Robert Yi - Senior VP, Investor Relations SeWon Chun - Senior VP, Semiconductor Business (Memory) Chang Lee - VP, Samsung Display KyeongTae Lee - VP, Mobile Communications business Yoon Lee - Senior VP, Visual Display Business

Claire Kyung Min Kim - Daishin Securities Peter Seicheol Lee - NH Investment Securities Do-hoon Lee - CIMB Chung Chang Won - Nomura Securities Simon Woo - Bank of America Merrill Lynch Nicholas Gaudois - UBS Marcus Shin - Goldman Sachs JJ Park - JPMorgan Yoo Jong Woo - Korea Investment and Securities Do Hyun-Woo - Mirae Asset Securities Han Seung-hoon - Deutsche Securities Peter Yu - BNP Paribas Mehdi Hosseini - Susquehanna International Group Song Myung-seob - Hi Investment Securities Mark Newman - Sanford C. Bernstein

-- third quarter, the total revenue was KRW47.8 trillion, a 7.5% year-on-year decline. This decrease was mainly due to the Note 7 issue, despite the increase of sales in the memory and OLED businesses. The gross profit for the quarter was KRW18.4 trillion, about KRW1.7 trillion year-on-year decrease. But the gross profit margin as a percent of sale held steady due to higher gross profits from the sales expansion of premium products in the OLED and consumer electronics businesses. Our SG&A expenditures increased Y-on-Y, mainly due to the recall cost related to Note 7. The operating profit decreased by KRW2.2 trillion, year on year to KRW5.2 trillion, and the operating profit margin declined by 3.4 percentage points to 10.9%. The earnings of the component business decreased marginally year on year due to price correction of DRAM during the first half of this year. However, on Q-on-Q basis, this operating profit increased due to sales expansion of high-end products such as SSD, flexible OLED under the stabilized ASP environment. In the set business, earnings declined in the IM division due to the loss resulting from the Note 7 issue, but the consumer electronics business continued to grow year on year, driven by the sales growth of SUHD TVs and premium home appliance products. In this quarter's strengthening of the Korean won against the major currencies such as U.S. dollar and euro had a negative impact on the operating profit quarter on quarter. We figured it's approximately KRW700 billion effect, mostly on the component business. The non-operating profit was KRW540 billion, mainly from the sales of various investments including investments in ASML. Now I would like to address the business outlook. In the fourth quarter we expect the overall earnings to improve year on year. The mobile business is expected to recover its earnings to the similar level as 4Q last year through solid S7 sales, while earnings in the component business is projected to improve year on year. For the semiconductor business, we expect the earnings to improve due to the sales expansion of the V-NAND-based SSD. For the display business, we expect the earnings to improve also from LCD business recovery year on year. However, Q-on-Q earnings will decline due to the reduction of flexible OLED panel shipments from discontinuation of the Note 7. For 2017, we will focus on solid earnings growth through normalization of mobile business, while improving earnings from the component businesses with the expansion of OLED panels as well as vertical NAND products. Regarding our memory business, we expect the earnings in NAND business will increase significantly year on year, led by the supply expansion of the highly-profitable vertical NAND. We will strengthen our technology leadership by expanding 64-layer vertical NAND as well as 1x nanometer DRAM. Also in system MSI business, we will enhance profitability by maintaining a high utilization rate for the 14 nano and above capacities, while expanding the leadership position in the 10 nano process technology. For the OLED business, we expect to achieve significant earnings improvements year on year. We plan to expand the supply of high-end flexible OLED panels for external customers based on unrivaled technology leadership and capacity. With regard to the IM business, our top priority will be regaining consumer's confidence and expanding sales of the new flexi products, with a differentiated design and innovative features. Also we will further strengthen our competitiveness through continuously enhancing solution capabilities such as KNOX, Samsung Pay, cloud systems and artificial intelligence. For the TV business, we will continue to solidify our leadership in the premium market based on quantum dot technology. Regarding the home appliance business, we will focus on improving earnings by expanding sales of premium products and strengthening the B2B business. Now I'd like to comment on our capital expenditure plan. We expect the total capacity expenditure for this year to be at a record high of over KRW27 trillion. In particular, we are focusing on investments in OLED business with a significant demand increase in 2017 and a strong demand for vertical NAND. Capacity -- I'm sorry, the CapEx for the semiconductor business will reach KRW13.3 trillion, with about 8-to-2 split between memory and system MSI. For the display business, the expenditure is expected to reach close to KRW11 trillion, which is more than double from that of the last year. During the third quarter we invested KRW6 trillion in CapEx, including KRW3 trillion for the semiconductor and KRW2.5 trillion for the display division. This brings the cumulative capital expenditure at the end of the third quarter at KRW14 trillion. We completed the U.S. $10 billion special buyback and cancellation program last month as planned. We invested approximately KRW11.4 trillion during the four phases and we were able to repurchase and cancel 6.6 million common shares and 2.3 million preferred shares. Currently we are reviewing the overall shareholder return policy including how we will utilize the remaining allocated capital from last year's free cash flow. At this point, we are leaning toward using the allocated capital from unused portion from 2015 for share buyback and cancellation. However, we will update you on the details of overall shareholder return policy by end of November. Before the presentation of each business unit, I would like to share with you several data points relating to the key business areas. In the semiconductor DRAM, for the third quarter, our bit growth came in around mid-20% growth, while we saw ASP decline of single digit. For the fourth quarter, we expect market DRAM bit growth to be low single digit and we expect our bit growth to be flat Q-on-Q. This will bring 2016 annual market bit growth at high 20% and our bit growth should be in mid-30%. For NAND flash, in the third quarter, our bit growth came in at low 20% and we saw ASP decline of low single digit. In Q4, we expect the market NAND bit growth to be about 10%, and our bit growth would be mid-teens in Q4. This brings the total year-on-year bit growth of NAND flash about mid 40%. For handset business, total sales of handset in the third quarter was about 89 million units. We also had 6.5 million tablet sales. Blended ASP in the third quarter came in at high $180, with mix of smartphone within the total handset shipment at about mid-80%. Q4, we expect our shipment of handsets to be similar to that of the third quarter and we expect to see an increase of tablet sales in Q4. Blended ASP for our handsets in Q4, we expect it to decline slightly. The mix of the smartphone within handset will remain at about mid-80%. For TV business, sales of our LCD TV in Q3 was roughly 11 million units and we expect to see about 50% increase in Q4. Now I'll turn the call over to gentlemen [ph] from the business units to present their specific outlooks and -- the results and the outlook. Thank you.

Good morning. This is SeWon Chun from the Memory Marketing Team. In the third quarter, the demand for memory increased remarkably due to seasonality and new smartphone launches. The memory division achieved outstanding earnings growth by actively responding to increased demand for high-density mobile server products, including V-NAND. For NAND, the supply shortage has intensified due to continued strong demand for mobile storage and SSD. Demand for mobile storage such as EMCP and EMMC [inaudible] due to expanded adoption of high-density products of 64 gigabytes through solely the demand from Chinese smartphone makers. For server SSD, where demand is concentrated on Samsung products, demand for high-density over 8 terabyte increased due to the expanding transition of 10K and 15K RPM HDD2 enterprise SSD. We focused on addressing the demand for mobile storage over 64 gigabytes and high-density enterprise SSD, such as 8 and 16 terabytes, as well as on expanding supply of PC NVMe over 256 kilobytes. We achieved outstanding improvement in profit by continuing migration to third-generation V-NAND, which is continuously securing profitability. For DRAM, mobile demand remained strong, driven by expanded adoption of high-density mobile DRAM due to smartphones with highest specifications. High-density server demand for datacenter also increased, led by increased adoption of the Broadwell [ph] platform. For PC, following the previous quarter, price continued to increase on the strong seasonal demand. Demand for 20nm products increased due to the supply and demand imbalance for some applications. We focused on expanding to this increased demand by improving process efficiencies and utilizing available sources. By doing so, we achieved the outstanding improvement in earnings compared to the previous quarter [inaudible] exceeding our initial forecast. Next, our comment on the memory market outlook and our strategy for the first quarter. For NAND, demand continued to remain strong, driven by increasing mobile content and server SSD adoption. Supply and demand conditions will be tight as the strong demand will continue for SSD in all segments, driven by the launch of [inaudible] systems equipped with products over 8 terabytes. Also increasing demand for high-density products over 256 kilobytes will contribute to this result, led by accelerated increase of PC SSD attach ratio and expansion of high-density NVMe adoption. For DRAM, although there will be some impact for yearend seasonal demand, the overall market situation is expected to be favorable. This is because of a demand for mobile remaining solid, thanks to new smartphone launches, continued strength in 32 gigabytes and 64 gigabytes server DRAM demand, led by expanded transition to product [ph] platform, and increased 8 gigabyte potential ratio for PCS [ph]. We will focus on improving earnings by focusing on a profit focused product mix based on our unrivaled competitiveness of V-NAND and 20nm DRAM. Next, our comment on our strategy for 2017. For NAND, overall demand will increase due to content growth in all applications, especially production of a high-density mobile storage, over 64 gigabytes, is expected to increase due to high specifications of smartphones such as dual camera. Demand for server SSD will remain strong due to an increasing portion of high-density datacenter products, and expanding adoption of [inaudible] in enterprise. Also, as I said, the adoption in PC continued to grow, continue to increase. We saw attach ratio for notebook is expected to exceed 50%. Although demand is expected to remain solid in 2017, for industries, the 3D NAND ramp-up status will be a key variable for supply and demand. We are focusing on investing in V-NAND in order to actively respond to the growth demand for high-density storage, which has growth potential, and we will concentrate on premium markets such as high-performance server SSD. Also in addition to highly-profitable 48-layer of V-NAND, we will strengthen technology leadership and secure differentiated profitability by focusing on 64-layer process migration. For DRAM, supply and demand is expected to be balanced, led by solid growth of demand. We project increasing adoption of mobile DRAM over 6 gigabytes and strong demand for high-density server DRAM due to [inaudible] server platform launches and expansion of cloud services. Meanwhile, in terms of supply and demand, we expect some uncertainties will remain in the first step, such as industry supply expansion due to process migration. We will focus on maximizing profit through maintaining the basis of investment and supply management, taking into account the market situation. Also we will strengthen our product and market leadership by supplying high-performance, low-power, high-density products, and by continuing cost reduction through 1x nano ramp-up. Now moving onto the System LSI business. In the third quarter we have achieved solid earnings due to strong 14nm foundry demand, expanded shipment of mid to low-range associates [ph], and consistently increasing sales of image sensors in China. In the fourth quarter, we expect the demand to remain solid, mainly for LSI products, despite a seasonal component inventory adjustment in the market. Also we have started the industry first mass production of 10nm logic [ph] process and we're commencing shipment within the year. We will work tirelessly to maintain our leadership in the cutting-edge process technology. In 2017, we will begin mass production of 10nm products in first scale, diversify 14nm products customers and applications, and further differentiated key technologies for LSI products such as imaging sensors and OLED DDIs. By doing so, we will strive to ensure our continuous growth. Thank you.

Good morning, this is Chang Lee from the Planning Department of Samsung Display. During the third quarter, total earnings for the display business improved significantly Q-o-Q. This was driven by increased earnings from OLED panels as well as increased shipments in large-sized LCD TV. For the OLED business, third quarter earnings improved sharply Q-o-Q, with increased shipments of high-end products such as flexible display, based on the strong demand for flagship smartphone. For the LCD business, our third quarter earnings turned profit under stabilized ASPs, led by favorable supply/demand situation. Also we have strengthened profitability with improved yield and continued cost reduction, as well as expanded value-added products, especially from the large-sized UHDs. In the first quarter, on the strong seasonality of the smartphone market, we expect OLED demand to rise constantly as major set-makers pursue product differentiation in the form of hardware specification. Under this circumstance, we expect to produce solid result through actively addressing demand of flagship products as well as enhancing product mix. In the first quarter, UHD TV market growth and size migration towards large screens are expected to continue under stable panel pricing. In preparation for these market conditions, we will make the best efforts to improve sales and profits by focusing on cost reduction and yield improvement, as well as expansion of value-added products such as large-size -- ultra large-size high-resolution and curved panels. Now I would like to present the outlook for the display market and our core strategies for 2017. For the OLED business, we'll strive to achieve a significant improvement of earnings Y-o-Y through expanding supply of the flexible display to address major smartphone customer demands. Although we expect competition to intensify in the LCD industry under the capacity expansion, we also expect that the market for premium TV panels such as UHD and ultra-large-size TV panels will continue to grow. Under this circumstance, we will make best efforts to strengthen profitability by improving competitiveness of value-added products, focusing on UHDs and larger-size TVs, as well as expanding a portion of differentiated products such as frameless and curved TVs. Thanks for listening.

Good morning everyone. I am KyeongTae Lee from the IT and Mobile Communications Business. I would like to present our third quarter business results and the future outlook for the IM Business. Our earnings for the mobile communication business declined significantly Q-on-Q due to the Galaxy Note 7 issues. However, with the strong sales of our existing models including the Galaxy S7 and S7 Edge, our smartphone shipments have only slightly decreased Q-on-Q. For the network business, our operating profit improved from the previous quarter, mainly because of supply expansion of products for new frequency bands to our major partners. Next, let me move on to the outlook for -- outlook of the fourth quarter. Market demand for both smartphone and tablet is expected to increase Q-on-Q as we enter the yearend peak season. For the mobile communication business, we will push forward to achieve the business earnings at a similar level to the same period in the previous year by focusing on the sales of the Galaxy S7 and S7 Edge, which have shown continuous demand and stable profitability. Moreover, we will aim to increase our smartphone shipment Q-on-Q with the new introduction models in the mid to low-end segments. As for the network business, we will focus on improving our business performance by leveraging the LTE expansion in the emerging markets and extending supply of product for new frequency bands. Lastly, I would like to address the outlook for the year 2017. We are expecting some difficulties until the first quarter of 2017, but we will achieve a business turnaround with the release of our new flagship smartphone. We will continue our depreciation in hardware, including design and camera. In terms of software and services, we will expand the service coverage and available models for the Samsung Pay and Cloud, while introducing artificial intelligence related service to provide new values to our customers. With these efforts, we will do our best to regain trust from our geo customers and get our business back on track as soon as possible. Thank you for listening.

Good morning. I'm Yoon Lee from Visual Display Sales and Marketing Team. For the TV business in the third quarter, global TV demand decreased compared to the same period last year due to economic slowdown in major emerging markets including Latin America. Under such market conditions, our performance improved year on year by enhancing promotional activities in various local markets, preparing for the upcoming peak season, and by expanding the sales of premium products such as SUHD and curved TV. In particular, significant sales increased in North America and positive outcome from Latin America also contributed to such improvement in the third quarter. Our efforts in Latin America started to show tangible results as we have increased operational efficiency and strengthened proactive cooperation with our channel partners since last year. Other digital appliance business in the third quarter, although demand in North American market continued growth momentum, global market demand declined year on year due to the slower market growth in China and the impact from continued economic downturn from emerging markets. Despite these circumstances, earnings improved compared to the previous year, led by increasing sales of premium innovative products such as breeze-free air-conditioner and Chef's Collection kitchen appliances. Especially strong sales in Korea and Southwest Asia market greatly contributed to the earning growth. Other TV market in the fourth quarter, as yearend peak season is around the corner, we expect to see an increasing demand quarter on quarter. However, due to the continued economic recession in Latin America, we forecast a decrease in global TV demand year on year. In response, we will maintain solid performance and set a new record for the 11th consecutive year global number one position by expanding the sales of strategic products based on accumulated expertise in seasonal promotion activities. As for the digital appliance business, in order to prepare for the upcoming yearend peak season, we will strengthen our existing partnership to maximize opportunities and increase sales for our premium products, largely in the North American markets. At the same time, we will expand investment in B2B business and reinforce our online marketing to actively create new market opportunities and increase sales. (Inaudible) business in 2017, we will set up a foundation for sustainable growth and [inaudible] that encompasses existing sales opportunity and new demand by launching innovative products based on quantum dots, the core material for the next generation of TV display, and by expanding premium lineups in UHD and large-screen TV. Furthermore, in order to ensure continued growth and improved profitability in 2017, we will diversify our sales structure to focus on high-value-added B2B products such as gaming monitor, LED and outdoor signage, and we will expand sales through online channel which is currently showing growth. As for the digital appliance business in 2017, we will continue to produce innovative premium products as well as products that uniquely reflect different lifestyles of local consumers in order to improve our performance and capitalize on new demand in the market. Thank you.

Thank you. So this will complete the part of the presentation by the management. Now we'll move on to question-and-answer session. A - Robert Yi: As we have done in the past, we'll have to -- we will do the consecutive interpretation for this session. So please understand that this may take a little longer, but this is the best way to get the most accurate information delivered to you. Again I would like to ask you to refrain from asking questions that were already asked from other individuals and ones that are involving data points which I provided as part of the presentation. Okay? So let's get the Q&A going.

[Interpreted] Now Q&A session will begin. [Operator Instructions] The first questions will be provided by Ms. Claire Kung Min Kim from Daishin Securities. Please go ahead, ma'am. Claire Kyung Min Kim - Daishin Securities: [Interpreted] My first question is about the CapEx plans for next year. This year you focused your CapEx plans especially around the 3D NAND capacity in Hwasung. Looking towards next year, what will be the size and timing of the CapEx investments for Pyeongtaek. Also, what are your plans next year for operation of the Hwasung capacity? And what are your plans about investments -- CapEx investments with DRAM next year? Next year, DRAM bit growth is expected to be in the 20% range. And so within that context, what will be your investments in DRAM capacity?

[Interpreted] First, to answer the question regarding CapEx for V-NAND, we are expecting that next year the demand concentration will continue upon us in terms of the high-density, high-performance SSD as well as high-capacity mobile storage. And so we will continue to actively pursue investments, expansion of capacity in V-NAND.

[Interpreted] Also regarding our Pyeongtaek campus, I think this is the first time we're officially mentioning of our plans there, but our schedule at Pyeongtaek is to start mass production at Pyeongtaek of V-NAND from mid-2017. And so according to that schedule, our plan is to complete the fab construction before the end of this year. Regarding Line 17, our schedule there is to start mass production within the first half of next year, and we're currently in the process of bringing in the equipment to hit that schedule. Of course, the actual production and supply will be flexibly managed depending on how the market situation as well as customer demand falls out next year. And that would also have impact on the bit growth of our supply for our shipments next year.

[Interpreted] Regarding the DRAM, it's difficult for us to talk about the exact DRAM bit growth that we're expecting from our sites next year. But given the fact that we haven't done much investments in DRAM this year, we are expecting our growth rates to come down and be close to -- be in line with market bit growth in DRAM next year. Once again, as we have always mentioned, regarding DRAM, our focus is not to increase our market share but to maximize our profits. And so our investments as well as production will also be flexibly managed according to how the market unfolds.

[Interpreted] The next questions will be presented by Mr. Peter Seicheol Lee from NH Investment Securities. Please go ahead, sir. Peter Seicheol Lee - NH Investment Securities: [Interpreted] I have a follow-up question to the previous question which is about semiconductor memory market outlook for next year. You did mention about the demand and supply outlook for next year during the speech. I'm particularly noticing that you've mentioned uncertainties in demand and supply situation possible in the first half. Can you give us some details of why you're expecting uncertainty?

[Interpreted] To give you some details of why we are -- why we expect possible uncertainties in the first half next year is overall, as we mentioned during the speech, overall demand next year in 2017, we're expecting that to remain very strong. But given the fact that this year specific applications have increased their adoption, more than what we had expected, relative to this year, next year the increased rates may be relatively slower. And so that is why it's particularly related with smartphone or server adoption, we think that that is a potential risk versus the high adoption growth rates this year.

[Interpreted] Also, overall, looking upon next year, we do expect that the market will have a balanced supply and demand situation and we'll continue to report sound growth. But we also think that there are uncertainties possible in demand and supply situation. And so in response to that, we have prepared scenarios depending on different demand and supply situations and we will implement the right scenarios depending on the market situation. We will focus on leveraging our competitive products and also focus -- manage our product mix based on profitability.

[Interpreted] The next questions will be presented by Mr. Do-hoon Lee from CIMB. Please go ahead, sir. Do-hoon Lee - CIMB: [Interpreted] I have two questions related with the IM division. First of all, recently, through press releases, the Company had stated that the opportunity loss due to the discontinuation of Note 7 would be around the range of mid KRW2 trillion in the fourth quarter and an additional mid KRW1 trillion next first quarter. Could you explain what were the outlook as well as assumptions that were behind such projections? And also, can you divide that into direct impact on the IM division versus the impact on other business divisions that you have? Second is, there were recently reports by the media saying that a large part of the Note 7 replacement demand is -- or Note 7's are being replaced by S7 or S7 Edges. Do you think that this will possibly reduce the opportunity loss that you have projected previously?

Before we answer Note 7 related questions, I would like to inform you that Mr. Shin Jong-Kyun, President of IM division, is going to make a special report during the extraordinary shareholders meeting. He wants to share the steps that we're taking to investigate the cause of the Note 7 issue. He will also conduct Q&A sessions within that EGM to address shareholders' concerns. Because of this, we'll not cover any Note 7 issues, except the financial aspects, which is the question that was just raised. The content of Mr. Shin's report will be shared with everyone as soon as it becomes available, which I assume to be within the next couple of hours. I appreciate your understanding and cooperation.

[Interpreted] To give further answer to your question, within the mid -- around mid KRW2 trillion range of opportunity loss that we announced to the market that we expect in the fourth quarter, most of that is IM directly related, perhaps around close to KRW500 billion is related with the component business.

[Interpreted] I've also been looking at the analysis that's been produced by the market, and I don't see many of them presuming an opportunity loss around the KRW2 trillion ranges. I think perhaps this is because a different definition of earnings are being used by the market than what we are using. We believe that, even if the revenue is not incurred, because we still need to pay considerable amount of fixed costs, that the standard to be used here is the contribution margin.

[Interpreted] To answer the second part of your question, I'm KyeongTae Lee of the IM division. Regarding your second part question of many of the Note 7's being replaced with S7's, in the third quarter, yes, actually, we've seen our S7 sales to maintain a strong sales and we think that the S7 will be able to greatly surpass the previous Galaxy S series in terms of full-year sales. Actually, in all of our Galaxy S series, the S7 probably will be recording the highest sales in the launch year. Also in the mid to low range are Galaxy A and J series. Sales have actually increased quarter on quarter, and we are seeing these other substitute models taking on the Note 7 space.

[Interpreted] The next questions will be presented by Mr. Chung Chang Won from Nomura Securities. Please go ahead, sir. Chung Chang Won - Nomura Securities: [Interpreted] I have a question about last month, Elliott [ph] made several proposals as a shareholder, including special dividends and changing of the Company's governance structure. Does the Company have any responses to offer on that? And also during the speech, you mentioned that the shareholder return plan will be announced around mid-November, is there any possibility that we'll see different elements than what we saw last year?

[Interpreted] Regarding the proposal, the BOD, the Board meeting, as well as the management team, is very carefully considering and reviewing the proposals, not only about the shareholder return but also all aspects of the proposal that was made. We believe that shareholder return is not a one-time event, that we need to continuously improve our shareholder return. And therefore, from that context, we are considering the proposal. As we mentioned, we will be finalizing the plan regarding not only shareholder return but the overall aspects of the proposal and plan to communicate the plan within November with the market.

[Interpreted] To correct the translation, what we will be communicating will be the direction of our not only shareholder return but the overall proposal. And therefore, what we will be communicating within November would not be the finalized plan.

[Interpreted] The next questions will be presented by Mr. Simon Woo from Bank of America Merrill Lynch. Please go ahead, sir. Simon Woo - Bank of America Merrill Lynch: [Interpreted] My question is related with the LSI non-memory division. You've recently announced mass production of 10nm, and I also welcome how we're hearing more about areas such as AI or IoT as a part of the business plan, which is related with the non-memory side of the business. However, also looking at the overall trend, I do notice that actually the products that would need the relatively expensive technologies, such as 7 or 10nm, is decreasing overall, in the overall tech trend. And so my question against that backdrop is, what are the specific applications that would need such high performance, 10nm or 7nm technology? And when do you think the 10nm or 7nm technology will per chip become cost competitive versus the 14nm?

[Interpreted] In the case of cutting-edge process technology for the System LSI, it is -- the cutting-edge technology, as you mentioned, is a relatively high-cost process. And so what usually happens is that the first productions are used for the premium applications where we can still guarantee sufficient ROI. So, for example, the high-value SOCs are where the first cutting-edge process technologies are used. And then as the yield ramps up and the fab is able to produce more cost efficiently, then the supply migrates to other mass applications. An example will be our 14nm process which we started mass production last year, so we're in year two. Next year will be year three. Initially the 14nm was used for the premium products and started to go for the more mass applications from mid last year. And this year we're seeing an increase of more mass applications taking on our 14nm products. And we think that the same migration process will happen to our 10nm technology.

[Interpreted] Also regarding 7nm which you mentioned, as we have always mentioned previously, we are ready to go 7nm. The decision is the economics, the ROI and also whether there are products or what products would be taking on 7nm. And once those business decisions are made, we are technically ready.

[Interpreted] The next questions will be presented by Mr. Nicholas Gaudois from UBS. Please go ahead, sir. Nicholas Gaudois - UBS: Yes, hi, good morning. Thanks for taking my question. The first one relates to DRAM. So you just indicated you intend to grow next year more or less in line with the market. At the same time, considering that supply is still tight, are there any parameters where you will -- that you would consider to potentially add any wafer capacity in DRAM next year? And if so, when could you actually do that [inaudible] site or Line 17? Thank you.

[Interpreted] Regarding the DRAM, once again our bit growth will be focused more on process migration. And so as we have mentioned, our -- we will be focusing on -- quickly and flexibly responding to the market environment as it unfolds.

[Interpreted] The next questions will be presented by Mr. Marcus Shin from Goldman Sachs. Please go ahead, sir. Marcus Shin - Goldman Sachs: [Interpreted] I have two questions related with the IM. One is that, what are your -- what are you noticing in terms of sales trends for the S7 and the S7 Edge, since the discontinuation of Note 7? And also, some are talking about a possible early launch of the S8. What are your plans regarding that?

[Interpreted] Regarding the Note 7, we don't see any impact of the Note 7 discontinuation on our other product demands. As I previously mentioned, the S7 sales trends remained strong in the third quarter. And on a full year basis it will greatly surpass the sales of its previous model. Also the sales on our mid to low-end models are also strong.

[Interpreted] The second question about the release, early release possibly that's been talked about of the next flagship model, the S8, it's difficult for us to talk about a model that we have not yet launched, but our basic approach is that we will launch it after thorough verification and once safety is guaranteed.

[Interpreted] The next questions will be presented by Mr. JJ Park from JPMorgan. Please go ahead, sir. JJ Park - JPMorgan: [Interpreted] (Inaudible) first of all, the technologies, the new technologies for DRAM, that'll be 1x nano, for NAND that'll be 64 layers. These new technologies, how much in terms of cost as well as productivity improvements do you expect versus existing technology? And can you quantify that change or difference? The second question, regarding the System LSI side, is, currently, how much of a yield are you seeing on your 10nm production? And during the previous, last quarter's conference call, you mentioned that you're planning to use EUV technology for the 7nm, but I guess since then the industry trend is to not use EUV for 7nm. I'm wondering if you've changed your strategy as well.

[Interpreted] It's difficult for us to talk about specific costs or productivity on products that are not yet even in mass production. But for DRAM, the 1x nano went into mass production in the third quarter and we're in the process of ramping that up. For the NAND, the 64-layer, the target is to start mass production during the fourth quarter and to start to ramp that up during the first half of next year.

[Interpreted] We cannot give you the exact internal yield that we're seeing on the 10nm, but I can say that the yield is according to our plan, what we had expected and planned for. And the current plan is to have that commercially adopted on the flagship model next year. The 7nm, we still plan to use EUV and we're going to maximize the advantage of the EUV technology so that we have improvements in terms of performance, power, as well as scalability, which are the key features of semiconductors.

[Interpreted] The next questions will be presented by Mr. Yoo Jong Woo from Korea Investment and Securities. Please go ahead, sir. Yoo Jong Woo - Korea Investment and Securities: [Interpreted] I have a question related with OLED-related investments. As you mentioned, the demand, especially for the mid and small size OLED panels are increasing quite significantly, especially driven by the smartphone makers. In that context, I'm expecting that you'll probably need additional investments in OLED capacity in addition to what you're currently investing in. And so, can you give us your plans of additional OLED investments as well as what, in terms of your space plans, because I see that you may have not enough space for the additional expansions necessary.

[Interpreted] Our outlook in terms of market demand is that market demand for OLED panels will continue to increase, especially around flexible panels. And our approach to investment is to make timely and preemptive investments so that we are able to maintain our competitive advantage. And we plan to strategically utilize the resources that we currently have, that we have, to respond effectively to market and customer needs.

[Interpreted] The next questions will be presented by Mr. Do Hyun-Woo from Mirae Asset Securities. Please go ahead, sir. Do Hyun-Woo - Mirae Asset Securities: [Interpreted] I have a question related with the CE business. Recently the CE business's earnings has I think moved up to the next level. I think a main factor behind that is the strong sales of high-value-add products, especially the quantum dot TV. In that context, my first question is, what are the recent sales trends you're seeing of the quantum dot TV? And what are your sales targets, for example, next year? Second is, do you think that this enhancement of earnings for the CE division is temporary or do you think this is more of a structural nature?

[Interpreted] Regarding the sales trends of the quantum dot TV, the SUHD TV that's based on the quantum dot technology is having the top-tier lineup and third quarter sales of the SUHD TV increased 60% year on year. And we think that on a full year and -- there will be additional growth in the fourth quarter which is a peak season. And so on a full year basis, we're expecting the sales to double versus the sales last year.

[Interpreted] As you know, the quantum dot technology is considered the next-generation display technology that overcomes many of the limitations of the existing TV technology in terms of brightness, color, reproduction and durability. We're still in the process of working out our business plans for next year, so it's difficult for us to share our sales targets for next year now. But our basic approach is that we will continue to innovate our product based on the quantum dot technology and maintain our market leadership in the premium segment.

[Interpreted] Your second part of the question was whether the earnings improvement enhancements are sustainable. We've analyzed that there are three major factors that explain why we have been surpassing market expectations in terms of our earnings performance. One is the premium product lineup, the improvement of our product mix, represented by the quantum dot TV. Second is that, in all -- in many key regions, we have strengthened our relationship with the major key distributors in the region, and that has also helped. The third is that we've actually been able to preemptively manage many of the external risks, including foreign exchange volatility this year, and this has all helped improve our earnings. We are -- looking towards the fourth quarter, there are some risks. For example, the overall market is contracting or decreasing in terms of sales size in all regions, and also the panel prices are tending to go up. But despite that backdrop, we will continue to provide a differentiating user experience to our premium products and continue this trend of good performance next year.

[Interpreted] The next questions will be presented by Mr. Han Seung-hoon at Deutsche Securities. Please go ahead, sir. Han Seung-hoon - Deutsche Securities: [Interpreted] I have a question about the service side. This year, Samsung acquired a cloud company and mentioned that that Company's capabilities will be leveraged in order to further develop future software as well as content. And so, could you give us an update on how that preparation is coming along? And can we expect to see some new and differentiating features on the next year new smartphones?

[Interpreted] Yes, we acquired Joyent during the first half of this year and we are currently in the process of building out our own cloud infrastructure globally. We believe that this will be able to provide a more efficient cloud service in the future, where we will also expand the connectivity between our multiple devices, not only the handset but tablet and wearables, and also use -- leverage the content to provide a seamless experience to the users across different devices. This will also in the future be expanded to connect with IoT, as well as further connectivity between devices. And this -- we plan to leverage this to provide a differentiating service experience.

[Interpreted] The next questions will be presented by Mr. Peter Yu from BNP Paribas. Please go ahead, sir. Peter Yu - BNP Paribas: [Interpreted] I have an additional question related with the solutions for the mobile business. During the speech you mentioned plans of adopting AI-based services for the mobile side in 2017. Can we expect this to be a differentiating, a major differentiating point for the handsets that you'll be launching next year? I'm assuming that also the capabilities that you've acquired through the acquisition of Viv will be used to do this. And this AI platform, are you planning to run this, operate this as a complete open platform that is open also to non-Samsung devices? Or would it be limited to Samsung products? And if it's the second, that if it's limited to Samsung products, what are your plans in terms of attracting third party vendors to join the platform or creating an ecosystem?

[Interpreted] Regarding the AI service, if I can share some of the direction that we're preparing that for, we have noticed that in the mobile space there's a very rapid shift of these services from app-based to more voice recognition based, big data analysis, AI supporting services. And Viv Labs, the company that -- Viv Labs, the company that we acquired, has a platform that is natural language based AI. And it also is a platform where external third-party service providers can easily connect their services onto that platform. And so we believe that this will help us create an open ecosystem for intelligence-based services in the future. And through the acquisition of Viv, we have been able to secure a key capability in creating a very vibrant open AI ecosystem. We will be connecting not only our smartphones and tablets but also TVs and other home appliances. And this will be to create an AI conversational interface to provide various services to the devices. And this will be a differentiating point. And we will leverage this as a differentiating point for our Samsung devices.

[Interpreted] The next questions will be presented by Mr. Mehdi Hosseini from Susquehanna International Group. Please go ahead, sir. Mehdi Hosseini - Susquehanna International Group: Yes. Thanks for taking my question. I actually have two clarifications. Earlier you said you -- there is some uncertainty regarding the DRAM environment looking into the first half 2017. Can you please elaborate on it? There is a process migration to 20nm and Samsung is migrating to 1x. And I'm not sure if anybody is adding wafer capacity. So, what exactly did you mean by uncertain environment as it relates to DRAM? And my follow-up question has to do with display. You mention flexible OLED, but I think you're referencing a curved edges. In that context, when should we expect Samsung to finally introduce a true flexible display? Thank you.

[Interpreted] To give you more detail on --

[Interpreted] Regarding the uncertainty that we have mentioned before, the uncertainty or the risk that we potentially see next year in terms of the demand side is the first -- or demand side, is, first of all, that as you know, the gigabyte per system this year for smartphones and servers have both grown very strong, higher than what we had expected. And so the risk on the demand side is the potential of the growth -- or demand growth not sustaining what we saw this year, is, for example, the demand growth levels of next year versus this year, that could potentially -- or make the demand softer next year. So that is the risk that we're seeing on the demand side. On the supply side, as you mentioned, most of the bit growth is being driven by process migration, migrating to the cutting-edge processes. And so on that end, on the supply side, the risk would be perhaps the ramp-up plans not going as scheduled, having a negative impact on supply, or the rivers, whether the ramp-up goes better than expected, the cutting-edge process migration goes better than expected, and that would have an upside on the play.

[Interpreted] But then any demand/supply outlook has pertained risks and uncertainties, and despite these risks and uncertainties that we potentially see next year, we will focus on leveraging our differentiated products, leveraging our competitiveness versus the competitors, to focus on operating product mix that is profitability oriented.

[Interpreted] The second question about the flexible display, in addition to the curved flexible, curved edge, we are also preparing various applications, including the true flexible to meet the customer demands. Also in terms of timing, we are continuously working to raise the level of perfection to meet market as well as consumer demand. And we will continue to do that.

[Interpreted] The next questions will be presented by Mr. Song Myung-seob from Hi Investment Securities. Please go ahead, sir. Song Myung-seob - Hi Investment Securities: [Interpreted] My question is related to the previous question about the DRAM demand/supply outlook next year. While mentioning the potential uncertainties next year, you mentioned also first half of next year. In that context, I think what the market is concerned about in terms of demand next year is the fact that recently Intel made comments about its PC inventory. There's talk that Lenovo also has a huge amount of inventory. Also on the smartphone side, the Chinese smartphone makers have been competing to increase their production against each other. And also with the absence of Note 7, we're hearing that Apple or other Chinese makers are also planning to increase their high-end handset production, and this may all end up being an over-production now which will end up having to be -- having eventually leading to perhaps an inventory adjustment next first quarter. I think that is the concern that the market has in terms of potential demand risk. What is your views about this?

[Interpreted] I think once again we have to repeat what we have said before, that, in terms of the demand and supply outlook next year, the main risks that we are looking on the demand side is the possibility that the huge growth in gigabit per system that we saw this year may perhaps not be sustained next year, and that is the risk that we're seeing on the demand side. On the supply side, as I previously mentioned, the demand/supply balance will be affected depending on how the cutting-edge process migration or ramp-up takes place. We are very carefully watching the demand and supply side and we are in the process of establishing scenario-based strategies to respond to whatever situation unfolds. But given the fact that we have many products that are differentiated by themselves, we will be able to maintain a very profit-oriented product mix next year to respond to whatever demand and supply situation. Song Myung-seob - Hi Investment Securities: [Interpreted] Would it be correct for me to understand that you don't see an oversupply on the application side?

[Interpreted] To the question of whether we think that there are overproduction on the set side, smartphones or PCs, we don't think there is an overproduction. And once again, in terms of our DRAM business, basic approach that we will be more profitability oriented and market share oriented, and we plan to next year, at this point, expect to grow at market level.

[Interpreted] The next questions will be presented by Mr. Ike Cho from Sanford C. Bernstein. Please go ahead, sir. Mark Newman - Sanford C. Bernstein: Hi. This is actually Mark Newman from Bernstein. Thanks for taking my question. I wanted to clarify a little bit on some of the capacity ramping comments you made. So, first of all, in DRAM, your -- Samsung is going to have about mid-30% bit growth this year, which is quite a lot higher than what was previously guided. So, first question is perhaps, could you clarify exactly how the capacity or how the bit growth was significantly higher than the I think low 20s that was previously guided for this year? And then moving forwards to 2017 for DRAM, there's a comment earlier about Line 17 ramping. I just want to clarify if that was the additional space of Line 17 ramping for DRAM or was that a NAND specific comment? And then final question related to that is, any specific capacity numbers you could give us? I know you'd mentioned very much depending on demand, but perhaps you could put some ranges around the potential capacity additions that we should expect in NAND flash next year and also for DRAM if any. Thanks very much.

[Interpreted] Regarding the DRAM bit growth, one factor was that there was a seasonality, it was a peak season, so that's one effect on the demand side. Also there was a high concentration of demand for high-density DRAM that came to us. So that was another reason behind our DRAM bit growth. There was a demand/supply imbalance in specific applications, and a lot of that demand came towards the 20nm DRAM, our 20nm DRAM, and that helped us achieve the higher bit growth.

[Interpreted] And so in response to such concentrated demand, we improved the efficiency of our production and also managed our inventory quite effectively, and that is how we were able to achieve higher bit growth than previously guided. But once again, regarding the capacity plans, it's difficult for us to talk about the ranges that you've asked for, and our position is that we will be managing the capacity depending on the demand and supply situation unfolding.

[Interpreted] Your last question will be provided by Mr. Kim Son Woo [ph] from Merit Securities [ph]. Please go ahead, sir.

[Interpreted] The question I have is a follow-up to the bendable display question. I think in the answer to the previous question you left the issue of timing open. And given the fact that even the curved edge display, which only provides mainly aesthetic value, is being hugely -- in huge demand by the Chinese makers and other leading makers. I would expect that if you are able to supply a bendable, a true, flexible display, that would bring about very explosive, significant expectations or responses from the market. So in that context, where are you in terms of technology at this point? Is it correct for me to assume that you are technically capable of producing something on a pilot basis, but you're waiting to -- for other elements to come into play so that you would be able to provide a differentiated consumer experience on the end-device level, which will drive up, for example, ASPs as well as demands? I do understand that, especially, given the recent Note 7 experience, the Company may focus more on quality or yield rather than trying to show off its technology prowess. But given all of that, could we expect something of a bendable or truly flexible display-based product next year or we have to wait after -- will we have to wait more?

[Interpreted] If I take that question from the IM business side, regarding bendable or foldable displays, it is a new form factor and we are focused on finding the optimized user experience for this form factor. And so the timing of commercialization will depend mainly on whether we have the optimized user experience where the consumers can actually feel differentiated value through this new form factor. Also in terms of hardware, for a smartphone, the -- not only the display has to be bendable and foldable, but other parts of the device, such as battery or cases, and other material, also have to be compliant. And so that is also a factor in determining the commercialization time point. So in terms of the form factor, we are focused on optimizing the usability and also whether we are able to provide a differentiated new user experience that customers will find satisfactory. And given all of that, more time is necessary before we launch the product.

[Interpreted] Thank you very much. This ends the conference call.