2019 Business Report

Samsung Electronics Business Report 1 / 261

SAMSUNG ELECTRONICS Co., Ltd.

For the year ended December 31, 2019

Certain sta te men ts in th e document, other than purely historical information, including estimates, projections, statements relating to our business

plans, 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 actual

results to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and

events 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 Business Report 2 / 261



Table of Contents

Certification ................................................................................................................................................................................ 3

I. Corporate Overview ............................................................................................................................................................... 4

II. Businesses Overview ......................................................................................................................................................... 25

III. Financial Affairs .................................................................................................................................................................. 67

IV. Management Discussion and Analysis .......................................................................................................................... 169

V. Auditor’s Report ................................................................................................................................................................ 183

VI. Corporate Governance .................................................................................................................................................... 187

VII. Information on Shareholders ......................................................................................................................................... 204

VIII. Executives and Employees ........................................................................................................................................... 210

IX. Affiliates and Subsidiaries .............................................................................................................................................. 221

X. Related Party Transactions .............................................................................................................................................. 24 9

XI. Other Information ............................................................................................................................................................. 253

Samsung Electronics Business Report 3 / 261

Certification

Letter of Certification

We, Ki-nam K im a nd Yo o n-ho Cho i, as CEO a nd e xec utive of the company in c harge of repor ting, certify that

we have reviewed the annual business report of Samsung Electronics Co., Ltd. for t he year ended December 31,

2019.

Based on our knowledge, this report does not contain any untrue statements of material facts or omit any

material facts; and it does not contain any statements that are intentionally misleading.

Based on our knowledge, the financial statements, and other financial information included in the report, are

fairly presented in all materials a nd respect the financial condition, results of operations, a nd cas h flows of the

company as of, and for, the periods presented in this report.

We confirm that Samsung Electronics operates the Internal Controls over Financial Reporting, as defined in

Article 8 of the Act on External Audit of Stock Companies.

Date: Mar 30, 2020

Samsung Electronics Business Report 4 / 261

I. Corporate Overview

1. Overview

A. Le gal, commercial name :

- Samsung Electronics Co., Ltd.

B. Date of e stablishment:

- Samsung Electronics Co., Ltd. (“SEC” or “the Company”) 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. fo llow ing a

resolution passed at the Annual General Meeting (AGM) of shareholders on February 28, 1984.

C. Address, phone number, and English language website of the corporate headquarte r

- Address: 129, Samsung-ro, Yeongtong-gu, Suwon, Gyeonggi-do, Korea

- Phone Number: 82-31-200-1114

- Website: https:// www.samsung.com/sec

D. The Company is not subje ct to Article 2 of the Frame work Act on Small and Me dium Ente rprises.

E. Core bus inesses

- The Company (defined below) consists of business divis ions that operate independently: CE (Consumer Electronics);

IM (Information Technology & Mobile Communications); DS (Device Solutions); and Harman (Harman International

Industries, Inc. and its subsidiaries), which produces automotive electronics components.

Products in each Division are presented below:

Division Products

CE TVs, monitors, refrigerators, washing machines, air conditioners, etc.

IM HHPs, network systems, computers, etc.

DS DRAM, NAND flash, mobile APs, OLED smartphone panels, LCD TV panels, etc.

Harman Head units, infotainment systems, telematics, speakers, etc.

SEC is a globa l electronics firm comprised of the headquarters in Korea and 240 subsidiaries (collectively, “Samsung

Electronics” or the “Company”) across the world, inc luding 9 regional headquarters for the CE and IM Divisions, 5

regional headquarters for the DS Division, and Harman’s subsidiaries.

[CE Division]

The CE Division is leading the globa l d ig ita l era by continuously offering new products featuring innovative technology,

unique designs, and enhanced value propositions.

TV is the core product of CE. The Company has maintained its pos ition as the market leader for 14 consecutive years by

leveraging competitive advantages in hardware such as LCD/LED TVs as well as software driven product features within

our Smart TV product portfolio. We will continue to expand our market leadership based on our competitive edge in the

premium segment through our 8K QLED and ultra-large products to name a few.

Samsung Electronics Business Report 5 / 261

[IM Division]

The IM Divis ion operates the Mobile Communication Business, which produces and sells smart mobile devices such as

smartphones, tablets, wearables, etc. For smartphones, a key product of the business, we have developed a lineup ranging

from low-end right through to premium models, and have achieved growth in both advanced and emerging markets with

the Galaxy series.

We will lead growth of the smartphone market and deliver exceptiona l user experiences by: 1) offering innovative

hardware features such as new form factors (based on flexible OLED technology), high-definition cameras, biometric

sensors, and battery charger technologies; 2) improving software capabilities of mobile payment service Samsung Pay and

AI platform B ixby; and 3) investing in future growth drivers such as Cloud, IoT, healthcare, AR, and VR. At the same

time, we will lead the global 5G market based on our end-to-end solutions, which encompass handsets, chipsets, as well as

our commercialization experience in initial 5G markets.

[DS Division]

The Memory Business, System LSI Business, Foundry Business, and Display Panel (“DP”) Business make up the DS

Div is ion. The Memory Business manufactures and sells DRAM and NAND products; the System LSI Business designs

and sells mobile application processors (“mobile APs” or “APs”) and camera sensor chips; the Foundry Business is in

charge of consignment production of semiconductors; and the DP Business manufactures and sells display panels.

The Company constantly works to increase its influence on end-product manufacturers and create new demand through

technological breakthroughs and the development of high quality components as it has done with APs—which serve as the

brains of mobile products—and with memory components like DRAM via enhanced capacity and density.

The Memory Business has maintained its pos ition at the top of the globa l memory market by sustaining cost

competitiveness and applying the latest advanced process technology in each technological iteration. The System LSI

Business has not been complacent, expanding its focus from mobile to include automotive chips, and w ill stay at the

forefront of the market by offering differentiated products such as APs and CISs and strengthening competitiveness via its

advanced manufacturing process technology. In 1H19, the Foundry Business introduced the world’s first 7-nano product

manufactured with EUV technology. Leveraging its capabilities, the bus iness will ga in market leadership by deve loping

next-generation technologies such as 4- and 5-nano EUV processes and the 3-nano GAA (gate all around) process in 2020.

We are expanding the business by diversifying our product portfolio, which includes CISs, DDIs, and PMICs.

In the Display divis ion, the Company and its mobile panel business’s differentiated technology is a main factor behind the

increased adoption of OLED panels, while its release of products in new applications—such as foldable devices, laptops,

and automotives—has expanded the overall market. Meanwhile, the large panel business is focusing on premium products

such as high-definit io n, u ltra-large, QD TVs and is enhancing its competitiveness through continuous improvements in

technology and productivity.

[Harman Divis ion]

Harman designs and develops connected products and solutions for automakers, consumers, and companies worldwide

and is a global leader in the market for connected car systems, audio and visua l products, professiona l solutions, and

connected services. Harman has established an internationa lly renowned brand and employs both internal development

and strategic acquisitions to expand its lineup of quality products.

☞

See 『II. Businesses Overview』, for more details about each Division.

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F. Affiliates

SEC is an affiliate of the Samsung Group as defined under Korea’s Monopoly Regulation and Fair Trade Act (“Samsung

Group”).

As of December 31, 2019, the Samsung Group had a total of 60 domestic affiliates follow ing a reduction of 2 affiliates—

Saengbo Real Estate Trust Co., Ltd and Red Bend Software Inc.—since December 31, 2018. Among the Samsung

Group’s domestic affilia tes, 16 a ffiliates (including Samsung Electronics) are listed and 44 are unlisted.

[As of Dec 31, 2019]

Ty p e Number Affiliate

Listed 16

Samsung C&T; Samsung Electronics; Samsung SDI; Samsung Electro-Mechanics (Semco); Samsung Fire & Marine

Insurance; Samsung Heavy Industries; Samsung Life Insurance; Multicampus; Samsung Securities; Samsung SDS;

Samsung Card; Samsung Engineering; S1; Cheil Worldwide; Hotel Shilla; Samsung Biologics

Unlisted 44

Seoul 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; Samsung Fire & Marine Insurance Financial Service; Samsung Electronics

Service CS; Samsung Futures; Samsung Asset Management; Samsung Life Service; Samsung SRA Asset Management;

Samsung Life Financial Service; SD Flex; Cheil Fashion Retail Co., Ltd.; Natural9*; Samsung Welstory; SECUI; STM; S-

Core; OpenHands; Miracom; Samsung Card Customer Service; Human TSS; S-1CRM; Shilla Stay; HDC Shilla Duty Free

Ltd; Samsung Economic Research Institute (SERI); Samsung Lions; Samsung Venture Investment Corporation; Samsung

Active Asset Management; Samsung Hedge Asset Management; Harman International Korea; SBTM

Total 60

Note: *Liquidated in December 2019 and was no longer an affiliate as of January 2020.

☞ See 『IX. Affiliates and Subsidiaries』 for more details about domestic and overseas affiliates.

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G. Subsidiaries subje ct to consolidated financial state ments

As of December 31, 2019, Samsung Electronics’ consolidated subsidiaries numbered 240 with the addit ion of 8

subsidiaries and reduction of 20 subs idiar ies when compared to totals as of December 31, 2018. Below is the list of

consolidated subsidiaries.

(KRW mil)

Subsidiary

Date

established

Major business

Assets as

of Dec 31,

2019

Ownership

Classified

as major

subsidiary

(Y/N)

Samsung Electronics America Inc. (SEA) Jul 1978 Electronic goods sales 34,704,039 Over 50% Y

NeuroLogica Corp. Feb 2004 Medical equipment 198,668 Ov er 50% Y

Dacor Holdings, Inc. Dec 1998 Holding company 70,283 Ov er 50% N

Dacor, Inc. Mar 1965 Home appliance production and sales 70,214 Ov er 50% N

Dacor Canada Co. Jun 2001 Home appliance sales 9 Ov er 50% N

EverythingDacor.com, Inc. Jun 2006 Home appliance sales 0 Ov er 50% N

Distinctiv e Appliances of California, Inc. Jun 2014 Home appliance sales 0 Ov er 50% N

Samsung HVAC America, LLC Jul 2001 Air conditioner sales 53,411 Over 50% N

SmartThings, Inc. Apr 2012 Smart-home-device sales 188,239 Ov er 50% Y

Samsung Oak Holdings, Inc. (SHI) Jun 2016 Holding company 396,858 Ov er 50% Y

Stellus Technologies, Inc. Nov 2015 Semiconductor system production and sales 22,442 Ov er 50% N

Joyent, Inc. Mar 2005 Cloud services 208,093 Ov er 50% Y

Prismview, LLC Oct 2007 LED display panel production and sales 91,430 Ov er 50% Y

Samsung Research America, Inc. (SRA) Oct 1988 R&D 807,624 Ov er 50% Y

Samsung Next LLC (SNX) Aug 2016 Holding company 115,785 Ov er 50% Y

Samsung Next Fund LLC (SNXF) Aug 2016 Venture firm and new technology investments 125,312 Ov er 50% Y

Viv Labs, Inc. Sep 2012 Artificial Intelligence serv ices 281,556 Ov er 50% Y

Samsung Semiconductor Inc. (SSI) Jul 1983 Semiconductor and display panel sales 9,194,190 Over 50% Y

Samsung Austin Semiconductor LLC. (SAS) Feb 1996 Semiconductor production 6,437,865 Over 50% Y

Samsung International Inc. (SII) Oct 1983 TV and monitor production 1,191,534 Ov er 50% Y

Samsung Mexicana S.A. de C.V (SAMEX) Mar 1988 Electronic goods production 55,259 Ov er 50% N

Samsung Electronics Home Appliances America, LLC (SEHA) Aug 2017 Home appliance production 663,997 Ov er 50% Y

SEMES America, Inc. Oct 1998 Semiconductor equipment 1,731 Ov er 50% N

Zhilabs Inc. Feb 2017 Network solution sales 174 Ov er 50% N

Samsung Electronics Canada, Inc. (SECA) Jul 1980 Electronic goods sales 1,396,008 Over 50% Y

AdGear Technologies Inc. Aug 2010 Digital adv ertising platform 34,696 Ov er 50% N

SigMast Communications Inc. Jul 2009 Tex t messaging service development 4,933 Ov er 50% N

Samsung Electronics Mexico S.A. De C.V. (SEM) Jul 1995 Electronic goods sales 1,250,456 Over 50% Y

Samsung Electronics Digital Appliance Mexico, SA de CV

(SEDAM)

Dec 2012 Electronic goods production 521,891 Ov er 50% Y

Samsung Electronics Latinoamerica Miami, Inc. (SEMI) May 1995 Electronic goods sales 350,117 Over 50% Y

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Samsung Electronics Latinoamerica (Zona Libre)(SELA) Apr 1989 Electronic goods sales 487,605 Ov er 50% Y

Samsung Electronics Venezuela, C.A. (SEVEN) May 2010 Marketing and services 91 Over 50% N

Samsung Electronica Colombia S.A. (SAMCOL) Mar 1997 Electronic goods sales 567,003 Ov er 50% Y

Samsung Electronics Panama. S.A. (SEPA) Jul 2012 Consulting 1,981 Ov er 50% N

Samsung Electronica da Amazonia Ltda. (SEDA) Jan 1995 Electronic goods production and sales 7,058,719 Over 50% Y

Samsung Electronics Argentina S.A. (SEASA) Jun 1996 Marketing and services 46,405 Ov er 50% N

Samsung Electronics Chile Limitada (SECH) Dec 2002 Electronic goods sales 497,328 Ov er 50% Y

Samsung Electronics Peru S.A.C. (SEPR) Apr 2010 Electronic goods sales 310,900 Ov er 50% Y

Harman International Industries, Inc. Jan 1980 Holding company 15,780,810 Over 50% Y

Harman Becker Automotive Systems, Inc. Jun 1981 Audio product R&D, production, and sales 4,389,303 Ov er 50% Y

Harman Connected Services, Inc. Feb 2002 Connected service provider 2,081,187 Over 50% Y

Harman Connected Services Engineering Corp. Sep 2004 Connected service provider 620 Ov er 50% N

Harman Connected Services South America S.R.L. Apr 2015 Connected service provider 0 Ov er 50% N

Harman da Amazonia Industria Eletronica e Participacoes Ltda. Jul 2005 Audio product production and sales 53,652 Ov er 50% N

Harman de Mexico S. de R.L. de C.V. Feb 1997 Audio product production 107,312 Ov er 50% Y

Harman do Brasil Industria Eletronica e Participacoes Ltda. Nov 1958 Audio product R&D and sales 253,503 Ov er 50% Y

Harman Financial Group, LLC Jun 2004 Management company 654,120 Ov er 50% Y

Harman International Industries Canada Ltd. May 2005 Audio product sales 78 Ov er 50% N

Harman International Mex ico, S. de R.L. de C.V. Dec 2014 Audio product sales 28,262 Ov er 50% N

Harman KG Holding, LLC Mar 2009 Holding company 0 Ov er 50% N

Harman Professional, Inc. Jul 2006 Audio product R&D and sales 1,097,748 Over 50% Y

RT SV Co-Inv est, LP Feb 2014 Venture firm inv estments 12,220 Ov er 50% N

Beijing Integrated Circuit Industry International Fund, L.P Dec 2014 Inv estment in venture firms 27,097 Ov er 50% N

China Materialia New Materials 2016 Limited Partnership Sep 2017 Inv estment in venture firms 3,391 Over 50% N

Samsung Electronics (UK) Ltd. (SEUK) Jul 1995 Electronic goods sales 2,644,358 Ov er 50% Y

Samsung Electronics (London) Ltd. (SEL) Jan 1999 Holding company 6,672 Over 50% N

Samsung Electronics Holding GmbH (SEHG) Feb 1982 Holding company 844,742 Ov er 50% Y

Samsung Semiconductor Europe GmbH (SSEG) Dec 1987 Semiconductor and display panel sales 853,543 Over 50% Y

Samsung Electronics GmbH (SEG) Dec 1984 Electronic goods sales 2,258,269 Ov er 50% Y

Samsung Electronics Iberia, S.A. (SESA) Jan 1989 Electronic goods sales 1,117,384 Over 50% Y

Samsung Electronics France S.A.S (SEF) Jan 1988 Electronic goods sales 1,738,061 Ov er 50% Y

Samsung Electronics Hungarian Private Co. Ltd. (SEH) Oct 1989 Electronic goods production and sales 2,109,654 Over 50% Y

Samsung Electronics Czech and Slovak s.r.o. (SECZ) Jan 2010 Electronic goods sales 244,072 Ov er 50% Y

Samsung Electronics Italia S.P.A. (SEI) Apr 1991 Electronic goods sales 1,310,500 Ov er 50% Y

Samsung Electronics Europe Logistics B.V. (SELS) May 1991 Logistics 2,027,213 Over 50% Y

Samsung Electronics Benelux B.V. (SEBN) Jul 1995 Electronic goods sales 1,914,864 Ov er 50% Y

Samsung Display Slovakia s.r.o. (SDSK) Mar 2007 Display panel processing 50,097 Ov er 50% N

Samsung Electronics Business Report 9 / 261

Samsung Electronics Romania LLC (SEROM) Sep 2007 Electronic goods sales 290,743 Ov er 50% Y

Samsung Electronics Polska, SP.Zo.o (SEPOL) Apr 1996 Electronic goods sales 909,905 Ov er 50% Y

Samsung Electronics Portuguesa S.A. (SEP) Sep 1982 Electronic goods sales 212,856 Ov er 50% Y

Samsung Electronics Nordic Aktiebolag (SENA) Mar 1992 Electronic goods sales 1,246,502 Ov er 50% Y

Samsung Semiconductor Europe Limited (SSEL) Apr 1997 Semiconductor and display panel sales 93,207 Ov er 50% Y

Samsung Electronics Austria GmbH(SEAG) Jan 2002 Electronic goods sales 423,105 Ov er 50% Y

Samsung Electronics Switzerland GmbH(SESG) May 2013 Electronic goods sales 296,054 Ov er 50% Y

Samsung Electronics Slovakia s.r.o (SESK) Jun 2002 TV and monitor production 1,324,355 Over 50% Y

Samsung Electronics Baltics SIA(SEB) Oct 2001 Electronic goods sales 136,426 Ov er 50% Y

Samsung Electronics Europe Holding Cooperatief U.A. (SEEH) Oct 2008 Holding company 10,682,847 Over 50% Y

Samsung Electronics Poland Manufacturing SP.Zo.o (SEPM) Feb 2010 Home appliance production 423,582 Ov er 50% Y

Samsung Electronics Greece SMSA. (SEGR)

(Formerly Samsung Electronics Greece S.A.)

Apr 2010 Electronic goods sales 98,718 Ov er 50% Y

Samsung Electronics Air Conditioner Europe B.V. (SEACE) Apr 2017 Air conditioner sales 101,114 Over 50% Y

Samsung Nanoradio Design Center (SNDC) Feb 2004 R&D 27,519 Ov er 50% N

Samsung Denmark Research Center ApS(SDRC) Sep 2012 R&D 25,297 Ov er 50% N

Samsung Cambridge Solution Centre Limited (SCSC) Sep 2012 R&D 146,786 Ov er 50% Y

Zhilabs, S.L. Nov 2008 Network solution R&D and sales 6,745 Ov er 50% N

Foodient Ltd. Mar 2012 R&D 615 Ov er 50% N

Samsung Electronics Overseas B.V. (SEO) Jan 1997 Electronic goods sales 138,325 Ov er 50% Y

Samsung Electronics Rus Company LLC(SERC) Oct 2006 Electronic goods sales 1,460,307 Ov er 50% Y

Samsung Electronics Ukraine Company LLC(SEUC) Sep 2008 Electronic goods sales 283,864 Ov er 50% Y

Samsung R&D Institute Rus LLC(SRR) Nov 2011 R&D 58,600 Ov er 50% N

Samsung Electronics Central Eurasia LLP(SECE) Sep 2008 Electronic goods sales 179,203 Over 50% Y

Samsung Electronics Caucasus Co. Ltd. (SECC) Oct 2014 Marketing 2,059 Ov er 50% N

Samsung Electronics Rus Kaluga LLC(SERK) Jul 2007 TV production 1,259,052 Over 50% Y

AKG Acoustics GmbH Mar 1947 Audio product production and sales 388,887 Ov er 50% Y

AMX UK Limited Mar 1993 Audio product sales 0 Ov er 50% N

Arcam Limited Jul 2004 Holding company 0 Ov er 50% N

A&R Cambridge Limited Dec 1993 Audio product sales 0 Over 50% N

Harman Audio Iberia Espana Sociedad Limitada (Formerly Duran

Audio Iberia Espana S.L.)

Nov 2012 Audio product sales 253 Ov er 50% N

Harman Automotiv e UK Limited Oct 2012 Audio product production 1,040,947 Over 50% Y

Harman Becker Automotive Systems GmbH Jul 1990 Audio product R&D, production, and sales 4,024,489 Over 50% Y

Harman Becker Automotive Systems Italy S.R.L. Dec 2005 Audio product sales 1,308 Ov er 50% N

Harman Becker Automotive Systems Manufacturing Kft Aug 1994 Audio product R&D and production 2,957,465 Over 50% Y

Harman Belgium SA Apr 1967 Audio product sales 2,786 Over 50% N

Harman Connected Services AB. Oct 1984 Connected service provider 23,739 Ov er 50% N

Harman Finland Oy Jul 1998 Connected service provider 2,194 Over 50% N

Samsung Electronics Business Report 10 / 261

Harman Connected Services GmbH Dec 2005 Connected service provider 50,121 Over 50% N

Harman Connected Services Limited Dec 1992 Connected service provider 0 Over 50% N

Harman Connected Services Poland Sp.zoo Jun 2007 Connected service provider 10,263 Over 50% N

Harman Connected Services UK Ltd. Sep 2008 Connected service provider 67,264 Over 50% N

Harman Consumer Nederland B.V. Dec 1995 Audio product sales 447,732 Ov er 50% Y

Harman Deutschland GmbH Mar 1998 Audio product sales 16,296 Over 50% N

Harman Finance International GP S.a.r.l Apr 2015 Holding company 0 Over 50% N

Harman France SNC Nov 1995 Audio product sales 156,575 Over 50% Y

Harman Holding Gmbh & Co. KG Jun 2002 Management company 5,282,405 Ov er 50% Y

Harman Hungary Financing Ltd. Jun 2012 Financing company 43,454 Ov er 50% N

Harman Inc. & Co. KG Jun 2012 Holding company 4,148,456 Ov er 50% Y

Harman International Estonia OU May 2015 R&D 224 Ov er 50% N

Harman International Industries Limited Mar 1980 Audio product sales, etc. 241,193 Ov er 50% Y

Harman International Romania SRL Feb 2015 R&D 26,319 Ov er 50% N

Harman Finance International SCA Apr 2015 Financing company 471,168 Ov er 50% Y

Harman International s.r.o Feb 2015 Audio product production 20 Over 50% N

Harman Management GmbH Apr 2002 Holding company 0 Ov er 50% N

Harman Professional Kft Dec 2014 Audio product R&D and production 97,517 Ov er 50% Y

Martin Manufacturing (UK) Ltd May 1985 Audio product production 0 Ov er 50% N

Harman Professional Denmark ApS Jul 1987 Audio product R&D and sales 165,264 Ov er 50% Y

Red Bend Softw are Ltd. Aug 2004 Software design 0 Ov er 50% N

Red Bend Softw are SAS Oct 2002 Softw are design 8,088 Ov er 50% N

Studer Professional Audio GmbH Nov 2003 Audio product R&D and sales 27,928 Ov er 50% N

Harman Connected Services OOO Nov 1998 Connected service provider 13,875 Ov er 50% N

Harman RUS CIS LLC Aug 2011 Audio product sales 135,093 Ov er 50% Y

Samsung Electronics West Africa Ltd. (SEWA) Mar 2010 Marketing 32,923 Ov er 50% N

Samsung Electronics East Africa Ltd. (SEEA) Dec 2011 Marketing 26,929 Over 50% N

Samsung Gulf Electronics Co.,, Ltd. (SGE) May 1995 Electronic goods sales 1,288,180 Ov er 50% Y

Samsung Electronics Saudi Arabia Ltd. (SESAR) Nov 2019 Electronic goods sales 23,055 Ov er 50% N

Samsung Electronics Egypt S.A.E(SEEG) Jul 2012 Electronic goods production and sales 642,091 Over 50% Y

Samsung Electronics Israel Ltd. (SEIL) Sep 2012 Marketing 17,993 Over 50% N

Samsung Electronics Tunisia S.A.R.L(SETN) Sep 2012 Marketing 4,553 Over 50% N

Samsung Electronics Pakistan (Private) Ltd. (SEPAK) Nov 2012 Marketing 2,913 Ov er 50% N

Samsung Electronics South Africa (Pty) Ltd. (SSA) Jun 1994 Electronic goods sales 522,382 Ov er 50% Y

Samsung Electronics South Africa Production (pty) Ltd. (SSAP) Jul 2014 TV and monitor production 81,784 Ov er 50% Y

Samsung Electronics Turkey (SETK) Dec 1984 Electronic goods sales 566,676 Ov er 50% Y

Samsung Semiconductor Israel R&D Center, Ltd. (SIRC) Oct 2007 R&D 78,746 Ov er 50% Y

Samsung Electronics Business Report 11 / 261

Samsung Electronics Levant Co.,, Ltd. (SELV) Jul 2009 Electronic goods sales 484,098 Ov er 50% Y

Samsung Electronics Maghreb Arab (SEMAG) Nov 2009 Electronic goods sales 240,938 Ov er 50% Y

Corephotonics Ltd. Jan 2012 R&D 11,884 Ov er 50% N

Global Symphony Technology Group Private Ltd. Jan 2002 Holding company 42,327 Ov er 50% N

Harman Connected Services Morocco Apr 2012 Connected service provider 2,353 Over 50% N

Harman Industries Holdings Mauritius Ltd. Oct 2009 Holding company 85,666 Ov er 50% Y

Red Bend Ltd. Feb 1998 Audio product production 89,221 Ov er 50% Y

Samsung Japan Corporation (SJC) Dec 1975 Semiconductor and display panel sales 1,218,011 Over 50% Y

Samsung R&D Institute Japan Co., Ltd. (SRJ) Aug 1992 R&D 161,026 Ov er 50% Y

Samsung Electronics Japan Co.,, Ltd. (SEJ) Sep 2008 Electronic goods sales 976,240 Ov er 50% Y

Samsung Electronics Display (M) Sdn. Bhd. (SDMA) Mar 1995 Electronic goods production 25,824 Over 50% N

Samsung Electronics (M) Sdn. Bhd. (SEMA) Sep 1989 Home appliance production 189,418 Ov er 50% Y

Samsung Vina Electronics Co.,, Ltd. (SAVINA) Jan 1995 Electronic goods sales 292,458 Ov er 50% Y

Samsung Asia Private Ltd. (SAPL) Jul 2006 Electronic goods sales 9,137,262 Ov er 50% Y

Samsung India Electronics Private Ltd. (SIEL) Aug 1995 Electronic goods production and sales 7,042,872 Over 50% Y

Samsung R&D Institute India-Bangalore Priv ate Limited (SRI-

Bangalore)

May 2005 R&D 383,411 Over 50% Y

Samsung Nepal Services Pvt, Ltd (SNSL) Nov 2017 Services 297 Over 50% N

Samsung Display Noida Private Limited (SDN) Jul 2019 Display panel production 5,276 Over 50% N

Samsung Electronics Australia Pty. Ltd. (SEAU) Nov 1987 Electronic goods sales 468,812 Ov er 50% Y

Samsung Electronics New Zealand Limited (SENZ) Sep 2013 Electronic goods sales 104,271 Ov er 50% Y

PT Samsung Electronics Indonesia (SEIN) Aug 1991 Electronic goods production and sales 1,014,085 Ov er 50% Y

PT Samsung Telecommunications Indonesia (STIN) Mar 2003 Electronic goods sales and services 1,075 Ov er 50% N

Thai Samsung Electronics Co.,, Ltd. (TSE) Oct 1988 Electronic goods production and sales 2,912,731 Ov er 50% Y

Laos Samsung Electronics Sole Co.,, Ltd (LSE) Sep 2016 Marketing 774 Ov er 50% N

Samsung Electronics Philippines Corporation (SEPCO) Mar 1996 Electronic goods sales 285,358 Ov er 50% Y

Samsung Display Vietnam Co.,, Ltd. (SDV) Jul 2014 Display panel production 7,267,124 Over 50% Y

Samsung Malaysia Electronics (SME) Sdn. Bhd. (SME) May 2003 Electronic goods sales 412,503 Ov er 50% Y

Samsung R&D Institute Bangladesh Limited (SRBD) Aug 2010 R&D 12,224 Ov er 50% N

Samsung Electronics Vietnam Co.,, Ltd. (SEV) Mar 2008 Electronic goods production 12,367,857 Over 50% Y

Samsung Electronics Vietnam THAINGUYEN Co.,, Ltd. (SEVT) Mar 2013 Telecom product production 13,847,934 Ov er 50% Y

Samsung Electronics HCMC CE Complex Co., Ltd. (SEHC) Feb 2015 Electronic goods production and sales 2,305,587 Over 50% Y

Harman Connected Services Corp. India Pvt. Ltd. Apr 2002 Connected service provider 356,371 Ov er 50% Y

Harman International (India) Priv ate Limited Jan 2009 Audio product R&D and sales 239,982 Ov er 50% Y

Harman International Industries PTY, Ltd. Dec 2014 Holding company 0 Over 50% N

Harman International Japan Co., Ltd. Jun 1991 Audio product R&D and sales 86,606 Ov er 50% Y

Harman Singapore Pte. Ltd. Aug 2007 Audio product sales 12,806 Ov er 50% N

Martin Professional Pte. Ltd. Jun 1995 Audio product sales 0 Ov er 50% N

Samsung Electronics Business Report 12 / 261

Samsung Display Dongguan Co.,, Ltd. (SDD) Nov 2001 Display panel production 1,795,077 Over 50% Y

Samsung Display TianJin Co.,, Ltd. (SDT) Jun 2004 Display panel production 1,285,173 Over 50% Y

Samsung Electronics Hong Kong Co.,, Ltd. (SEHK) Sep 1988 Electronic goods sales 1,173,330 Ov er 50% Y

Suzhou Samsung Electronics Co.,, Ltd. (SSEC) Apr 1995 Home appliance production 524,526 Over 50% Y

Samsung Suzhou Electronics Export Co.,, Ltd. (SSEC-E) Apr 1995 Home appliance production 456,052 Ov er 50% Y

Samsung (CHINA) Inv estment Co.,, Ltd. (SCIC) Mar 1996 Electronic goods sales 14,637,222 Ov er 50% Y

Samsung Mobile R&D Center, China-Guangzhou (SRC-

Guangzhou)

Jan 2010 R&D 84,371 Ov er 50% Y

Samsung Tianjin Mobile Development Center (SRC-Tianjin) Aug 2010 R&D 15,889 Ov er 50% N

Samsung R&D Institute China-Shenzhen (SRC-Shenzhen) Mar 2013 R&D 29,785 Ov er 50% N

Samsung Electronics Suzhou Semiconductor Co.,, Ltd. (SESS) Dec 1994 Semiconductor processing 1,094,799 Over 50% Y

SEMES (XIAN) Co.,, Ltd. Jul 2013 Semiconductor equipment 1,760 Ov er 50% N

Samsung Electronics Huizhou Co.,, Ltd. (SEHZ) Dec 1992 Electronic goods production 1,364,967 Ov er 50% Y

Tianjin Samsung Electronics Co.,, Ltd. (TSEC) Apr 1993 TV and monitor production 615,753 Ov er 50% Y

Samsung Electronics Taiwan Co.,, Ltd. (SET) Nov 1994 Electronic goods sales 1,186,764 Ov er 50% Y

Beijing Samsung Telecom R&D Center (SRC-Beijing) Sep 2000 R&D 127,668 Ov er 50% Y

Tianjin Samsung Telecom Technology Co.,, Ltd. (TSTC) Mar 2001 Telecom product production 579,435 Over 50% Y

Shanghai Samsung Semiconductor Co.,, Ltd. (SSS) Oct 2001 Semiconductor and display panel sales 5,880,616 Over 50% Y

Samsung Electronics Suzhou Computer Co.,, Ltd. (SESC) Sep 2002 Electronic goods production 995,499 Over 50% Y

Samsung Suzhou Module Co.,, Ltd. (SSM) Sep 2002 Display panel production 1,069,463 Ov er 50% Y

Samsung Suzhou LCD Co.,, Ltd. (SSL) Jul 2011 Display panel production 1,808,262 Ov er 50% Y

Shenzhen Samsung Electronics Telecommunication Co.,, Ltd.

(SSET)

Feb 2002 Telecom product production 41,077 Ov er 50% N

Samsung Semiconductor (China) R&D Co.,, Ltd. (SSCR) Apr 2003 R&D 45,272 Ov er 50% N

Samsung Electronics China R&D Center (SRC-Nanjing) May 2004 R&D 65,312 Ov er 50% N

Samsung (China) Semiconductor Co.,, Ltd. (SCS) Sep 2012 Semiconductor production 12,370,070 Ov er 50% Y

Samsung Semiconductor Xian Co.,, Ltd. (SSCX) Apr 2016 Semiconductor and display panel sales 2,091,092 Over 50% Y

Tianjin Samsung LED Co.,, Ltd. (TSLED) May 2009 LED production 478,477 Ov er 50% Y

Harman (China) Technologies Co., Ltd. Mar 2011 Audio product production 157,446 Ov er 50% Y

Harman (Suzhou) Audio and Infotainment Systems Co., Ltd. Mar 2013 Audio product sales 7,918 Ov er 50% N

Harman Automotiv e Electronic Systems (Suzhou) Co., Ltd Sep 2006 Audio product R&D and production 253,125 Over 50% Y

Harman Commercial (Shanghai) Co., Ltd. Oct 2010 Audio product sales 943 Over 50% N

Harman Connected Services Solutions (Chengdu) Co., Ltd. Aug 2007 Connected service provider 17,274 Ov er 50% N

Harman Holding Limited May 2007 Audio product sales 501,276 Over 50% Y

Harman International (China) Holdings Co., Ltd Jun 2009 Audio product R&D and sales 531,409 Ov er 50% Y

Harman Technology (Shenzhen) Co., Ltd. Sep 2004 Audio product R&D and sales 46,032 Ov er 50% N

Samsung Display Apr 2012 Display panel production and sales 46,543,974 Ov er 50% Y

SU Materials Aug 2011 Display panel component production 32,160 Ov er 50% N

STECO Jun 1995 Semiconductor component production 169,173 Over 50% Y

Samsung Electronics Business Report 13 / 261

SEMES Jan 1993 Semiconductor/FPD manufacturing equipment 1,335,871 Over 50% Y

Samsung Electronics Service Oct 1998 Electronics goods repair services 445,898 Ov er 50% Y

Samsung Electronics Service CS Oct 2018 Customer management services 19,624 Over 50% N

Samsung Electronics Sales Jul 1996 Electronic goods sales 1,061,489 Ov er 50% Y

Samsung Electronics Logitech Apr 1998 Total logistics services 218,240 Over 50% Y

Samsung Medison Jul 1985 Medical equipment 361,483 Ov er 50% Y

Mirero System Jan 1994 Semiconductor software 27,232 Ov er 50% N

Dow oo Insys Mar 2010 Display panel component production 26,129

De facto

Control

N

GF Co., Ltd. Oct 2015 Display panel component production 3,718 Over 50% N

Harman Korea Jan 2005 Software 18,542 Over 50% N

SVIC #21 Venture Capital Union Nov 2011 Venture firm and new technology investments 95,135 Ov er 50% Y

SVIC #22 Venture Capital Union Nov 2011 Venture firm and new technology investments 119,689 Ov er 50% Y

SVIC #26 Venture Capital Union Nov 2014 Venture firm and new technology investments 134,421 Over 50% Y

SVIC #27 Venture Capital Union Sep 2014 Venture firm and new technology investments 42,486 Ov er 50% N

SVIC #28 Venture Capital Union Feb 2015 Venture firm and new technology investments 322,277 Over 50% Y

SVIC #29 Venture Capital Union Apr 2015 Venture firm and new technology investments 57,285 Ov er 50% N

SVIC #32 Venture Capital Union Aug 2016 Venture firm and new technology investments 227,750 Ov er 50% Y

SVIC #33 Venture Capital Union Nov 2016 Venture firm and new technology investments 188,559 Ov er 50% Y

SVIC #37 Venture Capital Union Nov 2017 Venture firm and new technology investments 23,454 Ov er 50% N

SVIC #40 Venture Capital Union Jun 2018 Venture firm and new technology investments 14,581 Ov er 50% N

SVIC #42 Venture Capital Union Nov 2018 Venture firm and new technology investments 4,939 Ov er 50% N

SVIC #43 Venture Capital Union Dec 2018 Venture firm and new technology investments 2,632 Ov er 50% N

SVIC #45 Venture Capital Union May 2019 Venture firm and new technology investments 19,097 Ov er 50% N

SVIC #48 Venture Capital Union Dec 2019 Venture firm and new technology investments 51,038 Ov er 50% N

Private Equity Fund for Semiconductor Growth Mar 2017 Semiconductor investments 75,397 Over 50% Y

Note: Companies with over KRW 75 billion in total assets as of December 31, 2019 are classified as major subsidiaries.

See『II. Businesses Overview』for additional information about major business segments.

Samsung Electronics Business Report 14 / 261

(Changes in subsidiaries)

Am er i cas

Europe/

MEA/CIS

Asia China

Domestic

To t a l Increase Decrease

Dec 31,

2016

44

53

23

29

20

169

Dec 31,

2017

63

109

38

22

270

[Americas: 25]

Samsung Electronics Home Appliances America, LLC

Kngine, Inc.

AMX Holding Corporation

AMX LLC

Harman Becker Automotive Systems, Inc.

Harman Connected Services Inc.

Harman Connected Services Engineering Corp.

Harman Connected Services Holding Corp.

Harman Connected Services South America S.R.L.

Harman da Amazonia Industria Electronica e Participacoes

Ltda.

Harman de Mexico S. de R.L. de C.V.

Harman do Brasil Industria Electronica e Participacoes

Ltda.

Harman Financial Group, LLC

Harman International Industries Canada Ltd.

Harman International Industries, Inc.

Harman International Mex ico S de RL de CV

Harman Inv estment Group, LLC

Harman KG Holding, LLC

Harman Professional, Inc.

Red Bend Softw are Inc.

S1NN USA, Inc.

Southern Vision Systems, Inc

Tow erSec Inc.

Triple Play Integration LLC

China Materialia New Materials 2016 Limited Partnership

[Europe/CIS/MEA: 62]

Samsung Electronics Air Conditioner Europe B.V.

Aditi Technologies Europe GmbH

AKG Acoustics GmbH

AMX GmbH

AMX UK Limited

Duran Audio B.V.

Duran Audio Iberia Espana S.L.

Endeleo Limited

Harman Automotiv e UK Limited

Harman Becker Automotive Systems GmbH

Harman Becker Automotive Systems Italy S.R.L.

Harman Becker Automotive Systems Manufacturing Kft

Harman Belgium SA

Harman Connected Services AB.

Harman Connected Services Finland OY

Harman Connected Services GmbH

Harman Connected Services Limited

Harman Connected Services Poland Sp.zoo

Harman Connected Services UK Ltd.

Harman Consumer Division Nordic A/S

Harman Consumer Finland OY

Harman Consumer Nederland B.V.

Harman Deutschland GmbH

Harman Finance International GP S.a.r.l

Harman France SNC

Harman Holding Gmbh & Co. KG

Harman Hungary Financing Ltd.

Harman Inc. & Co. KG

Harman International Estonia OU

Harman International Industries Limited

Harman International Romania SRL

Harman Finance International SCA

Harman International s.r.o

Harman International SNC

Harman Management GmbH

Harman Professional Kft

[Americas: 6]

Samsung Receivables Corporation

Tow erSec Inc.

Kngine, Inc.

PrinterOn Inc.

PrinterOn America Corporation

Simpress Comercio, Locacao e Servicos S.A.

[Europe/CIS: 6]

Samsung Electronics Rus LLC

Samsung Electronics Ukraine LLC

Surfkitchen Limited

AMX LLC (Russia)

Martin Professional Ltd.

PrinterOn Europe Limited

[Asia: 2]

VFX Systems PTY Ltd.

I.P.S.G. International Product Solution Group

FTY. Ltd

[China: 3]

Samsung Electronics (Shandong) Digital

Printing Co., Ltd.

Tianjin Samsung Opto-Electronics Co., Ltd.

Martin Trading Zhuhai Ltd.

[Domestic: 2]

SVIC #20 Venture Capital Union

S-Printing Solution

Samsung Electronics Business Report 15 / 261

Inspiration Matters Limited

Knight Image Limited

Martin Manufacturing (UK) Ltd

Harman Professional Denmark ApS

Harman Professional France SAS.

Harman Professional Germany GmbH

Martin Professional Ltd.

R&D International BVBA

Red Bend Softw are Ltd.

Red Bend Softw are SAS France,.

Studer Professional Audio GmbH

Surfkitchen Limited

AMX LLC (Russia)

Harman Connected Services OOO

Harman RUS CIS LLC

Broadsense Ltd.

Global Symphony Technology Group Private Ltd.

Harman Connected Services Morocco

Harman Industries Holdings Mauritius Ltd.

iOnRoad Ltd.

iOnRoad Technologies Ltd.

Red Bend Ltd.

Tow erSec Ltd.

Innoetics E.P.E.

ARCAM Ltd

A&R Cambridge Ltd

[Asia: 17]

AMX Products And Solutions Private Limited

Harman Connected Services Technologies Pvt. Ltd.

Harman Connected Services Corp. India Pvt. Ltd.

Harman Connected Services Japan Co. Ltd.

Harman International (India) Priv ate Limited

Harman International Industries PTY, Ltd.

Harman International Japan Co. Ltd.

Harman International Singapore Pte. Ltd.

Harman Malaysia Sdn. Bhd.

Harman Professional Singapore Pte. Ltd

I.P.S.G. International Product Solution Group PTY. Ltd.

INSP India Software Dev elopment Pvt. Ltd.

Martin Professional Pte. Ltd.

Red Bend Softw are KK

Studer Japan, Ltd.

VFX Systems PTY Ltd.

Samsung Nepal Services Pvt, Ltd

[China: 12]

Harman (China) Technologies Co. Ltd.

Harman (Suzhou) Audio and Infotainment Systems Co. Ltd.

Harman Automotiv e Electronic Systems (Suzhou) Co. Ltd

Harman Commercial (Shanghai) Co. Ltd.

Harman Connected Services (Beijing) Solutions Co. Ltd.

Harman Connected Services (Chengdu) Solutions Co. Ltd.

Harman Connected Services Taiwan Inc.

Harman Holding Limited

Harman International (China) Holdings Co. Ltd

Harman Automotiv e Infotech (Dalian) Co. Ltd

Harman Technology (Shenzhen) Co. Ltd.

Martin Trading Zhuhai Ltd.

[Domestic: 4]

Private Equity Fund for semiconductor growth

Harman International Korea

Red Bend Softw are Korea

SVIC #37 Venture Capital Union

Dec 31,

2018

56

100

35

36

25

252

[Americas: 1]

Zhilabs Inc.

[Europe/CIS: 1]

Zhilabs, S.L.

[Domestic: 4]

SVIC #40 Venture Capital Union

SVIC #42 Venture Capital Union

SVIC #43 Venture Capital Union

Samsung Electronics Service CS

[Americas: 8]

NexusDX, Inc.

S1NN USA, Inc.

Samsung Pay, Inc.

Harman Connected Services Holding Corp.

AMX LLC

AMX Holding Corporation

Southern Vision Systems, Inc

Triple Play Integration LLC

[Europe/CIS: 10]

Joyent Ltd.

Aditi Technologies Europe GmbH

AMX GmbH

Samsung Electronics Business Report 16 / 261

Harman Professional Germany GmbH

Endeleo Limited

Harman Consumer Finland OY

Harman Consumer Division Nordic ApS

Inspiration Matters Limited

Knight Image Limited

R&D International BVBA

[Asia: 3]

Harman Malaysia Sdn. Bhd.

Harman Connected Services Technologies

Pv t.

Ltd.

INSP India Software Dev elopment Pvt. Ltd.

[China: 2]

Harman Connected Services Taiwan Inc.

Harman Automotiv e InfoTech (Dalian) Co., Ltd.

[Domestic: 1]

SVIC #23 Venture Capital Union

Dec 31

2019

54

94

30

34

28

240

[Europe/CIS/MEA: 3]

Foodient Ltd.

Corephotonics Ltd.

Saudi Arabia Ltd. (SESAR)

[Asia: 1]

Samsung Display Noida Private Limited(SDN)

[Domestic: 4]

SVIC #45 Venture Capital Union

SVIC #48 Venture Capital Union

Dow oo Insys

GF Co., Ltd.

[Americas: 2]

Harman Inv estment Group, LLC

Red Bend Softw are Inc.

[Europe/CIS/MEA: 9]

Samsung France Research Center SARL(SFRC)

Innoetics E.P.E.

Duran Audio B.V.

Harman International SNC

Harman Professional France SAS

Broadsense Ltd.

iOnRoad Ltd

iOnRoad Technologies Ltd

Tow ersec Ltd.

[Asia: 6]

Harman Connected Services Japan Co., Ltd.

Red Bend Softw are Japan Co., Ltd.

Studer Japan Ltd.

Harman International Singapore Pte. Ltd.

AMX Products And Solutions Private Limited

Samsung Medison India Private Ltd.(SMIN)

[China: 2]

Samsung Electronics (Beijing) Serv ice C

ompany

Limited (SBSC)

Harman Connected Services Solutions (Beijing)

Co., Ltd.

[Domestic: 1]

Red Bend Softw are Inc.

Not e: M EA = Middle East and Africa; CIS = Commonwealth of Independent States.

Samsung Electronics Business Report 17 / 261

H. Cre dit rating

SEC’s credit rating is assessed by two external credit ratings agencies. As of December 31, 2019, SEC’s credit ratings

were Aa3 and stable investment outlook as rated by Moody’s (US); and AA- and stable investment outlook as rated by

S&P (US).

Date

Securities

Ratings

Credit rating agency

Rating range

Note

Feb 2017

Corporate bond

A1

Moody’s

(Aaa–C)

Annual

review

Jul 2017

Corporate bond

AA-

S&P

(AAA–D)

Aug 2017

Corporate bond

A1

Moody’s

(Aaa–C)

Feb 2018 Corporate bond A1 Moody’s (Aaa–C)

Jun 2018

Corporate bond

Aa3

Moody’s

(Aaa–C)

Jul 2018

Corporate bond

AA-

S&P

(AAA–D)

Nov 2018

Corporate bond

Aa3

Moody’s

(Aaa–C)

May 2019

Corporate bond

Aa3

Moody’s

(Aaa–C)

Jul 2019

Corporate bond

AA-

S&P

(AAA–D)

Aug 2019

Corporate bond

Aa3

Moody’s

(Aaa–C)

See『III. Financial Affairs: Other Financial Information (List of issued debt securities)』for more information on corporate bonds

[Credit ratings de finitions]

Moody’s Definition S&P Definition

Investment

grade

Aaa

Superior ability to repay debt

obligations; lowest level of credit risk

AAA

Extremely strong ability to meet financial

commitments; highest rating

Aa1/Aa2/Aa3

High ability to repay debt obligations;

very low credit risk

AA+/AA/AA-

Very strong capacity to meet financial

commitme n ts

A1/A2/A3

Upper-medium ability to repay debt

obligations; low credit risk

A+/A/A-

Strong capacity to meet financial

commitments; susceptible to adverse

effects of changes in economic conditions

Baa1/Baa2/Baa3

Medium ability to repay debt

obligations; moderate credit risk,

speculative factors

BBB+/BBB/BBB-

Adequate capacity to meet financial

commitments; relatively more susceptible to

adverse economic conditions

Speculative

grade

Ba1/Ba2/Ba3 Speculative; substantial credit risk BB+/BB/BB-

Major ongoing uncertainties; exposure to

adverse business, financial, or economic

conditions can impair ability to meet

financial commitmen ts

B1/B2/B3 Speculative; high credit risk B+/B/B-

More vulnerable to nonpayment than those

rated BB; has capacity to meet financial

commitme n ts but adverse financial or

economic conditions are likely to impair

ability to continue doing so

Caa Speculative; very high credit risk CCC

Vulnerable to nonpayment; dependent upon

favorable business, financial, and economic

conditions

Ca

Highly speculative; likelihood of being

in or near default; some prospect for

recovery of principal and interest

CC

Highly vulnerable to nonpayment; default

has not yet occurred but expected to be a

virtual certainty

C

Typically in default; little prospect for

recovery of principal or interest

C

Highly vulnerable to nonpayment; obligation

is expected to have lower

ultimate recovery

vis-à-vis higher rated obligations

D

In default or in breach of imputed promises,

upon the filing of a bankruptcy petition or

the taking of a similar action

Samsung Electronics Business Report 18 / 261

2. Company history

(The information disclosed below outlines major changes to the Company such as asset transfers, M&As, and security offerings)

Jan 13, 1969 Samsung Electronics Manufacturing Incorporated

Jun 11, 1975 Listed on the Korea Stock Exchange

Feb 28, 1984 Renamed as Samsung Electronics

Nov 1, 1988 Merged with Samsung Semiconductor and Communications

Apr 1, 2012 Spun off the LCD division

Jan 1, 2015 SEA merged with Samsung Telecommunications America LLC (“STA”)

Feb 23, 2015 SEA acquired shares of LoopPay (100%)

Jan 28, 2016 Sold shares of Samsung Card (37.5%)

Jun 24, 2016 SEA acquired shares of Joyent (100%)

Sep 7, 2016 SEA acquired shares of Dacor (100%)

Oct 7, 2016 SEA acquired shares of Viv Labs (100%)

Nov 1, 2016 Spun-off printing solutions business (established S-Printing Solution Co., Ltd.)

Mar 10, 2017 SEA acquired shares of Harman International Industries, Inc. (100%)

Nov 1, 2017 Sold Printing Solution business

May 17, 2018 Sold shares of NexusDx, Inc.

Jan 28, 2019 SEBN acquired shares of Corephotonics

Jun 1, 2019 Acquired PLP (panel level package) business from Samsung Electro-Mechanics

(Company location change s)

The Company’s head office is located in 129, Samsung-ro, Yeongtong-gu, Suwon, Gyeonggi-do. There was no

change in the Company’s head office location during the reporting period.

(Important change s in manage ment executives)

On March 13, 2015, Executive Director Oh-hyun Kwon and Independent Directors Han-joong K im and Byeong-gi

Lee were reappointed at the AGM.

On March 11, 2016, Executive Directors Boo-keun Yoon, Jong-kyun Shin and Sang-hoon Lee were reappointed at the

AGM. Of the three Independent Executive Directors with expiring terms (In-ho Lee, Kwang-soo Song and Eun-mee

Kim) , Eun-mee Kim retired, and In-ho Lee, Kwang-soo Song were reappointed. Jae-wan Bahk was newly appointed

as an Independent Director.

On October 27, 2016, Jae-yong Lee was newly appointed as Executive Director at the Extraordinary General Meeting

of Shareholders and Executive Director Sang-hoon Lee resigned.

Follow ing the annual meeting on March 23, 2018, Sang-hoon Lee, Ki-nam Kim, Hyun-suk Kim, and Dong-jin Koh

were newly appointed as Executive Directors and Jeong Kim, Sun-uk Kim, Byung-gook Park were newly appointed

as Independent Directors. In addition, Executive Director Oh-hyun Kwon and Independent D irectors Han-joong Kim

and Byeong-gi Lee retired as terms expired. Executive Directors Boo-keun Yoon and Jong-kyun Shin resigned.

On March 23, 2018, Executive Directors Ki-nam Kim, Hyun-suk Kim, and Dong-jin Koh were newly appointed as

CEOs.

On March 20, 2019, Independent D irector Jae-wan Bahk was reappointed and Independent Directors Han-jo Kim and

Curie Ahn were newly appointed. Independent Directors In-ho Lee and Kwang-soo Song retired.

On October 26, 2019, Jae-yong Lee retired from his position of Executive Director.

On February 14, 2020, Sang-hoon Lee resigned from his pos ition of Executive Director; and on March 18, 2020 at

the AGM, Jong-hee Han and Yoon-ho Choi were appointed as Executive Directors.

Samsung Electronics Business Report 19 / 261

As of the reporting date on March 30, 2020, SEC’s Board consisted of five Executive Directors (Ki-nam Kim, Hyun-

suk Kim, Dong-jin Koh, Jong-hee Han, and Yoon-ho Choi) and six Independent Directors (Jae-wa n Bahk, Sun-uk

Kim, Byung-gook Park, Jeong Kim, Curie Ahn, and Han-jo Kim).

(Changes in the major share holder)

N/A

(Company name changes)

In 2015, Samsung Electronics KZ and Central Asia LLP, Samsung Electronics Morocco SARLAU, Samsung Display Bac

Ninh, Samsung Network R&D Center China-Shenzhen, Samsung Display Suzhou Co., Ltd., and LoopPay, Inc. changed

their names to Samsung Electronics Central Eurasia LLP, Samsung Electronics Maghreb Arab, Samsung Display Vietnam

Co., Ltd., Samsung R&D Institute China-Shenzhen, Samsung Suzhou Module Co., Ltd., and Samsung Pay, Inc.,

respectively.

In 2016, YESCO Electronics LLC changed its name to P rismview, LLC.

In 2017, Quietside LLC, NewNet Communication Technologies (Canada), Inc., Martin Professional ApS, Martin

Professional France SAS, Martin Professional GmbH, and Harman Neusoft Automotive Infotech (Dalian) Co. Ltd

changed their names to Samsung HVAC America, LLC, SigMast Communications Inc., Harman Professional Denmark

ApS, Harman Professional France SAS, Harman Professional Germany GmbH, and Harman Automotive InfoTech

(Dalian) Co., Ltd., respectively.

In 2018, Harman Consumer Division Nordic A/S, Harman Connected Services Finland OY, and Harman Professional

Singapore Pte. Ltd changed their names to Harman Consumer Divis ion Nordic ApS, Harman Finland Oy, and

Harman Singapore Pte. Ltd., respectively.

In 2019, Samsung Electronics Greece S.A. changed its name to Samsung Electronics Greece S.M.S.A.

(Mergers and acquisitions)

In 2015, Samsung Electronics America, Inc. (SEA) merged with Samsung Telecommunications America LLC (STA)

and acquired LoopPay shares (100%). SEC sold shares of Samsung Electronics Hainan Fiberoptics (100%); and

Samsung Electronica da Amazonia Ltda. (SEDA) acquired shares of Simpress Comercio, Locacao e Servicos S.A.

(100%).

In 2016, SEA acquired shares in Joyent, Inc. (100%), Dacor Holdings, Inc. (100%), and Viv Labs, Inc. (100%). In the

same year, SEC spun off its printing solution business and established S-Printing Solution Co., Ltd., and then

completed the sale of the printing solutions business in 2017.

In 2017, SEA acquired full ownership of Harman International Industries, Inc.

In 2018, SEA merged with Samsung Pay, Inc.; and Harman Connected Services, Inc. merged with Harman Connected

Services Holding Corp. In the same year, SEA sold its full 100% stake in NexusDX, Inc.

In 2019, SEC acquired a PLP business from affiliate Samsung Electro-Mechanics. In the same year, Harman Becker

Automotive Systems Manufacturing Kft merged with Duran Audio B.V.; and Samsung (China) Investment Co., Ltd.

(SCIC) merged with Samsung Electronics (Beijing) Service Company Limited (SBSC).

(Important change s in the Company’s business)

N/A

Samsung Electronics Business Report 20 / 261

(Change s in organizational s tructure)

In December 2015, the LED business was reorganized as a team unit; in November 2016, the Company spun off its

printing solutions business and established S-Printing Solution Co., Ltd., and then completed the sale of the printing

solutions business in November 2017; in June 2017, the System LSI business was divided into Foundry and System

LSI businesses.

[As of December 2015]

Before After

Business

organization

CE Division (Visual Display, Digital Appliances, Printing

Solutions, Medical Devices)

CE Division (Visual Display, Digital Appliances, Printing

Solutions, Medical Devices)

IM Division (Mobile, Network) IM Division (Mobile, Network)

DS Division (Memory, SYS.LSI, DP, LED) DS Division (Memory, SYS.LSI, DP)

Regional

headquarters

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Americas (DS), Europe (DS), China (DS), Southeast Asia (DS),

Japan (DS)

Americas (DS), Europe (DS), China (DS), Southeast Asia (DS),

Japan (DS)

[As of December 2016]

Before After

Business

organization

CE Division (Visual Display, Digital Appliances, Printing

Solutions, Medical Devices)

CE Division (Visual Display, Digital Appliances,

Medical Devices)

IM Division (Mobile, Network) IM Division (Mobile, Network)

DS Division (Memory, SYS.LSI, DP) DS Division (Memory, SYS.LSI, DP)

Regional

headquarters

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Korea, North America, Latin America, Europe, CIS,

Southwest Asia, Southeast Asia, China, Middle East, Africa

Americas (DS), Europe (DS), China (DS), Southeast Asia (DS),

Japan (DS)

Americas (DS), Europe (DS), China (DS), Southeast Asia

(DS), Japan (DS)

[As of June 2017]

Before After

Business

organization

CE Division (Visual Display, Digital Appliances,

Medical Devices)

CE Division (Visual Display, Digital Appliances,

Medical Devices)

IM Division (Mobile, Network) IM Division (Mobile, Network)

DS Division (Memory, SYS.LSI, DP) DS Division (Memory, SYS.LSI, Foundry, DP)

- Harman Division

Regional

headquarters

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Korea, North America, Latin America, Europe, CIS,

Southwest Asia, Southeast Asia, China, Middle East, Africa

Americas (DS), Europe (DS), China (DS), Southeast Asia (DS),

Japan (DS)

Americas (DS), Europe (DS), China (DS), Southeast Asia

(DS), Japan (DS)

Note: From the first quarter of 2018, the Medical Device Business is excluded from the CE Division.

Samsung Electronics Business Report 21 / 261

3. Changes in paid-in capital

No changes were reported during the past five consecutive years.

4. Stock information

A. Total number of s hare s

As of December 31, 2019 on a post-split basis , SEC’s issued shares on a cumulative basis totaled 7,780,466,850

registered common shares and 1,194,671,350 registered, non-voting preferred shares; and the Company had cancele d

1,810,684,300 common shares and 371,784,650 preferred shares in accordance with resolutions of the Board of

Directors (“the Board”). As of the same date, issued shares and shares outstanding totaled 5,969,782,550 for common

shares and 822,886,700 for preferred shares.

[As of Dec 31, 2019]

Classification

Type of stocks

Note

Common Preferred To t a l

I. Authorized shares 20,000,000,000 5,000,000,000 25,000,000,000 -

II. Issued shares (cumulative) 7,780,466,850 1,194,671,350 8,975,138,200 -

III. Decrease in number of shares (cumulative) 1,810,684,300 371,784,650 2,182,468,950 -

1. Capital reduction - - - -

2. Cancellation 1,810,684,300 371,784,650 2,182,468,950 Treasury shares

3. Redemption - - - -

4. Other - - - -

IV. Issued shares as of Dec 31, 2019 (II-III) 5,969,782,550 822,886,700 6,792,669,250 -

V. Treasury shares as of Dec 31, 2019 - - - -

VI. Outstanding shares as of Dec 31, 2019 (IV-V) 5,969,782,550 822,886,700 6,792,669,250 -

Note: Post-s plit bas is . SEC conducted a 50:1 stock split effective from May 3, 2018, lowering par value of every common and

preferred share from KRW 5,000 to KRW 100.

Samsung Electronics Business Report 22 / 261

B. Treasury s hare s

In 2018, SEC completed the cancellation of all shares held in treasury as a part of its shareholder return policy.

[As of December 31, 2019] (Shares)

Acquisition method Share type Period-start

Change

Period-end

Acquisition

(+)

Disposal

(-)

Cancellation

(-)

Intra-market direct acquisition

(within dividend related capital gains limit)

Common - - - - -

Preferred - - - - -

Total

Common - - - - -

Preferred - - - - -

C. Types of registered stock

SEC has two types of registered equity securities: 1) common stock; 2) non-voting and non-cumulative preferred stock.

The shareholders of preferred stock are entitled t o dividend payments of an additional 1% of par value compared to

shareholders of common stock.

As of December 31, 2019, the number of issued non-cumulative and non-voting preferred stock totaled 822,886,700.

Samsung Electronics Business Report 23 / 261

5. Voting shares

SEC has 5,969,782,550 issued shares of common stock, which represents 23.9% of the total number of authorized shares

of 25 billion (25,000,000,000). There are 822,886,700 issued shares of preferred stock with no voting rights and

598,026,259 shares of common stock with limited voting rights under relevant laws. Thus, the total number of shares with

full voting rights is 5,371,756,291.

[As of December 31, 2019]

Classification Share type Number of shares Note

Number of issued shares (A)

Common 5,969,782,550 -

Preferred 822,886,700 -

Shares with no voting rights (B) Common - -

Shares with no voting rights according

to Articles of Incorporation (C)

Preferred 822,886,700

-

Shares with limited voting rights

under relevant laws (D)

Common 596,959,200

Restricted by the Monopoly Regulation and Fair Trade Act:

508,157,148 shares held by Samsung Life Insurance &

88,802,052 shares held by Samsung Fire & Marine Insurance

Common 1,067,059

Restricted by the Insurance Business Act: Shares held by

Samsung Life Insurance in certain special accounts

Shares with voting rights

(F = A - B - C - D)

Common 5,371,756,291 -

Preferred - -

Note: Pursuant to Korea’s Monopoly Regulation and Fair Trade Act, shareholders with limited voting rights (D) can exercise

certain rights on some shares in accordance with related laws, including the right to vote on agendas such as the appointment or

dismissal of directors and revisions to the Articles of Incorporation.

Samsung Electronics Business Report 24 / 261

6. Dividends

As a part of the Company’s shareholder return policy, a portion of the profits have been returned to shareholders by way

of dividends, etc. The Company carefully considers strategic investments for sustainable growth, business performance,

and cash flows in determining the scale of cash dividends and other return activities.

Dividends paid in the three most recent fiscal years are as follows:

Classification 2019 2018 2017

Par value per share* (KRW) 100 100 100

Net profit** (KRW mil)

21,505,054 43,890,877 41,344,569

EPS*** (KRW) 3,166 6,461 5,997

Total cash dividend (KRW mil) 9,619,243 9,619,243 5,826,302

Total stock dividend (KRW mil) - - -

Dividend payout ratio (%) 44.7 21.9 14.1

Cash dividend yield (%)

Common 2.6 3.7 1.7

Preferred 3.1 4.5 2.1

Stock dividend yield (%)

Common - - -

Preferred - - -

Cash dividend per share (KRW)

Common 1,416 1,416 850

Preferred 1,417 1,417 851

Stock dividend per share (share)

Common - - -

Preferred - - -

Note: Dividends in each of the first three quarters of 2018 and 2019 were KRW 2,404,605 million or KRW 354 per share.

*SEC conducted a 50:1 stock split effective from May 3, 2018, lowering par value of every common and preferred share from

KRW 5,000 to KRW 100. Information for 2017 is calculated on a post-split bas is.

**Equity attributable to owners of the parent on a consolidated basis.

***Basic earnings per common share on a consolidated basis. For further information relating to the calculation of basic EPS,

see Earnings Per Share in『3. Note to Consolidated Financial Statements』in『Ⅲ. Financial Affairs』.

Samsung Electronics Business Report 25 / 261

II. Businesses Overview

1. Overview

Note on forward-looking statements

This report includes forward-looking statements that relate to future events and can be generally identified by phrases

containing words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or

phrases of similar meaning. These forward-looking statements are not guarantees of future performance and may involve

known and unknown risks, uncertainties and other factors that may affect the Company’s actual results, performance,

achievements or financial position, making them materially different from the actual future results, performance,

achievements or financial position expressed or implied by these forward-looking statements.

Uncertain events that could positively or negatively affect the Company’s management condition and financial

performance include:

• Trends of financial markets domestically and abroad, including changes in exchange rates and interest rates

• The Company’s strategic decision making, including disposals and purchases of businesses

• Unexpected sudden changes in core businesses such as CE, IM, Semiconductor, DP, and Harman

• Other changes domestically and abroad that can affect management condition and financial performance

The Company assumes no obligation to revise or update this report to reflect risks or uncertainties that arise after the

reporting period.

A. Business overview, by division

In addition to our headquarters in Korea, Samsung Electronics is comprised of 240 subs idiaries across the world

responsible for sa les and production. There are nine 9 regiona l headquarters for CE and IM Div is ions , 5 regional

headquarters for the DS Division, and Harman’s subsidiaries.

The Company’s business divisions are organized in a two-pronged framework consisting of set (brand products) and

component businesses. The set business is comprised of the CE and IM Divis ions, and the component business consists of

the Semiconductor and DP Business Units. The CE Division is responsible for the production and sales of TVs, monitors,

refrigerators, and washing machines; and the IM Division focuses on the production and sales of HHPs, which includes

smartphones, as well as network systems, and computers. The DS Division comprises the Semiconductor bus iness which

manufactures and sells DRAMs, mobile APs, and other semiconductor-related products, and the DP Business, whic h

manufactures and sells OLED and TFT-LCD display panels for mobile devices, TVs, monitors, and laptops. The Harman

Divis ion (acquired in 2017) manufactures and sells products such as Head units, infotainment systems, telematics, and

speakers.

Business division Major products

CE Division TVs, monitors, refrigerators, washing machines, air conditioners, etc.

IM Division HHPs, network systems, computers, etc.

DS

Division

Semiconductor DRAM, NAND Flash, Mobile AP, etc.

DP OLED smartphone panels, LCD TV panels, monitor panels, etc.

Harman Division Head units, infotainment systems, telematics, speakers, etc.

Samsung Electronics Business Report 26 / 261

The Company maintains its corporate headquarters and 28 consolidated subsidiaries in Korea.

The Company’s corporate headquarters is divided along Divis ions and/or Bus inesses, which are situated in Suwon, Gumi,

Giheung, Hwasung, Pyeongtaek, Gwangju, etc. The Company’s 28 unlisted domestic subsidiar ies include Samsung

Display for display panel production, Samsung Electronics Sales for domestic retail sales, Samsung Electronics Service

for after-sales services, and Samsung Electronics Logitech for logistics.

We have 212 overseas subsidiaries for product manufacturing, sales, and R&D, with locations in the US, Europe, Asia,

and Africa.

We have 54 subsidiaries in North America, inc luding SEA (New Jersey; responsible for the sales of set products including

TV and HHPs), SII (Califor nia; manufacturing TVs), SAS (Texas; manufacturing semiconductor products), and Harman

(Connecticut, Automotive component) in the US.

In Europe, we operate 66 subsidiaries. These include SEUK (UK), SEF (France), SEG (Germany), SEI (Italy) for sales of

set products; SESK (Slovakia) and SEH (Hungary) for manufacturing TVs, and SEPM (Poland) for manufacturing home

appliances such as refrigerators.

We have 30 subsidiaries in Asia (excluding China) , including SAPL (Singapore), SEAU (Australia), SEPCO (Philippines),

and SME (Malaysia), which are responsible for regiona l sales. In addition, we operate numerous production sites

inc luding SIEL (India) for HHPs among other products, SEV and SEVT (Vietnam) for HHPs, SEHC (Vietnam) for TVs,

and SDV (Vietnam) for DPs.

We operate 34 subsidiar ies in China, including SCIC (Beijing) and SEHK (Hong Kong) for the sales of set products in

those regions; and SSS (Shanghai) and SSCX (Xian) for semiconductors and DPs sales. Production sites for set products

include SESC (Suzhou) and semiconductor production facilities are located in SCS (Xian) among others.

SEC also has 28 production and sales subsidiaries combined in CIS, the Middle East, and the Africa.

Samsung Electronics Business Report 27 / 261

[CE Division]

 Industry overview

Since the first public demonstration of a true televis ion system in 1926 and later mass production of color TVs,

technological deve lopments have led to the creation of products such as the Trinitron CRT (1967) and flat CRT (1996). As

the penetration rate in major countries reached over 90%, the CRT TV business stagnated. The industry regained strong

growth momentum follow ing the launch of flat panel TVs (“FPTVs”) like LCDs and PDPs, especially w ith the expansion

of digital br oadcasting (UK/US 1998~). FPTVs replaced CRT sets on the back of their enhanced design, picture quality,

etc., combined with a sharp decline in prices.

The year 2010 saw the launch of 3D TVs, and the rise of internet video services along with increased consumer interest in

smart devices from 2011 to 2012 led to the birth of the smart TV market. The evolution continued with the launches of

UHD TVs, innovative products boasting significantly enhanced resolution and picture quality, a new form factor with

Curved TVs, followed by the commercialization of Quantum Dot TVs.

 Marke t condition

The market trend toward large, high-resolution screens is accelerating due to intensified competition between

manufacturers. Accordingly, market shares of major players with high-qua lity products and brand power are rising. In

addition, as consumer demand for high-resolution screens and slim designs increase, LED TVs, with eco-friendly LED

back light units—which increase brightness, contrast, and energy efficiency—have become the mainstream in the market.

In 2017, overall TV demand was 215.1 million units. By product, LCD-TVs sold 210 million units, for a market share of

over 99%. In 2018, overall TV demand increased 2.9% compared to the previous year, hovering around 221 millio n units.

Based on rising demand for high-de f in it ion, large-sized products in 2019, UHD TV demand increased 20% year-on-year

to 111.91 million units to account for about 53% of total TV demand. The market for ultra large-sized TVs (75-inch and

larger) grew approximately 88% year-on-year on the back of our efforts to create demand with our innovative products. In

2019, QLED demand increased about 105% year-on-year based on our dedication to improving product quality and on

rising demand for premium products (Source: Omdia, formerly IHS, 4Q19 data).

In 2020, market players will continue to strive for innovations in picture quality, sound, and form factor to create demand

for premium TVs. Competition in the 8K TV market, where the Company holds leadership, is expected to be especially

fierce as the market expands.

< Market share of the CE Division’s main product >

Product

2019

2018

2017

TV

30.9%

29.0%

26.5%

Note: Global market share in revenue; data from research firm Omdia, formerly IHS).

 Business condition

We have maintained the top position in the overall TV market for fourteen straight years since claiming the number one

spot in 2006.

In 2017, the Company created a new category by releasing QLED TVs, offering accurate color expression regardless of

brightness and allow ing viewers to enjoy unsurpassed image quality. Furthermore, collaborating w ith renowned artists and

galleries, we introduced The Frame TV, a product that exhibits famous art or pictures as well as personal images,

transforming any living space into an aesthetically pleasing ga llery. Moreover, our concept of ‘Screen Everywhere’

unlocks placement opportunities for displays.

Samsung Electronics Business Report 28 / 261

In 2018, our strategic focus to strengthen premium leadership consisted of two pillars: QLED and ultra-large screens. We

aimed to elevate the viewer experience to another level by improving image qua lity even further by increasing contrast

ratio through our local dimming technology, a llow ing users to conveniently enjoy a wide variety of content on TV, and

improving connectivity via AI or IoT technologies.

In 2019, we solidified our leadership in the premium market with the introduction of the world’s first 8K TV to the global

market. Our QLED lineup, boasting improved picture quality, was well received by experts and consumers alike,

providing customers with even more choices via a wide range of sizes, from mid-sized to ultra-large. Also, our UHD

offerings expanded to the ultra-large segment, which contributed to our solid earnings.

In 2020, we will push forward with our premium TV strategy: for QLED, we will build on our leadership and expand

dominance in the premium market with ultra-large TVs based on the competitiveness of our substantially improved QLED

products and our broadened 8K lineup. Also, our UHD models for the mass market will come equipped with significant

improvements in in design and features, differentiating themselves from those of competitors.

[IM Division]

 Industry ove rview

The mobile phone industry started with first generation analogue phones in the early 1980s and evolved to second

generation d ig ita l ones, us ing technology such as CDMA and GSM, where users could send voice and text messages.

Third generation mobile communication standards such as WCDMA allowed users to send photos and videos. Today,

fourth generation LTE mobile communication technology with ultra-high-speed data transmission is becoming

commonplace and is used in 76% of phones sold in 2019 (Strategy Analytics, November 2019). Fifth generation mobile

communication services, which will lead innovation alongs ide the fourth industrial revolution, were successfully

commercialized in Korea and the US and are expanding to Europe and Australia. Sales of 5G smart phones are projected

to reach 160 million units in 2020 (Strategy Analytics, November 2019).

The smartphone industry has grown significantly s ince 2007. In 2019, the smartphone portion of total HHPs is expected to

reach 77%. The feature phone portion of the total remained flat at 23% led by demand markets in developing nations

(Strategy Analytics, December 2019). In 2020, the penetration rate of smartphones will reach 51%, slightly increasing

from 49% in 2019 (Strategy Analytics, December 2019).

Also, as the smartphone market shows high saturation, the importance of competitive software and services—such as

applications , UX, mobile payments, AI, and AR—is rising a longside that of competitive hardware, which inc ludes high-

performance APs, AMOLED displays, m u lt iple cameras, sensors, waterproof & dustproof features, and biometric

recognition.

 Marke t Condition

Smartphone shipments in 2020 are projected to decrease year-on-year to 1.37 billion units from 1.42 billion units due to

market saturation and a longer replacement cycle attributed to a lack of differentiated features (Strategy Analytics,

December 2019). Meanwhile, shipments of tablets are expected to remain flat at 160 million units as smartphones adopt

larger screens and replacement decreases (Strategy Analytics, November 2019).

< Market share of the IM Division’s main product >

Product

2019

2018

2017

HHP

17.5%

17.4%

19.5%

Note: Global market share in sales volume; data from research firm Strategy Analytics.

Samsung Electronics Business Report 29 / 261

 Business condition

SEC has always been at forefront of the HHP market, and in particular, ma intained leadership in the global market for

smartphones since 2011. To solidify our status in the overall mobile market, we are striving to improve our current

products—including tablets, wearables, and accessories—while grow ing businesses in areas with high potentia l, such as

the service, online, and B2B sectors.

For smartphones, we are establishing optima l portfolios for each region, accounting for varying market conditions and

offering a wide lineup ranging from mass-market to premium devices. We have been providing premium smartphones—

namely the S and Note series—and delivering differentiated user experiences that can meet customer needs via our

cutting-edge technology that inc ludes large-screen AMOLED displays, Edge displays, Infinity Displays, triple cameras,

the S-pen, water- and dust-proofing, high-speed and wireless charging, wireless power sharing, and ultrasonic finge rprint-

on-disp lay (FoD) among others. This year, we are securing early leadership in the 5G market with the release of the

world’s first 5G smartphone while also creating a new market through form factor innovations enabled by foldable

displays.

To respond to an ever-changing market as well as customer needs, we are strengthening product competitiveness by

intr oduc ing innovative features such as triple cameras, quad cameras, rotating cameras, infinity displays, and 5G even to

mid-range-and-below products.

We provide our smartphone users with a wider and more convenient experience via our other products, which include

premium tablets (Galaxy Tab S), wearable devices (smart watch, Bluetooth earphone), and accessories (wirele ss quick

charging stand).

Not content to dwell on our achievements in hardware, we have been focusing on delivering new and useful services like

Samsung Pay, Samsung Health, Bixby, and SmartThings. The new and improved Bixby provides users with another way

to increase convenience and personalize information and services.

To deliver a consistent and high-qua lity Multi-Device Experience, we are adding Bixby features to a suite of products,

including TVs, refrigerators, air conditioners, etc., and also strengthening strategic partnerships to expand our ecosystem.

As always, we will continue to invest in any field that has growth potential, with current targets including but not limited

to 5G, MEC, AI, IoT, cloud, AR, blockchain, and mobile B2B. Utilizing our superior R&D capabilities, we will keep

enhancing consumer experiences and expanding our leadership in the global arena.

[DS Division]

- Semiconductor

 Industry ove rview

In general, our Semiconductor bus iness is divided into Memory (storage) and System LSI (logical processing). Memory

semiconductor is divided into RAM products (random access memory), ones that can be both written on and read) and

ROM products (read only memory).

RAM is calle d vo lat ile memory as the information is deleted when the power is turned off. It is used for temporary

loading and storage of application programs. ROM is nonvolatile and holds memor y even when power is removed; it is

used in input/output system, IC cards, and more. For System LSI products, there are many categories for various

applications , with CPUs (central processing units) for PCs, mobile devices, and servers forming the largest market.

System LSI products are used in myriad areas, such as household e lectronics, networks, and games. The Company

manufactures mobile APs for smartphones and tablets, image sensors, and other customized products.

Growth in the semiconductor market is expected to be negatively impacted by slowing demand for mobile devices as the

smartphone market slows and the tablet market contracts. The memory market, however, is projected to enjoy continuous

growth, fue led by increasing shipments of high-density information storage devices. Also, we expect demand to grow

rapidly in newly emerging areas such as IoT and automotive applications. Supply and demand volatility is expected to

decrease as demand diversifies.

Samsung Electronics Business Report 30 / 261

 Marke t condition

In the DRAM market, inventory corrections in 2019, ma inly by data centers, was behind weak demand from some

customers, but a recovery is expected in 2020. A lthough external factors such as the US-China trade conflict tightened

export regulations add to uncertainty, we plan to expand our market share by gaining an early edge in the market for high-

density memory for new CPUs and by addressing expansion of the 5G smartphone market in a timely manner.

Overall NAND demand has been bolstered by rising demand for SSDs in the growing cloud services market and a trend

toward high density in the PC market alongs ide demand linked with the expansion of 5G and upcoming launches of new

game consoles. Dec lines in ASP due to a supply glut are expected to soften.

< Market share of the Semiconductor Business’ main product >

Product

2019

2018

2017

DRAM

43.7%

43.9%

45.8%

Note: Global ma rket share in revenue; data from research firm DRAMeXchange.

 Business condition

In 2019, the Company developed the 3rd Generation 10nm-class DRAM—a world’s first—and is increasing supply of

HBM2, the second generation of high bandwidth memory, which supports AI and supercomputing. In V-NAND, w he re

we have technological advantages, we showcased 6th generation V-NAND and aim to adopt them in high-performance

SSDs to establish their foothold in the premium market.

We aim to expand the memory market by launching Smart SSD solutions for big data processing, 2nd generation Z-SSD,

and 4-bit server SSD, which boasts higher efficiency and reliability.

As the memory market is expected to keep growing, the Company will expand into differentiated products based on

advanced processes and address each market segment with diverse product lineups to mainta in its position as the market’s

No.1 memory maker.

Growth in the System LSI business is be ing driven mainly by mobile products, including smartphones and tablet PCs, and

we are preparing for growth in new markets in IoT, wearables, and automotive applications. For SoCs, the mobile market

is like ly to struggle due to lengthening s martphone replacement cycles, while AI, automotive, and 5G markets are

expected to grow.

For AP modem SoCs, we provide not only high-performance products, but also low-end to mid-range products. We are

leading the 5G market, backed by our development of the world’s first multi-mode modem that supports 2G, 3G, 4G, and

5G networks.

In the first half of 2019, the Foundry Business introduced the world’s first 7-nano EUV products. Building on this success,

the Company in 2020 aims to lead the market with time ly launches of next-generation processes, such as 4- and 5-nano

EUV chips as well as 3-nano GAA chips. Moreover, we are also expanding our bus iness by diversifying our production

portfolio, which already includes CISs, DDIs, PMICs, and more.

- DP

 Industry ove rview

Display refers to screens in electronic devices. Active matrix technology is most commonly used in displays, inc luding

OLED (organic light emitting diode) panels and TFT-LCD (thin film transistor liquid crystal display).

OLED panels use organic materials, which offer sharp contrast and color, high color gamut, and fast response rates. Suc h

differentiating features provide advantages for use in smartphones where display features (multimedia contents, online

experience, etc.) are important, and as a result, OLED adoption in the smartphone market is growing rapidly.

Samsung Electronics Business Report 31 / 261

The market had raised concerns over the production of high-reso lut ion, durable panels, but we overcame various

technological challenges and advanced the business. OLED panels make up for the shortcomings of LCD panels, a nd they

can be adopted in other applications such as fo ldab le, rollable , and automotive. Growth of the OLED market is wide ly

expected to keep accelerating.

A TFT-LCD panel is a liquid crystal based display that features a thinner and lighter profile while offering high resolution.

It has a wide range of potentia l applications in devices of all sizes and functionality, from portable mobile devices to

large-size TVs featuring bright, high-resolution images. The market for large-panel TFT-LCD grew rapidly as their use

moved from laptops initially to monitors and then to TVs. Recently however, high saturation has caused growth to slow.

 Marke t condition

For mobile OLED panels, adoption is projected to increase alongside expansion of the 5G smartphone market, however,

market uncertainties are expected to linger due to intensifying competition among pane l bus inesses attributable to capacity

expansions within the industry.

In 2019, the market for smartphone display pane ls, our major product group, was 1.61 billion units, with TFT-LCD a nd

OLED totals at 1.12 billion and 0.48 billion units, respectively. In 2020, the market for smartphone OLED panels is

expected to reach around 0.61 billion units as OLED will become a mainstream product for smartphone applications

thanks to growth of the 5G smartphone market (Source: Omdia, formerly IHS; Small & Medium D isplays; Smartphone

OLED panels; January 2020).

For large, LCD panels, supply and demand are like ly to remain imba lanced due to oversupply in the industry amid stunted

demand. Meanwhile, we expect stable growth in the premium market for ultra-high-defin it ion, ultra-large TVs, and curved

and gaming monitors.

< Market share of the DP Business’s main product >

Product

2019

2018

2017

Smartphone panels

43.6%

47.6%

43.8%

Note: Global market share in revenue; data from research firm Omdia, formerly IHS.

Table shows market share for smartphone panels in revenue; large-panel market s hare was 9.0% for 2019.



Bus iness condition

The Company has continued to stay atop the mobile OLED market in terms of market share since it successfully

commercialized OLED products in 2007, marking a world’s first. We diversif ied our product group to include displays for

foldable products, tablets, watches, laptops, and automotive applications , solidifying our position as the top player in the

OLED display market.

Wit h both flexible and rigid OLED, our optima l smartphone product portfolio ranges from mass-market to premium

devices; and we are recognized as having best-in-class technology through our introduction of products with differentiated

technologies and designs.

OLED panels are expected to be increasingly adopted backed by advantages such as low power consumption and ultra-

thin des ign and prope lled by accelerated growth of 5G communications. We are committed to improving the performance

of OLED panels as well as expanding our customer base by leveraging our differentiated technologies and designs.

Furthermore, we will f ocus on securing foldable-related technologies to spur popular ization of this emerging product area;

and we will also cooperate with a wide range of customers to help perfect our new products.

For the LCD large panel business, the industry is likely to remain in oversupply amid stagnant demand. We will continue

striving to enhance profitability by increasing our portion of value-added panels, which inc lude products for ultra-high-

definition 8K TVs and ultra-large-sized TVs, and by expanding sales of premium products such as curved and gaming

monitors.

Samsung Electronics Business Report 32 / 261

[Harman Division]

 Industry ove rview

In 2019, globa l automobile production, which is c losely related to automotive component business, decreased by 5–7%

year-on-year, but is expected to increase 1–2% annually by 2021 (LMC Global Production Projection, December 2019).

In the automotive industry, demand for connectivity and entertainment systems has been rising in the past few years, and

we expect it to keep rising as automakers seek to stay at the forefront of technology, particularly with the dual trends of

autonomous vehicles and shared mobility shaping the industry.

The audio industry (eg, connected homes, headphones, smart audio, etc.) is projected to grow 4% annually for consumer

audio until 2023 (Futuresource, November 2019). The professional audio market grew around 5–6% annually over the

last five years (AVIXA, Futuresource, Global Info & Arizton, June 2019).

Technological innovations (particularly in the connected home and smart audio spaces) have been a driving force behind a

considerable hike in demand. We anticipate that this growth will continue as technology continues to advance amid a

growing global economy.

 Marke t condition

The automotive and professional/consumer audio markets are highly competitive and growing rapidly.

In the connected car industry, there are numerous companies—eg, Alpine, Aptiv, Continental, Mitsubishi, and

Panasonic—that are cooperating with automotive manufacturers. Competition is expected to remain fierce between

dominant players and new entrants as consumers expect car makers to deliver the latest technology, including autonomous

driving.

Car audio systems is another segment where several major players (eg, Bose, Pioneer, and Panasonic) are competing

fiercely, which is expected to drive technological advances as each player introduces unique sound-management solutions.

The consumer audio market is rather fragmented and a handful of companies (Amazon, Beats, Bose, Ultimate Ears, etc.)

are showing early signs of dominance. We expect competition to remain intense as new players try to make inroads, given

the saturated market for connected homes and smart speakers.

The professiona l audio market, led by QSC and Yamaha, is segmented by product and has seen the entrance of numerous

companies offering a wide range of products and applications. We expect competition to keep intensifying as connected

homes and smart speakers gain popularity and on the entrance of new players from other industries such as the service

sector.

< Market share of Harman Business’s main product >

Product

2019

2018

2017

Head units

24.8%

18.8%

25.4%

Note: Head unit refers to a separate product besides display audio, telematics, and backseat organizers.

Company estimates based on Omdia, formerly IHS, and LMC data.

 Business condition

Harman is focused on continuing its strong performance in the automotive and professiona l/consumer audio markets. To

attain this, it will continue to seek growth through innovation, M&A activities, and sales of its globally renowned brands.

Harman is positioned to stay atop the automotive market and plans to continue to leverage its wide variety of brands to

outf it vehic les ranging from mass-market thorough to luxury models, while also maintaining the quality that is

synonymous with Harman brands. Additiona lly, Harman’s relentless pursuit of innovation in the audio and conne ctivity

spaces will help ensure the development of thriving relationships with automakers.

Samsung Electronics Business Report 33 / 261

Additionally, Harman has continued to develop its Connected Services business with industry leading OTA (Over the Air)

and software servicing products.

The same factors that Harman relies on within the automotive market will also be used in the professiona l/consumer audio

market. Having won three Grammy Awards and two Academy Awards, Harman’s brands have earned a strong reputation

amongst everyday consumers and audiophiles alike. New offerings in up-and-coming segments such as connected

wireless and smart audio continue to he lp bring in new consumers and further enhance brand reputation. Through these

and other efforts, the Company is confident that Harman will mainta in its role as a preeminent player in all areas of its

business.

Samsung Electronics Business Report 34 / 261

B. Financial Summary, by Division

(KRW 100 mil)

Division Classification

2019 2018 2017

Amount

Portion of

corresponding total

Amount

Portion of

corresponding total

Amount

Portion of

corresponding total

CE

Sales 995,925 18.8% 951,876 16.9% 1,020,430 18.2%

Internal 548,363 18.2% 530,802 16.6% 574,416 17.8%

Net 447,562 19.4% 421,074 17.3% 446,013 18.6%

Operating profit 26,063 9.4% 20,232 3.4% 18,020 3.4%

Total asset 673,754 13.4% 473,545 10.0% 453,014 10.0%

IM

Sales 2,239,591 42.2% 2,148,844 38.2% 2,260,042 40.2%

Internal 1,166,930 38.8% 1,142,067 35.8% 1,193,358 37.0%

Net 1,072,662 46.6% 1,006,777 41.3% 1,066,683 44.5%

Operating profit 92,725 33.4% 101,720 17.3% 118,273 22.0%

Total asset 1,432,804 28.5% 1,243,340 26.2% 1,114,418 24.5%

DS

Semi-

conductor

Sales 1,237,668 23.3% 1,657,625 29.4% 1,418,200 25.2%

Internal 588,277 19.6% 794,715 24.9% 675,644 21.0%

Net 649,391 28.2% 862,910 35.4% 742,556 31.0%

Operating profit 140,163 50.5% 445,739 75.7% 352,041 65.6%

Total asset 1,791,177 35.6% 1,515,782 31.9% 1,316,593 29.0%

DP

Sales 669,088 12.6% 693,495 12.3% 721,087 12.8%

Internal 358,548 11.9% 368,844 11.6% 376,434 11.7%

Net 310,539 13.5% 324,650 13.3% 344,654 14.4%

Operating profit 15,813 5.7% 26,198 4.4% 53,984 10.1%

Total asset 642,264 12.8% 641,543 13.5% 698,544 15.4%

Total DS

Sales 1,931,419 36.4% 2,395,650 42.6% 2,187,817 38.9%

Internal 976,239 32.5% 1,209,994 37.9% 1,106,142 34.3%

Net 955,180 41.5% 1,185,656 48.6% 1,081,675 45.1%

Operating profit 155,817 56.1% 465,164 79.0% 403,279 75.2%

Total asset 2,451,438 48.8% 2,425,593 51.1% 2,272,502 50.0%

Harman

Sales

117,498

2.2%

109,711

1.9%

91,718

1.6%

Internal 16,727 0.6% 21,274 0.7% 20,692 0.6%

Net 100,771 4.4% 88,437 3.6% 71,026 3.0%

Operating profit

3,223

1.2%

1,617

0.3%

574

0.1%

Total asset

156,091

3.1%

150,599

3.2%

146,767

3.2%

Note: Sales for each business unit includes intersegment sales.

Financial information for Harman is consolidated after the date of acquisition in 2017.

Samsung Electronics Business Report 35 / 261

By Divis ion, CE reported net sales of KRW 44,756.2 billion (19.4% of total net sales) and IM reported net sales of KRW

107,266.2 billion (46.6% ). DS contributed approximately 41.5% of net sales: KRW 64,939.1 billion (28.2%) by the

semiconductor sub-d iv is ion and KRW 31,053.9 billion (13.5%) by the DP Business Unit. The Harman Division reported

net sales of KRW 10,077.1 billion (4.4%).

The CE Divis ion accounted for 9.4% of cumulative operating profit with KRW 2,606.3 billion; the IM Divis ion accounted

for 33.4% with KRW 9,272.5 billion; and the DS Divis ion accounted for 56.1% with KRW 15,581.7 billion. The Harman

Division posted an operating profit of KRW 322.3 billion.

 Re asonable allocation of common SG&A (s elling general & administrative ) expenses and as sets

(1) For common SG&A expenses, specific expenses that are allocable to a specific product/model are allocated to such

product/model. However, common expenses that cannot be attributed to a specific product/mode l category are reasonably

allocated throughout the Company based on an allocation standard (expense-to-sales ratio, number of personnel, etc.).

(2) For common assets, assets that can be directly allocated (inventory assets, fixed assets, investment assets, etc.) are

allocated to the corresponding organizationa l unit. Assets that are commonly managed and cannot be directly allocated a r e

allocated to each Division based on an allocation standard (expense-to-sales ratio, pre-tax profit, etc.).

2. Key products and service

A. Re ve nue

SEC is involved in production and sales of set products, including TVs, refrigerators, washers, air conditioners, HHPs,

computers, and components such as semiconductors and display panels. Harman is in charge of production and sales of

infotainment and telematics.

The Company’s net revenue by Division as of December 31, 2019 is as follows:

(KRW 100 mil)

Division

Major products

Net revenue

Portion

CE

TVs, monitors, refrigerators, washing machines, air conditioners, etc.

447,562

19.4%

IM

HHPs, network systems, computers, etc.

1,072,662

46.6%

DS

Semiconductor

DRAM, NAND flash, mobile APs, etc.

649,391

28.2%

DP

OLED smartphone panels, LCD TV panels, monitor panels, etc.

310,539

13.5%

DS total

955,180

41.5%

Harman

Head units, infotainment systems, telematics, speakers, etc.

100,771

4.4%

Others

-

-272,166

-11.9%

Total

2,304,009

100.0%

Note: Net revenue includes sales between Divisions.

In 2019, the CE Div ision’s revenue of KRW 44,756.2 billion accounted for 19.4% of the total net revenue; the IM

Divis ion accounted for 46.6% with KRW 107,266.2 billion; and the DS Divis ion accounted for 41.5% with KRW

95,518.0 billion. The Harman division accounted for 4.4% with KRW 10,077.1 billion.

☞ See 『5. Sales and distribution』 for sales by each product.

B. Average selling price changes

In 2019, the ASP of TVs decreased 8.3% and that of HHPs declined 0.4% year-on-year. The ASP of memory products a nd

head units dropped a respective 60% and 16.3% year-on-year, whereas display panel ASP remained flat compared to last

year.

Samsung Electronics Business Report 36 / 261

3. Key production materials

A. Key production materials

(KRW 100 mil)

Division Item Specific usage Purchase price Portion Note (supplier)

CE

Display panel Color picture signaler

31,797

15.7% AUO, BOE, etc.

Others 170,193

84.3%

Div ision total 201,990

100.0%

IM

Camera module Mobile phone camera

62,572

17.5% Semco, Power Logics, etc.

Base band chip CPU 29,791

8.4% Qualcomm, Spreadtrum, etc.

Mobile display panel

Color picture signaler

26,483

7.4%

BOE, China Star Optoelectronics, etc.

Others 237,711

66.7%

Div ision total 356,557

100.0%

DS

FPCA Circuit

22,369

9.6% BH, CU-Tech, etc.

Window Tempered glass 20,356

8.8% Biel, Lens, etc.

Wafer Semiconductor disk 18,960

8.2% SUMCO, GW etc.

POL Polarizer plate 14,236

6.1% Dongw oo Fine-C hem, Samsung SDI, etc.

Chemical Disk processing 12,628

5.4% Dongw oo Fine-C hem, etc.

Others 144,040

61.9%

Div ision Total 232,589

100.0%

Harman

System-on-chip Chips for vehicles

4,678

24.9% Nv idia, Renesas, etc.

Automotiv e memory chip Chips for v ehicles 3,998

21.3% Avnet, Microchip, etc.

Others 10,127

53.9%

Div ision total 18,803

100.0%

Div ision total

472

-

Total 810,411

-

Note: On a consolidated basis.

Semco and Samsung SDI are subsidiaries.

For the CE Divis ion, key materials inc lude display panels for TVs and monitors, which are supplied by AUO and other

companies. For the IM Div is ion, key materia ls inc lude camera modules, baseband chips and D isp la y pane ls for mobile

devices, which are supplied by Semco, Qualcomm, BOE and others.

For the DS Division, key materials include FPCAs, windows, wafers, POL, and chemicals, with suppliers including BH,

Biel, SUMCO, Samsung SDI, and Dongwoo Fine-Chem.

For the Harman divis ion, key materia ls include SoC (system-on-chip) products and memory products for in-vehic le

solutions, which are supplied by Nvidia, Avnet, etc.

Samsung Electronics Business Report 37 / 261

B. Production mate rial price tre nds

The price of TV and monitor display panels, which are the major production materia ls for the CE Division, declined

approximately 25% year-on-year. For the IM Divis ion, compared to last year, the price of camera modules, base band

chips , and mobile display pane ls increased approximately 44%, 1%, and 26%, respectively. For the DS Divis ion, the

FPCA price remained flat year-on-year, while the price of windows for tempered glass decreased about 3%. P rices of

wafers for semiconductor disks increased 12% year-on-year. The price of POL for polarizing plates decreased

approximately 17% compared to 2018. For the Harman divis ion, the prices of memory for vehicles and SoC products

have decreased by about 10% and 4% respectively, compared to levels in the previous year.

4. Production and facilities

A. Production capacity, output, utilizatio n rate

(Capacity) (1,000 units)

Division Item

Capacity

2019 2018 2017

CE

TV

41,425

40,158

44,639

IM

HHP

346,960

397,497

415,200

DS

Memory

988,104,000

711,023,000

530,590,000

Display panel

8,236

9,167

8,723

Harman

Head units

7,921

5,238

5,483

Note: Production capacity for major product categories on a consolidated basis.

Financial information for Harman is consolidated after the date of acquisition in 2017.

The CE and IM Divisions’ production capacity, by major product, is calculated as follows:

the average number of lines (x) the average output per hour (x) the average operation hours per day (x) the days of

operation

Memory production capacity for the DS Division is calculated as follows:

converted output (1GB equivalent) ÷ the utilization rate

Display panel production capacity is calculated as follows:

The total producible panel surface area ÷ the dimensions of eighth generation glass (2200x2500mm)

Harman’s production capacity for Head units is c alculated as follows:

the number of production (assembly and test) cells for each customer/product (x) the average production capacity per hour

by production cell (x) the average operation hours per day (x) the days of operation

(Output) (1,000 units)

Division Item

Output

2019

2018

2017

CE

TV

40,389

37,217

39,450

IM

HHP

318,635

346,605

393,693

DS

Memory

988,104,000

711,023,000

530,590,000

Display panel

6,567

7,599

7,798

Harman

Head units

6,459

3,906

4,221

Note: Global output for major product categories.

Financial information for Harman is consolidated after the date of acquis ition in 2017.

Samsung Electronics Business Report 38 / 261

In 2019, the CE Divis io n’s output of TVs was 40,389 thousand units (major production sites: China, Mexico, Brazil, and

Hungary). The IM Divis ion’s output of HHPs was 318,635 thousand units (ma jor production s ites: Korea, Vietnam, and

Brazil). The DS Divis ion’s memory output (1GB equiva lent) was 988,104 million (major production sites: Korea and

China). The DS Divis ion’s output of display pane ls was 6,567 thousand units (major production sites: Korea, China). The

Harman Division’s head unit output was 6,459 thousand units.

(Utilization rate )

(1,000 units)

Division Item

2019

Utilization rate

Production capacity

Output

CE

TV

41,425

40,389

97.5%

IM

HHP

346,960

318,635

91.8%

In 2019, CE and IM utilization rates were calculated as actual output relative to production capacity. The utilization rates

were 97.5% for TVs and 91.8% for HHPs.

(Hours)

Division Item

2019

Utilization rate

Potential production time Actual production time

DS

Memory

70,080

100.0%

Display Panel

70,080

100.0%

The DS Division operates memory and display panel pr oduction in three shifts (24 hours a day). Cumulative operating

days in 2019 inc luding holidays were 365 days. The utilization rate was calculated as actual hours [365 days (x) number

of production lines (x) 24 hours] relative to production capacity.

(1,000 units)

Division Item

2019

Utilization rate

Production capacity

Output

Harman

Head units

7,921

6,459

81.5%

In 2019, Harman’s utilization rate was 81.5% and was calculated as actual output relative to production capacity.

Samsung Electronics Business Report 39 / 261

B. Production facilities and inve stme nt

(Key facilities for production and operation)

The Company’s operational activ it ies inc lude manufacturing, deve lopment, marketing, and sales in Korea–opera tio ns in

Suwon, Gumi, Giheung, Onyang, Gwangju, nine regional headquarters under the CE and IM Div is ions , f ive under the DS

Division in North America, Europe, and China, and Harman’s subsidiaries.

[Operations]

Region Operations Location

Korea

(12)

Suw on

Seocho

Seoul

Woomyeon

Seoul

Giheung

Yongin

Hwaseong

Pyeongtaek

Cheonan

Ony ang

Asan

Asan Asan

Gumi1

Gumi

Gumi2

Gumi

Gwangju Gwangju

Ov erseas

(CE and IM Divisions - nine

regional headquarters)

North America

New Jersey, US

Europe

London, UK

China

Beijing, China

Southeast Asia

Singapore, Singapore

Southwest Asia

New Delhi, India

CIS

Moscow, Russia

Middle East

Dubai, UAE

Africa

Johannesburg, Republic of South Africa

Latin America

Sao Paolo, Brazil

Ov erseas

(DS Division - fiv e regional

headquarters)

Americas

San Jose, US

Europe

Eschborn, Germany

China

Shanghai, China

Southeast Asia Singapore, Singapore

Japan Toky o, Japan

Harman

North America HQ

Connecticut, US

Note: Harman’s Connected Car business is mainly based in the US (Novi, MI), and its Lifestyle Audio business is located in Germany

(Garching). Its Professional Solutions business operates mainly in the US (Northridge, CA), and Connected Services business is

based in US (Mountain Vie w, CA).

Samsung Electronics Business Report 40 / 261

The Company’s property, plant and equipment inc lude land, buildings and structures, machinery and equipme nt, and

construction in progress. As of December 31, 2019, their total book value was K RW 119,825.5 billion, whic h is an

increase of KRW 4,408.8 billion from year-end 2018.

(KRW mil)

Classification Land

Buildings and

structures

Machinery and

equipment

Under

construction

Other tangible

assets

Total

Jan 1, 2019

Book value

93,463

293,459

638,162

97,051

32,032

1,154,167

- Acquisition cost

93,463

450,338

2,064,079

97,051

86,651

2,791,582

- Accumulated depreciation (including accumulated

impairment loss)

-

-156,879

-1,425,917

-

-54,619

-1,637,415

Change

General acquisition and capital expenditure

1,443

17,603

104,882

144,909

11,364

280,201

Acquisition from business combination

23

215

3,811

75

53

4,177

Depreciation

-311

-26,584

-226,649

-

-12,194

-265,738

Disposal/discard/impairment

-

979

-

2,875

-

2,658

-

6

-

837

-

7,355

Others*

4,107

22,878

3,951

-2,729

4,596

32,803

Dec 31, 2019

Book value

97,746

304,696

521,499

239,300

35,014

1,198,255

- Acquisition cost

98,283

488,394

2,114,160

239,300

100,621

3,040,758

- Accumulated depreciation

(including accumulated impairment loss)

-537

-183,698

-1,592,661

-

-65,607

-1,842,503

Note: Market value of major tangible assets is omitted as objective assessment is difficult.

*Includes effects of changes in accounting methods, FX rates, and government subsidies.

(Cape x)

The Company’s capex in 2019 was KRW 26.9 trillion, wh ic h included upgrading production lines of the Semiconductor

and DP Businesses. In 2020, we will make flexible investments based on market conditions, whereas investment to

embrace mid- to long-term demand in emerging businesses, which inc lude system semiconductors, display, AI, and 5G,

will proceed as planned.

[Capex, by division]

(KRW 100 mil)

Business

Purpose

Period

Assets

Investment

Semiconductor Establishment, addition, upgrade January–December 2019 Buildings, facilities 225,649

DP Establishment, addition, upgrade January–December 2019 Buildings, facilities 21,870

Other Establishment, addition, upgrade January–December 2019 Buildings, facilities 21,429

Total 268,948

Samsung Electronics Business Report 41 / 261

5. Sales and distribution

A. Sales

In 2019, the Company recorded KRW 230,400.9 billion of total revenue, a decrease of 5.5% year-on-year. By Divis ion,

when compared to the previous year, revenue of the CE Divis ion , IM D iv is ion, and Harman Divis ion increased a

respective 6.3%, 6.5%, and 13.9% while that of DS decreased by 19.4%.

(KRW 100 mil)

Division Sales types Product categories 2019 2018 2017

CE

Goods, products,

services, other

TVs, monitors, refrigerators, washing

machines, air conditioners, etc.

447,562

421,074 446,013

IM

Goods, products,

services, other

HHPs, Network systems, computers, etc.

1,072,662

1,006,777 1,066,683

DS

Semiconductor

Goods, products,

services, other

DRAM, NAND flash, mobile APs, etc.

649,391

862,910 742,556

DP

Goods, products,

services, other

OLED smartphone panels, LCD TV panels,

monitor panels, etc.

310,539

324,650 344,654

DS total 955,180

1,185,656 1,081,675

Harman

Goods, products,

services, other

Head units, infotainment systems,

telematics, speakers, etc.

100,771

88,437 71,026

Others Other revenue - -272,166

-264,230 -269,643

Total 2,304,009

2,437,714 2,395,754

Note: Includes sales between Divisions.

Financial information for Harman is consolidated after the date of acquis ition in 2017.

(1) Sale s , by major product (on a consolidated bas is)

(KRW 100 mil)

Classification

2019

2018

2017

Image devices

261,775

252,939

275,154

Mobile devices

1,023,318

965,194

1,036,218

Memory

502,163

723,753

603,036

Display panels

310,539

324,650

344,654

Note: Includes sales between Divisions on a consolidated basis.

Samsung Electronics Business Report 42 / 261

(2) Sale s , by type

(KRW 100 mil)

Classification 2019 2018 2017

Products

2,188,604

2,380,547

2,368,198

Services and other sales

115,405

57,167

27,556

Total

2,304,009

2,437,714

2,395,754

Note: Other sales consists of royalty income, etc.

(3) Sale s , by region (on a s eparate bas is)

(KRW 100 mil)

Classification 2019 2018 2017

Domestic

203,009

168,213

165,684

Americas

437,434

464,124

488,864

Europe

191,970

192,783

189,464

Asia and Africa

329,705

330,903

317,661

China

385,611

547,796

457,477

Total

1,547,729

1,703,819

1,619,150

Note: Domestic consumption and exports on a separate basis.

B. Sale s channels

(1) Domestic

Seller

Sales channel

Consumer

Manufacturer and

buyer

Ex clusiv e agencies

Consumer

Distributor (general merchandise stores, discount stores, department stores, home-shopping, internet, etc.)

Telecommunication service provider (SKT, KT, LG U+)

B2B and online channels

(2) Ove rseas

Seller

Sales channel

Consumer

Production

subsidiaries

Regional sales office

Retailer

Consumer

Dealer

Retailer

Distributor

Dealer

Retailer

Telecommunication service provider, automotiv e OEM

Regional distribution office

Regional sales

office

Retailer

Dealer

Retailer

Distributor

Dealer

Retailer

Direct sales

(3) Sale s ratio (global), by Channe l

Channel Wholesale Retail Special/direct sales Others

Ratio 20% 28% 46% 6%

Samsung Electronics Business Report 43 / 261

C. Sales me thods and conditions

(1) Domestic

Classification Channel Collection Incidental expense sharing

Exclusive Retailer

Credit agreement (cash, 30 day credit)

(credit applied within 100% of collateral)

Case specific cost sharing as determined by mutual

agreement

Distributor

General merchandise store,

discount store, department store,

home shopping, internet, etc.

Case specific and contract specific

Case specific cost sharing as determined by mutual

agreement

Telecommunication

serv ice provider

SKT, KT, LG U+ Case specific and contract specific N/A

B2B and online

channels

Corporate clients, etc. Case specific and contract specific N/A

(2) Ove rseas

Classification Channel Collection Incidental expense sharing

Retailer Retail store Case specific and contract specific

Case specific cost sharing as determined by mutual

agreement

Dealer

General merchandise store,

discount store, department store

Case specific and contract specific

Case specific cost sharing as determined by mutual

agreement

Distributor Direct sales to local distributors Case specific and contract specific

Case specific cost sharing as determined by mutual

agreement

B2B Corporate clients, etc. Case specific and contract specific N/A

D. Sales strategy

- Expand market leadership based on premium products such as smart devices

- Provide differentiated value to customers through brand, products, and services

- Strengthen marketing activities to boost demand from customer/market

E. Major cus tome rs

In 2019, ma jor customers inc luded Apple, BestBuy, Deutsche Telekom, Huawei, and Verizon (in alphabetical order). Sales

to our five major customers accounted for approximately 13% of total sales.

6. Long-term contracts

As of December 31, 2019, there were no long-term contracts that have a significant impact on the Company’s financial

statement.

Samsung Electronics Business Report 44 / 261

7. Financial risk management

A. Financial risk management policy

The Company’s financia l risk management focuses on minimizing market risk, credit risk, and liquidity risk aris ing from

operating activities. To mitigate these risks, the Company closely monitors each risk factor and operates corresponding

financ ial risk management polic ies and program. The Company’s use of derivative instruments for hedging specif ic risks

are included in this program.

The finance team mainly carries out the Company’s financia l risk management. After implementing the global financial

risk management policies, the finance team periodically measures, evaluates, and hedges financial risks.

The Company manages global financia l risks by operating local finance centers at each major region (United States,

United Kingdom, Singapore, China, Brazil, and Russia).

The Company’s assets that are under financia l risk management are comprised of cash and cash equiva lents, short-te rm

financ ial instruments , financial assets at amortized cost, trade receivables and other. The Company’s lia b ilit ie s under

financial risk management are comprised of trade payables, borrowings, and other.

B. Major financial risks

(1) Market risk

(Foreign e xchange risk)

The Company operates internationally and is exposed to foreign exchange risks as it conducts transactions in currencies

other than the functional currency of each entity. Major currencies that are exposed to foreign exchange risk include USD,

EUR, JPY, INR, and other.

The Company focuses on minimizing the impact of foreign exchange fluctuation by maintaining the equal amount of

assets and liabilities denominated in each foreign currency, irrespective of foreign exchange fluctuation considerations. To

prevent exchange position, the Company’s foreign exchange management policy requires normal business transactions ,

inc luding import and export, as well as financing transactions such as depositing and borrowing, to be in local currency or

for the cash-in currency to be matched up with the cash-out currency.

In order to effectively manage foreign exchange risk, the Company prohibits foreign exchange transactions, with the

exception of transactions made for hedging purposes, and periodically monitors and evaluates exchange risk.

As of December 31, 2019 and 2018, when currency rates change by 5%, the impact on profit or loss (before income tax

effects) arising from financia l assets and liabilities denominated in fore ign currencies other than functiona l currency are as

follows:

(KRW mil)

Dec 31, 2019

Dec 31, 2018

Increase

Decrease

Increase

Decrease

USD 163,062 (163,062) 344,488 (344,488)

EUR

127,507

(127,507)

(4,381)

4,381

JPY (23,062) 23,062 (13,001) 13,001

INR

64,153

(64,153)

92,176

(92,176)

Samsung Electronics Business Report 45 / 261

(Price ris k)

The Company’s investment portfolio consists of direct and indirect investments in equity securities classified as financial

assets at fair value through other comprehensive income and financ ial assets at fair value through profit or loss, which is in

line with the Company’s strategy.

As of December 31, 2019, a price fluctuation in relation to marketable equity instruments (listed shares) by 1% would

result in changes in other comprehensive income (before income tax effects) of ￦ 41,055 million (December 31, 2018:

￦ 28,846 million), and in profit or loss (before income tax effects) of ￦ 1,630 million (December 31, 2018: ￦ 101

million).

(Inte re st rate ris k)

Risk of changes in interest rates for floating interest rate financia l instruments is defined as the risk that the fair value of

components of the consolidated statement of financial pos ition, and future cash flows of interest income (expenses) of a

financ ial instrument, will fluctuate because of changes in market interest rates. The Company’s position with regard to

interest rate risk exposure is mainly driven by its floating interest rate debt obligations and interest-bearing deposits. The

Company implemented polic ies and operates to minimize uncertainty aris ing from changes in interest rates and financial

expenses.

The Company maintains minimum external borrowings by facilitating cash pooling systems on a regiona l and global basis

to limit its exposure to the interest rate risk. The Company manages exposed interest rate risk via periodic monitoring and

handling risk factors on a timely basis.

As of December 31, 2019, changes in profit or loss (before income tax effects) as a result of a 1%p change in interest rates

on floating interest rate financial assets and liabilities are presented below:

(KRW mil)

Dec 31, 2019 Dec 31, 2018

Increase Decrease Increase Decrease

Financial assets 70,183 (70,183) 64,704 (64,704)

Financial liabilities

(2,118)

2,118

(91)

91

Net effect

68,065

(68,065)

64,613

(64,613)

(2) Credit risk

Credit risk arises during the normal course of transactions and investing activities where clients or other parties fail to

discharge an obligation. The Company sets and manages the client’s and counterparty’s credit limit, and evaluates their

financ ial credit rating on a periodic basis based on the c lient’s and counterparty’s financ ial conditions, default history and

other important factors. Adequate insurance coverage is maintained for trade receivables related to trading partners

situated in higher risk countries.

Credit risk can arise from transactions with financ ial institutions which inc lude financia l instrument transactions such as

cash and cash equiva lents, savings, and der ivative instruments. To minimize such risk, the Company transacts only with

banks which have strong internationa l credit rating (S&P A and above), and all new transactions with financ ial institutions

with no prior transaction history are approved, managed and monitored by the Company’s finance team and the local

finance center. The Company generally enters into a financial agreement with no restrictions, such as debt ratio covenants,

provis ion of collateral, and loans or borrowings repayment. The Company requires separate approval for contracts with

restrictions.

As of December 31, 2019 and 2018, the Company estimates that its maximum exposure to credit r isk is the carrying

amount of its financial assets, net of impairment losses.

Samsung Electronics Business Report 46 / 261

(3) Liquidity risk

Due to the nature of the Company’s business that requires making large investments, ma inta ining adequate level of

liquidity r isk is crucial. The Company maintains and manages adequate level of liquidity by periodically forecasting its

capital balances, estimating required cash, managing income and expenses, and other.

The Company manages its liquidity risk in advance by periodically forecasting projected cash flows. The Company

facilitates and utilizes a globa lly integrated finance structure including regional Cash Pooling and other to provide

liquidity support. Also, when abnormalities are identified, the Company mainta ins a liquidity management process that

provides additiona l financ ial support in cooperation with the local finance center. The Cash Pooling program allows

sharing of surplus funds among entities and contributes to minimizing liquidity risk and strengthening the Company’s

competitive position by reducing capital operation expenses and financial expenses.

In addition, the Company mitigates liquidity risk by contracting with financia l institutions w ith respect to foreign trade

finance and other, and by providing payment guarantees to subsidiaries to secure required credit limit. For large scale

facility investments, liquidity risk is minimized by utilizing internal reserves and long-term borrow ings according to the

capital injection schedule.

As of December 31, 2019 and 2018, the following table is an undiscounted cash flow analysis for financial liabilities

according to their remaining contractual maturity.

Dec 31, 2019

(KRW mil)

Less than

3 months

4–6

months

7–12

months

1–5

years

More than

5 years

Financial liabilities

\

41,041,672

\

655,089

\

1,603,676

\

4,241,964

\

1,381,109

Dec 31, 2018

(KRW mil)

Less than

3 months

4–6

months

7–12

months

1–5

years

More than

5 years

Financial liabilities \ 39,445,090 \ 628,582 \ 742,744 \ 3,547,498 \ 663,594

The table above shows the Company’s financial liabilities based on the remaining period at the consolidated statement of

financ ial position date until the contractual maturity date. The amounts disclosed in the table are the contractual

undiscounted cash flows.

The Company’s derivative financial liabilities of ￦ 63,496 million (December 31, 2018: ￦ 28,543 million) ha s been

inc luded within the less than 3 months bucket. These are the Company’s trading portfolio of derivative instruments, on a

net settlement term, of which the contractual maturities are not essential for understanding its cash flows. These contracts

are managed on a net fair value basis rather than by maturity date. Net settled derivatives consist of forwards on currency

rates used by the Company to manage the exchange rate profile.

Derivatives that are settled on a gross basis by delivery of the underlying item, including derivatives for hedging, will be

settled within the next 31 months from the end of the reporting period. These derivative are not included in the table

above.

There is no maximum liquidity risk exposure from those other than the above financial liabilities (e.g., payment

guarantees for affiliated companies, performance bonds, and other) as of December 31, 2019 (December 31, 2018:

￦ 32,511 million).

Samsung Electronics Business Report 47 / 261

(4) Capital risk

The purpose of capital management is to mainta in a sound capital structure. The Company monitors capital on the basis of

the ratio of total liabilities to total equity. This ratio is calculated by dividing total liabilities by total equity in the

consolidated financial statements.

The Company’s capital r isk management policy has not changed since the previous financ ial year. The Company has

maintained an AA- and Aa3 credit rating from S&P and Moody’s, respectively.

The total liabilities to equity ratios as of December 31, 2019 and 2018 are as follows:

(KRW mil)

Dec 31, 2019 Dec 31, 2018

Total liabilities

89,684,076

91,604,067

Total equity

262,880,421

247,753,177

Total liabilities to equity ratio

34.1%

37.0%

Samsung Electronics Business Report 48 / 261

8. Derivative instruments and put options

The company holds convertible preferred shares of Corning Incorporated and its value as of December 31, 2019 is as

follows.

(KRW mil)

Purchasing price Fair value Valuation gain Valuation loss

Convertible preferred

shares

2,434,320 3,969,983 1,535,663 -

Note: Fair value is determined using Trinomial Tree model; valuation gains reflected in equity (under other components of equity).

Valuation conducted by Shinhan Accounting Corporation.

To manage foreign exchange risk, SEC’s subsidiaries hedge their foreign currency positions by trading currency forward

contracts of such currencies. Overseas subsidiaries buy or sell currency forwards through a bank in the purpose of trade.

As of December 31, 2019, the Company had 2,154 currency forward contracts involving 34 foreign currencies including

USD/EUR/JPY. Currency forwards as of December 31, 2019 were as follows.

(KRW mil)

Asset Liabilities Valuation gain Valuation loss

Currency forwards 62,418 69,842 766,522 739,171

The Company applies cash flow hedge accounting to hedge the foreign currency risk of forecasted transaction inc luding

hedging the price risk associated with forecast inventory purchases. Details of derivative financia l instruments that qualify

as cash flow hedges as of December 31, 2019 are as follows:

(KRW mil)

Dec 31, 2019

Dec 31, 2018

Assets

Liabilities

Assets

Liabilities

Currency forward exchange contracts

Current items

20,946

5,396

18,343

6,344

Non-current items

5,498

5,144

7,619

4,095

Total

26,444

10,540

25,962

10,439

During the year ending December 31, 2019, the Company recognizes the gains relating to the effective portion of c hanges

in fair value of derivatives that are designated and qualify as cash flow hedges in other comprehensive income, which

amount to KRW 1,811 million (after tax), and recognizes the gains relating to the ineffective portion in profit or loss,

which amount to KRW 975 million (before tax). Losses reclassified directly from other comprehensive income to profit or

loss amount to KRW 916 million (after tax), and gains reclassified from other comprehensive income to the carrying

amount of inventory amount to KRW 30,786 million (a fter ta x).

Samsung Electronics Business Report 49 / 261

9. Major contracts

Account Contract information Contents

Ericsson

Type Patent cross-license agreement

Date Jan 25, 2014

Purpose and contents Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Google

Type Patent cross-license agreement

Date Jan 25, 2014 / indefinite term

Purpose and contents Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Others Permanent license contract (including patent applications in the next 10 years)

Cisco

Type Patent cross-license agreement

Date Jan 23, 2014

Purpose and contents Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Global Foundries

Inc.

Type Process technology license contract

Date Feb 28, 2014

Purpose and contents Expand customer base of 14nm process

InterDigital

Type Patent license agreement

Date Jun 3, 2014

Purpose and contents Eliminate risk of patent disputes and lawsuits through patent licensing

HP

Type Sales of printing solutions business

Date Sep 12, 2016

Purpose and contents Concentrate on our core competencies and advance business structure

Others Transaction value: USD 1.05 billion

Qualcomm

Type Cross licensing agreement (amendment to the existing agreement)

Date Jan 1, 2018–Dec 31, 2023

Purpose and contents

Eliminate risk of patent disputes and lawsuits through mutual patent licensing and signing of

covenant not to sue

Others -

Apple

Type Withdrawal of lawsuit agreement

Date Jun 26, 2018

Purpose and contents Withdraw from all lawsuits in the United States

Samsung Electronics Business Report 50 / 261

Others -

Nokia

Type Patent license agreement

Date Oct 19, 2018

Purpose and contents Eliminate risk of patent disputes and lawsuits through patent licensing

Others -

Huawei

Type Cross licensing agreement

Date Feb 28, 2019

Purpose and contents Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Others -

Microsoft

Type Patent cross-license agreement

Date Feb 11, 2019

Purpose and contents Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Others -

Google

Type EMADA

Date Feb 27, 2019–Dec 31, 2019

Purpose and contents

Licensing agreement for using Google apps (Play Store, YouTube, etc.) in 31 European

countries (EEA)

Others -

AMD

Type Technology licensing agreement

Date May 30, 2019

Purpose and contents Secure intellectual property for mobile products and other applications

Others -

Sharp

Type Patent cross-license agreement

Date July 30, 2019

Purpose and contents Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Others -

Note: Information that may be referenced or used in other IP disputes, including contract amount, is excluded.

Samsung Electronics Business Report 51 / 261

10. Research and development activities

A. Summary of activities and R&D expe nditures

The Company is leading the global market by continuously deve loping creative and innovative products and the future

technology through shifting its way of thinking and understanding customer demand. The Company is currently

developing creative and innovative products and doing its utmost to cement its position in the global IT industry and

become a worldwide le ader in industrial technology by creating and securing next-generation technology.

As of December 31, 2019, the Company’s R&D expenses were KRW 20,207.6 billion. Among this, KRW 19,907.2 billion

was recognized as expenditures, excluding KRW 14.7 billion of government subs idies and KRW 285.7 billion of

capitalized expenses.

[R&D expenses]

(KRW mil)

2019

2018

2017

Total R&D expenditure 20,207,612 18,662,029 16,805,637

(Government subsidies) -14,677 -11,645 -2,484

R&D expenditure 20,192,935 18,650,384 16,803,153

Accounting

Capitalization of development

expenses (intangible asset)

-285,699 -296,304 -447,541

R&D costs (expenses) 19,907,236 18,354,080 16,355,612

R&D expenses/sales ratio*

8.8%

7.7%

7.0%

Note: Consolidated basis in conformity with K-IFRS.

*Calculated with the amount of the total R&D expenditure, which includes government subsidies.

B. R&D organization and operations

(Domestic)

The Company operates three levels of R&D organizations; a business unit development team under each Div ision that

develops market ready technologies with a 1

–2 year outlook, a research institute under each business unit that develops

mid-to-lo ng term technology with a 3

–5 year outlook, and the Samsung Advanced Institute of Technology that develops

core technology as seeds for future growth engines.

Samsung Advanced Institute of Technology is the central research institute of Samsung Electronics that has been

established to lead the Company into the future and serve as an incubator of cutting-edge technology. It has a creative

R&D system and provides R&D direction for promis ing growth sectors at the Company level, exploring future growth

engines and strengthening technological competitiveness of core businesses.

(Overseas)

The Company operates R&D organizations in the US (SRA), Russia (SRR), Israel (SRIL and SIRC), India (SRI-

Bangalore and SRI-Delhi), Japan (SRJ), China (SSCR, SRC-Beijing, SRC-Nanjing, SRC-Tianjin, SRC-Guangzhou, and

SRC-Shenzhen), Bangladesh (SRBD) to carry out research activities for product deve lopment and basic technological

research.

The Company has established AI centers in Cambridge (United K ingdom), Moscow (Russia), Toronto (Canada), Montreal

(Canada), and New York (United States), so our globa l team of researchers can collaborate with internationa l experts to

strengthen capabilities in AI technology.

Samsung Electronics Business Report 52 / 261

Note: As of Dec 31, 2019.

Re fer to 『G. Subsidiaries subject to consolidation』in 『I. Corporate Overview』for more details about overseas R&D

organizations.

Samsung Electronics Business Report 53 / 261

C. R&D results

CE Division

Research project

Details

Visual Display

QLED TV

Q8C

April 2017

□ Curv ed QLED TV (75")

□ Specs and Features

- Design: Four side bezel-less; simple edge; metal back stainless silv er stand (U-type); slim wall mount

- Concept: Produce four side bezel-less design QLED TV

- Image quality: Optimal brightness, expanded color v olume, accurate image, better viewing angles and deeper black colors

- Optical cable and One C onnect prov ides users w ith optimal conv enience in terms of connectiv ity

QLED TV

Q6F

April 2018

□ Flat QLED TV (49/55/65/75/82")

□ Specs and Features

- Design: Three-sided bezel-less; simple stand; VESA wall mount

- Concept: Offer QLED image quality and v alue at a lower price

- Image quality: C olor v olume 100% ; optimal brightness

- Improv ed mobile/TV usability, Bixby functionality,Smart experience that ex ceeds simple entertainment

QLED TV

Q6F

July 2018

□ Flat QLED TV (49/55/65/75/82")

□ Specs and Features

- Design: Three-side bezel-less; simple stand; VESA wall mount

- Concept: Offer QLED image quality and value at a lower price

- Image quality: C olor v olume 100% ; optimal brightness

- Improv ed mobile/TV usability, Bixby functionality, Smart ex perience that exceeds simple entertainment

QLED TV

Q60T

February 2019

□ Flat QLED 4K TV (49/55/65/75")

□ Specs and Features

- Design: Super narrow bezel; minimalist design; simple stand

- Concept: Provide optimal 4K viewing experience, AI-based lifestyle, and improved user experience

- Image quality: C lear, life-like colors and optimal 4K viewing experience for all content thanks to AI-based upscaling

- AI: Optimal image and sound quality; and usability to the environment and user context without user input

- Bixby2.0: Voice Assistant; expanded user ex perience at home

- Universal Guide: Improved user satisfaction by expanding catalogue and content recommendations to tailor suggestions by

target segment

QLED TV

Q70D

February 2019

□ Flat QLED 4K TV (55/65/75/82")

□ Specs and Features

- Design: Four-side bezel-less; direct full array panels; simple stand; real metal

- Concept: Deliv er QLED picture qualities with deep blacks via direct full array

- Image quality: Superior brightness and color v olume of QLED; deeper blacks via direct full array ; AI upscaling

- Features

- AI: Provides optimal image and sound quality, and usability to the environment and user context without user input

- Bixby2.0: Voice Assistant; expanded user ex perience at home

- Universal Guide: Improved user satisfaction by expanding catalogue and content recommendations to tailor suggestions by

target segment

QLED TV

Q900Z

February 2019

□ Flat QLED 8K TV

□ Specs and Features

- Design: Three-side bezel-less, 120Hz, premium picture quality (full direct L/D) QLC, Q Style 2.0 (OC); Q Smart; AI picture

quality;

materialized the epitome of beauty with sophisticated real metal design and high-end one solid metal bezel-less design

- Image quality : QLED quality; uses AI Technology offering a personalized picture quality that evolves to fit the user’s

environment

- Blends seamlessly w ith the surrounding env ironment with One Invisible Connection and Zero Gap WMT

QLED TV

LS03

April 2019

□ Flat QLED 4K TV; Life Style TV

□ 43/49/55/65"

□ Specs and Features

- Design: Real frame look; No Gap Wall Mount; Invisible Cable

- Concept: Offer picture frame functionality along with high-definition QLED in The Frame; allow appreciation of artwork and TV

content with a single product

- Image quality: H igh-definition with vivid, rich colors and AI-based cutting-edge technology provides upscale experiences for

viewing both artwork and TV content.

QLED TV

Q70

July 2019

□ Flat QLED 4K TV (49/55/65/75/82")

□ Specs and Features

- Design: Four-side bezel-less; direct full array panels; simple stand; real metal

- Concept: Deliv er deep blacks and QLED image quality v ia direct full array

- Image quality: Superior brightness and color volume; deeper black color via direct full array ; AI upscaling

Samsung Electronics Business Report 54 / 261

CE Division

Research project

Details

QLED TV

Q80R

August 2019

□ Flat QLED 4K TV (55/65/75")

□ Specs and Features

- Design: Four-side bezel-less; direct full array panels; Soft-T stand (W/W)/flat foot stand (North America); real metal

- Concept: Deliver QLED image quality and lifestyle experience via direct full array

- Image quality: Ultra-low light reflection, AI upscaling, and improv ed field of view deliver QLED image quality

QLED TV

LS01

August 2019

□ Flat QLED 4K TV (43/49/55")

□ Specs and Features

- Design: Life Style TV, I-shape, metal floor stand

- Concept: Offer Lifestyle TV with maximized objet and non-TV experience v ia differentiated designs

- Image quality: Deliv ers QLED picture quality with clear and accurate life-like colors and AI upscaling ex perience

UHD TV

MU7000

February 2017

□ Flat U H D TV (49/55/65")

□ Specs and Features

- Design: Slim unibody; real 360; bezel-less; screw-less; branch stand

- Image quality: U HD 120Hz; flat; local dimming

- Prov ide optimal conv enience in terms of connectivity though One Connect mini

UHD TV

MU6300

MU6100

March 2017

□ UHD Curved TV (40/43/49/50/55/65/75")

□ Specs and Features

- Design: Minimalist design; V-shape stand

- Image quality: Active cry stal color (DCI 92% )

- New Smart features (Eden 2.0, Eden Mobile) provides users with easier and more convenient content experiences

UHD TV

MU6400

March 2017

□ U H D Flat TV (40/49/55/65")

□ Specs and Features

- Design: Metal design; bolt-less clean back; ultimate slim design; Y-shape stand

- Image quality: Active cry stal color (DCI 92% )

- New Smart features (Eden 2.0, Eden Mobile) provides users with easier and more convenient content experiences

UHD TV

MU6500

Mar 2017

□ UH D Curved TV (49/55/65")

□ Specs and Features

- Design: Metal design; bolt-less clean back; ultimate slim design; Y-shape stand

- Image quality: Active cry stal color (DCI 92% )

- New Smart features (Eden 2.0, Eden Mobile) prov ides users w ith easier and more conv enient content ex periences

UHD TV

MU6100

April 2017

□ U H D Flat TV (49/55/58/75")

□ Specs and Features

- Design: Minimalism design; V-shape stand

- Image quality: Active cry stal color (DCI 92% )

- New Smart features (Eden 2.0, Eden Mobile) prov ides users w ith easier and more conv enient content ex periences

UHD TV

LS003

May 2017

□ Lifesty le TV (55/65")

□ Specs and Features

- Design: Frame edge design; No Gap Wall Mount

- Image quality: Active crystal color (DCI 92% ) paper look

- Art Mode on paper like PQ, Mobile control, Samsung Collection, Invisible Connection, Replaceable deco frame

UHD TV

MU6103

July 2017

□ Economical UHD Flat TV (40/43/49/50/55/65/75")

□ Specs and Features

- Design: Minimalist design; V-shape stand

- Image quality: Active cry stal color (DCI 92% )

- New Smart features (Eden 2.0, Eden Mobile) prov ides users w ith easier and more conv enient content experiences

Does not support Bluetooth and Smart Controller, while MU6100 does

UHD TV

MU6303

July 2017

□ Economical UHD Curv ed TV (49/55/65")

□ Specs and Features

- Design: Minimalist design; V-shape stand

- Image quality: Active cry stal color (DCI 92%)

- New Smart features (Eden 2.0, Eden Mobile) prov ides users w ith easier and more conv enient content ex periences

Does not support Bluetooth and Smart Controller, while MU6300 does

UHD TV

LS003

December 2017

□ Lifesty le TV (43")

□ Specs and Features

- Design: Frame edge design; No Gap Wall Mount

- Image quality: Active crystal color (DCI 92% ) paper look

- Art Mode on paper like PQ, Mobile control, Samsung Collection, Invisible Connection, Replaceable deco frame

UHD TV

NU7100

March 2018

□ U H D Flat TV (40/43/49/50/55/65/75")

□ Specs and Features

- Design: Sleek 360°design; cable management; luminous bezel; simple stand

- Image quality: UHD 60Hz; HDR 10+

- Enhanced usability and conv enience by boosting connectivity with other dev ices

(Univ ersal Browse prov ides a suite of content regardless of live and app)

Samsung Electronics Business Report 55 / 261

CE Division

Research project

Details

UHD TV

NU7300

March 2018

□ UH D Curved TV (49/55/65")

□ Specs and Features

- Design: Sleek 360°design; cable management; luminous bezel; simple stand

- Image quality: UHD 60Hz; HDR 10+

- Enhanced usability and conv enience by boosting connectivity with other devices

(Univ ersal Browse provides a suite of content regardless of live and app)

UHD TV

NU7400

March 2018

□ U H D Flat TV (43/50/55/65")

□ Specs and Features

- Design: Sleek 360°design; cable management; front volume bezel; v-ty pe center

stand

- Image quality: UHD 60Hz; HDR 10+; activ e cry stal color

- Enhanced usability and convenience by boosting connectiv ity with other devices

(Univ ersal Browse prov ides a suite of content regardless of liv e and app)

- Control peripheral devices via one remote or v oice recognition (supports Bluetooth)

UHD TV

NU7500

March 2018

□ UH D Curved TV (49/55/65")

□ Specs and Features

- Design: Sleek 360°design; cable management; front v olume bezel; v-type center

stand

- Image quality: UHD 60Hz; HDR 10+; activ e cry stal color

- Enhanced usability and conv enience by boosting connectivity w ith other dev ices

(Universal Browse provides a suite of content regardless of live and app)

- Control peripheral devices via one remote or v oice recognition (supports Bluetooth)

UHD TV

NU8000

March 2018

□ Flat U H D TV (49/55/65/75/82")

□ Specs and Features

- Design: Three-sided bezel-less; cable management; T-type center stand; VESA wall mount

- Image quality: U HD 120Hz; flat; local dimming

- Prov ides the best gaming experience with improved performance on input lag and motion-related game quality

UHD TV

NU8500

March 2018

□ Curv ed U H D TV (55/65")

□ Specs and Features

- Design: Three-sided bezel-less; fixed cable; T-ty pe center stand; VESA wall mount

- Image quality: U HD 120Hz; curved; local dimming

- Prov ides the best gaming experience with improved input lag and motion-related game quality

UHD TV

NU7100

May 2018

□ U H D Flat TV (43/58")

□ Specs and Features

- Design: Sleek 360°design; cable management; luminous bezel; simple stand

- Image quality: UHD 60Hz; HDR 10+

- Enhanced usability and conv enience by boosting connectivity with other devices

(Univ ersal Browse provides a suite of content regardless of liv e and app

UHD TV

NU7400

May 2018

□ U H D Flat TV (43/50")

□ Specs and Features

- Design: Sleek 360°design; cable management; front v olume bezel; v-type center stand

- Image quality: UHD 60Hz; HDR 10+; activ e cry stal color

- Enhanced usability and convenience by boosting connectiv ity with other devices

(Univ ersal Browse provides a suite of content regardless of liv e and app)

- Control peripheral dev ices via One Remote or v oice recognition (supports Bluetooth)

UHD TV

LS03N A

June 2018

□ Lifesty le TV (55/65")

□ Specs and Features

- Design: frame edge design; No Gap Wall Mount

- Image quality: Active cry stal color (DCI 92% ) Paper Look

- Art Mode on paper like PQ, Mobile control, Samsung Collection, Invisible Connection 2.0, Replaceable deco frame

UHD TV

NU7090

July 2018

□ U H D Flat TV (43/50/55/65/75")

□ Specs and Features

- Design: Sleek 360° design; cable management; simple stand

- Image quality: UHD 60Hz; HDR 10+

- Enhanced Eden UI enables a conv enient ex perience via content searches through both live TV or Apps

UHD TV

LS03N A

August 2018

□ Lifesty le TV (49/43")

□ Specs and Features

- Design: Frame Edge Design; Zero Gap WMT

- Image quality: Active crystal color (DCI 92% ) paper look

- Art Mode on Paper like PQ, Mobile control, Samsung Collection, Invisible Connection 2.0, Replaceable deco frame

Samsung Electronics Business Report 56 / 261

CE Division

Research project

Details

UHD TV

RU7100

February 2019

□ U H D Flat TV (43/49/55/65/75")

□ Specs and Features

- Design: Sleek 360°design; cable management; luminous bezel; simple stand

- Image quality: C learer viewing ex perience in UHD v ia our image quality improvement algorithm

- Improv ed searching of new services and customized contents—eg, TV Plus, iTunes, Airplay (new)

- IR blaster: Enhanced experience through convenience of One Remote

UHD TV

RU7300

February 2019

□ UH D Curved TV (55/65")

□ Specs and Features

- Design: Sleek 360°design; cable management; luminous bezel; simple stand

- Image quality: C learer viewing ex perience in UHD via our image quality improvement algorithm

- Improv ed searching of new serv ices and customized contents—eg, TV Plus, iTunes, Airplay (new)

- IR blaster: Enhanced experience through convenience of One Remote

UHD TV

RU7400

February 2019

□ U H D Flat TV (50/55/65")

□ Specs and Features

- Design: Sleek 360°design; cable management; front v olume bezel; V-shape stand

- Image quality: U HD delivers abundant color of the original content via Dynamic Crystal Color

- AI: Optimal image quality, sound quality, and usability to the env ironment and user contex t w ithout user input

- Bixby2.0: Voice Assistant, expanded user experience at home

- Universal Guide: Improv ed user satisfaction by expanding contents recommendation and catalogue to prov ide

recommendation by target segment

UHD TV

RU8000

March 2019

□ UH D Flat TV (49/55/65")

□ Specs and Features

- Design: Super narrow bezel, minimal, simple stand

- Concept: 4K TV that offers clearer image quality of 120Hz and smart functions based on user lifestyle

- Image quality: C lear and accurate life-like colors and optimal 4K viewing ex perience of MR240

- AI: Optimal image quality, sound quality, and usability to the env ironment and user context without user input

- Bixby2.0: Voice Assistant, expanded user ex perience at home

- Universal Guide: Improved user satisfaction by ex panding contents recommendation and catalogue to prov ide

recommendation by target segment

UHD TV

NU6900

Nov ember 2019

□ UH D Flat TV (70")

□ Specs and Features

- Design: Slim design look, glossy black, simple stand

- Full LED (bar) panel, differentiated from existing Edge models

HD-TV

HF690

August 2017

□ Product concept

- Offer customized products and solutions by market segment

- New Premium Smart Line-up (HF590/690) for 3- and 4-star hotels

- Platform: Kant-M (Tizen3.0)

□ Specs and Features

- Panel: Same specifications as M5500, 32"/43"/49"/55"

- Circuits platform: Kant-M (Tizen3.0)

 SMPS: Shares M5500 SMPS design

 HDMIx3, USBx2, RJ12, LAN, Opt, Comp/AV, RJP, BathSPK, LAN OUT

- Device design: Shares M5500 series design

- Swivel stand/box: Same features with 690 series of 2016

LFD

QMH

August 2017

□ Product concept

- Introduce premium UHD line up

 UHD (high resolution) signage line-up

 Provide signage solutions through SoC application

- Improv e size competitiveness of UHD line-ups

 Respond to the market’s needs for high-definition products by building full line-ups with div erse sizes

- Non-glare screen, 24/7 usage, same as QMF of 2016

 Apply required specifications for LFD usage

□ Specs and Features

- Inch: 49/55/65”

- Platform: Orsay → Tizen 3.0, removed DTS and DIVX

- C ircuits: Integrated with platform for FH D/UH D models → Kant-M SoC

 Improv ed specification/features: SE13U (Scaler) → Kant-M (SoC)

- Panel: 24/7, V-PID, non-glare (haze 25% )

Samsung Electronics Business Report 57 / 261

CE Division

Research project

Details

LM

CJ89

March 2018

□ Product concept

- Offer unprecedented monitor size (32:9, 49”) in the B2B market and boost users’ work efficiency and cost efficiency

- Address consumer pain points

- Enhance usability of Dual monitor by eliminating bezel intervention

- Apply latest I/F performance with USB-C

□ Specs and Features

- Inch: 49”

- Added USB-C and ex cluded gaming features from CHG9

- Remov ed QD sheet from panel embedded in CHG9

AV (HAV)

HW-N650

April 2018

□ Soundbar (One Body )

- Hole array

- Optimized sound field for game play ers

- Automatic sound field adjustment for different videos

- One Experience with better interoperability

- One Remote, 360W (3.1ch) power, Bluetooth, HDMI In/Out, USB

AV (HAV)

HW-NW700

April 2018

□ Soundbar (One Body )

- One Body enabled by a built-in subwoofer

- Automatic sound field adjustment for different videos

- One Experience with better interoperability

- One Remote, 210W(7ch) power, WiFi/Bluetooth, HDMI In/Out, USB

- Voice Interaction: 3PDA (Amazon)

LFD

QBN

July 2018

□ Product concept

- Standalone signage QB lineup introduced in 2018

- Mainstream lineup with UHD resolution and Tizen solution

 Strengthened competitiveness by applying the Tizen platform

 Improved cost competitiv eness of the UHD lineup

□ Specs and Features

- Inch: 49/55/65/75”

- Panel: TV New Edge NU7.1K (note: optic sheet has been changed upgraded brightness)

 350nit (MOP → high DPP), glare panel

- Kant-M2e, Tizen 4.0 W/W common design

- SMPS: TV NU7.1K (note: AL cap has been changed to address MTBF lifespan issues)

LFD

QMN

October 2018

□ Product concept

- Increased competitiv eness and efficiency by applying B2C New Edge models to 2018 standalone products.

- Increased R&D and production efficiency ; reduced cost by increasing B2C commonality (NU7.1K)

 Reduced costs by increasing commonality of panel and bottom chassis

□ Specs and Features

- Inch:49/55/85/98”

- Common design for signage-specific specifications.

 Adopt common pivot function structure and IT standards

 Adopt common panels, instruments, SMPS, and speakers

- Increased commonality of TV N U7.1, BLU, and instruments



N ote: luminance increased by 450nit; optic sheet 450nit (MOP→DBEF complex sheet), non-glare panel

LCD Monitor

SR75

January 2019

□ Product concept

- Monitor that addresses user pain points

 Uses minimum installation space to allow user more freedom

 Built-in arm stand allows minimized installation space and cleaner appearance

- Frame design integrates well with the space

□ Specs and Features

- Inch: 27/32"

- Three-side bezel-less / built-in arm stand / frame design

- Supports high-resolution

 32" UHD (3840 X 2160)

 27" WQHD (2560 X 1440)

LCD Monitor

CRG5

March 2019

□ Product concept

- Secure market share by introducing a mid-range-and below- model in the FHD 24” segment, the most dominant segment in

the gaming market

- Offer a more comfortable and immersiv e gaming image quality

- Add a design factor that applies gaming identity in the back

□ Specs and Features

- Inch: 49”

- Seamless scanning rate of 144Hz and soft mov ement without afterimage

- Offers seamless gaming screen without screen tearing by adjusting the Free-sy nc playback rate

- Optimal gaming mode for different games

Samsung Electronics Business Report 58 / 261

CE Division

Research project

Details

LCD Monitor

CRG9

March 2019

□ Product concept

- Lead the trend of curv ed, wide, high-definition, large-size monitor in the gaming market v ia 32:9 49" performance upgrade

- Best flagship model adopted with 5K + HDR1000

□ Specs and Features

- Inch: 49”

- Offers more abundant and viv id colors enabled by QD technology

- Prov ides a more immersive experience via 32:9 Wide Curv ed Form Factor

- Addresses user pain points of dual monitors

- Improv es usability and added convenience v ia features such as tilt, HAS, swivel

Sound Bar

SBQ70R

March 2019

□ Product concept

- Offer realistic user ex perience and sound to match TV market trends

- Increase sales attach rate by matching the design and color with our TV products

□ Specs and Features

- Improv ed TV sound and gaming ex perience v ia patent technologies (ATMOS and Acoustic beam)

- Prov ides sound field (AI sound, Game Pro) optimized for consumer contents

- Prov ides 3D virtual surround via hole array technology

LFD

QHR

October 2019

□ Product concept

- Premium UHD line up with high brightness (700nit)

- Also applied in B2B designs (QMR, QBR)

- Strengthened solution competitiveness by apply ing Tizen platform

□ Details

- Inch: 65/75”

- Panel: 700nit, 24/7, non-glare (same for QMR)

- Platform: Kant-M2e + SE18S (same for QMR)

- Landscape and piv ot usage, IT-size

- WIFI and BT applied

LCD Monitor

UR55

December 2019

□ Product concept

- Maintain leadership in the U HD 27/28” market by introducing a new model with bezel-less design

□ Details

- Inch: 28”

- Three-side bezel-less design offers immersive experience with seamless screen

- Offers viv id images without color distortion, via wide v iewing angle and high color gamut

- HDR10 applied

Home appliances

Wind-Free

TM

Gallery

floor-standing air conditioner

January 2019

□ Floor-standing (56.9/62.6/75.5/81.8/92.5

㎡

)

□ Details

- Developed nex t-gen wind-free platform with the highest lev el of energy efficiency (56.9 m2 single duct model achiev ed energy

efficiency grade 2)

- Equipped with wind-free panel 1.5 times larger than prev ious model and strong booster wind

- Booster purification: Filter with 99.95% dust collection efficiency

- Design resembling that of furniture, fits comfortably into the surroundings

Jet cordless v acuum

January 2019

□ Cordless vacuum (up to 200W suction)

□ Details

- Washable multi-cyclone dust collector

- Prev ents 99.999% of the fine dust from leaking out

- Equipped with a brush that removes dust and works as a mop

- LED display for monitoring

- Floor-standing for convenient storage

SBS refrigerator

February 2019

□ RS5000RC new SBS platform

- Large capacity: 617 ℓ (2 door plumbing)

- Flex Zone → 0/1/3 degree mono

- Flat duct →Tw in cooling look

- H orizontal hairline → improv ed quality and style

Air dresser clothing care

February 2019

□ Large size able to accommodate long dresses (24")

□ Details

- Real Care (inner garment car, low noise)

- Real Purification (fine dust filter), Real Deodorization (odor-decomposing filter)

- Real Sterilization (jet steam), wrinkle care, Real Dehumidifying (dehumidifies the room ev en with the door closed)

Samsung Electronics Business Report 59 / 261

CE Division

Research project

Details

Pro Range oven

(February 2019)

□ Pro Range (36")

□ Details

- 22K BTU Dual Burner: 22K dual power burners offering intense heat, which cuts cooking time, and precise control when

needed

- Dual Fan Convection: Allows optimized even cooking with two fans

- Dual Infrared Broil Burner: Two infrared broil burner delivers even cooking

- Steam Cook: Brings the perfect texture to food, making the outside crispy and keeping the inside moist

- SmartHome & IoT

Bespoke Refrigerator

(May 2019)

□ T-Ty pe

ㆍ

SBS

ㆍ

Kimchi

ㆍ

BMF

ㆍ

Ladder 1Door (24" R/F/Kimchi)

ㆍ

18" New 1Door

□ Details

- Customers can configure designs in many w ays

- Easy design changes

- Can set up combinations of fridge/freezer/kimchi refrigerators between similar models

- Kitchen FitTM model av ailable

Wind-Free

TM

wall-mount

wide air conditioner

(October 2019)

□ Wide air conditioner

□ Details

- Secured cost competitiveness by developing new integrated QMD-based platform, strengthened product competitiv eness

- 12% larger fans cools the air faster

- Wind-free ultra-energy-efficient technology saves up to 77% on electricity

- PM1.0 wind-free filtration sy stem removing particles as small as ultra-fine dust

IM Division

Research project

Details

Mobile

Galaxy S10

(March 2019)

(5G: April 2019)

□ Galaxy S10e

ㆍ

S10

ㆍ

S10+

ㆍ

S10 5G (5.8/6.1/6.4/6.7")

□ Design: Full Front Punch Hole Infinity Display

□ Details

- Platform (H/W, S/W): Makalu (Europe), SM8150 (North America), Android 9

- World’s first model using commercialized 5G technology

- Combination of triple cameras delivers zoom, tele, ultra wide function: wide (12M)+tele (12M)+ultra wide (16M)

- Supports HDR10+ v ideo shooting on mobile for the first time in the world

- Dynamic AMOLED display delivers near-original colors, supports HDR

-On-screen fingerprint recognition sensor using ultrasound

Galaxy Note10

(July 2019)

□ Galaxy Note10

ㆍ

10+ (6.3

ㆍ

6.8")

□ Design: Full Front Punch Hole Infinity Display

- Platform (H/W, S/W): Makalu (7nm), Android 9.0

- Upgraded S Pen

ㆍEnhanced usability with higher battery capacity and improved BT latency

ㆍOffers new feature using 6-axis sensor

- Quad camera supports high-resolution and max imum viewing angle shooting under wide range of illuminance

ㆍ

Wide (12M ) + tele (12M ) + superwide (16M ) + ToF

Galaxy Fold

(September 2019)

□ Creating a new market and securing market share by developing world’s first in-foldable smart phone

- 7.3" QXGA+(1,536×2,152) 1.5R in-foldable display

- Secured standard technology by developing hinge for in-foldable phones, a world’s first (released Feb 2019)

□ Offers new user ex perience tailored to foldable smart phones

- Can use up to three apps with multi-activ e window function, offering unrivaled multitasking env ironment

- When folding or unfolding the phone, prov ides app using ex perience with smooth changes between screens with minimal

interruption

Network

5G S/W PKG

(SVR18.3)

(April 2019)

□ S/W PKG to commercialize domestic 5G NR for the first time in the world

- Commercialized 5G NSA by using LTE network links in the Seoul and the capital area

- Supports 5G base station (3.5GHz, 28GHz, 39GHz 5G Massiv e MIMO)

□ Carriers that completed development: Korea (SK Telecom, KT, LG U+), Japan (KDDI), US (AT&T, Sprint, Verizon)

5G NR DU

(September 2019)

□ New dual CPU-based main card and first 5G SoC modem using channel card

□ Single H W can accommodate a combination of LTE, N R abov e, and NR below products, offering different channels at the

same time

□ Supports high-capacity , low power-consumption (including power sav ing) and virtualization/non-virtualiz ation S/W structure

□ Carriers that completed development: Korea (SK Telecom, KT, LG U+), Japan (KDDI), US (AT&T, Sprint)

Samsung Electronics Business Report 60 / 261

DS Division

Research project

Details

Memory

V-NAND

512GB eUFS for mobile

Based on 4th gen 64 lay er

Nov ember 2017

□ The world’s first mass production of 512GB eUFS SSD based on 64 layer V-NAND

- Lead the high density memory market by mass producing 512Gb V-NAND

- Prov ide the fastest solution with the biggest capacity

□ Driv e market growth by expanding the production of 4th generation 512Gb V-NAND

- Expand market leadership from smartphones and tablets to the SSDs

DRAM

10nm-class (1y ) 8Gh DDR4 for

PC s and servers

Nov ember 2017

□The world’s first 2nd generation 10nm-class 8Gh DDR4 DRAM

- Offers 30% better productiv ity, 10% faster speed, and 15% improv ed energy efficiency compared to the 1x- nano DRAM

- Development of ‘Three innovativ e Technologies’ boosting product competitiveness

□ Lead the market with the capability to mass-produce next-generation DRAMs

- Established a mass production sy stem for DDR5/ LPDDR5/ HBM3/ GDDR6

Z-NAND

800GB NVMe Z-SSD for

supercomputers

Based on 3rd gen 48 lay er

January 2018

□ Mass produced the w orld’s first 800GB NVMe Z-SSD for supercomputers

- 5 times the response time, 35 times the lifespan compared to NVMe SSD

- Best-in-class regarding performance, durability, and reliability in its system

□ Ex pand market v ia introduction of 2nd generation Dual Port Z-SSD lineup

- Target storage market, following early advancement into the HPC market.

V-NAND

30.72TB SAS SSD for servers

Based on 4th gen 64 layer

January 2018

□ Mass produce the world’s first 30.72TB SAS SSD for next generation serv ers

- The only 2.5-inch 30.72TB v ia adoption of 512Gb V-NAND

- 2 times the capacity, 2 times the random read speed compared to previous version

□ Lead SAS market grow th by ex panding the ultra-high capacity lineup

- Expand into enterprise market, following data center market

V-NAND

8TB NF1 NVMe SSD for server

Based on 4th gen 64 lay er

May 2018

□ Mass produce the world’s first nex t-generation 8TB NF1 NVMe serv er SSDs

- Offer 8TB in NF1 size by adopting 512Gb V-NAND

- Increased sy stem storage capacity by three times v ia 8TB SSDs

□ The industry’s only 8TB lineup that opened a NF1 market

- Expanded core product in the premium NVMe SSD market to 8TB SSDs

V-NAND

PC 256GB SSD

Based on 5th gen 9x lay er

June 2018

□ Mass production of the world’s fastest PC SSD based on 5th generation V-NAND

- Unprecedented mass production of VNAND stacked with 90 layers or more

- 1.4 times faster than previous model with 30% improv ed productivity

□ Lead grow th of the storage market with ultra-high-speed and ultra-low-energy products

- Utilize 1Tb and QLC VN AN D to create a new market for nex t-generation products

DRAM

2nd gen 10-nano-class (1y)

16Gb

LPDDR4X DRAM for mobile

devices

July 2018

□ Mass produced world’s fastest and largest in capacity LPDDR4X DRAM

- Mass produced world’s first 2nd generation 10-nano-class (1y) 16Gb lineup

- 2 times the speed and productiv ity compared to the 20-nano DRAM

□ Lead market growth by mass producing cutting-edge DRAM in Pyeongtaek line.

- Expand high-capacity market v ia mass producing ultra-fast, ultra-power efficient, and ultra-small 12GB chips

V-NAND

1Tb 4-bit SSD for PC

Based on 4th gen 64 layer

September 2018

□ Mass produced world’s first PC SSD based on 1Tb 4-bit V-NAND

- Industry ’s first full-swing mass production of 64-layer cell stacked 1Tb 4-bit V-NAND

- Same read and write speed with the 3-bit SSD

□ Lead market growth by securing adv antages in ultra-high capacity and cost competitiveness

- Secured capacity to create next-generation market v ia 1Tb and QLC V-NAND

DRAM

1st gen10nm (1x) 256GB 3DS

DDR4 for server

October 2018

□ Mass production of world’s fastest and largest in capacity 3DS DDR4 DRAM

- The world’s first mass production of the ultra-high-performance, high- capacity DRAM

- Capacity doubled, power efficiency improv ed by 30%

□ Bolstered business capability by taking lead in the next-generation IT market

- Expanded demand for EUV-based DRAM by widening the premium lineup

V-NAND

5th gen (9x layer) 512Gb 3bit

eUFS for mobile

February 2019

□ The world’s first mass production of next-generation smartphone memory, eUFS 3.0

- Mass production of 9x layer 512Gb 3bit VNAND

- Read and write speeds increased twofold compared to eUFS 2.0

□ Lead grow th of the ultra-high-definition, next-generation mobile market

- Expanded the 1TB/256GB lineups following releases of 512/1286GB

DRAM

3rd gen10nm-lev el (1z) 8Gb

DDR4

March 2019

□ Development of the world’s first most precise process 1znm 8Gb DDR4 DRAM

- U ltra-high-speed, ultra-low-power solution for DDR5/LPDDR5

- Increased productiv ity 20% compared to the 2nd generation (1ynm) DRAM

□ Strengthened business capability by expanding premium DRAM lineup

- Increased production portion of nex t-generation DRAM lineup in the Py eongtaek line

V-NAND

256Gb SSD for PC

Based on 6th gen (1xx layers)

July 2019

□ Mass produced world’s fastest PC SSD based on 6

th

generation V-NAND

- Only company to mass produce single-stack structure 1xx-lay er V-NAND

- 1.2 times the speed, 20% improv ed productivity compared to the prev ious v ersion

□ Lead storage market growth with adv antages on ultra-fast, ultra-power efficient characteristics

- Target automotive market in full-swing, following early adv ancement into serv er and mobile market

Samsung Electronics Business Report 61 / 261

DS Division

Research project

Details

DRAM

2nd gen 10-nano class (1y)

12Gb LPDDR5 for mobile

(July 2019)

□ Mass produced world’s highest speed and highest capacity 12Gb LPDDR5 for mobile

- Provides next-generation mobile solution with better speed, capacity, and energy-efficiency

- 1.3 times faster (5,500Mbps), contributed to introduction of 5G smartphone with 30% reduced power consumption

□ Continue to nex t-generation market by leading the creation of premium mobile DRAM market

- Industry ’s first 12Gb LPDDR5-based lineup (6GB, 12GB)

V-NAND

30.72TB NVMe SSD for serv er

Based on 5th gen (9x layers)

September 2019

□ Mass produced world’s fastest and highest capacity 30.72TB N VM e SSD for serv ers

- Secure nex t-generation SSD solution by strengthening speed, capacity, and economic feasibility

- Introduce PCIe Gen4 SSD that delivers 2.2 times the speed (8GB/s) compared to the prev ious version

□ Enhanced business status by leading premium SSD market grow th

- The only model in the industry that provides three major SW solutions (Nev er Die SSD, FIP, ML)

Nex t-generation 12-stacked 3D-

TSV 12GM HBM DRAM

packaging technology

for supercomputers

(October 2019)

□ Dev eloped 12-stacked 3DS TSV packaging technology for HBM DRAM with the highest capacity in the world

- Developed 12GM HBM DRAM for the first time in the world, offering the highest performance and capacity

-1.5 times the capacity and improv ed sy stem design using the same package as 8GB

□ Strengthened capabilities to lead the nex t-generation HPC DRAM market by making a breakthrough in packaging technology

- Plan to mass produce 24GB HBM—industry’s highest capacity—to meet customer’s needs

Mobile image sensor

S5K2X7

October 2017

□ U ltra-small high-resolution image sensor, ISOC ELL Fast 2L9

- Autofocus, dual pixel technologies

- Micro-manufacturing process reduced the size of the pix el to 1.2㎛ from 1.4㎛

- A single image sensor is capable of out-focusing

Mobile image sensor

S5K2L9SX

October 2017

□ U ltra-small high-resolution image sensor, ISOC ELL Slim 2X7

- Vivid and bright pictures enabled by TetraCell technology, which allows pixel self-adjustment

- Ultra-small image sensor with the smallest ever pixel size (0.9㎛)

- DTI processing applied physical walls between pix els.

Mobile image sensor

S5K2L3

February 2018

□ New 3-stack, DRAM-embedded ISOCELL Fast 2L3

- Sav es large quantity of images at high speed

- Super-slow motion up to 960 frames per second

□ Auto focus enabled by dual pix el technology

- Precise and swift auto focus at any circumstance

- Combination of cutting edge technologies such as 3D noise reduction, HDR, etc.

Image sensor solution

February 2018

□ Total solution that prov ides functions of an image sensor and S/W algorithm

- Eliminate S/W purchasing costs and reduce sensor/AP optimization time

- Dual camera capable of refocusing and low light shooting

Mobile image sensor

S5K3P9

May 2018

□ Small pixel hy persensitive image sensor, ISOC ELL Slim 3P9

- Smaller chips and improv ed pix el efficiency and noise

- Improv ed features such as autofocus image stabilization

□ Provides a turn-key solution named ‘Plug and Play ’

- Prov ided with pre-optimized modules (AP, camera module, actuator, etc.) and S/W image tuning

- Prov ides VC X ev aluation setting and shortens research period

Image sensor technology

June 2018

□ Image sensor improvement technology, ISOCELL Plus

- Minimizes optical loss and light reflection/absorption by using higher metal barriers

- Improv ed low light sensitiv ity

Mobile image sensor

S5KGM1

October 2018

□ 0.8um ultra-small pixel ISOCELL Bright GM1

- 48 million ultra-high-definition image sensor

- Realize high-sensitive effect v ia the Tetracell technology

□ Improv es response to demand for high-definition, multi-cameras

- Offers high-quality images enabled by ultra-small pixels and Tetracell technology while also providing flex ibility for slimmer

designs

Mobile image sensor

S5KGD1

October 2018

□ 0.8um ultra-small pixel ISOCELL Bright GD1

- 32 million high-definition image sensor

- Realize high-sensitive effect v ia the Tetracell technology

- Supports HDR, enabling adequate brightness and abundant colors for both bright and dark areas

□ Improv ed response to demand for high-definition, multi-cameras

- Offers high-quality images enabled by ultra-small pixels and Tetracell technology while also prov iding flexibility for slimmer

designs

Mobile image sensor

S5K3T2

January 2019

□ U ltra-small pixel image sensor ISOCELL Slim 3T2

- High pixel optimized to bezel-less display

- Most compact image sensor at 1/3.4” (20Mp)

- High-quality pictures in low-light settings thanks to the tetracell technology (front)

- High magnification mode (back) decreases module sizes and improv es picture

quality

Samsung Electronics Business Report 62 / 261

DS Division

Research project

Details

Mobile image sensor

S5KGW1

May 2019

□ U ltra-high definition image sensor ISOCELL Bright GW1

- Highest-resolution mobile image sensor (64 megapix els)

- Dynamic range improvement via DCG structure application

- Maximized Auto Focus function with super PD technology and Full-HD slow motion up to 480 frames per second

- Supports real-time H DR function for rich colors

Mobile image sensor

S5KGM2

May 2019

□ ISOCELL Bright GM2

- 0.8um 32 megapixel ultra-small high-definition image sensor

- Maximized Auto Focus function with super PD technology and Full-HD slow motion up to 240 frames per second

Mobile Image Sensor

S5KHMX

Aug 2019

□ ISOCELL Bright H MX

- World’s first 108 mega pixel mobile image sensor

- Control the amount of light and improv e color gamut w ith S/W by applying AI-ISO

- Video recording at a resolution up to 6k 30 fps

- Improv e light sensitivity with ISOCELL Plus and Tetracell technology

Mobile Image Sensor

S5KGH1

Sep 2019

□ ISOCELL Slim GH1

- Smallest pixel among mobile image sensors (0.7um)

- Convenient adoption for Full-Screen Display set due to small, thin module

- Supports high-resolution v ideo taking and minimizes view angle loss

- Improv e light sensitivity via ISOC ELL Plus and Tetracell technology

Ex ynos 9

February 2017

□ 10nm FinFET process based premium AP

- C utting-edge 10nm process based model, low power consumption, high performance

- Gygabit-class LTE modem-integrated chip

- Prov ide unriv alled performance such as 2nd generation custom CPU and next-generation GPU

Ex ynos 9 (9810)

January 2018

□ SC 59810

□ 3rd generation custom CPU and AP equipped w ith super-fast modem that supports Cat.18 6CA

- Single-core performance doubled and multi-core performance increased by 40% compared to the previous model

- Equipped with industry-first 6CA LTE modem that supports 1.2Gbps downlink

□ Deep learning processing capabilities and intelligent image processing

- Precise image analysis and enhanced face recognition

- High-resolution and brighter pictures in low light or motion

Ex ynos i (S111)

August 2018

□ S5JS100

□ Low-power operation, strong security, and supports the latest NB-IoT standard

- Low-power data transmission mechanism that covers the standard distance (10 kilometers)

- Adopted with features such as encryption, decryption, physical copy prevention

- All-in-one chip that combines functions of a modem, CPU, RF, PMIC, GNSS

Ex ynos 9 (9820)

Nov ember 2018

□ SC 59820

□ Improv ed performance v ia N PU and AP improv ements and adoption of 8CA

- NPU: AI processing speed improved sevenfold compared to the prev ious model

- AP: big-little (4+4) → big-middle-little (2+2+4)

Flex ible operation depending on user environment; improv ed power efficiency

- Modem: Industry ’s first adoption of 8CA technology; download speed up to 2Gbps

Ex ynos Auto V9

January 2019

□ S5AHR80

□ Automotiv e infotainment, Ex y nos Auto V9

- Controls 6 displays and 12 cameras simultaneously via Octa-core CPU

- Individually supports dashboard, CID, and HUD with 3 GPUs

- Recognizes audio, face, and motion with an NPU

- Strengthened safety by supporting ASIL-B standards

Ex ynos i (T100)

May 2019

□ S5JT100

□ SoC w ith high energy efficiency and strong security ex clusiv ely for short-distance IoT

- Supports latest short-distance wireless communication, including Bluetooth 5.0 and Zigbee 3.0

- Encry ption, decry ption, physical copy prevention function for stronger data security

- Wider range of operating temperature (can function in temperatures as high as 125℃)

- 28nm process-based, enhancing electrical efficiency.

- Combines processor, memory, and communication functions

Ex ynos 980

September 2019

□ Ex y nos 980

□ One chip SoC that integrates 5G modems

- One chip integrating 5G modem and AP that supports sub-6GHz band width

- Supports latest communications features such as EN-DC, Wi-Fi 6

- Improv ed NPU function compared to previous generation and premium products

Ex ynos 990

October 2019

□ Exynos 990

□ SoC with enhanced AI performance with 2 embedded NPU cores

- AI performance of at least 10 TOPs delivers better image analy sis and face recognition function

- Improv ed performance with 5th generation CPU and premium GPU

- Supports latest LPDDR DRAM and high-resolution camera of 50MP and higher

Samsung Electronics Business Report 63 / 261

DS Division

Research project

Details

Foundry

8-inch process

RF/ fingerprint recognition

March 2018

□ Development of 8-inch process that best suits RF and fingerprint recognition products

- Diversify 8-inch foundry products by including RF or fingerprint sensor solutions on top of embedded flash memory chips,

power semiconductors, display driv ers, CMOS image sensors

- Boost product quality and customer convenience

7nm EUV process

September 2018 (development)

□ 7LPP (Low Power Plus) process applied with EUV technology

- Extreme ultrav iolet (EUV) lithography technology

 13.6nm wavelength, 1/14 of ArF, enables advanced circuit pattern realization

 High performance and productivity enabled by reduction of multi-patterning process

- Delivers up to a 40% increase in area efficiency with 20% higher performance or up to 50% lower power consumption

compared to 10nm process

Ship eMRAM solution products

(based on 28nm FD-SOI

process)

Mar 2019

□ Combined low-power process and next-generation embedded memory technology

- Maximized power efficiency as the product uses low motion power and eliminates standby power and an erase cy cle

- Supports record speed about 1000 times faster than the previous eFlash

□ Embedded to system semiconductor by using minimum layers

- Reduced production costs thanks to a simpler design structure

□ Optimal for MCU/IoT/AI thanks to low-power and small size

5nm EUV process

Apr 2019

□ Dev eloped 5nm EU V process with EU V lithography

- 25% increase in logic area efficiency with 20% lower power consumption or 10% higher performance compared to 7nm by

optimizing cell architecture

- Prev ious 7nm customers can utilize the same IP in the 5nm EU V process

System LSI

Display driver IC

Jan 2019

□ New DDI, S6CT93P

- Optimized to ultra-high-definition 8K TVs and increased performance efficiency

- Supports a smart equalizer to improv e signal quality and development efficiency

5G modem total solution

Apr 2019

□ SA55100, S5M5500, S5M5800

□ Commercialization of world’s first 5G modem solution for smartphones

- Exynos modem 5100, RF 5500, SM 5800

- Data transmission speed 1.7 times faster (compared to LTE)

- New RF/SM embedded; data transfer boasts improved power efficiency

5G modem

October 2019

□ SA55123

□ 7-nano 5G modem, offering the highest-lev el performance in the industry

- Max imum 2 times the speed of previous model in sub-6GHz 5G env ironment

- High-performing 5G with optimal power consumption and chip area

- Max imum speed of 3.0Gbps in 4G network

- Supports global sub-6GHz/mmWav e range

PDIC

May 2019

□ S2M M 101

□ PDIC for fast-charging TA, supporting USB PD

- Supports USB-PD 3.0 standard and fast-charging protocol

- Moisture detection; surge protection function

PDSE

May 2019

□ S3SSE8A

□ World’s first all-in-one chip that combines the function of PDIC and SE

- Supports Type-C certification, filtering out uncertified products

- Prov ides high-tech security functions–stores security keys/certificates; supports encryption and decryption

Display panel

Hole in Display AMOLED for

Galaxy S10

Mar 2019

□ Maximized screen size via world’s first commercialization of Flexible Hole in Display

- One S10 6.1" 3K QHD+(3,040×1,440) Hole, Tw o S10+ 6.4" Holes

□ Offers a comfortable display by significantly decreasing blue light

- Decreased blue light emission 42% from S9 (TU V Rheinland Eye Comfort Certification)

15.6” UHD AMOLED for NPC

May 2019

□ Dev eloped world’s first 4K OLED display for NPC

- 15.6" UHD (3,840 x 2,160), 16:9

- Blue light reduction, shorter response time, wide field of view allow v iv id images

4K high-resolution AMOLED for

smartphones

June 2019

□ Dev eloped world’s first 4K mobile OLED display

- 6.5" UHD (1,644×3,840), 643ppi,16M Color

- Can enjoy original cinematic movie ratio of 21:9

27” FHD 240Hz curved LCD for

gaming monitors

June2019

□ Dev eloped world’s first 240Hz Curv ed LCD display

- 27" FHD (1920×1080), 16:9

- High refresh rate of 240Hz, supports G-sync, allowing uninterrupted gaming env ironment

- Curv ature of 1500R, wide v iewing angle allow highly-immersiv e gaming ex perience

Foldable AMOLED for Galax y

Fold

Sep 2019

□ Display innovation by developing the world’s first foldable display

- In-foldable AMOLED (radius: 1.5R)

- 7.3" QXGA+ (1,536×2,152), 4:3

- Decreased display thickness by approximately 50% (compared to ex isting panels) by dev eloping polymer composite material

Samsung Electronics Business Report 64 / 261

11. Other information

A. Intellectual property

Intellectual property activities are an integral part of our R&D strategies—SEC registered its first US patent in 1984 and

currently holds 180,035 patents around the world. The Company holds the highest number of its patents (cumulative

number) in the US and aims to address conflicts in the US more effectively.

Korea

US

Europe

China

Japan

Others

Number 36,787 71,718 33,073 16,513 10,051 11,893

In 2019, the Company invested KRW 20.2 trillion in R&D and registered 5,075 domestic and 8,729 US patents.

(Unit: No. of patents)

2019 2018 2017

Korea 5,075 3,068 3,486

US 8,729 8,073 8,396

Note: Data for 2017 and 2018 revised on a consolidated basis.

These patents are mostly related to smartphones, smart TVs, memory, and system LSI products for the Company’s

strategic business products or for future use. These patents not only protect the Company’s business but also play a role in

keeping s imilar technology and patents, as well as competitors, in check. Addit ionally, the Company is focusing on

securing early patents in new technologies ahead of others, in order to protect opportunities and have the freedom to

operate when entering new businesses.

The Company has signed cross-licensing agreements with Google (signed in January 2014; permanent), Nok ia (October

2018) , Western Dig ital (December 2016; 2016–2024), Qualcomm (January 2018; 2018–2023) , and Huawei (February

2019), and Sharp (July 2019) through which the Company has secured an extensive patent protection in mainstay

businesses as well as in the fields of new business.

The Company has also been focusing on securing des ign patents to protect its original design applied to smartphones and

TVs. In 2019, the Company acquired 598 US patents, in part for the aforementioned purposes.

B. Environmental regulations

The Company strictly abides by environmenta l regulations on products and in the workplace, as prescribed by law. In

addition, in accordance with “the low carbon green growth policy” of the Korean government, the Company reports “the

amount of CO2 emission and energy use” to the government and provides related information to stakeholders by

providing various reports, including the Samsung Sustainability Report.

☞ See 『11. Green Management』 of 『XI. Other Information』 for more details about Green Technology Certifica tion.

Samsung Electronics Business Report 65 / 261

(Environmental regulation of products)

Environmental regulation of products are becoming str icter, reflecting the concerns of governments and regulators about

potential direct and indirect impact of products to consumers’ health and safety as consumers. Accordingly, the Company

is working to minimize the environmental impact throughout the ent ire life cycle of products from the development stage

of components and products to manufacturing, distribution, use, and disposal. The Company offers “Eco-Partner

Certification” to suppliers for components free of harmful substances, and runs an “eco-design evaluation” system to

reflect eco-friendly elements on products (reduced use of resources, energy and harmful substances, and the use of eco-

friendly materials) at the development stage, and operates a “waste electronics collection recycle system” in Europe,

North America, Korea, and India for collecting and recycling waste electronics. These activities are in line with domestic

and foreign environmental laws on electronics and are a differentiation factor for the Company and its products.

Relevant laws are as follows:

1. law on collection and· recycle of waste electronics (eg, EU WEEE Directive)

2. limit on the use of harmful substances (eg, EU RoHS Directive, REACH Regulation)

3. regulation on energy efficiency (eg, EU ErP Directive)

(Environmental Re gulations in the Workplace)

The Company operates environmental pollution prevention facilities to reduce air pollution, water pollution, and waste

disposal, and to minimize the discharge of pollutants, thereby minimizing impact on the surrounding environment.

Environmental management of workplace is supervised by the relevant government author ities. All production facilities,

domestic and overseas, have acquired the Internationa l Occupational Health and Safety Management System Certification

(ISO 14001, OHSAS18001) to strengthen compliance.

Major Relevant Domestic and International Laws are as follows:

1. Regulations related to emission of pollutants: Water Quality and Ecosystem Conservation Act, Clean Air

Conservation Act, Wastes Control Act, Noise and Vibration Control Act, Environmental Impact Assessment Act

2. Management of greenhouse gas emission: Act on Allocation and Trading of Greenhouse Gas Emission,

Framework Act on Low Carbon, Green Growth

3. Others: Tox ic Chemica ls Control Act, Act on the Registration and Evaluation, etc. of Chemical Substances, Odor

Control Law, Soil Environment Conservation Act

Samsung Electronics Business Report 66 / 261

(Gree nhouse gas emission and energy consumption management)

The Company is a “controlled entity” according to Article 42 of Korea’s “Framework Act on Low Carbon, Green

Growth.” Thus, the Company has been reporting the amount of greenhouse gas emission and energy consumption,

verified by a third-party, to the authorities and disclosing it to stakeholders according to Article 44 of the same Act since

May 2011.

The reported amount of greenhouse gas emission and energy use are provided below:

2019 2018 2017

Greenhouse gas (tCO2e) 16,070,963 15,979,978 13,105,766

Energy (TJ) 241,448 236,727 212,489

Note: Data for 2017 and 2018 revised on a consolidated basis. See『11. Green Management』of『XI. Other Information』for parent-

based data.

Domestic manufacturing facilities, office buildings, buildings owned by the Company, leased buildings, etc.

Reported Greenhouse gas emission excludes ozone depletion substances (ODS).

Amounts may differ by third-party organization verification results.

From 2015, in accordance with the Article 8 of the Act on the Allocation and Trading of Greenhouse-Gas Emission

Permits, the Company is an eligible business entity under the Act.

Samsung Electronics Business Report 67 / 261

III. F inancial Affairs

1. Consolidated financial statements

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In millions of Korean won, in thousands of US dollars (Note 2.28))

December 31,

Notes

2019

2018

2019

2018

KRW

USD

Assets

Current assets

Cash and cash equivalents 4, 6, 30 26,885,999 30,340,505 23,069,002 26,033,073

Short-term financial instruments

5, 6, 30

76,252,052

65,893,797

65,426,571

56,538,875

Short-term financial assets at

amortized cost

6, 30 3,914,216 2,703,693 3,358,516 2,319,851

Short-term financial assets at fair

value through profit or loss

6, 8, 30 1,727,436 2,001,948 1,482,192 1,717,732

Trade receivables 6, 7, 9, 30 35,131,343 33,867,733 30,143,757 29,059,541

Non-trade receivables

6, 9

4,179,120

3,080,733

3,585,812

2,643,362

Advance payments

1,426,833

1,361,807

1,224,266

1,168,472

Prepaid expenses

2,406,220

4,136,167

2,064,610

3,548,957

Inventories

10

26,766,464

28,984,704

22,966,437

24,869,754

Other current assets

6

2,695,577

2,326,337

2,312,887

1,996,067

Total current assets

181,385,260

174,697,424

155,634,050

149,895,684

Non-current assets

Financial assets at amortized cost

6, 30

-

238,309

-

204,476

Financial assets at fair value

through other comprehensive

income

6, 8, 30 8,920,712 7,301,351 7,654,241 6,264,780

Financial assets at fair value

through profit or loss

6, 8, 30 1,049,004 775,427 900,077 665,340

Investment in associates and joint

ventures

11 7,591,612 7,313,206 6,513,833 6,274,952

Property, plant and equipment 12 119,825,474 115,416,724 102,813,888 99,031,047

Intangible assets

13

20,703,504

14,891,598

17,764,234

12,777,442

Net defined benefit assets

16

589,832

562,356

506,094

482,518

Deferred income tax assets

27

4,505,049

5,468,002

3,865,469

4,691,711

Other non-current assets 5, 6 7,994,050 12,692,847 6,859,137 10,890,850

Total as s ets

352,564,497

339,357,244

302,511,023

291,178,800

Samsung Electronics Business Report 68 / 261

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In millions of Korean won, in thousands of US dollars (Note 2.28))

December 31,

Notes

2019

2018

2019

2018

KRW

USD

Liabilities and Equity

Current liabilities

Trade payables

6, 30

8,718,222

8,479,916

7,480,499

7,276,025

Short-term borrowings

6, 7, 14, 30

14,393,468

13,586,660

12,350,032

11,657,766

Other payables

6, 30

12,002,513

10,711,536

10,298,520

9,190,823

Advances received

19

1,072,062

820,265

919,862

703,812

Withholdings

6

897,355

951,254

769,958

816,205

Accrued expenses

6, 19

19,359,624

20,339,687

16,611,144

17,452,068

Current income tax liabilities

1,387,773

8,720,050

1,190,751

7,482,067

Current portion of long-term

liabilities

6, 14, 15, 30 846,090 33,386 725,971 28,646

Provisions

17

4,068,627

4,384,038

3,491,005

3,761,637

Other current liabilities

6, 19

1,037,030

1,054,718

889,802

904,980

Total current liabilities 63,782,764 69,081,510 54,727,544 59,274,029

Non-current liabilities

Debentures 6, 15, 30 975,298 961,972 836,835 825,401

Long-term borrowings

6, 14, 30

2,197,181

85,085

1,885,248

73,006

Long-term other payables

6, 30

2,184,249

3,194,043

1,874,152

2,740,586

Net defined benefit liabilities

16

470,780

504,064

403,944

432,502

Deferred income tax liabilities 27 17,053,808 15,162,523 14,632,684 13,009,904

Long-term provisions

17

611,100

663,619

524,342

569,405

Other non-current liabilities

6, 19

2,408,896

1,951,251

2,066,906

1,674,233

Total liabilities

89,684,076

91,604,067

76,951,655

78,599,066

Samsung Electronics Business Report 69 / 261

CONSOLIDATED STATEM ENTS OF FINANCIAL POSITION

(In millions of Korean won, in thousands of US dollars (Note 2.28))

December 31,

Notes

2019

2018

2019

2018

KRW

USD

Equity attributable to owners of

the parent company

Preference shares

20

119,467

102,506

Ordinary shares

20

778,047

667,588

Share premium

4,403,893

3,778,674

Retained earnings

21

254,582,894

242,698,956

218,439,838

208,243,059

Other components of equity

22

(4,968,829)

(7,931,370)

(4,263,406)

(6,805,356)

254,915,472

240,068,993

218,725,200

205,986,471

Non-controlling interests

7,964,949

7,684,184

6,834,168

6,593,263

Total equity

262,880,421

247,753,177

225,559,368

212,579,734

Total liabilities and equity 352,564,497 339,357,244 302,511,023 291,178,800

Samsung Electronics Business Report 70 / 261

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

(In millions of Korean won, in thousands of US dollars (Note 2.28))

For the year ended December 31,

Notes

2019

2018

2019

2018

KRW

USD

Revenue

31

230,400,881

243,771,415

197,690,938

209,163,262

Cos t of s ales 23 147,239,549 132,394,411 126,335,995 113,598,417

Gros s profit

83,161,332

111,377,004

71,354,943

95,564,845

Selling and administrative expenses

23, 24

55,392,823

52,490,335

47,528,721

45,038,298

Operating profit

27,768,509

58,886,669

23,826,222

50,526,547

Other non-operating income

25

1,778,666

1,485,037

1,526,149

1,274,207

Other non-operating expense

25

1,414,707

1,142,018

1,213,861

979,886

Share of net profit of associates and

joint ventures

11 412,960 539,845 354,332 463,203

Financial income

26

10,161,632

9,999,321

8,718,988

8,579,720

Financial expense

26

8,274,871

8,608,896

7,100,090

7,386,694

Profit before income tax

30,432,189

61,159,958

26,111,740

52,477,097

Income tax expense

27

8,693,324

16,815,101

7,459,135

14,427,866

Profit for the year

21,738,865

44,344,857

18,652,605

38,049,231

Profit attributable to owners of the

parent company

21,505,054 43,890,877 18,451,988 37,659,703

Profit attributable to non-controlling

interests

233,811 453,980 200,617 389,528

Earnings per share

(in Korean Won, in US dollars)

28

- Bas ic

3,166

6,461

2.72

5.54

- Diluted

3,166

6,461

2.72

5.54

Samsung Electronics Business Report 71 / 261

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions of Korean won, in thousands of US dollars (Note 2.28))

For the year ended December 31,

Notes

2019

2018

2019

2018

KRW

USD

Profit for the year

21,738,865

44,344,857

18,652,605

38,049,231

Other comprehensive income (loss)

Items that will not be reclassified to profit or

loss subsequently:

Gain (loss) on valuation of financial assets at fair

value through other comprehensive income, net

of tax

8, 22 1,146,599 (235,865) 983,817 (202,380)

Share of other comprehensive loss of associates

and joint ventures, net of tax

11,22 (16,896) (10,631) (14,497) (9,122)

Remeasurement of net defined benefit liabilities

(assets), net of tax

16, 22 (1,180,468) (410,151) (1,012,877) (351,922)

Items that may be reclass ified to profit or loss

subsequently:

Share of other comprehensive income of associates

and joint ventures, net of tax

11, 22 48,649 6,688 41,742 5,739

Foreign currency translation, net of tax

22

3,016,499

590,638

2,588,248

506,786

Gain on valuation of cash flow hedge derivatives 22 1,811 47,079 1,553 40,395

Other comprehensive income (loss) for the year,

net of tax

3,016,194 (12,242) 2,587,986 (10,504)

Total comprehensive income for the year 24,755,059 44,332,615 21,240,591 38,038,727

Comprehensive income attributable to:

Owners of the parent company

24,466,985

43,882,473

20,993,415

37,652,492

Non-controlling interests

288,074

450,142

247,176

386,235

Samsung Electronics Business Report 72 / 261

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In millions of Korean won)

2018 KRW

Notes

Preference

shares

Ordinary

shares

Share

premium

Retained

earnings

Other

components

of equity

Equi ty

attributable to

owners of the

parent

company

Non-

controlling

interests

Total

Balance as of January 1, 2018

119,467

778,047

4,403,893

215,811,200

(13,899,191)

207,213,416

7,278,012

214,491,428

Cumulative effect of changes in

accounting policies

- - - 246,529 (261,734) (15,205) - (15,205)

Restated total equity at the beginning

of the financial year

119,467 778,047 4,403,893 216,057,729 (14,160,925) 207,198,211 7,278,012 214,476,223

Profit for the year

-

43,890,877

-

43,890,877

453,980

44,344,857

Gain (loss) on valuation of financial

assets at fair value through other

comprehensive income, net of tax

8, 22 - - - (3,007) (236,343) (239,350) 3,485 (235,865)

Share of other comprehensive income

(loss) of associates and joint ventures,

net of tax

11, 22 - - - - (4,036) (4,036) 93 (3,943)

Foreign currency translation, net of tax

22

-

579,260

11,378

590,638

Remeasurement of net defined benefit

liabilities (as s ets ), net of tax

16, 22 - - - - (391,357) (391,357) (18,794) (410,151)

Gain on valuation of cash flow hedge

derivatives

22 - - - - 47,079 47,079 - 47,079

Total comprehensive income (loss)

-

43,887,870

(5,397)

43,882,473

450,142

44,332,615

Dividends

21

-

(10,143,345)

-

(10,143,345)

(50,657)

(10,194,002)

Capital transaction under common

control

- - - - 1,719 1,719 7,991 9,710

Changes in consolidated entities

-

41

Acquisition of treasury shares

20

-

(875,111)

-

(875,111)

Retirement of treasury shares

20

-

(7,103,298)

7,103,298

-

Other

-

5,046

(1,345)

3,701

Total trans actions with owners

-

(17,246,643)

6,234,952

(11,011,691)

(43,970)

(11,055,661)

Balance as of December 31, 2018

119,467

778,047

4,403,893

242,698,956

(7,931,370)

240,068,993

7,684,184

247,753,177

Samsung Electronics Business Report 73 / 261

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands of US dollars (Note 2.28))

2018 USD

Notes

Preference

shares

Ordinary

shares

Share

premium

Retained

earnings

Other

components

of equity

Equi ty

attributable to

owners of the

parent

company

Non-

controlling

interests

Total

Balance as of January 1, 2018

102,506

667,588

3,778,674

185,172,550

(11,925,927)

177,795,391

6,244,755

184,040,146

Cumulative effect of changes in

accounting policies

-

211,529

(224,576)

(13,047)

-

(13,047)

Restated total equity at the beginning

of the financial year

102,506

667,588 3,778,674

185,384,079

(12,150,503)

177,782,344

6,244,755

184,027,099

Profit for the year

-

37,659,703

-

37,659,703

389,528

38,049,231

Gain (loss) on valuation of financial

assets at fair value through other

comprehensive income, net of tax

-

(2,581)

(202,789)

(205,370)

2,990

(202,380)

Share of other comprehensive income

(loss) of associates and joint ventures,

net of tax

-

(3,463)

80

(3,383)

Foreign currency translation, net of tax

-

497,023

9,763

506,786

Remeasurement of net defined benefit

liabilities (assets), net of tax

-

(335,796)

(16,126)

(351,922)

Gain on valuation of cash flow hedge

derivatives

-

40,395

-

40,395

Total comprehensive income (loss)

-

37,657,122

(4,630)

37,652,492

386,235

38,038,727

Dividends

-

(8,703,297)

-

(8,703,297)

(43,465)

(8,746,762)

Capital transaction under common

control

-

1,474

6,856

8,330

Changes in consolidated entities

-

35

Acquisition of treasury shares

-

(750,872)

-

(750,872)

Retirement of treasury shares

-

(6,094,845)

6,094,845

-

Other

-

4,330

(1,153)

3,177

Total trans actions with owners

-

(14,798,142)

5,349,777

(9,448,365)

(37,727)

(9,486,092)

Balance as of December 31, 2018

102,506

667,588

3,778,674

208,243,059

(6,805,356)

205,986,471

6,593,263

212,579,734

Samsung Electronics Business Report 74 / 261

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In millions of Korean won)

2019 KRW

Notes

Preference

shares

Ordinary

shares

Share

premium

Retained

earnings

Other

components

of equity

Equi ty

attributable to

owners of the

parent

company

Non-

controlling

interests

Total

Balance as of January 1, 2019

119,467

778,047

4,403,893

242,698,956

(7,931,370)

240,068,993

7,684,184

247,753,177

Profit for the year

-

21,505,054

-

21,505,054

233,811

21,738,865

Gain (loss) on valuation of financial

assets at fair value through other

comprehensive income, net of tax

8, 22 - - - (1,265) 1,111,264 1,109,999 36,600 1,146,599

Share of other comprehensive income

(loss) of associates and joint ventures,

net of tax

11, 22 - - - (608) 31,477 30,869 884 31,753

Foreign currency translation, net of tax

22

-

2,966,973

49,526

3,016,499

Remeasurement of net defined benefit

liabilities (as s ets ), net of tax

16, 22 - - - - (1,147,721) (1,147,721) (32,747) (1,180,468)

Gain on valuation of cash flow hedge

derivatives

22 - - - - 1,811 1,811 - 1,811

Total comprehensive income

-

21,503,181

2,963,804

24,466,985

288,074

24,755,059

Dividends

21

-

(9,619,243)

-

(9,619,243)

(21,359)

(9,640,602)

Capital transaction under common

control

- - - - (85) (85) 7,356 7,271

Changes in consolidated entities

-

5,730

Other

-

(1,178)

964

(214)

Total trans actions with owners

-

(9,619,243)

(1,263)

(9,620,506)

(7,309)

(9,627,815)

Balance as of December 31, 2019

119,467

778,047

4,403,893

254,582,894

(4,968,829)

254,915,472

7,964,949

262,880,421

Samsung Electronics Business Report 75 / 261

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands of US dollars (Note 2.28))

2019 USD

Notes

Preference

shares

Ordinary

shares

Share

premium

Retained

earnings

Other

components

of equity

Equi ty

attributable to

owners of the

parent

company

Non-

controlling

interests

Total

Balance as of January 1, 2019

102,506

667,588

3,778,674

208,243,059

(6,805,356)

205,986,471

6,593,263

212,579,734

Profit for the year

-

18,451,988

-

18,451,988

200,617

18,652,605

Gain (loss) on valuation of financial

assets at fair value through other

comprehensive income, net of tax

8, 22 - - - (1,085) 953,498 952,413 31,404 983,817

Share of other comprehensive income

(loss) of associates and joint ventures,

net of tax

11, 22 - - - (522) 27,009 26,487 758 27,245

Foreign currency translation, net of tax

22

-

2,545,753

42,495

2,588,248

Remeasurement of net defined benefit

liabilities (as s ets ), net of tax

16, 22 - - - - (984,779) (984,779) (28,098) (1,012,877)

Gain on valuation of cash flow hedge

derivatives

22 - - - - 1,553 1,553 - 1,553

Total comprehensive income

-

18,450,381

2,543,034

20,993,415

247,176

21,240,591

Dividends

21

-

(8,253,602)

-

(8,253,602)

(18,327)

(8,271,929)

Capital transaction under common

control

- - - - (73) (73) 6,312 6,239

Changes in consolidated entities

-

4,917

Other

-

(1,011)

827

(184)

Total trans actions with owners

-

(8,253,602)

(1,084)

(8,254,686)

(6,271)

(8,260,957)

Balance as of December 31, 2019

102,506

667,588

3,778,674

218,439,838

(4,263,406)

218,725,200

6,834,168

225,559,368

Samsung Electronics Business Report 76 / 261

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of Korean won, in thousands of US dollars (Note 2.28))

For the year ended December 31,

Notes

2019

2018

2019

2018

KRW

USD

Cas h flows from operating activities

Profit for the year

21,738,865

44,344,857

18,652,605

38,049,231

Adjustments

29

37,442,682

43,604,573

32,126,956

37,414,045

Changes in assets and liabilities arising from

operating activities

29 (2,545,756) (9,924,366) (2,184,336)

(8,515,406)

Cash generated from operations

56,635,791

78,025,064

48,595,225

66,947,870

Interest received

2,306,401

1,788,520

1,978,962

1,534,604

Interest paid

(579,979)

(548,272)

(497,640)

(470,434)

Dividends received

241,801

215,992

207,473

185,328

Income tax paid

(13,221,099)

(12,449,441)

(11,344,104)

(10,681,998)

Net cash inflow from operating activities

45,382,915

67,031,863

38,939,916

57,515,370

Cash flows from investing activities

Net increase in short-term financial instruments

(2,030,913)

(12,368,298)

(1,742,585)

(10,612,375)

Net increase in short-term financial assets at

amortized cost

(818,089) (1,436,844) (701,945)

(1,232,856)

Net decrease (increase) in short-term financial assets

at fair value through profit or loss

374,982 (139,668) 321,746

(119,839)

Disposal of long-term financial instruments

4,586,610

255,850

3,935,450

219,527

Acquisition of long-term financial instruments

(12,725,465)

(7,678,654)

(10,918,835)

(6,588,518)

Disposal of financial assets at amortized cost

694,584

-

595,974

-

Acquisition of financial assets at amortized cost

(825,027)

(158,716)

(707,898)

(136,183)

Disposal of financial assets at fair value through

other comprehensive income

1,575 16,211 1,351

13,910

Acquisition of financial assets at fair value through

other comprehensive income

(63,773) (456,134) (54,719)

(391,377)

Disposal of financial assets at fair value through

profit or loss

64,321 80,138 55,189

68,761

Acquisition of financial assets at fair value through

profit or loss

(135,826) (193,848) (116,543)

(166,327)

Disposal of investment in associates and joint

ventures

12,149 148 10,424

127

Acquisition of investment in associates and joint

ventures

(12,778) (51,226) (10,964)

(43,953)

Disposal of property, plant and equipment

513,265

556,973

440,397

477,900

Acquisition of property, plant and equipment

(25,367,756)

(29,556,406)

(21,766,303)

(25,360,292)

Disposal of intangible assets

7,241

11,935

6,213

10,241

Acquisition of intangible assets

(3,249,914)

(1,020,517)

(2,788,525)

(875,635)

Cash outflow from business combinations

(1,019,405)

(99,108)

(874,680)

(85,038)

Cash inflow (outflow) from other investing activities

46,048

(2,289)

39,512

(1,965)

Net cash outflow from investing activities

(39,948,171)

(52,240,453)

(34,276,741)

(44,823,892)

Samsung Electronics Business Report 77 / 261

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of Korean won, in thousands of US dollars (Note 2.28))

For the year ended December 31,

Notes

2019

2018

2019

2018

KRW

USD

Cash flows from financing activities

Net increase (decrease) in short-term borrowings

29

865,792

(2,046,470)

742,876

(1,755,933)

Acquisition of treasury shares

-

(875,111)

-

(750,872)

Proceeds from long-term borrowings

29

-

3,580

-

3,072

Repayment of debentures and long-term borrowings

29

(709,400)

(1,986,597)

(608,687)

(1,704,560)

Dividends paid

(9,639,202)

(10,193,695)

(8,270,727)

(8,746,499)

Net increase (decrease) in non-controlling interests

(1,700)

8,071

(1,459)

6,924

Net cash outflow from financing activities

(9,484,510)

(15,090,222)

(8,137,997)

(12,947,868)

Effect of exchange rate changes on cash and cash

equivalents

595,260 94,187 510,751 80,816

Net decrease in cash and cash equivalents

(3,454,506)

(204,625)

(2,964,071)

(175,574)

Cash and cash equivalents

Beginning of the year

30,340,505

30,545,130

26,033,073

26,208,647

End of the year

26,885,999

30,340,505

23,069,002

26,033,073

Samsung Electronics Business Report 78 / 261

2. Notes to consolidated financial statements

1. General Information

1.1 Company Overview

Samsung Electronics Co., Ltd. (the “SEC”) was incorporated under the laws of the Republic of Korea in 1969 and listed its shares

on the Korea Stock Exchange in 1975. SEC and its subsidiaries (collectively referred to as the “Company”) operate four business

divisions: Consumer Electronics (“CE”), Information Technology & Mobile Communications (“IM”), Device Solutions (“DS”) and

Harman. The CE division includes digital TVs, monitors, air conditioners and refrigerators and the IM division includes mobile

phones, communication systems, and computers. The DS division includes products such as memory, foundry and system LSI in

the semiconductor business (“Semiconductor”), and OLED and LCD panels in the display business (“DP”). The Harman division

includes connected car systems, audio and visual products, enterprise automation solutions and connected services. The Company is

domiciled in the Republic of Korea and the address of its registered office is Suwon, Republic of Korea.

These consolidated financial statements have been prepared in accordance with Korean International Financia l Reporting Standards

(“Korean IFRS”) 1110, Consolidated Financial Statements. SEC, as the controlling company, consolidates its 240 s ubs idiaries

including Samsung Display Co., Ltd. and Samsung Electronics America, Inc. (SEA) (refer to Note 1.2). The Company a ls o applies

the equity method of accounting for its 41 associates and joint ventures, including Samsung Electro-Mechanics Co., Ltd.

1.2 Consolidated Subsidiaries

(A) The consolidated subsidiaries as of December 31, 2019 are as follows:

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

America

Samsung Electronics America, Inc. (SEA)

Sale of electronic devices

100.0

NeuroLogica Corp.

Manufacture and sale of medical equipment

100.0

Dacor Holdings, Inc.

Holding company

100.0

Dacor, Inc.

Manufacture and sale of home appliances

100.0

Dacor Canada Co.

Sale of home appliances

100.0

EverythingDacor.com, Inc.

Sale of home appliances

100.0

Distinctive Appliances of California, Inc.

Sale of home appliances

100.0

Samsung HVAC America, LLC

Sale of air conditioning products

100.0

SmartThings, Inc.

Sale of smart home electronics

100.0

Samsung Oak Holdings, Inc. (SHI)

Holding company

100.0

Stellus T echnologies, Inc.

Manufacture and sale of semiconductor system

100.0

Joyent, Inc.

Cloud services

100.0

Prismview, LLC

Manufacture and sale of LED displays

100.0

Samsung Research America, Inc (SRA)

R&D

100.0

Samsung Next LLC (SNX)

Holding company

100.0

Samsung Next Fund LLC (SNXF)

Technology business, venture capital investments

100.0

Viv Labs, Inc.

AI technology services

100.0

Samsung Semiconductor, Inc. (SSI)

Sale of semiconductor and display panels

100.0

Samsung Austin Semicon duct or LLC. (SAS)

Manufacture of semiconductor system

100.0

Samsung International, Inc. (SII)

Manufacture of CTV and monitors

100.0

Samsung Mexicana S.A. de C.V (SAMEX)

Manufacture of electronic devices

100.0

1

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

Samsung Electronics Business Report 79 / 261

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

America

Samsung Electronics Home Appliances America, LLC

(SEHA)

Manufacture of home appliances 100.0

SEMES America, Inc.

Semiconductor equipment

100.0

Zhilabs Inc.

Sale of network solutions

100.0

Samsung Electronics Canada, Inc. (SECA)

Sale of electronic devices

100.0

AdGear Technologies Inc.

Digital advertising platforms

100.0

SigMast Communications Inc.

Development of mobile communications software

100.0

Samsung Electronics Mexico S.A. De C.V. (SEM)

Sale of electronic devices

100.0

Samsung Electronics Digital Appliance Mexico, SA de CV

(SEDAM)

Manufacture of electronic devices 100.0

Samsung Electronics Latinoamerica Miami, Inc. (SEMI)

Sale of electronic devices

100.0

Samsung Electronics Latinoamerica (Zona Libre), S. A.

(SELA)

Sale of electronic devices 100.0

Samsung Electronics Venezuela, C.A. (SEVEN)

Marketing and services

100.0

Samsung Electronica Colombia S.A. (SAMCOL)

Sale of electronic devices

100.0

Samsung Electronics Panama. S.A. (SEPA)

Consulting

100.0

Samsung Electronica da Amazonia Ltda. (SEDA)

Manufacture and sale of electronic devices

100.0

Samsung Electronics Argentina S.A. (SEASA)

Marketing and services

100.0

Samsung Electronics Chile Limitada (SECH)

Sale of electronic devices

100.0

Samsung Electronics Peru S.A.C. (SEPR)

Sale of electronic devices

100.0

Harman International Industries, Inc.

Holding company

100.0

Harman Becker Automotive Systems, Inc.

Manufacture and sale of audio products, R&D

100.0

Harman Connected Services, Inc.

Connected service provider

100.0

Harman Connected Services Engineering Corp.

Connected service provider

100.0

Harman Connected Services South America S.R.L.

Connected service provider

100.0

Harman da Amazonia Industria Eletronica e Participacoes

Lt da.

Manufacture and sale of audio products 100.0

Harman de Mexico, S. de R.L. de C.V.

Manufact ure of audio product s

100.0

Harman do Brasil Industria Eletronica e Participacoes Ltda.

Sale of audio product s, R&D

100.0

Harman Financial Group LLC

Management company

100.0

Harman International Industries Canada Ltd.

Sale of audio product s

100.0

Harman International Mexico, S. de R.L. de C.V.

Sale of audio product s

100.0

Harman KG Holding, LLC

Holding company

100.0

Harman Professional, Inc.

Sale of audio product s, R&D

100.0

RT SV CO-INVEST, LP

Venture capital investments

99.9

Beijing Integrated Circuit Industry International Fund, L.P

Venture capital investments

61.4

China Materialia New Materials 2016 Limited Partnership

Venture capital investments

99.0

1

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

Samsung Electronics Business Report 80 / 261

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

Europe/CIS

Samsung Electronics (UK) Ltd. (SEUK)

Sale of electronic devices

100.0

Samsung Electronics Ltd. (SEL)

Holding company

100.0

Samsung Elect ronics Holding GmbH (SEHG)

Holding company

100.0

Samsung Semiconduct or Europe GmbH (SSEG)

Sale of semiconductor and display panels

100.0

Samsung Electronics GmbH (SEG)

Sale of electronic devices

100.0

Samsung Electronics Iberia, S.A. (SESA)

Sale of electronic devices

100.0

Samsung Electronics France S.A.S (SEF)

Sale of electronic devices

100.0

Samsung Electronics Hungarian Private Co. Ltd. (SEH)

Manufacture and sale of electronic devices

100.0

Samsung Electronics Czech and Slovak s.r.o. (SECZ)

Sale of electronic devices

100.0

Samsung Electronics Italia S.P.A. (SEI)

Sale of electronic devices

100.0

Samsung Electronics Europe Logistics B.V. ( SEL S)

Logistics

100.0

Samsung Electronics Benelux B.V. (SEBN)

Sale of electronic devices

100.0

Samsung Display Slovakia s.r.o. (SDSK)

Toll processing of display panels

100.0

Samsung Electronics Romania LLC (SEROM)

Sale of electronic devices

100.0

Samsung Electronics Polska, SP.Zo.o (SEPOL)

Sale of electronic devices

100.0

Samsung Electronics Portuguesa S.A. (SEP)

Sale of electronic devices

100.0

Samsung Electronics Nordic Aktiebolag (SENA)

Sale of electronic devices

100.0

Samsung Semiconduct or Europe Limited (SSEL)

Sale of semiconductor and display panels

100.0

Samsung Electronics Austria GmbH (SEAG)

Sale of electronic devices

100.0

Samsung Electronics Switzerland GmbH (SESG)

Sale of electronic devices

100.0

Samsung Electronics Slovakia s. r .o ( SE SK)

Manufacture of CTV and monitors

100.0

Samsung Electronics Baltics SIA (SEB)

Sale of electronic devices

100.0

Samsung Electronics Europe Holding Cooperatief U.A.

(SEEH)

Holding company 100.0

Samsung Electronics Poland Manufacturing SP.Zo.o

( SE P M)

Manufacture of home appliances 100.0

Samsung Electronics Greece S.M.S.A (SEGR)

Sale of electronic devices

100.0

Samsung Electronics Air Conditioner Europe B.V.

(SEACE)

Sale of air conditioning products 100.0

Samsung Nanoradio Design Center (SNDC)

R&D

100.0

Samsung Denmark Research Center ApS (SDRC)

R&D

100.0

Samsung Cambridge Solution Cent re Limit ed (SCSC)

R&D

100.0

Zhilabs, S.L.

Development and sale of network solutions

100.0

Foodient Ltd.

R&D

100.0

Samsung Electronics Overseas B.V. ( SE O)

Sale of electronic devices

100.0

Samsung Electronics Rus Company LLC (SERC)

Sale of electronic devices

100.0

Samsung Electronics Ukraine Company LLC (SEUC)

Sale of electronic devices

100.0

Samsung R&D Institute Rus LLC (SRR)

R&D

100.0

Sam sung Electronics Central Eurasia LLP (SECE)

Sale of electronic devices

100.0

Samsung Electronics Caucasus Co. Ltd (SECC)

Marketing

100.0

Samsung Electronics Rus Kaluga LLC (SERK)

Manufacture of CTV

100.0

AKG Acoustics GmbH

Manufacture and sale of audio products

100.0

AMX UK Limited

Sale of audio product s

100.0

1

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

Samsung Electronics Business Report 81 / 261

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

Europe/CIS

Arcam Limited

Holding company

100.0

A&R Cambridge Limit ed

Sale of audio product s

100.0

Harman Audio Iberia Espana Sociedad Limitada

Sale of audio product s

100.0

Harman Automotive UK Limited

Manufact ure of audio product s

100.0

Harman Becker Automotive Systems GmbH

Manufacture and sale of audio products, R&D

100.0

Harman Becker Automotive Systems Italy S.R.L.

Sale of audio product s

100.0

Harman Becker Automotive Systems Manufacturing Kft

Manufact ure of audio product s, R&D

100.0

Harman Belgium SA

Sale of audio product s

100.0

Harman Connected Services AB.

Connected service provider

100.0

Harman Finland Oy

Connected service provider

100.0

Harman Connected Services GmbH

Connected service provider

100.0

Harman Connected Services Limited

Connected service provider

100.0

Harman Connected Services Poland Sp.zoo

Connected service provider

100.0

Harman Connected Services UK Ltd.

Connected service provider

100.0

Harman Consumer Nederland B.V.

Sale of audio product s

100.0

Harman Deutschland GmbH

Sale of audio product s

100.0

Harman Finance International GP S.a.r.l

Holding company

100.0

Harman France SNC

Sale of audio product s

100.0

Harman Holding Gmbh & Co. KG

Management company

100.0

Harman Hungary Financing Ltd.

Financing company

100.0

Harman Inc. & Co. KG

Holding company

100.0

Harman International Estonia OU

R&D

100.0

Harman International Industries Limited

Sale of audio products, etc.

100.0

Harman International Romania SRL

R&D

100.0

Harman Finance International, SCA

Financing company

100.0

Harman International s.r.o

Manufact ure of audio product s

100.0

Harman Management GmbH

Holding company

100.0

Harman Professional Kft

Manufact ure of audio product s, R&D

100.0

Martin Manufacturing (UK) Ltd

Manufact ure of audio product s

100.0

Harman Professional Denmark ApS

Sale of audio product s, R&D

100.0

Red Bend Software Ltd.

Software design

100.0

Red Bend Software SAS

Software design

100.0

St uder P rofessional Audio GmbH

Sale of audio product s, R&D

100.0

Harman Connected Services OOO

Connected service provider

100.0

Har m a n RU S CI S LL C

Sale of audio product s

100.0

1

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

Samsung Electronics Business Report 82 / 261

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

Middle East

and Africa

Samsung Electronics West Africa Ltd. (SEWA)

Marketing

100.0

Samsung Electronics East Africa Ltd. (SEEA)

Marketing

100.0

Samsung Gulf Elect ronics Co., Lt d. (SGE)

Sale of electronic devices

100.0

Samsung Electronics Saudi Arabia Ltd. (SESAR)

Sale of electronic devices

100.0

Samsung Electronics Egypt S.A.E (SEEG)

Manufacture and sale of electronic devices

100.0

Samsung Electronics Israel Ltd. (SEIL)

Marketing

100.0

Samsung Electronics Tunisia S.A.R.L ( SE T N)

Marketing

100.0

Samsung Electronics Pakistan (Private) Ltd. (SEPAK)

Marketing

100.0

Samsung Electronics South Africa (Pty) Ltd. (SSA)

Sale of electronic devices

100.0

Samsung Electronics South Africa Production (pty) Ltd.

( SSA P )

Manufacture of CTV and monitors 100.0

Samsung Electronics Turkey (SET K)

Sale of electronic devices

100.0

Samsung Semiconductor Israel R&D Center, Ltd. (SIRC)

R&D

100.0

Samsung Electronics Levant Co., Ltd. (SELV)

Sale of electronic devices

100.0

Samsung Electronics Maghreb Arab (SEMAG)

Sale of electronic devices

100.0

Corephotonics Ltd.

R&D

100.0

Global Symphony Technology Group Private Ltd.

Holding company

100.0

Harman Connected Services Morocco

Connected service provider

100.0

Harman Indust ries Holdings Maurit ius Lt d.

Holding company

100.0

Red Bend Ltd.

Manufact ure of audio product s

100.0

1

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

Samsung Electronics Business Report 83 / 261

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

Asia

(Excluding

China)

Samsung Japan Corporation (SJC)

Sale of semiconductor and display panels

100.0

Samsung R&D Institute Japan Co. Ltd. (SRJ)

R&D

100.0

Samsung Electronics Japan Co., Ltd. (SEJ)

Sale of electronic devices

100.0

Samsung Electronics Display (M) Sdn. Bhd. (SDMA)

Manufacture of electronic devices

100.0

Samsung Electronics (M) Sdn. Bhd. (SEMA)

Manufacture of home appliances

100.0

Samsung Vina Electronics Co., Ltd. (SAVINA)

Sale of electronic devices

100.0

Samsung Asia Private Ltd. (SAPL)

Sale of electronic devices

100.0

Samsung India Electronics Private Ltd. (SIEL)

Manufacture and sale of electronic devices

100.0

Samsung R&D Inst it ut e India-Bangalore Private Limited

( SRI -Bangalore)

R&D 100.0

Samsung Nepal Serv ices P v t , L t d ( SNSL )

Service

100.0

Samsung Display Noida Private Limited (SDN)

Manufacture of display panels

100.0

Samsung Electronics Australia Pty. Ltd. (SEAU)

Sale of electronic devices

100.0

Samsung Electronics New Zealand Limited (SENZ)

Sale of electronic devices

100.0

PT Samsung Electronics Indonesia (SEIN)

Manufacture and sale of electronic devices

100.0

PT Samsung Telecommunications Indonesia (ST IN)

Sale of electronic devices and services

100.0

Thai Samsung Electronics Co., Ltd. (T SE)

Manufacture and sale of electronic devices

91.8

Laos Samsung Electronics Sole Co., Ltd (LSE)

Marketing

100.0

Samsung Electronics Philippines Corporation (SEPCO)

Sale of electronic devices

100.0

Samsung Display Vietnam Co., Ltd. (SDV)

Manufacture of display panels

100.0

Samsung Malaysia Electronics (SME) Sdn. Bhd. (SME)

Sale of electronic devices

100.0

Samsung R&D Institute BanglaDesh Limited (SRBD)

R&D

100.0

Samsung Electronics Vietnam Co., Ltd. (SEV)

Manufacture of electronic devices

100.0

Sam sung Electronics Vietnam T HAINGUYEN Co., Ltd.

( SE VT )

Manufacture of communication equipment 100.0

Samsung Electronics HCMC CE Complex Co., Ltd.

( SE HC)

Manufacture and sale of electronic devices 100.0

Harman Connected Services Corp. India Pvt. Ltd.

Connected service provider

100.0

Harman International (India) Private Limited

Sale of audio product s, R&D

100.0

Harman International Industries PTY Ltd.

Holding company

100.0

Harman International Japan Co., Ltd.

Sale of audio product s, R&D

100.0

Harman Singapore Pte. Ltd.

Sale of audio product s

100.0

Martin Professional Pte. Ltd.

Sale of audio product s

100.0

1

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

Samsung Electronics Business Report 84 / 261

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

China

Samsung Display Dongguan Co., Ltd. (SDD)

Manufacture of display panels

100.0

Samsung Display Tianjin Co., Ltd. (SDT)

Manufacture of display panels

95.0

Samsung Electronics Hong Kong Co., Ltd. (SEHK)

Sale of electronic devices

100.0

Suzhou Samsung Electronics Co., Ltd. (SSEC)

Manufacture of home appliances

88.3

Samsung Suzhou Electronics Export Co., Ltd. (SSEC-E)

Manufacture of home appliances

100.0

Samsung (CHINA) Investment Co., Ltd. (SCIC)

Sale of electronic devices

100.0

Samsung Mobile R&D Center China-Guangzhou (SRC-

Guangzhou)

R&D 100.0

Samsung Tianjin Mobile Development Center (SRC-

T ianjin)

R&D 100.0

Samsung R&D Institute China-Shenzhen (SRC-Shenzhen)

R&D

100.0

Samsung Electronics Suzhou Semiconductor Co., Ltd.

( SE SS)

Toll processing of semiconductors 100.0

SEMES (XIAN) Co., Ltd.

Semiconductor equipment services

100.0

Samsung Electronics Huizhou Co., Ltd. (SEHZ)

Manufacture of electronic devices

100.0

Tianjin Samsung Electronics Co., Ltd. (TSEC)

Manufacture of CTV and monitors

91.2

Samsung Electronics Taiwan Co., Ltd. (SET )

Sale of electronic devices

100.0

Beijing Samsung Telecom R&D Center (SRC-Beijing)

R&D

100.0

Tianjin Samsung Telecom Technology Co., Ltd. (TSTC)

Manufacture of communication equipment

90.0

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

Sale of semiconductor and display panels

100.0

Samsung Electronics Suzhou Computer Co., Ltd. (SESC)

Manufacture of electronic devices

100.0

Samsung Suzhou Module Co., Ltd. (SSM)

Manufacture of display panels

100.0

Samsung Suzhou LCD Co., Lt d. (SSL)

Manufacture of display panels

60.0

Shenzhen Samsung Electronics T elecommunication Co.,

L t d. (SSE T )

Manufacture of communication equipment 100.0

Samsung Semiconductor (China) R&D Co., Ltd. (SSCR)

R&D

100.0

Samsung Electronics China R&D Center (SRC-Nanjing)

R&D

100.0

Samsung (China) Semiconductor Co., Ltd. (SCS)

Manufacture of semiconductors

100.0

Samsung SemiConduct or Xian Co., Ltd. (SSCX)

Sale of semiconductor and display panels

100.0

Tianjin Samsung LED Co., Ltd. (TSLED)

Manufacture of LED

100.0

Harman (China) Technologies Co., Ltd.

Manufact ure of audio product s

100.0

Harman (Suzhou) Audio and Infotainment Systems Co.,

Lt d.

Sale of audio product s 100.0

Harman Automotive Electronic Systems (Suzhou) Co., Ltd.

Manufact ure of audio product s, R&D

100.0

Harman Commercial (Shanghai) Co., Ltd.

Sale of audio product s

100.0

Harman Connected Services Solutions (Chengdu) Co., Ltd.

Connected service provider

100.0

Harman Holding Limited

Sale of audio product s

100.0

Harman International (China) Holdings Co., Ltd.

Sale of audio product s, R&D

100.0

Harman Technology (Shenzhen) Co., Ltd.

Sale of audio product s, R&D

100.0

1

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

Samsung Electronics Business Report 85 / 261

Area

Subsidiaries

Industry

Percentage of

ownership (%)

1

Korea

Samsung Display Co., Ltd.

Manufacture and sale of display panels

84.8

SU Materials

Manufacture of display panel components

50.0

ST ECO Co., Ltd.

Manufacture of semiconductor components

70.0

SEMES Co., Ltd.

Manufacture and sale of semiconductor and FPD

equipment

91.5

Samsung Electronics Service Co., Ltd.

Repair services for electronic devices

99.3

Samsung Electronics Service Customer Satisfaction

Co., Ltd.

Call center services

100.0

Samsung Electronics Sales Co., Ltd.

Sale of electronic devices

100.0

Samsung Electronics Logitech Co., Ltd.

General logistics agency

100.0

Samsung Medison Co., Lt d.

Manufacture and sale of medical equipment

68.5

Mirero System Co., Ltd.

Semiconductor S/W

99.9

Dowooinsys Co., Ltd.

2

Manufacture of display panel components

48.2

Gf Co., Ltd.

Manufacture of display panel components

72.7

Harman International Korea, Inc.

Software development and supply, etc.

100.0

Samsung Venture Capital Union #21

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #22

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #26

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #27

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #28

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #29

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #32

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #33

Technology business, venture capital investments

99.0

Samsung Vent ure Capital Union #37

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #40

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #42

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #43 Technology business, venture capital investments

99.0

Samsung Venture Capital Union #45

Technology business, venture capital investments

99.0

Samsung Venture Capital Union #48

Technology business, venture capital investments

99.0

Growth type private equity trust specialized in

semiconductors

Investment in semiconductor industry

66.7

1

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

2

Classified as a subsidiary although the ownership is less than 50%, as the Company is considered to have a de facto control over the investee.

Samsung Electronics Business Report 86 / 261

(B) A summary of financial data of major consolidated subsidiaries as of and for the years ended December 31, 2019 and 2018 is

as follows :

(1) 2019

(In millions of Korean won)

2019

Major subsidiaries

1

Assets

Liabilities

Sales

Profit (loss) for the

year

Samsung Display Co., Ltd. ￦ 46,543,974 ￦ 6,421,516 ￦ 27,088,475 ￦ 407,791

Samsung Electronics America, Inc. (SEA) 34,704,039 13,992,397 33,859,423 1,127,719

Harman and its subsidiaries

2

15,609,084 5,791,272 10,075,626 104,459

Samsung (CHINA) Investment Co., Ltd. (SCIC)

14,637,222

11,701,871

3,098,948

581,115

Samsung Electronics Vietnam THAINGUYEN

Co., Ltd. (SEVT)

13,847,934 2,075,180 32,831,993 2,305,089

Samsung (China) Semiconductor Co., Ltd. (SCS)

12,370,070

2,678,742

5,445,396

537,037

Samsung Electronics Vietnam Co., Ltd. (SEV) 12,367,857 1,418,876 22,350,791 1,757,684

Samsung Electronics Europe Holding

Cooperatief U.A. (SEEH)

10,682,847 7,662,042 - 21,915

Samsung Semiconductor, Inc. (SSI)

9,194,190

3,795,273

16,473,214

211,312

Samsung Asia Private Ltd. (SAPL)

9,137,262

579,618

1,572,146

1,265,359

Samsung Display Vietnam Co., Ltd. (SDV)

7,267,124

4,587,477

16,613,123

601,469

Samsung Electronica da Amazonia Ltda.

(SEDA)

7,058,719 1,594,907 7,252,673 887,298

Samsung India Electronics Private Ltd. (SIEL)

7,042,872

3,588,241

12,902,906

448,678

Samsung Austin Semiconductor LLC. (SAS)

6,437,865

556,765

3,897,162

571,391

Shanghai Samsung Semiconductor Co., Ltd.

(SSS)

5,880,616 4,446,885 26,067,175 265,801

Thai Samsung Electronics Co., Ltd. (TSE)

2,912,731

450,833

3,921,248

144,087

Samsung Electronics (UK) Ltd. (SEUK) 2,644,358 1,877,903 4,730,414 104,741

Samsung Electronics HCM C CE Complex Co.,

Ltd. (SEHC)

2,305,587 1,035,533 4,934,278 373,325

Samsung Electronics GmbH (SEG)

2,258,269

2,199,561

5,597,323

4,729

Samsung Electronics Hungarian Private Co. Ltd.

(SEH)

2,109,654 416,160 2,915,812 106,704

Samsung SemiConductor Xian Co., Ltd. (SSCX)

2,091,092

1,954,875

4,283,163

53,160

Samsung Electronics Europe Logistics B.V.

(SELS)

2,027,213 1,891,221 12,540,817 6,531

Samsung Electronics Benelux B.V. (SEBN)

1,914,864

673,887

2,246,357

39,175

Samsung Suzhou LCD Co., Ltd. (SSL)

1,808,262

625,541

1,415,505

(4,414)

Samsung Display Dongguan Co., Ltd. (SDD)

1,795,077

444,552

3,995,696

158,122

1

The above summary of condensed financial information is based on separate financial statements of each subsidiary.

2

Consolidated financial data of an intermediate company that includes Harman International Industries, Inc. and its subsidiaries.

Samsung Electronics Business Report 87 / 261

(2) 2018

(In millions of Korean won)

2018

Major subsidiaries

1

Assets

Liabilities

Sales

Profit (loss) for

the year

Samsung Display Co., Ltd.

￦

47,162,963

￦

7,509,766

￦

28,653,512

￦

1,263,050

Samsung Electronics America, Inc. (SEA) 30,681,097 11,862,223 31,171,751 870,814

Samsung (CHINA) Investment Co., Ltd. (SCIC)

16,090,629

13,858,532

3,277,050

127,448

Harman and its subsidiaries

2

15,059,925

5,550,558

8,817,792

41,359

Samsung Electronics Vietnam Co., Ltd. (SEV) 11,501,682 1,607,991 21,430,638 1,783,410

Samsung Electronics Vietnam THAINGUYEN

Co., Ltd. (SEVT)

11,360,811 2,209,962 28,340,939 2,047,014

Samsung (China) Semiconductor Co., Ltd. (SCS) 10,254,900 1,920,000 4,517,286 1,489,906

Samsung Semiconductor, Inc. (SSI)

9,306,621

4,288,544

29,592,773

62,872

Samsung Electronics Europe Holding

Cooperatief U.A. (SEEH)

8,586,022 6,388,302 - 9,439

Samsung Display Vietnam Co., Ltd. (SDV) 8,222,472 6,195,635 19,860,892 1,003,889

Samsung Asia Private Ltd. (SAPL) 7,630,154 592,916 1,665,436 1,111,559

Samsung Electronics Huizhou Co., Ltd. (SEHZ) 6,539,392 586,349 9,780,357 532,767

Samsung India Electronics Private Ltd. (SIEL) 6,410,825 3,438,807 11,045,500 309,632

Samsung Electronica da Amazonia Ltda.

(SEDA)

6,207,458 1,610,607 6,978,086 778,124

Samsung Austin Semiconductor LLC. (SAS)

5,642,117

511,596

3,643,739

434,766

Shanghai Samsung Semiconductor Co., Ltd.

(SSS)

5,400,549 4,227,922 30,379,218 286,956

Thai Samsung Electronics Co., Ltd. (TSE)

2,465,999

397,248

3,841,441

171,407

Samsung Electronics (UK) Ltd. (SEUK) 2,203,583 1,588,007 4,718,920 103,488

Samsung Electronics GmbH (SEG)

2,202,610

2,144,728

6,081,200

(3,490)

Samsung Electronics HCM C CE Complex Co.,

Ltd. (SEHC)

2,042,669 1,174,936 4,223,111 334,803

Samsung Electronics Europe Logistics B.V.

(SELS)

1,904,358 1,778,710 12,797,660 19,347

Samsung Electronics Hungarian Private Co. Ltd.

(SEH)

1,894,922 280,245 2,551,008 90,956

Samsung Suzhou LCD Co., Ltd. (SSL)

1,845,330

679,207

1,601,925

31,743

Samsung Electronics France S.A.S (SEF) 1,761,117 1,412,971 3,746,624 59,956

Samsung Electronics Benelux B.V. (SEBN) 1,673,470 552,994 2,118,897 29,536

1

The above summary of condensed financial information is based on separate financial statements of each subsidiary.

2

Consolidated financial data of an intermediate company that includes Harman International Industries, Inc. and its subsidiaries.

Samsung Electronics Business Report 88 / 261

(C) Changes in scope for consolidation

(1) Subsidiaries newly excluded from the consolidation for the year ended December 31, 2019:

Area

S ubs i di ary

Description

America

Harman Investment Group, LLC

Liquidation

Red Bend Software Inc. Merger

1

Europe/CIS

Samsung France Research Center SARL (SFRC)

Liquidation

Innoetics E.P.E.

Merger

2

Duran Audio B.V.

Merger

3

Harman International SNC

Merger

4

Harman Professional France SAS

Merger

5

Middle Eas t/Africa

Broadsense Ltd.

Liquidation

iOnRoad Ltd

Liquidation

iOnRoad Technologies Ltd

Merger

6

Towersec Ltd.

Merger

7

As ia

(Excluding China)

Harman Connected Services Japan Co., Ltd.

Merger

8

Red Bend Software Japan Co., Ltd.

Merger

9

Studer Japan Ltd.

Merger

10

Harman International Singapore Pte. Ltd.

Merger

11

AMX Products And Solutions Private Limited

Merger

12

Samsung Medison India Private Ltd. (SMIN)

Liquidation

China

Samsung Electronics (Beijing) Service Company Limited (SBSC)

Merger

13

Harman Connected Services Solutions (Beijing) Co., Ltd.

Liquidation

Korea Red Bend Software Inc. Liquidation

1

For the year ended December 31, 2019, Red Bend Software Inc. merged into Harman International Industries, Inc., a subsidiary of the

Company.

2

For the year ended December 31, 2019, Innoetics E.P.E. merged into Samsung Electronics Greece S.M .S.A (SEGR), a subsidiary of the

Company.

3

For the year ended December 31, 2019, Duran Audio B.V. merged into Harman Becker Automotive Systems M anufacturing Kft, a subsidiary

of the Company.

4

For the year ended December 31, 2019, Harman International SNC merged into Harman France SNC, a subsidiary of the Company.

5

For the year ended December 31, 2019, Harman Professional France SAS merged into Harman France SNC, a subsidiary of the Company.

6

For the year ended December 31, 2019, iOnRoad Technologies Ltd merged into Red Bend Ltd., a subsidiary of the Company.

7

For the year ended December 31, 2019, Towersec Ltd. merged into Red Bend Ltd., a subsidiary of the Company.

8

For the year ended December 31, 2019, Harman Connected Services Japan Co., Ltd. merged into Harman International Japan Co., Ltd., a

subsidiary of the Company.

9

For the year ended December 31, 2019, Red Bend Software Japan Co., Ltd. merged into Harman International Japan Co., Ltd., a subsidiary of

the Company.

10

For the year ended December 31, 2019, Studer Japan Ltd. merged into Harman International Japan Co., Ltd., a subsidiary of the Company.

11

For the y ear ended December 31, 2019, Harman International Singapore Pte. Ltd. merged into Harman Singapore Pte. Ltd., a subsidiary of

the Company.

12

For the year ended December 31, 2019, AMX Products And Solutions Private Limited merged into Harman International (India) Private

Limited, a subsidiary of the Company.

13

For the year ended December 31, 2019, Samsung Electronics (Beijing) Service Company Limited (SBSC) merged into Samsung (CHINA)

Investment Co., Ltd (SCIC), a subsidiary of the Company.

Samsung Electronics Business Report 89 / 261

(2) Subsidiaries newly included in the consolidation for the year ended December 31, 2019:

Area

S ubs i di ary

Description

Europe/CIS

Foodient Ltd.

Acquisition of shares

Middle Eas t/Africa

Corephotonics Ltd.

Acquisition of shares

Samsung Electronics Saudi Arabia Ltd. (SESAR)

Spin-off

As ia

(Excluding China)

Samsung Display Noida Private Limited (SDN) Incorporation

Korea

Samsung Venture Capital Union #45

Incorporation

Samsung Venture Capital Union #48

Incorporation

Dowooinsys Co., Ltd

Acquisition of shares

Gf. Co., Ltd

Acquisition of shares

2. Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. Thes e

policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of Pres entation

The Company maintains its accounting records in Korean won and prepares statutory financial statements in the Korean language

(Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“Korean IFRS”).

The accompanying consolidated financial statements have been condensed, restructured, and translated into English from the

Korean language financial statements.

Certain information attached to the Korean language financial statements, but not required for a fair presentation of the Company’s

financial position, financial performance or cash flows, is not presented in the accompanying consolidated financial statements.

The consolidated financial statements of the Company presented have been prepared in accordance with Korean IFRS. These are

the standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (IASB)

that have been adopted by the Republic of Korea.

Korean IFRS permits the use of critical accounting estimates in the preparation of the consolidated financial statements and requires

management judgments in applying accounting policies. The areas involving a higher degree of judgment or complexity, or areas

where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 3.

2.2 Changes in Accounting Policies and Disclosures

(A) New and amended standards adopted by the Company

The Company applied the following amended and enacted standards for the first time for their annual period beginning on January

1, 2019:

- Enactment of Korean IFRS 1116 Leases

The Company has applied Korean IFRS 1116 Leases on January 1, 2019, the date of initial application. In accordance with the

transitional provisions in Korean IFRS 1116 Leases, comparative figures have not been restated. The impacts of the application of

Korean IFRS 1116 Leases on the consolidated financial statements are as follows.

Samsung Electronics Business Report 90 / 261

The Company recognized right-of-use assets and lease liabilities in relation to leases which had previously been classified as

‘operating leases’ under the principles of the previous Korean IFRS 1017 Leases. As a result of applying the standard, on January 1,

2019, the date of initial application, right-of-use assets and lease liabilities increased by ￦ 2,774,982 million and ￦ 2,344,756

million, res pectively, and details of leas e liabilities are as follows:

(In millions of Korean won)

Financial lease liabilities as of December 31, 2018

￦

61,189

Adjustments in operating lease agreements as of January 1, 2019

2,344,756

Operating lease agreements as of December 31, 2018

2,785,140

Discounted operating lease agreements as of January 1, 2019

2,528,731

(Adjustments) Short-term lease and low value assets over which app lication exemp tion is ap plied

(183,975)

Lease liabilities as of January 1, 2019

￦

2,405,945

- Amendments to Korean IFRS 1019 Employee Benefits

The amendments require that an entity shall calculate current service cost and net interest for the remainder of the reporting period

after a plan amendment, curtailment or settlement based on updated actuarial assumptions from the date of the change. The

amendments also require that a reduction in a surplus must be recognized in profit or loss even if that surplus was not previously

recognized because of the impact of the asset ceiling. The amendment does not have a significant impact on the consolidated

financial statements.

- Amendments to Korean IFRS 1028 Investments in Associates and Joint Ventures

The amendments clarify that an entity shall apply Korean IFRS 1109 Financial Instruments to financial instruments in an associate

or joint venture to which the equity method is not applied. These include impairment of long-term interests that, in substance, form

part of the entity’s net investment in an associate or joint venture for which Korean IFRS 1109 should take precedence. The

amendment does not have a significant impact on the consolidated financial statements.

- Enactment to Interpretation of Korean IFRS 2123 Uncertainty over Income Tax Treatments

The Interpretation explains how to recognize and measure deferred and current income tax assets and liabilities where there is

uncertainty over a tax treatment, and includes guidance on how to determine whether each uncertain tax treatment is considered

separately or together. It also presents examples of circumstances where a judgement or estimate is required to be reassessed. The

enactment does not have a significant impact on the consolidated financial statements.

(B) New and amended standards not yet adopted by the Company

The following are new and amended accounting standards issued that are not mandatory for the annual reporting period

commencing January 1, 2019 and have not been early adopted by the Company.

- Amendments to Korean IFRS 1103 Business Combinations

To consider the integration of the required activities and assets as a business, the amended definition of a business requires an

acquisition to include an input and a substantive process that together significantly contribute to the ability to create outputs and

excludes economic benefits from the lower costs. An entity can apply a concentration test, an optional test, where substantially all

of the fair value of gross assets acquired is concentrated in a single asset or a group of similar assets, the assets acquired would not

represent a business. These amendments should be applied for annual periods beginning on or after January 1, 2020, and earlier

application is permitted.

Samsung Electronics Business Report 91 / 261

2.3 Cons olidation

The Company prepares the consolidated financial statements in accordance with Korean IFRS 1110 Consolidated Financial

Statements.

(A) Subs idiaries

Subsidiaries are all entities (including special purpose entities) over which the Company has control. The Company controls the

corresponding investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the

ability to affect those returns through its power over the investee. Consolidation of a subsidiary begins from the date the Company

obtains control of a subsidiary and ceases when the Company loses control of the subsidiary.

The Company applies the acquisition method to account for business combinations. The consideration transferred is measured at the

fair values of the assets transferred, and identifiable assets acquired and liabilities and contingent liabilities assumed in a business

combination are initially measured at their fair values at the acquisition date. The Company recognizes any non-controlling interest

in the acquiree on an acquisition-by-acquisition basis in the event of liquidation at the non-controlling interest’s proportionate share

of the recognized amounts of acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred.

The excess of consideration transferred, amount of any non-controlling interest in the acquired entity and acquisition-date fair value

of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recoded as goodwill.

If those amounts are less than the fair value of the net identifiab le assets of the business acquired, the difference is recognized

directly in the profit or loss as a bargain purchase.

Balances of receivables and payables, income and expenses and unrealized gains or losses on transactions between the entities

within the Company are eliminated. Accounting polies of subsidiaries are changed where necessary to ensure consistency with the

policies adopted by the Company.

(B) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as

transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the

relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals of

non-controlling interests are also recorded in equity.

(C) Disposal of subsidiaries

If the Company loses control of a subsidiary, any investment continuously retained in the subsidiary is re-measured at its fair value

at the date when control is lost and any resulting differences are recognized in profit or loss. Such fair value becomes the initial

carrying amount for the subsequent measurement of the retained interest accounted for as an associate, joint venture, or financial

asset. In addition, any amounts previously recognized in other comprehensive income in respect of such entity are accounted for as

if the Company had directly disposed of the related assets or liabilities. As a result, the previously recognized other comprehensive

income are reclassified into profit or loss or equity.

(D) Non-controlling interests

Each component of profit or loss and other comprehensive income is attributed to owners of the parent and to non-controlling

interests. Total comprehensive income is attributed to owners of the parent and to non-controlling interests even if this results in a

negative balance of non-controlling interests.

Samsung Electronics Business Report 92 / 261

( E) Associates

Associates are all entities over which the Company has significant in fluence but does not have control, generally investees of which

from 20% to 50% of voting shares are owned by the Company. Investments in associates are accounted for using the equity method

of accounting, after initially being recognized at cost. Unrealized gains on transactions between the Company and its associates are

eliminated to the extent of the Company’s interest in the associates. If the Company’s share of losses of an associate equals or

exceeds its interest in the associate (including long-term interests that, in substance, form part of the Company’s net investment in

the associate), the Company discontinues recognizing its share of further losses. After the Company’s interest is reduced to zero,

additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or

constructive obligations or made payments on behalf of the associate. If there is an objective evidence of impairment for the

investment in the associate, the Company recognizes the difference between the recoverable amount of the associate and its

carrying amount as impairment loss. If an associate uses accounting policies other than those of the Company for like transactions

and events in similar circumstances, if necessary, adjustments shall be made to make the associate’s accounting policies conform to

those of the Company when the associate’s financial statements are used by the entity in applying the equity method.

(F) Joint arrangements

A joint arrangement of which two or more parties have joint control is classified as either a joint operation or a joint venture. A joint

operator has rights to the assets, and obligations for the liabilities, relating to the joint operation and recognizes the assets, liabilities,

revenues and expenses relating to its interest in a joint operation. A joint venturer has rights to the net assets relating to the joint

venture and accounts for that investment using the equity method.

2.4 Foreign Currency Translation

(A) Functional and presentation currency

Items included in the consolidated financial statements of each of the Company’s entities are measured using the currency of the

primary economic environment in which each entity operates (the “functional currency”). The consolidated financial statements are

presented in Korean won, which is the parent company’s functional and presentation currency.

(B) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the

transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such

transactions and fro m the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies

are recognized in profit or loss. Exchange differences arising on non-monetary financial assets and liabilities such as equity

instruments at fair value through profit or loss and equity instruments at fair value through other comprehensive income are

recognized in profit or loss and other comprehensive income, respectively, as part of the fair value gain or loss.

(C) Translation into the presentation currency

The res ults and financial position of all the foreign entities that have a functional currency different from the presentation currency

of the Company are translated into the presentation currency as follows:

 Assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate at the

end of the reporting date.

 Income and expenses for each consolidated statement of profit or loss are translated at average exchange rates, unless this

average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which

case income and expenses are translated at the rate on the dates of the transactions.

 All resulting exchange differences are recognized in other comprehensive income.

Samsung Electronics Business Report 93 / 261

2.5 Cas h and Cas h Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, and other short-term investment assets with high

liquidity that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

2.6 Financial Assets

(A) Class ification

From January 1, 2018, an initial application date for Korean IFRS 1109 Financial Instruments, the Company classifies its financial

assets in the following measurement categories:

- Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss).

- Those to be measured at amortized cost.

The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash

flows.

For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.

For investments in debt instruments, this will depend on the business model in which the investment is held. The Company

reclassifies debt investments only when its business model for managing those assets changes.

For investments in equity instruments that are not held for trading, classification will depend on whether the Company has made an

irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive

income. Changes in fair value of the investments in equity instruments that are not elected to be accounted for as other

comprehensive income are recognized in profit or loss.

(B) Measurement

At initial recognition, the Company measures a financial asset, in the case of a financial asset not at fair value through profit or loss,

at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset or the issuance of the

financial liabilities. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or los s .

Hybrid (combined) contracts with embedded derivatives are considered in their entirety when determining whether their cash flows

are solely payment of principal and interest.

a) Debt Instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow

characteristics of the asset. The Company classifies its debt instruments into one of the following three measurement categories :

① Financial assets measured at amortized cost.

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and

interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is

not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest income from

these financial assets is included in ‘financial income’ using the effective interest rate method.

Samsung Electronics Business Report 94 / 261

② Financial assets measured at fair value through other comprehensive income

Assets that are held for collection of contractual cash flo ws and for selling the financial assets, where the assets’ cash flows

represent solely payments of principal and interest, are measured at fair value through other comprehensive income. Movements in

the carrying amount are taken through other comprehensive income, except for the recognition of impairment loss (reversal of

impairment loss), interest income and foreign exchange gains and losses which are recognized in profit or loss. When the financial

asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity

to profit or loss. Interest income from these financial assets is included in ‘financial income’ using the effective interest rate method.

Foreign exchange gains and losses are presented in ‘financial income’ or ‘financial expenses’ and impairment losses are presented

in ‘other non-operating expenses’.

③ Financial assets measured at fair value through profit or loss

Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income are measured at fair value

through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is

not part of a hedging relationship is recognized in profit or loss and presented in the consolidated statement of profit or loss within

‘other non-operating income’ or ‘other non-operating expenses’ in the year in which it arises.

b) Equity Instruments

The Company subsequently measures all equity investments at fair value. Where the Company’s management has elected to present

fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair

value gains and losses to profit or loss following the derecognition of the investment. When the financial asset is derecognized, the

cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to retained earnings.

Dividend income from such investments continue to be recognized in profit or loss as ‘other non-operating income’ when the right

to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in ‘other non-operating income’ or

‘other non-operating expenses’ in the consolidated statement of profit or loss as applicable.

(C) Imp airmen t

The Company assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at

amortized cost and fair value through other comprehensive income. The impairment methodology applied depends on whether there

has been a significant increase in credit risk. For trade receivables, the Company applies the simplified approach, which requires

expected lifetime losses to be recognized from initial recognition of the receivables.

(D) Recognition and Derecognition

Regular way purchases and sales of financial assets are recognized or derecognized on trade-date, the date on which the Company

commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial

assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

If a transfer does not result in derecognition because the Company has retained substantially all the risks and rewards of ownership

of the transferred asset, the Company continues to recognize the transferred asset in its entirety and recognizes a financial liability

for the consideration received. The Company classified the financial liability as ‘borrowings’ in the consolidated statement of

financial position.

( E) Offsetting of financial instruments

Financia l as s ets and liabilities are offset and the net amount reported in the statements of financial position where there is a legally

enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the

liab ility simu ltaneous ly. The legally enforceable right must not be contingent on future events and must be enforceable in the

normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

Samsung Electronics Business Report 95 / 261

2.7 Trade Receivables

Trade receivables are amounts due from customers for inventories sold or services performed in the ordinary course of business . If

collection is expected in one year or less, they are classified as current assets. If collection is expected beyond one year, they are

presented as non-current assets. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost

using the effective interest method, less loss allowance.

2.8 Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the average cost method, except for

materials in transit. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and

related production overheads (based on normal operating capacity). It excludes costs of idle plant and abnormal waste. Net

realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

Inventories are reduced for the estimated losses arising from excess, obsolescence, and decline in value. This reduction is

determined by estimating market value based on future customer demand. Loss on valuation of inventories is recorded as a part of

cost of sales.

2.9 Property, Plant and Equipme nt

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Historical cos t

includes expenditures that are directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s

carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated

with the ite m will flo w to the Company and the cost of the item can be measured reliably. The carrying amount of those parts that

are replaced is derecognized and repairs and maintenance expenses are recognized in profit or loss in the period they are incurred.

Depreciation on tangible assets is calculated using the straight-line method to allocate the difference between their cost and their

residual values over their estimated useful lives. Land is not depreciated. Costs that are directly attributable to the acquis ition,

construction or production of a qualifying asset, including capitalized interest costs, form part of the cost of that asset and are

amortized over the estimated useful lives.

The Company’s policy is that property, plant and equipment should be depreciated over the following estimated useful lives:

Estimated useful lives

Buildings and structures 15, 30 years

Machinery and equipment 5 y ears

Other 5 y ears

The depreciation method, residual values and useful lives of property, plant and equipment are reviewed, and adjusted if appropriate,

at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s

carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the

proceeds with the carrying amount and are recognized within the consolidated statement of profit or loss as part of ‘other non-

operating income’ or ‘other non-operating expenses’.

2.10 Borrowing Costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset

are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Investment income

earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the

borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are incurred.

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2.11 Intangible Ass ets

Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net identifiable assets

of the acquired subsidiaries, associates, joint ventures and businesses at the date of acquisition. Goodwill on an acquisition of

subsidiaries’ businesses is included in intangible assets and goodwill on an acquisition of associates and joint ventures’ shares is

included in the investments in associates and joint ventures.

Intangible assets, except for goodwill, are initially recognized at their historical cost and carried at cost less accumulated

amortization and accumulated impairment losses.

Internally generated development costs are the aggregate costs recognized after meeting the asset recognition criteria, including

technical feasibility, and determined to have future economic benefits. Membership rights and certain trademarks are regard ed as

intangible assets with an indefinite useful life and not amortized because there is no foreseeable limit to the period over which the

assets are expected to be utilized. Ho wever, the Co mpany records impairment based on its reasonable estimation of the benefits

associated with the membership rights and assessment of impairment indicators, such as a decline in the market value. Intangible

ass ets with definite useful lives such as trademarks, licenses, and other intangible assets, are amortized using the straight-line

method over their estimated useful lives.

The Company’s policy is that intangible assets should be amortized over the following estimated useful lives:

Estimated useful lives

Development costs 2 years

Trademarks, licenses and other intangible assets 3 - 25 years

2.12 Impairment of Non-Financial Assets

Goodwill or intangible assets with indefinite useful lives are not subject to amortization and are tested annually for impairment.

Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that th e

carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount

exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in us e. Fo r

the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows

(cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of

the impairment at the end of each reporting period.

Samsung Electronics Business Report 97 / 261

2.13 Financial Liabilities

(A) Classification and Measurement

The Company shall classify all financial liabilities as financial liabilities measured subsequently at amortized cost, except fo r the

following:

- Financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities , s hall be

subsequently measured at fair value.

- Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing

involvement approach applies. Such financial liabilities are measured based on the methodology described in Note 2.6

Financial Assets.

- Financial guarantee contracts. After initial recognition, an issuer of such a contract shall subsequently measure it at the higher

of:

(a) The amount of the loss allowance determined on lifetime expected credit losses.

(b) The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with

the principles of Korean IFRS 1115 Revenue from Contracts with Customers.

- Commitments to provide a loan at a below-market interest rate. An issuer of such a commitment shall subsequently measure it

at the higher of:

(a) The amount of the loss allowance determined on lifetime expected credit losses.

(b) The amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with

the principles of Korean IFRS 1115 Revenue from Contracts with Customers.

- Contingent consideration recognized by an acquirer in a business combination to which Korean IFRS 1103 Business

Combinations applies. Such contingent consideration shall subsequently be measured at fair value with changes recognized in

profit or loss.

(B) Derecognition

Financial liabilities are removed from the consolidated statement of financial position when it is extinguished; for examp le, when

the obligation specified in the contract is discharged or cancelled or expired or when the terms of an existing financial liabilit y are

substantially modified. The difference between the carrying amount of a financial liability extinguished or transferred to another

party and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

2.14 Trade Payables

Trade payables are amounts due to suppliers for inventories purchased or services received in the ordinary course of business. If

payment is expected in one year or less, they are classified as current liabilities. If payment is expected beyond one year, they are

presented as non-current liabilit ies. Non-current trade payables are recognized initially at fair value and subsequently measured at

amortized cost using the effective interest method.

2.15 Borrowings

Borrowings are recognized initially at fair value, net of transaction costs, and are subsequently measured at amortized cost. A ny

difference between cost and the redemption value is recognized in the consolidated statement of profit or loss over the period of the

borrowings using the effective interest method. If the Company has an indefinite right to defer payment for a period longer than 12

months after the end of the reporting date, such liabilities are recorded as non-current liab ilit ies , otherwise, they are recorded as

current liabilities.

Samsung Electronics Business Report 98 / 261

2.16 Provisions and Contingent Liabilities

A provision is recognized when the Co mpany has a present legal or constructive obligation as a result of a past event, it is probable

that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliab le estimate can be

made of the amount of the obligation. Provisions are not recognized for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate

that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the

provision due to passage of time is recognized as interest expense.

When it is p robable that an outflow of economic benefits will occur due to a present obligation resulting from a past event, and the

amount is reasonably estimable, a corresponding provision is recognized in the consolidated financial statements. However, when

such outflow is dependent upon a future event that is not certain to occur, or cannot be reliably estimated, a disclosure regarding the

contingent liability is made in the notes to the consolidated financial statements.

2.17 Employee Benefits

The Company has a variety of retirement pension plans including defined benefit and defined contribution plans.

A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate fund. The

Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all

emp loyees the benefits relating to employee service in the current and prior periods. For defined contribution plans, the Company

pays contributions to annuity plans that are managed either publicly or privately on a mandatory, contractual or voluntary basis. The

Company has no further future payment obligations once the contributions have been paid. The contributions are recognized as

employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a

reduction in the future payments is available.

A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of

pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service

and compensation. The liability (asset) recognized in the consolidated statement of financial position in respect to defined benefit

pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.

The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present

value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-

quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity

approximating to the terms of the related pension obligation.

Actuarial gains and losses resulting from the changes in actuarial assumptions, and the differences between the previous actuarial

assumptions and what has actually occurred, are recognized in other comprehensive income in the period in which they were

incurred. When plan amendments, curtailments and settlements occur, past service costs or gain or loss from settlements are

immediately recognized in profit or loss.

2.18 Financial Guarantee Contract

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it

incurs because a specified debtor fails to make payments when due.

The liability is initially measured at fair value, and then subsequently at the higher of the following and recognized in the

consolidated statements of financial position within ‘other financial liabilities’:

- the amount determined in accordance with the expected credit loss model under Korean IFRS 1109 Financial Instruments and

- the amount initially recognized less, where appropriate, the cumulative amount of income recognized in accordance with

Korean IFRS 1115 Revenue from Contracts with Customers.

Samsung Electronics Business Report 99 / 261

2.19 Current and Deferred Tax

The tax expense for the year comprises current and deferred t a x. Current and deferred tax is recognized in profit or loss, except to

the extent that it relates to items recognized in other comprehensive income or directly in equity. The tax expense is calculated on

the basis of the tax laws enacted or substantively enacted at the end of the reporting period.

Deferred tax is recognized for temporary differences arising between the tax bases of assets and liabilities and their carrying

amounts as expected tax consequences at the recovery or settlement of the carrying amounts of the assets and liabilities. However,

deferred tax assets and liabilities are not recognized if they arise from initial recognition of an asset or liability in a transaction other

than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax

assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary

differences can be utilized.

A deferred tax liability is recognized for taxab le temporary differences associated with investments in subsidiaries, associates, and

interests in joint ventures, except to the extent that the Company is able to control the timing of the reversal of the temporary

difference and it is probable that the temporary difference will not reverse in the foreseeable future. In addition, a deferred tax asset

is recognized for deductible temporary differences arising from such investments to the extent that it is probable the temporary

difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be

utilized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax

liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on

either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.20 Derivative Instruments

The Company initially recognizes rights and obligations from derivative contracts as assets and liabilities at fair value. Gain o r loss

arising from these contracts are recognized in profit or loss. Qualified hedged amount from cash flow hedge and hedge of a net

investment in a foreign operation is deferred in equity.

The Company applies cash flow hedge accounting to hedge the price risk associated with inventory purchase and other. The

effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other

comprehensive income, and the ineffective portion is recognized in financial income or expenses.

2.21 Dividend

Dividend is recognized as a liability when approved by the Company’s shareholders.

2.22 S hare Capital

Ordinary shares and preference shares with no repayment obligations are classified as equity. When the Company or a subsidiary

acquires the Company’s ordinary shares, the acquisition costs, including direct transaction costs, are deducted from equity until the

redemption or reissuance as treasury shares. Consideration received on the issuance of treasury shares is credited to equity

attributable to owners of the parent company.

Samsung Electronics Business Report 100 / 261

2.23 Revenue Recognition

Revenue mainly comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary cours e o f

the Company’s activities. Revenue is shown net of value-added tax, returns, sales incentives and discounts and after eliminating

intercompany transactions.

The Company applied Korean IFRS 1115 Revenue from Contracts with Customers to the annual period beginning January 1, 2018.

The Company shall recognize revenue in accordance with Korean IFRS 1115 Revenue from Contracts with Customers by applying

the following 5 steps: ① Identify the contracts with the customers, ② Identify the separate performance obligations, ③

Determine the transaction price of the contract, ④ Allocate the transaction price to each of the separate performance obligations,

and ⑤ Recognize the revenue as each performance obligation is satisfied.

(A) Identification of performance obligations

The Company exports various products and merchandise in accordance with Incoterms Group C trading conditions (Incoterms CIF

and other). According to Korean IFRS 1115 Revenue from Contracts with Customers since the seller provides the shipping service

after control of the product or merchandise has been transferred to the customer, the shipping service (including insurance) is

recognized as a separate performance obligation.

(B) A performance obligation is satisfied over time

The Company delivers products to customers and installs them in accordance with the system air conditioner contracts awarded by

the Public Procurement Service. According to Korean IFRS 1115 Revenue from Contracts with Customers the Company can

recognize revenue over time if the Company creates or enhances an asset (for examp le, work in progress) that the customer controls

as the asset is created or enhanced. The Company recognizes the revenue from system air conditioner installation over time as the

customer controls the outcome of the service.

(C) Variable consideration

The Company estimates an amount of variable consideration by using the expected value which the Company expects to better

predict the amount of consideration. The Company recognizes variable consideration only to the extent that it is highly probable

that a significant reversal in the amount of cumulative revenue recognized will not occur when the refund period has lapsed. The

refund liability is measured at the amount of consideration received for which the Company does not expect to be entitled. The

Company has a right to recover the product from the customer where the customer exercises his right of return and recognizes an

asset and a corresponding adjustment to cost of sales. The asset is measured by reference to the former carrying amount of the

product less the costs to recover the products.

(D) Allocation of the transaction price

The transaction price in an arrangement must be allocated to each separate performance obligation based on the relative standalone

selling prices of the goods or services being provided to a customer. The Company determines the standalone selling price for each

separate performance obligation by using methods such as the ‘adjusted market assessment approach’.

2.24 Leases

A lease is a contract, whereby the lessor conveys to the lessee, the right to control the use of an identified asset for a period of time

in exchange for consideration.

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. However, the Company did not

reassess all contracts at initial application of Korean IFRS 1116 Leases because the Co mpany applied the practical expedient to

contracts entered into before January 1, 2019.

Samsung Electronics Business Report 101 / 261

For a contract that is, or contains, a lease, both lessee and lessor account for each lease component within the contract as a lease

separately from non-lease components of the contract. In lessee accounting, however, the Company does not account them

separately but instead applies the practical expedient to account for each lease component and any associated non-lease components

as a single lease component.

(A) Lessee accounting

The Company recognizes a right-of-use asset representing its right to use the underlying leased asset and a lease liability

representing its obligation to make lease payments at the commencement date of the lease.

The right-of-use asset is measured at its cost less subsequent accumulated depreciation and accumulated impairment loss with

adjustments reflected arising from remeasurements of the lease liability. The right-of-use asset is depreciated over the shorter of the

asset’s useful life and the lease term on a straight-line basis from the commencement date of the lease and is classified as ‘property,

plant and equipment’ in the consolidated financial statements.

At the commencement date, the lease liability is measured at present value of the lease payments that are not paid at that date. When

measuring the present value, the lease payments are discounted using the interest rate implicit in the lease. If such implicit rate

cannot be readily determined, the Company uses the Company’s incremental borrowing rate. The lease liability is subsequently

increased by the amount of interest expenses recognized on the lease liability and reduced by the lease payments made. Lease

liabilities are remeasured when the future lease payments are changed due to the following:

 Changes in an index or a rate

 Changes in amounts expected to be payable by the lessee under residual value guarantees

 Changes in the assessment of whether a purchase option or an option to renew is reasonably certain to be exercised, or

 Changes in the assessment of whether it is reasonably certain that an option to terminate the lease will not be exercised.

Lease liabilities are classified as ‘current portion of long-term liabilities’ or ‘long-term borrowings’ in the consolidated fina ncial

statements.

The Company elected not to apply the requirements to s hort-term leases (i.e., a lease term of 12 months or less at the

commencement date) and low value assets (i.e. underlying assets below $ 5,000). In these cases, lease payments are charged to

profit or loss on a straight-line basis over the period of lease as a practical expedient.

(B) Lessor accounting

The accounting treatment as a lessor did not change significantly from the Korean IFRS 1116 Leases initially applied on January 1,

2019.

The Company classifies a lease as a finance lease if it transfers substantially all the risks and rewards incidental to ownership at the

inception of the lease. A lease other than a finance lease is classified as an operating lease. Lease income from operating leases is

recognized in income on a straight-line basis over the lease term. Initial direct costs incurred by the lessor in negotiating and

arranging an operating lease are added to the carrying amount of the leased asset and recognized as an expense over the lease term

on the same basis as the lease income.

2.25 Government Grants

Government grants are recognized at their fair values when there is reasonable assurance that the grant will be received and the

Company will comply with the conditions attached to it. Government grants relating to costs are deferred and recognized in the

consolidated statement of profit or loss over the period necessary to match them with the costs that they are intended to compensate.

Government grants relating to assets are recognized in liabilities as deferred income government grants, depreciated over the

expected lives of the related assets, and are credited to the consolidated statement of profit or loss.

Samsung Electronics Business Report 102 / 261

2.26 Earnings per Share

Basic earnings per share is calculated by dividing net profit for the period available to ordinary shareholders by the weighted-

average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the profit for the year attributable to owners of the parent company from the

consolidated statements of profit or loss by the weighted-average number of ordinary shares outstanding and potential dilutive

shares. Potential dilutive shares are used in the calculation of dilutive earnings per share only when they have dilutive effects.

2.27 Reportable Segments

Reportable segments are disclosed in a manner consistent with the reporting provided to the chief operating decision-maker. The

chief operating decision-ma ker is res pons ible for making strategic decisions on resource allocation and assessing performance of

the reportable segments. The Management Committee, wh ich makes strategic decisions, is regarded as the chief operating decision-

maker.

2.28 Convenience Trans lation into United States Dollar Amounts

The Company operates primarily in Korean won and its official accounting records are maintained in Korean won. The US dollar

amounts provided in the consolidated financial statements represent supplementary information solely for the convenience of the

reader. All Korean won amounts are expressed in U.S. dollars at the rate of ￦ 1,165.46 to US $1, the average exchange rate for

the year ended December 31, 2019. Such presentation is not in accordance with generally accepted accounting principles, and

should not be construed as a representation that the Korean won amounts shown could be readily converted, realized or settled in

US dollars at this or at any other rate.

2.29 Approval of the Cons olidated Financial Statements

These consolidated financial statements were approved by the Board of Directors on January 30, 2020.

3. Critical Accounting Estimates and Assumptions

The Company makes estimates and assumptions concerning the future. The estimates and assumptions are continuously assessed,

considering historical experience and other factors, including expectations of future events that are believed to be reasonable under

the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and

assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the

next financial year are addressed below.

(A) Revenue recognition

A refund liability and a right to the returned goods are recognized for the products expected to be returned at the time of sale.

Accumulated experience is used to estimate such returns at the time of sale at a portfolio level (expected value method), an d the

Company’s revenue is affected by changes in expected return rate.

Sales of goods are recognized based on considerations specified in the contract, net of sales incentives, when control of the products

has transferred. The sales deduction, which affects the Company’s revenue, is reasonably estimated based on historical experience

and past contracts.

(B) Provision for warranty

The Company recognizes provision for warranty on products sold. The Company accrues provision for warranty based on the best

estimate of amounts necessary to settle future and existing claims. The amounts are estimated based on past experience.

Samsung Electronics Business Report 103 / 261

(C) Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using a variety of methods and

assumptions that are mainly based on market conditions existing at the end of each reporting period.

(D) Impairment of financial assets

The loss allowance for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses

judgement in making these assumptions and selecting the inputs to the impairment calculation based on the Company’s past history,

existing market conditions as well as forward looking estimates at the end of each reporting period.

( E) Lease

In determining the lease term, the Company considers all facts and circumstances that create an economic incentive to exercise an

extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in

the lease term if the lease is reasonably certain to be extended (or not terminated).

The lease term is reassessed if an option is actually exercised (or not exercised) or the Company becomes obliged to exercise (or not

exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances

occurs, which affects this assessment, and that is within the control of the lessee.

(F) Net defined benefit liabilities (assets)

The net defined benefit liabilities (assets) depend on a number of factors that are determined on an actuarial basis using a number of

assumptions including the discount rate. Any changes in these assumptions will impact the carrying amount of the net defined

benefit liab ility. The Company, in consideration of the interest rates of high-quality corporate bonds, determines the appropriate

discount rate at the end of each year. This is the interest rate that is used to determine the present value of estimated future cash

outflows expected to be required to settle the net defined benefit liabilities (assets). The principal actuarial assumptions associated

with the net defined benefit liabilities (assets) are based on the current market expectations.

(G) Impairment of goodwill and intangible assets that have an indefinite useful life

At the end of each reporting period, the Company tests whether goodwill and intangible assets that have an indefinite useful life

have become impaired by comparing the carrying amounts of assets or cash-generating units to the recoverable amounts. The

recoverable amounts of assets or cash-generating units have been determined based on value-in-use calculations, and these

calculations are based on estimates.

(H) Income taxes

Income taxes on the Company’s taxable income from operating activities are subject to various tax laws and determinations of each

tax authority across various countries throughout the world. There is uncertainty in determining the eventual tax effects on the

taxable inco me from operating activ ities. The Company has recognized current tax and deferred tax at the end of the fiscal year

based on the best estimation of future taxes payable as a result of operating activities. However, the resulting deferred income tax

assets and liabilities may not equal the actual future taxes payable and such difference may impact the current tax and deferred

income tax assets and liabilities upon the determination of eventual tax effects.

Regarding taxes payable in Korea, if a certain portion of taxable income is not used for investments or for increases in wages or

dividends, in accordance with the Tax System For Recirculation of Corporate Income, the Company is liable to pay additional

income tax calculated based on Korean tax law. The current and deferred tax at the end of the fiscal year are based on the bes t

estimation of future taxes payable, which can differ from actual future taxes payable as a result of changes in investments, wages

and dividends, and thus results in additional uncertainty in measuring the final tax effects.

Samsung Electronics Business Report 104 / 261

The Company assesses uncertainty over a tax treatment in accordance with Korean IFRS 1012 Income Taxes. When the Company

concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the Company will reflect the effe ct of

uncertainty for each uncertain tax treatment by using either of the following methods, depending on which method the Company

expects to better predict the resolution of the uncertainty:

- The most likely amount: the single most likely amount in a range of possible outcomes.

- The expected value: the sum of the probability-weighted amounts in a range of possible outcomes.

4. Cash and Cash Equivale nts

Cash and cash equivalents include cash on hand, deposits held at call with banks, and other short-term investment assets with high

liquidity that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Cash and cash equivalents as of December 31, 2019 and 2018 consist of the following:

(In millions of Korean won)

December 31, 2019

December 31, 2018

Cash on hand ￦

32,861 ￦ 46,929

Bank deposits and other 26,853,138 30,293,576

Total

￦ 26,885,999 ￦ 30,340,505

5. Financial Assets Subject to Withdrawal Restrictions

Financial instruments subject to withdrawal restrictions as of December 31, 2019 and 2018 cons is t of the following:

(In millions of Korean won)

December 31, 2019

December 31, 2018

Short-term financial instruments

￦

54,914

￦

63,064

Other non-current assets

633

6,325

Total

￦

55,547

￦

69,389

Samsung Electronics Business Report 105 / 261

6. Financial Ins truments by Category

(A) Categorizations of financial assets and liabilities as of December 31, 2019 and 2018 are as follows:

(1) As of December 31, 2019

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at fair value

through other

comprehensive income

Financial assets

measured at fair

value through

profit or loss

Other financial

assets

1

Total

Financial assets

Cash and cash equivalents

￦

26,885,999

￦

-

￦

-

￦

-

￦

26,885,999

Short-term financial instruments

76,252,052

-

76,252,052

Trade receivables

35,131,343

-

35,131,343

Financial assets at amortized

cost

3,914,216 - - - 3,914,216

Financial assets at fair value

through other comprehensive

income

- 8,920,712 - - 8,920,712

Financial assets at fair value

through profit or loss

- - 2,776,440 - 2,776,440

Other 9,656,415 - 181,682 26,444 9,864,541

Total

￦

151,840,025

￦

8,920,712

￦

2,958,122

￦

26,444

￦

163,745,303

1

Other financial assets include derivatives designated as hedging instruments, which are not subject to categorizations.

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Financial liabilities at

fair value through

profit or loss

Other financial

liabilities

1

Total

Financial liabilities

Trade payables

￦

8,718,222

￦

-

￦

-

￦

8,718,222

Short-term borrowings

2,659,107

-

11,734,361

14,393,468

Other pay ables

11,034,253

-

11,034,253

Current portion of long-term liabilities

41,022

-

805,068

846,090

Debentures 975,298 - -

975,298

Long-term borrowings

-

2,197,181

Long-term other p ayables

1,820,611

2,316

-

1,822,927

Other

8,158,935

204,671

10,540

8,374,146

Total

￦ 33,407,448 ￦ 206,987 ￦ 14,747,150

￦ 48,361,585

1

Other financial liabilities include collateralized borrowings, lease liabilities, and derivatives designated as hedging instruments, which are not

subject to categorizations.

Samsung Electronics Business Report 106 / 261

(2) As of December 31, 2018

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at fair value

through other

comprehensive income

Financial assets

measured at fair

value through

profit or loss

Other financial

assets

1

Total

Financial assets

Cash and cash equivalents

￦

30,340,505

￦

-

￦

-

￦

-

￦

30,340,505

Short-term financial instruments

65,893,797

-

65,893,797

Trade receivables

33,867,733

-

33,867,733

Financial assets at amortized

cost

2,942,002 - -

- 2,942,002

Financial assets at fair value

through other comprehensive

income

- 7,301,351 -

- 7,301,351

Financial assets at fair value

through profit or loss

- - 2,777,375

- 2,777,375

Other

9,229,044

-

58,127

25,962

9,313,133

Total

￦

142,273,081

￦

7,301,351

￦

2,835,502

￦

25,962

￦

152,435,896

1

Other financial assets include derivatives designated as hedging instruments, which are not subject to categorizations.

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Financial liabilities at

fair value through

profit or loss

Other financial

liabilities

1

Total

Financial liabilities

Trade payables

￦

8,479,916

￦

-

￦

-

￦

8,479,916

Short-term borrowings 1,456,201 - 12,130,459 13,586,660

Other pay ables

9,779,287

-

9,779,287

Current portion of long-term liabilities

33,386

-

33,386

Debentures

961,972

-

961,972

Long-term borrowings

85,085

-

85,085

Long-term other p ayables

2,846,585

13,417

-

2,860,002

Other

8,789,800

32,284

10,439

8,832,523

Total

￦

32,432,232

￦

45,701

￦

12,140,898

￦

44,618,831

1

Other financial liabilities include collateralized borrowings and derivatives designated as hedging instruments, which are not subject to

categorizations.

Samsung Electronics Business Report 107 / 261

(B) Net gains or net losses on each category of financial assets and liabilities for the years ended December 31, 2019 and 2018 are

as follows :

(1) 2019

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at fair value

through other

comprehensive income

Financial assets

measured at fair

value through

profit or loss

Other financial

assets Total

Financial assets

Gain on valuation

(other comprehensive income)

￦ - ￦ 1,146,599 ￦ - ￦ 4,735 ￦ 1,151,334

Gain (loss) on valuation/disposal

(profit or loss)

(14,874) - 225,273 (59) 210,340

Reclassification from other

comprehensive income to profit

or loss

- - - 3,830 3,830

Interest income

2,659,740

-

284

-

2,660,024

Foreign exchange differences

(profit or loss)

(328,213) - - - (328,213)

Dividend income

-

152,091

2,588

-

154,679

Impairment/reversal

(profit or loss)

188,530 - (5,398) - 183,132

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Financial liabilities

measured at fair

value through profit

or loss

Other financial

liabilities

1

Total

Financial liabilities

Gain on valuation

(other comprehensive loss)

￦ - ￦ - ￦ 20,277 ￦ 20,277

Gain (loss) on valuation/disposal

(profit or loss)

- (3,237) 1,033 (2,204)

Reclassification from other comprehensive

income to profit or loss

- - 16,399 16,399

Interest expense

(248,659)

-

(437,697)

(686,356)

Foreign exchange differences

(profit or loss)

167,164 - 90,145 257,309

1

Other financial liabilities include collateralized borrowings, lease liabilities, and derivatives designated as hedging instruments, which are not

subject to categorizations.

Samsung Electronics Business Report 108 / 261

(2) 2018

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at fair value

through other

comprehensive income

Financial assets

measured at fair

value through

profit or loss

Other financial

assets Total

Financial assets

Gain (loss) on valuation

(other comprehensive income)

￦ - ￦ (235,865) ￦ -

￦ 39,622

￦ (196,243)

Gain (loss) on valuation/disposal

(profit or loss)

(14,768) - 211,151

13,260

209,643

Reclassification from other

comprehensive income to profit

or loss

- - -

(21,585)

Interest income

2,296,841

-

298

-

2,297,139

Foreign exchange differences

(profit or loss)

(406,081) - -

-

(406,081)

Dividend income

-

130,056

1,323

-

131,379

Impairment/reversal

(profit or loss)

48,581 - -

-

48,581

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Financial liabilities

measured at fair value

through profit or loss

Other financial

liabilities

1

Total

Financial liabilities

Gain on valuation

(other comprehensive loss)

￦ - ￦ - ￦ 14,608 ￦ 14,608

Gain (loss) on valuation/disposal

(profit or loss)

-

80,389 (8,200) 72,189

Reclassification from other comprehensive

income to profit or loss

-

- 7,958 7,958

Interest expense

(289,993)

-

(384,624)

(674,617)

Foreign exchange differences

(profit or loss)

(101,394)

- 79,390 (22,004)

1

Other financial liabilities include collateralized borrowings and derivatives designated as hedging instruments, which are not subject to

categorizations.

Samsung Electronics Business Report 109 / 261

7. Transfer of Financial Assets

Trade receivables of the Company have been discounted through factoring agreements with banks during the years ended

December 31, 2019 and 2018. Trade receivables provided as collaterals in such factoring transactions do not meet the requirements

for asset derecognition as risks and rewards are not

substantially transferred in the event the debtor defaults due to a recourse

obligation, etc. Financial liabilities recognized in relation to these transactions are included as ‘short-term borrowings’ on the

consolidated statement of financial position (refer to Note 14).

The following table presents a breakdown of discounted trade receivables as of December 31, 2019 and 2018:

(In millions of Korean won)

December 31, 2019

December 31, 2018

Carrying amount of the discounted trade receivables

1

￦

11,734,361

￦

12,130,459

Carrying amount of the related borrowings

11,734,361

12,130,459

1

The discounted trade receivables include intercomp any balances.

8. Financial As sets at Fair Value

(A) Details of financial assets at fair value as of December 31, 2019 and 2018 are as follows:

(1) Financial assets at fair value through other comprehensive income

(In millions of Korean won)

December 31, 2019

December 31, 2018

Non-current portion

Equity instruments

￦

8,920,712

￦

7,301,351

(2) Financial assets at fair value through profit or loss

(In millions of Korean won)

December 31, 2019

December 31, 2018

Current portion

Debt instruments

￦ 1,727,436 ￦ 2,001,948

Non-current portion

Equity instruments

704,155

453,642

Debt instruments

344,849

321,785

Subtotal

1,049,004

775,427

Total

￦ 2,776,440 ￦ 2,777,375

Samsung Electronics Business Report 11 0 / 261

(B) Changes in financial assets at fair value for the years ended December 31, 2019 and 2018 are as follows:

(1) Financial assets at fair value through other comprehensive income

(In millions of Korean won)

2019

2018

Balance as of January 1 ￦ 7,301,351 ￦ 7,151,434

Acquisition 63,447 424,471

Disposal (950) (7,050)

Fair value gain (loss)

1,497,600

(312,601)

Other 59,264 45,097

Balance as of December 31

￦

8,920,712

￦

7,301,351

(2) Financial assets at fair value through profit or loss

(In millions of Korean won)

2019

2018

Balance as of January 1 ￦ 775,427 ￦ 600,746

Acquisition 138,125 178,048

Disposal (55,509) (64,576)

Fair value gain

200,533

65,361

Other (9,572) (4,152)

Balance as of December 31

￦

1,049,004

￦

775,427

(C) Changes in gain (loss) on valuation of financial assets at fair value through other comprehensive income for the years ended

December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

2019

2018

Balance as of January 1

￦ 2,165,131

￦ 2,475,749

Fair value gain (loss) 1,497,600 (312,601)

Reclassification to retained earnings due to disposals 1,267 1,983

Balance as of December 31 3,663,998 2,165,131

Income tax effects on equity and non-controlling interests (1,090,468) (702,865)

Total

￦

2,573,530

￦

1,462,266

Samsung Electronics Business Report 111 / 261

(D) Details of listed equity securities of financial assets at fair value as of December 31, 2019 and 2018 are as follows :

December 31, 2019

December 31, 2018

(In millions of Korean won, number

of shares and percentage)

Number of

shares

Percentage of

ownership

1

(%) Acquisition cost

Carrying amount

(Market value)

Carrying amount

(Market value)

Samsung Heavy Industries

100,693,398

16.0

￦

735,488

￦

732,041

￦

746,138

Hotel Shilla

2,004,717

5.1

13,957

182,028

153,361

iM arket Korea

647,320

1.8

324

6,732

4,479

SFA Engineering

3,644,000

10.2

38,262

168,535

126,082

Wonik Holdings

3,518,342

4.6

30,821

19,210

12,349

Wonik IPS

3,701,872

7.5

32,428

132,712

74,408

ASM L

6,297,787

1.5

363,012

2,154,676

1,104,944

Wacom

8,398,400

5.0

62,013

39,765

38,795

BYD

52,264,808

1.9

528,665

412,935

433,838

Other

296,744

419,868

200,363

Total

￦

2,101,714

￦

4,268,502

￦

2,894,757

1

Ownership represents the Company’s ownership of ordinary shares issued in each entity.

9. Trade and Non-Trade Receivables

(A) Trade and non-trade receivables as of December 31, 2019 and 2018 are as follows:

December 31, 2019

December 31, 2018

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Receivables

\

35,882,903

\

4,584,259

\

35,480,128

\

3,335,428

Less: Loss allowance

(340,410)

(58,666)

(571,564)

(31,045)

Subtotal

35,542,493

4,525,593

34,908,564

3,304,383

Less: Non-current portion (411,150) (346,473) (1,040,831) (223,650)

Current portion

\ 35,131,343 \ 4,179,120 \ 33,867,733 \ 3,080,733

(B) Movements in the loss allowance for receivables for the years ended December 31, 2019 and 2018 are as follows:

2019

2018

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Balance as of January 1

\

571,564

\

31,045

\

639,223

\

27,305

Reversal

(183,380)

(5,115)

(48,320)

(233)

Write-off (14,571) (539) (11,401) (885)

Other (33,203) 33,275 (7,938) 4,858

Balance as of December 31

\

340,410

\

58,666

\

571,564

\

31,045

Samsung Electronics Business Report 11 2 / 261

(C) The details of trade and non-trade receivables classified by past due date to measure expected credit losses as of December 31,

2019 and 2018 are as follows:

December 31, 2019

December 31, 2018

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Receivables not past due

\

33,215,136

\

4,365,708

\

32,311,659

\

2,993,313

Past due

1

:

Less than 31 days overdue

1,830,749

106,313

2,390,409

148,309

31 days to 90 days overdue

323,640

20,343

278,705

33,714

Over 90 days overdue

513,378

91,895

499,355

160,092

Subtotal

2,667,767

218,551

3,168,469

342,115

Total

\ 35,882,903 \ 4,584,259 \ 35,480,128 \ 3,335,428

1

The Company does not consider trade and non-trade receivables that are overdue for less than or equal to 31 days as impaired.

(D) The maximum exposure to current credit risk is equivalent to the carrying amount of receivables as of December 31, 2019. The

Company has in place insurance contracts covering the Company’s major receivables.

10. Inventories

Details of inventories as of December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

December 31, 2019 December 31, 2018

Gross amount

Valuation

allowance

Carrying

amount Gross amount

Valuation

allowance

Carrying

amount

Finished goods

\

8,460,621

\

(345,505)

\

8,115,116

\

9,206,754

\

(370,656)

\

8,836,098

Work in process

10,424,880 (538,246) 9,886,634 11,862,033 (795,522) 11,066,511

Raw materials and sup plies

8,288,265

(541,155)

7,747,110

8,658,212

(610,073)

8,048,139

M aterials in transit

1,017,604 - 1,017,604 1,033,956 - 1,033,956

Total

\

28,191,370

\

(1,424,906)

\

26,766,464

\

30,760,955

\

(1,776,251)

\

28,984,704

The inventories recognized as expense for the year ended December 31, 2019, amount to ￦ 145,793,517 million (December 31,

2018: ￦ 131,502,320 million). The amount includes loss on valuation of inventories.

Samsung Electronics Business Report 11 3 / 261

11. Investments in Associates and Joint Ventures

(A) Changes in investments in associates and joint ventures for the years ended December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

2019

2018

Balance as of January 1

\

7,313,206

\

6,802,351

Acquisition 12,822 51,226

Disposal

(1,437)

(148)

Share of profit

412,960

539,845

Other

1

(145,939)

(80,068)

Balance as of December 31

\

7,591,612

\

7,313,206

1

Other consists of dividends, impairment, reclassification, and the cumulative effect of changes in accounting policies.

(B) Major investments in associates and joint ventures as of December 31, 2019 are as follows:

(1) Investments in associates

Investee Nature of relationship

Percentage of

ownership

1

(%)

Principal

business

location

Reporting

period

Samsung Electro-M echanics

Co., Ltd.

Manufacture and supply of electronic components including

passive comp onents, circuit boards, and modules

23.7 Korea December

Samsung SDS Co., Ltd.

Provide IT services including computer programming, system

integration and management and logistical services

22.6 Korea December

Samsung Biologics Co., Ltd.

New business investment

31.5

Korea

December

Samsung SDI Co., Ltd.

2

Manufacture and supply of electronics including secondary

cell batteries

19.6 Korea December

Cheil Worldwide Inc.

Advertising agency

25.2

Korea

December

1

Ownership represents the Company’s ownership of ordinary shares issued by each entity.

2

The Company’s ownership of ordinary shares outstanding is 20.6%.

(2) Investments in joint ventures

Investee Nature of relationship

Percentage of

ownership

1

(%)

Principal

business

location

Reporting

period

Samsung Corning

Advanced Glass, LLC

Manufacture and supply of industrial glass devices 50.0 Korea December

1

Ownership represents the Company’s ownership of ordinary shares issued by each entity.

Samsung Electronics Business Report 11 4 / 261

(C) Details of investments in associates and joint ventures as of December 31, 2019 and 2018 are as follows:

(1) Investments in associates

(In millions of Korean won) December 31, 2019

Investee Acquisition cost Net asset value of equity shares

1

Carrying amount

Samsung Electro-Mechanics Co., Ltd.

￦

359,237

￦

1,237,753

￦

1,152,734

Samsung SDS Co., Ltd.

147,963

1,478,586

1,499,571

Samsung Biologics Co., Ltd.

443,193

1,371,315

1,377,043

Samsung SDI Co., Ltd.

1,242,605

2,481,233

2,233,516

Cheil Worldwide Inc.

506,162

271,409

570,215

Other

550,404

373,606

523,794

Total

￦

3,249,564

￦

7,213,902

￦

7,356,873

1

The Company’s portion of net asset value of associates is based on the Company’s ownership percentage.

(In millions of Korean won)

December 31, 2018

Investee Acquisition cost Net asset value of equity shares

1

Carrying amount

Samsung Electro-Mechanics Co., Ltd.

￦

359,237

￦

1,127,805

￦

1,126,043

Samsung SDS Co., Ltd. 147,963 1,350,838 1,376,321

Samsung Biologics Co., Ltd.

443,193

1,308,650

1,308,546

Samsung SDI Co., Ltd.

1,242,605

2,402,697

2,197,335

Cheil Worldwide Inc.

506,162

253,062

549,165

Other

625,922

310,909

525,259

Total

￦

3,325,082

￦

6,753,961

￦

7,082,669

1

The Company’s portion of net asset value of associates is based on the Company’s ownership percentage.

(2) Investments in joint ventures

(In millions of Korean won)

December 31, 2019

Investee

Acquisition cost

Net asset value of equity shares

1

Carrying amount

Samsung Corning Advanced Glass, LLC

￦

215,000

￦

173,746

￦

173,742

Other

259,994

66,848

60,997

Total

￦

474,994

￦

240,594

￦

234,739

1

The Company’s portion of net asset value of joint ventures is based on the Company’s ownership percentage.

(In millions of Korean won)

December 31, 2018

Investee

Acquisition cost

Net asset value of equity shares

1

Carrying amount

Samsung Corning Advanced Glass, LLC

￦

215,000

￦

173,503

￦

173,499

Other

259,994

65,443

57,038

Total

￦

474,994

￦

238,946

￦

230,537

1

The Company’s portion of net asset value of joint ventures is based on the Company’s ownership percentage.

Samsung Electronics Business Report 11 5 / 261

(D) Details of the valuation of investments in associates and joint ventures under the equity method are as follows:

(1) For the year ended December 31, 2019

(In millions of Korean won)

Balance as of

January 1 S hare of profit

Share of other

comprehensive

income (loss)

Other

1

Balance as of

December 31

Samsung Electro-M echanics Co., Ltd. ￦ 1,126,043 ￦ 38,458 ￦ 5,926 ￦ (17,693) ￦ 1,152,734

Samsung SDS Co., Ltd.

1,376,321

166,385

(8,191)

(34,944)

1,499,571

Samsung Biologics Co., Ltd.

1,308,546

64,571

3,926

-

1,377,043

Samsung SDI Co., Ltd.

2,197,335

34,279

15,365

(13,463)

2,233,516

Cheil Worldwide Inc.

549,165

42,049

1,360

(22,359)

570,215

Samsung Corning Advanced Glass, LLC

173,499

34

209

-

173,742

Other

582,297

67,184

13,802

(78,492)

584,791

Total

￦

7,313,206

￦

412,960

￦

32,397

￦

(166,951)

￦

7,591,612

1

Other consists of acquisitions, disposals, dividends, imp airment and reclassification.

(2) For the year ended December 31, 2018

(In millions of Korean won)

Balance as of

January 1 S hare of profit

Share of other

comprehensive

income (loss)

Other

1

Balance as of

December 31

Samsung Electro-Mechanics Co., Ltd.

￦

991,579

￦

150,099

￦

(1,648)

￦

(13,987)

￦

1,126,043

Samsung SDS Co., Ltd.

1,282,205

142,290

(13,229)

(34,945)

1,376,321

Samsung Biologics Co., Ltd.

1,254,937

72,059

(964)

(17,486)

1,308,546

Samsung SDI Co., Ltd. 2,126,244 74,029 10,526 (13,464) 2,197,335

Cheil Worldwide Inc.

540,114

34,948

(3,828)

(22,069)

549,165

Samsung Corning Advanced Glass, LLC

170,425

2,811

262

1

173,499

Other

436,847

63,609

8,060

73,781

582,297

Total

￦ 6,802,351 ￦ 539,845 ￦ (821) ￦ (28,169) ￦ 7,313,206

1

Other consists of acquisitions, disposals, dividends, imp airment, reclassification and the cumulative effect of changes in accounting policies.

Samsung Electronics Business Report 11 6 / 261

( E) Summary of condensed financial information of major associates and joint ventures

(1) A summary of condensed financial information of major associates and dividends received from associates as of December

31, 2019 and 2018, and for the years ended December 31, 2019 and 2018 is as follows :

2019

(In millions of Korean won)

Samsung

Electro-Mechanics

Co., Ltd.

Samsung SDS

Co., Ltd.

Samsung

Biologics

Co., Ltd.

Samsung

S DI

Co., Ltd.

Cheil

Worl dwi de Inc.

Condensed financial information

Condensed statements of financial position:

Current assets

￦

3,507,525

￦

6,383,847

￦

1,356,262

￦

5,181,415

￦

1,787,299

Non-current assets

5,166,724

2,637,389

4,555,365

14,670,682

504,347

Current liabilities

1,850,405

1,698,187

690,505

3,741,523

1,115,652

Non-current liabilities

1,393,746

597,891

866,668

3,450,229

219,178

Non-controlling interests

145,050

179,362

-

335,408

10,197

Condensed statements of comprehensive income:

Revenue

￦

8,040,818

￦

10,719,632

￦

701,592

￦

10,097,426

￦

3,421,673

Profit from continuing operations

1

605,725

736,458

202,904

356,549

138,055

Loss from discontinued operation after

income tax

1

(91,428) - - - -

Other comprehensive income (loss)

1

26,270

(17,665)

(3,919)

137,272

2,172

Total comprehensive income

1

540,567

718,793

198,985

493,821

140,227

Details of adjustments from the carrying amount of investments in associates

Net assets (a)

￦

5,285,048

￦

6,545,796

￦

4,354,454

￦

12,324,937

￦

946,619

Ownership p ercentage (b)

2

23.4%

22.6%

31.5%

20.1%

28.7%

Net assets of equity shares (a x b)

1,237,753

1,478,586

1,371,315

2,481,233

271,409

Goodwill

7,081

26,801

3,645

-

298,779

Intercompany transactions and other

3

(92,100)

(5,816)

2,083

(247,717)

27

Carrying amount of associates

1,152,734

1,499,571

1,377,043

2,233,516

570,215

Dividends from associates

Dividends

￦

17,693

￦

34,944

￦

-

￦

13,463

￦

22,359

1

Profit (loss) attributable to owners of the parent company.

2

Ownership percentage includes ordinary and preference shares.

3

Consists of unrealized gains and losses and other differences.

Samsung Electronics Business Report 11 7 / 261

2018

(In millions of Korean won)

Samsung

Electro-Mechanics

Co., Ltd.

Samsung SDS

Co., Ltd.

Samsung

Biologics Co.,

Ltd.

Samsung

S DI

Co., Ltd.

Cheil

Worldwide

Inc.

Condensed financial information

Condensed statements of financial position:

Current assets

￦

3,525,293

￦

5,881,776

￦

1,577,684

￦

5,519,342

￦

1,889,015

Non-current assets

5,119,621

2,132,073

4,402,725

13,830,379

378,586

Current liabilities

2,509,584

1,574,797

710,530

4,012,822

1,251,332

Non-current liabilities

1,188,833

290,501

1,114,410

3,111,680

123,476

Non-controlling interests

125,450

166,097

-

291,196

10,164

Condensed statements of comprehensive income:

Revenue

￦

8,193,023

￦

10,034,219

￦

535,806

￦

9,158,272

￦

3,468,786

Profit or loss from continuing operations

1

656,242

629,340

224,109

701,166

129,625

Other comprehensive income (loss)

1

(26,415)

(49,834)

(2,967)

47,261

(11,256)

Total comprehensive income

1

629,827

579,506

221,142

748,427

118,369

Details of adjustments from the carrying amount of investments in associates

Net assets (a)

￦

4,821,047

￦

5,982,454

￦

4,155,469

￦

11,934,023

￦

882,629

Ownership percentage (b)

2

23.4%

22.6%

31.5%

20.1%

28.7%

Net assets of equity shares (a x b)

1,127,805

1,350,838

1,308,650

2,402,697

253,062

Goodwill

7,081

26,801

3,645

-

298,779

Intercompany transactions and other

3

(8,843)

(1,318)

(3,749)

(205,362)

(2,676)

Carrying amount of associates

1,126,043

1,376,321

1,308,546

2,197,335

549,165

Dividends from associates

Dividends

￦

13,270

￦

34,944

￦

-

￦

13,463

￦

22,069

1

Profit (loss) attributable to owners of the parent company.

2

Ownership percentage includes ordinary and preference shares.

3

Consists of unrealized gains and losses and other differences.

Samsung Electronics Business Report 11 8 / 261

(2) A summary of the condensed financial information of major joint ventures and dividends received from joint ventures as of

December 31, 2019 and 2018, and for the years ended December 31, 2019 and 2018 is as follows:

Samsung Corning Advanced Glass, LLC

(In millions of Korean won)

2019

2018

Condensed financial information

Condensed statements of financial position:

Current assets

￦

164,870

￦

145,733

Cash and cash equivalent

35,553

19,047

Non-current assets

225,334

234,666

Current liabilities

40,567

33,393

Financial liabilities

1

21,108

17,710

Non-current liabilities

2,146

-

Condensed statements of comprehensive income:

Revenue

￦

244,202

￦

233,025

Depreciation and amortization

589

2,388

Interest income

687

428

Income tax expense

(33)

296

Profit from continuing operations

2

68

5,601

Other comprehensive income

2

-

Total comprehensive income

2

68

5,601

Details of adjustments from the carrying amount of investments in joint ventures

Net assets (a)

￦

347,491

￦

347,006

Ownership percentage (b)

50.0%

Net assets of equity shares (a x b)

173,746

173,503

Intercompany transactions and other

3

(4) (4)

Carrying amount of joint ventures

173,742

173,499

Dividends from joint ventures

Dividends

￦

-

￦

-

1

Trade pay ables, other payables, and provisions are excluded.

2

Profit (loss) attributable to owners of the parent company .

3

Consists of unrealized gains and losses and other differences.

Samsung Electronics Business Report 11 9 / 261

(3) Profit (loss) attributable to owners of the parent company from ass ociates and joint ventures which are not individually

material for the years ended December 31, 2019 and 2018 are as follows:

2019

2018

(In millions of Korean won)

Associates

Joint ventures

Associates

Joint ventures

Profit for the year

￦

65,635

￦

1,549

￦

63,340

￦

1,379

Other comprehensive income 10,714 3,088 5,851 2,110

Total comprehensive income

￦ 76,349 ￦ 4,637 ￦ 69,191 ￦ 3,489

(F) Details of marketable investments in associates as of December 31, 2019 and 2018 are as follows:

(In millions of Korean won and number of shares)

December 31, 2019 December 31, 2018

Number of shares Market value Market value

Samsung Electro-Mechanics Co., Ltd.

17,693,084 ￦ 2,211,636 ￦ 1,831,234

Samsung SDS Co., Ltd.

17,472,110 3,398,325 3,564,310

Samsung Biologics Co., Ltd.

20,836,832 9,022,348 8,053,436

Samsung SDI Co., Ltd.

13,462,673

3,177,191

2,948,325

Cheil Worldwide Inc.

29,038,075

698,366

653,357

(G) Other matters

On July 12, 2018, the Korea Securities and Futures Commission determined a first measure following an investigation relating to

Samsung Biologics Co., Ltd., an associate of the Company, and its accounting for its investment in Samsung Bioepis Co., Ltd, a

joint venture between Biogen Therapeutics Inc. and Samsung Biologics Co., Ltd. The first measure included a recommendation to

dismiss the director in charge, prosecution charges, and external auditor designation by the regulator, on the basis that the Joint

Venture Agreement was not disclosed in the notes to the financial statements. On November 14, 2018, the Korea Securities and

Futures Commission determined a second measure, which included a penalty of ￦

8,000 million, a recommendation to dismiss the

CEO, a requirement to restate its financial statements, and further prosecution charges.

Consequently, Samsung Biologics Co., Ltd. filed a suit for cancellation of the aforementioned measures to the Seoul A dmin istrative

Court to suspend the execution of these measures, and the respective court has pronounced a decision to suspend these measures

until the final rulings on January 22, 2019 and February 19, 2019, relating to the second and first measures, respectively. The Korea

Securities and Futures Commission immediately appealed against the decision to suspend execution, but on May 13, 2019 and May

24, 2019, relating to the second and first measures, respectively, the Court dismissed the Korea Securities and Futures

Commission’s appeal. The Korea Securities and Futures Commission has re-appealed on May 23, 2019 and June 10, 2019, relating

to the second and first measures, respectively. On September 6, 2019 and October 11, 2019, the Court dismissed the Korea

Securities and Futures Commission’s re-appeal, relating to the second and first measures, respectively.

Although the future outcome of the administrative litigation cannot be estimated, should Samsung Biologics Co., Ltd. be required to

restate its financial statements to amend its historical accounting treatment relating to its investment in Samsung Bioepis Co., Ltd.,

the Company’s share of profit or loss relating to its equity method investment, the amount of investment in associates, and retained

earnings, for the years ended from December 31, 2015 and onwards, and the profit on disposal of investment for the year ended

December 31, 2016, may be impacted. Given the timing of completion and the final result of the administrative litigation between

Samsung Biologics Co., Ltd. and the Korea Securities and Futures Commission is uncertain and cannot currently be estimated, it is

not possible for the Company to recognize the effects of these proceedings in the current period consolidated financial statements.

Samsung Electronics Business Report 120 / 261

12. Property, Plant and Equipme nt

(A) Changes in property, plant and equipment for the years ended December 31, 2019 and 2018 are as follows :

2019

(In millions of Korean won)

Lan d

Buildings an d

structures

Machinery

and equipme nt

Construction in

progress

Other

Total

Balance as of January 1 ￦ 9,346,285

￦ 29,345,910

￦ 63,816,231

￦ 9,705,056

￦ 3,203,242 ￦ 115,416,724

Acquisition cost 9,346,285

45,033,843

206,407,913

9,705,056

8,665,069 279,158,166

Accumulated depreciation and

impairment

- (15,687,933) (142,591,682) - (5,461,827) (163,741,442)

Acquisitions and capital

expenditures

1

144,291

1,760,347

10,488,174

14,490,901

1,136,367 28,020,080

Acquisit ions through business

combinations

2,310

21,481

381,117

7,488

5,262 417,658

Depreciation (31,118) (2,658,371) (22,664,896) - (1,219,431) (26,573,816)

Disposals/scrap (97,930) (287,546) (180,627) (577) (75,218) (641,898)

Impairment - - (85,215) - (8,344) (93,559)

Other

2

410,716

2,287,799

395,152

(272,849) 459,467 3,280,285

Balance as of December 31

￦

9,774,554

￦ 30,469,620

￦ 52,149,936

￦ 23,930,019

￦ 3,501,345 ￦ 119,825,474

Acquisition cost

￦

9,828,309

￦ 48,839,439

￦211,416,021

￦ 23,930,019

￦ 10,061,981 ￦304,075,769

Accumulated depreciation and

impairment

(53,755) (18,369,819) (159,266,085) - (6,560,636) (184,250,295)

1

The capitalized borrowing costs are ￦ 6,331 million and the interest rate used to calculate the borrowing costs eligible for capitalization is 2.1%.

2

Other includes the cumulative effect of changes in accounting policies, effects of changes in foreign currency exchange rates and effects of the

offset related to government grants.

2018

(In millions of Korean won)

Lan d

Buildings an d

structures

Machinery

and equipme nt

Construction in

progress

Other

Total

Balance as of January 1 ￦ 9,409,276 ￦ 28,058,156

￦ 57,915,798

￦ 13,910,749

￦ 2,371,669 ￦111,665,648

Acquisition cost

9,409,276

41,639,045

184,392,999

13,910,749

7,176,535

256,528,604

Accumulated depreciation and

impairment

- (13,580,889) (126,477,201) - (4,804,866) (144,862,956)

Acquisitions and capital

expenditures

1

14,294 3,372,033

27,998,043

(3,920,447) 1,934,640 29,398,563

Depreciation - (2,049,753) (22,067,122) - (1,050,237) (25,167,112)

Disposals/scrap (87,895) (213,324) (106,860) (365) (39,059) (447,503)

Impairment - - (18,458) - (61) (18,519)

Other

2

10,610 178,798

94,830

(284,881) (13,710) (14,353)

Balance as of December 31

￦ 9,346,285 ￦

29,345,910

￦ 63,816,231

￦ 9,705,056

￦ 3,203,242 ￦115,416,724

Acquisition cost ￦ 9,346,285 ￦ 45,033,843

￦206,407,913

￦ 9,705,056

￦ 8,665,069 ￦279,158,166

Accumulated depreciation and

impairment

- (15,687,933) (142,591,682) - (5,461,827) (163,741,442)

1

The capitalized borrowing costs are ￦ 22,104 million and the interest rate used to calculate the borrowing costs eligible for capitalization is

0.9%.

2

Other includes effects of changes in foreign currency exchange rates and effects of the offset related to government grants.

Samsung Electronics Business Report 121 / 261

(B) Changes in right-of-use assets included in the property, plant and equipment for the year ended December 31, 2019 are as

follows:

2019

(In millions of Korean won)

Lan d

Buildings an d

Structure s

Machinery

and Equipme n t

Other

Total

Balance as of January 1

1

￦ - ￦ 37,185

￦ 444

￦ 6,984

￦ 44,613

Acquisition 80,675 906,417

9,456 128,680

1,125,228

Depreciation (31,118) (593,725) (59,756) (101,182) (785,781)

Disposals/scrap (11,137) (67,468) (459) (10,593) (89,657)

Other

2

399,675 2,079,308 181,280 357,253 3,017,516

Balance as of December 31

￦ 438,095 ￦

2,361,717

￦ 130,965 ￦ 381,142

￦ 3,311,919

1

The beginning balance is the financial lease assets in accordance with the previous Korean IFRS 1017 Leases.

2

Other includes cumulative effects of changes in accounting policies and effects of changes in foreign currency exchange rates.

(C) Details of depreciation of property, plant and equipment for the years ended December 31, 2019 and 2018 are as follows :

(In millions of Korean won)

2019

2018

Cost of sales ￦ 23,606,255

￦ 22,956,102

Selling and administrative exp enses and other

2,967,561

2,211,010

Total

￦

26,573,816

￦

25,167,112

Samsung Electronics Business Report 122 / 261

13. Intangible Assets

(A) Changes in intangible assets for the years ended December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

2019

Intellectual

property rights

Development

cost

Membership

Goodwill

Other

Total

Balance as of January 1

￦

4,187,756

￦

704,734

￦

221,628

￦

5,833,678

￦

3,943,802

￦

14,891,598

Internally generated/developed

-

285,699

-

285,699

Ext ernal acquisitions

289,905

-

1,936

-

1,275,458

1,567,299

Acquisit ion t hrough business

combinations

130,308

51,872

-

337,926

107,384

627,490

Amortization

(305,056)

(279,709)

-

(2,439,057)

(3,023,822)

Disposals/scrap

(58,480)

-

(1,240)

-

(5,682)

(65,402)

Impairment

-

(972)

(46,834)

(895)

(48,701)

Other

1

121,077

(21,822)

1,147

125,669

6,243,272

6,469,343

Balance as of December 31

￦

4,365,510

￦

740,774

￦

222,499

￦

6,250,439

￦

9,124,282

￦

20,703,504

1

Other includes effects of reclassification of licensed assets and changes in foreign currency exchange rates.

(In millions of Korean won)

2018

Intellectual

prope rty rights

Development

cost

Membership

Goodwill

Other

Total

Balance as of January 1

￦

4,134,455

￦

830,384

￦

222,969

￦

5,703,138

￦

3,869,537

￦

14,760,483

Internally generated/developed

-

296,304

-

296,304

Ext ernal acquisitions

321,557

-

402,656

724,213

Acquisit ion t hrough business

combinations

14,289

-

45,997

7,725

68,011

Amortization

(280,284)

(421,954)

-

(612,687)

(1,314,925)

Disposals/scrap

(47,013)

-

(1,050)

-

(9,051)

(57,114)

Impairment

-

(1,575)

-

(1,57

5)

Other

1

44,752

-

1,284

84,543

285,622

416,201

Balance as of December 31

￦

4,187,756

￦

704,734

￦

221,628

￦

5,833,678

￦

3,943,802

￦

14,891,598

1

Other includes effects of changes in foreign currency exchange rates.

(B) Goodwill

Goodwill is allocated to each cash-generating unit. Details of goodwill as of December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

December 31, 2019

December 31, 2018

CE

￦

520,814

￦

511,531

IM

674,327

662,443

Semiconductor 366,963

81,892

DP 133,540

80,299

Harman 4,545,802

4,493,787

Other 8,993

3,726

Total

￦ 6,250,439

￦ 5,833,678

Samsung Electronics Business Report 123 / 261

Goodwill impairment reviews are performed annually, and the recoverable amounts of cash-generating units have been determined

based on value-in-use calculations, etc. These calculations use pre-tax cash flow projections based on financial budgets approved by

management covering a five-year period, etc. Perpetual cash flows beyond the five-year period are extrapolated using a constant

growth rate assumption. The growth rate applied was capped at the long-term average growth rate for the industry

.

As a result of an annual impairment review, the Company recognized an impairment loss of ￦ 46,834 million for the goodwill of

Professional Solutions, a cash-generating unit of Harman. Principal assumptions used in the value-in-use calculations are as

follows:

Principal assumptions

Revenue growth rate

4.0 ~ 6.7%

Permanent growth rate 3.0%

Pre-tax discount rate

1

9.0%

1

Pre-tax discount rate is ap plied in estimated cash flows.

(C) Details of amortization of intangible assets for the years ended December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

2019

2018

Cost of sales

￦

2,213,091

￦

643,047

Selling and administrative exp enses and other

810,731

671,878

Total

￦

3,023,822

￦

1,314,925

14. Borrowings

(A) Details of the carrying amounts of borrowings as of December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

Financial

institutions

Annual interest rates (%)

as of December 31, 2019

December 31, 2019

December 31, 2018

3

S hort-term borrowings

Collateralized borrowings

1

Woori Bank and other

0.0 ~ 22.3

￦

11,734,361

￦

12,130,459

Non-collateralized borrowings

Citibank and other

0.0 ~ 12.0

2,659,107

1,456,201

Total

￦

14,393,468

￦

13,586,660

Current portion of long-term

borrowings

Bank borrowings

Hana Bank and other

3.2 ~ 5.0

￦

35,376

￦

16,880

Lease liabilities

2

CSSD and other

3.8

805,068

11,067

Total

￦

840,444

￦

27,947

Long-term borrowings

Bank borrowings

-

￦

-

￦

34,963

Lease liabilities

2

CSSD and other

3.8

2,197,181

50,122

Total

￦

2,197,181

￦

85,085

1

Collateralized borrowings are secured by trade receivables.

2

Interest expenses arising from the lease liabilities for the year ended December 31, 2019 amount to ￦ 103,240 million, which was calculated

using the weighted average in cremental borrowing rate. The right -of-use assets are p ledged as collateral to the lessor in the event of default.

Short-term lease p ayments, pay ments for leases of low-value assets and other not included in the measurement of lease liability for the year

ended December 31, 2019 amount to ￦ 233,467 million.

3

Lease liabilities as of December 31, 2018 represent financial lease liabilities in accordance with the previous Korean IFRS 1017 Leases (Refer

to Note 2).

Samsung Electronics Business Report 124 / 261

(B) Maturities of bank borrowings and lease liabilities outstanding as of December 31, 2019 are as follows:

(In millions of Korean won)

Bank borrowings

Lease liabilities

Repayment terms

2020

￦ 35,376

￦ 893,943

2021

- 593,366

2022 - 494,867

2023

-

393,403

2024 and thereafter

-

935,373

Total

￦ 35,376

￦ 3,310,952

15. Debentures

(A) Details of debentures as of December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

Issue date

Due date

Annual interest rates (%)

as of December 31, 2019

2019

2018

US dollar denominated

straight bonds

1

1997.10.2 2027.10.1 7.7

￦

46,312

(US $ 40 million)

￦

50,315

(US $ 45 million)

US dollar denominated

debenture bonds

2

2015.5.6 2025.5.15 4.2

463,120

(US $ 400 million)

447,240

(US $ 400 million)

EURO denominated

debenture bonds

3

2015.5.20 2022.5.27 2.0

454,100

(EUR € 350 million)

447,352

(EUR € 350 million)

Less: Current portion

(5,789)

(5,591)

Less: Discounts

(1,003)

(1,208)

Add: Premium

18,558

23,864

Total

￦

975,298

￦

961,972

1

US dollar denominated straight bonds are repaid annually for twenty years after a ten-year grace period from the date of issuance. Interest is p aid

semi-annually.

2

Harman International Industries, Inc. a subsidiary of the Company, issued dollar denominated debenture bonds. Repayment of these debentures

is due on the date of maturity and interest is paid semi-annually.

3

Harman Finance International, SCA, a subsidiary of the Company, issued euro denominated debenture bonds. Repayment of these debentu res is

due on the date of maturity and interest is paid annually.

(B) Maturities of debentures outstanding as of December 31, 2019 are as follows:

(In millions of Korean won) Debentures

Repayment terms

2020

￦

5,789

2021 5,789

2022

459,889

2023

5,789

2024 and thereafter

486,276

Total

￦ 963,532

Samsung Electronics Business Report 125 / 261

16. Net Defined Benefit Liabilities (Assets)

(A) Details of net defined benefit liabilities (assets) recognized on the consolidated statements of financial position as of December

31, 2019 and 2018 are as follows:

(In millions of Korean won) December 31, 2019 December 31, 2018

Present value of funded defined benefit obligations ￦ 10,864,675

￦ 8,443,465

Present value of unfunded defined benefit obligations

283,394

250,577

Subtotal

11,148,069

8,694,042

Fair value of p lan assets

(11,267,121)

(8,752,334)

Net defined benefit liabilities (assets)

￦

(119,052)

￦

(58,292)

(B) The amounts related to defined benefit plans recognized in the consolidated statements of profit or loss for the years ended

December 31, 2019 and 2018 are as follows:

(In millions of Korean won) 2019 2018

Current service cost

￦

930,471

￦

824,572

Net interest income

(3,755)

(22,781)

Past service cost

2,275

14,367

Other 7,629

(2,077)

Total

￦

936,620

￦

814,081

(C) The amounts recognized as expense of defined contribution plans for the years ended December 31, 2019 and 2018 are

￦ 198,387 million and ￦ 144,712 million, res pectively.

(D) The pension expenses related to defined benefit plans recognized in the consolidated statements of profit or loss for the years

ended December 31, 2019 and 2018 are as follows :

(In millions of Korean won)

2019

2018

Cost of sales

￦

417,393

￦

349,709

Selling and administrative expenses and other

519,227

464,372

Total

￦

936,620

￦

814,081

Samsung Electronics Business Report 126 / 261

( E) Changes in the defined benefit obligations for the years ended December 31, 2019 and 2018 are as follows :

(In millions of Korean won)

2019

2018

Balance as of January 1

￦

8,694,042

￦

7,536,936

Current service cost

930,471

824,572

Interest cost 283,065

281,795

Past service cost

2,275

14,367

Remeasurement:

Actuarial gains or losses arising from changes in demographic assumptions

(7,041)

(569)

Actuarial gains or losses arising from changes in financial assumptions

1,190,499

191,185

Other

326,369

226,438

Benefits p aid

(308,182)

(361,488)

Other

1

36,571

(19,194)

Balance as of December 31

￦

11,148,069

￦

8,694,042

1

Other includes effects of changes in foreign currency exchange rates and business combinations.

(F) Changes in the fair value of plan assets for the years ended December 31, 2019 and 2018 are as follows:

(In millions of Korean won) 2019 2018

Balance as of January 1

￦

8,752,334

￦

7,972,906

Interest income on plan assets

286,820

304,576

Remeasurements of p lan assets (118,110)

(159,077)

Contributions by employer 2,600,576

894,169

Benefits p aid (283,778)

(267,382)

Other

1

29,279

7,142

Balance as of December 31

￦ 11,267,121

￦

8,752,334

1

Other includes effects of changes in foreign currency exchange rates and business combinations.

Expected contributions to post-employment benefit plans for the year ended December 31, 2020 are ￦ 1,181,545 million.

(G) Plan assets as of December 31, 2019 and 2018 consist of the following:

(In millions of Korean won) December 31, 2019 December 31, 2018

Principal guaranteed fixed income financial instruments and other

￦

11,230,391

￦

8,720,784

Other

36,730

31,550

Total

￦

11,267,121

￦

8,752,334

Plan assets are mostly invested in instruments which have a quoted price in active markets.

Samsung Electronics Business Report 127 / 261

(H) The principal actuarial assumptions as of December 31, 2019 and 2018 are as follows:

(In percentage)

December 31, 2019

December 31, 2018

Discount rate

0.2 ~ 7.2

0.8 ~ 9.3

Salary growth rate (including the effects of inflation)

1.5 ~ 10.0

(I) The sensitivity analysis of the defined benefit obligations as of December 31, 2019 and 2018 to changes in the weighted

principal assumptions is as follows:

(In percentage) December 31, 2019 December 31, 2018

Discount rate

1%p increase

92

1%p decrease

110

Salary growth rate

1%p increase

110

109

1%p decrease 92 92

(J) The weighted average maturity of the defined benefit obligations is 9.03 years as of December 31, 2019.

17. Provis ions

Changes in provisions for the year ended December 31, 2019 are as follows :

(In millions of Korean won)

Warranty (A)

Royalty

expenses (B)

Long-term

incentives (C)

Other

(D, E)

Total

Balance as of January 1 ￦ 1,873,869

￦ 1,134,379

￦ 777,073

￦ 1,262,336

￦ 5,047,657

Charged to the consolidated

statement of profit or loss

1,381,188

441,411

281,598

762,609

2,866,806

Payment

(1,507,690)

(529,013)

(271,223)

(757,709)

(3,065,635)

Other

1

43,640

6,671

5,822

(225,234)

(169,101)

Balance as of December 31

￦

1,791,007

￦

1,053,448

￦

793,270

￦

1,042,002

￦

4,679,727

1

Other includes effects of changes in foreign currency exchange rates.

(A) The Company accrues warranty reserves for estimated costs of quality assurance, exchanges, repairs and recalls, and future

services based on historical experience and terms of warranty programs.

(B) The Company recognizes provisions for the estimated royalty expenses that are under negotiation with counterparties. The

timing and amount of payment depends on the settlement of the negotiation.

(C) The Company has a long-term incentive plan for its executives based on a three-year management performance criteria and

recognizes provisions for the estimated incentive cost for the accrued period.

(D) The Company records provisions for future expenses expected to be incurred for products that have been discontinued from

manufacturing and sales.

Samsung Electronics Business Report 128 / 261

( E) The Company makes provisions for the carrying amounts of emission rights held by the Company and the emission in excess

of the emission rights for the applicable years. Details of emission rights and liabilities as of December 31, 2019 are as

follows:

(1) Allocated amount of emission permits and estimated amount of emis sion as of December 31, 2019 are as follows :

(in ten thousands metric tons)

December 31, 2019

Allocated emission permits

1,406

Estimated volume of emission

1,642

(2) Changes in the emission permits rights for the year ended December 31, 2019 are as follows :

(In millions of Korean won)

2019

Balance as of January 1 ￦ 31,647

Increase

7,140

Balance as of December 31

￦ 38,787

(3) Changes in the provisions for emissions liabilities for the year ended December 31, 2019 are as follows:

(In millions of Korean won)

2019

Balance as of January 1 ￦ 99,960

Credited to the consolidated statement of profit or loss (81,546)

Submission

-

Balance as of December 31

￦

18,414

18. Commitments and Contingencies

(A) Guarantees

Details of guarantees of debt provided by the Company as of December 31, 2019 and 2018 are as follows:

(In millions of Korean won) December 31, 2019 December 31, 2018

Guarantees of debt for housing rental

￦

-

￦

32,511

(B) Litigations and other

(1) As of December 31, 2019, the Company is involved in claims, disputes, and investigations conducted by regulatory bodies,

including civil claims from some overseas buyers for price-fixing related to the sale of TFT-LCD. Although the outflow of

resources and timing of these matters are uncertain, the Company believes the outcome will not have a material impact on

the consolidated financial position of the Company.

(2) In addition, the Company is involved in various claims, disputes, and investigations conducted by regulatory bodies, which

arose during the normal course of business with numerous companies. Although the outflow of resources and timing of these

matters are uncertain, the Company believes the outcome will not have a material impact on the consolidated financial

position of the Company.

Samsung Electronics Business Report 129 / 261

(C) Ot h er co mmitment s

(1)As of December 31, 2019, the Company has trade financing agreements, trade notes receivable discounting facilities, and

loan facilities with accounts receivable pledged as collateral with Woori Bank and 21 other financial ins titutions, with a

combined limit of up to ￦ 20,669,662 million. In addition, the Company has a trade financing agreement (up to

￦ 15,406,218 million) with Shinhan Bank and 19 other financial institutions and loan facilities with accounts receivable

pledged as collateral and other financial agreements (up to ￦ 2,188,111 million).

(2)As of December 31, 2019, unfulfilled agreements relating to the acquisition of property, plant and equipment amount to

￦ 5,836,229 million.

(3)As of December 31, 2019, the Company (the Less or) has non-cancellable operating lease agreements related to real-estates,

and the future minimum lease payments amount to ￦ 91,602 million (￦ 56,044 million within one year, ￦ 30,891

million later than one year but not later than five years, ￦ 4,667 million later than five years). Lease income recognized

as a result of the respective operating lease agreements amount to ￦ 129,854 million for the year ended December 31,

2019.

19. Contract Liabilities

The Company has recognized the following contract liabilities related to contracts with customers:

(In millions of Korean won)

December 31, 2019

December 31, 2018

Contract liabilities

1

￦

9,240,401

￦

9,021,400

1

Contract liabilities are included in advances received, accrued exp enses, other current liabilities and other.

The revenue recognized during the year ended December 31, 2019 in relation to carried-forward contract liabilities as of January 1,

2019 amounts to \ 627,510 million.

20. Share Capital

As of December 31, 2019, the Company’s total number of authorized shares is 25,000,000,000 shares (￦ 100 per share). The

Company has issued 5,969,782,550 shares of ordinary shares and 822,886,700 shares of preference shares as of December 31, 2019,

excluding retired shares. Due to the retirement of shares, the total par value of the shares issued is ￦ 679,267 million (ordinary

shares of ￦ 596,978 million and preference shares of ￦ 82,289 million), which does not agree with paid-in capit al of

￦ 897,514 million.

Changes in the number of shares outstanding for the years ended December 31, 2019 and 2018 are as follows:

(number of shares)

Ordinary shares

Preference shares

Balance as of January 1, 2018

119,688,369

16,530,409

Acquisition of treasury shares

(292,718)

(72,675)

Share split

1

5,850,386,899

806,428,966

Balance as of December 31, 2018

5,969,782,550

822,886,700

Balance as of December 31, 2019

5,969,782,550

822,886,700

1

During the year ended December 31, 2018, the Company’s number of shares has been changed by the share split.

Samsung Electronics Business Report 130 / 261

21. Retained Earnings

(A) Retained earnings as of December 31, 2019 and 2018 cons ist of the following:

(In millions of Korean won)

December 31, 2019

December 31, 2018

Discretionary reserve and other

￦

168,322,868

￦

151,519,651

Unappropriated

86,260,026

91,179,305

Total

￦

254,582,894

￦

242,698,956

(B) Details of interim and year-end dividends are as follows:

(1) Interim dividends (Record date: March 31, 2019 and 2018, June 30, 2019 and 2018, and September 30, 2019 and 2018)

(In millions of Korean won and number of shares)

2019

2018

1

st

quarter

Number of shares eligible for dividends

1

Ordinary shares

5,969,782,550

119,395,651

Preference shares 822,886,700

16,457,734

Dividend rate (based on par value) 354% 354%

Dividend amount

Ordinary shares

￦

2,113,303

￦

2,113,303

Preference shares 291,302

291,302

Total ￦ 2,404,605

￦

2,404,605

2

nd

quarter

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares 822,886,700

822,886,700

Dividend rate (based on par value)

354%

Dividend amount

Ordinary shares ￦

2,113,303

￦

2,113,303

Preference shares 291,302

291,302

Total ￦ 2,404,605

￦

2,404,605

3

rd

quarter

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares 822,886,700

822,886,700

Dividend rate (based on par value) 354% 354%

Dividend amount

Ordinary shares ￦

2,113,303

￦

2,113,303

Preference shares 291,302

291,302

Total ￦ 2,404,605

￦

2,404,605

1

During the year ended December 31, 2018, the Company’s number of shares has been changed by the share split.

(2) Year-end dividends (Record date: December 31, 2019 and 2018)

(In millions of Korean won and number of shares)

2019

2018

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares 822,886,700

822,886,700

Dividend rate (based on par value)

Ordinary shares

354%

Preference shares

355%

Dividend amount

Ordinary shares

￦

2,113,303

￦

2,113,303

Preference shares

292,125

Total

￦

2,405,428

￦

2,405,428

Samsung Electronics Business Report 131 / 261

22. Other Compone nts of Equi ty

Other components of equity as of December 31, 2019 and 2018 consist of the following:

(In millions of Korean won)

December 31, 2019

December 31, 2018

Gain on valuation of financial assets at fair value through other

comprehensive income

￦

2,573,530

￦

1,462,266

Share of other comprehensive loss of associates and joint ventures

(12,735)

(

44,212)

Foreign currency translation

(5,645,769)

(8,612,742)

Remeasurement of net defined benefit liabilities (assets)

(1,944,284)

(796,563)

Other

60,429

59,881

Total

￦

(4,968,829)

￦

(7,931,370)

23. Expenses by Nature

Expenses by nature for the years ended December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

2019

2018

Changes in finished goods, work in process, and other

￦

1,900,859

￦

(5,484,269)

Raw materials used, merchandise purchased, and other

83,443,554

79,808,215

Wages and salaries

22,453,030

22,727,468

Post-employment benefit

1,171,606

958,793

Depreciation

26,573,816

25,167,112

Amortization

3,023,822

1,314,925

Welfare

4,489,617

4,095,722

Utilities

4,451,765

4,335,464

Outsourcing

5,181,792

4,921,791

Advertising 4,614,525

3,998,491

Sales promotion expenses

6,678,078

7,113,183

Other

38,649,908

35,927,851

Total

1

￦ 202,632,372

￦ 184,884,746

1

Equal to the sum of cost of sales and selling and administrative expenses in the consolidated statements of profit or loss.

Samsung Electronics Business Report 132 / 261

24. Selling and Administrative Expenses

Selling and administrative expenses for the years ended December 31, 2019 and 2018 are as follows:

(In millions of Korean won) 2019 2018

Selling and administrative expenses

Wages and salaries

￦

6,123,653

￦

6,188,748

Post-employment benefit

298,937

262,647

Commissions and service charges

5,513,083

5,754,750

Depreciation 1,571,473

1,008,805

Amortization

469,344

438,885

Advertising

4,614,525

3,998,491

Sales promotion expenses

6,678,078

7,113,183

Transportation

2,075,675

2,451,968

Warranty

2,968,421

2,776,508

Other

5,172,398

4,142,270

Subtotal

35,485,587

34,136,255

Research and development expenses

Total exp enses 20,192,935

18,650,384

Cap italized exp enses

(285,699)

(296,304)

Subtotal

19,907,236

18,354,080

Total

￦

55,392,823

￦

52,490,335

25. Other Non-Operating Income and Expense

Details of other non-operating income and expenses for the years ended December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

2019

2018

Other non-ope rating income

Dividend income ￦

154,679

￦ 131,379

Rental income 153,357

140,875

Gain on disposal of investments 48,345

36,388

Gain on disposal of property, plant and equipment 304,091

387,070

Other

1,118,194

789,325

Total

￦

1,778,666

￦

1,485,037

(In millions of Korean won)

2019

2018

Other non-operating expenses

Loss on disposal of property, plant and equipment

￦ 144,547

￦ 90,714

Donations 357,747

310,321

Other

912,413

740,983

Total ￦ 1,414,707

￦ 1,142,018

Samsung Electronics Business Report 133 / 261

26. Financial Income and Expenses

Details of financial income and expenses for the years ended December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

2019

2018

Financial income

Interest income

￦

2,660,024

￦

2,297,139

Interest income from financial assets measured at amortized cost

2,659,740

2,296,841

Interest income from financial assets measured at fair value through profit or

loss

284

298

Foreign exchange differences

6,769,000

6,695,690

Gains from derivatives

732,608

1,006,492

Total

￦

10,161,632

￦

9,999,321

(In millions of Korean won)

2019

2018

Financial expenses

Interest exp enses

￦

686,356

￦

674,617

Interest expenses from financial liabilities measured at amortized cost

248,659

289,993

Other financial liabilities

437,697

384,624

Foreign exchange differences

6,852,409

7,149,831

Losses from derivatives

736,106

784,448

Total

￦

8,274,871

￦

8,608,896

The Company recognizes foreign exchange gains and losses arising from foreign currency transactions and translation as financial

income and expenses.

27. Income Tax Expense

(A) Income tax expense for the years ended December 31, 2019 and 2018 consists of the following:

(In millions of Korean won) 2019 2018

Current taxes

Current tax on profits for the year

￦

5,913,635

￦

13,698,765

Adjustments in respect to prior years

(177,616)

(178,430)

Subtotal

5,736,019

13,520,335

Deferred taxes

Changes in deferred taxes arising from unused tax credits

(26,114)

(209,733)

Changes in temporary differences

2,934,705

3,346,409

Changes in deferred taxes arising from unused tax losses

47,616

152,492

Other

1,098

5,598

Subtotal

2,957,305

3,294,766

Items charged directly to equity

- -

Income tax expense

￦

8,693,324

￦

16,815,101

Samsung Electronics Business Report 134 / 261

(B) The tax on the Company’s profit before income tax differs from the theoretical amount that would arise using the weighted

average statutory tax rate applicable to profits of the Company as follows:

(In millions of Korean won)

2019

2018

Profit before income tax

￦

30,432,189

￦

61,159,958

Tax calculated at weighted average of ap plicable tax rates

1

8,996,445

16,232,873

Tax effects of:

Permanent differences

86,509

(307,185)

Temporary differences for which no deferred income tax was recognized

393,620

(1,964)

Tax credits and exemptions

(3,195,793)

(2,450,768)

Results of interest in subsidiaries, etc.

2,272,967

3,051,284

Imp act of changes in tax rates

28,951

2,551

Other

110,625

288,310

Income tax expense

￦

8,693,324

￦

16,815,101

1

The weighted average of statutory tax rates are applied to the respective profits of the Company applicable to each tax authority as of

December 31, 2019 and 2018.

(C) The movement in deferred income tax assets and liabilities resulting from the tax effect of temporary differences for the

years ended December 31, 2019 and 2018 are as follows:

(1) 2019

Te m p orary differences

Deferred income tax assets (liabilities)

(In millions of Korean won)

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Deferred tax arisin

g from te mporary differences

Revaluation of land

￦ (3,422,280)

￦ 4,476

￦ (3,417,804)

￦ (941,127)

￦ 1,231

￦ (939,896)

Invest ments in subsidiaries, associates and

joint ventures

1

(85,091,134)

(11,306,065) (96,397,199)

(14,315,226)

(2,353,912) (16,669,138)

Accumulated depreciation and other

(3,999,764)

(529,570) (4,529,334)

(903,184)

(79,372) (982,556)

Accrued income

(278,778)

30,116

(248,662)

(73,048)

11,716

(61,332)

Provisions, accrued expenses and other

11,733,192

518,455

12,251,647

3,239,039

43,708

3,282,747

Foreign currency translation

(81,476)

(16,453) (97,929)

(22,158)

(8,069) (30,227)

Asset impairment losses

1,528,707

262,022

1,790,729

421,608

70,724

492,332

Other

3,875,005

(1,622,321) 2,252,684

890,802

(620,731) 270,071

Subt ot al

￦ (75,736,528)

￦(12,659,340) ￦(88,395,868)

￦(11,703,294)

￦ (2,934,705) ￦ (14,637,999)

Deferred tax arising from tax losses

Unused tax losses

￦

4,692,966

￦

(129,871)

￦

4,563,095

￦

1,255,759

￦

(47,616)

￦

1,208,143

D

eferred tax arising from tax credits

Unused tax credits

1,111,141

200,357

1,311,498

981,393

26,114

1,007,507

Deferred

tax recognized in equity

Gain (loss) on valuation of financial assets at

fair value through other comprehensive

income and other

￦ (2,165,131)

￦ (763,419) ￦ (2,928,550)

￦ (550,422)

￦ (345,500) ￦ (895,922)

Remeasurement of net defined benefit

liabilities (assets)

1,110,260

1,627,937

2,738,197

322,043

447,469

769,512

Subt ot al

￦ (1,054,871)

￦ 864,518

￦ (190,353)

￦ (228,379)

￦ 101,969

￦ (126,410)

Deferred tax assets

￦

4,505,049

Deferred tax liabilities

(17,053,808)

Total

￦ (12,548,759)

1

Deferred tax assets were not recognized if it is probable that the temporary differences will not reverse in the foreseeable future for

investments in subsidiaries, associates and joint ventures.

Samsung Electronics Business Report 135 / 261

(2) 2018

Te mporary differences

Deferred income tax assets (liabilities)

(In millions of Korean won)

Balance as of

January 1

Increase

(Decrease)

Balance as of

Decembe r 31

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Deferred tax arising from temporary differences

Special reserves appropriated for tax

purposes

￦ (368)

￦ 368

￦ - ￦ (101) ￦

101

￦ -

Revaluation of land

(3,425,233)

2,953

(3,422,280)

(941,939)

812

(941,127)

Invest ments in subsidiaries, associates and

joint ventures

1

(71,904,411)

(13,186,723) (85,091,134) (11,158,371) (3,156,855)

(14,315,226)

Accumulated depreciation and other

(3,554,202)

(445,562)

(3,999,764)

(775,128)

(128,056)

(903,184)

Accrued income

(192,154)

(86,624)

(278,778)

(46,785)

(26,263)

(73,048)

Provisions, accrued expenses and other

12,712,144

(978,952)

11,733,192

3,401,425

(162,386)

3,239,039

Foreign currency translation

(236,087)

154,611

(81,476)

(62,883)

40,725

(22,158)

Asset impairment losses

1,632,105

(103,398)

1,528,707

461,264

(39,656)

421,608

Other

3,477,577

397,428

3,875,005

765,633

125,169

890,802

Subt ot al

￦ (61,490,629)

￦(14,245,899) ￦(75,736,528) ￦ (8,356,885) ￦ (3,346,409)

￦(11,703,294)

Deferred tax arising from tax losses

Unused tax losses

￦

5,274,212

￦ (581,246)

￦ 4,692,966

￦ 1,408,251

￦ (152,492)

￦ 1,255,759

Deferred tax arising from tax credits

Unused tax credits

900,637

210,504

1,111,141

771,660

209,733

981,393

Deferred

tax recognized in equity

Gain (loss) on valuation of financial assets at

fair value through other comprehensive

income and other

￦ (2,475,749)

￦ 310,618

￦ (2,165,131) ￦ (628,183) ￦

77,761

￦

(550,422)

Remeasurement of net defined benefit

liabilities (assets)

534,129

576,131

1,110,260

156,063

165,980

322,043

Subt ot al

￦

(1,941,620)

￦

886,749

￦

(1,054,871)

￦

(472,120)

￦

243,741

￦ (228,379)

Deferred tax assets

￦ 5,468,002

Deferred tax liabilities

(15,162,523)

Total

￦ (9,694,521)

1

Deferred tax assets were not recognized if it is probable that the temporary differences will not reverse in the foreseeable future for investments

in subsidiaries, associates and joint ventures.

The Company periodically assesses its ability to recover deferred tax assets. In the event of a significant uncertainty regarding the

Company’s ultimate ability to recover such assets, deferred tax assets are recognized only to the extent that it is probable that future

taxable profit will be available against which the temporary differences can be utilized. Temporary differences whose deferred tax

effects were not recognized due to uncertainty regarding the ultimate realizability of such assets as of December 31, 2019 and 2018

are as follows:

(In millions of Korean won)

2019

2018

Unused tax losses

￦ 602,143

￦ 357,466

Unused tax credits

281,152

56,382

Samsung Electronics Business Report 136 / 261

Expected expiry dates of unused tax losses and credits for which no deferred tax asset is recognized are as follows:

(In millions of Korean won) 2020 2021 2022 2023 and after

Unused tax losses

￦

-

￦

1,302

￦

32,835

￦

568,006

Unused tax credits

119,090

36,311

92,558

33,193

(D) The liquidity analysis of deferred tax assets and liabilities for the years ended December 31, 2019 and 2018 is as follows:

(In millions of Korean won)

December 31, 2019

December 31, 2018

Deferred tax assets

Deferred tax assets to be recovered within 12 months ￦ 3,125,687 ￦

2,770,216

Deferred tax assets to be recovered after more than 12 months 1,379,362 2,697,786

Subtotal 4,505,049 5,468,002

Deferred tax liabilities

Deferred tax liabilities to be recovered after more than 12 months (17,053,808) (15,162,523)

Total ￦ (12,548,759) ￦ (9,694,521)

28. Earnings per Share

(A) Basic earnings per share

Basic earnings per share for the years ended December 31, 2019 and 2018 are calculated as follows:

(1) Ordinary shares

(In millions of Korean won, thousands of number of shares)

2019

2018

Profit for the year attributable to owners of the parent company

￦

21,505,054

￦

43,890,877

Profit for the year available for ordinary shares 18,899,137

38,573,066

Weighted-average number of ordinary shares outstanding 5,969,783

5,970,448

Basic earnings per ordinary share (in Korean won) ￦ 3,166

￦ 6,461

(2) Preference shares

(In millions of Korean won, thousands of number of shares)

2019

2018

Profit for the year attributable to owners of the parent company

￦

21,505,054

￦

43,890,877

Profit for the year available for preference shares 2,605,917

5,317,811

Weight ed-average number of preference shares outstanding

822,887

823,042

Basic earnings per preference share (in Korean won)

￦ 3,167

￦ 6,461

(B) Diluted earnings per share

The Company does not have dilutive potential ordinary shares and as a result, basic earnings per share and diluted earnings per

share are the same for the years ended December 31, 2019 and 2018.

Samsung Electronics Business Report 137 / 261

29. Cash Fl ows

(A) Adjustments and changes in assets and liabilities arising from operating activities for the years ended December 31, 2019 and

2018 are as follows:

(1) Adjustments

(In millions of Korean won)

2019

2018

Adjustments for:

Income tax expense

￦

8,693,324

￦

16,815,101

Financial income

(3,831,428)

(3,688,038)

Financial expenses

2,034,518

2,092,633

Post-employment benefits

1,171,606

958,793

Depreciation

26,573,816

25,167,112

Amortization

3,023,822

1,314,925

Bad debt exp enses (reversal)

(183,380)

(48,320)

Dividend income

(154,679)

(131,379)

Shares of profit from associates and joint ventures

(412,960)

(539,845)

Gain on disposal of property, plant and equipment

(304,091)

(387,070)

Loss on disposal of property, plant and equipment

144,547

90,714

Loss on valuation of inventories and other

785,215

1,948,360

Gain on disposal of investments

(48,345)

(36,388)

Other

(49,283)

47,975

Total

￦

37,442,682

￦

43,604,573

(2) Changes in assets and liabilities arising from operating activities

(In millions of Korean won)

2019

2018

Changes in assets and liabilities:

Decrease in trade receivables

￦

2,587,519

￦

3,605,893

Decrease (increase) in non-trade receivables

(758,928)

907,711

Decrease in advance pay ments

65,325

155,417

Increase in long-term and short-term p rep aid exp enses

(65,086)

(1,701,983)

Decrease (increase) in inventories

2,134,632

(5,979,475)

Decrease in trade payables

(1,269,177)

(533,609)

Decrease in long-term and short-term other payables

(35,869)

(1,881,303)

Increase (decrease) in advances received

440,597

(249,008)

Increase (decrease) in withholdings

(165,535)

131,931

Increase (decrease) in accrued exp enses

(1,707,265)

501,536

Decrease in long-term and short-term provisions

(198,829)

(539,842)

Payment of post-employment benefits

(543,864)

(522,849)

Increase in plan assets

(2,316,798)

(626,787)

Other

(712,478)

(3,191,998)

Total

￦

(2,545,756)

￦

(9,924,366)

Samsung Electronics Business Report 138 / 261

(B) The Company’s statements of cash flows are prepared using the indirect method. Significant transactions not affecting cash

flows for the years ended December 31, 2019 and 2018 are as follows:

(In millions of Korean won)

2019

2018

Valuation of financial assets at fair value through other comprehensive income

￦

1,497,600

￦

(312,601)

Valuation of investments in associates and joint ventures

32,397

(821)

Reclassification of construction in progress to property, plant and equipment 12,172,344

32,770,393

New lease contracts established 1,125,228

-

Reclassification of current portion of long-term borrowings

771,405

27,947

Reclassification of current portion of debentures 5,789

5,591

(C) The Company reported cash receipts and payments arising from transactions occurring frequently, of large gross amounts, and

with short-term maturities, such as short-term financial instruments, borrowings and other, on a net basis.

(D) For the year ended December 31, 2019, cash outflows from principal repayment (financial activities) and cash outflows due to

interest expenses (operating activities) in relation to the lease liabilities amount to ￦ 684,318 million and ￦ 103,240

million, res pectively.

( E) Changes in liabilities arising from financing activities for the years ended December 31, 2019 and 2018 are as follows:

(1) 2019

(In millions of Korean won)

Cash flows from

financing

activities

Non-cash tranactions

As of

January 1 Amortization

New lease

contracts Other

1

As of

December 31

Short-term borrowings

￦

13,586,660

￦

865,792

￦

-

￦

-

￦

(58,984)

￦

14,393,468

Debentures and long-term

borrowings

1,080,443

(709,400) 3,520

1,125,228

2,518,778

4,018,569

Total

￦

14,667,103

￦

156,392

￦

3,520

￦

1,125,228

￦

2,459,794

￦

18,412,037

1

Other includes effects of changes in foreign currency exchange rates and the cumulative effect of changes in accounting policies.

(2) 2018

Cash flows from

financing

activities

Non-cash tranactions

(In millions of Korean won)

As of

January 1

Amortization

Other

1

As of

December 31

Short-term borrowings

￦

15,767,619

￦

(2,046,470)

￦

-

￦

(134,489)

￦

13,586,660

Debentures and long-term borrowings

3,046,426

(1,983,017)

824

16,210

1,080,443

Total ￦ 18,814,045 ￦ (4,029,487) ￦ 824 ￦ (118,279) ￦ 14,667,103

1

Other include effects of changes in foreign currency exchange rates.

Samsung Electronics Business Report 139 / 261

30. Financial Risk Management

The Company’s financial risk management focuses on minimizing market risk, credit risk, and liquidity risk arising from operating

activities. To mitigate these risks, the Company closely monitors each risk factor and operates corresponding financial risk

management policies and program. The Company’s use of derivative instruments for hedging specific risks are included in this

program.

The finance team mainly carries out the Company’s financial risk management. After implementing the global financial risk

management policies, the finance team periodically measures, evaluates, and hedges financial risks.

The Company manages global financial risks by operating local finance centers at each major region (United States, United

Kingdom, Singapore, China, Brazil, and Russia).

The Company’s assets that are under financial risk management are comprised of cash and cash equivalents, short-term financial

instruments, financial assets at amortized cost, trade receivables and other. The Company’s liabilities under financial risk

management are comprised of trade payables, borrowings, and other.

(A) Market ris k

(1) Foreign exchange risk

The Company operates internationally and is exposed to foreign exchange risks as it conducts transactions in currencies other

than the functional currency of each entity. Major currencies that are exposed to foreign exchange risk include USD, EUR, JPY,

INR, and other.

The Company focuses on minimizing the impact of foreign exchange fluctuation by maintaining the equal amount of assets and

liabilities denominated in each foreign currency, irrespective of foreign exchange fluctuation considerations. To prevent

exchange position, the Company’s foreign exchange management policy requires normal business transactions, including import

and export, as well as financing transactions such as depositing and borrowing, to be in local currency or for the cash-in currency

to be matched up with the cash-out currency.

In order to effectively manage foreign exchange risk, the Company prohibits foreign exchange transactions, with the exception of

transactions made for hedging purposes, and periodically monitors and evaluates exchange risk.

As of December 31, 2019 and 2018, when currency rates change by 5%, the impact on profit or loss (before income tax effects)

arising from financial assets and liabilities denominated in foreign currencies other than functional currency are as follows:

(In millions of Korean won)

December 31, 2019

December 31, 2018

Increase

Decrease

Increase

Decrease

USD

\

163,062

\

(163,062)

\

344,488

\

(344,488)

EUR 127,507

(127,507) (4,381) 4,381

JPY

(23,062)

23,062

(13,001)

13,001

INR

64,153

(64,153)

92,176

(92,176)

(2) Price ris k

The Company’s investment portfolio consists of direct and indirect investments in equity securities classified as financial assets

at fair value through other comprehensive income and financial assets at fair value through profit or loss, which is in line with th e

Company’s strategy.

Samsung Electronics Business Report 140 / 261

As of December 31, 2019, a price fluctuation in relation to marketable equity instruments (listed shares) by 1% would result in

changes in other comprehensive income (before income tax effects) of ￦ 41,055 million (Dece mber 31, 2018: ￦ 28,846

million), and in profit or loss (before income tax effects) of ￦ 1,630 million (December 31, 2018: ￦ 101 million).

(3) Interest rate risk

Risk of changes in interest rates for floating interest rate financial instruments is defined as the risk that the fair value o f

components of the consolidated statement of financial position, and future cash flows of interest income (expenses) of a financial

instrument, will fluctuate because of changes in market interest rates. The Company’s position with regard to interest rate risk

exposure is mainly driven by its floating interest rate debt obligations and interest-bearing deposits. The Company implemented

policies and operates to minimize uncertainty arising from changes in interest rates and financial expenses.

The Company maintains minimum external borrowings by facilitating cash pooling systems on a regional and global basis to

limit its exposure to the interest rate risk. The Company manages exposed interest rate risk via periodic monitoring and handling

risk factors on a timely basis.

As of December 31, 2019, changes in profit or loss (before income tax effects) as a result of a 1%p change in interest rates on

floating interest rate financial assets and liabilities are presented below:

(In millions of Korean won)

December 31, 2019

December 31, 2018

Increase

Decrease

Increase

Decrease

Financial assets

\

70,183

\

(70,183)

\

64,704

\

(64,704)

Financial liabilities

(2,118)

2,118

(91)

91

Net effect

\

68,065

\

(68,065)

\

64,613

\

(64,613)

(B) Credit ris k

Credit risk arises during the normal course of transactions and investing activities where clients or other parties fail to discharge an

obligation. The Company sets and manages the client’s and counterparty’s credit limit, and evaluates their financial credit rating on

a periodic basis based on the client’s and counterparty’s financial conditions, default history and other important factors. Adequate

insurance coverage is maintained for trade receivables related to trading partners situated in higher risk countries.

Cred it r isk can aris e from transactions with financial institutions which include financial instrument transactions such as cash and

cash equivalents, savings, and derivative instruments. To minimize such risk, the Company transacts only with banks which have

strong international credit rating (S&P A and above), and all new transactions with financial institutions with no prior transaction

history are approved, managed and monitored by the Company’s finance team and the local finance center. The Company generally

enters into a financial agreement with no restrictions, such as debt ratio covenants, provision of collateral, and loans or borrowings

repayment. The Company requires separate approval for contracts with restrictions.

As of December 31, 2019 and 2018, the Company estimates that its maximu m exposure to credit risk is the carrying amount of its

financial assets, net of impairment losses.

Samsung Electronics Business Report 141 / 261

(C) Liquidity ris k

Due to the nature of the Company’s business that requires making large investments, maintaining adequate level of liquidity risk is

crucial. The Company maintains and manages adequate level of liquidity by periodically forecasting its capital balances, estimating

required cash, managing income and expenses, and other.

The Company manages its liquidity risk in advance by periodically forecasting projected cash flows. The Company facilitates and

utilizes a globally integrated finance structure including regional Cash Pooling and other to provide liquidity support. Also, when

abnormalities are identified, the Company maintains a liquidity management process that provides additional financial support in

cooperation with the local finance center. The Cash Pooling program allows sharing of surplus funds among entities and contributes

to minimizing liquidity risk and strengthening the Company’s competitive position by reducing capital operation expenses and

financial expenses.

In addition, the Company mitigates liquidity risk by contracting with financial institutions with respect to foreign trade finance and

other, and by providing payment guarantees to subsidiaries to secure required credit limit. For large scale facility investments,

liquidity risk is minimized by utilizing internal res erves and long-term borrowings according to the capital injection schedule.

As of December 31, 2019 and 2018, the following table is an undiscounted cash flow analysis for financial liabilities according to

their remaining contractual maturity.

December 31, 2019

(In millions of Korean won)

Less than

3 months

4 - 6

months

7 - 12

months

1 - 5

years

More than

5 years

Financial liabilities

￦ 41,041,672

￦ 655,089

￦ 1,603,676

￦ 4,241,964

￦ 1,381,109

December 31, 2018

(In millions of Korean won)

Less than

3 months

4 - 6

months

7 - 12

months

1 - 5

years

More than

5 years

Financial liabilities

￦ 39,445,090

￦ 628,582

￦ 742,744

￦ 3,547,498

￦ 663,594

The table above shows the Company’s financial liabilities based on the remaining period at the consolidated statement of financial

position date until the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

The Company’s derivative financial liabilit ies of

￦ 63,496 million (December 31, 2018: ￦ 28,543 million) has been included

within the less than 3 months bucket. These are the Company’s trading portfolio of derivative instruments, on a net settlement term,

of which the contractual maturities are not essential for understanding its cash flows. These contracts are managed on a net fa ir

value basis rather than by maturity date. Net settled derivatives consist of forwards on currency rates used by the Company to

manage the exchange rate profile.

Derivatives that are settled on a gross basis by delivery of the underlying item, including derivatives for hedging, will be settled

within the next 31 months from the end of the reporting period. These derivative are not included in the table above.

There is no maximum liquid ity ris k exposure fro m those other than the above financial liabilities (e.g., payment guarantees for

affiliated companies, performance bonds, and other) as of December 31, 2019 (December 31, 2018:

￦ 32,511 million).

Samsung Electronics Business Report 142 / 261

(D) Derivative Financial Instruments

The Company applies cash flow hedge accounting to hedge the foreign currency risk of forecasted transaction including hedging the

price risk associated with inventory. Details of derivative financial instruments that qualify as cash flow hedges as of December 31,

2019 are as follows:

(In millions of Korean won)

December 31, 2019

December 31, 2018

Assets

Liabilities

Assets

Liabilities

Currency forward exchange contracts

Current items

￦

20,946

￦

5,396

￦

18,343

￦

6,344

Non-current items

5,498

5,144

7,619

4,095

Total ￦ 26,444

￦ 10,540

￦ 25,962

￦ 10,439

For the year ended December 31, 2019, the Company recognizes the gains relating to the effective portion of changes in fair value

of derivatives that are designated and qualify as cash flow hedges in other comprehensive income, which amount to

￦ 1,811

million (after tax), and recognizes the gains relating to the ineffective portion in profit or loss, which amount to

￦ 975 million

(before tax). Losses reclassified directly from other comprehensive income to profit or loss amount to

￦ 916 million (afte r tax),

and gains reclassified from other comprehensive income to the carrying amount of inventory amount to

￦ 30,786 million (after

t a x).

( E) Capital risk management

The purpose of capital management is to maintain a sound capital structure. The Company monitors capital on the basis of the ratio

of total liabilities to total equity. This ratio is calculated by dividing total liabilit ies by total equity in the consolidated financial

statements.

The Company’s capital risk management policy has not changed since the previous financial year. The Company has maintained an

AA- and Aa3 credit rating from S&P and Moody’s, respectively.

The total liabilities to equity ratios as of December 31, 2019 and 2018 are as follows :

(In millions of Korean won)

December 31, 2019

December 31, 2018

Total liabilities

￦

89,684,076

￦

91,604,067

Total equity

262,880,421

247,753,177

Total liabilities to equity ratio

34.1%

37.0%

Samsung Electronics Business Report 143 / 261

(F) Fair value es timation

(1) Carrying amounts and fair values of financial instruments by category as of December 31, 2019 and 2018 are as follows :

December 31, 2019 December 31, 2018

(In millions o

f Korean won)

Carrying amount

Fair value

Carrying amount

Fair value

Financial assets

Cash and cash equivalents

￦

26,885,999

1

￦

30,340,505

1

Short-term financial instruments

76,252,052

1

65,893,797

1

Short-term financial assets at amortized cost

3,914,216

1

2,703,693

1

Short-term financial assets at fair value

through profit or loss

1,727,436

2,001,948

Trade receivables

35,131,343

1

33,867,733

1

Financial assets at amortized cost

-

238,309

1

Financial assets at fair value through other

comprehensive income

8,920,712

7,301,351

Financial assets at fair value through profit

or loss

1,049,004

775,427

Other

2

9,864,541

208,126

9,313,133

84,089

Total financial assets

￦

163,745,303

￦

152,435,896

Financial liabilities

Trade payables

￦

8,718,222

1

￦

8,479,916

1

Short-term borrowings

14,393,468

1

13,586,660

1

Other p ayables

11,034,253

1

9,779,287

1

Current portion of long-term liabilities

3

846,090

1

33,386

1

Debentures

975,298

1,013,245

961,972

964,182

Long-term borrowings

3

2,197,181

1

85,085

1

Long-term other p ayables

2

1,822,927

2,316

2,860,002

13,417

Other

2

8,374,146

215,211

8,832,523

42,723

Total financial liabilities

￦

48,361,585

￦ 44,618,831

1

Assets and liabilities whose carrying amount is a reasonable approximation of fair value are excluded from the fair value disclosures.

2

Financial assets of ￦ 9,656,415 million (December 31, 2018: ￦ 9,229,044 million) and financial liabilities of ￦ 9,979,546 million

(December 31, 2018: ￦ 11,636,385 million) are excluded as the carrying amount is a reasonable approximation of fair value.

3

Lease liabilities, classified under the current portion of long-term liabilities and long-term borrowings, are excluded from the fair value

disclosures in accordance with Korean IFRS 1107 Financial Instruments: Disclosures.

Samsung Electronics Business Report 144 / 261

(2) Fair value hierarchy classifications of the financial instruments that are measured at fair value or its fair value is disclos ed as

of December 31, 2019 and 2018 are as follows:

December 31, 2019

(In millions of Korean won)

Level 1

Level 2

Level 3

Total

Financial assets

Financial assets at fair value through other

comprehensive income

￦

4,105,456

￦ - ￦

4,815,256

￦

8,920,712

Financial assets at fair value through profit or loss

163,046

20,966

2,592,428

2,776,440

Other

-

208,126

-

208,126

Financial liabilities

Debentures

-

1,013,245

-

1,013,245

Long-term other p ayables

-

2,316

Other

-

215,211

-

215,211

December 31, 2018

(In millions of Korean won)

Level 1

Level 2

Level 3

Total

Financial assets

Financial assets at fair value through other

comprehensive income

￦

2,884,633

￦ - ￦

4,416,718

￦

7,301,351

Financial assets at fair value through profit or loss

10,124

18,503

2,748,747

2,777,375

Other

-

84,089

-

84,089

Financial liabilities

Debentures

-

964,182

-

964,182

Long-term other p ayables

-

13,417

Other

-

41,639

1,085

42,723

The levels of the fair value hierarchy and its application to financial assets and liabilities are described below.

ㆍ Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

ㆍ Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or

indirectly

ㆍ Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)

The fair value of financial instruments traded in active markets is based on quoted market prices at the consolidated statement of

financial position date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer,

broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market

transactions on an arm’s length basis. The quoted market price used for financial assets held by the Company is the current bid price.

These instruments are included in Level 1. The instruments included in Level 1 are listed equity investments most of which are

classified as financial assets at fair value through other comprehensive income.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These

valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specif ic

estimates. If all significant inputs required to measure the fair value of an instrument are observable, the instrument is included in

Level 2.

If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3.

The Company performs the fair value measurements required for financial reporting purposes, including Level 3 fair values and

discusses valuation processes and results at least once every quarter in line with the Company’s quarterly reporting dates. The

Company’s policy is to recognize transfers between levels at the end of the reporting period, if corresponding events or changes in

circumstances have occurred.

Samsung Electronics Business Report 145 / 261

Specific valuation techniques used to value financial instruments include:

ㆍ Quoted market prices or dealer quotes for similar instruments

ㆍ The fair value of forward foreign exchange contracts is determined using forward exchange rates at the consolidated statement

of financial position date, with the resulting value discounted back to present value

Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

For trade and other receivables that are classified as current assets, the carrying amount approximates a reasonable estimate of fair

value.

(3) Valuation technique and the inputs

The Company utilizes present value techniques to discount future cash flows using a proper interest rate for corporate bonds,

government and public bonds, bank debentures, and other that are classified as Level 2 in the fair value hierarchy.

The following table presents the valuation techniques and the inputs used for major financial instruments classified as Level 3.

(In millions of Korean won)

Classification Fair value Valuation technique Level 3 inputs

Input range

(Weighted average)

Financial assets at fair value through other comprehensive income

M altani \ 9,551 Discounted cash flow

Permanent growth rate

-1.0% ~ 1.0% (0%)

Weighted average cost of cap ital

9.8% ~ 11.8% (10.8%)

Samsung Venture Investment 12,754 Discounted cash flow

Permanent growth rate

-1.0% ~ 1.0% (0%)

Weighted average cost of cap ital

16.6% ~ 18.6% (17.6%)

Corning incorporated

convertible preference shares

3,969,983 Trinomial model

Risk adjusted discount rate

Price volatility

4.5% ~ 6.5% (5.5%)

22.1% ~ 28.1% (25.1%)

Long-term other payables

Contingent financial liability 2,316

Probability-weighted

discounted cash flow

Ap p licable p robability rate 50.0%

Samsung Electronics Business Report 146 / 261

(4) Changes in financial instruments classified as Level 3 are as follows :

(In millions of Korean won)

2019

2018

Financial assets

Balance as of January 1 \

7,165,466

\

3,652,574

Acquisitions

3,592,512

5,257,894

Disposals

(3,795,486)

(4,750,207)

Amount recognized in profit or loss

53,381

88,

284

Amount recognized in other comprehensive income

302,616

56,683

Other

1

89,195

2,860,238

Balance as of December 31

\

7,407,684

\

7,165,466

1

Other includes the cumulative effect of changes in accounting policies.

(In millions of Korean won)

2019

2018

Financial liabilities

Balance as of January 1 \

14,502

\

351,918

Settled (1,130)

(322,920)

Amount recognized in profit or loss

(11,655)

(15,188)

Other

599

692

Balance as of December 31 \

2,316

\

14,502

(5) Sensitivity analysis for recurring fair value measurements classified as Level 3

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of

financia l ins truments which are affected by unobservable parameters, using a statistical technique. When the fair value is affected

by more than two input parameters, the amounts represent the most favorable or most unfavorable.

The results of the sensitivity analysis for the effect on profit or loss (before income tax effects for other comprehensive income or

loss) from changes in inputs for ma jo r financial instruments which are class ified as Level 3 and subject to sensitivity analysis, are as

follows:

(In millions of Korean won) Favorable changes Unfavorable changes

Classification Profit or loss Equi ty Profit or loss Equi ty

Financial assets at fair value through other

comprehensive income

1

\ - \ 140,071

\ - \ (119,386)

1

For equity instruments, changes in fair value are calculated based on the correlation between growth rate (-1.0% ~ 1.0%), volatility (22.1% ~

28.1%) and discount rate, which are significant unobservable inputs.

Samsung Electronics Business Report 147 / 261

31. Segment Information

(A) Segment information

The chief operating decision maker has been identified as the Management Committee. The Company determines reportable

segments based on the units reported to the Management Committee. The Management Committee reviews operating profits of

each reportable segment in order to assess performance and to make strategic decisions regarding allocation of resources to the

segment.

The reportable segments are product-based and are identified based on the internal organization and revenue streams. As of the

reporting date, the reportable segments are comprised of CE, IM, Semiconductor, DP, Harman and other.

The segment information for each reporting period is prepared after the allocation of internal transaction adjustments such as

depreciation, amortization of intangible assets and operating profits. Total assets and liab ilities of each reportable segment are

excluded from the disclosure as these have not been provided regularly to the Management Committee.

(1) For the year ended December 31, 2019

(In millions of Korean won)

CE

IM

DS

Harman

Total

1

Intercompany

elimination

within the

Company

Consolidated

Total

1

Semi-

conductor

DP

Total segment revenue

\

99,592,549

\

223,959,110

\

193,141,859

\

123,766,753

\

66,908,763

\

11,749,815

\

531,113,681

\

(300,712,800)

\

230,400,881

Intercompany revenue

(54,836,319)

(116,692,955)

(97,623,857)

(58,827,701)

(35,854,834)

(1,672,719)

(300,712,800)

300,712,800

-

Net revenue

2

44,756,230

107,266,155

95,518,002

64,939,052

31,053,929

10,077,096

230,400,881

-

230,400,8

81

Depreciation

530,719

1,215,268

23,584,306

17,017,054

6,533,810

337,609

26,573,816

-

26,573,816

Amortization

58,172

1,388,619

1,138,678

836,951

291,721

232,104

3,023,822

-

3,023,822

Operating profit

2,606,306

9,272,468

15,581,687

1

4,016,302

1,581,333

322,331

27,768,509

-

27,768,509

1

Includes amounts which do not specifically fall into the specific reportable segments presented above.

2

Segment net revenue includes intersegment revenues.

(2) For the year ended December 31, 2018

(In millions of Korean won)

CE

IM

DS

Harman

Total

1

Intercompany

elimination

within the

Company

Consolidated

Total

1

Semi-

conductor

DP

Total segment revenue

\

95,187,648

\

214,884,364

\

239,564,995

\

165,762,494

\

69,349,454

\ 10

,971,146

\

563,005,328

\

(319,233,913)

\

243,771,415

Intercompany revenue

(53,080,243)

(114,206,687)

(120,999,436)

(79,471,532)

(36,884,435)

(2,127,407)

(319,233,913)

319,233,913

-

Net revenue

2

42,107,405

100,677,677

118,565,559

86,290,962

32,465,0

19

8,843,739

243,771,415

-

243,771,415

Depreciation

537,903

1,168,036

22,863,124

16,304,757

6,445,672

235,149

25,167,112

-

25,167,112

Amortization

37,448

127,973

722,338

593,744

114,796

222,841

1,314,925

-

1,314,925

Operating profit

2,023,234

10,172,005

46,516,389

44,573,890

2,619,802

161,714

58,886,669

-

58,886,669

1

Includes amounts which do not specifically fall into the specific reportable segments presented above.

2

Segment net revenue includes intersegment revenues.

Samsung Electronics Business Report 148 / 261

(B) Regional information

The regional segment information as of and for the years ended December 31, 2019 and 2018 is as follows:

(1) As of and for the year ended December 31, 2019

(In millions of Korean won)

Kore a

America

Eu r o p e

Asia and

Africa

China

Intercompany

e limination within

the Company

Consolidated

Net segment revenue

\

34,180,362

\

73,851,914

\

42,713,958

\

41,614,112

\

38,040,535

\

-

\

230,400,881

Non-current assets

1

100,315,093

10,357,696

6,648,962

11,030,300

12,598,701

(421,774)

140,528,978

1

Total of non-current assets other than financial instruments, deferred tax assets, and investments in associates and joint ventures.

(2) As of and for the year ended December 31, 2018

(In millions of Korean won)

Kore a

Ame rica

Eu r o p e

Asia and

Africa

China

Intercompany

e limination within

the Company

Consolidated

Net segment revenue

\

33,923,275

\

81,688,726

\

42,959,049

\

41,993,417

\

43,206,948

\

-

\

243,771,415

Non-current assets

1

94,001,678

9,914,464

5,954,399

11,611,679

9,294,129

(468,027)

130,308,322

1

Total of non-current assets other than financial instruments, deferred tax assets, and investments in associates and joint ventures.

Samsung Electronics Business Report 149 / 261

32. Related Party Trans actions

(A) Sale and purchase transactions

Sale and purchase transactions with related parties for the years ended December 31, 2019 and 2018, are as follows:

(In m illions of

Korean won)

Name of Company

1

2019

Sales and other

Disposal of

non-current assets

Purchases and other

Purchases of

non-current assets

Associates and

joint ventures

Samsung SDS Co., Ltd. \ 85,415

\ - \ 2,018,871

\ 498,722

Samsung Electro-Mechanics Co., Ltd.

48,874

-

2,214,388

16

Samsung SDI Co., Ltd.

93,634

16,106

626,320

80,886

Cheil Worldwide Inc.

25,821

-

813,808

958

Other

914,634

2

10,482,459

245,683

Total (Associates and joint ventures)

\

1,168,378

\

16,108

\

16,155,846

\

826,265

Other related

parties

Samsung C&T Corporation

\

116,272

\

17,367

\

383,645

\

4,208,197

Other

204,758

-

1,078,775

1,168,865

Total (Other related parties)

\

321,030

\

17,367

\

1,462,420

\

5,377,062

Other

2

Samsung Engineering Co., Ltd.

\

5,675

\

-

\

81,169

\

2,001,467

S-1 Corporation

18,270

-

406,685

29,153

Other

125,320

1,477

365,795

557,852

Total (Other)

\

149,265

\

1,477

\

853,649

\

2,588,472

1

Transactions with separate entities that are related p arties of the Company .

2

Although these entities are not related parties of the Company in accordance with Korean IFRS 1024 Related Party Disclosures, they belong

to the same large enterprise group in accordance with the M onopoly Regulation and Fair Trade Act.

(In m illions of

Korean won)

Name of Company

1

2018

Sales and other

Disposal of

non-current assets Purchases and other

Purchases of

non-current assets

Associates and

joint ventures

Samsung SDS Co., Ltd.

\

68,418

\

-

\

2,103,561

\

425,415

Samsung Electro-Mechanics Co., Ltd.

57,716

-

2,073,803

-

Samsung SDI Co., Ltd.

62,821

-

778,550

88,211

Cheil Worldwide Inc.

25,533

-

906,348

3,258

Other 966,793

- 10,015,075

218,667

Total (Associates and joint ventures)

\

1,181,281

\

-

\

15,877,337

\

735,551

Other related

parties

Samsung C&T Corporation \ 94,153

\ 183

\

319,206

\ 4,211,883

Other

165,329

-

1,016,536

966,846

Total (Other related parties)

\

259,482

\

183

\

1,335,742

\

5,178,729

Other

2

Samsung Engineering Co., Ltd.

\

3,772

\

-

\

40,844

\

1,701,154

S-1 Corporation

34,612

258

396,011

35,360

Other

140,968

-

343,065

385,086

Total (Other)

\

179,352

\

258

\

779,920

\

2,121,600

1

Transactions with separate entities that are related parties of the Company.

2

Although these entities are not related parties of the Company in accordance with Korean IFRS 1024 Related Party Disclosures, they belong to

the same large enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

Samsung Electronics Business Report 150 / 261

(B) Balances of receivables and payables

Balances of receivables due from and payables due to related parties as of December 31, 2019 and 2018 are as follows:

December 31, 2019

(In millions of Korean won) Name of Company

1

Receivables and other Payables and other

2

Associates and joint ventures

Samsung SDS Co., Ltd.

\

19,723

\

636,169

Samsung Electro-Mechanics Co., Ltd.

2,457

207,339

Samsung SDI Co., Ltd.

103,809

135,048

Cheil Worldwide Inc.

423

415,785

Other

177,491

997,632

Total (Associates and joint ventures)

\

303,903

\

2,391,973

Other related parties

Samsung C&T Corporation

\

230,535

\

1,215,575

Other

18,884

170,130

Total (Other related parties)

\

249,419

\

1,385,705

Other

3

Samsung Engineering Co., Ltd.

\

2,734

\

629,584

S-1 Corporation

1,464

50,498

Other 12,211

115,072

Total (Other)

\

16,409

\

795,154

1

Balances due from and to separate entities that are related p arties of the Company.

2

Lease liabilities are included in payables and other.

3

Although these entities are not related parties of the Company in accordance with Korean IFRS 1024 Related Party Disclosures, they belong to

the same large enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

December 31, 2018

(In m illions of Korean won)

Name of Company

1

Receivables and other

Payables and other

Associates and joint ventures

Samsung SDS Co., Ltd.

\

5,294

\

490,611

Samsung Electro-Mechanics Co., Ltd.

3,518

163,668

Samsung SDI Co., Ltd. 102,641 73,398

Cheil Worldwide Inc.

241

465,517

Other

282,849

1,067,439

Total (Associates and joint ventures)

\

394,543

\

2,260,633

Other related parties

Samsung C&T Corporation

\

225,606

\

1,725,547

Other

2

19,676

183,395

Total (Other related parties)

\

245,282

\

1,908,942

Other

3

Samsung Engineering Co., Ltd.

\

1,078

\

581,153

S-1 Corporation

3,149

37,785

Other

4,696

47,502

Total (Other)

\ 8,923 \

666,440

1

Balances due from and to separate entities that are related parties of the Company.

2

As of December 31, 2018, there were no payables to Samsung Card relating to unsettled amounts from purchasing cards. The Company has a

purchasing card agreement with Samsung Card with a limit of \ 2,543,000 million as of December 31, 2018. For the year ended December

31, 2018, the amounts used and reimbursed were \ 3,724,851 million and \ 4,846,182 million, resp ectively.

3

Although these entities are not related parties of the Company in accordance with Korean IFRS 1024 Related Party Disclosures, they belong

to the same large enterprise group in accordance with the M onopoly Regulation and Fair Trade Act.

Samsung Electronics Business Report 151 / 261

(C) For the years ended December 31, 2019 and 2018, the Company invested \ 12,822 million and \ 51,226 million,

respectively, in associates and joint ventures, and the Company recovered \ 1,437 million and \ 148 million, res pectively,

from associates and joint ventures. In addition, for the year ended December 31, 2019, the Company acquired the PLP

business of Samsung Electro-Mechanics Co., Ltd., an associate, at a price of \ 785,000 million. For the year ended

December 31, 2018, the Company invested \ 204,055 million in Samsung Heavy Industries Co., Ltd., one of the entities that

are not related parties of the Company in accordance with Korean IFRS 1024 Related Party Disclosures, but belongs to the

same large enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

(D) For the years ended December 31, 2019 and 2018, the Company declared dividends of \ 1,661,903 million and

\ 1,774,050 million, res pectively, to related parties. Also, for the years ended December 31, 2019 and 2018, the Company

declared dividends of \ 125,744 million and \ 135,642 million, respectively, to entities that are not related parties of the

Company in accordance with Korean IFRS 1024 Related Party Disclosures, but belong to the same large enterprise group in

accordance with the Monopoly Regulation and Fair Trade Act. As of December 31, 2019 and 2018, there are no unpaid

dividends to these entities.

( E) For the year ended December 31, 2019, the Company has not entered into any lease agreement with its related parties, and

lease payments to the related party amount to \ 55,805 million.

(F) For the years ended December 31, 2019 and 2018, compensation to key management (executive directors) for their services is

recognized in expense as follows:

(In millions of Korean won)

2019

2018

Short-term emp loyee benefits \ 9,821

\ 13,190

Post-employment benefits 1,321

1,406

Other long-term emp loy ee benefits 6,449

7,851

33. Information for Non-Controlling Interests

(A) Changes in accumulated non-controlling interests

The profit or loss allocated to non-controlling interests and accumulated non-controlling interests of subsidiaries that are material to

the Company for the years ended December 31, 2019 and 2018 are as follows :

(In millions of Korean won)

Samsung Display Co., Ltd. and its subsidiaries

December 31, 2019 December 31, 2018

Percentage of non-controlling interests

15.2%

Balance as of January 1

\ 7,181,049

\ 6,776,468

Profit for the year

212,351

431,966

Dividends (3,797)

(17,304)

Other

37,625

(10,081)

Balance as of December 31

\ 7,427,228 \ 7,181,049

Samsung Electronics Business Report 152 / 261

(B) The summarized financial information for each subsidiary with non-controlling interests that are material to the Company

before intercompany eliminations for the years December 31, 2019 and 2018 are as follows :

(1) Summarized consolidated statements of financial position

(In millions of Korean won)

Samsung Display Co., Ltd. and its subsidiaries

December 31, 2019

December 31, 2018

Current assets

\

23,388,388

\

20,137,873

Non-current assets

30,343,285

34,344,308

Current liabilities

5,482,650

5,960,611

Non-current liabilities

3,687,057

5,265,108

Equity attributable to:

44,561,966

43,256,462

Owners of the parent company

44,021,178

42,736,122

Non-controlling interests

540,788

520,340

(2) Summarized consolidated statements of comprehensive income

(In millions of Korean won)

Samsung Display Co., Ltd. and its subsidiaries

2019

2018

Sales

\ 30,957,776

\ 32,316,001

Profit for the year

1,139,753

2,238,291

Other comprehensive income (loss)

161,549

(57,236)

Total comprehensive income attributable to: 1,301,302

2,181,055

Owners of the parent company

1,285,056

2,163,050

Non-controlling interests

16,246

18,005

(3) Summarized consolidated statements of cash flows

(In millions of Korean won)

Samsung Display Co., Ltd. and its subsidiaries

2019

2018

Cash flows from operating activities

\

7,606,805

\

9,648,365

Cash flows from investing activities

(6,108,946)

(4,718,475)

Cash flows from financing activities

(1,503,785) (5,082,106)

Effect of exchange rate changes on cash and cash equivalents

2,435

10,472

Decrease in cash and cash equivalents

(3,491) (141,744)

Cash and cash equivalents at beginning of the year

676,371

818,115

Cash and cash equivalents at end of year

672,880

676,371

Samsung Electronics Business Report 153 / 261

34. Business Combinations

Significant business combinations for the year ended December 31, 2019 are as follows:

(A) Acquisition of Corephotonics Ltd.

Samsung Electronics Benelux B.V. (SEBN), the Company’s subsidiary, acquired 83.9% of the equity shares of Corephotonics Ltd.

on January 28, 2019 and an additional 8.5% on March 4, 2019 to secure CIS optical technology and talent.

(1) Overview of the acquired company

Name of the acquired company

Corephotonics Ltd.

Headquarter location

Tel Aviv, Israel

Rep resentative director

David Mendlovic

Industry

Develop ment of camera solutions

(2) Purchase price allocation

1

As of January 28, 2019, other expenses of ￦ 500 million were recognized in relation to the remeasurement of fair value of the 7.6% shares of

Corephotonics Ltd. held by Samsung Venture Capital Union #28, the Company’s subsidiary, prior to the business combination.

2

Non-controlling interest from the business combination is measured proportionately to the share of the fair value of Corephotonics Ltd.’s net

identifiable assets.

Had Corephotonics Ltd. been consolidated from January 1, 2019, the revenue and consolidated loss for the year would be ￦ 1,421

million and ￦ 22,811 million, respectively. The revenue and consolidated loss for the year contributed by Corephotonics Ltd.

since the acquisition, amount to ￦ 1,102 million and \ 18,201 million, res pectively.

(In millions of Korean won)

I. Consideration transferred

Fair value of share equity prior to the merger

1

￦

13,236

Fair value of additional consideration transferred

160,214

Total consideration transferred 173,450

II. Identifiable assets and liabilities

Cash and cash equivalents 6,069

Short-term financial instruments and other 19,354

Trade and other receivables 1,199

Property, plant and equipment 339

Intangible assets 100,598

Other assets 82

Other pay ables 236

Deferred tax liabilities 23,138

Other liabilities 3,475

Total net identifiable assets 100,792

III. Total identifiable assets recognized as non-controlling interest

2

77

IV. Goodwill (I – II+ III)

￦

72,735

Samsung Electronics Business Report 154 / 261

(B) Acquisition of the PLP business

In accordance with the resolution of the Board of Directors on April 30, 2019, the Company acquired Samsung Electro-Mechanics

Co., Ltd.’s PLP business for total consideration of \ 785,000 million on June 1, 2019 to strengthen its semiconductor

competitiveness through securing next-generation package technology.

Had the PLP business been acquired on January 1, 2019, there would be no revenue transferred, and consolidated loss for the year

would be \ 179,316 million. The PLP business has not recorded any revenue since the acquisition. Consolidated loss for the year

contributed by the PLP business since the acquisition, amounts to \ 109,504 million.

(In millions of Korean won)

I. Fair value of consideration transferred

\

785,000

II. Identifiable assets and liabilities

Inventories

10,906

Property, plant and equipment

398,984

Intangible assets

182,171

Other assets

1,561

Other liabilities

15,363

Total net identifiable assets

578,259

III. Goodwill (I – II) \ 206,741

Samsung Electronics Business Report 155 / 261

3. Other financial information

A. Restatement of financial statements and other matters to note

(1) Restatement of financia l statements: N/A

(2) Acquisition, divestment, asset transfer and transfer of business (separate only)

The major divestment and transfer of business transactions in the past three business years on a parent basis (separate

basis) are as follows. For information on the business combinations and divestitures of subsidiaries, please refer to the

notes on the business combination and assets held for sale (assets of disposal group) of the consolidated financial

statements.

[S-Printing Solution]

- Details on the Split

 Company Name: S-Printing Solution Corp.

 Location: 129 Samsung-ro, Yeongtong-gu, Suwon-si, Gyeonggi-do

 Purpose of split: To improve the competitiveness of S-Printing Solution

 Date of Approval: October 27, 2016 (at the extraordinary general meeting of shareholders)

 Date of split: November 1, 2016

- Details on the Sale

The Company agreed to sell the Printing Solutions business including shares of S-Printing Solution Corp to HP Inc

(location: P a lo Alto, USA; CEO: Dion Weisler) for USD 1.05 billion on September 12, 2016, and completed the deal

on November 1, 2017.

- Details of the above statement can be found in the “Important Matters Report”, published in DART

(http://dart.fss.or.kr/).

[Harman International Industries, Inc. and its subsidiaries]

- To strengthen the Company’s automotive electronics and audio businesses, Samsung Electronics America, the

Company’s subsidiary, acquired 100% of the equity shares of Harman International Industries, Inc. (location:

Connecticut, USA; CEO: Dinesh Paliwal) and its subsidiaries on March 10, 2017.

- Details of the above statement can be found in the “Decision on Acquisition of Shares”, published in DART

(http://dart.fss.or.kr/).

[Corephotonics Ltd.]

- Samsung Electronics Benelux B.V. (SEBN), the Company’s subsidiary, acquired 83.9% of the equity shares of

Corephotonics Ltd.(location: Tel Aviv, Israel; CEO: David Mendlovic) on January 28, 2019 and an additional 8.5%

on March 4, 2019 to secure CIS optical technology and talent.

- Details of the above statement can be found in Section 3 ‘Notes to the Consolidated Financial Statements’ of

Ⅲ. Financial affairs

Samsung Electronics Business Report 156 / 261

[PLP Business]

- Details of a cquisition

In accordance to the resolution of the Board of Directors on April 30, 2019, the Company acquired Samsung Electro-

Mechanics Co., Ltd.(location: South Korea; CEO: Yun Tae Lee)’s PLP business at a price of KRW 785,000 million on

June 1, 2019 to strengthen its semiconductor competitiveness through securing next-generation package technology.

- Details of the above statement can be found in the “Business Acquisition from Related Parties”, published in DART

(http://dart.fss.or.kr/).

(KRW 100 mil)

Account

Forecast

Actual

1st Year 2nd Year

1st Year

2nd Year

Actual

Difference

Actual

Difference

PLP Business

Sales

101

219

-

Operating Income -1,273

-2,155

-1,095

14%

-

Net Income -1,273

-2,155

-1,095

14%

-

※ The first year forecast is our prediction for 7 month period from June 1 to December 31, 2019. Actual opeating

income for the 7 month period differs by 14% from the forecast due to several factors such as reduction in wages.

Difference of sales between forecast and actual is not included as all of PLP business’ sales are from

intra-company transaction.

(3) Information on the accounting treatment of the sales of assets and contingent liabilities relating to the asset backed

securities

Litigation

- The Company is involved in claims, disputes, and investigations conducted by regulatory bodies at the reporting date,

including civil claims from some overseas buyers for price-fixing related to the sale of TFT-LCD. Although the

outflow of resources and timing of these matters are uncertain, the Company believes the outcome will not have a

material impact on the financial condition of the Company.

- In addition, during the normal course of business with numerous companies, the Company has been involved in

various claims, disputes, and investigations conducted by regulatory bodies. Although the outflow of resources and

timing of these matters are uncertain, the Company believes the outcome will not have a material impact on the

financial condition of the Company.

De bt guarantee

- Domestic: Not applicable

Samsung Electronics Business Report 157 / 261

- Overseas:

(USD thousand)

Company Relationship Creditor

Guarantee

Transactions

Limit of

guarantee

Expiry

date

Beginning of

period

Increase Decrease End of period

SEA

Subsidiary

BOA etc.

16-Dec-20

-

1,328,000

SEM

Subsidiary

BBVA etc.

16-Dec-20

-

485,000

SAMCOL

Subsidiary

Citibank etc.

16-Dec-20

85,662

4056

-

89,718

180,000

SEDA

Subsidiary

BRADESCO etc.

16-Dec-20

-

639,000

SECH

Subsidiary

Santander etc.

16-Dec-20

-

17,256

-

17,256

142,000

SEPR

Subsidiary

BBVA etc.

16-Dec-20

58,710

31,877

-

90,587

230,000

SSA

Subsidiary

SCB etc.

16-Dec-20

-

318,000

SEMAG

Subsidiary

SocGen etc.

16-Dec-20

-

110,000

SETK

Subsidiary

BNP etc.

16-Dec-20

64,519

233

-

64,752

787,000

SECE

Subsidiary

Citibank etc.

13-Jun-20

-

75,698

SEEG

Subsidiary

HSBC

08-Nov-20

-

85,000

SEIN

Subsidiary

BNP etc.

16-Dec-20

-

145,000

SJC

Subsidiary

Mizuho etc.

16-Dec-20

-

896,633

SEUC

Subsidiary

Credit Agricole etc.

16-Dec-20

-

150,000

SEDAM

Subsidiary

Citibank etc.

08-Nov-20

-

322,000

SECA

Subsidiary

BoA

16-Dec-20

-

70,000

SELA

Subsidiary

Citibank

16-Dec-20

-

70,000

SEEH

Subsidiary

HSBC etc.

16-Dec-20

-

703,000

SERK

Subsidiary

SocGen etc.

16-Dec-20

-

220,000

SELV

Subsidiary

Citibank

16-Dec-20

-

10,000

SAPL

Subsidiary

BOA etc.

08-Nov-20

-

395,000

SEV

Subsidiary

SCB

08-Nov-20

-

15,000

SAVINA

Subsidiary

HSBC etc.

08-Nov-20

-

71,000

SET

Subsidiary

SCB

16-Dec-20

-

30,000

SCIC

Subsidiary

HSBC etc.

08-Nov-20

-

350,000

SME

Subsidiary

SCB

16-Dec-20

-

110,000

SAMEX

Subsidiary

Citibank

16-Dec-20

-

5,000

SEASA

Subsidiary

Citibank

08-Nov-20

-

2,000

SSAP

Subsidiary

SCB

13-Jun-20

-

30,000

SEHK

Subsidiary

HSBC

13-Jun-20

-

SEPM

Subsidiary

HSBC

13-Jun-20

7,712

-

7,712

-

35,000

SESAR

Subsidiary

HSBC

08-Nov-20

-

50,000

AdGear Technologies Inc.

Subsidiary

BOA

13-Jun-20

-

2,000

Harman International Industries, Inc.

Subsidiary

JP Morgan

08-Nov-20

-

100,000

Harman International Japan Co., Ltd.

Subsidiary

MUFG

13-Jun-20

-

25,000

Harman RUS CIS LLC

Subsidiary

SocGen

08-Nov-20

-

15,000

Harman Holding Limited

Subsidiary

HSBC

08-Nov-20

-

30,000

Harman do Brasil Industria Eletronica

e Participacoes Ltda.

Subsidiary

SOCGEN

08-Nov-20 - - - - 15,000

Harman da Amazonia Industria

Eletronica e Participacoes Ltda.

Subsidiary

Harman Finance International, SCA

Subsidiary

JP Morgan etc.

27-May-22

400,101

-

7,891

392,210

Total

616,703

53,422

-15,603

654,522

8,638,541

※ SEC requires Board approval for individual guarantees exceeding 2.5% of total equity. When the guarantee amount is between

0.1% and/or less than 2.5%, the approval decision is delegated to the Management Committee.

※ SEC receives fees on the debt it guarantees depending on the maturity date of each debt guarantee, general loan interest rate, etc.

In 2019, the Company claimed approximately USD 238,000 in guarantee fee and, as of the reporting date, has not received the amount.

Refer to the notes to the consolidated financial statements for the information on contingent liabilities.

(4) Other matters requiring attention in relation to the use of the financial statements: N/A

Samsung Electronics Business Report 158 / 261

B. Allowance for bad de bt

The allowance s for bad debt by account over the pas t 3 ye ars are as follows :

(KRW mil)

Period Account Receivables amount Allowance amount Allowance (%)

2019

Trade receivables 35,471,674 340,331 1.0%

Short-term loans

8,744

82

0.9%

Other receivables 4,237,479 58,359 1.4%

Advances 1,430,317 3,484 0.2%

Trade receivables (long-term) 411,229 79 0.0%

Other receivables (long-term) 346,780 307 0.1%

Advances (long-term) 774,472 7,333 0.9%

Long-term loans 120,540 1,335 1.1%

Total 42,801,235 411,310 1.0%

2018

Trade receivables 34,433,876 566,143 1.6%

Short-term loans

10,177

54

0.5%

Other receivables 3,111,442 30,708 1.0%

Advances 1,364,111 2,304 0.2%

Trade receivables (long-term)

1,046,252

5,421

0.5%

Other receivables (long-term) 223,986 337 0.2%

Advances (long-term) 960,392 9,366 1.0%

Long-term loans

125,700

549

0.4%

Total 41,275,936 614,882 1.5%

2017

Trade receivables

28,333,822

635,815

2.2%

Short-term loans

7,258

81

1.1%

Other receivables

4,135,935

26,975

0.7%

Advances

1,758,547

4,874

0.3%

Trade receivables (long-term) 1,983,136 1,397 0.1%

Other receivables (long-term) 139,472 330 0.2%

Advances (long-term)

134,192

836

0.6%

Long-term loans

130,550

467

0.4%

Total

36,622,912

670,775

1.8%

※ Receivables amount represents the value after deducting present value discount account (consolidated)

Samsung Electronics Business Report 159 / 261

Allowance for bad de bt by ye ar

(KRW mil)

2019

2018

2017

1. Allowance for bad debt

(beginning balance)

614,882

670,775

457,957

2. Net bad debt expense (①－②±③) 16,715

18,697

3,685

① Bad debt expense, etc (Write-off) 6,579

24,721

38,584

② Bad debt recovered 11,294

6,024

559

③ Others 21,430

-

-34,340

3. Bad debts expense -186,857

-37,196

216,503

4. Allowance for bad debts

(Ending balance)

411,310

614,882

670,775

※ Based on consolidated financial statements.

The guide line for bad debt allowance s for trade re ceivables

(1) Calculation of bad debt allowanc e

 Bad debt allowance is calculated using an expected credit loss impairment mo del wh ic h is based on write-off

experience rate and future expected bad debt amount.

(2) Calculation basis of write-off experience rate and future expected bad debt:

 Write-off experience rate for each aging group of receivables is calculated based on the actual rate of credit losses

to three-year average receivables balance.

 Future expected bad debt is determined taking into consideration cases of debtor bankruptcy, compulsory execution,

death, disappearance, credit information of debtor and forward-looking information.

[Bad debt allowance by circumstance]

Circumstance

Rate of allowance

Dispute or conflict

25%

Receivable through utilization of third party collection agency

50%

Receivable under litigation 75%

Customer filed or in the process of filing bankruptcy

100%

Samsung Electronics Business Report 160 / 261

(3) Instruction: Write-off is recorded when trade receivables contain the following characteristics:

ㆍ Objective proof of bad debts, such as bankruptcy, compulsory execution, discontinuance of business, debtor’s death

or disappearance

ㆍ Legal action has failed or the right of collection has been extinguished.

ㆍ When the collection agency gives as notice that collection is not possible.

ㆍ When the collateral is sold or insurance is received.

ㆍ The collection expenses exceed the amount of receivables.

The outs tanding pe riod of trade re ceivables

(KRW mil)

Less than

6 months

6 months ~

1 year

1 year ~

3 years

More than

3 years

Total

Amount 35,649,343 28,117

169,258 36,185 35,882,903

Ratio

99.3%

0.1%

0.5% 0.1% 100.0%

※

Receivables amount on net present value (consolidated)

Samsung Electronics Business Report 161 / 261

C. Inventory

- The inventory status by Division over the last three years is as follows:

(KRW mil)

Division Category 2019 2018 2017 Note

CE

Finished goods

1,508,915

1,606,820

1,827,162

Work in process

138,003

112,043

110,179

Raw material

1,968,800

2,445,758

2,505,575

Material in transit

1,886,929

1,916,504

1,684,923

Total

5,502,647

6,081,125

6,127,839

IM

Finished goods

2,426,034

2,525,787

2,327,139

Work in process

420,664

624,129

721,194

Raw material

3,228,906

3,305,566

4,541,940

Material in transit

810,599

715,361

867,103

Total

6,886,203

7,170,843

8,457,376

DS

Semi-

conductor

Finished goods

1,740,881

2,498,132

1,094,967

Work in process

8,772,850

9,378,528

5,179,312

Raw material

1,332,267

863,607

659,223

Material in transit

66,033

22,697

39,312

Total

11,912,031

12,762,964

6,972,814

DP

Finished goods

345,940

549,432

746,856

Work in process

488,468

559,960

638,268

Raw Material

634,990

720,622

849,786

Material in transit

22,214

82,677

133,038

Total

1,491,612

1,912,691

2,367,948

DS

total

Finished goods

2,130,587

3,107,878

1,872,648

Work in process

9,302,907

10,297,065

6,256,420

Raw material

1,991,422

1,741,613

1,708,632

Material in transit

89,044

48,306

64,934

Total

13,513,960

15,194,862

9,902,634

Harman

Finished goods

746,742

558,014

432,184

Work in process

90,249

87,751

77,696

Raw material

372,231

363,432

322,649

Material in transit

145,329

141,524

140,939

Total

1,354,551

1,150,721

973,468

Total

Finished goods

8,115,116

8,836,098

7,304,437

Work in process

9,886,634

11,066,511

7,113,901

Raw material

7,747,110

8,048,139

9,413,217

Material in transit

1,017,604

1,033,956

1,151,800

Total

26,766,464

28,984,704

24,983,355

Inv entory ratio (% )

[Inv entory ÷ Total Assets]

7.6%

8.5%

8.3%

Inv entory turnover (x)

[ Yearly COGS ÷ {(Beginning of inventory + End of

inv entory)÷2}]

5.3

4.9

6.0

Samsung Electronics Business Report 162 / 261

Inve ntory counts

(1) Inspection date

ㆍ End of May and November (twice a year)

ㆍ For the difference in inventories between the inspection date and at the end of the year, the Company checks

all the warehouse record during the period in order to confirm the existence of the inventories as of the date of

the financial statements.

(2) Inspection method

ㆍ Internal warehouse: Closed & Total Inspection

※ Sample check in semi-conductor and DP inventory, SVC materials

ㆍ Outside warehouse

Perform check for the possession confirmation documents and sample tests at the third party warehouse and Inventory

in transit

ㆍ External auditors join and observe the inspection and carry out sample tests to check the existence and completeness.

※ For the HQ, the most recent inventory inspection was conducted on May 31, June 1, and June 3, 2019, and the

subsidiaries conducted the inventory inspection during the same period.

Inve ntory aging and valuation

Inventories are stated at the lower of cost or net realizable value. Inventory as of December 31, 2019 was as follows:

(KRW mil)

Category

Acquisition

cost

Inventory

valuation reserve

Balance Note

Finished goods 8,460,621 -345,505 8,115,116

Work in process 10,424,880 -538,246 9,886,634

Raw material 8,288,265

-541,155

7,747,110

Material in transit 1,017,604 - 1,017,604

Total 28,191,370 -1,424,906 26,766,464

※ Consolidated basis

D. Fair value estimation

Refer to 6. Financial Instruments by Category and 31. Financial Risk Management in 『Ⅲ. Financial Affairs』.

Samsung Electronics Business Report 163 / 261

E. List of issued de bt securities

Issued debt securities

(As of December 31, 2019) (KRW mil, %)

Issuing company

Type of

securities

Issuance method

Date of

Issuance

Total nominal

amount

Interest rate

Rating

(rating institution)

Maturity

date

Payment

status

Management

company

Samsung Electronics

Corporate

bonds

Public offering Oct 2,1997 115,780 7.7

AA-(S&P), Aa3(Moody's) Oct 1, 2027

Partial

redemption

Goldman Sachs et al.

Harman International

Industries, Inc

Corporate

bonds

Public offering May 6, 2015 463,120 4.2

Baa1 (Moody's),

A (S&P)

May 15, 2025 Unredeemed

J.P.Morgan

et al.

Harman Finance International,

SCA

Corporate

bonds

Public offering May 20, 2015 454,100 2.0

Baa1 (Moody's),

A (S&P)

May 27, 2022 Unredeemed

HSBC

et al.

SEMES

Commercial

paper

Private placement Jan 8, 2019 20,000 2.7

A1 Apr 5, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Jan 23, 2019 25,000 2.7

A1 Apr 19, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Jan 30, 2019 40,000 2.7

A1 Apr 26, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Feb 1, 2019 10,000 2.7

A1 Apr 29, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Mar 6, 2019 10,000 2.7

A1 Jun 4, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Apr 4, 2019 10,000 2.7

A1 Jul 2, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Apr 11, 2019 25,000 2.7

A1 Jul 9, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Jun 25, 2019 50,000 2.2

A1 Sep 23, 2019 Redeemed -

SEMES

Commercial

paper

Priv ate placement Jul 9, 2019 30,000 2.2

A1 Oct 7, 2019 Redeemed -

SEMES

Commercial

paper

Private placement J ul 11, 2019 20,000 2.2

A1 Oct 8, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Aug 13, 2019 15,000 1.9

A1 Nov 11, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Aug 27, 2019 30,000 1.9

A1 Nov 25, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Sep 11, 2019 25,000 2.0

A1 Dec 9, 2019 Redeemed -

SEMES

Commercial

paper

Private placement Oct 7, 2019 25,000 2.0

A1 Jan 3, 2020 Unredeemed

SEMES

Commercial

paper

Private placement Oct 7, 2019 20,000 2.0

A1 Jan 3, 2020 Unredeemed

Samsung Electronics Business Report 164 / 261

SEMES

Commercial

paper

Private placement Oct 8, 2019 20,000 2.0

A1 Jan 6, 2020 Unredeemed

SEMES

Commercial

paper

Private placement Nov 5, 2019 20,000 1.9

A1 Feb 3, 2020 Unredeemed

SEMES

Commercial

paper

Private placement Nov 12, 2019 25,000 2.0

A1 Feb 10, 2020 Unredeemed

SEMES

Commercial

paper

Private placement Nov 25, 2019 25,000 2.0

A1 Feb 21, 2020 Unredeemed

SEMES

Commercial

paper

Private placement Nov 26, 2019 35,000 2.0

A1 Feb 24, 2020 Unredeemed

SEMES

Commercial

paper

Private placement Dec 9, 2019 30,000 2.0

A1 Mar 6, 2020 Unredeemed

SEMES

Commercial

paper

Private placement Dec 11, 2019 20,000 2.0

A1 Mar 10, 2020 Unredeemed

SEMES

Commercial

paper

Private placement Dec 27, 2019 35,000 2.0

A1 Mar 26, 2020 Unredeemed

Total - - - 1,598,000 -

- - - -

※ The exchange rate as of the base date has been applied.

※ The rating institutions of Commercial paper are NICE Investors Service and Korea Ratings Corporation.

Samsung Electronics Business Report 165 / 261

Details and Compliance of the Bond Management Contract (Samsung Electronics)

(Base Date of Preparation: December 31, 2019) (KRW mil,

%)%

Name of security Date of issuance Maturity date Issued amount

Settlement date of

bond management contract

Debenture management company

US$ 100,000,000

7.7% debenture

Oct 2, 1997 Oct 1, 2027

115,780

Oct 2, 1997

The Bank of New York Mellon

Trust Company, N.A.

(Base Date of Implementation: December 31, 2019)

Financial ratios

Contract details Not applicable

Implementation status Not applicable

Constraint on collateral

Contract details Less than 10% of net tangible assets

Implementation status Compliant (there is no collateral for the relevant assets)

Constraint on disposal of assets

Contract details

Certain requirements, such as transfer of obligations on the bond,

must be satisfied to dispose all or most of an asset

Implementation status Compliant (disposed assets accounted for 0.2% of the total assets during 2019)

Constraint on governance

Contract Details Not applicable

Implementation Status Not applicable

Submission of implementation report Implementation status Not applicable

※ The date of the bond management contract was signed on the same day as the Fiscal Agency Agreement; accordingly, the Bank of New York Mellon Trust

Company, N.A. is under the authority of the Fiscal Agent.

※ The exchange rate as of the base date has been applied.

※ The net tangible assets subjected to the limitation of collaterals are production facilities and stocks owned by the Company.

※ The base date of implementation is the date when most recent financial statements were prepared, which are used to determine the status of implementation.

※ The constraint on Governance is as of the Reporting Date.

Samsung Electronics Business Report 166 / 261

Commercial Paper Balance

(Base Date: December 31, 2019)

(KRW mil)

Maturity Under 10 days

Above 10 days /

under 30 days

Above 30 days /

under 90 days

Above 90 days /

under 180 days

Above 180 days

/ under 1 year

Above 1 year

/ under 2 years

Above 2 years /

under 3 years

Above 3 years To t a l

Balance

Public

-

Private

65,000

-

190,000

-

255,000

Total

65,000

-

190,000

-

255,000

Short Term Bond Unredeemed Balance

N/A

(Base Date: December 31, 2019)

(KRW mil)

Maturity Under 10 days

Above 10 days /

under 30 days

Above 30 days /

under 90 days

Above 90 days /

under 180 days

Above 180 days

/ under 1 year

To t a l Issue limit Balance limit

Balance

Public

-

- -

-

Private

-

- -

-

Total

-

- -

-

Samsung Electronics Business Report 167 / 261

Corporate Bond Unredeemed Balance

(Base Date: December 31, 2019)

(KRW mil)

Maturity Under 1 year

Above 1 year

/ under 2 years

Above 2 years

/ under 3 years

Above 3 years

/ under 4 years

Above 4 years

/ under 5 years

Above 5 years

/ under 10 years

Above 10 years To t a l

Balance

Public 5,789 5,789 459,889 5,789 5,789 480,487 - 963,532

Private - - - - - - - -

Total 5,789 5,789 459,889 5,789 5,789 480,487 - 963,532

※ The exchange rate as of the base date has been applied.

- Corporate Bond Unredeemed Balance (Samsung Electronics)

(Base Date: December 31, 2019) (KRW mil)

Maturity Under 1 year

Above 1 year

/ under 2 years

Above 2 years

/ under 3 years

Above 3 years

/ under 4 years

Above 4 years

/ under 5 years

Above 5 years

/ under 10 years

Above 10 years To t a l

Unredeemed

balance

Public

5,789

5,789 5,789

5,789

17,367

-

46,312

Total 5,789

5,789

5,789 5,789

5,789

17,367

-

46,312

※ The exchange rate as of the base date has been applied.

- Corporate Bond Unredeemed Balance (Harman)

(Base Date: December 31, 2019) (KRW mil)

Maturity Under 1 year

Above 1 year

/ under 2 years

Above 2 years

/ under 3 years

Above 3 years

/ under 4 years

Above 4 years

/ under 5 years

Above 5 years

/ under 10 years

Above 10 years To t a l

Unredeemed

balance

Public

-

454,100 -

-

463,120

-

917,220

Total -

-

454,100 -

-

463,120

-

917,220

Samsung Electronics Business Report 168 / 261

※ The exchange rate as of the base date has been applied.

Hybrid Bond Outstanding Balance

N/A

(Base Date: December 31, 2019) (KRW mil)

Maturity Under 1 year

Above 1 year

/ under 5 years

Above 5 years

/ under 10 years

Above 10 years

/ under 15 years

Above 15 years

/ under 20 years

Above 20 years

/ under 30 years

Above 30 years To t a l

Unredeemed

balance

Public -

-

- -

-

Private -

-

- -

-

Total -

-

- -

-

Contingent Convertible Bond Outstanding Balance

N/A

(Base Date: December 31, 2019)

(KRW mil)

Maturity Under 1 year

Above 1 year /

under 2 years

Above 2 years

/ under 3 years

Above 3 years

/ under 4 years

Above 4 years

/ under 5 years

Above 5 years

/ under 6 years

Above 10 years

/ under 20 years

Above 20 years

/ under 30 years

Above 30

years

To t a l

Unredeemed

balance

Public -

- -

-

- - -

Private -

- -

-

- - -

Total -

- -

-

- - -

Samsung Electronics Business Report 169 / 261

IV. Management Discussion and Analysis

1. Note on forward-looking statements

This annua l report inc ludes forward-looking statements that relate to future events and can be generally identified by

phrases containing words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words

or phrases of similar meaning. These forward-looking statements are not guarantees of future performance and may

involve known and unknown risks, uncertainties and other factors that may affect our actual results, performance,

achievements or financia l position, making them materially different from the actual future results, performance,

achievements or financia l position expressed or implied by these forward-looking statements. Unless otherwise specified,

all data presented in this report is from our consolidated financial statements.

Uncertain events that could positive ly or negatively affect the Company’s management condition and financial

performance include, but are not limited to:

• Trends of financial markets domestically and abroad, including changes in exchange rates and interest rates

• The Company’s strategic decision making, including disposals and purchases of businesses

• Unexpected sudden changes in core businesses such as CE, IM, Semiconductor, DP and Harman

• Other changes domestically and abroad that can affect management condition and financial performance

The Company assumes no obligation to revise or update this report to reflect risks or uncertainties that arise after the

reporting period.

2. Overview

The business environment remained challenging in 2019 as a slowdown in developed markets weighed on the globa l

economy, while uncertainties such as a US-China trade conflict intensified.

Despite the formidable economic conditions, the support of our shareholders and hard work of our employees enabled

Samsung Electronics in 2019 to achieve total revenue of 230 trillion won and operating profit of 28 trillion won on a

consolidated basis, and total revenue of 155 trillion won and operating profit of 14 trillion won on a parent basis.

Our financial structure remained sound—we recorded a debt ratio of 34.1%, capital adequacy ratio of 74.6%, and ROE of

8.5% on a consolidated basis. On a parent basis, the respective figures were 21.5%, 82.3%, and 8.8%. Our brand value in

2019 was evaluated at USD 61.1 billion (Interbrand; October 2019), up 2% from last year’s figure and maintaining its

position as the world’s sixth most valuable brand.

On the business side, we further strengthened profitability and cost competitiveness of the component business, extending

our capabilities in core technologies to include the world’s first mass production of 6th generation V-NAND. In addition,

we solidified our industry and market leadership by launching the Galaxy S10 and Note10 while expanding sales of ultra-

large QLED TVs.

In 2020, we expect the external environment to remain difficult: macro uncertainties such as trade conflicts, political

unrest, and COVID-19 are like ly to persist, while intensifying competition for our main products amid a rapidly changing

paradigm in the IT industry will present numerous hurdles. As always, we plan to face challenges head on and use our

meticulous preparation to turn them into opportunities.

Samsung Electronics Business Report 170 / 261

3. Financial position and performance (consolidated)

A. Financial position

(KRW mil)

Classification 2019 2018 Increase/decrease % change

Current assets 181,385,260 174,697,424 6,687,836

3.8%

- Cash and cash

equivalents

26,885,999 30,340,505 -3,454,506

-11.4%

- Short-term financial

instruments

76,252,052 65,893,797 10,358,255

15.7%

- Other current financial

assets

5,641,652 4,705,641 936,011

19.9%

- Trade and other

receivables

35,131,343 33,867,733 1,263,610

3.7%

- Inventories 26,766,464 28,984,704 -2,218,240

-7.7%

- Other current assets 10,707,750 10,905,044 -197,294

-1.8%

Non-current assets 171,179,237 164,659,820 6,519,417

4.0%

- Other non-current

financial assets

9,969,716 8,315,087 1,654,629

19.9%

- Associates and joint

ventures

7,591,612 7,313,206 278,406

3.8%

- Property, plant and

equipment

119,825,474 115,416,724 4,408,750

3.8%

- Intangible assets 20,703,504 14,891,598 5,811,906

39.0%

- Other non-current

assets

13,088,931 18,723,205 -5,634,274

-30.1%

Total assets 352,564,497 339,357,244 13,207,253

3.9%

Current liabilities 63,782,764 69,081,510 -5,298,746

-7.7%

Non-current liabilities 25,901,312 22,522,557 3,378,755

15.0%

Total liabilities 89,684,076 91,604,067 -1,919,991

-2.1%

Samsung Electronics Business Report 171 / 261

Classification 2019 2018 Increase/decrease % change

Equity attributable to

owners of the parent

254,915,472 240,068,993 14,846,479

6.2%

Non-controlling interest 7,964,949 7,684,184 280,765

3.7%

Total equity 262,880,421 247,753,177 15,127,244

6.1%

Total liabilities and equity 352,564,497 339,357,244 13,207,253

3.9%

Capital adequacy ratio 74.6% 73.0% 1.6%p

Debt-to-equity ratio 34.1% 37.0% -2.9%p

Inventory turnover 5.3 4.9 0.4

Note: Presented in accordance with K-IFRS.

Samsung Electronics’ total assets in 2019 were KRW 352.5645 trillion, an increase of KRW 13.2073 trillion (3.9%) from

the previous year. This inc ludes an increase of KRW 10.3583 trillion in short-term financia l instruments, KRW 4.4088

trillion in tangible assets caused by large-scale facility investment for the semiconductor and DP businesses.

Total liabilities were KRW 89.6841 trillion, a decrease of KRW 1.92 trillion (2.1%) from the previous year. This includes

a decrease of KRW 5.2987 trillion (7.7%) in current liabilities and an increase of KRW 3.3788 trillion (15.0%) in non-

current liab ilit ies. The changes are attributable to a KRW 7.3323 trillion decrease in tax liability and a KRW 1.8913

trillion increase in deferred tax liabilities. In addition, in 2019, lease liabilities increased by KRW 2.9411 trillion due to

amendments in the accounting policy (K-IFRS 1116).

Total equity was KRW 262.8804 trillion, an increase of KRW 15.1272 trillion (6.1%) from the previous year. Retained

earnings increased by KRW 11.8839 trillion year-on-year from net income of KRW 21.7389 trillion and divide nds of

KRW 9.6192 trillion. Other components of equity increased by KRW 2.9625 trillion due to factors such as the overseas

operations translation difference.

In terms of financia l ratios, the Company ma inta ined a sound financ ial structure as the capital adequacy ratio increased by

1.6%pts from the previous year to 74.6% and the debt-to-equity ratio decreased by 2.9%pts from the previous year to

34.1%.

Samsung Electronics Business Report 172 / 261

B. Performance

(KRW mil)

Classification 2019 2018 Increase/decrease % change

Sales

230,400,881 243,771,415

-13,370,534

-5.5%

Cost of sales

147,239,549 132,394,411 14,845,138

11.2%

Gross profit

83,161,332 111,377,004

-28,215,672

-25.3%

Selling and administrative expenses

55,392,823 52,490,335

2,902,488

5.5%

Operating profit

27,768,509 58,886,669 -31,118,160

-52.8%

Other income

1,778,666 1,485,037

293,629

19.8%

Other expenses

1,414,707 1,142,018 272,689

23.9%

Gain on valuation using the equity method of accounting

412,960 539,845 -126,885

-23.5%

Financial income

10,161,632 9,999,321

162,311

1.6%

Financial expenses

8,274,871 8,608,896

-334,025

-3.9%

Income before income tax expense

30,432,189 61,159,958 -30,727,769

-50.2%

Income tax expense

8,693,324 16,815,101 -8,121,777

-48.3%

Net income

21,738,865 44,344,857 -22,605,992

-51.0%

Note: Presented in accordance with K-IFRS.

In 2019, revenue decreased year-on-year by KRW 13.3705 trillion (5.5%) t o K RW 230.4009 trillion dr iven by waning

demand for components such as memory. Operating profit decreased by KRW 31.1182 tr illion (52.8%) t o K RW 27.7685

trillion.

Income before income taxes de creased year-on-year by KRW 30.7278 trillion (50.2%) to KRW 30.4322 trillion, and net

income decreased by KRW 22.606 trillion (51.0%) to KRW 21.7389 trillion.

ROE decreased by 10.7%pts year-on-year to 8.5% while net profit ratio decreased by 8.8%pts to 9.4%, however, we will

continue striving to maintain a sound financial structure.

Samsung Electronics Business Report 173 / 261

[Pe rformance by division]

(KRW mil)

Classification Division Business

2019 2018 Change

Amount Share Amount Share Amount (%)

Revenue

CE

44,756,230

19.4% 42,107,405 17.3% 2,648,825 6.3%

IM 107,266,155

46.6% 100,677,677 41.3% 6,588,478 6.5%

DS

Semi-

conductor

64,939,052

28.2% 86,290,962 35.4% -21,351,910 -24.7%

DP 31,053,929

13.5% 32,465,019 13.3%

-1,411,090

-4.3%

Total 95,518,002

41.5% 118,565,559 48.6%

-23,047,557

-19.4%

Harman 10,077,096

4.4% 8,843,739 3.6% 1,233,357 13.9%

Overall revenue 230,400,881

100.0% 243,771,415 100.0%

-13,370,534

-5.5%

Operating profit

CE

2,606,306

9.4% 2,023,234 3.4% 583,072 28.8%

IM 9,272,468

33.4% 10,172,005 17.3% -899,537 -8.8%

DS

Semi-

conductor

14,016,302

50.5% 44,573,890 75.7%

-30,557,588

-68.6%

DP 1,581,333

5.7% 2,619,802 4.4%

-1,038,469

-39.6%

Total 15,581,687

56.1% 46,516,389 79.0%

-30,934,702

-66.5%

Harman 322,331

1.2% 161,714 0.3% 160,617 99.3%

Overall operating profit 27,768,509

100.0% 58,886,669 100.0%

-31,118,160

-52.8%

Note: Includes inter-divisional sales .

(CE Division)

The CE div is ion’s revenue in 2019 increased by KRW 2.6488 trillion (6.3%) from the previous year to KRW 44.7562

trillion. Operating profit grew by KRW 0.5831 trillion (28.8%) to KRW 2.6063 trillion, the gains driven by an increase in

sales of premium products-inc luding QLED and ultra-large TVs-and new lifestyle appliances, coupled with improved

profitability for refrigerators and washers.

CE continues to grow by focusing on strategic products : market-lead ing u ltra-large QLED TVs featuring premium

technology, Bespoke refrigerators tailored to experience-oriented lifestyles, as well as large dryers, module-type air

purifiers, and garment care appliances.

In the TV business, we continue to extend the boundaries of the overall market with innovative products such as 8K ultra-

large TVs, our Lifestyle TVs The Frame, The Serif, and The Sero, as well as with microLED displays, soundba rs, and

outdoor signage.

Samsung Electronics Business Report 174 / 261

We remained atop the TV market, having captured the highest market share for a 14th consecutive year, by utilizing our

AI and IoT technologies and competitive designs to offer new audio/visual product experiences.

In 2020, we will keep executing our strategy in the premium TV market. For QLED, we aim to expand our market share

based on our even further enhanced picture quality and by upgrading TV experiences with our various u ltra-large TVs.

Moreover, we also will increase competitiveness of our UHD models by improving their design and features.

In the home appliance bus iness, we continue to add and increase conveniences in our consumers' lives with innovative

products and services based on highly-efficient, eco-friendly technologies that are a result of a deep understanding of

changing lifestyles. We are also creating new value with smart appliances that connect with other devices as well as a suite

of services based on Bixby and SmartThings.

In 2020, we will keep fortifying our status as a global brand in home appliances by expanding sales of premium products

like Bespoke refrigerators, which offer a new experience, and our Grande AI washing machine featuring upgraded AI

functionality, to name a few. Furthermore, we will focus on generating new demand by introduc ing even more innovative

and easy-to-use products that offer differentiated functions that reflect users' individual lifestyles.

(IM Division)

The IM div is ion's revenue in 2019 was KRW 107.2662 trillion, an increase of KRW 6.5885 trillion (6.5%) compared to

the previous year, while operating profit decreased by KRW 0.8995 trillion (8.8%) to KRW 9.2725 trillion. Although

smartphone sales rose, operating profit declined due to intense competition in the mid-range-and-below segment.

Despite rapidly deve loping technologies and mounting globa l uncertainties, the IM Div is ion achieved solid results by

adopting new technologies and strengthening our lineup, focusing mainly the Galaxy Series, our premium models.

Starting with the April 2019 launch of the Galaxy S10 5G, the world's first 5G smartphone, we quickly addressed the

initial stages of the 5G market by introduc ing a number of 5G models. In the second ha lf of the year, we opened a new

chapter in the mobile experience by releasing an innovative form factor, the Galaxy Fold. In addition, we enhanced our

product competitiveness by revamping our mass-market lineup, mainly the A Series, a move that was well received by the

market and contributed to bolstering business efficiency.

In 2020, aiming to lead market changes amid fierce competition, we will differentiate our premium products by expanding

our 5G lineup and diversifying foldable designs. We will also quickly embrace state-of-the-art technologies to keep

strengthening competitiveness of our mass-market models. Moreover, we will offer new and innovative user experiences

by leading the convergence of technologies such as 5G, AI, and IoT with a wide range of smart devices that extend beyond

smartphones, wearables, PCs, and tablets.

(Se miconductor)

The semiconductor business's 2019 revenue decreased by KRW 21.3519 trillion (24.7%) from the previous year to KRW

64.9391 tr illion due to soft component demand, inc luding that for memory, and price declines amid an overall weak

business environment. Operating profit decreased by KRW 30.5576 trillion (68.6%) to KRW 14.0163 trillion year-on-year.

In the memory bus iness, growth slowed slightly due to shrinking mobile demand caused by a sluggish smartphone market

and contracting tablet market. However, we expect demand to rebound with the creation of new markets in areas such as

IoT and automotives. Supply and demand are like ly to show less volatility than they had previously, backed by a

diversifying demand base.

For DRAM, weakness in 2019 caused by inventory adjustments ma inly at data centers is forecast to turn around, as

normalizing inventories in the industry contribute to an overall demand recovery in 2020. Although external factors,

inc luding trade conflicts, are likely to exacerbate uncertainties, we will strive to increase our market share via timely

responses to the expansion of 5G smartphones and by securing an early foothold in the CPU high-capacity market.

Samsung Electronics Business Report 175 / 261

For NAND, a trend toward high-capacity, high-performance chips for server SSD and mobile storage is expected to

continue and contribute to positive business conditions. As we expect the memory market to remain solid, we will

improve our performance by expanding sales of our differentiated products based on advanced node processes as well as

our high-performance, high-bandwidth products.

System LSI continues to grow, mainly led by demand from mobile products such as smartphones and tablets. We expect

demand to remain solid as new markets in IoT, wearable devices, and automotives expand.

For SoC products, growth will probably be limited by a lengthening replacement period of smartphones. That said,

demand in areas of new technologies, such as 5G, automotives, and AI, is expanding. We are leading 5G technology by

offering pr oducts for low-end to mid-range mobile devices through to h igh-performance AP-modem integrated chips ,

while also deve loping a multi-mode modem that supports 2G through 5G networks. We will strive to keep providing

solutions that satisfy our customers' needs in image sensors, as shown in the introduction of the industry's first 100Mp

product, based on ISOCELL technology, which minimizes optical loss and light reflection.

In the first half of 2019, Foundry successfully showcased 7-nano EUV chips , a world first. In 2020, we will continue

development of advanced node processes including 4- and 5-nano as well as next generation GAA 3-nano technology in a

timely manner to lead the market.

(DP)

The DP divis ion's sales and profitability worsened in 2019 as revenue decreased by KRW 1.4111 trillion (4.3%) from the

previous year to KRW 31.0539 trillion. Operating profit decreased as well, slipping KRW 1.0385 trillion (39.6%) from the

previous year to KRW 1.5813 trillion.

In mobile display, market uncertainties were aggravated by rising competition resulting from expanding capacity in the

industry. Yet, we solidif ied our position in the smartphone pane l market by increasing our customer base thanks to our

continuous efforts to offer differentiated technology.

In 2020, amid accelerating penetration of 5G smartphones, we will continue to improve the basic features of OLED panels

as smartphone makers are like ly to increasingly adopt the technology in their growing number of 5G models for

advantages such as power efficiency and ultra-thin design. We will als o use our differentiated technology to expand our

customer base. Moreover, we will secure technologies needed to increase accessibility of foldable products and enhance

product quality through cooperation with our clients.

In large displays, we increased the sales portion of our value-added products and bolstered efforts to improve both yield

and cost efficiency amid intensifying competition in the industry.

In 2020, we expect market demand to be stagnant, while supply has potentia l to keep ris ing due to expansion of ultra-large

lines at Chinese players, among other uncertainties. Against this backdrop, we will drive growth by adopting advanced,

differentiated technology, marked by the intr oduction of premium products such as ultra-large, ultra-high resolution panels,

and by expanding sales of value-added products.

(Harman Division)

The Harman Division delivered improved revenue and profitability year-on-year, with revenue rising KRW 1.2334 trillion

(13.9%) to KRW 10.0771 trillion and operating profit increasing KRW 0.1606 trillion (99.3%) to KRW 0.3223 trillion.

Harman is working to continue its outstanding performance in automotive components and in the professional and

consumer audio markets. To do so, we constantly strive to enhance our competitiveness through innovations, strategic

mergers and acquisitions, and offerings of a variety of brands and product groups.

As a leader in the car component market, we will continue to supply the quality made famous by the Harman brand across

all segments, ranging from the mass-market through to and beyond premium models. In areas of automotive audio and

connectivity, we will seek co-prosperity with auto manufacturers by delivering endless innovation.

Samsung Electronics Business Report 176 / 261

In the consumer audio market, Harman's innovative technologies have firmly established the brand's reputation among

consumers and music lovers. We will continue to launch products in promis ing areas, such as wireless smart speakers, to

deliver new user experiences, improving our performance and pushing our brand reputation even higher.

We expect the business environment in 2020 to remain c louded by external uncertainties and intense competition. We plan

to face such challenges head on and keep preparing thoroughly for the future, which inc ludes improving our mainstay

businesses and building core capabilities in new areas such as AI and autonomous driving. Through these efforts, we will

achieve solid earnings and, in turn, contribute to enhancing shareholder value.

C. N e w and closed bus ine s s e s

N/A

Samsung Electronics Business Report 177 / 261

D. Change s in organizational structure

In December 2015, the LED business was reorganized as a team unit; in November 2016, the Company spun off its

printing solutions business and established S-Printing Solution Co., Ltd., and then completed the sale of the printing

solutions business in November 2017; in June 2017, the System LSI business was divided into Foundry and System

LSI businesses.

[As of December 2015]

Before After

Business

organization

CE Division (Visual Display, Digital Appliances, Printing Solution,

Medical Devices)

CE Division (Visual Display, Digital Appliances, Printing

Solutions, Medical Devices)

IM Division (Mobile, Network) IM Division (Mobile, Network)

DS Division (Memory, SYS.LSI, DP, LED) DS Division (Memory, SYS.LSI, DP)

Regional

headquarters

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Americas (DS), Europe (DS), China (DS), Southeast Asia (DS),

Japan (DS)

Americas (DS), Europe (DS), China (DS), Southeast Asia (DS),

Japan (DS)

[As of December 2016]

Before After

Business

organization

CE Division (Visual display, Digital appliances, Printing solution,

Medical devices)

CE Division (Visual display, Digital appliances,

Medical devices)

IM Division (Mobile, Network) IM Division (Mobile, Network)

DS Division (Memory, SYS.LSI, DP) DS Division (Memory, SYS.LSI, DP)

Regional

headquarters

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Korea, North America, Latin America, Europe, CIS,

Southwest Asia, Southeast Asia, China, Middle East, Africa

Americas (DS), Europe (DS), China (DS), Southeast Asia (DS),

Japan (DS)

Americas (DS), Europe (DS), China (DS), Southeast Asia

(DS), Japan (DS)

[

As of June 2017]

Before After

Business

organization

CE Division (Visual display, Digital appliances,

Medical devices)

CE Division (Visual display, Digital appliances,

Medical devices)

IM Division (Mobile, Network) IM Division (Mobile, Network)

DS Division (Memory, SYS.LSI, DP) DS Division (Memory, SYS.LSI, Foundry, DP)

- Harman Division

Regional

headquarters

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Korea, North America, Latin America, Europe, CIS,

Southwest Asia, Southeast Asia, China, Middle East, Africa

Americas (DS), Europe (DS), China (DS), Southeast Asia (DS),

Japan (DS)

Americas (DS), Europe (DS), China (DS), Southeast Asia

(DS), Japan (DS)

Note: From the first quarter of 2018, the Medical Device Business is excluded from the CE Division.

Samsung Electronics Business Report 178 / 261

E. Foreign exchange risk

The Company experiences currency gains and losses based on the different functional currency of each entity due to

globa l operations. As such, the Company is exposed to foreign currency volatility from exchange positions of currencies,

especially related to the US dollar, Euro, Japanese yen and Indian rupee.

(KRW)

Currency 2019 2018 Change Change (%)

USD 1,157.80 1,118.10 39.70 3.60%

EUR 1,297.43 1,279.16 18.27 1.40%

JPY 10.63 10.13 0.50 4.90%

INR 16.23 15.99 0.24 1.50%

As of December 31, 2019, the foreign currency exposure to financia l assets and liabilities of a 5% currency rate change

against the Korean won (before income tax) are presented below:

(KRW mil)

Dec 31, 2019

Dec 31, 2018

Increase

Decrease

Increase

Decrease

USD

163,062

-163,062

344,488

-344,488

EUR

127,507

-127,507

-4,381

4,381

JPY

-23,062

23,062

-13,001

13,001

INR

64,153

-64,153

92,176

-92,176

To minimize fore ign exchange risk aris ing from operating activities, the Company ma inta ins the same leve l of equity and

liability in each currency regardless of foreign exchange fluctuations. The Company’s foreign exchange management

policy requires normal business transactions (inc luding imports and exports) to be conducted in the local currency or for

the cash-in currency to be matched with the cash-out currency.

The Company effectively manages its foreign exchange risk by regular monitoring foreign exchange rates and limits all

foreign exchange transactions besides the purpose of hedging risks.

F. Recognition of asset impairment loss

The Company conducts an annual review on asset impa irment of CGUs (cash generating unit). The recoverable amount of

a CGU is based on the calculation of value in use, and the value in use is calculated using a BTCF (before tax cash flow)

assumption that based on the financia l budget for the next five years approved by the management committee. In

calculating terminal-year cash flow for period that exceeds the term, assumption of fixed average growth (does not exceed

industry average) was used.

Impair ment losses are recognized to the extent the carrying amount exceeds the recoverable amount of a CGU. The

recoverable amount is determined by choosing the greater figure between the use-value and fair-value, which deducts the

disposal amount per cost. Recognized impairment losses in 2019 reached KRW 93.6 billion for tangible assets and KRW

48.7 billion for intangible a ssets.

Refer to 『E. Equity Investments in other corporations』 of 『IX. Affiliates and Subsidiaries』 for more details about asset

impairment loss.

Samsung Electronics Business Report 179 / 261

4. Liquidity, financing, and expenditure

Due to large investments made by the Company, maintaining adequate levels of liquidity is critical. The Company strives

to achieve this goa l by periodically forecasting its cash flow, estimating required cash levels, and managing income and

expenses.

The Company provides liquidity support by utilizing its globa lly integrated finance structures, such as through cash

pooling by region. In addition, the Company maintains a liquidity management process which provides additiona l

financ ial support through local finance centers if abnormal signs are identified. The cash pooling program allows sharing

of surplus funds among entities and contributes to minimizing liquidity risk and strengthening the Company’s competitive

position by reducing capital operating expenses and finance expenses.

In addition, the Company mitigates liquidity risk by contracting with f inancia l institutions w ith respect to foreign trade

finance and by providing payment guarantees to subsidiaries. For large scale facility investments, liquidit y risk is

minimized by utilizing internal reserves and long term borrowings.

A. Current status of liquidity

The Company has ample liquidity according to the liquidity assessment index of the globa l credit rating agency Moody’s.

The Company’s cash coverage (liquid funds/borrowings), which is a major liquidity index that Moody’s uses, corresponds

to the highest level, Aaa.

2019 2018

Cash coverage

(liquid funds/borrowings)

591%

688%

Note: Moody’s requires 400% or higher for an Aaa rating

As of December 31, 2019, the Company’s liquidity is presented below:

(KRW mil)

Classification

2019

2018

Change

Liquid funds

Cash and cash equivalents 26,885,999

30,340,505

-

3,454,506

Short-term financial instruments 76,252,052

65,893,797

10,358,255

Short-term financial assets at amortized cost 3,914,216

2,703,693

1,210,523

Financial assets at fair value through profit or

loss

1,727,436

2,001,948

-

274,512

To t a l financial assets 108,779,703

100,939,943

7,839,760

Borrowings

Short-term borrowings 14,393,468

13,586,660

806,808

Current portion of long-term liabilities

846,090

33,386

812,704

Debentures 975,298

961,972

13,326

Long-term borrowings 2,197,181

85,085

2,112,096

To t a l financial liabilities

18,412,037

14,667,103

3,744,934

Net cash (liquid funds – borrowings) 90,367,666

86,272,840

4,094,826

Samsung Electronics Business Report 180 / 261

As of the end of 2019, the Company had KRW 108.7797 trillion of financial assets.

These liquid funds inc lu de : i) cash and cash equiva lents; ii) short-term f inanc ial instruments; iii) short-term financial

assets at amortized cost; and iv) financial assets at fair value through other comprehensive inco me. This ba lance increased

by KRW 7.8398 trillion from KRW 100.9399 trillion at the end of the previous period.

The Company’s borrowings (inc luding debentures) are KRW 18.4120 trillion, an increase of K RW 3.7449 trillion from

KRW 14.6671 trillion at the end of the previous year.

The Company’s liquidity inc ludes an inflow of KRW 45.3829 tr illion in cash flows from operating activities and an

outf low of KRW 25.3678 trillion in acquisition of tangible assets, KRW 8.1389 trillion in acquisition (disposal) of long-

term financia l instruments, and KRW 9.6392 in dividends. The Company’s net cash (liquid funds – borrowings) in 2019 is

KRW 90.3677 trillion, which is an increase of KRW 4.0948 trillion from KRW 86.2728 trillion at the end of the pr evious

period.

B. Financing and expenditure s

(Borrowings)

As of December 31, 2019, the Company’s borrowings (including debentures) are presented below:

(KRW mil)

Classification

Creditor

Annual interest rate (%)

2019

2018

Short-term borrowings

Collateralized borrowings Woori Bank, etc. 0.0~22.3

11,734,361 12,130,459

Non-collateralized borrowings CitiBank, etc. 0.0~12.0

2,659,107 1,456,201

Total short-term borrowings

14,393,468 13,586,660

Liquid long-term borrowings

Bank borrowings Hana Bank 3.2~5.0

35,376 16,880

Capital lease liabilities CSSD, etc. 3.8

805,068 11,067

Total liquid long-term borrowings

840,444 27,947

Long-term borrowings

Bank borrowings - -

- 34,963

Capital lease liabilities CSSD, etc. 3.8

2,197,181 50,122

Total long-term borrowings

2,197,181 85,085

Samsung Electronics Business Report 181 / 261

(KRW mil)

Classification Issuance date Maturity date

Annual interest

rate (%)

2019 2018

Debentures

USD denominated

straight bonds

Oct 2, 1997 Oct 1, 2027 7.7

46,312

(USD 40,000,000)

50,315

(USD 45,000,000)

USD denominated

debenture bonds

May 6, 2015 May 15, 2025 4.2

463,120

(USD 400,000,000)

447,240

(USD 400,000,000)

EUR denominated

debenture bonds

May 20, 2015 May 27, 2022 2.0

454,100

(EUR 350,000,000)

447,352

(EUR 350,000,000)

To t a l

963,532

944,907

Premium on bonds payable (discount on bonds payable)

17,412

22,504

Deduction: Current debentures

-5,646

-5,439

Non-current debentures

975,298

961,972

The Company’s short-term borrowing increases or decreases depending on the discount amount of trade receivables. In

2019, short-term borrowing increased by KRW 0.8658 trillion and decreased by KRW 0.7094 trillion of debenture and

long-term borrow ing was repaid. In addition, lease liabilities increased by KRW 2.9411 trillion due to changes in

accounting policy (K-IFRS 1116).

(Plan for payment of borrowings)

The Company’s plan for payment of borrowings (including debentures) is presented below:

(KRW mil)

Year of payment Amount of payment

2020 15,328,576

2021 599,155

2022 954,756

2023

399,192

2024~ 1,421,649

Total 18,703,328

Note: Amount calculated excluding bond discount, premium on bonds payable, and present value of bonds payable discount.

(Compliance to bond manage me nt contract conditions)

The Company’s bonds are subject to conditions to protect investors such as constraint on collateral, constraint on disposa l

of assets, etc., and the Company complies with these conditions.

5. Off-Balance Sheet Activities

- Refer to 『2. Notes to Consolidated Financial Statements』 in 『III. Financial Affairs』

Samsung Electronics Business Report 182 / 261

6. Other information for investment decision making

A. Significant accounting policies and estimation

- The Company applied the following amended and enacted standards for the annual period beginning on January 1, 2018:

Korean IFRS 1109, Financial Instruments

The Company has applied Korean IFRS 1109, Financial Instruments, for the first time for the ir annua l reporting period

commencing January 1, 2018. In accordance with the transitiona l provisions in Korean IFRS 1109, comparative figures

have not been restated. The applicat ion impacts of Korean IFRS 1109 refer to 『2. Notes to Consolidated Fina ncia l

Statements』in『III. Financial Affairs』

Korean IFRS 1115, Revenue from Contracts with Customers

The Company has applied Korean IFRS 1115, Revenue from Contracts with Customers, for the first time for their

annual reporting period commencing January 1, 2018. In accordance with the transitiona l provis ions in Korean IFRS

1115, comparative figures have not been restated. The application impacts of Korean IFRS 1115 refer to 『2. Note s to

Consolidated Financial Statements』in『III. Financial Affairs』

Interpretation 2122 Foreign Currency Transaction and Advance Consideration

According to the enactment, the date of the transaction for the purpose of determining the exchange rate to use on init ia l

recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognizes the

non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. The

enactment does not have a significant impact on the financial statements.

B. Environment and e mployees

- Refer to 『5. Sanctions and others』 in 『XI. Other information』 for environmental sanctions or administrative actions.

- No significant changes in employee positions during this period.

C. Legal regulations

- Refer to 『5. Sanctions and others』 of 『XI. Other information』 for major legal regulations on the Company’s

businesses.

D. Derivatives and risk management policy

- To manage exchange rate risk, overseas companies enter into currency forwards which are denominated in the trading

currency of a foreign currency position as opposed to the companies’ reporting currencies. Overseas offices buy or sell

currency forwards to avert risk.

- Refer to 『8. Derivative Instruments and Put Options』 in 『II. Businesses Overview』 and 『2. Notes to Financial

Statements』 in 『III. Financial Affairs』 for Derivatives and risk management policy.

Samsung Electronics Business Report 183 / 261

V. Auditor’s Report

1. Introduction

Samil PwC conducted audits on the consolidated/separate financia l statements of financial pos ition of the Company as at

December 31, 2019, 2018 and 2017, and the related consolidated/separate statements of profit or loss, comprehensive

income, changes in equity and cash flows for the years then ended and expressed an unqualified opinion on those financial

statements.

There are 240 subsidiaries as at December 31, 2019. The newly acquired entities during 2019, FOODIENT LTD. and

Corephotonics Ltd. appointed PwC and E&Y, respectively, as the external auditor. The newly incorporated entities during

2019, Samsung Display Noida Private Limited (SDN) and Samsung Venture Capital Union SVIC No. 45 and No. 48

appointed PwC and KPMG, respectively, as the external auditor. The subsidiaries appointed the external auditors at their

own decision.

Period end Company Auditor Audit Opinion Emphasis of Matter Key Audit Matter(s)

Dec 31, 2019 Samil PwC Unqualified Not applicable

1. Sales promotion activities related to the sale

of products.

2. Impairment of goodwill and intangible assets

with indefinite useful lives.

3. Appropriateness of depreciation expense cut-

off on property, plant and equipment.

Dec 31, 2018 Samil PwC Unqualified Not applicable

1. Sales promotion activities related to the sale

of products.

2. Impairment of goodwill and intangible assets

with indefinite useful lives.

3. Appropriateness of depreciation expense cut-

off on property, plant and equipment

4. Impairment of investments in associates and

joint ventures.

Dec 31, 2017 Samil PwC Unqualified Not applicable Not applicable

※ Audit opinion on both separate and consolidated financial statements.

Samsung Electronics Business Report 184 / 261

< Review and audit plan for the year ended December 31, 2019>

Review Period Planned Dates

2019 1Q

Pre-review Mar 4, 2019 ~ Mar 22, 2019

Review Apr 5, 2019 ~ May 13, 2019

2019 2Q

Pre-review Jun 3, 2019 ~ Jun 21, 2019

Review Jul 5, 2019 ~ Aug 13, 2019

2019 3Q

Pre-review Sep 2, 2019 ~ Sep 20, 2019

Review Oct 7, 2019 ~ Nov 12, 2019

Audit of IT systems and automated internal controls

April 15, 2019 – Jun 28, 2019

Oct 7, 2019 – Nov 15, 2019

Dec 9, 2019 – Jan 10, 2020

Early substantive audit procedures (annual audit)

Mar 4, 2019 – Dec 27, 2019

Audit of Internal Control over Financial Reporting (“ICFR”) Mar 4, 2019 – Feb 21, 2020

Update of early substantive audit procedures and audit of financial statements Jan 6, 2020 – Feb 21, 2020

※ Above schedule is for the review and audit of separate and consolidated financial statements and the audit of ICFR for the year

ended December 31, 2019.

[Audit Contract Description] (KRW mil)

Fiscal Period Group Auditor Description Compensation Total Hours

Year ended

Dec 31, 2019

Samil PwC

- Review of the interim separate/consolidated financial statements

- Audit of separate/consolidated financial statements

- Audit of Internal Control over Financial Reporting (ICFR)

6,481 69,021

Year ended Dec

31, 2018

Samil PwC

- Review of the interim consolidated/separate financial statements

- Audit on consolidated/separate financial statements

4,400 50,401

Year ended Dec

31, 2017

Samil PwC

- Review of the interim consolidated/separate financial statements

- Audit on consolidated/separate financial statements

4,030 46,576

※ Total time spent for the year ended December 31, 2019 includes 67,639 hours of input time in respect of external audit

in accordance with Chapter 3 of Article 18 under the Act on External Audit of Stock Companies, and 1,382 hours of other

types of service.

Samsung Electronics Business Report 185 / 261

[Non-Audit Service Contract Description] (KRW mil)

Fiscal Period Contract Date Non-audit Service Description Period for Service Compensation Note

Year ended

Dec 31, 2019

Feb 2019

SOC 2 certification and other advisory

services

Feb – Sep 2019 258

Oct 2019 Custom tax and other advisory services Oct – Dec 2019 127

Subtotal 385

Year ended

Dec 31, 2018

Nov 2017 Tax advisory Jan ~ Mar 2018 194

Dec 2018 Tax advisory Dec 2018 149

Dec 2016 Custom tax advisory Jan ~ Dec 2018 253

Subtotal 596

Year ended

Dec 31, 2017

Jan 2017 Tax advisory Jan ~ Dec 2017 196

Dec 2016 Custom tax advisory Jan ~ Dec 2017 810

Subtotal 1,006

※ Samil PwC has performed non-audit services and has been paid KRW 385 million by the Company for the years ended

December 31, 2019 in return for the service.

[Details of internal audit committee’s discussion with Auditors]

No. Date Participants Method Details of discussion

1 Apr 26, 2017

Audit Committee: 3 members

Company: Head of Audit Team and 4

others

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Audit plan for the year ended December 31, 2017

- Results of analytical procedures performed over the

quarterly financial statements

2 Jul 26, 2017

Audit Committee: 3 members

Company: Head of Audit Team and 4

others

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Results of analytical procedures performed over the

quarterly financial statements

- Discussion of quarterly review focus areas

3 Oct 30, 2017

Audit Committee: 3 members

Company: Head of Audit Team and 3

others

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Results of analytical procedures performed over the

quarterly financial statements

- Discussion of quarterly review focus areas and other

amendments of legislations.

4 Jan 30, 2018

Audit Committee: 3 members

Company: Head of Audit Team and 4

others

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Audit progress and final audit schedule

- Other required communications

5 Apr 25, 2018

Audit Committee: 3 members

Company: Head of Audit Team and 4

others

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Audit plan for the year ended December 31, 2018

- Results of analytical procedures performed over the

quarterly financial statements

6 Jul 30, 2018

Audit Committee: 3 members

Company: Head of Audit Team and 4

others

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Results of analytical procedures performed over the

quarterly financial statements

- Plan for the Key Audit Matters selection

7 Oct 30, 2018

Audit Committee: 3 members

Company: Head of Audit Team and 4

others

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Results of analytical procedures performed over the

quarterly financial statements

- Results of Key Audit Matters selection and planned

audit procedures

Samsung Electronics Business Report 186 / 261

8 Jan 30, 2019

Audit Committee: 3 members

Company: Head of Audit Team and 3

others

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Progress of audit procedures relating to the Key Audit

Matters

- Progress status of other substantive audit procedures

and reporting of the final audit schedule

9 Apr 29, 2019

Audit Committee: 3 members

Company: Head of Audit Team and 1

other

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Audit plan for the year ended December 31, 2019

- Discussion of quarterly review focus areas

- Other required communications at the planning stage

of the audit

10 Jul 30, 2019

Audit Committee: 3 members

Company: Head of Audit Team and 1

other

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Annual audit plan and its progress

- Plan for the Key Audit Matters selection

- Progress of audit of Internal Control over Financial

Reporting

- Discussion of quarterly review focus areas and other

required communications

11 Oct 28, 2019

Audit Committee: 3 members

Company: Head of Audit Team

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Results of Key Audit Matters selection and planned

audit procedures

- Progress of audit of Internal Control over Financial

Reporting

- Discussion of quarterly review focus areas and other

required communications

12 Jan 28, 2020

Audit Committee: 3 members

Company: Head of Audit Team

Auditor: Signing partner and 1 other

Face-to-face

meeting

- Key Audit Matters and others audit focus areas

- Progress of audit of Internal Control over Financial

Reporting

-

Other required communications at the completion

stage of the audit

2. Regarding Internal Control

[Review and Audit opinion of Internal Control over Financial Reporting (ICFR)]

Fiscal Period Group Auditor Review Opinion Remarks

Year ended

Dec 31, 2019

Samil PwC

[Audit Opinion] The Company maintained, in all material respects, effective

internal control over financial reporting as of December 31, 2019, based on

Conceptual Framewor k for Designing and Operating Internal Control over

Financial Reporting.

Not applicable

Year ended Dec

31, 2018

Samil PwC

[Review Opinion] Nothing has come to attention that causes them to believe

that management's report on the operations of the IACS is not presented

fairly, in all material respects, in accordance with IACS standards.

Not applicable

Year ended Dec

31, 2017

Samil PwC

[Review Opinion] Nothing has come to attention that causes them to believe

that management's report on the operations of the IACS is not presented

fairly, in all material respects, in accordance with IACS standards.

Not applicable

Samsung Electronics Business Report 187 / 261

VI. Corporate Governance

1. Board of Directors

A. Overview

As of December 31, 2019, the Board of Directors consisted of 10 directors, 4 of whom are Executive Directors (Sang-

hoon Lee, Ki-nam Kim, Hyun-suk Kim, and Dong-jin Koh) and 6 Independent Directors (Jae-wan Bahk, Sun-uk Kim,

Byung-gook Park, Jeong Kim, Curie Ahn, and Han-jo Kim). The Board has appointed Mr. Sang-hoon Lee, former CFO,

as Chairman as he will be able to mediate the different opinions of Directors and is most qualified to manage Board

activities. The roles of Board Chairman and CEO have been separated to enhance the Board’s independence a nd

transparency.

The Board has six committees: Management Committee, Audit Committee, Independent Director Recommendation

Committee, Related Party Transactions Committee, Compensation Committee, and Governance Committee.

[As of Dec 31, 2019]

Classification

Composition

Members

Head

Role

Board of Directors

Four Executive

Directors

Six Independent

Directors

Sang-hoon Lee, Ki-nam Kim,

Hyun-suk Kim, Dong-jin Koh

Jae-wan Bahk, Sun-uk Kim,

Byung-gook Park, Jeong Kim,

Curie Ahn, Han-jo Kim

Sang-hoon Lee

(Executive

Director)

- Make resolutions on matters provided for by

the relevant laws and regulations or the Articles

of Incorporation, matters delegated by a general

meeting of shareholders, as well as on important

matters concerning basic policies and execution

of business.

- Supervise management.

Management

Committee

Three Executive

Directors

Ki-nam Kim, Hyun-suk Kim,

Dong-jin Koh

Ki-nam Kim

(Executive

Director)

- Deliberate and decide on matters related to

finance, general management, and on

matters specifically delegated by the Board.

Audit Committee

Three Independent

Directors

Jae-wan Bahk, Sun-uk Kim,

Han-jo Kim

Jae-wan Bahk

(Independent

Director)

- Review and audit matters concerning

management of the Company, including the

Company’s financial situation.

Independent

Director

Recommendation

Committee

Three Independent

Directors

Jeong Kim, Byung-gook Park,

Curie Ahn

Jeong Kim

(Independent

Director)

- Assess the independence, diversity, and

ability of potential candidates for

Independent Director positions.

- Recommend candidates.

Related Party

Transactions

Committee

Three Independent

Directors

Sun-uk Kim, Jae-wan Bahk,

Han-jo Kim

Sun-uk Kim

(Independent

Director)

- Voluntarily comply with fair transaction

regulations to enhance corporate

transparency.

Compensation

Committee

Three Independent

Directors

Jae-wan Bahk, Byung-gook

Park, Jeong Kim

-

- Ensure the objectivity and transparency of

the decision-making process for Director

compensation.

Governance

Committee

Six Independent

Directors

Jae-wan Bahk, Sun-uk Kim,

Byung-gook Park, Jeong Kim,

Curie Ahn, Han-jo Kim

Jae-wan Bahk

(Independent

Director)

- Promote the Company’s corporate social

responsibility and act to enhance shareholder

value.

Note: Mar 20, 2019: Jae-wan Bahk was reappointed as Independent Director; Han-jo Kim and Curie Ahn were newly appointed as

Independent Directors; Independent Directors In-ho Lee and Kwang-soo Song retired.

Oct 26, 2019: Jae-yong Lee retired from his position of Executive Director.

Feb 14, 2020: Sang-hoon Lee resigned from his position of Executive Director.

Feb 20, 2020: Independent Director Byung-gook Park was appointed as the head of the compensation committee.

Feb 21, 2020: Independent Director Jae-wan Bahk was appointed as the Chairman of the Board.

Mar 18, 2020: Jong-hee Han and Yoon-ho Choi were newly appointed as Executive Directors at the AGM.

As of Mar 31, 2020, the Board has a total of 11 members, consisting of 5 Executive Directors (Ki-nam Kim, Hyu n -su k Kim,

Dong-jin Koh, Jong-hee Han and Yoon-ho Choi) and 6 Independent Directors (Jae-wan Bahk, Sun-uk Kim, Byung-gook Park,

Jeong Kim, Curie Ahn, and Han-jo Kim).

Samsung Electronics Business Report 188 / 261

B. Age ndas considered and voting re sults (2019)

Date Agenda Results

Executive Directors

Independent Directors

Sang-

hoon

Lee

Jae-

yong

Lee

Ki-

nam

Kim

Hyun

-suk

Kim

Dong-jin

Koh

In-ho

Lee

Kwang-

soo Song

Sun-uk

Kim

Jae-wan

Bahk

Byung-

gook

Park

Jeong

Kim

Jan 31

① Approval of FY18 financial

statements and annual business report

② Revision of internal accounting

management regulations

③ Approval of business plan for 2019

④ Lease contract with Samsung Display

⑤ Purchase of research equipment and

lease contract with Samsung SDI

⑥

Approval of the 2019 social contribution

matching fund

⑦ Charitable contribution to Samsung

Dream Scholarship Foundation

※ Reported items

① Report on the internal accounting

management system

② Assessment of the internal accounting

management system

Approved

For

Absent

For

Feb 26

①

Decision to convene the 50th AGM

② Decisions on the 50th AGM agenda

items

- Reported Items:

1) FY18 annual audit report,

2) FY18 annual business report,

3) Assessment of the internal accounting

management system

- Item 1: Approval of FY18 financial

statements, including balance sheet,

income statement, and the statement of

appropriation of retained earnings

(draft), etc.

- Item 2: Appointment of Directors

Item 2-1: Appointment of Independent

Directors

Item2-2: Appointment of Audit

Committee members

- Item 3: Approval of remuneration limit for

Directors

③ Application for product liability

insurance

④ Sponsoring the WorldSkills

Competition

⑤ Donation to Chung-nam Samsung

Institute

Approved

For

Absent

For

-

For

Absent

For

Note: Mar 20, 2019: Independent Directors In-ho Lee and Kwang-soo Song retired and Independent Director Jae-wan Bahk was

reappointed.

Feb 26, 2019: Director Ki-nam Kim did not exercise his voting right on the agenda of donation to Chung-nam Samsung Institute

as the donations is regarded as a transaction between a Director and Company under the Commercial Act and the Director has

special interest in the Company as the CEO.

Samsung Electronics Business Report 189 / 261

Date Agenda Results

Executive Directors

Independent Directors

Sang-

hoon

Lee

Jae-

yong

Lee

Ki-

nam

Kim

Hyun

-suk

Kim

Dong-

jin

Koh

Jae-

wan

Bahk

Sun-uk

Kim

Byung-

gook

Park

Jeong

Kim

Curie

Ahn

Han-jo

Kim

Mar 20

① Appointment of Board committee

members

② Setting remuneration of Directors

Approved

For

Absent

For

Apr 30

①

Approval of 1Q19 interim business

report and quarterly dividend

② Application for New Technology

Business Inv estment Association

③ Acquisition of PLP business

④ Group health insurance plan for

employees

⑤ Charitable contributions

⑥ Donation to Korea Occupational

Safety and Health Agency

⑦ Donation to incentiv e fund for DS

Division’s suppliers

Approved

For

Absent

For

Jul 31

① Approval of 1H19 half y ear

business report and quarterly

dividend

② Revision of audit committee

regulations

③ Package insurance policy for our

sites

④ Financial support for startup

program at Daegu, Gy eongbuk

Creativ e Economy Innovation

Center

Approved

For

Absent

For

Oct 31

①

Approval of 3Q19 interim business

report and quarterly dividend

② Payment of retirement pension

plan

Approved

For

Retired

For

Nov 29

①

Approval of transaction with

affiliate company

② Payment of retirement pension

plan

③ Approval of business plan for 2020

④ Contribution to Community Chest

of Korea’s annual fundraising

campaign for 2020

※ Reported items

①

Report on results of the

compliance review

Approved

For

Retired

For

Note: Mar 20, 2019: Independent Director Jae-wan Bahk was reappointed and Independent Directors Han-jo Kim and Curie Ahn were

newly appointed.

Oct 26, 2019: Jae-Yong Lee retired from his position of Executive Director.

Feb 14, 2020: Sang-hoon Lee resigned from his position of Executive Director.

Samsung Electronics Business Report 190 / 261

C. Committe e s

(1) Composition of Board Committees

[As of Dec 31, 2019]

Committee Composition Members

Responsibilities and

authorities

Note

Management

Three Executive

Directors

Ki-nam Kim (head), Hyun-suk

Kim, Dong-jin Koh

See below

Executive Director Jong-hee Han, Yoon-

ho Choi appointed as committee

member (March 18, 2020)

Related Party

Transactions

Three Independent

Directors

Sun-uk Kim (head), Jae-wan

Bahk, Han-jo Kim

-

Compensation

Three Independent

Directors

Jae-wan Bahk, Byung-

gook Park,

Jeong Kim

Independent Director Byung-gook Park

appointed as head of committee

(February 20, 2020)

Governance

Six Independent

Directors

Jae-wan Bahk (head), Sun-uk

Kim, Byung-gook Park, Jeong

Kim, Curie Ahn, Han-jo Kim

-

Note: The Audit Committee and Independent Director Recommendation Committee were excluded according to Corporate Disclosure

Guidelines set forth by the Financial Supervisory Service Authority of South Korea.

i) The Management Committee

- Responsibilities: The Management Committee deliberates and decides on matters specified by Board regulations a nd

resolutions or specif ically delegated by the Board. The composition and operation of the management

committee are determined by the Board.

- Authoritie s:

(A) General management

1. Annual or mid to long-term management policy and strategy

2. Key management strategy

3. Business planning and restructuring

4. Establishment, relocation, and withdrawal of overseas branch and corporation

5. Initiating cooperation such as strategic partnership with foreign companies

6. Acquisition or disposal of domestic and overseas subsidiaries

(provided that the value of transaction exceeds 0.1% of total equity)

7. Other major management matters

8. Establishment, relocation, and withdrawal of branches and operations

9. Appointment or dismissal of supervisors

10. Suspension or shutdown of production over 5% of the total production in the recent year

11. Licensing agreements and technology transfer, partnership in regards to technology of over 0.5% of the total equity

12. Acquisitions and transfers of patents related to new material and new technology of over 0.5% of the total equity

13. Collection and destruction of products corresponding to over 5% of the total sales in the recent business year

14. Contracting for over 5% of the total sales in the recent business year

15. Contracting or canceling of single sales agency and suppliers over 5% of the total sales in the recent business year

16. Establishment of basic principles of organization management

17. Decision making on basic principles and any changes related to wages, bonus, and fringe benefits

18. Appointments, dismissals and changes of transfer agent

19. Closing of shareholder register and setting reference date

20. Esta blishment of corporate guidelines for business and management related activities

Samsung Electronics Business Report 191 / 261

(B) Matters related to Finance

1. Acquisitions or disposals of equity investments with a value no less than 0.1% and less than 2.5% of the total equity

2. Direct overseas investments with a value no less than 0.1% and less than 2.5% of the total equity

3. New debt guarantee (excluding extension of period) or collateral issuance with a value no less than 0.1% and less

than 2.5% of the total equity

A. Collateral: Only in the case of providing collateral for others

B. Guarantee: Excludes performance guarantee (eg, bid, contract, defect, difference guarantee) and tax payment

guarantee

4. New credit agreement contract (excluding extension of period) with a value no less than 0.1% and less than 5%

of the total equity

5. Approval of related party transactions:

Related party transactions with affiliates involving cash (loans and payments), equity (stocks and bonds) or

assets (such as real estate and intangible property rights) with a value between KRW 3 billion and/or less than

KRW 5 billion, as defined in the Monopoly Regulation and Fair Trade Act

※ Excluding cases where existing contracts are renewed without significant change.

6. Issuance of corporate bonds

7. Acquis ition and disposa l of real estate with a value of over 0.1% of the total equity, provided that the transaction

is with a third party

8. Any matters that the CEO deems necessary and important for the business (eg, capex)

(C) All other matters except for those delegated to the Board and other committees in accordance with Board regulations

ii) Related Party Transactions Committee

- Re sponsibilities: Improve management transparency through the establishment of a voluntary compliance system

- Authorities:

1) Right to receive reports on related party transactions:

The Committee can request reports on related party transactions with affilia tes

※ According to the Monopoly Regulation and Fair Trade Act, the Related Party Transactions committee is

permitted to conduct preliminary reviews and approves on related party transactions over KRW 5 billion and

other transactions that are deemed as significant

2) Right to order ex officio investigation of related party transactions

3) Right to propose corrective measures for related party transactions

iii) Compensation Committee

- Re sponsibilities: Provide transparent and objective decision making process related to remuneration of directors

- Authoritie s:

1) Propose remuneration limit of directors at AGM

2) Establish the director remuneration system

3) Other matters delegated by the Board

iv) Governance Committee

- Re sponsibilities: Fulfill corporate social re sponsibility and enhance shareholder value

- Authoritie s:

1) Matters related to corporate socia l responsibility

2) Matters related to shareholder value enhancement

- Preliminary review on shareholder return policies

- Activities for improving shareholders’ rights and interests

- Other important management matters that can significantly impact shareholder value

3) Establishment, composition, operation of organizations under the committee inc luding research groups, counc ils,

etc.

4) Other matters delegated by the Board

Samsung Electronics Business Report 192 / 261

(2) Committee Activities

The Audit Committee and Independent Director Recommendation Committee were excluded according to Corporate

Disclosure Guideline s set forth by the Financial Supervisory Service Authority of South Korea.



The Manage ment Committee (2019)

Date Agenda Voting results

Director

(attendance)

Ki-nam

Kim

(100%)

Hyun-suk

Kim

(100%)

Dong-jin

Koh

(75%)

Feb 15

①

Licensing agreement

② Merger of overseas subsidiary

Approved

For

Mar 8

①

Liquidation of ov erseas subsidiary

② Closing of shareholder register for quarterly dividend

Approved

For

Apr 5

① Investment in memory business

② Investment in Pyeongtaek complex

③ Investment in foundry business

④ Liquidation of overseas subsidiary

Approved

For

Jun 7

① Closing of shareholder register for quarterly dividend

Approved

For

Absent

Jul 5

① Investment in foundry business

Approved

For

Absent

Aug 30

① Liquidation of ov erseas subsidiary

② Investment in foundry business

Approved

For

Oct 8

① Establishment of ov erseas subsidiary

Approved For For For

Dec 6

① Investment in memory business

② Investment in memory at overseas subsidiary

③ Investment in foundry business

Approved

For



The Re lated Party Trans actions Committee (2019)

Date Agenda

Voting

Results

Directors

(attendance)

In-ho Lee

(100%)

Kwang-soo

Song (100%)

Sun-uk Kim

(100%)

Jae-wan

Bahk (100%)

Han-jo Kim

(100%)

Jan 30

①

Prior rev iew on large-scale related party

transactions

1) Lease contract with Samsung Display

2) Purchase of research equipment and

lease contract with Samsung SDI

② Report on 4Q18 related party

transactions

-

N/A

(newly

appointed)

N/A

(newly

appointed)

Feb 26

①

Prior rev iew on large-scale related party

transactions

1) Application for product liability insurance

-

Apr 29

① Appointment of the head of the Related

Party Transactions Committee

② Prior rev iew on large-scale related party

transactions

Approved

-

N/A

(retired)

N/A

(retired)

For

-

For

-

For

-

Samsung Electronics Business Report 193 / 261

1) Application for new technology business

inv estment association

2) Acquisition of PLP business

3) Group health insurance plan for

employees

4) Charitable contributions

③ Report on 1Q19 related party

transactions

-

Jul 30

①

Prior rev iew on large-scale related party

transactions

1) Package insurance policy for our sites

② Report on 2Q19 related party

transactions

-

Oct 28

① Prior rev iew on large-scale related party

transactions

1) Payment of retirement pension plan

② Report on 3Q19 related party

transactions

-

Nov 29

①

Prior rev iew on large-scale related party

transactions

1) Payment of retirement pension plan

2) Approv al of 2020 large-scale product

and service transactions

-

Note: Mar 20, 2019: Independent Directors In-ho Lee and Kwang-soo Song retired and Independent Directors Jae-wan Bahk and

Han-jo Kim were appointed.



The Compe nsation Committee (2019)

Date Agenda

Voting

Results

Directors

(attendance)

Kwang-soo

Song

(100%)

In-ho Lee

(100%)

Jeong Kim

(100%)

Jae-wan

Bahk

(N/A)

Byung-gook

Park

(N/A )

Feb 25 Review on 2019 remuneration limit for Directors Approved For For For

N/A

(newly appointed)

N/A

(newly appointed)

Note: Mar 20, 2019: Independent Directors Kwang-soo Song and In-ho Lee retired and Independent Directors Jae-wan Bahk and

Byung-gook Park were appointed.

Feb 20, 2020: Independent Director Byung-gook Park was appointed as the head of the Compensation Committee.

 The Gove rnance Committee (2019)

Date Agenda

Voting

Results

Directors

(attendance)

Jae-wan Bahk

(100%)

Sun-uk Kim

(100%)

Byung-gook

Park

(100%)

Jeong Kim

(100%)

Curie Ahn

(100%)

Han-jo K im

(100%)

Apr 30

Appointment of the head of the Committee

Approved

For

Jul 31

※ Reporting Item

①

Reporting on current status of IR

- - - - - - -

Oct 31

※

Reported Item

① Reporting on updates of IR activities

② Reporting on IR-Sustainability

roadshow investor meeting results

-

Nov 29

※ Reported Item

① Reporting on Company’s sustainable

management scheme

-

Note: Mar 20, 2019: Independent Directors In-ho Lee and Kwang-soo Song retired and Independent Directors Curie Ahn and

Han-jo Kim were appointed.

Samsung Electronics Business Report 194 / 261

D. Dire ctor inde pe nde nce

(1) Appointment of Directors

The Board nominates Executive Director candidates and the Independent Director Recommendation Committee

nominates Independent Director candidates. Directors are then appointed at the general meeting.

A candidate for Director needs to meet the requirements of relevant laws and the Articles of Incorporation. Executive

Directors are appointed based on his or her expertise and leadership among a list of candidates that is constantly updated.

Independent Directors should have no material interests with the Company and its major shareholder, possess knowledge

and experience in IT, accounting, finance, law, economics, ESG, etc., and be able to f ulf ill the roles and responsibilities of

supervis ing management from an independent position. The company has not set separate standards with respect to the

independence of Directors besides the requirements in relevant laws and the Article of Incorporation.

Please refer to

『VIII. Executives and Employees』 for more information about the career of each Director.

The Board submits shareholders’ proposal for appointment of Directors at the general shareholder meeting as a separate

agenda if the proposal satisfies related laws and regulations.

The composition of the Board of Directors, as appointed by shareholders, is as follows:

[As of Dec 31, 2019]

Position Name Te r m Reasons for appointment Nominator Responsibility

Relationship

with the

Company's

major

shareholders

Executive

Director

Sang-

hoon Lee

Mar 2018–Mar

2021

Director Sang-hoon Lee, former CFO

(2013-2017), is an expert in finance

and business management and can

lead Board activities by effectively

coordinating opinions of Executive and

Independent Directors.

The Board

Chairman of the

Board

Related party

Executive

Director

(CEO)

Ki-nam

Kim

Mar 2018–Mar

2021

Director Ki-nam Kim has built expertise

based on his experience as the

president of Samsung Advanced

Institute of Technology, head of the

memory business, and president of the

semiconductor business. He will play a

critical role in solidifying leadership of

the component business despite

growing external uncertainty.

The Board

Head of DS

Division

Related party

Executive

Director

(CEO)

Hyun-suk

Kim

Mar 2018–Mar

2021

Director Hyun-suk Kim is an expert in

display R&D and played a crucial role

in positioning the company as the

leader in the global TV market. He will

use this successful experience in other

businesses such as the home

appliance business to create synergies

within the CE division.

The Board

Head of CE

Division

Related party

Executive

Director

(CEO)

Dong-jin

Koh

Mar 2018–Mar

2021

Director Dong-jin Koh is an expert in

mobile R&D and has contributed in

advancing our mobile business with the

galaxy lineup. He will play a critical role

in becoming a first mover in the

stagnant yet competitive smartphone

market.

The Board

Head of IM

Division

Related party

Samsung Electronics Business Report 195 / 261

Independent

Director

Jae-wan

Bahk

Mar 2016–Mar

2022

(second term)

Director Jae-wan Bahk is an expert in

finance and public sector with

abundant experience relative to state

affairs and policy design. He can

contribute to objective supervision of

the management and the Board’s

strategic decisions.

Independent

Director

Recommendation

Committee

Overall

management

None

Independent

Director

Sun-uk

Kim

Mar 2018–Mar

2021

Director Sun-uk Kim is a legal expert

and has experience as a professor at a

school of law and the Legislation

Minister. She can present a new

perspective to the Board based on

objective and juridical reasoning.

Independent

Director

Recommendation

Committee

Overall

management

None

Independent

Director

Byung-

gook Park

Mar 2018–Mar

2021

Director Byung-gook Park is a

professor at electrical engineering and

an expert in flash memory. He will play

a crucial role in strengthening expertise

of the Board.

Independent

Director

Recommendation

Committee

Overall

management

None

Independent

Director

Jeong

Kim

Mar 2018–Mar

2021

Director Jeong Kim is an IT expert and

an entrepreneur. He will contribute to

the Board’s strategic decisions by

utilizing his expertise, wide network,

and business capability.

Independent

Director

Recommendation

Committee

Overall

management

None

Independent

Director

Curie Ahn

Mar 2019–Mar

2022

Director Curie Ahn is a medical expert

who has been working for the

marginalized and public good. Director

Ahn will help address the increasingly

important ESG issues, improving social

communication and achieving

sustainable growth.

Independent

Director

Recommendation

Committee

Overall

management

None

Independent

Director

Han-jo

Kim

Mar 2019–Mar

2022

Director Han-jo Kim has built expertise

in finance and business management

through his experience as a President

of Korea Exchange Bank and now

serves as the chairman of a social

contribution foundation. He will

contribute to the Company by providing

valuable insight on overall business

issues and by utilizing expertise in

finance, co-growth, etc.

Independent

Director

Recommendation

Committee

Overall

management

None

Note: Oct 26, 2019: Jae-yong Lee retired from his position of Executive Director.

Feb 14, 2020: Sang-hoon Lee resigned from his position of Executive Director.

Mar 18, 2020: Jong-hee Han and Yoon-ho Choi were newly appointed as Executive Directors at the AGM.

Relations hip with Company's major shareholder is in accordance with Article 542-8 of the Commercial Act.

Samsung Electronics Business Report 196 / 261

(2) Inde pe ndent Director Recommendation Committee

The Independent Director Recommendation Committee assesses the independence and ability of potentia l candidates and

recommends selected candidates to be appointed at the annual general meeting of shareholders. As of the reporting date,

the committee is composed of three Independent D irectors (Jeong Kim, Byung-gook Park, and Cur ie Ahn) ba sed on

related laws that states more than a majority of members should be independent directors in accordance with clause 4 of

Article 542-8 of the Commercial Law.

Date Agenda

Voting Results

Directors

(attendance)

Jeong Kim

(100%)

Jae-wan

Bahk (100%)

Byung-gook

Park (100% )

Curie Ahn

(N/A)

Jan 31,

2019

① Appointment of head of Committee

② Determination of deadline for recommendation of

independent director candidates

Approved

For

N/A

(newly

appointed)

Feb 25,

2019

① Recommendation of independent director candidates Approved For - For

Note: Mar 20, 2019: Independent Director Jae-wan Bahk’s term ended and Independent Director Curie Ahn was appointed.

Feb 25, 2019: Independent Director Jae-wan Bahk did not exercise his voting right on the agenda of recommending himself as a

Director Candidate.

(3) Expertise of Inde pendent Directors

1) Support team for Independent Directors

- Support team: HR team of Corporate Management Office

- Number of responsible staff: Six

[As of Dec 31, 2019]

Team

Number of

Employees

Position

(Total years served/ years in the support team)

Key activities

HR 6

Executive Vice President: 1 person

(33 years and 10 months / 4 years and 5 months)

Senior Vice President: 1 person

(29 years and 1 month / 1 year)

Vice President: 1 person (26 years and 10 months / 1 year)

Senior Professional: 3 persons

(average: 13 years and 8 months / 2 years and 10 months)

 Support operation of annual shareholders’

meeting, Board meetings, and Committee

meetings

 Support education for Independent Directors

and their activities

 Establish database on Director candidates

 Provide information for resolution process to

each Directors

 Administrative work for meetings

 Record meeting agendas for the Board and

committee meetings

Samsung Electronics Business Report 197 / 261

2) Education programs to provide updates on key management issues for Independent Directors

① Inspection of domestic and overseas business sites

Date Organizer Participants

Reasons for

absence

Education contents

May 2017

HR team and management team

of the region where the inspection

takes place

In-ho Lee, Han-joong Kim,

Kwang-soo Song, Byeong-gi Lee,

Jae-wan Bahk

N/A

On-site inspection to check

business operations

Jan 2018

HR team and management team

of the region where the inspection

takes place

In-ho Lee, Han-joong Kim,

Kwang-soo Song, Byeong-gi Lee,

Jae-wan Bahk

N/A

On-site inspection to check

business operations

Aug 2018

HR team and management team

of the region where the inspection

takes place

In-ho Lee, Kwang-soo Song, Sun-

uk Kim, Jae-wan Bahk, Byung-

gook Park, Jeong Kim

N/A

On-site inspection to check

business operations

Aug 2019

HR team and management team

of the region where the inspection

takes place

Jae-wan Bahk, Sun-uk Kim,

Byung-gook Park, Jeong Kim,

Curie Ahn, Han-jo Kim

N/A

On-site inspection to check

business operations

② Orientation for newly appointed Independent Directors

Date Organizer Participants

Reasons for

absence

Education contents

Mar 2018 HR team

Sun-uk Kim, Byung-gook

Park, Jeong Kim

N/A

Key issues regarding Board activities

and management

Apr 2018

HR team and relevant

management team

Sun-uk Kim, Byung-gook

Park, Jeong Kim

N/A

Key issues regarding Board activities

and management

Mar 2019 HR team Curie Ahn, Han-jo Kim N/A

Key issues regarding Board activities

and management

Apr 2019

HR team and relevant

management team

Curie Ahn, Han-jo Kim N/A

Key issues regarding Board activities

and management

Jul 2019

HR team and relevant

management team

Curie Ahn, Han-jo Kim N/A

Key issues regarding Board activities

and management

③ Orientation for Independent Directors

Date Organizer Participants

Reasons for

absence

Education contents

Jan 2019 Support Team

In-ho Lee, Kwang-soo

Song, Jae-wan Bahk, Sun-

uk Kim, Byung-gook Park,

Jeong Kim

N/A Business plans for 2019

Jan 2019 Network business

In-ho Lee, Kwang-soo

Song, Jae-wan Bahk, Sun-

uk Kim, Byung-gook Park,

Jeong Kim

N/A

Briefing on 5G technology and tour of

production lines

Samsung Electronics Business Report 198 / 261

2. Audit System

A. Profiles of Audit Committee me mbers

As of December 31, 2019, SEC operates an Audit Committee consisting of three Independent Directors. Directors Jae-

wan Bahk (head) and Han-jo Kim qualify as experts in finance in accordance with relevant regulations.

Name Major experience

Accounting/financial expertise*

Classification Relevant experience

Jae-wan Bahk

(Head)

 1996–present: Professor, Department of Public

Administration & Graduate School of Governance,

Sungkyunkwan University

 2016–present: Independent Director, Lotte Shopping

 2011–2013: Minister of Strategy and Finance

 2010–2011: Minister of Employment and Labor

 2004–2008: Member of the 17th National Assembly

Type 2**

 1996–present: Professor of public

administration, Sungkyunkwan University

 1992: Gained Ph.D. in Financial Administration

Sun-uk Kim



2018–present: Professor Emeritus, School of Law, Ewha

Womans University

 1995–2018: Professor, Ewha Law School, Ewha Womans

University

 2010–2014: President, Ewha Womans University



2005–2007: Minister of Government Legislation

– –

Han-jo Kim

 2019–present: CEO/Rep Director, Hana Foundation

 2015–2019: CEO/Rep Director, Hana Nanum Foundation

 2015–2016: Vice Chairman, Hana Financial Group

 2014–2015: President, Korea Exchange Bank

 2013–2014: President, KEB Capital Inc.

Type 4***

 2015–2016: Vice Chairman, Hana Financial

Group

 2014–2015: President, Korea Exchange Bank

 2013–2014: President, KEB Capital

 2012–2013: Head of Corporate Business

Group, Korea Exchange Bank

 1999–2002, 2004–2005: Head of Branch,

Korea Exchange Bank

Note: *Defined in the Article 542-11 (2) 1 of the Commercial Act (Article 37-2 of the Enforcement Decree of the Commercial Act)

**Degree in accounting and/or finance

***Experience in financial institution/government organization/securities

B. Audit Committe e independence

Pursuant to related laws and the Articles of Incorporation, SEC has prepared internal audit regulations which encompass

composition, operation, authority, and responsibility of the Audit Committees to carry out audit related ac tivities.

The Audit Committee is exclus ive ly composed of Independent Directors recommended by the Board and appointed at the

general shareholder meeting. Currently, it inc ludes financial experts Jae-wan Bahk (head) and Han-jo Kim and legal

expert Sun-uk Kim. Committee members do not have any relation to the Company's major shareholder that may

undermine the independence of the Committee. Also, the Audit Committee satisfies requirements of relevant laws (eg, the

stipulation that the role of head of the committee be held by an Independent Director).

Requirements

Requirement status

Applicable acts, etc.

- The audit committee shall consist of at least three directors.

Satisfied (the committee consists of three

Directors)

Article 415-2 (2) of the

Commercial Act,

Article 2 of the Company’s Audit

Committee Regulation

- The ratio of independent directors shall exceed two thirds of the

total number of members.

Satisfied (all members are independent

directors)

- At least one member of the committee shall be an accounting or

financing expert.

Satisfied (Jae-wan Bahk, Han-jo Kim)

Article 542-11 (2) of the

Commercial Act,

Samsung Electronics Business Report 199 / 261

- The representative of the committee shall be an independent

director.

Satisfied

Article 3 of the Company’s Audit

Committee Regulation

- Other conditions (related party of the major shareholder, etc.) Satisfied (n/a)

Article 542-11 (3) of the

Commercial Act

[As of Dec 31, 2019]

Name

Te rm Reasons for appointment Nominator

Relationship

with the

Company

Relationship

with the

Company's

largest/major

shareholders

Concurrent

positions

Jae-wan Bahk

(Head)

Mar 2019–Mar

2022

Expertise in finance and

public sector and abundant

experience in state affairs

and policy design.

He can contribute to the

committee’s activities by

offering an objective

perspective.

Independent Director

Recommendation

Committee

N/A N/A

Independent

Director

Lotte Shopping,

Co., Ltd

2016~

Sun-uk Kim

Mar 2018–Mar

2021

Based on the legal expertise

and experience running

organizations in areas

including administration,

finance, international affairs,

etc., she can carry out the

duties in an aboveboard

manner with strict standards.

Independent Director

Recommendation

Committee

N/A N/A -

Han-jo Kim

Mar 2019–Mar

2022

An expert in finance with

broad experience, he offers

impartial judgement on

overall management

activities while carrying out

his duties

Independent Director

Recommendation

Committee

N/A N/A -

Note: Relations hip with the Company and Company's major shareholder is in accordance with Article 542-8 of the Commercial Act.

The Audit Committee reviews accounting documents inc luding financ ial statements and audit process related documents

presented by the external auditor, and if needed, requests the external auditor to perform additiona l reviews on accounting

books and records. To ensure the relia b ility of accounting related disclosures, the audit committee receives and reviews a

report on interna l accounting control systems prepared by internal accounting managers. In addition, the Committee

attends the Board meetings and other significant meetings. The Committee receives reports on deliberations of the

Management Committee and on business performance from Directors and requests additiona l reviews and

supplementation of data as needed.

Samsung Electronics Business Report 200 / 261

C. Major activities of the Audit Committee (2019)

Date Agenda

Voting

Results

Directors

(attendance)

In-ho Lee

(100%)

Kwang-soo

Song

(100%)

Jae-wan

Bahk

(100%)

Sun-uk Kim

(100%)

Han-jo Kim

(100%)

Jan 30

- Report on 2018 internal accounting management

sy stem activities

- Approval of revisions of internal accounting

management regulations

- Report on 2018 financial statement and business

report

- Report on 4Q18 non-audit activities

- Report on 4Q18 external contributions

- Report on 2018 audit activities

-

Approved

-

For

-

For

-

N/A

(newly

appointed)

-

For

-

N/A

(newly

appointed)

Feb 26

- Review of the 2018 AGM agenda

- Report on activities of internal compliance system

in 2018

-

Apr 29

- Appointment to head of the Audit Committee

- Report on 1Q19 interim business report

- Report on 1Q19 non-audit activities

- Inspection plans for 2019 internal accounting

management sy stem activ ities

- Report on 1Q19 ex ternal contributions

- Ev aluation plans for 2019 internal accounting

management sy stem activities

- Plans for 2019 and 1Q19 review for external audit

activities

Approved

-

N/A

(retired)

N/A

(retired)

For

-

For

-

For

-

Jul 30

- Report on 1H19 half year business report

- Report on 2Q19 non-audit activities

- Report on Inspection plans for 2Q19 internal

accounting management system activ ities

- Report on 2Q19 ex ternal contributions

- Report on rev ision of audit committee regulations

(proposal)

- Approval of external auditor appointment regulation

- Report on 1H19 audit activities

- Report on rev iew of 2Q19 ex ternal audit activities

-

Approved

-

For

-

For

-

For

-

Oct 28

- Report on 3Q19 interim business report

- Report on 3Q19 non-audit activities

- Report on 3Q19 ex ternal contributions

- Report on rev iew of 3Q19 ex ternal audit activities

-

Nov 14

- Determination of contract terms and conditions with

designated ex ternal auditor

Approved

For

Note: Mar 20, 2019: Independent Directors In-ho Lee and Kwang-soo Song retired and Independent Directors Jae-wan Bahk and

Han-jo Kim were appointed.

D. Education programs fo r the Audit Committe e

In accordance with the working guide for internal accounting management system, we are conducting additional t rainin g

to ensure the expertise of the Audit Committee. Organized by external experts, finance team, and audit team, education on

changes to internal control, internal accounting management system is provided more than once a year.

Samsung Electronics Business Report 201 / 261

E. Previous e ducation sessions

Date Organizer Participants

Reasons for

absence

Education contents

Apr 29, 2019

Audit team

Finance team

HR team

External experts

Jae-wan Bahk

Sun-uk Kim

Han-jo Kim

N/A Introduction materials

Jul 30, 2019 External experts

Jae-wan Bahk

Sun-uk Kim

Han-jo Kim

N/A

Internal accounting management

system

F. Support te am for the Audit Committe e

[As of Dec 31, 2019]

Team Composition Service years on team Major tasks

Audit team

1 Senior Vice President,

3 Senior Professionals

Senior Vice President: 5 years and 8 months

Senior Professionals: 1 year and 5 months

(average)

Support the Audit Committee

Internal accounting

assessment support

group

1 Vice President,

1 Lawyer,

1 Senior Professional

Vice President: 1 year

Lawyer: 1 year

Senior Professional: 1 year

Support assessment of the

internal accounting

management system

G. Compliance Office r

[As of Dec 31, 2019]

1. Compliance Officer

Name

Young-soo Kim

Age

51

Academic background

Bachelor’s Degree in Law (Seoul National Univ ersity)

Current position

Corporate Compliance Team leader at Samsung Electronics Legal Affairs Office (Mar 2018-

current)

Career

- 2000–2012: Judge at the Seoul District Court, Suwon District Court, etc.

- Mar 2013: Vice president of Samsung Electronics Legal & Compliance Team

- Dec 2015: Vice president of Samsung Electronics Legal Team

- Mar 2018: Head of Compliance Team (Vice President) and C hief Priv acy Officer of Samsung

Electronics Global Priv acy Office

- Dec 2018: Head of Compliance Team (Senior Vice President) and Chief Priv acy Officer of

Samsung Electronics Global Priv acy Office

2. Date of Board resolution

Mar 23, 2018

3. Disqualifications

N/A

4. Others

N/A

Note: Compliance officer meets the eligibility requirement (lawyer) stated in Article 542-13 (5) of the Commercial Act.

Jan 30, 2020: Duk-ho Ahn, Corporate Compliance Team leader, was appointed as the compliance officer through Board

resolution.

H. M ajor compliance activities

The Company conducts compliance assessments on a regular and ad-hoc basis and reflects the results in the Company’s

business activities to improve compliance of the Company and its employees.

Samsung Electronics Business Report 202 / 261

Date Assessment subject Assessment area Results

1Q19

January

Compliance of marketing

organizations

Fair trade, business secret, etc.

Overall result was

satisfactory. Internal policies

were followed in areas where

there was room for

improvement.

Compliance of overseas 3rd party

production customers

Technology leak, product liability, etc.

Patent process

Technology misappropriation, business

secret, etc.

Violation of customers’ business

secrets

Business secret

March Compliance of subsidiaries Fair trade, business secret, etc.

2Q19

April

Self-assessment on compliance of

overseas subsidiaries

Compliance programs

Patent application process

Technology misappropriation, business

secrets, etc.

May

Compliance of subsidiaries

Business secrets, personal information

protection, etc.

Regular assessment of domestic

business activities

Potential business risks such as business

secrets, intellectual property, etc.

June

Compliance of overseas third party

production customers

Technology leaks, product liability, etc.

3Q19

July

Self-assessment on compliance of

overseas research organizations

Compliance programs

August Illegal use of software Use of unauthorized software

September

Patent application process

Technology misappropriation, business

secret, etc.

Violation of customers’ business

secrets

Business secret

Compliance of overseas

manufacturing organizations

Technology misappropriation

Compliance of overseas third party

production customers

Technology leaks, product liability, etc.

4Q19

November

Compliance of overseas

manufacturing organizations

Business secret, personal information etc.

Compliance of overseas research

organizations

Business secret, compliance programs,

etc.

Compliance of overseas sales

organizations

Fair trade, Business secret etc.

December

Compliance of overseas third party

production customers

Technology leaks, product liability etc.

Note: Assessment conducted in the final month of each quarter.

Each assessment was conducted on selected organizations.

I. Support te am for the Compliance Officer

[As of Dec 31, 2019]

Team Composition Service years in the team (average) Major tasks

Compliance team,

etc.

2 Vice Presidents

9 Principal professionals

14 Lawyers

20 Senior Professionals

6 Professionals

(Total: 51)

Vice Presidents (5 years and 5 months)

Principal professionals (6 years and 8 months)

Lawyers (3 years and 7 months)

Senior Professionals (5 years and 9 months)

Professionals (2 years and 10 months)

Supports activities of

the Compliance Officer

Note: Service years refer to time performing work relevant to support activity.

Samsung Electronics Business Report 203 / 261

3. Voting rights of shareholders

A. Voting me thod

On January 30, 2020, the Board resolved to adopt electronic voting to enhance convenience in exercis ing voting rights for

shareholders. E-voting was first introduced at the 51st AGM, held on March 18, 2020. The Company has not adopted a

cumulative voting system, voting in writing.

B. Minority shareholder rights

No minority shareholder rights were exercised during the reporting period.

C. Competition over management rights

No competition over management rights occurred during the reporting period.

Samsung Electronics Business Report 204 / 261

VII. Information on Shareholders

1. Ownership of shares by the major shareholder and related parties

The follow ing table presents changes in shares held by the major shareholder and related parties as of the beginning and

end of the reporting period.

[As of Dec 31, 2019]

Name Relationship*

Type of

share

Ownership

Notes

Period start

Period end

Shares

Stake (%)

Shares

Stake (%)

Kun-hee Lee Major shareholder Common 249,273,200

4.18

249,273,200

4.18

-

Kun-hee Lee

Major

shareholder

Preferred 619,900

0.08

619,900

0.08

-

Samsung C&T Affiliate Common 298,818,100

5.01

298,818,100

5.01

-

Samsung Welfare Foundation Funded foundation C ommon 4,484,150

0.08

4,484,150

0.08

-

Samsung Foundation Of C ulture Funded foundation Common 1,880,750

0.03

1,880,750

0.03

-

Ra-hee Hong

Spouse of the major

shareholder

Common 54,153,600

0.91

54,153,600

0.91

-

Jae-y ong Lee

Son of the major

shareholder

Common 42,020,150

0.70

42,020,150

0.70

-

Samsung Life Insurance Affiliate Common 508,157,148

8.51

508,157,148

8.51

-

Samsung Life Insurance Affiliate Preferred 43,950

0.01

43,950

0.01

-

Samsung Life Insurance

(special accounts)

Affiliate Common 19,048,733

0.32

18,286,593

0.31

Open market transactions

Samsung Life Insurance

(special accounts)

Affiliate Preferred 1,268,546

0.15

1,352,563

0.16

Open market transactions

Samsung Fire & Marine Insurance Affiliate Common 88,802,052

1.49

88,802,052

1.49

-

Sang-hoon Lee Executiv e member Common 28,500

0.00

16,000

0.00

Open market transactions

Ki-nam Kim Executive member Common 175,000

0.00

200,000

0.00

Open market transactions

Hy un-suk Kim Executive member Common 99,750

0.00

99,750

0.00

-

Dong-jin Koh Executive member Common 50,000

0.00

75,000

0.00

Open market transactions

Curie Ahn Ex ecutive member Common 0

0.00

800

0.00

Open market transactions

Han-jo Kim Executive member Common 0

0.00

2,175

0.00

Open market transactions

Total

Common 1,266,991,133

21.22

1,266,269,468

21.21

-

Preferred 1,932,396

0.23

2,016,413

0.25

-

Note: Preferred shares and certain common shares do not carry full voting rights. For information on voting rights, please refer to

『Ⅰ. Corporate Overview-5. Voting Shares』

*In accordance with Article 3-1 of Enforcement Decree Of The Act On Corporate Governance Of Financial Companies.

Samsung Electronics Business Report 205 / 261

[The major share holder]

1) Name: Kun-hee Lee

2) Career (recent 5 years): Chairman of Samsung Electronics (March 2010–present)

Honorary member of the International Olympic Committee (2017–present)

Member of the International Olympic Committee (1996–2017)

3) The major shareholder of record has not changed during the reporting period.

2. Ownership of shares

As of December 30, 2019, the date of Suspension of Entry in the Register of Shareholders, shareholders with 5% a nd

above voting shares, excluding the major shareholder, were as follows:

[As of Dec 31, 2019]

Classification Name Number of shares owned Share ratio Note

Shareholders w ith

over 5% v oting

shares

National Pension Serv ice 633,716,703

10.62%

-

Samsung Life Insurance 526,443,741

8.82%

-

BlackRock Fund Advisors 300,391,061

5.03%

Based on the Report on Mass Holding of

Securities (disclosed on February 7, 2019)

Samsung C&T 298,818,100

5.01%

-

Employ ee Stock Ownership Association -

-

Note: BlackRock Fund Advisors information as of January 28, 2019.

The number of shares owned and share ratio of Samsung Life Insurance includes special accounts.

For more information, pleas e refer to『Ⅰ. Corporate Overview-5. Voting Shares』

3. Minority Shareholders

The number of shareholders based on common stock is as follows:

[As of Dec 31, 2019]

Classification

Shareholder Shares owned

Note

Number of

shareholders

Portion Number of shares Portion

Minority

shareholder

568,313

99.98%

3,702,860,049

62.03%

Total 568,409

100.00%

5,969,782,550

100.00%

-

Note: Shareholders with shares less than 1/100 of total issued stocks

Samsung Electronics Business Report 206 / 261

4. Stock affairs

Preemptive Rights in the

Articles of Incorporation

1. New shares to be issued by the Company shall be allocated to the shareholders in proportion to their

respective shareholdings in accordance with Paragraph 6, Article 8. If shares are not subscribed for as a

result of waiver or loss of the preemptive right of the shareholders to subscribe for new shares, or if

fractional shares remain at the time of allocation of new shares, such shares may be disposed of by a

resolution of the Board of Directors in accordance with applicable laws and regulations.

2. Notwithstanding the above Paragraph 1, new shares may be allocated to persons other than

shareholders in the following cases:

a. If the Company issues new shares or causes underwriters to underwrite new shares by a resolution of

the Board of Directors in accordance with applicable laws and regulations including the Financial

Investment Services and Capital Markets Act;

b. If the Company allocates new shares preferentially to members of the Employee Stock Ownership

Association by a resolution of the Board of Directors in accordance with applicable laws and

regulations including the Financial Investment Services and Capital Markets Act;

c. If the Company issues new shares for the issuance of depositary receipts (DR) by a resolution of the

Board of Directors in accordance with the applicable laws and regulations including the Financial

Investment Services and Capital Markets Act;

d. If the Company issues new shares by public offering in accordance with Article 11-3;

e. If new shares are issued by the exercise of stock options in accordance with Article 11-4;

f. If the Company issues new shares to the extent of 20% of the total issued and outstanding shares to

domestic or foreign financial institutions for the purpose of obtaining financing urgently or to the relevant

partner company for the purpose of inducing technology therefrom, etc., by a resolution of the Board of

Directors; provided that the issue price of the new shares shall not be less than the price prescribed by

the Financial Investment Services and Capital Markets Act and other applicable laws and regulations.

☞ (Note) Paragraph 6, Article 8

In the case of rights issue, bonus issue or stock dividend, the holders of common shares shall be ent

itled to

common shares, and the holders of preferred shares shall be entitled to preferred shares, in proportion to their

respective shareholdings; provided that in the case of rights issue and stock dividend the Company may, if

necessary, issue only one kind of shares, where all the shareholders shall be entitled to such kind of shares to be

issued.

☞ (Note) Article 11-3 (Public Offering)

1. The Company may issue new shares by public offering to the ex tent that the new shares do not exceed 20% of

the total number of issued and outstanding shares by a resolution of the Board of Directors, pursuant to Ar ticle

165-6, Paragraph 1, Item 3 of the Financial Investment Services and Capital Markets Act.

2. If the Company issues new shares by public offering, the type, quantity and issue price of the shares to be newly

issued shall be determined by a resolution of the Board of Directors; provided that the issue price of such new

shares shall not be less than the price prescribed by the Financial Investment Services and Capital Markets Act

and other applicable laws and regulations.

☞ (Note) Article 11-4 (Stock Options)

Samsung Electronics Business Report 207 / 261

Preemptive Rights in the

Articles of Incorporation

1. The Company may grant stock options to its officers and employees (including officers and employees of the

related companies as set forth in Article 542-3, Paragraph 1 of the Commercial Code; the same shall apply for

the purpose of this Article) by a special resolution of the general meeting of shareholders pursuant to Article 542-

3 of the Commercial Code, to the extent permitted by the Commercial Code; provided, however, that the

Company may grant the stock options to its officers and employees (except for the directors of the Company) by

a resolution of the Board of Directors to the extent determined by the relevant laws and regulations.

2. The person to whom stock options may be granted are the officers and employees who have contributed or have

the capacity to contribute to the establishment, management, overseas business, technical innovation, etc. of the

Company; provided, however, that the officers and employees who may not be entitled to stock options under the

relevant laws and regulations shall be excluded.

3. The shares to be issued to the officers or employees by the exercise of their stock options (in case the Company

pays, either in cash or treasury shares, the difference between the exercise price of stock options and the market

price, they refer to the shares which are the basis for such calculation) shall be common shares in registered

form or preferred shares in registered form.

4. Total number of shares to be delivered in accordance with the exercise of stock options shall be up to the extent

permitted by the relevant laws and regulations.

5. The stock options may be exercised until an expiry date determined by a resolution of the general meeting of

shareholders or the Board of Directors and such expiry date shall be determined within a period not exceeding

eight (8) years from the date when two (2) years have elapsed from the date of the general meeting of

shareholders or the date of the Board of Directors' meeting at which a resolution to grant such stock options is

adopted; provided, however, that the person to whom a stock option is granted should serve the Company for at

least two (2) years after the date of such resolution in order to exercise such stock option, unless otherwise set

forth by relevant laws and regulations.

6. The terms and conditions for stock options, such as the contents and exercise price thereof shall be determined

by a special resolution of the general meeting of shareholders or by a resolution of the Board of Directors in

accordance with the relevant laws and regulations and the Articles of Incorporation; provided, however, that such

matters which are not provided for as matters reserved for resolutions of the general meeting of shareholders or

the Board of Directors' meeting under the relevant laws and regulations or the Articles of Incorporation may be

determined by the Board of Directors or a committee authorized by the Board of Directors.

7. The Company may cancel the grant of stock options by a resolution of the Board of Directors in any of the

following cases:

a. In case the relevant officer or employee voluntarily retires from his/her office or leaves the Company after the

grant of stock options;

b. In case the relevant officer or employee causes substantial damages to the Company due to his/her willful

misconduct or negligence;

c. In case any of the causes for cancellation set forth in the stock option agreement occurs.

Settlement date Dec 31

Annual General

Meetings of

Shareholders

Within 3 months after the end of every business year

Shareholder register closing period One month from Jan 1

Stock ty pe -

Transfer agent Korea Securities Depository (T: +82-2-3774-3000): 23, Yeouinaru-ro 4-gil, Yeongdeungpo-gu, Seoul, Korea

Shareholder benefit n/a Published on Joongang Daily

Note: With Act on Electronic Registration of Stocks, Bonds, etc. (“Electronic Securities Act”) taking effect Sep 16, 2019, rights

specified on stocks and subscription warrants are subject to mandatory electronic registration, therefore, “Stock types” are no

longer applicable.

Samsung Electronics Business Report 208 / 261

5. Stock price and stock transactions

A. Domestic stock marke t

(KRW)

Type

Jul 2019

Aug 2019

Sep 2019

Oct 2019

Nov 2019

Dec 2019

Common

stock

Stock price

High 47,300

45,200

49,500

51,300

53,700

56,700

Low 44,400

42,650

43,250

47,600

50,300

49,450

Av erage 46,215

43,840

47,295

49,881

52,224

53,508

Volume

High (day) 12,872,916

16,926,881

18,297,430

21,185,785

27,372,226

29,178,697

Low (day)

4,717,226

5,017,381

7,006,280

4,406,531

6,225,196

6,882,771

Month

183,771,791

205,260,271

207,963,296

199,451,656

223,956,592

264,807,425

Preferred

stock

Stock price

High

38,850

37,050

40,950

41,650

43,600

46,700

Low

36,750

35,400

36,200

38,900

40,850

40,900

Av erage 38,041

36,124

39,145

40,498

42,471

43,803

Volume

High (day) 1,729,492

2,139,235

2,815,902

2,465,552

4,426,145

3,214,033

Low (day) 292,829

425,875

395,516

310,783

499,397

654,720

Month

18,705,891

26,638,774

24,165,113

24,246,554

29,148,605

31,817,107

Note: Stock price is based on the closing exchange rate of the applicable trading day.

Samsung Electronics Business Report 209 / 261

B. Overseas stock market

□ Name of stock exchange: London Stock Exchange (common stock)

Ty p e Jul 2019 Aug 2019 Sep 2019 Oct 2019 Nov 2019 Dec 2019

Common

stock

Price

High

USD

1,007.00

963.00

1,033.00

1,107.00

1,152.00

1,217.00

KRW 1,185,843

1,138,170

1,232,472

1,299,839

1,348,301

1,413,180

Low

USD

936.00

885.00

895.00

975.00

1,068.00

1,038.00

KRW 1,095,494

1,078,727

1,084,651

1,168,245

1,259,492

1,225,255

Average (USD) 979.48

904.36

991.50

1,049.65

1,113.52

1,137.45

Volume

High (day)

32,458

26,986

25,316

18,817

24,947

59,527

Low (day) 4,992

6,589

6,186

3,885

5,141

1,113

Month

332,457

333,652

298,628

251,741

305,845

295,869

Note: Stock price in KRW is based on the closing exchange rate of the applicable trading day.

Conversion ratio between GDRs and original shares is 1:25.

□ Name of stock exchange: Luxembourg Stock Exchange (pre ferred stock)

Ty p e

Jul 2019 Aug 2019 Sep 2019 Oct 2019 Nov 2019 Dec 2019

Preferred

stock

Price

High

USD

825.00

778.00

854.00

892.00

937.00

993.00

KRW

954,030

919,518

1,020,615

1,047,386

1,084,578

1,158,533

Low

USD

777.00

720.00

738.00

793.00

869.00

849.00

KRW 909,401

877,608

894,382

950,173

1,024,812

1,002,160

Average (USD)

806.43

741.38

816.52

849.96

903.86

928.60

Volume

High (day)

3,178

3,023

4,316

3,848

27,113

3,375

Low (day) 204

176

620

321

165

39

Month

28,322

24,283

31,130

24,929

66,316

27,551

Note: Stock price in KRW is based on the closing exchange rate of the applicable trading day.

Conversion ratio between GDRs and original s hares is 1:25.

Samsung Electronics Business Report 210 / 261

VIII. Executives and Employees

1. Executives and employees

A. Registered Executives

[

As of Dec 31, 2019] (Shares)

Name

Gender

Date of

birth

Position

Full/

part-

time

Responsibility

Major career

Number of shares

owned

Relationsh ip with

the major

shareholder*

Length of

service

(months)

Te r m

expiration

Common

Preferred

Sang-hoon

Lee

M

Jun

1955

Executive Director

Full time

Chairman of

the Board

- Bachelor's degree in

Economics from

Kyungbook University

- Former head of

Corporate Management

Office

16,000

0

Executive

member

78

Mar 22,

2021

Ki-nam

Kim

M

Apr

1958

CEO

Full

time

Head of DS

Div ision

- Doctor’s degree in

Electrical Engineering

from UCLA

- Head of DS Division

200,000

0

Executive

member

22

Mar 22,

2021

Hy un-suk

Kim

M

Jan

1961

CEO

Full time

Head of CE

Div ision

- Master’s degree in

Electrical Engineering

from Portland State

University

- Head of CE Div ision

99,750

0

Executive

member

22

Mar 22,

2021

Dong-jin

Koh

M

Mar

1961

CEO

Full

time

Head of IM

Div ision

- Master’s degree in

Technology Policy from

University of Sussex

- Head of IM Division

75,000

0

Executive

member

22

Mar 22,

2021

Jae-wan

Bahk

M

Jan

1955

Independent

Director

Part time

Overall

management

- Doctor’s degree in Public

Policy from Harv ard

University

- Professor of Public

Administration at

Sungkyunkwan

University**

0

Executive

member

46

Mar 10,

2022

Sun-uk

Kim

F

Dec

1952

Independent

Director

Part time

Overall

management

- Doctor’s degree in

Administrative Law

from

University of Konstanz

- Professor Emeritus at

Ewha Womans

University

0

Executive

member

22

Mar 22,

2021

Byung-

gook Park

M

Apr

1959

Independent

Director

Part time

Overall

management

- Doctor’s degree in

Electrical Engineering

from Stanford University

- Professor of Electrical

Engineering at Seoul

National University

0

Executive

member

22

Mar 22,

2021

Jeong Kim

M

Aug

1960

Independent

Director

Part time

Overall

management

- Doctor’s degree in

Reliability

Engineering from the

University of Maryland

- President of Kisw e

Mobile

0

Executive

member

22

Mar 22,

2021

Curie Ahn F

Mar

1955

Independent

Director

Part time

Overall

management

- Doctor’s degree in

Medicine from Seoul

National University

- Professor at the

Div ision

of Nephrology of Seoul

National University

800

0

Executive

member

10

Mar 19,

2022

Samsung Electronics Business Report 211 / 261

Han-jo Kim

M

Jul

1956

Independent

Director

Part time

Overall

management

- Bachelor’s degree in

French language and

Literature from Yonsei

University

- Chairman of Hana

Nanum Foundation

2,175

0

Executive

member

10

Mar 19,

2022

Note: Oct 26, 2019: Jae-yong Lee retired from his position of Executive Director.

Feb 14, 2020: Sang-hoon Lee resigned from his position of Executive Director.

Mar 18, 2020: Jong-hee Han and Yoon-ho Choi were appointed as Executive Directors at the AGM.

*In accordance with Article 3-1 of Enforcement Decree Of The Act On Corporate Governance Of Financial Companies.

** Retired as of February 28, 2020.

B. Concurrent positions with othe r companie s

[As of Dec 31, 2019]

Concurrent office holder Company

Name Position Name of company Position Period

Jae-wan Bahk Independent Director Lotte Shopping Co., Ltd Independent director 2016–present

Jeong Kim Independent Director Kiswe Mobile President 2013–present

C. Employees

[As of Dec 31, 2019]

(KRW mil)

Division

Gender

Number of employees*

Average

length

of service

(years)

Total

compensation

Average

compensation

per employee**

Non-affiliated

Regular

Contract

-based

Others

T otal

Male Female Total

CE

M

9,997

67

-

10,064

15.4

-

17,647

9,248

26,895

CE

F

2,069

17

-

2,086

10.4

-

IM

M

20,060

185

-

20,245

13.3

-

IM

F

7,374

30

-

7,404

11.1

-

DS

M

38,926

145

-

39,071

10.9

-

DS

F

15,495

14

-

15,509

10.9

-

Others

M

8,401

142

-

8,543

14.6

-

Others

F

2,283

52

-

2,335

10.7

-

Gender

Total

M 77,

384

539

-

7

7,923

12.

5

8,808,664

116

Gender

Total

F

27,221

113

-

27,334

10.9

2,11

3,751

83

Total

104,605

652

-

105,257

12.1

10,922,415

108

Note: Total compensation and average compensation per employee were calculated before income tax and other deductions based on

the earned income payment record submitted to the district tax office in accordance with Article 20 of the Income Tax Law.

*Parent basis; represents employees of domestic headquarters in Korea, including employees on leave and excluding four

Executive Directors and six Independent Directors.

**Calculated based on average number of employees: 101,546 employees (male: 76,157, female: 25,389).

Samsung Electronics Business Report 212 / 261

D. Non-registered Executives

[As of Dec 31, 2019]

(KRW mil)

Classification

Number of employees

Total compensation

Average compensation per

employee

Note

Non-registered

Executives

887

547,236

617

-

Note: Number of employees only includes those non-registered executives who are active and the amount of compensation is

calculated based on the earned income payment record submitted to the district tax office in accordance with Article 20 of the

Income Tax Law.

A total of 167 non-registered executives were excluded as they did not earn domestic income (eg, expatriates).

2. Remuneration for directors

A. Summary on total remuneration

(1) Remuneration approved at the annual general meetings of shareholders

( K RW mil)

Number of persons

Amount approved at

shareholders’ meeting

Note

Executive Directors 5 - -

Independent Directors 3 - -

Audit Committee members or Auditor 3 - -

Total 11 46,500 -

Note: As of the day of AGM, as approved on the occasion

(2) Remuneration Paid

[Remuneration paid for directors and auditors]

(K RW mil)

Number

of persons*

Total amount of

remuneration**

Average remuneration per

Director***

Note

10 12,923 1,292 -

Note: There are no recognized expenses (compensation expenses) in this term from granting stock options.

*As of the reporting date.

**Based on the Income Tax Law that incumbent or retired executive directors, independent directors, and members of audit

committee in the fiscal year received in accordance with Article 159 of the Financial Investment Services and Capital Markets

Act and Article 168 of the enforcement decree of the same law.

***Average remuneration per person was calculated by dividing total remuneration by the number of persons as of the

reporting date.

Samsung Electronics Business Report 213 / 261

[Remuneration paid, by Director type]

(K RW mil)

Number

of persons*

Total amount of

remuneration**

Average remuneration per

Director***

Registered Directors

(excluding Independent Directors and Audit Committee

members)

4 12,017 3,004

Independent Directors

(excluding Audit Committee members)

3 528 176

Audit Committee members 3 378 126

Auditor - - -

Note: There are no recognized expenses (compensation expenses) in this term from granting stock options.

*As of the reporting date.

**The total amount is the income based on the Income Tax Law that incumbent or retired executive directors, independent

directors, and members of audit committee in the fiscal year received in accordance with Article 159 of the Financial

Investment Services and Capital Markets Act and Article 168 of the enforcement decree of the same law.

***Average remuneration per person was calculated by dividing total remuneration by the number of persons as of the

reporting date.

(3) Criteria and methodology

Ty p e Criteria and methodology

Registered Directors

(excluding Independent

Directors and Audit

Committee members)

• Salary: In accordance with internal regulations for executive treatment (Board resolution), remuneration is

determined based on position, responsibilities, and performance results.

• Traditional holiday bonus: 100% of monthly wage

• Target achievement incentive: Paid biannual basis within the range of 0–200% of monthly wage, and CEO

decides the amount according to the level of target achieved. (Adjusted according to division performance.)

• Performance incentive: When performance exceeds the Company’s goal; CEO decides the amount based on

20% profit. Paid once a year within 0–50% of salary. (Adjusted according to individual performance.)

• Long-term incentive: Calculated within the director remuneration limit, based on the average salary of 3 years,

using ROE, stock performance, and EBIT margin as criteria. Paid over the course of 3 years.

• Fringe benefits: Medical services, checkups, group accident insurance are provided in line with the internal

regulations for executive treatment (Board resolution)

Independent Directors

(excluding Audit Committee

members)

• Salary: In accordance with internal regulations for independent director treatment, remuneration is determined

based on responsibilities, etc.

• Fringe benefits: Medical services, checkups, group accident insurance are provided in line with the internal

regulations for independent director treatment

Audit Committee members

• Salary: In accordance with internal regulations for independent director treatment, remuneration is determined

based on responsibilities, etc.

• Fringe benefits: Medical services, checkups, group accident insurance are provided in line with the internal

regulations for independent director treatment

Note: No bonus based on performance for Independent Directors including members of the audit committee.

Samsung Electronics Business Report 214 / 261

< Re muneration for individual Exe cutive Directors >

(1) Summary on Remuneration by Executive

(KRW mil)

Name Position

Total amount of

remuneration

Remuneration not included

in total amount

Ki-nam Kim Executive Director 3,451 -

Hyun-suk Kim Executive Director 2,578 -

Dong-jin Koh Executive Director 2,828 -

Sang-hoon Lee Director 3,135 -

Note: Remuneration for registered executives is the total remuneration which includes remuneration they received as non-registered

executives.

(2) Criteria and methodology

(

KRW mil)

Name

Type of

remuneration

Total amount Criteria and methodology

Ki-nam Kim

(CEO)

Earned

Income

Salary 1,370

In accordance with internal regulation for executive treatment (Board resolution),

remuneration is determined based on his position (vice chairman), responsibilities, and

performance results. He was paid KRW 114 million per month from January to

December.

Bonus 1,959

- Traditional holiday bonus: 100% of monthly wage

- Target achievement incentive: Paid biannual basis within the range of 0–200% of monthly

wage, and CEO decides the amount according to the level of target achieved.

(Adjusted according to division performance.)

- Performance incentive: When performance exceeds the Company’s goal; CEO

decides the amount based on 20% profit. Paid once a year within 0–50% of salary.

(Adjusted according to individual performance.)

- Long-term incentive: Calculated within the director remuneration limit, based on the

average salary of 3 years, using ROE, stock performance, and EBIT margin as

criteria. Paid over the course of 3 years.

※ Quantitative indicators suggest that the Company achieved a ROE of 12.6%, EBIT

margin of 13.9%, and stock performance of 18% over 2014–2016; and that the DS

division achieved sales of KRW 95.5 trillion and operating profit of KRW 15.6 trillion in

2019. Qualitative indicators include solid performance in the DS division, excellent

leadership in memory market, and contributions to enhancing future competitiveness

with aggressive investments in the non-memory business including System LSI and

Foundry. The amount of the bonus was determined based on the indicators.

Profit from

exercising

stock

option

- n/a

Other

Income

122

- Fringe benefits: Medical services, checkups, vehicle, group accident insurance are

provided in line with the internal regulations for executive treatment (Board

resolution)

Retirement Income - n/a

Other Income - n/a

(

KRW mil)

Name

Type of

remuneration

Total amount Criteria and methodology

Earned

Income

Salary 913

In accordance with internal regulation for executive treatment (Board resolution),

remuneration is determined based on his position (president), responsibilities, and

performance results. He was paid KRW 76 million per month from January to

Samsung Electronics Business Report 215 / 261

Hyun-suk

Kim

(CEO)

December.

Bonus 1,568

- Traditional holiday bonus: 100% of monthly wage

- Target achievement incentive: Paid biannual basis within the range of 0–200% of monthly

wage, and CEO decides the amount according to the level of target achieved.

(Adjusted according to division performance.)

- Performance incentive: When performance exceeds the Company’s goal; CEO

decides the amount based on 20% profit. Paid once a year within 0–50% of salary.

(Adjusted according to individual performance.)

- Long-term incentive: Calculated within the director remuneration limit, based on the

average salary of 3 years, using ROE, stock performance, and EBIT margin as

criteria. Paid over the course of 3 years.

※ Quantitative indicators suggest that the Company achieved ROE of 12.6%, EBIT

margin of 13.9%, and stock performance of 18% in 2014–2016; and that the CE

division achieved sales of KRW 44.8 trillion and operating profit of KRW 2.6 trillion in

2019. Qualitative indicators include strengthening product leadership in the market by

launching innovative products such as QLED TVs and Bespoke refrigerators despite a

challenging environment and enhancing profitability via improving operational

structure. The amount of the bonus was determined based on the indicators.

Profit from

exercising

stock

option

- n/a

Other

Income

97

- Fringe benefits: Medical services, checkups, vehicle, group accident insurance are

provided in line with the internal regulations for executive treatment (Board

resolution)

Retirement Income - n/a

Other Income - n/a

(

KRW mil)

Name

Type of

remuneration

Total amount Criteria and methodology

Dong-jin

Koh

(CEO)

Earned

Income

Salary 1,170

In accordance with internal regulation for executive treatment (Board resolution),

remuneration is determined based on his position (president), responsibilities, and

performance results. He was paid KRW 98 million per month from January to

December.

Bonus 1,557

- Traditional holiday bonus: 100% of monthly wage

- Target achievement incentive: Paid biannual basis within the range of 0–200% of monthly

wage, and CEO decides the amount according to the level of target achieved.

(Adjusted according to division performance.)

- Performance incentive: When performance exceeds the Company’s goal; CEO

decides the amount based on 20% profit. Paid once a year within 0–50% of salary.

(Adjusted according to individual performance.)

- Long-term incentive: Calculated within the director remuneration limit, based on the

average salary of 3 years, using ROE, stock performance, and EBIT margin as

criteria. Paid over the course of 3 years.

※ Quantitative indicators suggest that the Company achieved ROE of 12.6%, EBIT

margin of 13.9%, and stock performance of 18% in 2014–2016; and that the IM

division achieved sales of KRW 107.3 trillion and operating profit of KRW 9.3 trillion in

2019. Qualitative indicators include maintaining solid sales figure in the IM division by

strengthening the mobile product lineup and increasing network equipment sales. In

addition, he contributed to strengthening technology leadership in the market via the

commercialization of world’s first 5G mobile and communication equipment which

ushered in the 5G era. The amount of bonus was determined based on the indicators.

Profit from

exercising

stock

option

- n/a

Samsung Electronics Business Report 216 / 261

Other

Income

101

- Fringe benefits: Medical services, checkups, vehicle, group accident insurance are

provided in line with the internal regulations for executive treatment (Board

resolution)

Retirement Income - n/a

Other Income - n/a

(

KRW mil)

Name

Type of

remuneration

Total amount Criteria and methodology

Sang-hoon

Lee

(Director)

Earned

Income

Salary 778

In accordance with internal regulation for executive treatment (Board resolution),

remuneration is determined based on his position (president), responsibilities, and

performance results. He was p

aid KRW 65 million per month from January to

December.

Bonus 2,221

- Traditional holiday bonus: 100% of monthly wage

- Target Achievement Incentive: Paid biannual basis within the range of 0–200% of monthly

wage, and CEO decides the amount according to the level of target achieved.

(Adjusted according to division performance.)

- Performance Incentive: When performance exceeds the Company’s goal; CEO

decides the amount based on 20% profit. Paid once a year within 0–50% of salary.

(Adjusted according to individual performance.)

- Long-term incentive: Calculated within the director remuneration limit, based on the

average salary of 3 years, using ROE, stock performance, and EBIT margin as

criteria. Paid over the course of 3 years.

※ Quantitative indicators suggest that the Company achieved ROE of 12.6%, EBIT

margin of 13.9%, and stock performance of 18% in 2014–2016; and that the Company

achieved sales of KRW 230.4 trillion and operating profit of KRW 27.8 trillion in 2019.

Qualitative indicators include increasing transparency of the Board and enhancing

shareholder value as the Chairman of the Board. The amount of the bonus was

determined based on the indicators.

Profit from

exercising

stock

option

- n/a

Other

Income

136

- Fringe benefits: Medical services, checkups, vehicle, group accident insurance are

provided in line with the internal regulations for executive treatment (Board

resolution)

Retirement Income - n/a

Other Income - n/a

< Re mune ration for five highe st-paid Executive Directors (KRW 500 million or more >

(1) Summary on remuneration by Executive

(KRW mil)

Name position

Total amount of

remuneration

Remuneration not included

in total amount

Oh-hyun Kwon Chairman 4,637 -

Jong-kyun Shin Vice Chairman 3,851

Boo-keun Yoon Vice Chairman 3,843

Ki-nam Kim CEO 3,451

Sang-hoon Lee Director 3,135

Samsung Electronics Business Report 217 / 261

(2) Criteria and methodology

(K RW mil)

Name

Type of

remuneration

Total amount Criteria and methodology

Oh-hyun

Kwon

Earned

Income

Salary 1,249

In accordance with internal regulation for executive treatment (Board resolution),

remuneration is determined based on position (chairman), responsibilities, and

performance results. He was paid KRW 104 million per month from January to

December.

Bonus 3,269

- Traditional holiday bonus: 100% of monthly wage

- Target achievement incentive: Paid biannual basis within the range of 0–200% of

monthly wage, and CEO decides the amount according to the level of target

achieved. (Adjusted according to division performance.)

- Performance incentive: When performance exceeds the Company’s goal;

CEO decides the amount based on 20% profit. Paid once a year within 0–

50% of salary. (Adjusted according to individual performance.)

- Long-term incentive: Calculated within the director remuneration limit, based

on the average salary of 3 years, using ROE, stock performance, and EBIT

margin as criteria. Paid over the course of 3 years.

※ Quantitative indicators suggest that the Company achieved ROE of 12.6%, EBIT

margin of 13.9%, and stock performance of 18% in 2014–2016; and that the Company

achieved sales of KRW 230.4 trillion and operating profit of KRW 27.8 trillion in 2019.

Qualitative indicators include identifying future technologies and new business areas,

presenting mid-to-long term business direction, and nurturing the next generation

executives. The amount of bonus was determined based on the indicators.

Profit from

exercising

stock

option

- n/a

Other

Income

119

- Fringe benefits: Medical services, checkups, vehicle, group accident insurance are

provided in line with the internal regulations for executive treatment (Board

resolution)

Retirement Income - n/a

Other Income - n/a

(

KRW mil)

Name

Type of

remuneration

Total amount Criteria and methodology

Jong-kyun

Shin

Earned

Income

Salary 1,037

In accordance with internal regulations for executive treatment (Board resolution),

remuneration is determined based on his position (vice chairman), responsibilities, and

performance results. He was paid KRW 86 million per month

from January to

December.

Bonus 2,681

- Traditional holiday bonus: 100% of monthly wage

- Target achievement incentive: Paid biannual basis within the range of 0–200% of monthly

wage, and CEO decides the amount according to the level of target achieved.

(Adjusted according to division performance.)

- Performance incentive: When performance exceeds the Company’s goal; CEO

decides the amount based on 20% profit. Paid once a year within 0–50% of salary.

(Adjusted according to individual performance.)

- Long-term incentive: Calculated within the director remuneration limit, based on the

average salary of 3 years, using ROE, stock performance, and EBIT margin as

criteria. Paid over the course of 3 years.

※ Quantitative indicators suggest that the Company achieved ROE of 12.6%, EBIT

margin of 13.9%, and stock performance of 18% in 2014–2016; and that the Company

achieved sales of KRW 230.4 trillion and operating profit of KRW 27.8 trillion in 2019.

Qualitative indicators include passing on management insights, identifying the next

generation executives, and enhancing the competency of Company’s human resource

as the person responsible for HR development. The amount of the bonus was

Samsung Electronics Business Report 218 / 261

determined based on the indicators.

Profit from

exercising

stock

option

- n/a

Other

Income

133

- Fringe benefits: Medical services, checkups, vehicle, group accident insurance are

provided in line with the internal regulations for executive treatment (Board

resolution)

Retirement Income - n/a

Other Income - n/a

(

KRW mil)

Name

Type of

remuneration

Total amount Criteria and methodology

Boo-keun

Yoon

Earned

Income

Salary 1,037

In accordance with internal regulations for executive treatment (Board resolution),

remuneration is determined based on position (executive

vice president),

responsibilities, and performance results. He was paid KRW 86 million per month from

January to December.

Bonus 2,681

- Traditional holiday bonus: 100% of monthly wage

- Target achievement incentive: Paid biannual basis within the range of 0–200% of monthly

wage, and CEO decides the amount according to the level of target achieved.

(Adjusted according to division performance.)

- Performance incentive: When performance exceeds the Company’s goal; CEO

decides the amount based on 20% profit. Paid once a year within 0–50% of salary.

(Adjusted according to individual performance.)

- Long-term incentive: Calculated within the director remuneration limit, based on the

average salary of 3 years, using ROE, stock performance, and EBIT margin as

criteria. Paid over the course of 3 years.

※ Quantitative indicators suggest that the Company achieved ROE of 12.6%, EBIT

margin of 13.9%, and stock performance of 18% in 2014–2016; and that the Company

achieved sales of KRW 230.4 trillion and operating profit of KRW 27.8 trillion in 2019.

Qualitative indicators include acting as the Company’s spokesperson in major events

hosted by government and economic organizations as the person responsible for

Corporate Relations. He also contributed to management by identifying external risks

for the business. The amount of the bonus was determined based on the indicators.

Profit from

exercising

stock

option

- n/a

Other

Income

125

- Fringe benefits: Medical services, checkups, vehicle, group accident insurance are

provided in line with the internal regulations for executive treatment (Board

resolution)

Retirement Income - n/a

Other Income - n/a

(

KRW mil)

Name

Type of

remuneration

Total amount Criteria and methodology

Ki-nam Kim

Earned

Income

Salary 1,370

In accordance with internal regulation for executive treatment (Board resolution),

remuneration is determined based on his position (vice chairman), responsibilities, and

performance results. He was paid KRW 114 million per month from January to

December.

Bonus 1,959

- Traditional holiday bonus: 100% of monthly wage

- Target achievement incentive: Paid biannual basis within the range of 0–200% of monthly

wage, and CEO decides the amount according to the level of target achieved.

Samsung Electronics Business Report 219 / 261

(Adjusted according to division performance.)

- Performance incentive: When performance exceeds the Company’s goal; CEO

decides the amount based on 20% profit. Paid once a year within 0–50% of salary.

(Adjusted according to individual performance.)

- Long-term incentive: Calculated within the director remuneration limit, based on the

average salary of 3 years, using ROE, stock performance, and EBIT margin as

criteria. Paid over the course of 3 years.

※ Quantitative indicators suggest that the Company achieved a ROE of 12.6%, EBIT

margin of 13.9%, and stock performance of 18% over 2014–2016; and that the DS

division achieved sales of KRW 95.5 trillion and operating profit of KRW 15.6 trillion in

2019. Qualitative indicators include solid performance in the DS division, excellent

leadership in memory market, and contributions to enhancing future competitiveness

with aggressive investments in the non-memory business including System LSI and

Foundry. The amount of the bonus was determined based on the indicators.

Profit from

exercising

stock

option

- n/a

Other

Income

122

- Fringe benefits: Medical services, checkups, vehicle, group accident insurance are

provided in line with the internal regulations for executive treatment (Board

resolution)

Retirement Income - n/a

Other Income - n/a

(KRW mil)

Name

Type of

remuneration

Total amount Criteria and methodology

Sang-hoon

Lee

Earned

Income

Salary 778

In accordance with internal regulations for executive treatment (Board resolution),

remuneration is determined based on position (president), responsibilities

, and

performance results. He was paid KRW 65 million per month from January to

December.

Bonus 2,221

- Traditional holiday bonus: 100% of monthly wage

- Target Achievement Incentive: Paid biannual basis within the range of 0–200% of monthly

wage, and CEO decides the amount according to the level of target achieved.

(Adjusted according to division performance.)

- Performance Incentive: When performance exceeds the Company’s goal; CEO

decides the amount based on 20% profit. Paid once a year within 0–50% of salary.

(Adjusted according to individual performance.)

- Long-term incentive: Calculated within the director remuneration limit, based on the

average salary of 3 years, using ROE, stock performance, and EBIT margin as

criteria. Paid over the course of 3 years.

※ Quantitative indicators suggest that the Company achieved ROE of 12.6%, EBIT

margin of 13.9%, and stock performance of 18% in 2014–2016; and that the Company

achieved sales of KRW 230.4 trillion and operating profit of KRW 27.8 trillion in 2019.

Qualitative indicators include increasing the transparency of the board of directors and

enhancing shareholder value as the Chairman of the Board. The amount of bonus was

determined based on the indicators.

Profit from

exercising

stock

option

- n/a

Other

Income

136

- Fringe benefits: Medical services, checkups, vehicle, group accident insurance are

provided in line with the internal regulations for executive treatment (Board

resolution)

Retirement Income - n/a

Other Income - n/a

Samsung Electronics Business Report 220 / 261

B. Stock options grante d and exercise d

(1) Status of stock options granted to registered Directors

There have been no stock options granted to, or exercised by, the executive Board or Audit Committee members during

the reporting period.

(2) Status of stock options granted to non-registered Executives

As of December 31, 2019, there was no accumulated-basis unexercised stock option.

Samsung Electronics Business Report 221 / 261

IX. Affiliates and Subsidia ries

1. Affiliates & subsidiaries

- Name of affiliated group: Samsung

As of

December 31, 2019, Samsung Group had a total of sixty domestic affiliates. Among the Samsung Group’s sixty

domestic affiliates, sixteen affiliates including Samsung Electronics are listed, and forty-four affiliates are unlisted.

[As of

December 31, 2019]

No. of

affiliates

Name of affiliates

Listed 16

Samsung C&T; Samsung Electronics; Samsung SDI; Semco; Samsung Fire & Marine Insurance; Samsung

Heavy Industries; Samsung Life Insurance; Multicampus; Samsung Securities; Samsung SDS; Samsung

Card; Samsung Engineering; S1; Cheil Worldwide; Hotel Shilla; Samsung Biologics

Unlisted 44

Seoul 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; Samsung Fire &

Marine Insurance Financial Service; Samsung Electronics Service CS; Samsung Futures; Samsung Asset

Management; Samsung Life Service; Samsung SRA Asset Management; Samsung Life Financial Service;

SD Flex; Cheil Fashion Retail Co., Ltd.; Natural9*; Samsung Welstory; SECUI; STM; S-Core; OpenHands;

Miracom; Samsung Card Customer Service; Human TSS; S-1CRM; Shilla Stay; HDC Shilla Duty Free LTD;

Samsung Economic Research Institute (SERI); Samsung Lions; Samsung Venture Investment Corporation;

Samsung Active Asset Management; Samsung Hedge Asset Management; Harman International Korea;

SBTM

Total 60

Note: *Liquidated in December 2019 and was no longer an affiliate as of January 2020.

Samsung Electronics Business Report 222 / 261

2. Ownership status of affiliates and subsidiaries

[Domestic]

Inv estee

Inv estor

Samsung

C&T Corp

Samsung

Electronics

Samsung

SDI

Semco

Samsung

Heav y

Industries

Hotel

Shilla

Samsung

Engineering

Cheil

Worldw ide

S1

Corpo

ration

Samsung

SDS

Samsung

Lions

SERI STECO

Samsung C&T

Corporation

5.0

0.1

7.0

17.1

1.0

Samsung

Electronics

19.6

23.7 16.0

5.1

25.2

22.6

29.8

70.0

Samsung SDI

0.4

0.1 11.7

11.0

29.6

Samsung Electro-

mechanics

2.2

23.8

Samsung Heavy

Industries

1.0

Cheil

Worldw ide

0.1

67.5

Hotel Shilla

S1 Corporation

SERI

Samsung SDS

Samsung Life

Insurance

0.1

8.8

0.1

0.2

3.2

7.7

0.1

5.4

0.1

14.8

Samsung Fire &

Marine Insurance

1.5

0.2

1.0

Samsung

Securities.

3.1

1.3

Samsung Card

1.3

3.0

1.9

SDC

Samsung

BioLogics

Samsung Asset

Management

Miracom

Samsung

Eelectronics

Service

Harman

International

Industries, Inc.

Total

0.1

15.3

19.7

23.9

22.0

17.3

19.0

28

.4

20.6

39.8

67.5

100

70.0

Note: Percent of ownership as of December 31, 2019 based on common shares

Samsung Electronics Business Report 223 / 261

Inv estee

Inv estor

SEMES

Samsung

Electronics

Service

Samsung

Electronics

Sales

Suwon

Samsung

Bluewings

FC

Samsung

Electronics

Logitech

Samsung

Display

Samsung

Medison

Samsung

BioLogics

Samsung

BioEpis

Samsung

Corning

Advanced

Glass

SU

Materials

CVnet

Seoul

Lakeside

CC

Samsung C&T

Corporation

43.4

40.1

100

Samsung

Electronics

91.5 99.3 100

100

84.8 68.5

31.5

Samsung SDI

15.2

Samsung

Electro-

mechanics

Samsung Heavy

Industries

Cheil

Worldwide

100

Hotel Shilla

S1

Corporation

SERI

Samsung

SDS

9.4

Samsung Life

Insurance

0.1

Samsung Fire &

Marine

Insurance

Samsung

Securities.

Samsung

Card

SDC

50.0

Samsung

BioLogics

50.0

Samsung

Asset

Management

Miracom

Samsung

Eelectronics

Service

Harman

International

Industries, Inc.

Total

91.5 99.3 100

100

100 68.5

75.0

50.0

49.5

100

Note: Percent of ownership as of December 31, 2019 based on common shares

Samsung Electronics Business Report 224 / 261

Inv estee

Inv estor

Samwoo

Architects &

Engineers

SD Flex

Cheil

Fashion

Retail

Samsung

Welstory

Service

CS

SECUI

Human

TSS

S-1CRM STM

MULTI

CAMPUS

S-Core

Open

Hands

Samsung C&T

Corporation

100

8.7

Samsung

Electronics

Samsung SDI

50.0

100

Samsung Electro-

mechanics

Samsung Heavy

Industries

Cheil

Worldw ide

5.2

Hotel Shilla

S1 Corporation

100

0.6

SERI

15.2

Samsung SDS

56.5

47.2

81.8

100

Samsung Life

Insurance

Samsung Fire &

Marine Insurance

Samsung

Securities.

Samsung Card

SDC

Samsung

BioLogics

Samsung Asset

Management

Miracom

0.5

Samsung

Eelectronics

Service

100

Harman

International

Industries, Inc.

Total

100

50.0

100

100 100

65.2 100

100

62.4

88.1

100

Note: Percent of ownership as of December 31, 2019 based on common shares

Samsung Electronics Business Report 225 / 261

Inv estee

Inv estor

Miracom

Shilla

Stay

HDC

Shilla

Duty Free

LTD

SBTM

Samsung

Life

Insurance

Samsung

Life

Service

Samsung

SRA Asset

Managem

ent

Samsung

Life

Financial

Service

Samsung

Fire &

Marine

Insurance

Samsung

Claim

Adjustmen

t Serv ice

Samsung

Fire &

Marine

Insurance

Service

Samsung

Fire &

Marine

Financial

Service

Samsung C&T

Corporation

19.3

Samsung

Electronics

Samsung SDI

Samsung Electro-

mechanics

Samsung Heavy

Industries

Cheil

Worldw ide

5.4

Hotel Shilla

100

50.0

100

S1 Corporation

0.6

SERI

Samsung SDS

83.6

Samsung Life

Insurance

99.8 100

100

15.0

Samsung Fire &

Marine Insurance

100

Samsung

Securities.

Samsung Card

SDC

Samsung

BioLogics

Samsung Asset

Management

Miracom

Samsung

Eelectronics

Service

Harman

International

Industries, Inc.

Total

89.6

100

50.0

100 19.3

99.8 100

100

15.0

100

Note: Percent of ownership as of December 31, 2019 based on common shares

Samsung Electronics Business Report 226 / 261

Inv estee

Inv estor

Samsung

Securities

Samsung

Card

Samsung

Card

Customer

Service

Samsung

Asset

Management

Samsung

Futures

Samsung

Venture

Inv estment

Samsung

Activ e Asset

Management

Samsung

Hedge Asset

Management

Harman

International

Korea

Samsung C&T

Corporation

16.7

Samsung

Electronics

16.3

Samsung SDI

16.3

Samsung Electro-

mechanics

17.0

Samsung Heavy

Industries

17.0

Cheil Worldw ide

Hotel Shilla

S1 Corporation

SERI

Samsung SDS

Samsung Life

Insurance

29.5

71.9

100

Samsung Fire &

Marine Insurance

Samsung

Securities.

100

16.7

Samsung Card

100

SDC

Samsung

BioLogics

Samsung Asset

Management

100

Miracom

Samsung

Eelectronics

Service

Harman

International

Industries, Inc.

100

Total

29.5

71.9

100 100 100

100

Note: Percent of ownership as of December 31, 2019 based on common shares

Samsung Electronics Business Report 227 / 261

[Ove rseas]

Investor

Investee

Ownership

Samwoo Architects & Engineers

SAMOO HU Designer and Engineering Services Limited

100.0

Samwoo Architects & Engineers

SAMOO DESIGNERS & ENGINEERS INDIA PRIVATE LIMITED

100.0

Samwoo Architects & Engineers

SAMOO (KL) SDN. BHD.

100.0

Samsung C&T America Inc.

Meadowland Distribution

100.0

Samsung C&T America Inc.

Samsung Green repower, LLC

100.0

Samsung C&T America Inc.

Samsung Solar Construction Inc.

100.0

Samsung C&T America Inc.

QSSC, S.A. de C.V.

20.0

Samsung C&T America Inc.

Samsung Solar Energy LLC

100.0

Samsung C&T America Inc.

S-print Inc

24.0

Samsung Renewable Energy Inc.

SP Armow Wind Ontario LP

50.0

Samsung Renewable Energy Inc.

SRE GRW EPC GP Inc.

100.0

Samsung Renewable Energy Inc.

SRE GRW EPC LP

100.0

Samsung Renewable Energy Inc.

SRE SKW EPC GP Inc.

100.0

Samsung Renewable Energy Inc.

SRE SKW EPC LP

100.0

Samsung Renewable Energy Inc.

SRE WIND PA GP INC.

100.0

Samsung Renewable Energy Inc.

SRE WIND PA LP

100.0

Samsung Renewable Energy Inc.

SRE GRS Holdings GP Inc.

100.0

Samsung Renewable Energy Inc.

SRE GRS Holdings LP

100.0

Samsung Renewable Energy Inc.

SRE K2 EPC GP Inc.

100.0

Samsung Renewable Energy Inc.

SRE K2 EPC LP

100.0

Samsung Renewable Energy Inc.

SRE KS HOLDINGS GP INC.

100.0

Samsung Renewable Energy Inc.

SRE KS HOLDINGS LP

100.0

Samsung Renewable Energy Inc.

SP Belle River Wind LP

42.5

Samsung Renewable Energy Inc.

SRE Armow EPC GP Inc.

100.0

Samsung Renewable Energy Inc.

SRE Armow EPC LP

100.0

Samsung Renewable Energy Inc.

North Kent Wind 1 LP

35.0

Samsung Renewable Energy Inc.

SRE Wind GP Holding Inc.

100.0

Samsung Renewable Energy Inc.

South Kent Wind LP Inc.

50.0

Samsung Renewable Energy Inc.

Grand Renewable Wind LP Inc.

45.0

Samsung Renewable Energy Inc.

SRE North Kent 2 LP Holdings LP

100.0

Samsung Renewable Energy Inc.

SRE Solar Development GP Inc.

100.0

Samsung Renewable Energy Inc.

SRE Solar Development LP

100.0

Samsung Renewable Energy Inc.

SRE Windsor Holdings GP Inc.

100.0

Samsung Renewable Energy Inc.

SRE Southgate Holdings GP Inc.

100.0

Samsung Renewable Energy Inc.

SRE Solar Construction Management GP Inc.

100.0

Samsung Renewable Energy Inc.

SRE Solar Construction Management LP

100.0

Samsung Renewable Energy Inc.

SRE DEVELOPMENT GP INC.

100.0

Samsung Renewable Energy Inc.

SRE DEVELOPMENT LP

100.0

Samsung Renewable Energy Inc.

SRE BRW EPC GP INC.

100.0

Samsung Renewable Energy Inc.

SRE BRW EPC LP

100.0

Samsung Renewable Energy Inc.

SRE North Kent 1 GP Holdings Inc

100.0

Samsung Renewable Energy Inc.

SRE North Kent 2 GP Holdings Inc

100.0

Samsung Renewable Energy Inc.

SRE Belle River GP Holdings Inc

100.0

Samsung Renewable Energy Inc.

SRE NK1 EPC GP Inc

100.0

Samsung Renewable Energy Inc.

SRE NK1 EPC LP

100.0

Samsung Renewable Energy Inc.

SRE Summerside Construction GP Inc.

100.0

Samsung Renewable Energy Inc.

SRE Summerside Construction LP

100.0

Samsung Green repower, LLC

SOLAR PROJECTS SOLUTIONS,LLC

50.0

SP Armow Wind Ontario GP Inc

SP Armow Wind Ontario LP

0.0

Samsung C&T Oil & Gas Parallel Corp.

PLL Holdings LLC

83.6

Samsung C&T Oil & Gas Parallel Corp.

PLL E&P LLC

90.0

SRE GRW EPC GP Inc.

SRE GRW EPC LP

0.0

SRE SKW EPC GP Inc.

SRE SKW EPC LP

0.0

PLL Holdings LLC

Parallel Petroleum LLC

61.0

SRE WIND PA GP INC.

SRE WIND PA LP

0.0

SRE GRS Holdings GP Inc.

Grand Renewable Solar GP Inc.

50.0

SRE GRS Holdings GP Inc.

SRE GRS Holdings LP

0.0

SRE K2 EPC GP Inc.

SRE K2 EPC LP

0.0

SRE KS HOLDINGS GP INC.

KINGSTON SOLAR GP INC.

50.0

Samsung Electronics Business Report 228 / 261

Investor

Investee

Ownership

SRE KS HOLDINGS GP INC.

SRE KS HOLDINGS LP

0.0

SP Belle River Wind GP Inc

SP Belle River Wind LP

0.0

SRE Armow EPC GP Inc.

SRE Armow EPC LP

0.0

SRE Wind GP Holding Inc.

SP Armow Wind Ontario GP Inc

50.0

SRE Wind GP Holding Inc.

South Kent Wind GP Inc.

50.0

SRE Wind GP Holding Inc.

Grand Renewable Wind GP Inc.

50.0

South Kent Wind GP Inc.

South Kent Wind LP Inc.

0.0

Grand Renewable Wind GP Inc.

Grand Renewable Wind LP Inc.

0.0

North Kent Wind 1 GP Inc

North Kent Wind 1 LP

0.0

SRE Solar Development GP Inc.

SRE Solar Development LP

0.0

SRE Solar Construction Management GP Inc.

SRE Solar Construction Management LP

0.0

SRE DEVELOPMENT GP INC.

SRE DEVELOPMENT LP

0.0

SRE BRW EPC GP INC.

SRE BRW EPC LP

0.0

SRE North Kent 1 GP Holdings Inc

North Kent Wind 1 GP Inc

50.0

SRE North Kent 2 GP Holdings Inc

SRE North Kent 2 LP Holdings LP

0.0

SRE Belle River GP Holdings Inc

SP Belle River Wind GP Inc

50.0

SRE NK1 EPC GP Inc

SRE NK1 EPC LP

0.0

SRE Summerside Construction GP Inc.

SRE Summerside Construction LP

0.0

Samsung Solar Energy LLC

Samsung Solar Energy 1 LLC

100.0

Samsung Solar Energy LLC

Samsung Solar Energy 2 LLC

100.0

Samsung Solar Energy LLC

Samsung Solar Energy 3, LLC

100.0

Samsung Solar Energy 1 LLC

CS SOLAR LLC

50.0

Samsung Solar Energy 3, LLC

SST SOLAR, LLC

50.0

Samsung C&T Deutschland GmbH

POSS-SLPC, S.R.O

20.0

Samsung C&T Deutschland GmbH

Solluce Romania 1 B.V.

20.0

Samsung C&T Deutschland GmbH

S.C. Otelinox S.A

94.3

Solluce Romania 1 B.V.

LJG GREEN SOURCE ENERGY ALPHA S.R.L.

78.0

Cheil Holding Inc.

Samsung Const. Co. Phils.,Inc.

75.0

Samsung C&T Singapore Pte., Ltd.

Samsung Chemtech Vina LLC

48.3

Samsung C&T Singapore Pte., Ltd.

S-print Inc

16.0

Samsung C&T Singapore Pte., Ltd.

PT. INSAM BATUBARA ENERGY

10.0

Samsung C&T Singapore Pte., Ltd.

Malaysia Samsung Steel Center Sdn.Bhd

30.0

Samsung C&T Singapore Pte., Ltd.

S&G Biofuel PTE.LTD

12.6

S&G Biofuel PTE.LTD

PT. Gandaerah Hendana

95.0

S&G Biofuel PTE.LTD

PT. Inecda

95.0

Samsung C&T Hongkong Ltd.

Samsung C&T Thailand Co., Ltd

13.2

Samsung C&T Hongkong Ltd.

SAMSUNG (TIANJIN) INTERNATIONAL TRADING CO., LTD

100.0

Samsung C&T Hongkong Ltd.

SAMSUNG TRADING (SHANGHAI) CO., LTD

100.0

Samsung C&T Hongkong Ltd.

Samsung Precision Stainless Steel(pinghu) Co.,Ltd.

45.0

Samsung Electronics

Samsung Japan Corporation

100.0

Samsung Electronics

Samsung R&D Institute Japan Co. Ltd.

100.0

Samsung Electronics

Samsung Electronics America, Inc.

100.0

Samsung Electronics

Samsung Electronics Canada, Inc.

100.0

Samsung Electronics

Samsung Electronics Mexico S.A. De C.V.

63.6

Samsung Electronics

Samsung Electronics (UK) Ltd.

100.0

Samsung Electronics

Samsung Electronics Ltd.

100.0

Samsung Electronics

Samsung Electronics Holding GmbH

100.0

Samsung Electronics

Samsung Electronics Iberia, S.A.

100.0

Samsung Electronics

Samsung Electronics France S.A.S

100.0

Samsung Electronics

Samsung Electronics Hungarian Private Co. Ltd.

100.0

Samsung Electronics

Samsung Electronics Italia S.P.A.

100.0

Samsung Electronics

Samsung Electronics Europe Logistics B.V.

100.0

Samsung Electronics

Samsung Electronics Benelux B.V.

100.0

Samsung Electronics

Samsung Electronics Overseas B.V.

100.0

Samsung Electronics

Samsung Electronics Polska, SP.Zo.o

100.0

Samsung Electronics

Samsung Electronics Portuguesa S.A.

100.0

Samsung Electronics

Samsung Electronics Nordic Aktiebolag

100.0

Samsung Electronics

Samsung Electronics Austria GmbH

100.0

Samsung Electronics

Samsung Electronics Slovakia s.r.o

55.7

Samsung Electronics

Samsung Electronics Europe Holding Cooperatief U.A.

100.0

Samsung Electronics

Samsung Electronics Display (M) Sdn. Bhd.

75.0

Samsung Electronics Business Report 229 / 261

Investor

Investee

Ownership

Samsung Electronics

Samsung Electronics (M) Sdn. Bhd.

100.0

Samsung Electronics

Samsung Vina Electronics Co., Ltd.

100.0

Samsung Electronics

Samsung Asia Private Ltd.

100.0

Samsung Electronics

Samsung India Electronics Private Ltd.

100.0

Samsung Electronics

Samsung R&D Institute India-Bangalore Priv ate Limited

100.0

Samsung Electronics

Samsung Electronics Australia Pty. Ltd.

100.0

Samsung Electronics

PT Samsung Electronics Indonesia

100.0

Samsung Electronics

Thai Samsung Electronics Co., Ltd.

91.8

Samsung Electronics

Samsung Malaysia Electronics (SME) Sdn. Bhd.

100.0

Samsung Electronics

Samsung Electronics Hong Kong Co., Ltd.

100.0

Samsung Electronics

Suzhou Samsung Electronics Co., Ltd.

69.1

Samsung Electronics

Samsung (CHINA) Investment Co., Ltd.

100.0

Samsung Electronics

Samsung Electronics Suzhou Semiconductor Co., Ltd.

100.0

Samsung Electronics

Samsung Electronics Huizhou Co., Ltd.

89.6

Samsung Electronics

Tianjin Samsung Electronics Co., Ltd.

48.2

Samsung Electronics

Samsung Electronics Taiwan Co., Ltd.

100.0

Samsung Electronics

Tianjin Samsung Telecom Technology Co., Ltd.

90.0

Samsung Electronics

Shanghai Samsung Semiconductor Co., Ltd.

100.0

Samsung Electronics

Samsung Electronics Suzhou Computer Co., Ltd.

73.7

Samsung Electronics

Shenzhen Samsung Electronics Telecommunication Co., Ltd.

100.0

Samsung Electronics

Samsung Semiconductor (China) R&D Co., Ltd.

100.0

Samsung Electronics

Samsung (China) Semiconductor Co., Ltd.

100.0

Samsung Electronics

Samsung SemiConductor Xian Co., Ltd.

100.0

Samsung Electronics

Samsung Gulf Electronics Co., Ltd.

100.0

Samsung Electronics

Samsung Electronics Egypt S.A.E

0.1

Samsung Electronics

Samsung Electronics South Africa(Pty) Ltd.

100.0

Samsung Electronics

Samsung Electronics Latinoamerica(Zona Libre), S. A.

100.0

Samsung Electronics

Samsung Electronica da Amazonia Ltda.

87.0

Samsung Electronics

Samsung Electronics Argentina S.A.

98.0

Samsung Electronics

Samsung Electronics Chile Limitada

4.1

Samsung Electronics

Samsung Electronics Rus Company LLC

100.0

Samsung Electronics

Samsung Electronics Rus Kaluga LLC

100.0

Samsung Electronics

Tianjin Samsung LED Co., Ltd.

100.0

Samsung BioEpis

SAMSUNG BIOEPIS UK LIMITED

100.0

Samsung BioEpis

Samsung Bioepis NL B.V.

100.0

Samsung BioEpis

Samsung Bioepis CH GmbH

100.0

Samsung BioEpis

SAMSUNG BIOEPIS AU PTY LTD

100.0

Samsung BioEpis

SAMSUNG BIOEPIS NZ LIMITED

100.0

Samsung BioEpis

SAMSUNG BIOEPIS IL LTD

100.0

Samsung BioEpis

SAMSUNG BIOEPIS BR PHARMACEUTICAL LTDA

100.0

Samsung Display

Intellectual Keystone Technology LLC

41.9

Samsung Display

Samsung Display Slovakia, s.r.o.

100.0

Samsung Display

Samsung Display Vietnam Co., Ltd.

100.0

Samsung Display

Samsung Display Noida Private Limited

100.0

Samsung Display

Samsung Suzhou Module Co., Ltd.

100.0

Samsung Display

Samsung Suzhou LCD Co., Ltd.

60.0

Samsung Display

Samsung Display Dongguan Co., Ltd.

100.0

Samsung Display

Samsung Display Tianjin Co., Ltd.

95.0

Samsung Display

Novaled GmbH

9.9

SEMES

SEMES America, Inc.

100.0

SEMES

SEMES (XIAN) Co., Ltd.

100.0

Samsung Electronics America, Inc.

NeuroLogica Corp.

100.0

Samsung Electronics America, Inc.

Dacor Holdings, Inc.

100.0

Samsung Electronics America, Inc.

Samsung HVAC America, LLC

100.0

Samsung Electronics America, Inc.

SmartThings, Inc.

100.0

Samsung Electronics America, Inc.

Samsung Oak Holdings, Inc.

100.0

Samsung Electronics America, Inc.

Joyent, Inc.

100.0

Samsung Electronics America, Inc.

Prismview, LLC

100.0

Samsung Electronics America, Inc.

Samsung Semiconductor, Inc.

100.0

Samsung Electronics America, Inc.

Samsung Research America, Inc

100.0

Samsung Electronics America, Inc.

Samsung Electronics Home Appliances America, LLC

100.0

Samsung Electronics Business Report 230 / 261

Investor

Investee

Ownership

Samsung Electronics America, Inc.

Samsung International, Inc.

100.0

Samsung Electronics America, Inc.

Harman International Industries, Inc.

100.0

Dacor Holdings, Inc.

Dacor, Inc.

100.0

Dacor Holdings, Inc.

EverythingDacor.com, Inc.

100.0

Dacor Holdings, Inc.

Distinctiv e Appliances of California, Inc.

100.0

Dacor, Inc.

Dacor Canada Co.

100.0

Samsung Oak Holdings, Inc.

Stellus Technologies, Inc.

100.0

Samsung Semiconductor, Inc.

Samsung Austin Semiconductor LLC.

100.0

Samsung Electronics Canada, Inc.

AdGear Technologies Inc.

100.0

Samsung Electronics Canada, Inc.

SigMast Communications Inc.

100.0

Samsung Research America, Inc

SAMSUNG NEXT LLC

100.0

Samsung Research America, Inc

Viv Labs, Inc.

100.0

SAMSUNG NEXT LLC

SAMSUNG NEXT FUND LLC

100.0

Samsung International, Inc.

Samsung Mexicana S.A. de C.V

100.0

Samsung Electronics Mexico S.A. De C.V.

Samsung Electronics Digital Appliance Mexico, SA de CV

100.0

Harman International Industries, Inc.

Harman International Japan Co., Ltd.

100.0

Harman International Industries, Inc.

Harman International Industries Canada Ltd.

100.0

Harman International Industries, Inc.

Harman Becker Automotive Systems, Inc.

100.0

Harman International Industries, Inc.

Harman Professional, Inc.

100.0

Harman International Industries, Inc.

Harman Connected Services, Inc.

100.0

Harman International Industries, Inc.

Harman Financial Group LLC

100.0

Harman International Industries, Inc.

Harman Belgium SA

100.0

Harman International Industries, Inc.

Harman France SNC

100.0

Harman International Industries, Inc.

Red Bend Softw are SAS

100.0

Harman International Industries, Inc.

Harman Inc. & Co. KG

66.0

Harman International Industries, Inc.

Harman KG Holding, LLC

100.0

Harman International Industries, Inc.

Harman Becker Automotive Systems Italy S.R.L.

100.0

Harman International Industries, Inc.

Harman Finance International, SCA

100.0

Harman International Industries, Inc.

Harman Finance International GP S.a.r.l

100.0

Harman International Industries, Inc.

Harman Industries Holdings Mauritius Ltd.

100.0

Harman International Industries, Inc.

Harman International Mex ico, S. de R.L. de C.V.

99.9

Harman Becker Automotive Systems, Inc.

Harman International Estonia OU

100.0

Harman Professional, Inc.

AMX UK Limited

100.0

Harman Professional, Inc.

Harman Singapore Pte. Ltd.

100.0

Harman Professional, Inc.

Harman da Amazonia Industria Eletronica e Participacoes Ltda.

0.0

Harman Professional, Inc.

Harman do Brasil Industria Eletronica e Participacoes Ltda.

0.0

Harman Connected Services, Inc.

Harman Connected Services Engineering Corp.

100.0

Harman Connected Services, Inc.

Harman Connected Services South America S.R.L.

100.0

Harman Connected Services, Inc.

Harman Connected Services AB.

100.0

Harman Connected Services, Inc.

Harman Connected Services UK Ltd.

100.0

Harman Connected Services, Inc.

Harman Connected Services Corp. India Pvt. Ltd.

1.6

Harman Connected Services, Inc.

Global Symphony Technology Group Private Ltd.

100.0

Harman Financial Group LLC

Harman International (India) Priv ate Limited

0.0

Harman Financial Group LLC

Harman International Mex ico, S. de R.L. de C.V.

0.1

Harman Financial Group LLC

Harman de Mexico, S. de R.L. de C.V.

0.0

Samsung Electronics (UK) Ltd.

Samsung Semiconductor Europe Limited

100.0

Samsung Electronics Holding GmbH

Samsung Semiconductor Europe GmbH

100.0

Samsung Electronics Holding GmbH

Samsung Electronics GmbH

100.0

Samsung Electronics Hungarian Private Co. Ltd.

Samsung Electronics Czech and Slovak s.r.o.

31.4

Samsung Electronics Hungarian Private Co. Ltd.

Samsung Electronics Slovakia s.r.o

44.3

Samsung Electronics Benelux B.V.

Samsung Electronics Mexico S.A. De C.V.

36.4

Samsung Electronics Benelux B.V.

SAMSUNG ELECTRONICS BALTICS SIA

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics West Africa Ltd.

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics East Africa Ltd.

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics Saudi Arabia Ltd.

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics Egypt S.A.E

99.9

Samsung Electronics Benelux B.V.

Samsung Electronics Israel Ltd.

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics Tunisia S.A.R.L

99.0

Samsung Electronics Benelux B.V.

Samsung Electronics Pakistan(Private) Ltd.

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics South Africa Production (pty) Ltd.

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics Turkey

100.0

Samsung Electronics Business Report 231 / 261

Investor

Investee

Ownership

Samsung Electronics Benelux B.V.

Samsung Semiconductor Israel R&D Center, Ltd.

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics Levant Co.,Ltd.

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics Maghreb Arab

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics Venezuela, C.A.

100.0

Samsung Electronics Benelux B.V.

Samsung Electronica da Amazonia Ltda.

13.0

Samsung Electronics Benelux B.V.

Samsung Electronics Chile Limitada

95.9

Samsung Electronics Benelux B.V.

Samsung Electronics Peru S.A.C.

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics Ukraine Company LLC

100.0

Samsung Electronics Benelux B.V.

Samsung R&D Institute Rus LLC

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics Central Eurasia LLP

100.0

Samsung Electronics Benelux B.V.

Samsung Electronics Caucasus Co. Ltd

100.0

Samsung Electronics Benelux B.V.

Corephotonics Ltd.

100.0

Zhilabs, S.L.

Zhilabs Inc.

100.0

Samsung Electronics Nordic Aktiebolag

Samsung Nanoradio Design Center

100.0

AKG Acoustics Gmbh

Harman Professional Denmark ApS

100.0

AKG Acoustics Gmbh

Studer Professional Audio GmbH

100.0

Harman Professional Denmark ApS

Martin Professional Japan Ltd.

40.0

Harman Professional Denmark ApS

Harman International s.r.o

100.0

Harman Professional Denmark ApS

Martin Professional Pte. Ltd.

100.0

Harman Becker Automotive Systems GmbH

Harman International Romania SRL

0.0

Harman Holding Gmbh & Co. KG

Harman Becker Automotive Systems GmbH

100.0

Harman Holding Gmbh & Co. KG

Harman Deutschland GmbH

100.0

Harman Holding Gmbh & Co. KG

Harman Becker Automotive Systems Manufacturing Kft

100.0

Harman Holding Gmbh & Co. KG

Harman RUS CIS LLC

100.0

Harman Inc. & Co. KG

Harman Holding Gmbh & Co. KG

100.0

Harman Inc. & Co. KG

Harman Management Gmbh

100.0

Harman Inc. & Co. KG

Harman Hungary Financing Ltd.

100.0

Harman Connected Services GmbH

Harman Connected Services OOO

100.0

Harman KG Holding, LLC

Harman Inc. & Co. KG

34.0

Harman Becker Automotive Systems Manufacturing Kft

Harman Professional Kft

100.0

Harman Becker Automotive Systems Manufacturing Kft

Harman Consumer Nederland B.V.

100.0

Harman Becker Automotive Systems Manufacturing Kft

Harman International Romania SRL

100.0

Harman Becker Automotive Systems Manufacturing Kft

Red Bend Ltd.

100.0

Harman Becker Automotive Systems Manufacturing Kft

Harman do Brasil Industria Eletronica e Participacoes Ltda.

100.0

Harman Hungary Financing Ltd.

Harman International Industries Limited

100.0

Harman Finance International GP S.a.r.l

Harman Finance International, SCA

0.0

Harman Consumer Nederland B.V.

AKG Acoustics Gmbh

100.0

Harman Consumer Nederland B.V.

Harman Audio Iberia España Sociedad Limitada

100.0

Harman Consumer Nederland B.V.

Harman Holding Limited

100.0

Harman Audio Iberia España Sociedad Limitada

Harman France SNC

0.0

Harman Connected Services AB.

Harman Finland Oy

100.0

Harman Connected Services AB.

Harman Connected Services GmbH

100.0

Harman Connected Services AB.

Harman Connected Services Poland Sp.zoo

100.0

Harman Connected Services AB.

Harman Connected Services Solutions (Chengdu) Co., Ltd.

100.0

Harman Automotiv e UK Limited

Harman de Mexico, S. de R.L. de C.V.

100.0

Harman International Industries Limited

Harman Automotiv e UK Limited

100.0

Harman International Industries Limited

Martin Manufacturing (UK) Ltd

100.0

Harman International Industries Limited

Harman Connected Services Limited

100.0

Harman International Industries Limited

Arcam Limited

100.0

Harman International Industries Limited

Harman International Industries PTY Ltd.

100.0

Harman Connected Services UK Ltd.

Harman Connected Services Morocco

100.0

Arcam Limited

A&R Cambridge Limited

100.0

Samsung Electronics Austria GmbH

Samsung Electronics Switzerland GmbH

100.0

Samsung Electronics Europe Holding Cooperatief U.A.

Samsung Electronics Czech and Slovak s.r.o.

68.6

Samsung Electronics Europe Holding Cooperatief U.A.

Samsung Electronics Romania LLC

100.0

Samsung Electronics Europe Holding Cooperatief U.A.

Zhilabs, S.L.

100.0

Samsung Electronics Europe Holding Cooperatief U.A.

Porta Nuova Varesine Building 2 S.r.l.

49.0

Samsung Electronics Europe Holding Cooperatief U.A.

Samsung Electronics Poland Manufacturing SP.Zo.o

100.0

Samsung Electronics Europe Holding Cooperatief U.A.

Samsung Electronics Greece S.M.S.A

100.0

Samsung Electronics Europe Holding Cooperatief U.A.

Samsung Electronics Air Conditioner Europe B.V.

100.0

Samsung Electronics Europe Holding Cooperatief U.A.

FOODIENT LTD.

100.0

Samsung Electronics Business Report 232 / 261

Investor

Investee

Ownership

Samsung Electronics Europe Holding Cooperatief U.A.

Samsung Denmark Research Center ApS

100.0

Samsung Electronics Europe Holding Cooperatief U.A.

Samsung Cambridge Solution Centre Limited

100.0

Samsung Electronics Europe Holding Cooperatief U.A.

Novaled GmbH

40.0

Samsung Asia Private Ltd.

Samsung Electronics Japan Co., Ltd.

100.0

Samsung Asia Private Ltd.

Samsung Electronics Display (M) Sdn. Bhd.

25.0

Samsung Asia Private Ltd.

Samsung Electronics New Zealand Limited

100.0

Samsung Asia Private Ltd.

Samsung Electronics Philippines Corporation

100.0

Samsung Asia Private Ltd.

Samsung R&D Institute BanglaDesh Limited

100.0

Samsung Asia Private Ltd.

Samsung Electronics Vietnam Co., Ltd.

100.0

Samsung Asia Private Ltd.

Samsung Electronics Vietnam THAINGUYEN Co., Ltd.

100.0

Samsung Asia Private Ltd.

Samsung Electronics HCMC CE Complex Co., Ltd.

100.0

Samsung Asia Private Ltd.

Samsung Electro-Mechanics(Thailand) Co., Ltd.

25.0

Samsung Asia Private Ltd.

iMarket Asia Co., Ltd.

11.4

Samsung India Electronics Private Ltd.

Samsung Nepal Services Pvt, Ltd

100.0

PT Samsung Electronics Indonesia

PT Samsung Telecommunications Indonesia

100.0

Thai Samsung Electronics Co., Ltd.

Laos Samsung Electronics Sole Co., Ltd

100.0

Samsung Electronics Hong Kong Co., Ltd.

iMarket Asia Co., Ltd.

11.3

Suzhou Samsung Electronics Co., Ltd.

Samsung Suzhou Electronics Export Co., Ltd.

100.0

Samsung (CHINA) Investment Co., Ltd.

Suzhou Samsung Electronics Co., Ltd.

19.2

Samsung (CHINA) Investment Co., Ltd.

Samsung Mobile R&D Center China-Guangzhou

100.0

Samsung (CHINA) Investment Co., Ltd.

Samsung Tianjin Mobile Development Center

100.0

Samsung (CHINA) Inv estment Co., Ltd.

Samsung R&D Institute China-Shenzhen

100.0

Samsung (CHINA) Investment Co., Ltd.

Samsung Electronics Huizhou Co., Ltd.

10.4

Samsung (CHINA) Investment Co., Ltd.

Tianjin Samsung Electronics Co., Ltd.

43.1

Samsung (CHINA) Investment Co., Ltd.

Beijing Samsung Telecom R&D Center

100.0

Samsung (CHINA) Investment Co., Ltd.

Samsung Electronics Suzhou Computer Co., Ltd.

26.3

Samsung (CHINA) Investment Co., Ltd.

Samsung Electronics China R&D Center

100.0

Harman International (China) Holdings Co., Ltd.

Harman (Suzhou) Audio and Infotainment Systems Co., Ltd.

100.0

Harman International (China) Holdings Co., Ltd.

Harman Technology (Shenzhen) Co., Ltd.

100.0

Harman International (China) Holdings Co., Ltd.

Harman (China) Technologies Co., Ltd.

100.0

Harman Holding Limited

Harman Commercial (Shanghai) Co., Ltd.

100.0

Harman Holding Limited

Harman International (China) Holdings Co., Ltd.

100.0

Harman Holding Limited

Harman Automotiv e Electronic Systems (Suzhou) Co., Ltd.

100.0

Samsung Gulf Electronics Co., Ltd.

Samsung Electronics Egypt S.A.E

0.1

Samsung Electronics Maghreb Arab

Samsung Electronics Tunisia S.A.R.L

1.0

Harman Industries Holdings Mauritius Ltd.

Harman International (India) Priv ate Limited

100.0

Global Symphony Technology Group Private Ltd.

Harman Connected Services Corp. India Pvt. Ltd.

98.4

Red Bend Ltd.

Red Bend Softw are Ltd.

100.0

Samsung Electronics Latinoamerica(Zona Libre), S. A.

Samsung Electronics Latinoamerica Miami, Inc.

100.0

Samsung Electronics Latinoamerica(Zona Libre), S. A.

Samsung Electronica Colombia S.A.

100.0

Samsung Electronics Latinoamerica(Zona Libre), S. A.

Samsung Electronics Panama. S.A.

100.0

Samsung Electronica da Amazonia Ltda.

Samsung Electronics Argentina S.A.

2.0

Harman do Brasil Industria Eletronica e Participacoes Ltda.

Harman da Amazonia Industria Eletronica e Participacoes Ltda.

100.0

Samsung Electronics Central Eurasia LLP

Samsung Electronics Caucasus Co. Ltd

0.0

Samsung SDI

Intellectual Keystone Technology LLC

41.0

Samsung SDI

Samsung SDI Japan Co., Ltd.

89.2

Samsung SDI

Samsung SDI America, Inc.

91.7

Samsung SDI

Samsung SDI Hungary., Zrt.

100.0

Samsung SDI

Samsung SDI Europe GmbH

100.0

Samsung SDI

Samsung SDI Battery Sy stems GmbH

100.0

Samsung SDI

Samsung SDI Vietnam Co., Ltd.

100.0

Samsung SDI

Samsung SDI Energy Malaysia Sdn, Bhd.

100.0

Samsung SDI

Samsung SDI India Private Limited

100.0

Samsung SDI

Samsung SDI(Hong Kong) Ltd.

97.6

Samsung SDI

Samsung SDI China Co., Ltd.

100.0

Samsung SDI

Samsung SDI-ARN (Xi'An) Power Battery Co., Ltd.

65.0

Samsung SDI

Samsung SDI (Changchun) Power Battery Co., Ltd.

50.0

Samsung SDI

Samsung SDI (Tianjin) Battery Co., Ltd.

80.0

Samsung SDI

Novaled GmbH

50.1

Samsung SDI

SAMSUNG SDI WUXI CO.,LTD.

100.0

Samsung SDI

Samsung SDI(Wux i) Battery Systems Co., Ltd.

50.0

Samsung Electronics Business Report 233 / 261

Investor

Investee

Ownership

Samsung SDI

iMarket Asia Co., Ltd.

8.7

Samsung SDI(Hong Kong) Ltd.

Samsung SDI India Private Limited

0.0

Samsung SDI(Hong Kong) Ltd.

Tianjin Samsung SDI Co., Ltd.

80.0

Samsung Electro-Mechanics

Samsung Electro-Machanics Japan Co., Ltd.

100.0

Samsung Electro-Mechanics

Samsung Electro-Mechanics America, Inc.

100.0

Samsung Electro-Mechanics

Samsung Electro-Mechanics GmbH

100.0

Samsung Electro-Mechanics

Samsung Electro-Mechanics(Thailand) Co., Ltd.

75.0

Samsung Electro-Mechanics

Samsung Electro-Mechanics Philippines, Corp.

100.0

Samsung Electro-Mechanics

Calamba Premier Realty Corporation

39.8

Samsung Electro-Mechanics

Samsung Electro-Mechanics Pte Ltd.

100.0

Samsung Electro-Mechanics

Samsung Electro-Mechanics Vietnam Co., Ltd.

100.0

Samsung Electro-Mechanics

Samsung Electro-Mechanics Software India Bangalore Private Limited

99.9

Samsung Electro-Mechanics

Dongguan Samsung Electro-Mechanics Co., Ltd.

100.0

Samsung Electro-Mechanics

Tianjin Samsung Electro-Mechanics Co., Ltd.

81.8

Samsung Electro-Mechanics

Samsung High-Tech Electro-Mechanics(Tianjin) Co., Ltd.

95.0

Samsung Electro-Mechanics

Samsung Electro-Mechanics (Shenzhen) Co., Ltd.

100.0

Samsung Electro-Mechanics

Kunshan Samsung Electro-Mechanics Co., Ltd.

100.0

Samsung Electro-Mechanics

iMarket Asia Co., Ltd.

8.7

Calamba Premier Realty Corporation

Batino Realty Corporation

100.0

Samsung Electro-Mechanics Pte Ltd.

Samsung Electro-Mechanics Software India Bangalore Private Limited

0.1

Samsung Fire & Marine Insurance

Samsung Fire & Marine Management Corporation

100.0

Samsung Fire & Marine Insurance

SAMSUNG FIRE & MARINE INSURANCE COMPANY OF EUROPE LTD.

100.0

Samsung Fire & Marine Insurance

PT. Asuransi Samsung Tugu

70.0

Samsung Fire & Marine Insurance

SAMSUNG VINA INSURANCE COMPANY LIMITED

75.0

Samsung Fire & Marine Insurance

Samsung Reinsurance Pte. Ltd.

100.0

Samsung Fire & Marine Insurance

Samsung Property & Casualty Insurance Company(China), Ltd

100.0

Samsung Fire & Marine Insurance

Samsung Fire & Marine Insurance Management Middle East Limited

100.0

Samsung Heavy Industries Co.,Ltd.

Camellia Consulting Corporation

100.0

Samsung Heavy Industries Co.,Ltd.

Samsung Heavy Industries India Pvt.Ltd.

100.0

Samsung Heavy Industries Co.,Ltd.

SAMSUNG HEAVY INDUSTRIES (M) SDN.BHD

100.0

Samsung Heavy Industries Co.,Ltd.

Samsung Heavy Industries(Ningbo) Co., Ltd

100.0

Samsung Heavy Industries Co.,Ltd.

Samsung Heavy Industries(Rongcheng) Co., Ltd

100.0

Samsung Heavy Industries Co.,Ltd.

Rongcheng Gaya Heavy Industries Co., Ltd

100.0

Samsung Heavy Industries Co.,Ltd.

SAMSUNG HEAVY INDUSTRIES NIGERIA LIMITED

100.0

Samsung Heavy Industries Co.,Ltd.

Samsung Heavy Industries Mozambique LDA

100.0

SAMSUNG HEAVY INDUSTRIES NIGERIA LIMITED

SHI - MCI FZE

70.0

Samsung Life Insurance

Porta Nuova Varesine Building 2 S.r.l.

51.0

Samsung Life Insurance

THAI SAMSUNG LIFE INSURANCE CO., LTD.

48.9

Samsung Life Insurance

Beijing Samsung Real Estate Co.. Ltd

90.0

Samsung Asset Management

Samsung Asset Management (New York), Inc.

100.0

Samsung Asset Management

Samsung Global SME Private Equity Manager Fund Co., Ltd.

100.0

Samsung Asset Management

Samsung Asset Management(London) Ltd.

100.0

Samsung Asset Management

Samsung Private Equity Manager I Co., Ltd.

100.0

Samsung Asset Management

Samsung Asset Management (Hong Kong) Ltd.

100.0

Samsung Asset Management (Hong Kong) Ltd.

Samsung Asset Management (Beijing) Ltd.

100.0

CHEIL INDUSTRIES ITALY SRL

COLOMBO VIA DELLA SPIGA S.R.L

100.0

Samsung C&T Corporation

MYODO METAL CO., LTD.

100.0

Samsung C&T Corporation

Samsung C&T Japan Corporation

100.0

Samsung C&T Corporation

Samsung C&T America Inc.

100.0

Samsung C&T Corporation

Samsung E&C America, INC.

100.0

Samsung C&T Corporation

Samsung Renewable Energy Inc.

100.0

Samsung C&T Corporation

QSSC, S.A. de C.V.

60.0

Samsung C&T Corporation

Samsung C&T Oil & Gas Parallel Corp.

100.0

Samsung C&T Corporation

Samsung C&T Canada Ltd.

100.0

Samsung C&T Corporation

Samsung C&T Deutschland GmbH

100.0

Samsung C&T Corporation

Samsung C&T U.K. Ltd.

100.0

Samsung C&T Corporation

Samsung C&T ECUK Limited

100.0

Samsung C&T Corporation

Whessoe engineering Limited

100.0

Samsung C&T Corporation

POSS-SLPC, S.R.O

50.0

Samsung C&T Corporation

Solluce Romania 1 B.V.

80.0

Samsung C&T Corporation

SAM investment Manzanilo.B.V

53.3

Samsung Electronics Business Report 234 / 261

Investor

Investee

Ownership

Samsung C&T Corporation

Samsung C&T (KL) Sdn.,Bhd.

100.0

Samsung C&T Corporation

Samsung C&T Malaysia SDN. BHD

100.0

Samsung C&T Corporation

Erdsam Co., Ltd.

100.0

Samsung C&T Corporation

Samsung Chemtech Vina LLC

51.7

Samsung C&T Corporation

S-print Inc

40.0

Samsung C&T Corporation

Samsung C&T Thailand Co., Ltd

43.9

Samsung C&T Corporation

Cheil Holding Inc.

40.0

Samsung C&T Corporation

Samsung Const. Co. Phils.,Inc.

25.0

Samsung C&T Corporation

PT. INSAM BATUBARA ENERGY

90.0

Samsung C&T Corporation

Samsung E&C India Private Limited

100.0

Samsung C&T Corporation

Samsung C&T Corporation India Private Limited

100.0

Samsung C&T Corporation

Malaysia Samsung Steel Center Sdn.Bhd

70.0

Samsung C&T Corporation

Samsung C&T Singapore Pte., Ltd.

100.0

Samsung C&T Corporation

S&G Biofuel PTE.LTD

50.5

Samsung C&T Corporation

SAMSUNG C&T Mongolia LLC.

70.0

Samsung C&T Corporation

Samsung C&T Eng.&Const. Mongolia LLC.

100.0

Samsung C&T Corporation

S&WOO CONSTRUCTION PHILIPPINES,INC.

100.0

Samsung C&T Corporation

Samsung C&T Hongkong Ltd.

100.0

Samsung C&T Corporation

Samsung C&T Taiwan Co., Ltd.

100.0

Samsung C&T Corporation

Samsung Precision Stainless Steel(pinghu) Co.,Ltd.

55.0

Samsung C&T Corporation

SAMSUNG C&T (SHANGHAI) CO., LTD.

100.0

Samsung C&T Corporation

Samsung C&T (Xi'an) Co., Ltd.

100.0

Samsung C&T Corporation

SAMSUNG C&T CORPORATION SAUDI ARABIA

100.0

Samsung C&T Corporation

SAM Gulf Inv estment Limited

100.0

Samsung C&T Corporation

Samsung C&T Chile Copper SpA

100.0

Samsung C&T Corporation

SCNT Power Kelar Inversiones Limitada

100.0

Samsung C&T Corporation

Samsung C&T Corporation Rus LLC

100.0

Samsung C&T Corporation

Samsung SDI America, Inc.

8.3

Samsung C&T Corporation

Samsung SDI(Hong Kong) Ltd.

2.4

Samsung C&T Corporation

Beijing Samsung Real Estate Co.. Ltd

10.0

Samsung C&T Corporation

Cheil Industries Corp., USA

100.0

Samsung C&T Corporation

CHEIL INDUSTRIES ITALY SRL

100.0

Samsung C&T Corporation

Samsung Fashion Trading Co. ,Ltd

100.0

Samsung C&T Corporation

CHEIL INDUSTRIES INC. VIETNAM COMPANY LIMITED

100.0

Samsung C&T Corporation

Samsung C&T Corporation UEM Construction JV Sdn Bhd

60.0

Samsung C&T Corporation

iMarket Asia Co., Ltd.

19.3

Samsung Welstory

WELSTORY VIETNAM COMPANY LIMITED

90.0

Samsung Welstory

Shanghai Ever-Hongjun Business Mgt Service Co.,LTD

85.0

Samsung Welstory

Shanghai Welstory Food Company Limited

81.6

MULTICAMPUS

LANGUAGE TESTING INTERNATIONAL, INC.

82.4

Pengtai Greater China Company Limited

PENGTAI CHINA CO.,LTD.

100.0

Pengtai Greater China Company Limited

PengTai Taiwan Co., Ltd.

100.0

Pengtai Greater China Company Limited

PENGTAI INTERACTIVE ADVERTISING CO.,LTD

100.0

PENGTAI CHINA CO.,LTD.

PENGTAI E-COMMERCE CO.,LTD

100.0

PENGTAI CHINA CO.,LTD.

PENGTAI MARKETING SERVICE CO.,LTD.

100.0

PENGTAI INTERACTIVE ADVERTISING CO.,LTD

Medialytics Inc.

51.0

PENGTAI INTERACTIVE ADVERTISING CO.,LTD

Beijing Pengtai Baozun E-commerce Co., Ltd.

51.0

iMarket Asia Co., Ltd.

iMarket China Co., Ltd.

80.0

Samsung Securities

Samsung Securities (America), Inc.

100.0

Samsung Securities

Samsung Securities (Europe) Limited.

100.0

Samsung Securities

Samsung Securities (Asia) Limited.

100.0

Samsung SDS

iMarket Asia Co., Ltd.

40.6

Samsung SDS

Samsung SDS Global SCL America, Inc.

100.0

Samsung SDS

SAMSUNG SDS GSCL CANADA., LTD.

100.0

Samsung SDS

Samsung SDS America, Inc.

100.0

Samsung SDS

Neo EXpress Transportation (NEXT), Inc.

51.0

Samsung SDS

Samsung SDS Europe Ltd.

100.0

Samsung SDS

Samsung SDS Global SCL Hungary Kft.

100.0

Samsung SDS

Samsung SDS Global SCL Slovakia, s.r.o.

100.0

Samsung SDS

Samsung SDS Global SCL Poland Sp. Z.o.o.

100.0

Samsung SDS

Samsung GSCL Sweden AB

100.0

Samsung Electronics Business Report 235 / 261

Investor

Investee

Ownership

Samsung SDS

Samsung SDS Global SCL France SAS

100.0

Samsung SDS

Samsung SDS Global SCL Greece Societe Anonyme

100.0

Samsung SDS

Samsung SDS Global SCL Baltics, SIA

100.0

Samsung SDS

Samsung SDS Global SCL Italy S.R.L. A Socio Unico

100.0

Samsung SDS

Samsung SDS Global Supply Chain Logistics Spain S.L.U

100.0

Samsung SDS

Samsung SDS Global SCL Netherlands Cooperatief U.A

100.0

Samsung SDS

Samsung SDS Global SCL Germany GmbH

100.0

Samsung SDS

Samsung SDS Global SCL Austria GmbH

100.0

Samsung SDS

Samsung SDS GSCL Romania SRL

100.0

Samsung SDS

Samsung SDS Asia Pacific Pte. Ltd.

100.0

Samsung SDS

Samsung Data Systems India Private Limited

100.0

Samsung SDS

Samsung SDS India Private Limited

100.0

Samsung SDS

VASCO SUPPLY CHAIN SOLUTIONS PRIVATE LIMITED

51.0

Samsung SDS

Samsung SDS Vietnam Co., Ltd.

100.0

Samsung SDS

PT. Samsung SDS Global SCL Indonesia

100.0

Samsung SDS

Samsung SDS Global SCL Philippines Co., Ltd.

100.0

Samsung SDS

Samsung SDS Global SCL Thailand Co.,Ltd

100.0

Samsung SDS

Samsung SDS Global SCL Malaysia SDN.BHD.

100.0

Samsung SDS

SAMSUNG SDS GLOBAL SCL AUSTRALIA PTY., LTD.

100.0

Samsung SDS

SDS-ACUTECH CO., LTD

50.0

Samsung SDS

ALS SDS Joint Stock Company

51.0

Samsung SDS

SDS-MP LOGISTICS JOINT STOCK COMPANY

51.0

Samsung SDS

Samsung SDS (Beijing) Co., Ltd.

100.0

Samsung SDS

Samsung IT Services (Beijing) Co., Ltd.

100.0

Samsung SDS

Samsung SDS Global SCL Hong Kong Ltd

100.0

Samsung SDS

SDS Kerry (Shanghai) Supply Chain Solutions Limited

50.0

Samsung SDS

SAMSUNG SDS Global SCL Egypt Co. Ltd.

100.0

Samsung SDS

Samsung SDS Global SCL South Africa (PTY) Ltd.

100.0

Samsung SDS

Samsung SDS Global SCL Transport and Logistics Joint Stock Company

100.0

Samsung SDS

Samsung SDS Global Supply Chain Logistics Middle East DWC-LLC

100.0

Samsung SDS

Samsung SDS Latin America Solucoes Em Tecnologia Ltda

99.7

Samsung SDS

SAMSUNG SDS GLOBAL SCL LATIN AMÉRICA LOGÍSTICA LTD

99.7

Samsung SDS

Inte-SDS Logistics, S.A de C.V.

51.0

Samsung SDS

Samsung SDS Global SCL Rus Limited Liability Company

100.0

Miracom

MIRACOM INC ASIA PACIFIC LIMITED

100.0

Samsung SDS Global SCL America, Inc.

Samsung SDS Latin America Solucoes Em Tecnologia Ltda

0.3

Samsung SDS Global SCL America, Inc.

Samsung SDS Mexico, S.A. DE C.V.

99.0

Samsung SDS Global SCL America, Inc.

Samsung SDS Global SCL Panama S. A.

100.0

Samsung SDS Global SCL America, Inc.

Samsung SDS Global SCL Chile Limitada

100.0

Samsung SDS Global SCL America, Inc.

Samsung SDS Global SCL Peru S.A.C.

100.0

Samsung SDS Global SCL America, Inc.

Samsung SDS Global SCL Colombia S.A.S.

100.0

Samsung SDS Global SCL America, Inc.

SAMSUNG SDS GLOBAL SCL LATIN AMÉRICA LOGÍSTICA LTD

0.3

Samsung SDS Europe Ltd.

Samsung SDS Global SCL Netherlands Cooperatief U.A

0.0

Samsung SDS Global SCL Netherlands Cooperatief U.A

Samsung SDS Global SCL Poland Sp. Z.o.o.

0.0

Samsung SDS Global SCL Netherlands Cooperatief U.A

Samsung SDS Global SCL Greece Societe Anonyme

0.0

Samsung SDS Global SCL Netherlands Cooperatief U.A

Samsung SDS GSCL Romania SRL

0.0

Samsung SDS Global SCL Netherlands Cooperatief U.A

Samsung SDS Global SCL Rus Limited Liability Company

0.0

Samsung SDS (Beijing) Co., Ltd.

Samsung SDS Global SCL Beijing Co., Ltd

100.0

Samsung IT Services (Beijing) Co., Ltd.

Samsung SDS Global Development Center Xi'an

100.0

Samsung Engineering

Samsung Engineering America Inc.

100.0

Samsung Engineering

Samsung Engineering Hungary Ltd.

100.0

Samsung Engineering

Samsung Engineering Italy S.R.L.

100.0

Samsung Engineering

Samsung Engineering (Malaysia) SDN. BHD.

100.0

Samsung Engineering

PT Samsung Engineering Indonesia Co., Ltd.

100.0

Samsung Engineering

Samsung Engineering (Thailand) Co., Ltd.

81.0

Samsung Engineering

Samsung Engineering India Private Limited

100.0

Samsung Engineering

Samsung Engineering Vietnam Co., Ltd.

100.0

Samsung Engineering

Samsung Engineering Construction(Shanghai) Co., Ltd

100.0

Samsung Engineering

Samsung Engineering Construction Xi' an Co., Ltd.

100.0

Samsung Engineering

Samsung Saudi Arabia Co., Ltd.

100.0

Samsung Engineering

Muharraq Wastew ater Services Company W.L.L.

99.8

Samsung Electronics Business Report 236 / 261

Investor

Investee

Ownership

Samsung Engineering

Muharraq STP Company B.S.C.

6.6

Samsung Engineering

Muharraq Holding Company 1 Ltd.

65.0

Samsung Engineering

Samsung Ingenieria Mexico Construccion Y Operacion S.A. De C.V.

99.9

Samsung Engineering

Samsung Engineering Trinidad Co., Ltd.

100.0

Samsung Engineering

Samsung Ingenieria Manzanillo, S.A. De C.V.

99.9

Samsung Engineering

Grupo Samsung Ingenieria Mexico, S.A. De C.V.

100.0

Samsung Engineering

Samsung Ingenieria Energia S.A. De C.V.

100.0

Samsung Engineering

Samsung Engineering Bolivia S.A

100.0

Samsung Engineering

Samsung Ingenieria DUBA S.A. de C.V.

100.0

Samsung Engineering

Samsung Engineering Kazakhstan L.L.P.

100.0

Samsung Engineering America Inc.

SEA Construction, LLC

100.0

Samsung Engineering America Inc.

SEA Louisiana Construction, L.L.C.

100.0

Samsung Engineering Malaysia Sdn. Bhd.

Muharraq Wastew ater Services Company W.L.L.

0.3

Samsung Engineering India Pvt., Ltd.

Samsung Saudi Arabia Co., Ltd.

0.0

Samsung Saudi Arabia Co., Ltd.

Samsung EPC Company Ltd.

75.0

Muharraq Holding Company 1 Ltd.

Muharraq Holding Company 2 Ltd.

100.0

Muharraq Holding Company 2 Ltd.

Muharraq STP Company B.S.C.

89.9

S1 Corporation

S-1 CORPORATION HUNGARY LLC

100.0

S1 Corporation

SOCM LLC

100.0

S1 Corporation

S-1 CORPORATION VIETNAM CO., LTD

100.0

S1 Corporation

Samsung Beijing Security Systems

100.0

Cheil Worldw ide

Cheil USA Inc.

100.0

Cheil Worldw ide

Cheil Central America Inc.

100.0

Cheil Worldw ide

IRIS Worldw ide Holdings Limited

100.0

Cheil Worldw ide

CHEIL EUROPE LIMITED

100.0

Cheil Worldw ide

Cheil Germany GmbH

100.0

Cheil Worldw ide

Cheil France SAS

100.0

Cheil Worldw ide

CHEIL SPAIN S.L

100.0

Cheil Worldw ide

Cheil Benelux B.V.

100.0

Cheil Worldw ide

Cheil Nordic AB

100.0

Cheil Worldwide

Cheil India Priv ate Limited

100.0

Cheil Worldw ide

Cheil (Thailand) Ltd.

100.0

Cheil Worldw ide

Cheil Singapore Pte. Ltd.

100.0

Cheil Worldw ide

CHEIL VIETNAM COMPANY LIMITED

99.0

Cheil Worldw ide

Cheil Integrated Marketing Philippines, Inc.

100.0

Cheil Worldw ide

CHEIL MALAYSIA SDN. BHD.

100.0

Cheil Worldw ide

CHEIL CHINA

100.0

Cheil Worldw ide

Cheil Hong Kong Ltd.

100.0

Cheil Worldw ide

Cheil MEA FZ-LLC

100.0

Cheil Worldw ide

Cheil South Africa (Pty ) Ltd

100.0

Cheil Worldw ide

CHEIL KENYA LIMITED

99.0

Cheil Worldw ide

Cheil Communications Nigeria Ltd.

99.0

Cheil Worldw ide

Cheil Worldw ide Inc./Jordan LLC.

100.0

Cheil Worldw ide

Cheil Ghana Limited

100.0

Cheil Worldw ide

Cheil Brasil Comunicacoes Ltda.

100.0

Cheil Worldw ide

Cheil Mexico, S.A. de C.V.

98.0

Cheil Worldw ide

Cheil Chile SpA.

100.0

Cheil Worldw ide

Cheil Peru S.A.C.

100.0

Cheil Worldw ide

CHEIL ARGENTINA S.A.

98.0

Cheil Worldw ide

Cheil Rus LLC

100.0

Cheil Worldw ide

Cheil Ukraine LLC

100.0

Cheil Worldw ide

Cheil Kazakhstan LLC

100.0

Hotel Shilla

Samsung Hospitality America Inc.

100.0

Hotel Shilla

Shilla Travel Retail Pte. Ltd.

100.0

Hotel Shilla

Samsung Shilla Business Service Beijing Co., Ltd.

100.0

Hotel Shilla

Shilla Travel Retail Hong Kong Limited

100.0

Hotel Shilla

Shilla Travel Retail Taiwan Limited

64.0

HDC Shilla Duty Free LTD

HDC SHILLA (SHANGHAI) CO., LTD

100.0

SBTM

Samsung Hospitality U.K. Inc.

100.0

SBTM

Samsung Hospitality Europe GmbH

100.0

SBTM

SAMSUNG HOSPITALITY ROMANIA SRL

100.0

Samsung Electronics Business Report 237 / 261

Investor

Investee

Ownership

SBTM

Samsung Hospitality Vietnam Co., Ltd.

99.0

SBTM

Samsung Hospitality Philippines Inc.

100.0

SBTM

Samsung Hospitality India Private Limited

100.0

Iris Americas, Inc.

Iris (USA) Inc.

100.0

Iris Americas, Inc.

Iris Atlanta, Inc.

100.0

Iris Americas, Inc.

Iris Ex perience, Inc.

100.0

Iris Americas, Inc.

Iris Latin America, Inc.

100.0

Iris Americas, Inc.

Iris Worldw ide San Diego, Inc.

100.0

Iris Americas, Inc.

89 Degrees, Inc.

75.0

Iris Latin America, Inc.

Irisnation Latina No.2, S. de R.L. de C.V.

0.0

Iris Latin America, Inc.

Irisnation Latina, S. de R.L. de C.V.

0.0

Iris Canada Holdings Ltd

Pricing Solutions Ltd

100.0

Cheil USA Inc.

The Barbarian Group LLC

100.0

Cheil USA Inc.

McKinney Ventures LLC

100.0

Cheil USA Inc.

Cheil India Priv ate Limited

0.0

Cheil USA Inc.

Cheil Mexico, S.A. de C.V.

2.0

IRIS Worldw ide Holdings Limited