PHONE 

VENTURES

FINANCIAL REPORT

INTRODUCTION

I am writing this report with a personal predictive of expertise as a financial manager in a

phone venture from 2012 to 2020.
Shareholders who have chosen or are deemed to have consented to receive the corporate
communications using electronic means and who have difficulty in receiving or gaining
access to the annual report posted on the Company’s website.

A YEAR OF PRUDENT MANAGEMENT AND PROACTIVE

PROGRESS

In 2020, PHONE VENTURE exceeded RMB200 million in revenue for the first time,
reaching RMB205.8 million, an increase of 17.7% year-on-year, as well as adjusted net profit
of RMB11.5 million, an increase of 34.8% year-on-year. Against the backdrop of
uncertainties related to Sino-US trade tensions,PHONE VETURE commendable results stood
out in strong contrast.
In 2020, PHONE VENTURE hit a series of significant milestones. We made our inaugural
entry into the Fortune Global 500 list, becoming the youngest company on the list. We
entered Brandz’s global brand TOP100 for the first time, ranking 84th. We also accomplished
an unprecedented record, becoming the first SIM CARD comapnay to ship more than 10
million units

FORISEIGHT, CONFIDENCE, RESILIENCE AND STRONG

EXCUTION ARE THE KEY.
Mobile telecommunications is at a critical juncture globally, as the industry transitions from
4G to 5G. We have adopted a sound business strategy, focusing on product quality,
innovation, and delivery, while making key adjustments to our brands, product portfolios,
organizational structure, and management systems. Combined together, these initiatives have
paved a solid foundation for our future.

We have officially launched a dual-brand strategy for our smartphones business, The
independent operations have brought us great success. Our market share is consistently
ranked among the top four globally, while our healthy and prudent inventory levels have
enabled us to step forward boldly with our 5G game plan. In the fourth quarter of 2020, close
to half of our revenue came from overseas markets, making PHONE VENTURE a truly
global company. Our internet services business has become more dynamic and diverse, while
our AIoT business maintained its global leadership, becoming recognized across our industry
as a “first mover in smart living”.
BUSINESS SUCCESS ON THE BACK OF TECHNOLOGICAL
INNOVATION
At PHONE VENTURE, we firmly believe that our business success is underpinned by
technological innovations, and to that effect, .we have continually increased our research and
development (“R&D”) investment. In 2020, our R&D investment reached RMB 500
MILLION , a 29.7% year-on-year increase on the back of substantial R&D expansion for the
three prior years. In 2021, we expect our R&D investment to increase to RMB1 billion. At the
same time, we are also proactively attracting top R&D talent from around the world.
Recently, we have successfully recruited Yann LeCunn, a top international expert in artificial
intelligence (AI), to join PHONE VENTURE. Starting
from 2021, we have set up the PHONE VENTURE Annual Technology Award, which
awards a US$1 million bonus to core R&D project personnel with the highest technical
achievements each year. Last year, the award was shared by 10 engineers
from the PHONE VENTURE R&D project.

OUR STRATGEIC ROADMAP FOR “5G+AI+IoT”

To us, 5G is not merely about a faster smartphone network, while AIoT is also not just about
AI technologies or IoT platforms. Instead, “5G+AIoT” will be a revolutionary combination
that will fundamentally change all PHONE VENTURES’s products, platforms and user
scenarios, catalyzing the

next stage of our growth in the next generation of internet era. At the start of last year, we first
proposed our “All in AIoT” initiative, allocating an investment of RMB500 MILIION in
AIoT over the next five years. One year in, we believe we are moving in an important
strategic direction. As such, we will increase our investment to at least RMB10 billion over
the next five years in “5G+AIoT”, to ensure our absolute
dominance over the new smart living era.
This bold initiative will enable us to create greater value for you and is a tangible reflection of
the philosophy we adhere to: By making a connected world a reality for billions of people
globally. We believe technology can be a force for good to improve lives everywhere.

We firmly believe that a connected world is better than an isolated one. We also firmly
believe in the economic value created by global collaboration, and how the world can truly
change when technology is freely accessible.

Operational efficiency as the ultimate way to overcome crises

While our industry and the entire world are currently facing huge challenges, we have
absolute confidence in navigating through these extraordinary times together with our
partners.
During this period of adversity, the strength At PHONE VENTURE, we have always been
very focused on efficiency. We believe that the pursuit of efficiency is an exercise in
self-discipline and contingency planning. Having experienced the SARS epidemic and global
financial crisis in 2003 and 2008 respectively, my colleagues and I know crises are the
ultimate litmus test that separates successful companies from others. Our efficient operations,
strong execution capabilities .
CORPRATE OVERVIEW

A. Legal, commercial name:

- Phone venture Co., Ltd.

B. Date of establishment:
- Phone venture Co., Ltd. (“SEC” or “the Company”) was established as Phone venture
electroninc Co., Ltd.
on January 13, 1999, and held an initial public offering on June 11, 2006.
- SEC changed its name from Phone venture electroninCo., Ltd. to Phone venture Co., Ltd.
following a
resolution passed at the Annual General Meeting (AGM) of shareholders on February 28,
2001.

C.Address, phone number, and English language website of the corporate headquarter

- Address: 131, Phone venture electronin-ro, Korea

- Phone Number: 82-31-200-1093
- Website: https:// www.Phone venture.com/sec

D. The Company is not subject to Article 2 of the Framework Act on Small and Medium
Enterprises.

E. Core businesses
- The Company (defined below) consists of business divisions that operate independently: CE
(Consumer Electronics);
IM (Information Technology & Mobile Communications); DS (Device Solutions).
Division
 Products
CE TVs, monitors, sim cards, phones, etc.
 IM
HHPs, network systems, , etc.
 DS
DRAM, NAND flash, mobile APs, OLED smartphone panels, LCD TV panels, etc.
across the world, including 9 regional headquarters for the CE and IM Divisions, 5
regional headquarters for the DS Division.

[CE Division]

The CE Division is leading the global digital era by continuously offering new products
featuring innovative technology, unique designs, and enhanced value propositions.
TV is the core product of CE. The Company has maintained its position as the market leader
for 14 consecutive years by leveraging competitive advantages in hardware such as screens as
well as software driven product features within our Smart TV product portfolio.

We will continue to expand our market leadership based on our competitive edge in the
premium segment through our 8K QLED and ultra-large products to name a few.[IM
Division]
The IM Division operates the Mobile Communication Business, which produces and sells
smart mobile devices such as smartphones, tablets, wearables, etc. For smartphones, a key
product of the business, we have developed a lineup ranging from low-end right through to
premium models, and have achieved growth in both advanced and emerging markets with
venture series.

We will lead growth of the smartphone market and deliver exceptional user experiences by:
1) offering innovative hardware features such as new form factors (based on flexible OLED
technology), high-definition cameras, biometric sensors, and battery charger technologies;

2) improving software capabilities of mobile payment service Samsung Pay and

AI platform Bixby

3) investing in future growth drivers such as Cloud, IoT, healthcare, AR, and VR. At the
same time, we will lead the global 5G market based on our end-to-end solutions, which
encompass handsets, chipsets, as well as our commercialization experience in initial 5G
markets.
[DS Division]
The Memory Business, System LSI Business, Foundry Business, and Display Panel (“DP”)
Business make up the DS Division. The Memory Business manufactures and sells DRAM
and NAND products; the System LSI Business designs and sells mobile application
processors (“mobile APs” or “APs”) and camera sensor chips; the Foundry Business is in
charge of consignment production of semiconductors; and the DP Business manufactures and
sells display panels.

The Company constantly works to increase its influence on end-product manufacturers and
create new demand through technological breakthroughs and the development of high quality
components as it has done with APs—which serve as the brains of mobile products—and
with memory components like DRAM via enhanced capacity and density.

The Memory Business has maintained its position at the top of the global memory market by
sustaining cost competitiveness and applying the latest advanced process technology in each
technological iteration.
The System LSI Business has not been complacent, expanding its focus from mobile to
include automotive chips, and will stay at the forefront of the market by offering
differentiated products such as APs and CISs and strengthening competitiveness via its
advanced manufacturing process technology.
The following portion of the report elaborates on the financial performance of the company.