decision. You did state a number of questions. It will be difficult for me to give you a very specific answer to those questions.

But it's true that we've gone through significant amount of discussions in order to hedge those risks and also to bring a strategic approach to the cooperation with the customers. As I mentioned in my presentation, when it comes to the customer commitment, it was not for the simple purpose of securing funds.

But it was a part of a process to continue a strategic collaboration with our customers. And from our company's perspective, this reducing of the uncertainties was a very critical point that we had to deal with in this decision-making process..

Our next question is from Daiwa..

I would like to ask two questions. First is a follow-up question on the China 8.5 generation OLED TV investment.

The reason to make this investment, was it purely for infrastructure and cost reasons? But -- or did you also see some significant demand coming out of your China customers? I would like to understand whether that had a part in helping you come to that conclusion.

And also, since OLED TV technology is a technology that is owned by LG Display only, are you not concerned about potential technology leakages or drains? I would like to understand what your position is on that.

And if you look at the second quarter earnings results, it fell slightly below the market expectation, and I think the key reason behind that is the weakness on your mobile business.

If in the second half of the year, the P-OLED, the new line enters a mass production phase, then I think in the second half, the concern for mobile could actually be more heightened.

Also, in light of the fact that different survey entities are giving mixed forecasts about the future LCD price trend, which is confusing quite, I would like to understand what your take is on the second half outlook in terms of your performance guidance..

You asked whether we decided to make the 8.5 generation investment in Guangzhou because of a certain customer in the Chinese market. As the market would understand, and as I have said on a repeated basis, we see the OLED TV demand actually broaden and expand.

There are multiple customers, including Chinese customers, who are moving to adapt OLED panels in their TV manufacturing. So it is not because of a particular Chinese customer. We looked at the advantages that we could enjoy from the existing fab and also looked at the market and the value that it could offer.

And thirdly, we're looking for ways to very quickly enhance our cost competitiveness so that we can further better the profitability of our OLED TV business. So this was a decision made in consideration of multiple factors and it was not because of one single customer.

Responding to your second question about our potential concern of technical expertise drainage, as you would know, the level of difficulty for implementing OLED is much higher from a technical perspective compared to LCD. There is oxide backplane, deposition, encapsulation as well as different circuitry that is required.

So this is a coming together of multiple aspects, and making a simple copy of this technology is impossible. It has to do with also our know-how in mass production. And also, the fab that we are moving to invest in is an 8.5 generation OLED fab.

And we already have proven experience, and it is a proven technology, and we have operated this out of Korea. So this is an existing technology. And already, we've had this 8.5 generation LCD fab in China from 2013. We've had -- it's been under operation since that point in time.

So we have a very rigorous process in place and overall control system is well set up. And there are very advanced cutting-edge technologies like the MMG technology that we have already employed, and we have not experienced any technical expertise drainages or leakages. So we do not have any concerns on this issue.

And so with that comfort, we've made the decision to make investment at the Guangzhou cluster. So rather than the issue of technology leakages, by making investment into China for this 8.5 gen fab, the overall display industry can benefit from this investment with -- in terms of the localization of the equipment that is used in the fab.

More -- there will be more benefits that go to not only LG Display, but also, it will be good opportunity for other equipment vendors and suppliers. So we believe that this investment will bring about good economic value..

Our next question is from Cowen and Company..

I have two questions, please. So first one, if you could review the expected schedule to ramp up the new capacity that was announced today, the 60K Gen 8.5 in China and the 30K additional plastic OLED and also just review the status of the E5 and E6 ramp-up. That's my first question, please..

Now for China generation 8.5 OLED, the ramp-up is currently scheduled at the first half of 2019. For P-OLED, the Gen 6, the additional capacity of 30,000, we will go about the ramp-up in a phased manner during 2019..

My second question is on the OLED business in the current quarter.

Could you provide any more color on the second quarter, how much OLED contributed to overall revenues? Any change to your outlook for how many TV panels you may produce this year, that sort of thing?.

Yes, since you also asked about E5 and E6, let me talk about that as well. E5 line, which is currently under preparation for mass production and is located at Gumi City, it will go into mass production this year. E6 line, which is in Paju, in the capacity of 15,000 sheets per month, it will go into mass production in the second quarter of next year.

On your second question, our strategy, as you know, is to make OLED a pivotal business for our top line generation. And if everything goes as planned, we believe that by 2020, out of the total sales revenue, OLED will account for 40%.

And for 2017, if you look at the percentage of mix of large-sized OLED panels used for TVs, it will account for around 10% of total sales. Yes, let me clarify that once again. Out of the total sales, 10% will come from large-sized OLED panels..

Our next question is from Merrill Lynch..

Yes, thank you for such a thorough explanation on your long-term strategy for your OLED business. But realistically speaking, this is a quite significant project in its size. And in order to execute this, you need capital, you need money.

And if you consider the fact that the China 8 generation fab and P10 Gen 6 P-OLED is all going to go into production in year 2019, I would think that your CapEx burden for this year and next year will be comparatively low.

So can you actually spend only around KRW5 trillion per year in CapEx? Or do you expect your CapEx amount on a per annum basis to be higher than this figure?.

As we announced yesterday, we will be investing approximately KRW20 trillion in new expansion. So that's KRW15 trillion for domestic and KRW5 trillion for Guangzhou, China. And this investment will be made over a period of 4 years. So compared to our investments in the past, it's clearly more, higher.

And also, the portion of investment is also going to be higher across the years of 2017, '18 and '19. But having said that, on a cash-out basis, I think the size of investment from 2017 to 2020 is going to be quite even. Now before 2019, we we've originally forecasted that the investment will be somewhere around KRW6 trillion level.

But considering that there is additional investment and more higher demand, it is inevitable that there will be some increases, so we now believe it will be around KRW7 trillion level..

And my last question could be a very minor question. But before your Paju plant goes fully OLED for 10.5 generation, I would think that you're taking the oxide backplane and making the LCD high-end product. So in 2018, you will be setting up the equipment.

And so would this approach be something that you're doing in the process as you reach or as you go towards 2019 and 2020? So I guess my question is, what is your plan for equipment operations and panel production guideline or guidance for 10.5 generation?.

Yes, what you've mentioned is correct. So from now on to about 15 to 18 months going forward, we will be placing equipment orders and setting up the equipment. After which, for around 6 to 12 months, we will need time for testing. So if you consider that, what you have mentioned is quite in line with the road map of the schedule.

I need to make a correction to my previous answer. This year's total OLED portion out of the total sales revenue is 10%, including the small P-OLED..

Our next question is from Korea Investment..

I have a question relating to your large-sized OLED panel capacity. You've mentioned that by 2020, the TV market is going to actually grow to 6 million units for the OLED TV. But as according to the plan that we see as of today, there seems to be no additional OLED TV panel capacity additions for next year.

So is it safe to say that from now on up until the Guangzhou 8.5 generation fab is complete that you will continue on with the current capacity level of 60,000 sheets per month? Will there be any possibility of additional capacity additions in the meantime? That is my question..

Now when it comes to production of OLED, we are very much closely monitoring and linked to the market. So we will operate our capacity in a -- very mindful of the market demand. So if the demand in the market becomes more stronger, then there are certain technologies in our mass production that we can employ like the MMG technology.

We could use that method to actually enhance capacity. So we are even considering those options as well..

Our next question is from SCMR..

And I just have a couple of small clarifications. I'm assuming that the usable infrastructure that you have in China is oxide backplane production and that will be shared by the eventual OLED capacity. And on the Gen 10.5 fab, I know it's going to be a long process to work through this fab.

But I'm assuming somewhere you have plans for what the ultimate capacity of that Gen 10.5 fab will be. If you could share those with us..

When I talked about the potential for using the infrastructure at Guangzhou cluster, it is not indirect bearings with -- not only indirect bearings with the production methodologies or the equipment of the fab. But it was more about the logistical infrastructure, the electricity, the water supply.

So this indirect capital usage is quite beneficial as well. Responding to your second question for 10.5 generation OLED panels, you asked about our ultimate capacity size. It is too early to specify that figure.

For the time being, we are working towards 30,000 sheets per month, and we are very much focused on the successful mass production of OLED mother glass for generation 10.5. Also, to add on that, regarding the existing LCD fab and its conversion to OLED, it is still a valid approach. We would be mindful of the market situation.

So for the LCD capacity, rather than expanding the capacity, we will maintain the capacity level and go more for profit. On the OLED side, on top of the investment into Korea and Guangzhou, if necessary, we will even consider conversion from LCD to OLED to respond to the market developments..

Lastly, before we wrap up, I would like to answer the additional question that Mr. Sung Kyu Kim from Daiwa had asked. You asked about the mobile portion for our company in the second quarter. And in Q1, the mobile mix was 26% and it declined to 22%. And yes, that did have an impact on our profit line item.

And then you asked also about in the second half, because of the PO aspect, would it not further aggravate this figure? There could be some increases on the cost side.

But considering the fact that the market is a high season in the second half, hence, leading to a greater amount of shipment, we believe that on the mobile side, the results will be better in the third quarter compared to the second quarter. Thank you. That brings us to the end..

This concluded today's conference call. Thank you for attending. You may disconnect now..