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SAMSUNG ELECTRONICS Co., Ltd.2016 Business ReportFor the year ended December 31, 2016Certain statements in the document, other than purely historical information, including estimates, projections, statements relating to our businessplans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.”Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actualresults to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results andevents to differ materially from such forward-looking statements is included in our financial reports available on our website.See, also, 『Note on Forward-Looking Statements』 in preamble of 『II. Business Overview』.Samsung Electronics 2016 Business Report1 / 240

Table of ContentsCertification. 3I. Corporate Overview . 4II. Businesses Overview . 22III. Financial Affairs. 62IV. Auditor’s Report . 165V. Management Discussion and Analysis . 167VI. Corporate Governance . 175VII. Information on Shareholders. 186VIII. Executives and Employees. 192IX. Affiliates and Subsidiaries . 200X. Related Party Transactions. 230XI. Other Information. 234Samsung Electronics 2016 Business Report2 / 240

CertificationLetter of CertificationWe, Oh-Hyun Kwon and Sang-Hoon Lee, as CEO and executive of the company in charge of reporting, certifythat we have reviewed the annual business report of Samsung Electronics Co., Ltd. for the year endedDecember 31, 2016.Based on our knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary that would be misleading with respect to the period covered by this report.Based on our knowledge, the financial statements, and other financial information included in the report, fairlypresent in all materials respects the financial condition, results of operations and cash flows of the company asof, and for, the periods presented in this report.We confirm that Samsung Electronics operates an Internal Accounting Management System, responsible forestablishing and maintaining disclosure controls and procedures and internal controls over financial reporting,as defined in Article 2.2 and 2.3 of the External Audit Act. We have disclosed our most recent evaluation ofinternal controls over financial reporting to the Company’s auditors and to the audit committee of theCompany’s board of directors.Date: 2017. 4. 28Samsung Electronics 2016 Business Report3 / 240

I. Corporate Overview1. OverviewA. Legal, Commercial Name:- Samsung Electronics Co., Ltd.B. Date of Establishment:- Samsung Electronics Co., Ltd. (“SEC”) was established as Samsung Electronics Industry Co., Ltd. on January 13,1969, and held an initial public offering on June 11, 1975.- SEC changed its name from Samsung Electronics Industry Co., Ltd. to Samsung Electronics Co., Ltd. following aresolution passed at the Annual General Meeting of Shareholders on February 28, 1984.C. Address, Phone Number, and English Language Website of the Corporate Headquarter- Address: 129, Samsung-ro, Yeongtong-gu, Suwon, Gyeonggi-do, Korea- Phone Number: 82-31-200-1114- Website: http:// www.samsung.com/secD. The Company is not subject to Article 2 of the Framework Act on Small and Medium Enterprises.E. Core Businesses- The Company (defined below) separately oversees three independent self-determining divisions (each a “Division”),CE (Consumer Electronics), IM (Information Technology & Mobile Communications), and DS (Device Solutions).Products in each Division are presented below:DivisionProductsCETV, Monitor, Refrigerator, Washing Machine, Air Conditioner, Medical Devices, etc.IMHHP, Network System, Computer, etc.DSDRAM, NAND Flash, Mobile AP, LCD panel, OLED panel, etc.The Company is a global electronics company comprised of the headquarters in Korea and 169 subsidiaries (SEC and itssubsidiaries collectively, “Samsung Electronics” or the “Company”) across the world including nine (9) regionalheadquarters for the CE and IM Divisions and five (5) regional headquarters for the DS Division.[CE Division]The CE Division is leading the global digital era by continuously offering new products with innovative technology,unique design, and enhanced value propositions.TV is the core product of CE. The Company has maintained its market leadership position for the past eleven (11)consecutive years by leveraging competitive advantages in hardware such as LCD/LED TVs as well as software drivenproduct features within our Smart TV product portfolio.Samsung Electronics 2016 Business Report4 / 240

[IM Division]The IM Division is at the forefront of mobile lifestyle innovation with consumer-friendly products such as the premium‘GALAXY’ series, while driving the paradigm shift in the market beyond mobile convergence to focus on software.The IM Division is focused on meeting market demand by enhancing mobile product differentiation through seamlessintegration of key features from various product categories.The IM Division expects increased convergence of mobile phones, digital media devices and personal computers, camerasand other devices in smartphones and tablets, with both serving as replacements for certain devices. As a result, the IMDivision has made, and will continue to make, significant investments in research and development of new technologies,products and services.In addition to handheld phone (“HHP”) products including smartphones, the IM Division is also leading technologicaldevelopment and standardization in the global networks system market including Long Term Evolution (“LTE”).[DS Division]The DS Division is comprised of the semiconductor sub-division and the display panel business. The semiconductorsub-division (“Semiconductor Sub-Division”) is further divided into the memory business and the system LSI business.The Company’s memory business unit (“Memory” or “Memory Business Unit”) manufactures and sells DRAM andNAND products. The Company’s system LSI business unit (“System LSI”) manufactures mobile application processors(“Mobile APs” or “APs”) and customized logic products. The display business (“DP Business Unit”) manufactures andsells display panels (“DP”).The Company is constantly working to increase its influence on end-product manufacturers and create new demand bydeveloping high quality components and through technological breakthroughs, as it has done with high-end 3D TV panelsand in memory components like DRAM by increasing capacity by increasing density.The Memory Business Unit produces differentiated products and has maintained the top position in the global memorymarket by continuously applying the latest advanced process technology ahead of the competition with each technologicaliteration. The system LSI market is shifting from PCs to mobile devices and like its sibling, the System LSI business unitplans to stay at the forefront of this market by offering differentiated products created using the latest advanced processtechnology and through efficient inventory management.The Company’s TFT-LCD business has been maintaining its position as a leader in the global flat panel display market bydeveloping evermore higher resolution panels that are more energy efficient and by producing these panels more costefficiently with a higher yield rate.OLED is increasingly and rapidly replacing TFT-LCD in smart phones and other IT devices. The Company is also amarket leader in the OLED displays, reaping the benefits of its continued investment and technological breakthroughs. See 『II. Businesses Overview』, for more details about each Division.Samsung Electronics 2016 Business Report5 / 240

F. AffiliatesSEC is an affiliate of the Samsung group as defined under Korea’s Monopoly Regulation and Fair Trade Act (“SamsungGroup”).As of December 31, 2016, Samsung Group had a total of fifty-eight (58) domestic affiliates, reduction of seven (7)affiliates (Nuri Solution, Samsung Fine Chemicals, S-EnPol, Hantok Chemicals, SDI-Chemical Co., Ltd., Jeongahm WindPower, Allat) and addition of three (3) affiliates (Samsung Fire & Marine Insurance Financial Service, SDI-Chemical Co.,Ltd., S-Printing Solution Co., Ltd.) when compared to December 31, 2015. Among the Samsung Group’s fifty-eight (58)domestic affiliates, sixteen (16) affiliates including Samsung Electronics are listed, and forty-two (42) affiliates areunlisted.[As of December 31, 2016]No. ofaffiliatesName of affiliatesSamsung C&T, Samsung Electronics, Samsung SDI, SEMCO, Samsung Fire & Marine Insurance,Listed16Samsung Heavy Industries, Samsung Life Insurance, MULTICAMPUS,Samsung Securities, Samsung SDS, Samsung Card, Samsung Engineering, S1,Cheil Worldwide, Hotel Shilla, Samsung BiologicsSeoul Lakeside CC, Samwoo Architects & Engineers, CVnet Corporation,Samsung Bioepis, Samsung Display, Samsung Corning Advanced Glass, SU Materials,STECO, SEMES, Samsung Electronics Service, Samsung Electronics Sales,Samsung Electronics Logitech, Suwon Samsung Bluewings FC, Samsung Medison,Samsung Claim Adjustment Service, Samsung Fire & Marine Insurance Service,Unlisted42Samsung Fire & Marine Insurance Financial Service, Daejung Offshore Wind Power Co., Ltd.,Samsung Futures, Samsung Asset Management, Saengbo, Samsung Life Service,Samsung SRA Asset Management, Samsung Life Financial Service, SD Flex, Cheil Fashion Retail Co., Ltd.,Natural9, Samsung Welstory, S-Printing Solution, SECUI, STM, S-Core, OpenHands,Miracom, Samsung Card Customer Service, Human TSS, S-1CRM, Shilla Stay,HDC Shilla Duty Free LTD, SERI, Samsung Lions, Samsung Venture Investment CorporationTotal58※ Effective March 11, 2016, CREDU changed its name to Multicampus Co., Ltd.※ Effective April 1, 2016, Colombo Korea changed its name to Cheil Fashion Retail Co., Ltd.※ Effective December 15, 2016, Allat was excluded from the Company group (sold its shares on September 30, 2016) See 『IX. Affiliates and Subsidiaries』 for more details about domestic and overseas affiliates.Samsung Electronics 2016 Business Report6 / 240