Good evening. Thank you all for joining the conference call of the earnings results of Samsung SDI. This conference will start with a presentation by the company, followed by a Q&A session. If you have a question, please press star 1 on your phone during the Q&A. Now we will begin the presentation on Samsung SDI's first quarter 2024 earnings results. Good morning and good evening. Thanks for joining us today. I'm Yoon-tae Kim, Vice President of Business Management Office at Samsung SDI. First on the call with me, CFO Jong-sung Kim, EVP Michael Son for Automotive and ESS Battery, EVP Han-jae Cho representing Small Battery, and VP Kyung-hoon Kim for Electronic Materials. We'll now begin the Earnings Call for the First Quarter of 2024. Let me start with our quarterly results and financial highlights. In Q1, under the effect of a slowed market demand incited by prolonged global recession as well as low seasonality, the revenue generated was KRW 5.1 trillion, down 8% QoQ and 4% YoY. The operating profit was KRW 267 billion, which decreased 14% QoQ and 29% YoY. The operating margin came in at 5.2%, a modest decline QoQ. In terms of performance by each business, the battery business reported KRW 4.6 trillion in revenue, which went down 8% QoQ and 5% YoY, while the operating profit stood at KRW 215 billion, falling 5% QoQ and 32% from a year ago. That said, prismatic batteries for EV had increased on-year revenue and higher operating profit both quarterly and yearly thanks to expanded sales of high-value products such as P6 that began supply in the United States. The electronic materials business saw revenue decline to KRW 549 billion, 3% QoQ and 1% YoY, with KRW 53 billion of the operating profit, which is now down 38% QoQ and 10% YoY. The pretax profit was KRW 293 billion, including KRW 26 billion non-operating profit such as profit and loss using the equity method. The net was KRW 287 billion. The core and total assets grew by KRW 1.4 trillion to record KRW 35.5 trillion due to expenditures capitalized to raise tangible assets, mainly for the EV battery business. The liabilities rose KRW 714 billion sequentially to KRW 14.8 trillion, with the equity at KRW 20.6 trillion, which went up by KRW 698 billion. The debt-to-equity ratio was 72%. Lastly, I would like to go over Samsung SDI's commitment to ESG principles. While seamlessly executing the eight strategic tasks for environmental management, we are in the process of establishing processes and systems for disclosure of data management that will enable us to comply with requirements for sustainability disclosures such as European Sustainability Reporting Standards and IFRS climate-related disclosures. To enhance our supply chain sustainability, we are currently working with RBA to assess ESG aspects of our global supply chains in Europe, China, and the U.S. We are also making sure that we provide due assistance where needed in order to boost ESG capabilities of our supply chain members. Now, I'd like to hand over the call to the representatives of each business unit for details of Q1 results and Q2 outlooks. Hello. I'm Michael Son, Head of Automotive and ESS Battery Business Strategic Marketing Office. In Q1, as the market demand slowdown extended, EV battery revenue declined QoQ. However, it went up YoY backed by sales expansion of high-value products as P5 showed solid sales and P6 began supply for premium model in the U.S. on top of AMPC profit recognition. The profit grew over quarter as well as over year. The ESS battery saw both revenue and profit fall due to the off-season effects and delays in some projects. In the second quarter, we anticipate the results to improve gradually with EV batteries. Though the demand may not recover in earnest soon, we will strive to secure solid profitability with stable sales volume raised from our current ongoing products while we press ahead with P6 battery sales expansion. For ESS battery business, we expect both revenue and profit to rebound as Samsung Battery Box sales expand in utility sector and also demand for the data center UPS grows. Thank you. Good morning. I am Han-jae Cho, Head of Small Battery Strategic Marketing Team. The Q1 revenue was adversely affected by seasonality trends, whereas profitability improved anchored by pouch battery sales. For cylindrical cells, the revenue fell, which is attributable to inventory buildups at our customers, mainly in mobility sector, while power tool batteries sustained similar results QoQ thanks to long-term agreements. We had big revenue growth for pouch batteries versus last quarter, pushed by major customers' launch of new flagship smartphones and robust sales. For yearly figures, both revenue and profit went up, hoisting the small battery results overall. In Q2, we will continue leveraging ongoing long-term agreements to ensure our profitability while seeking CLTA renewals to secure stable volume supply for the longer term. Also, we will preemptively penetrate new fast-growing markets of outdoor power equipment in the U.S. as well as electric two-wheelers in India and Southeast Asia. For 46-phi project, our plan is to acquire new customers while keeping our mass production preparation on track. For pouch cells, we will try to ensure the first-in-supply for our major customers' upcoming models in the second half. Thank you. Good morning. I'm Kyung-hoon Kim, Head of Electronic Materials Strategic Marketing Team. The Q1 revenue and profit went down quarter-on-quarter as we hit low-season volatility materials market, along with temporary inventory adjustments at our semiconductor materials customers. However, polarizer films saw revenue growth in magnitude as well as profitability improving as sales expanded, centering on large panels over 75-inch. In Q2, we expect the revenue to expand with the market recovery. The polarizer film sales will increase as we actively engage with peak-season demand for TV products coming up in the third quarter. We anticipate that the semiconductor materials will have better performance, capitalizing on the recovery in the memory chip market. However, on OLED material side, the revenue is likely to decline due to sluggish demand under the off-season effects. Thank you. Now, we will move on to the Q&A session, which will be provided in Korean, first followed by consecutive interpreting in English. If you have any questions, please follow the operator's guidance. [Foreign language]. Now, Q&A session will begin. Please press star one, star, and one if you have any questions. Please press star two, star, and two if you want to cancel questions. In order to allow as many Q&A chances as possible within the restricted time, we would appreciate only two questions per each participant. [Foreign language]. The first question will be provided by Woo-hyung Cho from HSBC Securities. Please go ahead with your question. [Foreign language] I have two questions. The first question is about your CapEx plans this year. When we look at your major competitors, they're either maintaining their CapEx similar to last year or actually reducing their CapEx spending versus their plan. On the other hand, SDI has planned to significantly increase its CapEx this year. Can the market expect SDI to change its stance in CapEx to a more aggressive stance? Also, can you give us a detailed breakdown of where you're planning to make your investments this year? Second question is about the cathode materials. Last year, you made the investment in STM. Can we expect the company to continue to increase the share of its internalized cathode materials? And if so, how much does it plan to expand? [Foreign language] This is CFO Jong-sung Kim, and I'll take your first question. You've asked about CapEx, and this year, automotive batteries will be the key focus of investment. Our investments are based on market and already secured customer demand with a long-term point of view to reflect the characteristics of the automotive battery business. The recent high interest rates and delays in global economic recovery have dampened EV market growth rates in the near term. However, growth rates are still expected to be high in the mid to long term, and our investments are being carried out as originally planned based on this long-term approach. Key investment projects currently underway this year include the expansion of our Hungary and Malaysia plants to supply demand that's already secured, as well as the construction of a new JV plant in the U.S. We are also actively planning new product-related investments such as the 46-phi, all solid-state battery, and LFP to secure the mid to long-term growth momentum. So overall, our investments this year will significantly increase versus last year. This year and going forward, we will continue to thoroughly execute our investment plans to ensure the timely response to customer demand and also the continued growth in the mid to long term. [Foreign language] This is Yoon-tae Kim of the Business Management Office and answered your second question about our investments into STM and cathode material. The company does see the need to internalize a certain portion of its total cathode material needs for the sake of ensuring stable supply and also for gaining cost competitiveness. This has been the rationale behind our investments in cathode material. So going forward, the company plans to maintain a certain level of internalized ratio on a mid- to long-term basis through STM as a way of optimizing our sourcing structure. [Foreign language]. [Foreign language]. The following question will be presented by Won -seok Jeong from Hi Investment & Securities. Please go ahead with your question. [Foreign language] I have two questions regarding next-generation batteries. First of all, this is the all-solid-state battery. The company has announced it's planning to mass produce it from year 2027, but when we calculate back, it appears that at least by this year, you need to make some detailed decisions, including winning orders or planning out new production line buildouts. Can you give us some updates and outlooks about your solid-state battery development? And also, can you compare what kind of pricing you're expecting on the all-solid-state battery versus the existing lithium-ion batteries? Second question is about the 46-phi development. 46 is a form factor that the market is very interested in. Can you give us some updates on your mass production preparations and what kind of schedules and timeline you're expecting? Also, have you been able to win any new customers other than the existing GM order? [Foreign language] This is Michael Son of our Automotive & ESS Battery division, and I'll take your first question about the all-solid-state battery development update. SDI set up the all-solid-state battery pilot line last year in June, and since then, samples have been supplied to several auto OEMs, and evaluation is currently undergoing. With the all-solid-state battery attracting growing interest in the market, we have been actually receiving sample requests from additional companies other than those that we are already working with. But we are currently examining details to finalize the production method and production line investment plans this year. We will also conduct technology verification and lay out SCM procurement plans in order to secure mass production capabilities of the key materials to prepare for mass production targeted in 2027. Now, regarding the pricing and future market growth, all-solid-state batteries would initially be used mainly in the super premium vehicle segment, but over time and as overall demand increases, cost would come down, which would help expand the addressable market. [Foreign language] This is Han-jae Cho of the Small Battery division, and I'll answer your second question about the 46-phi batteries. During the first half of last year, SDI set up production lines capable of producing 46-phi batteries of various heights and is currently supplying samples to various customers. Based on our edge in cylindrical battery technology that we have accumulated over a long time, SDI is currently developing 46-phi products that are differentiated in terms of high power outage, long cycle life, and fast charging, in addition to the highest energy density in the industry. We plan to complete preparations for mass production within this year. Regarding the customer contracts, we're talking not only with OEMs but also with customers in other applications such as mobility that are currently using the 21700 existing standard size cylindrical batteries. We're talking with them about mass production projects to start from 2025. [Foreign language] [Foreign language] The following question will be presented by Hyun-soo Kim from Hana Securities. Please go ahead with your question. [Foreign language] [Foreign language] The question was that this was the first time the AMPC was reflected in SDI's operating profit. There was a question asking for a detailed breakdown of what was reflected and whether the company is expecting to recognize a similar size going forward. And how much of AMPC can we expect once the Stellantis joint venture goes into mass production next year? [Foreign language] This is Yoon-tae Kim of the Business Support Office. I'll answer that question about the AMPC. As you know, on December 14th of last year, the U.S. Treasury Department announced the proposed regulations on the products that would be eligible for the AMPC application. With the help of outside experts, we confirmed that the products we currently produce in the U.S. are eligible for AMPC application. That is why KRW 46.7 billion was recognized this time in a lump sum for the products that had been produced from last year, that's 2023, until first quarter of this year. Going forward from second quarter, the amount accrued will be recognized on a quarterly basis. And once the Stellantis joint venture line operation ramps up next year, the AMPC benefit is expected to significantly increase. [Foreign language] [Foreign language]<The following question will be presented by Min-woo Ju from NH Investment & Securities. Please go ahead with your question. [Foreign language] My first question is about the development of low-cost batteries. In addition to the premium NCA-based products, you also are said to be preparing low-cost products. Can you give us an update on that development? And also, if the sales of these low-cost products increase, wouldn't that relatively negatively affect your profitability? Second question is about the decrease in growth rate of European EV sales and the impact that would have on your business. The decrease in the growth rate of EV sales appears to be more notable in the European side. You have a higher dependence on European sales. What kind of impact are you feeling? And do you think that that would have any implications for the operation of your Hungary plant? [Foreign language] This is EVP Michael Son, and I'll take your first question, which was about the development of low-cost platforms and the impact that may have on our profitability. The company's strategy of pursuing profitable and qualitative growth remains unchanged. That said, for the sake of increasing our mid to long-term growth potential, we are currently developing the NMX or LFP+ platforms, which target the volume and entry segment EVs where demand has been recently growing. Our mass production target of these platforms is 2026. Even though the volume and entry segments are more price-sensitive than the premium segment, we are planning to secure an appropriate level of margins through differentiation in various aspects. For example, in terms of performance, we aim to have the competitive edge within the same segment in key metrics such as energy density, charging speed, and product life. In terms of cost competitiveness, we're focusing on optimizing material and form factor and also gaining differentiation in technology and manufacturing process. Therefore, while maintaining our leadership in the premium segment of the existing high nickel batteries, we will also focus on developing and winning contracts for NMX and LFP+ for stable growth in order to achieve both profitability and quantitative growth. [Foreign language] This is EVP Michael Son continuing to answer your second question about the European impact on our battery operation. The EV market demand continues to remain dampened due to delays in global economic recovery, and as you mentioned, Europe is showing a relatively weaker growth rate. However, global demand, including in Europe, is expected to gradually improve starting from the second half. When we look at a mid- to long-term perspective, the EV market is expected to continue a fast pace of growth supported by various factors, including environmental policies. SDI does have a high share of European customers, but the vehicles that use our batteries are sold evenly across global markets, including Europe and the U.S. In terms of battery capacity, Europe does not account for an absolutely high share as our end market. This is why a slowdown in European demand has not particularly affected our Hungary plant more. And we will try to minimize the impact of the near-term EV growth rate slowdown by increasing supply of the existing P5 and newly launched P6 into U.S. markets. [Foreign language] [Foreign language] The last question will be presented by Chul-joong Kim from Mirae Asset Securities. Please go ahead with your question. [Foreign language] I have a few questions regarding the electronic materials, especially the semiconductor materials. First question is related with AI. A lot of attention is building up in the market regarding AI. What kind of implications do you think that would have in your semiconductor material business? Second question is, aside from AI, the overall industry situation of the semiconductor industry is improving quarter-over-quarter. Given that, what kind of business outlook or guidance can you give us for the business performance of your battery material, excuse me, the semiconductor material business? [Foreign language] This is Michael Son, and I'll answer your first question because even though you've asked about the implications of AI for the semiconductor material business, actually, from SDI's perspective, it would have a positive impact on our other businesses as well. The growth of the AI market is expected to bring positive effects to many aspects of SDI's business, including ESS battery, electronic materials, semiconductor material business, and also the small-size pouch battery business. First of all, the AI market growth leads to an increase in data center power demand, which is expected to more than double from the current levels by 2030. Increased demand for power is expected to drive a significant demand increase for not only utility ESS but also UPS, which is used as data center backup power. An increase in data centers and AI-enabled devices would drive a rapid increase in high-end semiconductors for AI applications, which would be positive to the business performance of our semiconductor material business. Also, the demand for on-device AI-enabled mobile IT devices requiring high-density batteries is expected to increase, and given that our key customers are leading the market, this would be another tailwind for our business. [Foreign language] This is EVP Kyung-hoon Kim of the electronic materials business, and I'll answer your second question, which was asking about the impact from the improving semiconductor industry situation. This year, the semiconductor market is expected to record significant growth versus last year as the semiconductor market situation starts to meaningfully improve following the semiconductor production cuts last year and also the positive impact from the increase in AI-related demand. This year, our semiconductor materials business is expected to record more than 20% year-over-year revenue growth and meaningful profitability improvement, particularly around key products such as the SOH, premium EMC, and EUV material. We also expect additional growth opportunities from the rapid increase in demand for high-end semiconductors. [Foreign language] That completes our conference call for the first quarter 2024 earnings results. If you have any further questions, please forward them to the IR team. Thank you.