About Samsung

Dear shareholders,

I wish you good health and happiness in the new year of 2012.

In 2011, difficult business environment persisted such as natural disasters and civil wars around the world, consumption slowdown in advanced countries in the aftermath of European fiscal crisis, and so on.

However, Samsung Electronics achieved record-high revenues and stable profits by making aggressive efforts to find opportunities in the time of hardships, thereby solidifying our industry leading position.

I express my gratitude to you, our shareholders, for your continued interest and support in making this possible, and would like to elaborate on some of our major achievements in 2011.

First, we achieved solid earnings by increasing leadership in core businesses and strengthening competitiveness in new businesses including System LSI and OLED.

In core businesses, our memory business including DRAM and NAND Flash further enhanced market leadership. Our TV business retained the global No.1 position for six consecutive years, while our smartphone business ranked No. 1 globally for the first time.

As for our growth businesses, System LSI business' leadership in mobile market strengthened, led by growth of AP and sensor segments. The OLED business reinforced growth and profitability by advancing its differentiated competitiveness.

As a result, we recorded sales of KRW 165 trillion (a 6.7% YoY growth), operating profit of KRW 16.2 trillion, and net profit of KRW 13.7 trillion. The results were solid in that they were achieved in an adverse business environment.

Second, we concentrated on strengthening our core competency including software, in preparation for revolutionary changes in the electronics industry.

The electronics industry is undergoing a revolutionary change with traditional hardware-centered companies declining, while contents, services, and Internet-oriented companies are becoming the mainstream by creating new business opportunities.

In line with the changes underway, Samsung Electronics enhanced our software capabilities. We increased the proportion of R&D personnels, who will be at the core of our company's future competitiveness, to about 43% of the total work force. We also reinforced the open innovation system by expanding partnerships with external research institutes. As a result, we received 4,894 US patents in 2011, securing solid foundation for our future technologies.

We consistently pursued our brand and sports marketing activities in 2011, resulting in market share and profit growth for our smartphones and TV products. According to Interbrand, our brand value recorded USD23.4 billion by increasing 20% YoY, the highest growth rate over the past eight years.

Third, we increased our shareholder value based on stable and differentiated earnings.

With solid earnings underscoring our differentiated competitiveness and the synergy between our set business and component business, our stock price reached KRW 1,058,000 as of end-2011, rising 11% YoY to far outperform KOSPI. We are very pleased that our solid earnings raised the value of our company, and ultimately enhanced our shareholder value. In 2011, we paid out interim dividend of KRW500 per share and our year-end dividend was decided at KRW5,000 per share.

 

Dear shareholders,

In 2012, the global economic slowdown is expected to continue, as uncertainties persist in financial markets and governments tighten their budget s. Reshuffle of the electronics industry will accelerate and global players will face intensified competition. Rather than fearing changes, we will find new opportunities for growth in an effort to continue improving our earnings.

First, we will further widen competitiveness gap in major businesses.

We will solidify our TV market leadership by offering a wide variety of differentiated contents and services along with the launch of the second generation smart TVs.

Regarding handsets, we will become an unrivaled market leader by establishing competitive edge in smartphones and leading new sectors such as LTE, Note, and Tablet.

As for semiconductors, we will widen the gap with our competitors by strengthening our technological leadership. In LCD, we will secure absolute competitiveness to survive market downturns by enhancing overall efficiency.

Second, we will generate new value unique to Samsung.

In order to win in increasingly competitive environment, we will establish differentiated value unique to Samsung by building proprietary platform, strengthening convergence, etc. In addition, we will reinforce our competitiveness and enhance our brand value by launching innovative products and region-specific products.

In addition, we will nurture the B2B business as our core competency by providing the best and optimal solutions along with our diverse products.

Third, we will strengthen our future competitiveness.

In new businesses we have already entered, such as System LSI and OLED, we will actively promote the open innovation system in order to establish a firm foundation and reinforce competitiveness. At the same time, we will make earnest efforts to develop our next generation growth businesses, including medical devices.

In addition, we will establish our smart organizational culture as our unique value no other competitors can emulate.

Fourth, we will make risk management a regular feature of business.

The recent increase in global economic uncertainties has made even near-term outlook unclear. We will revamp our organization to display stronger abilities in the times of hardships via optimized scenarios and sophisticated systems. Also, we will maximize our abilities to respond to market changes by innovating our logistics and distribution systems.

In addition, we will take proactive actions regarding patent issues in light of the increasing importance they carry.

Fifth, we will remain focused in raising our shareholder value in 2012.

All the management and employees of Samsung Electronics appreciate your unsparing trust and support. We will continue to make our utmost efforts in 2012 to achieve strong earnings results as we are aware that solid business management and differentiated earnings hold key to enhancing our shareholder value.

 

Dear shareholders,

Faced with the revolutionary changes underway in the electronics industry, the management and employees of Samsung Electronics are inspired with clearer goals and stronger determination than ever before.

Recently, the company was reorganized into Set Business and Component Business, with a view to strengthening mutual independence and efficiency. Keeping in mind that we can become the world's best only when each business achieves unparalleled global competitiveness, all our employees will make their best efforts at any given position.

I once again hope the best of health and happiness for you and your family in 2012.
Thank you.