Samsung El.gdr Regulatory News (SMSN)

On October 7, 2014, Samsung Electronics disclosed its earnings guidance for the third quarter, 2014.

Ÿ Consolidated Sales: Approximately 47 trillion Korean won

Ÿ Consolidated Operating Profit: Approximately 4.1 trillion Korean won

The above figures are consolidated earnings estimates based on K-IFRS. Korean disclosure regulations do not allow earnings estimates to be provided as a range. Therefore, the above figures are based on the median of the earnings estimate range, as given below.

Ÿ Sales: 46 ~ 48 trillion Korean won

Ÿ Operating Profit: 3.9 ~ 4.3 trillion Korean won

「2014 3Q Pre-Earnings Guidance Explanation」

In light of lower earnings guidance reported compared to the earlier market expectation, the purpose of the information contained below is to provide a brief explanation on the preliminary 3Q earnings forecast to improve investors' understandings and mitigate the market uncertainties prior to the Company's official announcement of the quarterly earnings results.

I. 3Q Earnings Guidance

Samsung Electronics' 3Q earnings is expected to decrease substantially quarter-on-quarter as a result of declines in the mobile business due to intensified smartphone competition, which also had an adverse effect on the performance of the OLED and S.LSI businesses, and weak seasonal demand for the CE business, including TVs.

1) Mobile Business

Smartphone shipments increased marginally amid intense competition. However, the operating margin declined due to marketing expenses related to aggressive promotions and lowered ASP (Average Selling Price) driven by reduced proportional shipments of high-end models coupled with price decreases for older smartphone models.

2) CE Business

Under typically weak seasonality, earnings for the CE business declined substantially quarter-on-quarter due to reduced ASP of TVs and an earlier-than-expected end to the peak summer sales season of home appliance products, such as air conditioners.

3) Memory Business

Earnings for the Memory business improved on-quarter led by continued strong seasonal demand momentum, including PCs and servers, price stabilization under tight market supply and demand conditions, and cost reduction thanks to improved process migration.

4) S.LSI and Display Panel Businesses

For the S.LSI and OLED panel businesses, shipments decreased and profitability weakened due to weaker demand for mobile products.

II. Future Outlook

In 4Q, uncertainty of the IM business remains, while the Company cautiously expects increased shipments of new smartphones and strong seasonal demand for TV products.

To secure sustainable mid- to long-term growth despite intensified competition, Samsung is preparing new smartphone lineups featuring new materials and innovative designs, as well as a series of new mid- to low-end smartphones with strong competitive positioning on both hardware specifications and price.

For component businesses, including OLED, the Company will continue to enhance competitiveness by continuously strengthening technological innovation and expanding its customer base.

※ The above information is provided for the convenience of our investors before the external audit on the financial results of our headquarters, subsidiaries and affiliates is completed. The statements contained herein includes forward-looking statements based on management's current expectations and assumptions regarding the Company's business and financial performance and future events or developments involving the Company, and all such statements are subject to certain risks and uncertainties that could cause our actual results to be materially different from those expressed in this document.

※ 2014 3Q consolidated figures based on K-IFRS are as follows