Transcription
2007SAMSUNGELECTRONICSANNUALREPORT
Yedj[dji 2007 financial highlightsj da d] WXekj oek01performance summary by business02message from the CEO04message from the board08at-a-glance10j da d] W [WZ e\ oekglobal performance14j da d] ] [h \eh oekbrand marketing22sponsorship24R&D26product gallery27design31j da d] icWhj[h \eh oekdigital media34telecommunication networks38digital appliance42semiconductor46LCD50j da d] ceh[ e\ oekcorporate citizenship56co-prosperity58green management60financial statements63investor information130global network131
2007 FINANCIAL HIGHLIGHTSSAMSUNG ELECTRONICS AND CONSOLIDATED SUBSIDIARIES[in billions of KRW ]200520062007Income StatementSales80,63085,42698,508Operating Profit7,5759,0088,973Net Income7,6407,9267,421Balance SheetTotal Assets74,46281,36693,375Total Liabilities32,85433,42637,40341,607 47,940 55,97213,32915,08114,791Cash Flow from Investing Activities(9,046)(11,098)(12,002)Cash Flow from Financing Activities(3,266)(3,889)(1,600) Shareholders’ Equity Cash FlowsCash Flow from Operating 6200720052006-9.0SALES AND OPERATING PROFITCASH FLOWS[in trillions of KRW ][in trillions of KRW ]SalesOperating Profit2007-11.1-12.0Cash Flow from Operating ActivitiesCash Flow from Investing ActivitiesPlease Read the Following Cautionary Statement Regarding Forward-looking Statements:This annual report includes “forward-looking statements” which relate to future events, and can be generally identified by phrases containing wordssuch as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates,” or other words or phrases of similar meaning. These forwardlooking statements are not guarantees of future performance and may involve known and unknown risks, uncertainties and other factors that mayaffect Samsung Electronics Co., Ltd. (SEC)’s actual results, performance, achievements or financial position, making them materially differentfrom the actual future results, performance, achievements or financial position expressed or implied by these forward-looking statements. Likewise,statements relating to behavior of financial and consumer electronics markets, fluctuations in interest and exchange rates or commercial andconsumer credit environments, changes in regulation and regulatory and legal actions, future integration or acquisition of businesses are forwardlooking statements. Therefore, you should treat all future statements containing such aforementioned information as forward-looking statements.Please understand that although SEC has been careful to ensure the accuracy of the contents of this annual report, the statements within are subject to a number of risks,uncertainties, and assumptions, any of which could cause actual results to materially differ from the plans, objectives, expectations, estimates, and intentions expressed in thisannual report as described above. Therefore, SEC and any of its subsidiaries, affiliates, directors, officers, agents, or employees assume no liability caused by these forwardlooking statements, and shall not be liable to any third party, including investors, for any damages resulting from an investment or business decision based on the informationcontained in forward-looking statements of this annual report. All risks in making an investment or business decision based on the information contained in the forward-lookingstatements shall be entirely assumed by you.All the financial data in this report comes from the consolidated financial statements.I7CIKD ;B;9JHED?9I7DDK7B H;FEHJ (&&-01
PERFORMANCE SUMMARY BY BUSINESSNet Sales and Operating ProfitOperating profit (loss)Net sales[in trillions of KRW ][in millions of KRW ]26.520.817.7200520062007\ 17,656,558\ 20,774,962\ 26,513,285247,700744,1781,061,601200520062007\ 20,914,815\ 20,249,759\ 23,767,2682,480,0011,937,7472,756,586200520062007\ 5,617,708\ 5,538,837\ 6,854,578(29,102)(71,213)159,835200520062007\ 20,332,235\ 22,827,624\ 22,331,5015,410,6775,129,8452,347,239200520062007\ 8,715,225\ 13,912,968\ 17,062,523598,773857,1802,115,629Digital Media1.060.70.220052006Net salesOperating profit (loss)2007[in trillions of KRW ][in millions of KRW t salesOperating profit (loss)200520062007[in trillions of KRW ]Digital Appliance5.6[in millions of KRW ]6.95.5Net sales20050.15-0.07-0.0320062007[in trillions of KRW ][in millions of KRW ]22.322.820.3Operating profit (loss)5.45.12.35SemiconductorNet salesOperating profit (loss)200520062007[in trillions of KRW ]LCD[in millions of KRW ]17.013.98.72.11Net sales0.90.62005Operating profit (loss)20062007
Description of Business2007 HighlightsOur Digital Media business leads the world’s digital media market by producinga wide range of products including digital TVs, monitors, audio-visual devices,printers and PCs. We hold the largest market share in flat-panel TVs and PCmonitors. Our innovative product lineup includes ‘Touch of Color’ TVs, all-in-onecolor laser printers including the world’s smallest, and a 4th-generation Blu-raydisc player. In May 2008, we reorganized our Digital Media unit to producegreater business synergy and enhance our overall performance. We integratedour Digital Appliance unit into our Digital Media operations and transferred ourPC, MP3 player and set-top box businesses to our Telecommunications Network business.In 2007, we achieved record-breaking business performance, boosted by highgrowth in the flat panel TV market and a steady increase in the sale of our coreproducts, such as LCD monitors, digital audio-visual products, laser printersand notebook PCs. The strength of our market leadership position in TVshelped us to maintain the No. 1 market share position across all TV market segments, from conventional TVs to flat panel and LCD TVs. We also ranked first inmarket share for monitors in 2007, widening our lead over our competitors. Ourprinter business also showed enhanced market leadership by holding the No. 1position in all-in-one mono laser printers and the No. 2 position in color laserprinters.Our Telecommunication Network business leads the world’s telecommunicationsindustry with the widest range of mobile phones on the market today, such as3G and multimedia phones, in addition to telecommunication systems. A premiumbrand image and distinctive product designs have elevated Samsung very highamong the leaders of the world market.We have also led the standardization of next-generation mobile phone technologies such as Mobile WiMAX and HSDPA. Through a business reorganizationcompleted in May 2008, we integrated our PC and MP3 player businesses intoour Telecommunication Network business to enhance our competitive edge indigital convergence solutions.In 2007, we achieved record-breaking sales of 160 million mobile phone units,securing the second largest share of the global market. This achievement can beattributed to the continued success of our very popular Ultra Edition seriesand our wide range of premium phones, as well as aggressive expansion intoemerging markets. Our operating profit also registered a steady performancegain, showing a two-digit rate of revenue increase. In addition, Samsung’sMobile WiMAX technology for broadband mobile services was adopted asthe 3G global standard to pave the way for further market expansion worldwide.Our Digital Appliance business creates premium home appliances that meet theneeds of consumers and help to make Samsung an undisputed market leader.Building on distinctive designs and innovative technologies, we continue todevelop new types of added-value products to offer our customers. Our lineupof world-leading premium products include refrigerators, air conditioners, washers, ovens, vacuum cleaners and other appliances that are ubiquitous in today’shouseholds. Under a company-wide reorganization plan implemented in May2008, our Digital Appliance business was folded into our new Digital Mediabusiness to leverage its competitive edge.Building on the world’s most innovative technology and product designs, wemade significant progress at the high end of the appliance market in 2007. Ourproduct lines were enhanced through such innovative products as our drumwashing machine with Vibration Reduction Technology , providing the lowestnoise and vibration levels in the industry, our highly efficient system air conditioners and our side-by-side refrigerator with twin-cooling systems. Such innovations helped us achieve a 24% increase in sales over 2006, and build a firmerfoundation from which to lead the world’s home appliance market.Our Semiconductor business consists of three major divisions: Memory, SystemLSI and Storage. With the world’s most advanced technology, we are leadingthe DRAM, SRAM, NAND Flash memory and MCP markets while pioneeringdevelopments in next-generation Solid State Drives (SSDs) and fusion memories.We also are building a strong base for our System LSI business to become oneof our next-generation growth engines and for the launch of several major newproducts within our storage division.Despite fierce competition and continued weakness in memory chip pricing,Samsung’s Semiconductor Division continued to show steady growth andincreased profits, backed by strong customer relationships and successfulcost-reducing efforts. In 2007, Our performance remained solid with continuedmarket dominance in most areas of the memory business, including sales inDRAM, SRAM, MCPs, flash memory and fusion memory devices. World-leadingintroductions, such as 60 nanometer (nm)-class 2 Gigabit (Gb) DRAM, 30nmclass 64Gb NAND Flash memory, 65nm digital TV receiver chips and the industry’s fastest (6Gbps) 512 Megabit (Mb) GDDR5 memory further enhanced ourleadership in core technologies.Our LCD business produces panels for TVs, digital information displays, notebook PCs and desktop monitors, as well as various display panels for mobile products. By investing in next-generation production facilities, we have remained theworld’s top LCD producer for the past six years. Our position is particularlydominant in the segment of LCD TVs 40 inches and larger. We also are expanding our premium product lineup for the multimedia and digital broadcastingenvironments, while focusing on new businesses such as next-generationdisplays and thin film solar cells.With the help of price increases triggered by product shortages and our continued cost-reduction efforts, our LCD business showed outstanding results in2007. Our sales and operating profits have increased dramatically, maintainingthe industry’s best profit rate. Successful commercialization of our 7th- and8th-generation production lines also made us the unrivaled top producer of 46and 52-inch LCD TV panels, ensuring our leadership in the global LCD industryfor a sixth consecutive year. In ongoing efforts to enhance our leadership, wealso have begun mass producing the world’s first touch-screen-enabled LCD.I7CIKD ;B;9JHED?9I7DDK7B H;FEHJ (&&-03
MESSAGE FROM THE CEOBy increasing management prowessand embracing innovation at every opportunity,Samsung Electronics will become one of themost profitable and most revered global companies.
We are determined to reach the highest echelon of global business leadership, even in theface of today’s challenging global and domestic business conditions. Through our management’spursuit of innovative approaches, processes and product designs and acceleratedcost-reduction efforts, we achieved our highest-ever record for consolidated sales in 2007,surpassing US 100 billion (KRW98 trillion), and attaining a net profit of KRW7.4 trillion.In 2008, we will continue to increase our competitiveness in key businesses, whiledeveloping new markets and businesses and laying a firm foundation for sustainable growththrough the pursuit of greater operational efficiency. Moreover, by promoting innovativemanagement practices that optimize the speed, efficiency and creativity of our workforce,we will generate additional value and establish ourselves as a true leader in the top tierof the world’s electronics industry. In defining success, we are determined to transform ourselvesinto one of the most respected, trusted and easily recognized global companies in the world.Dear Customers, Business Partners and Shareholders:I am extremely pleased to take this opportunity to discuss our 2007 achievements, as well as our future goalsand strategies. Samsung Electronics achieved its best ever business results in 2007, moving one step closer toour dream of becoming one of only a handful of companies who are not only tremendously successful, butalso true global innovators. I would like to express my heartfelt gratitude to all of our customers, businesspartners and shareholders who have supported us in accomplishing such excellent results.2007 RESULTS AND ANALYSISWe achieved our best-ever business results through a series of innovative management approachesIn 2007, at a time when the global economy was hampered by sharp increases in oil prices, as well as thesoaring cost of raw materials and unstable capital markets influenced by the U.S. subprime mortgage crisis.Concurrently, the Korean economy continued to undergo difficulties caused by sluggish consumption, unstablecurrency exchange rates and rising interest rates. Amidst these unfavorable business conditions, SamsungElectronics achieved record-breaking consolidated sales of US 100 billion (KRW98 trillion). We also achievedsolid earnings of KRW7.4 trillion in net profit thanks to an upward turn in profitability for our key strategicbusinesses and steady progress in our efforts to diversify further.Strengthening dominance in key strategic businessesIn 2007, our semiconductor business continued to yield substantial profits of over KRW2 trillion. This strongshowing was based on extensive cost reduction efforts, increased market differentiation in our areas of greatesttechnological competence and concerted efforts to retain a stable custo
Samsung’s Semiconductor Division continued to show steady growth and increased profits, backed by strong customer relationships and successful cost-reducing efforts. In 2007, Our performance remained solid with continued market dominance in most areas of the memory business, including sales in
