Daniel Kim - Vice President, Investor Relations Ron Wirahadiraksa - Chief Financial Officer, President Champ Shin - Vice President, TV Sales

Jae Lee – Daiwa Securities C.J. Muse - Lehman Brothers Christian Dinwoodie - UBS Luc Mouzon - BNP Paribas Ivan Goh - Dresdner Kleinwort Michael Bang - Macquarie Securities Chong Kim - CLSA Emerging Markets Jae Lee - Daiwa Securities Eli Cohen - ZBI Equities Chong Kim - CLSA Emerging Markets Tejinder Sandhu - HSBC Irene Lau - Citadel Investment Group Mark Austin - Sanford Bernstein Chun Tam - Thames River Capital Ivan Goh - Dresdner Kleinwort

Good morning and good evening. First of all, thank you all for joining this conference call, and now we will begin the conference of the fiscal year 2006 third quarter earnings results by LG Phillips LCD. (Operator Instructions) Now we shall commence the presentation on the fiscal year 2006 third quarter earnings results by LG Phillips LCD. Please go ahead, sir.

Welcome to LG Phillips LCD’s third quarter 2006 conference call. My name is Daniel Kim, Vice President of Investor Relations. On behalf of LG Phillips LCD, I would like to welcome everyone to our global quarterly earnings conference call. I am joined by our CFO, Ron Wirahadiraksa, and our Vice President of TV Sales, Champ Shin. We have approximately one hour for this call. We will spend the first part of the call discussing the key issues for the quarter, which correspond to the slides available on the website. Following this, we will take your questions. Please do not hesitate to contact us after the call if you have further questions. Before we move into the discussion of the earnings results, you should be aware that this conference call may contain forward-looking statements within the meanings of U.S. Private Securities Litigation Reform Act and securities regulations in Korea, including statements, among others, regarding LG Phillips LCD’s expected future financial performance. You are cautioned that these statements may be affected by the important factors among others, set forth in LG Phillips LCD’s filings with the U.S. Securities and Exchange Commission in its third quarter 2006 earnings release. Consequently, actual operations and results may differ materially from the results discussed or projected in these forward-looking statements. LG Phillips LCD undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Now, please take a minute to read the disclaimer. We are reporting in consolidated Korean GAAP, with an appendix to this presentation that includes our reconciled U.S. GAAP numbers. I would now like to turn the call over to Ron.

Thank you, Daniel. Ladies and gentlemen, welcome to our third quarter 2006 global conference call. During the next hour, I will review the third quarter earnings results, discuss our performance, and conclude with the outlook for the fourth quarter. After this, we will take your questions. Please turn to the next slide. Our performance during the third quarter was clearly not up to our expectations, principally due to the challenging pricing environment for LCD TVs, where the average ASP declined by 17%. As a result, we are focused on several key areas that will help us to better respond to the severity of the ASP decline in the LCD TV segment. We described some of these areas on our conference call last quarter, including a greater commitment to significant cost reduction, temporization of production, a concerted effort to reduce inventory turnover levels, better alignment with customers and prudent CapEx planning. Let’s review the progress we have made so far. First, on the cost side of the equation, our COGS per square meter declined 12% in U.S. dollars. While this decline was important, it was not sufficient enough to offset the LCD TV price decline we experienced during the third quarter. On the manufacturing side, our decision last quarter to temporize production, coupled with an increase in overall shipments, led to a reduction in inventory turnover levels from four weeks at the end of the second quarter to over two weeks at the end of the third quarter for large panels. In addition, we have introduced a new organizational structure last quarter to emphasize responsibilities and performance evaluation by business unit, namely TV, IT, and small and medium applications business units. We also expect to improve profitability and customer alignment with this. Customer collaboration is also an area where we focused a great deal of our resources. During the quarter, we worked diligently with our top customers to achieve better alignment. Activities include co-designing products as well as customer co-location. This strategy will ultimately allow us to better meet our customers’ needs in a very fast-moving industry. Toshiba’s equity participation in our new Poland module plant is an excellent example of the progress we have made in this area. Following the substantial reduction in 2006 CapEx to KRW 3 trillion, our 2007 CapEx will be approximately KRW 1 trillion. This should allow us to have more flexibility regarding future funding needs, focusing on investment in gen 5.5, enhancement of production efficiencies, and maintenance of our existing facilities. We believe our CapEx plans are aligned with the realities of the market, as consumers have yet to show strong demand for LCD TV panels over 50 inches. It is important to note that we remain committed to manufacturing 42- and 47-inch panels, as we anticipate the demand for these sizes should continue to increase. Further ramp up of our P7 facility should adequately fill the demand in this area. Please turn to the next slide. For the third quarter, revenue was KRW 2.8 trillion, up 20% sequentially from the second quarter. The quarter on quarter rise in sales was a result of increased seasonal demand across all segments and improving market conditions, especially in the monitor and notebook segments. In the third quarter, total cost of goods sold increased 19% quarter on quarter to KRW 3 trillion, mostly due to increased shipment levels. COGS per square meter in U.S. dollar decreased by 12% quarter on quarter and decreased 14% year on year. In KRW this was a decrease of 11% and 20% respectively. Cash COGS in U.S. dollar per square meter decreased by 8% quarter on quarter and decreased 17% year on year. In KRW, this was a decrease of 8% and 23% respectively. Quarter on quarter, our EBITDA margin increased to 11% and net margin improved by 2 percentage points to minus 12%. Despite the noteworthy cost reductions we made this quarter, additional improvements are necessary, given the likelihood of continuing sales price declines for LCD TV panels. Therefore, we are working on plans to achieve a significantly higher cost-down for 2007 in order to better prepare for the anticipated price declines. As discussed, we are taking the necessary steps to correct the issues that are limiting our profitability. While we are hampered by certain issues, such as ASP decline, we expect that some of the initiatives that are either in place or are about to be implemented should show immediate impact and others would have a more substantial effect in the future. Please turn to the next slide. As of September 30, 2006 we reported KRW 472 billion in cash and cash equivalents. The reduction last quarter was mainly due to improved working capital management, a decrease in borrowing and less CapEx spending. Finished goods inventory turnover levels decreased from four weeks at the end of the second quarter to over two weeks at the end of the third quarter for large panels. This reduction consisted of a decrease from more than five weeks to three weeks for TV, and a decrease in IT by more than one week to two weeks. The reduction in inventory turnover levels is largely due to temporizing production and an increase in seasonal demand last quarter. We expect to be able to maintain this level throughout the fourth quarter. Total debt increased by KRW 0.3 trillion to KRW 4.5 trillion, primarily due to CapEx spending. Our net debt-to-equity ratio as of September 30 was 57%. Please turn to the next slide. Cash flow from operations increased to KRW 322 billion, mainly due to our improved working capital. CapEx spending of KRW 908 billion was below our second quarter CapEx amount and mainly used for P7, P8 construction for gen 5.5 and our module facilities in China and Europe. Last quarter, we had substantially lowered our 2006 CapEx plan and our current spending is in line with that. Again, we have taken a more prudent approach to capital spending and believe that current market conditions continue to necessitate this. Please turn to the next slide. I would like now to go into more detail about several specific performance metrics. The average selling price per square meter of net display area shipped for the third quarter decreased at a greater-than-expected rate of 11% to $1,430. Quarter end to quarter end, prices per square meter decreased 3% to $1,428. While monitor and notebook segments began to show price increases last quarter, the overall decline in ASP was primarily the result of the greater-than-anticipated drop in LCD TV panel prices. ASP per square meter for the third quarter in the TV segment fell 17% on average and 10% quarter end on quarter end. For IT, ASP per square meter fell 5% on average and increased 4% quarter end on quarter end. The total display area shipped for the third quarter of 2006 was 2 million square meters, an increase of 34% quarter on quarter. In the TV and IT segments, we experienced 44% and 27% growth respectively, due to increased seasonal demand. This quarter’s revenue breakdown by product segment remained the same as the second quarter, with the TV segment being the largest portion, accounting for 48% of total revenue. This was followed by monitors at 26%, notebooks at 21%, and other applications at 5%. P7 continues to perform efficiently and averaged 52,000 input sheets per month during the quarter. In line with our capacity plans and future outlook, P7 is expected to reach 75,000 input sheets by the end of Q4. We will ramp P7 towards 90,000 input sheets per month, in line with market developments. Cash ROIC in the third quarter rose slightly from the second quarter to 12% as a result of an improved EBITDA margin and an increase of sales over invested capital. Improvement in the sales to invested capital ratio is primarily due to the further ramp up of P7. We now turn to our outlook discussion. For the first quarter of 2006, we anticipate continued growth and an increase in area shipments per square meter by a mid-twenties percentage quarter on quarter. For the TV segment, we expect a shipment increase in the low 40’s, and in the IT segment, a mid single-digit increase. We expect our average selling price per square meter at the end of the fourth quarter 2006 to decline by a low single-digit percentage, largely due to the continued decline in TV prices. The average ASP per square meter is expected to be flat. For the TV segment, we expect our average selling price per square meter at the end of the fourth quarter of 2006, on an average, to fall by a mid-single-digit percentage. The average selling price at the end of the fourth quarter for the IT segment is expected to be flat, and increase on average by a mid single-digit percent. Our cost reduction per square meter will be approximately a mid single-digit percentage in the fourth quarter. Our EBITDA margin for the fourth quarter of 2006 is expected to be a low-teens percentage as a result. We are working on plans to achieve a significantly higher cost-down for 2007 in order to better prepare for the anticipated price declines. Our CapEx guidance for 2006 remains, as said, unchanged at KRW 3 trillion. In line with us continuing to take a more prudent approach to capital spending, and in anticipation of a difficult first half in 2007, we expect our CapEx for 2007 to be approximately KRW 1 trillion, substantially lower than that of 2006. This CapEx will be used for the investment in gen 5.5, enhancement of production efficiencies, and maintenance of our existing facilities. This year, we have seen our industry consolidate, affected by pricing pressures more severe than previously anticipated. Competition is fierce and we know that the winners will be those companies who are best able to quickly adapt to changing market conditions and respond to customer demands with the highest quality products. LG Phillips LCD has not been immune to these pressures. We are now at a crucial inflection point. Without additional measures relating to product mix, cost and productivity, we will not be able to deliver value to our shareholders. In the coming months, LG Phillips LCD will take the required actions in these areas to better respond to a new reality on pricing, demand, and competitive pressures. We are confident that we have at least taken the right first steps, maintaining healthier inventory levels, reducing cost at an expedited rate in Q3, and aligning ourselves in a more substantial way with our customers. Management remains committed to do what is necessary to generate acceptable returns. We look forward to sharing our progress with you. This concludes our third quarter 2006 earnings presentation, and we would like to now answer your questions.

(Operator Instructions) The first question will be given my Mr. Jae Lee from Daiwa Securities. Please go ahead, sir. Jae Lee - Daiwa Securities: I just wanted to know if you can break down the TV revenues by 40-inch segment and about 30-inch segment?

Okay, thanks for the question. Champ.

Revenue for 43 inches and above is remarkable growth in the third quarter. The percentage of revenue would be about 30% of sales, and then about 45% to 50% would be 30-something inches. Jae Lee - Daiwa Securities: I see. Thank you. Regarding third quarter numbers, were there any inventory write-offs?

No. As you have seen, we have substantially lowered our inventory and actually there was not a write-off, there was a write-up as a result of that. As prices have increased and also, we made efforts to keep our inventory very current, so that means the aging effect was also positive. Jae Lee - Daiwa Securities: Great, thank you very much.

The following question will be given by Mr. C.J. Muse from Lehman Brothers. Please go ahead, sir. C.J. Muse - Lehman Brothers: Good evening. Two quick questions. First, I was wondering if you could possibly break out the TV mix on a unit basis by size?

Thanks for the question. Champ, you again.

Let me have just a minute. I am looking for the core details in my book.

How about your second question first? C.J. Muse - Lehman Brothers: Sure, okay. Can you comment on whether or not the Asahi tank issue, I know it is in Taiwan, but is that impacting your ability to secure glass at all?

No, we are not that heavily weighted in Asahi. We have made agreements, so there is no significant impact to LPL for that. C.J. Muse - Lehman Brothers: Has that altered the conversation in terms of trying to drive down price for glass?

We feel the glass situation is getting, for us, better and better. As you have also seen, we are slowing down capacity builds. We expect others to follow. Schott of Germany has entered. We are doing business with them already on a small scale, but it is basically good to keep the costs down. I do not think there will be any material impact to the glass price. C.J. Muse - Lehman Brothers: What size glass are you using Schott for?

At this moment, for our fourth and fifth gen, 3.5 and fifth generation fab. But as I said, it is on a modest basis. We just started. Okay, Champ.

The quarter two, 30-something inches was about close to 50%, similar when compared revenue-wise; 42 and above would be about close to 20%. C.J. Muse - Lehman Brothers: Thank you.

The following question will be given by Mr. Dinwoodie from UBS. Please go ahead, sir. Christian Dinwoodie - UBS: Thank you. I was just looking at a couple of the positive trends in, for example, that you mentioned, the inventory numbers come down 10% and it looks like the net change in working capital is also improving. Could you make a few more comments? I know you mentioned that the inventory has improved on temporizing production and improvement in shipments seasonally, but could you give a little bit more attention to the temporizing of production? I noticed your P7 actually went up in volume. Are the fabs getting less utilized? Could you make some comments on the working capital improvement? Thank you.

Thanks for the question. We said last quarter we would slow down the ramp of P7 to 75K in basically the second-half, fourth quarter. We are now at 52K, so we are well underway. So in making that comment, that is a big impact because as you know, the previous plan was to be in Q3 already starting with between 45 and 50, so the growth would have been larger. So that helped a lot. Also, in other factories, we have not expanded very fast in there, but the main impact is from the temporization of P7, as we said. Other improvements in working capital, we think we have done a lot also in TV. As I said, it came down by about two weeks, a little bit more than two weeks to three weeks, and IT came down by a week to two weeks. That overall gives us the inventory number that we set. We think we can sustain that. We think that the production discipline and better alignment of demand requirements with customers has improved a lot. We put many resources on that, and that has led to a very smooth improvement of working capital. If you look at the other elements, working capital, the receivables, we have made some more discounting of receivables than we anticipated, so that helps, although AR, because of sales growth, has shown an increase. In accounts payable, we are more or less at the same level. Christian Dinwoodie - UBS: Thank you.

The following question will be given by Mr. Luc Mouzon from BNP Paribas. Please go ahead, sir. Luc Mouzon - BNP Paribas: Good afternoon. I just have a question regarding the price trends you forecast for year end, and especially on the IT or the PC panels. If I am right, you are still anticipating some mid single-digit growth for the price in the fourth quarter. Could you comment a bit on this assumption? What did you see in the third quarter? Do you assume that the discipline is all across the sector, or do you assume that the volume on your end market is growing maybe a bit more rapidly than anticipated in the third and probably in the fourth quarter?

On the IT side, let me specifically talk about monitors and notebook PCs, separately. What we have seen in the third quarter is actually that monitors, certainly quarter end to quarter end, prices went up around 10%, and the average price down, as we started still quite negative at the beginning of the quarter, was only about a percent. In notebooks, we have seen a quarter end to quarter end, a little higher price erosion, close to 5%, and average was about 10% down, both down in notebooks. That is because in monitors there was more tightness coming earlier in the quarter. Going forward, we see for IT the trend that I discussed with you earlier, and if I look again more specifically in notebooks, than we see for monitors the quarter end to quarter end coming down, because we are reaching the end of the fourth quarter, but average, as we are still enjoying the tightness in many products, for October-November, the average is still up about single digits. For notebook PCs, the price erosion has basically, in our view, in Q4 reversed to price increases. I would say that both on quarter end to end, on average, we are looking at about a high-single-digit increase. Luc Mouzon - BNP Paribas: Okay. I just have a final one regarding inventories. Going a bit downstream, do you have a view about the situation on the TV vendor side of the TV panels? Do you think the inventories have normalized on your client base?

Thanks, I will let Champ answer that.

Thank you for your question. The inventory level of TVs was extremely high at the end of the second quarter. With several kinds of effort, we reduced it to close to three weeks at the end of the third quarter. We are trying to continuously reduce that inventory level through the end of this year. Also, the demand increase of TV arrears will help us through the debt.

The following question will be given by Mr. Ivan Goh from Dresdner Kleinwort. Please go ahead, sir. Ivan Goh - Dresdner Kleinwort: Good evening. A couple of questions. First of all, in July I think you mentioned that your 37-inch panel in the second quarter was above cash costs and the 42-inch panel in the second quarter was below cash costs. Can you give un update of these two sizes in the third quarter, please?

Actually, the 37-inch, I am not sure, but that was not below cash cost. It was well above cash costs and it remains that way. The 42-inch has also moved away from cash costs, so well above cash cost. Ivan Goh - Dresdner Kleinwort: Could you perhaps comment about whether P7, now that you have ramped to 52,000 input sheets per month, is profitable in the third quarter and going to maybe 75,000 input sheets per month, will you be profitable in Q4? My guess is not, but maybe you can say something about that?

I think it will take seeing the current price erosion of LCD TVs, I think the breakeven time for P7 will have to wait until we are around 90,000 input sheets. As I said earlier, we will ramp to 90,000 input sheets depending on market developments. Right now, that could be in the latter part of the first-half of next year. Ivan Goh - Dresdner Kleinwort: The real question I have is that with the situation where you could ramp to full maximum design capacity, and with your bearish view of the market in the first half, it looks like you might not actually be profitable, even if you had ramped to 100% of your design capacity. As you pointed out, you are at a critical inflection point, and you talked repeatedly about the additional steps that you will take to meet the challenges of the new realities of the pricing environment. Can you be more specific as to what steps you will take, so that you could at least break even at a lower utilization level at P7?

That is a very good point. Of course, very rightfully you pointed out, we are not just sitting and waiting on ramping fab to breakeven. At the same time, we will, as I indicated, basically speed up and intensify our efforts to deliver a much better cost-down program for 2007. For this year, we will remain, despite the ramp and all the production temporization we had, we will remain to get closer to 15% on a square meter basis for the year company wide, as I indicated. But for next year, it will have to be substantially higher. How high? I think it is too early to communicate that with you right now. As I said, we are looking into many areas in terms of productivity and product mix and other areas, all related to bring costs further down. More specifically, we need to have much faster, a much more broader increase on overseas sourcing. As you know, last quarter I indicated that. We started with that. We just need to do it faster and further scrutinize the existing supply base. We also need to look at the product mix, and that means that in P7, we will also make some monitor products. I think we will start with the 19-inch monitors in P7. As I said, the ramp of the fab, we will let that depend on the market developments. Those are some of the more specific measures that we are thinking about. Ivan Goh - Dresdner Kleinwort: My second question is, if you recall in July, you forecasted that TV panel prices will increase in the fourth quarter, but today, the forecast is for mid single-digit decrease. Maybe you can help us to understand what has changed between July, in your view, between July and today?

Basically, probably 32-inches and below, the price has to be stable in Q4, but still there is some room to reduce the price in 40-something inches, because now currently Samsung is trying to ramp up their second gen 7 fab, so in order to ramp up at a new fab, probably there is some risk of price dropping of 40-something inches. Our price forecast of TV area is mainly due to such a larger screen size price dropping, not the middle and smaller sizes.

Also, I think we indicated it would basically be TV relatively flat, but as we guide now, the average for Q4 will be mid-single-digit down. Ivan Goh - Dresdner Kleinwort: My last question, if I may, is can you perhaps give your views on what you -- be more specific about what you see in the first quarter of ’07? I know you said it will be a very challenging environment, but perhaps you can talk about what you think could happen to the industry in the first quarter of ’07, maybe talk a bit about what the seasonal swing could be?

Typical seasonality is larger in TV, about 35-65, sometimes one-third, two-thirds. Let me begin by saying that as you noted, we have significantly reduced the cap-ex ambitions, and are now at about 1 trillion. We would expect that other people, other players would follow. Maybe not everybody, but some of them would follow suit by recognizing that due to the economics, it is probably a wise idea to not ramp that fast all that capacity in the first half, as everybody was used to. I think the industry started to find out, step by step, that the volume ambitions should basically be changed. Of course, we always have to have volume. The emphasis should be more on value. We will try to take measures to mitigate the impact of the first half. It will still be challenging, as I said. So a lot depends on what capacity actually is coming on. In the case of LG Phillips LCD, it will probably be less than we anticipated earlier also, as I said, following P7’s ramp to market developments. I think on the TV area, the seasonality is highest in the first half. Maybe I can let Champ, without giving you very specific guidance, will give you an indication of what we would see in the first quarter, first half.

According to most of the research companies, they are forecasting it is going to be kind of an over-supplying at the beginning of next year, but they are actually, as Ron mentioned, we have not had any details about the other LCD makers ramping up fab. Most of them became very conservative compared to the past, so we do not know how they will ramp up their new fab and then how they will utilize their current fab. Also, some of the demand, even including IT areas, demand itself, how it will go, we do not have any concrete idea yet. Such kind of a demand situation and supply situation is not fixed yet. It seems to be a little bit early to say to you what will happen in the first quarter of next year, but compared to the beginning of this year, we have prepared a lot, especially the flexibility in motor mix in our new fabs and current fabs. Relatively, we have developed preparation for the first quarter of next year. We are prepared.

The following question will be given by Mr. Michael Bang from Macquarie Securities. Please go ahead, sir. Michael Bang - Macquarie Securities: Thank you very much. Your cost reduction in third quarter was quite impressive. I was just wondering if you could give some color as to where the cost reduction came from. For example, was it mainly raw material reduction or the lower inventory or new production processes, or the P7 ramp?

You actually gave the answer. It is a little bit of all that. As you have seen, the cash COGS came down by about 8%, and other than that, we have been able to reduce costs due to productivity, meaning ramping up fabs. So it is a real cost-down, as evidenced by the cash COGS down. Michael Bang - Macquarie Securities: Right. Then, just in terms of your guidance for the fourth quarter cost-down, is there something that you are doing differently that would not allow for a similar type of reduction that you saw in 3Q?

You start from a lower base. That is to start with, but the guidance that I gave is based on current information we have. What I said is we will look for 2007 into higher cost reduction efforts. We need to do that faster, as I very clearly indicated, and we will start already in Q4. I cannot be specific at this moment because we are looking at various things that we need to do, but we will try to go beyond that guidance, so there should be some upside to that.

The following question will be given by Mr. Chong Kim from CLSA. Please go ahead, sir. Chong Kim - CLSA Emerging Markets: Just a few questions. First of all, the difference in price now between a 40-inch television panel and 42-inch, it seems that the 42-inch, oddly enough, seems to be getting a lower price, something like $20 or so. How long do you think that will continue, where the larger panel size seems to be trading at a discount to a smaller panel in that market? That would be my first question.

Thank you for the question. Area difference between 40-inch and 42-inch is approximately about 10%. Current average price difference will be about 7% to 8%. We are trying to maintain that price gap up to now. The retail price, as we get towards kind of larger screen sizes will have a different story, because retail price will be dependent on the brand power. Some of the top line TV makers may position their retail price, even with 40-inches, much higher than our second-tier of 42-inches retail price. There is not so many TV players that have both 40- and 42-inches in their product line. Some of the Chinese, they have 40- and 42-inches, and according to their experience during these couple of months, if the retail price between 40-inches and 42-inches has about a 7% to 8% with the same brand name, 42-inches was a little bit better positioned than 40-inches. So according to that experience, we learned a lot, so we are trying to maintain the current price gap of 7% to 8%, up to now. Chong Kim - CLSA Emerging Markets: So are you saying that the 42-inch panel price, the 7% to 8% gap, the 42-inch is 7% to 8% cheaper than the 40-inch?

No, no. Chong Kim - CLSA Emerging Markets: It is more expensive?

More expensive than 40-inch. Chong Kim - CLSA Emerging Markets: I see. The other question I had was in terms of cap-ex, the number that you have for next year of 1 trillion, and what that naturally implies for your gen 8 plans or ambitions. Given that cap-ex of 1 trillion, if you hold to that number, what then does that mean for a gen 8 fab at LG Phillips LCD? Does that come on? Is it possible to even bring that on by the end of 2008, given the time and logistics and the money involved?

Thanks for the question. As we said earlier, gen 8 fab is at this moment for us not in discussion. We have to really see two things -- substantial improvement of the economics and the market being ready to absorb product coming out of that fab, from the larger size, as I said earlier, probably the 50-inch is not going that fast. That is at this moment not included in that number. On the gen 5.5 that we announced, that amount includes definitely the ongoing construction of the fab, probably the ramp of the gen 5.5 will have to be postponed. Chong Kim - CLSA Emerging Markets: I’m sorry, the gen 5.5?

Yes. Chong Kim - CLSA Emerging Markets: Will have to be postponed?

Right. We are looking at that right now. We have given you that number because we like to give you an indication of what our thoughts are at the moment, as we do every year. It is not crossed out 100%. We will construct the gen 5.5, but at this moment, perhaps the ramp of the fab will be pushed out a bit. Chong Kim - CLSA Emerging Markets: You had mentioned -- I think you had guided, Ron, that originally the gen 5.5 fab would start ramping in the third quarter.

Yes, that is correct. Chong Kim - CLSA Emerging Markets: Obviously that is a floating, as you said, but when you say postponed, just give me an indication -- is it 4Q, or could it even be pushed further to 2008?

It could be towards the end of Q4 or the beginning of the following quarter. That means Q108. Chong Kim - CLSA Emerging Markets: My last question is looking at the third quarter shipment numbers on the monitor side, it seems like you had a very big spike up in monitor shipments. Could you just give me some color on what is driving that monitor volume? Is it back to school PC demand, just vanilla seasonality or are you seeing a big shift towards higher end higher resolution wide type panel screens? Thank you.

Actually, because of some kind of seasonality, during the first half of this year, the monitor demand was not that strong. The PC makers had a very slow season in the first half of this year, so probably it is a kind of cooperation between SG makers and PC makers to catch up and make a recovery in the second-half of this year to make it a whole year records. On top of the seasonality issues, seasonality demand, such kind of effort among the companies in this industry make such kind of demand up in the third quarter. Chong Kim - CLSA Emerging Markets: Thank you.

Currently there are no participants with questions. (Operator Instructions) The following question will be given by Jae Lee from Daiwa Securities. Please go ahead, sir. Jae Lee – Daiwa Securities: I just wanted to know if you could provide the numbers, the depreciation amount for the P6 and P7 during the third quarter.

Just give me one second. P6 was KRW 179 billion. P7 was KRW 159 billion. Jae Lee – Daiwa Securities: 159, okay.

159, yes, so it was about six, seven -- Jae Lee – Daiwa Securities: Right. The total depreciation amount has increased I guess around 9% in third quarter compared to the second quarter, so should we expect mid-single to high-single digit increase for 4Q?

Yes, as I said, I guided for about KRW 2.5 trillion to KRW 2.6 trillion depreciation. That is still valid. Jae Lee – Daiwa Securities: Thank you.

The following question will be given by Mr. Eli Cohen from ZBI. Please go ahead, sir. Eli Cohen - ZBI Equities: I got on the call a little late, so I might have missed this if you already said it, and I apologize, but can you give us an indication of what area growth might be sequentially in Q4, and then year on year in 2007, given your shifting in cap-ex plans?

Area growth, we guided for mid-20’s, so that is in square meters. That is a combination of low-40’s for TV and mid-single-digit for IT. Eli Cohen - ZBI Equities: That is in 2007?

You asked for the fourth quarter, right? Eli Cohen - ZBI Equities: Right, but then do you also have an indication for 2007?

Not that specific, but probably the input capacity, that is what I like to say now, is going to be around 30%.

The following question will be given by Mr. Chong Kim from CLSA. Please go ahead, sir. Chong Kim - CLSA Emerging Markets: You had mentioned, in terms of cost-cutting efforts or just improving your business franchise, some organizational changes, incentive programs, things like that. Could you just describe what those programs are a little bit more, Ron? Just give me more confidence in terms for what types of -- what is happening in terms of your organizational structure that will obviously put an end to the losses that we are seeing? Could you talk a little bit more about that?

Thanks for the question. Actually, it is simply the introduction of a business unit system, so we are a functionally organized company, meaning we have sales division and manufacturing division, development division, et cetera, et cetera. So we had all these functional division discussions. Now we changed to a BU system. As a first step, the BU will include everything except a split-up of the factories on a management basis. We like to keep the factories under one pool for the time being, but economically, we are and we have already been doing that for a few years, following the BU economic results on a monthly basis. We now basically brought the organization in line with what we think is right in a company that became size and the complexity of LPL. We need a more focused approach. We need a better gearing of people from volume thinking to value thinking, more dedication and resources where it matters. Of course, along the lines of the whole chain for the value chain for every BU, we like to see what is going on and where we can take out costs. That is what I intended to say. We are now having more clearly defined business responsibilities along the segments TV, IT -- and in IT, we separately follow monitor and notebooks -- and the third business unit is small and medium. The performance evaluation is done on a monthly basis with the business unit management team and we expect that this will give us a lot of leverage and platform to improve our performance. As a first line, and we have been talking a lot to you about better customer alignment, this is also done by the business units by bringing sales, marketing and development closer together. We have made quite some in-roads in restoring and improving our ongoing activity there. Chong Kim - CLSA Emerging Markets: Thanks for the clarification. My last question is just a quick return to the issue of cap-ex. The number for next year, in absolute terms, is as low as I think we have seen LPL spend probably in the last five years. It is quite a small amount. To what degree do you think there is room for that cap-ex number to go up? I suspect there is not a lot of room for that to go down. Is there some type of range plan you have in terms of how you see potentially cap-ex changing?

That depends on market developments and our financial performance. You are right. We have, actually, since 2002 been spending a cap-ex budget of KRW 1 trillion, so we are back to that level now. So it means a lot in terms of potential expansion. On the other hand, we remain committed to be a significant player in the LCD industry, so we feel we have to do this now. We will resume cap-ex as soon as we feel that the market is going to be more favourable and our financial results turn out more favourable than we expect. We are doing, of course, many things with our own resources and initiatives, our own control and pricing. We hope, with the capacity mitigation, pricing development is also going to be better for us, and perhaps also for other players, if they follow suit. That is more the line of thinking. So at this moment, we are not thinking to increase that range. However, if we foresee that things are going to be better than expected, then we could re-think that.

The following question will be given by Mr. Tejinder Sandhu from HSBC. Please go ahead, sir. Tejinder Sandhu - HSBC: Thank you for taking the question. Ron, just to keep harping on this cap-ex thing, it is a very gutsy move to actually bring down the cap-ex by so much, but I just want to get a sense on without this cap-ex, even with this small cap-ex, how much do you think, on a year on year basis, your capacity will be up in 2007?

As I said in one of the previous questions, the input capacity in square meters will grow about 30%. Probably, you know, we have not made the definite sums as the CCF -- capacity conversion factor, that is, of the P7 factory is expected to be better at the start. It is now already hovering around 65%, then you can expect the output to grow more than that number. Tejinder Sandhu - HSBC: Right, so in effect, reducing this cap-ex cannot really hamper you in any way in participating in 2007 demand? You do not foresee losing a lot of market share basically in 2007?

If you are asking me how about your leadership position in the market, I think at this moment, that is what we tried to indicate also by saying we are at a kind of crucial inflection point, if you will. We would like to see the kind of redefined concept of leadership, where leadership does not mean having all the biggest capacity. As we see, there is limitation scale advantages, certainly for the newer fabs, and that is one of the reasons why we earlier guided not to go into gen 8. We think the new leadership is much more around the concept of creating value, and we are looking at a number of critical areas to do that. At the forefront of the mind for 2007 is not, per se, to just rigorously increase capacity. As I said, we think leadership means not anymore shipping glass but basically supporting products with high quality products and generating more value throughout the chain. Tejinder Sandhu - HSBC: Right, that is why I say it is a gutsy move, but if the competition is not as rational as you are, and you see people continue to spend aggressively, would that in any way affect your decisions three months, six months down the road?

As I said in answering a previous question, and it is a good point to emphasize on, so I am glad that we can elaborate on that a bit more, if we would foresee market circumstances and our financial performance to improve and we would see that it would stick, then we might go further with expansion on a modest scale, but you have seen us now already adhering to discipline. LPL has always been at the forefront of the industry direction, but right now, I think as I said, the leadership should be in quality, mix and having great customer collaboration and satisfaction. That is what we would like to focus our resources on now. Tejinder Sandhu - HSBC: When we look at you had 10% EBITDA margin in the second quarter, 11% in the third quarter, so obviously -- but if you look at the competition, people are making 20% EBITDA margins. They may not feel the same compulsion to cut back on cap-ex. They may see this as an opportunity to kind of gain market share. If your EBITDA margins were 20%, would you be considering such a drastic cap-ex cut? I think that is the point.

I think the cut will be less drastic, I believe, but as we already said before we started with the cap-ex cut program, we did not see how our gen 8 could work out economically, certainly not at current pricing conditions. We would need to have, as we pointed out at various times, we would need to see a greater level of technological renewal to warrant such another cap-ex investment. Where glass costs, although as I earlier said, the glass situation becomes more competitive for new fabs to increase a lot, we think it is just too risky at the moment. We do not see, as a third component, the market for 50-inch developing that fast. Yes, you are right in saying that if your profitability would be better, coupled with a better outlook with the first half, then we would probably increase cap-ex a bit more. But we are not in that position right now. Even though 20% EBITDA margin is better than 11%, it is still not a very glorious number to front risky investments on. Our understanding is there is actually one very aggressive player, but the rest is getting less aggressive. In Japan, people do things on a more modest capacity basis. Tejinder Sandhu - HSBC: Okay, fair enough. Just switching a little bit onto the demand side, so I just want to clarify. You were saying that the TV panel area in the fourth quarter would grow sequentially. I just want to check that number. Is that a very high number?

Sequential growth for TV in the fourth quarter, I think we guided you -- let me see, in the outlook. You are talking ASP, right? Tejinder Sandhu - HSBC: No, I am talking about area, panel area.

Area, yes, it was in the low-40’s for the fourth quarter. Tejinder Sandhu - HSBC: Low-40’s, okay. That is a significant number and you imagine you will be shipping panels even in December, you know, very large quantities?

December will be relatively smaller than that of October and November. Tejinder Sandhu - HSBC: Okay. Basically, you can ship a panel in the end of November and do you think that can -- is that for fourth quarter demand, or is that for first quarter demand next year?

We are delivering our panel, just the influence of their manufacturing size, so probably delivering goods within November will be for the ending year of sales. Tejinder Sandhu - HSBC: Okay, so basically you are talking about delivering from the module facilities in everywhere?

Yes. Some areas we do not have such kind of [assembly line]. We have a kind of a [inaudible] system, so we are doing kind of a just-in-time delivery.

Just to clarify or re-emphasize, we always guide on a square-meter basis, just so you understand. Tejinder Sandhu - HSBC: Right, I understand. Ron, the follow-up question on that is if you feel that December shipments of TV panels will drop off, at which point on the panel side do you start to lower the utilization rates? Do you continue to run them high in December, but from a module side, from the module end, you are already shipping much lower TV panels? When do you make that decision on cutting back utilization rates?

Probably we will have a very serious situation in the inventory level at the end of November, so even though the shipment may be relatively smaller in December compared to that of November, but still at the end of December, the inventory level will be much healthier than we had experienced in the second quarter and beginning of third quarter. Tejinder Sandhu - HSBC: Okay. All right, thank you very much for taking those questions.

The following question will be given by Ms. Irene Lau from Citadel. Please go ahead, Madam. Irene Lau - Citadel Investment Group: Ron, again you spoke about a lot of cost initiatives that you have planned, whether it is from productivity improvements, product mix changes and increased customer alignment. In terms of trying to judge how or when these cost reduction initiatives could start to come to fruition, do you have any visibility or any degree of confidence of when they could start to come in?

Thanks for the question. Yes, I think I elaborated earlier that we are looking for something very significantly higher in 2007 and we really want to start with that in Q4. Right now, it is too early to guide you. We have a number of things that we are working on. I more specifically told you the areas of product mix, and we have to look at product mix certainly from a TV perspective, and we are looking at purchasing and productivity in general for LPL. Some of the measures we can see a little earlier, you know, if we decide to switch a supplier. That can go relatively fast. Other things will take a little bit longer. I think if you want to think about a number for 2007, I think a significantly higher than the 15% that I have already guided for for this year, and probably that will materialize mostly in second, third quarter, when you see some more significant impact.

The following question will be given my Mr. Mark Austin from Sanford Bernstein. Please go ahead, sir. Mark Austin - Sanford Bernstein: I am just wondering if you can give us any insight into the Paju Electric Glass may be and what your earnings from that have been, or losses, and how that trend is changing over time? Thank you.

Paju Electric Glass company is performing very well. We are very satisfied with the supply that we get from there. The company is basically quite efficient in its operations, so the results are favourable, and we look forward to expand the corporation. Mark Austin - Sanford Bernstein: Is that -- you mentioned that you were very happy with the glass prices you are getting. My understanding was that implies some cost-down there. Is that negatively affecting Paju as a supplier of that glass?

We do not think so. We think the more favourable prices that we see versus our expectations are really driven by real cost-downs. As you know, at this moment, PEG sources the glass from NEG in Japan, because for the time being, PEG is a back-end operation.

The following question will be given by Mr. Chun Tam from Thames River Capital. Please go ahead, sir. Chun Tam - Thames River Capital: Hello, good afternoon. I just have another question, following on cap-ex again. I am just having some trouble reconciling your 1 trillion cap-ex, and you also mentioned that you are looking at 30% year on year input growth. Just taking your 1 trillion cap-ex, and also you mentioned that P8 might be pushed back towards the latter part of ’07 and on to 2008. I do not quite understand how you can get to 30% year on year input growth unless P7 is ramping up substantially further.

Actually, that is the key. Of course, we are trying to squeeze out a little bit more of the existing fabs without making any big investments there, but the P7, if we ramp -- let me put it like this. If we ramp the fabs to 75K towards the end of this quarter, then that is the starting point for next year, so we have a minimum of 75. We will go to 90K when market developments warrant it. That could be towards, as I said, the latter part of the first half. Then, from that, there is a big impact on the input capacity growth. I do not think at this moment there is a big relationship between the cap-ex that you see and if you try to explain that with 30% growth. What should I say? Just believe me when I say that these sums are well thought through, and the explanation is in basically the higher ramp than 2006 of the gen 7 line. Chun Tam - Thames River Capital: Okay, so the key would be in the ramp up of the P7, right?

Yes, absolutely. Chun Tam - Thames River Capital: Okay, thank you.

The following question will be given by Mr. Ivan Goh from Dresdner Kleinwort. Please go ahead, sir. Ivan Goh - Dresdner Kleinwort: Hi, sorry, just one or two more questions. First of all, on your cash balance, at the end of Q3, you had about 472 billion. Do you have a forecast for what it would be at the end of Q4?

The cash balance at the end of Q4? Ivan Goh - Dresdner Kleinwort: Yes.

It should be about a similar level -- let me see. Yes, it is going to be a little reduced, let’s say around 400. Ivan Goh - Dresdner Kleinwort: My last question is if you are looking at cap-ex of 1 trillion, can you help us break it up into maybe first half of ’07 and second half of ’07, what will it look like?

Yes. I think for the first half of ’07, that will be -- mostly, I think about 70%, 80% will be in the first half. Ivan Goh - Dresdner Kleinwort: And the vast majority of that would be already committed?

Not 100%, but there is a large part of that committed, yes. Ivan Goh - Dresdner Kleinwort: Okay, thank you very much.

Currently, there are no participants with questions.

If that is the case, on behalf of LG Phillips LCD, we thank you for participating in our third quarter earnings conference call. Should you have any further questions, please call me or my colleagues. Thank you very much.

Thank you.