Dear Shareholders,
At dawn of 2007, I wish you and your family the best.

In retrospect, 2006 was an eventful year both at home and abroad: On the global front, we were faced with political uncertainties such as the nuclear experiment of North Korea and the instability in Iraq. We also underwent the global economy slackened by high oil prices. On the domestic front, we witnessed the consumer sentiment fall and appreciation of the Korean Won against major global currencies.

Despite all these challenging business environments, we posted annual net income of KRW 7.9 trillion, by endeavoring endless efforts to reduce costs as well as pursuing management innovations. I believe we demonstrated once again our competency to generate profit with differentiated products, technology, and marketing skills. I would like to attribute these successes to your supports and encouragements.

Now, I would like to highlight our key achievements in 2006.

In our Semiconductor Business, the operating profit margin reached an industry top level of 26% thanks to the strong sales of DRAM and our endless efforts to reduce cost of NAND flash despite its dramatic price fall. In handsets, we led the ultra-slim trend with the launch of Ultra series (the ultra-slim handset line with high features), strengthening our position as the global premium brand.

In LCD, our continuous early investment despite fierce competitions was finally paid back by successful results. Unlike our competitors, who suffered from the steep decline of panel prices, our company recorded outstanding profitability with No.1 market share of 60% in the large TV panel market over 40", which is our target segment.

In TV, for the first time, we were ranked first in flat TV including LCD and PDP, and successfully took the largest overall TV market share. Our LCD TV business enabled us to strengthen our top position as the global premium brand with the great success of Bordeaux TV, our global hit product.

We have concentrated on building our core competencies by securing competent human resources, innovative technology, and differentiated brand value since we declared our ambition to be a world premier company in 2004. And such efforts have brought outstanding results in every business.

To begin with, our efforts to recruit talented workforce made it possible for us to have 30,000 employees devoted to R&D, with an annual increase of 20%. As a result, our R&D employees now accounts for about 35% of total employees.

Such efforts also enabled us to register over 2,600 US patents in 2006, taking the 2nd place which is three steps up from the 5th in 2005.

Also, based on continuous investment in next-generation core technology, we developed the world-first 50-Nano 1Gb DRAM and 40-Nano 32 Gb NAND Flash, and successfully commercialized WiBro, next generation wireless communication technology. These successes demonstrated Samsung Electronics as the world premier IT company.

We have also focused on various marketing activities for our premium products to enhance our brand value. Consequently, we took 10th place in the world and 7th place among global IT companies in a survey co-conducted by Interbrand and Businessweek, with an estimated brand value of $16.1 billion in 2006, up from $15 billion of 2005.

As a continuation of our shareholder-centric policy, in 2006 we spent approximately 40% of our net profits on enhancing our shareholder value: we paid out dividends of KRW 5,500 per share and repurchased shares worth KRW 2 trillion.

In addition, we successfully held "Samsung Tech Forum" in Singapore to further enhance our mid- to long-term value, following "2005 Analyst Day", which was the first of its kind by Asian companies. During the Tech Forum, we enhanced market confidence in our sustainable growth by providing investors with better understanding in our core competencies and introducing mid- to long-term trends of the technological development of each of our main business units. Our efforts to enhance our shareholder value were paid off: Samsung Electronics was selected as the best IR company by the world-renowned financial and IR journals such as Finance Asia and Asia Money.

We expect that in year 2007, we will once again be faced with risks and uncertainties as we did in 2006. We assume that there will be external risks related to the sluggish US economy and local wars in some parts of the world, as well as domestic uncertainties regarding the instability in the exchange rate, North Korean nuclear issues, and the presidential election.

Despite all those challenges, we will further solidify our foundation to grow into a world premier company with our creativity and innovations. We will turn ideas into reality, and risks into opportunities with our collected efforts, as we have done so far.

Appreciation of the Korean Won and continuing decrease of product prices are factors that may weaken our company's competitiveness. We must do our utmost to achieve undisputed cost competitiveness and respond timely to fast changing business environments.

For this, we will build the highly efficient management processes and cost structure in order to be able to guarantee sustained profitability even at the rate of KRW 800's to the USD. We will also focus on building the world-best Supply Chain Management system which can not be easily imitated by other competitors.

Appreciation of the Korean Won and continuing decrease of product prices are factors that may weaken our company's competitiveness. We must do our utmost to achieve undisputed cost competitiveness and respond timely to fast changing business environments.

For this, we will build the highly efficient management processes and cost structure in order to be able to guarantee sustained profitability even at the rate of KRW 800's to the USD. We will also focus on building the world-best Supply Chain Management system which can not be easily imitated by other competitors.

We became a "world class" company with our willingness and passion. However, we need to have completely new values and approaches in order to become the "world premier" company. To this end, we will develop the corporate culture of innovations and self-development with our challenging spirit. We will be able to achieve the goal to be a world premier company with the corporate culture focusing on 'creative management.'

We know that the successful journey of Samsung Electronics to be a world premier company was made possible by your trust and support for the company. With that in mind, we will continue to focus on generating profits, which we believe is the most important way to enhance our shareholder value, as well as proceed in diverse activities for our shareholders.

We are now standing near the top with an ambitious goal and vision to be a world premier company. As we are fully aware that remaining satisfied with the current achievement will only set us back, we will renew our sense of crisis by returning to the basic and strengthening the fundamentals, as we did so with drastic restructuring efforts post the financial crisis of 1997.

In the situation where countless competitors across the globe try hard to overtake us, we will have to overcome the challenges which are completely different from those of the past, forcing us to create our own new technologies and management systems.

Therefore, this year we will challenge the future by facing and overcoming changes and failures. We will passionately create our own future as the future is not to be predicted but to be created.
I wish you and your family the best.

Sincerely yours,