Opportunities in Electronics Industry with Korea October 2004 GS Choi President & CEO Samsung Electronics

India Mobile Subscribers (MN) Dec ’02 Jul ’03 Dec ’03 Jul ’04 Aug ’04 32.0 10.0 42.0 30.6 8.3 38.9 CDMA GSM 22.0 6.2 28.2 19.5 16.3 3.2 10.5 Dec ’02 Jul ’03 Dec ’03 Jul ’04 Aug ’04

India Foreign Exchange Reserves ($BN) 118.4 106.4 85.6 74.3 58.8 Jul ’02 Jan ’03 Jul ’03 Jan ’04 Jul ’04

India Forecast of India’s GDP ($BN) 7,854 3,174 1,411 554 604 2004 2005 2015 2025 2035 Source : Goldman Sachs BRICS report

India The Largest Economies in 2035 (GDP $BN) 23,828 19,605 7,854 5,882 3,734 USA China India Japan Russia Source : Goldman Sachs BRICS report

India – Market Growth Color TV Demand (Units: MN) 7.0 6.2 5.1 Curved CRT Flat CRT PDP/LCD/PJTV 5.1 11.4 17.1 0.3 6.2 4.4 10.7 0.1 7.0 1.0 8.0 2003 2006 2010

India – Market Growth Mobile Phone Demand (Units: MN) 57 30 12 21 11 7 CDMA GSM 21 57 78 30 11 41 12 7 19 2003 2006 2010

India – Market Growth Indian Market Size ($BN) Avg. Growth % 18% 14% 25% 22% 10% 1.9 6.8 2.9 3.8 15.3 HA Tel IT AV 1.5 5.3 2.0 3.2 12.0 1.3 3.8 1.4 2.3 8.8 1.1 2.5 9.0 1.9 6.3 1.0 1.7 5.0 1.6 4.8 2003 2004 2006 2008 2010

Status of Korea’s Electronics Industry Leading Production Country $301bil 26% ← Electronics Production (2003) ← Proportion to W/W Total $180bil 16% $1,417 $1,349 ←Production per capita $130bil 11% $1,026 $66bil 6% $46bil 4% $563 $100 USA Japan China Korea Germany Source: Yearbook of World Electronics Data Volume 4 East Europe & World Summary 2003/4, World Fact Book of CIA 2004

Status of Korea’s Electronics Industry Product Portfolio Others 1.4% IT 21.4% Communication 24.3% CE 7.6% Semiconductor & Parts 45.3%

[ Mobile Phone subscribers, 2002] Advanced Country in Digital Era High penetration ratio of devices & infrastructure [ Mobile Phone subscribers, 2002] 79 70% 68 54 21 Korea USA Japan Germany China Source: Korea Information Indicators Database 2004, National Computerization Agency

Advanced Country in Digital Era High penetration ratio of devices & infrastructure [ BB subscribers, 2002] 70% 18 19 8 1 Korea USA Japan Germany China Source: Korea Information Indicators Database 2004, National Computerization Agency

Electronics and Economic Growth Electronics has been driving the Korean Economy Electronics Production to GDP Electronics Exports to Total Exports 39% 35% 34% 26% 17% 15% 15% 11% 12% 7% 1985 1990 1995 2001 2003 Source: Electronic Industries Association of Korea, National Statistics Office of Korea

Samsung Electronics’ Contribution Samsung Electronics’ position in Korean economy % Employment to Manufacturing 1.3% Sales/GDP 6% Exports 17% Sales Revenue 10% Market Cap. 20% Net Income 23.4% R&D Expenses 40% ※ as of Dec. 31, 2003 Based on publicly traded companies

Korea – India Links Language Similarities Mother : amma (TAMIL ) umma (KOREAN) 엄마 Father : appa (TAMIL ) appa (KOREAN) 아빠 Elder brother's wife : anni (TAMIL ) unni (KOREAN) 언니 Rice : Bhat (KANNADA/HINDI) Baap (KOREAN) 밥

Korea India Economic Ties Korea-India Trade ($MN) India is the 10th Most Important Trade Partner for Korea 1300 2700 4000 Indian exports to Korea Indian imports from Korea 700 1900 2600 650 1536 2186 376 1394 1770 476 1273 1749 468 1002 1469 457 1127 1593 447 778 1126 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05(Est.)

Korea India Economic Ties Investors into India (FDI $BN) Korea is the 5th Largest Investor in India 13.9 7.5 4.4 2.7 2.5 2.3 USA Mauritius U.K. Japan Korea Germany

Manufacturing in India Importance Large Economic Potential Huge Market including Middle East & Africa Requirements Differentiation for Competitiveness - Basic Infrastructure : Power, Roads, Ports - Supportive Policy : Grant, Tax, Labor law - Local Procurement : Parts, Material Transfer manufacturing expertise from Korea

Case Study : Samsung India 1995 2004 Samsung brand unknown Finished goods imports Samsung set up manufacturing Samsung as a premium brand 150 Local vendors developed Exports “Made in India” products < Actions > Introduced disciplined manufacturing systems World class quality control system Nurtured local vendors Used India software and R&D expertise

Electronics Factory, NOIDA South West Asia Regional HQ, Case Study : Samsung India A Hub in India for Manufacturing India CTV factory is globally No.1 in productivity Spread quality control program (SQCI) - More than 50 vendors are certified this year Received Various Awards - Rajiv Gandhi National Quality Award, etc. Samsung India Electronics Factory, NOIDA South West Asia Regional HQ, New Delhi

Global R&D Hub in India Potential Over 100 MNCs have set up R&D centers in India → Need to deepen software, widen hardware 450,000 engineers and IT professionals, every year Requirements Korea is leading the most promising fields - Home Network & Mobile Communication → The more digitalized, the more software is needed Systematic support program for acceleration

Samsung India Software Operation (Bangalore) Software Center (NOIDA) Case Study : Samsung India R&D Centers Employee (mainly researchers) - Bangalore: 137(’00) → 329(’02) → 685(’04) → 800(’06) - Noida : 72(’03) → 150(’04) → 200(’05) → 300(’06) Local software outsourcing Supply of researchers to Korea Subjects : Embedded, Home network, IPv6, etc. Samsung India Software Operation (Bangalore) Samsung India Software Center (NOIDA)

Korea Can Help Position India As A Leading Global Electronics Hub Expertise in Electronics Manufacturing A Big Domestic Market World Class Components Industry Software and R&D Expertise World’s most Networked Economy High Quality Workforce

Thank you !