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February 01, 2006

Notice of Annual General Meeting of Shareholders and Reference Documents

Subject :Notice of Annual General Meeting of Shareholders and Reference Documents
date : 20060201
Content of Public Disclosure :
I. Activities of the Outside Directors
1. Attendance - BOD meetings

III. Management Reference

1. Business Overview

1) Corporate Overview
Producing a wide range of electronics, Samsung Electronics was established with shareholders’ equity of KRW 3,300,000 in 1969, and went public in 1975. Samsung Electronics took over Samsung Semiconductor, an affiliate, on November 1, 1988, expanding its business into semiconductors, office automation equipment, telecommunications, and optical communication systems.

With 80,594 employees as of December 31, 2005, Samsung Electronics operates manufacturing complexes in Suwon, Giheung, Hwaseong, Asan, Cheonan, and Gumi.

The Suwon complex produces digital goods such as CTV, DTV, DVDP, computer, monitor, and CD-ROM. The Gumi complex generates OA equipment such as mobile phone, communication system, and printer. The Giheung, Hwaseong, Onyang complexes manufacture memory and system LSI related products. The Cheonan and Tangjeong complexes produce LCD.

With its overseas subsidiaries in 60 different locations in 9 regions, Samsung Electronics continues to differentiate its products, R&D, marketing and services customized for each region, building up its position as a true world-class company.

Samsung Electronics has 170,132,764 shares outstanding (147,299,337 common shares), and shareholders’ equity of KRW 897,513,820,000.

2) Operations Overview

In 2005, the world economy suffered due to the surge of the oil price and cost of raw materials. Also, the slowdown of the US and Chinese economic growth added downward pressure on the world economy. Domestically, despite positive elements shown in the fourth quarter such as income growth, improvement in employment rate and good performance of the local stock market, sharp appreciation of the Korean Won against the US dollar had a negative affect on the exports.

Amid such challenging business environment domestic and overseas, Samsung Electronics posted a solid performance in 2005: The company generated sales of 57.5 trillion won and net income of 7.6 trillion won in 2005. Furthermore, the company posted record-high quarterly sales of 15 trillion won in the fourth quarter ended December 31.

As for the financial structure, Samsung Electronics' posted a debt/asset ratio of 27%, equity/asset ratio of 78%, and ROE of 21% for the year 2005. Furthermore, Samsung Electronics' brand continued to be one of the world's fastest growing brands with its brand value increasing from $12.6 billion in 2004 to $15 billion in 2005. Considering the fact that the company's brand value was $5.2 billion in 2000, Samsung Electronics has shown an exceptional improvement in its brand value.

All this splendid performance is largely attributed to our shareholders’ support and trust, as well as the employees' commitment and efforts.

In fiscal 2005, our company's semiconductor, LCD, and handset businesses - Samsung Electronics' key business units - further strengthened their market-dominant positions based on the cutting-edge technologies.

The Semiconductor Business posted operating margin of 30% thanks to the improved profitability of the DRAM and NAND Flash businesses. As for the LCD Business, it strengthened its dominant position in the LCD panel market through the operation of the 7G line. The Telecommunication Business posted a record-high shipment of 100 million units by introducing high performing products such as multi-media phones and by expanding production lines of the 3G phones. Also, our Digital Media/Appliance businesses posted the world's highest sales figure in the TV market including LCD TV, PDP TV, and CRT TV. This reaffirms Samsung Electronics' industry leadership in the TV market and also enhances its position as a world premier company.

In 2006, the global economy may settle into a period of slower growth due to high oil price, weak US dollar, and possible economic slowdown of the U.S and Chinese economies.

Domestically, we cautiously expect local demand to pick up in 2006. However, uncertainties over oil price, fluctuations in the exchange rate, and possible risk of hard landing of the Chinese economy may make competition among the companies more intense.

The company will take challenging global and domestic environment as an opportunity to enhance its dominant position in the global market. Samsung Electronics plans to continuously secure dominant market positions by continuously introducing global # 1 products and enhancing its market shares in the related sectors. Also, the company will build up brand value as a world premier company through creating new markets with its world leading technologies and technology- driven products.

Semiconductor Business Leads the Industry with Its Core Technologies.

In 2005, there was oversupply of the DRAM product due to the manufacturers' capacity increase while production of high density NAND Flash accelerated thanks to the soaring demand for NAND products from MP3 player manufacturers.

Our memory business outpaced the industry market growth by reinforcing its competitiveness through introduction of differentiated premium products such as high density NAND flash, High-Speed DRAM, and MCP products.

The System LSI business maintained its no. 1 position in Display-Driver IC (DDI) and also established the foundations for future growth by introducing to the market products such as CMOS image sensor, mobile CPU, chip card IC, and media player SoC., source of future profits.

In 2006, we expect the markets for the MP3 and digital cameras to expand, providing solid growth momentum for NAND flash products. This will help us our Semiconductor business post a strong year in 2006. Samsung Electronics will maintain its strong profit structure in 2006 by strengthening its market leadership in NAND flash, a major product of the company.

The System LSI division also plans to boost its competitiveness by making technological advancements in high-definition and high-speed I/F.

LCD Business Paves the Way for Next-Generation Display Market

Our LCD business has maintained its uncontestable no. 1 position in terms of LCD panel shipments and sales since 2002. Furthermore, for the first time in the industry, sales of LCD panels of 10" or larger size accumulated over 100 million units in 2005.

The company's focus on delivering innovative breakthroughs to the global market resulted in the the development of the world's first 82" TFT-LCD panel and 40" AM-OLED panel for TVs.

In 2006, the LCD-TV market is expected to grow to 36 million units, compared with 20 million units in 2005. In response to the rapidly growing market, our company will focus on the commercialization of large size LCD-TV panels (40"ㆍ46"), through production of 7-1G and 7-2G lines.

Telecommunication Network Business Leads the Market with Premium Brand and Differentiated Products.

The rapidly growing mobile handset market began to slow down in 2005 due to a drop in demand for handset replacement in the advanced markets such as North America and Western Europe. However, Samsung Electronics posted its annual sales of mobile handsets of over 100 million units in 2005 for the first time largely thanks to various 3G mobile handsets featuring WCDMA and CDMA EV-DO as well as its multi media phones such as mega-pixel camera phone, MP3 player phone, and DMB phone. Samsung Electronics' sales in handsets jumped 100 times in a decade: In fiscal 1996, the company sold 1.07 million units. This increase in sales is quite noteworthy, especially considering the fact that we mainly focus on high- end market.

In 2006, the company will solidify its leadership in the high end market through continuously releasing innovative products and diversifying models of mega pixel camera phone, slim phone, and WCDAM phone.

The telecommunications equipment market is expected to grow further as demand to upgrade wireless communication equipment featuring WCDMA and HSDPA, and new services such as wireless data service, broadcasting service, wired and wireless communication integrating service are launched.

Samsung Electronics will expand its exports to Japan and Indonesia focusing on telecommunications systems. Furthermore, the company plans to lead the wireless Internet market through taking the global market in the first place based on successful commercialization of the WiBro technology in Korea.

Digital Media Business Creates the Digital Culture

In 2005, our Digital Media Business continued its solid growth despite challenging business environment in the domestic and overseas market. We aggressively expanded overseas market based on cost and product competitiveness.

Growth in the slim CRT TV, PDP TV, and LCD TV markets helped us offset the negative effects stemmed from the company's decision to suspend production of analog products such as non-flat CRT TV. More notably, Samsung Electronics had the highest market in the global TV market during the third quarter in terms of sales and number of sets sold. Samsung Electronics plans to strengthen competitiveness in the digital product market, and to fortify it global leadership by improving product structure, gaining consensus on product excellence in markets of advanced countries, and expanding the list of countries where Samsung Electronics is the no. 1 in market share.

The 2006 market presents a mixed picture: the market for FPTV such as LCD TV and PDP TV is expected to grow rapidly while competition is expected to become more fierce with competitors focusing on digital products. In response, Samsung Electronics plans to develop highest quality products and conduct aggressive marketing to secure its position as the industry leader.

The Digital Appliance Business Reshapes Consumer Lifestyle

The Digital Appliance Business is leading the market by introducing to market products with differentiated design and innovative technology, meeting consumers' needs. Most notably, it is performing very well in the the premium market.

Especially, our side by side refrigerator had # 1 market share both in Korea and in 31 markets globally. Also, sales for our drum washing machine with the world's first silver nano technology surged by 76 % from the previous year in Europe and Asian markets.

JD Power ranked Samsung Electronics' refrigerators first in its consumer satisfaction index and KMCA ranked Samsung washing machine first in its consumer satisfaction index for six years in a row, and Samsung refrigerator first for three years in a row.

The digital appliance division plans to enhance competitiveness in 2006 through expanding the list of its high value-added products featuring state-of-the-art technology and innovative design, placing emphasis on home solution business, and cultivating overseas markets aggressively

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