Samsung Electronics Co., Ltd.

Samsung Electronics

Business

Report-XBRL

SAMSUNG ELECTRONICS Co., Ltd.

2022 Business Report

–

XBRL

For the year ended December 31, 2022

Certain statements in the document, other than purely historical information, including estimates, projections, statements relating to our business plans,

objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” Forward-

looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to

differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to

differ materially from such forward-looking statements is included in our financial reports available on our website.

See, also,

『

Note on Forward-Looking Statements

』

in preamble of

『

V. Management Discussion and Analysis

』

Samsung Electronics

Business

Report-XBRL

Table of Contents

Certification

I. Corporate Overview

II. Businesses Overview

III. Audited Financial Statements

IV. Other Financial Matters

V. Management Discussion and Analysis

VI. Appendix

Samsung Electronics

Business

Report-XBRL

Certification

Samsung Electronics

Business

Report-XBRL

I. Corporate Overview

1. Overview

A. Legal, commercial name:

Samsung Electronics Co., Ltd.

B. Date of establishment:

Samsung Electronics Co., Ltd. (“SEC” or “the Company”) was established as Samsung Electronics Industry Co., Ltd.

on January 13, 1969, and held an initial public offering on June 11, 1975.

SEC changed its name from Samsung Electronics Industry Co., Ltd. to Samsung Electronics Co., Ltd. following a

resolution passed at the Annual General Meeting (AGM) of shareholders on February 28, 1984.

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

Address: 129, Samsung-ro, Yeongtong-gu, Suwon, Gyeonggi-do, Korea

Phone Number: +82-31-200-1114

Website: https://www.samsung.com/sec

D. Core businesses

The Company (defined below) is comprised of two business divisions – DX (Device eXperience) and DS (Device

Solutions) – SDC (Samsung Display and its subsidiaries), which runs display panel business, and Harman (Harman

International Industries, Inc. and its subsidiaries), which operates businesses related to automotive electronics

components, etc.

SEC is a global electronics firm consisting of its headquarters in Korea and 232 subsidiaries (collectively, “Samsung

Electronics”, the “Company”, or “we”) across the world, including 9 regional headquarters for the DX Division, 5 regional

headquarters, as well as production and sales subsidiaries, for the DS Division, and subsidiaries of SDC and Harman.

Key products by each organization are set forth below:

Organization

Key products

DX Division

TVs, monitors, refrigerators, washing machines, air conditioners, hand held products (HHPs),

telecommunications network systems, computers, etc.

DS Division

DRAM, NAND flash, mobile APs, etc.

SDC

OLED panels for smartphones, etc.

Harman

Digital cockpits, telematics, speakers, etc.

In December 2021, the Company merged the CE and IM Divisions to create the DX Division; and it separated SDC and the DS Division to align with

the corporate organizational structure.

[DX Division]

The DX Division manufactures TVs, monitors, refrigerators, washing machines, air conditioners, smartphones, tablets, and

wearables. It is leading the global digital market with its differentiated technology, designs, and products, including premium

TVs based on leading technologies such as Neo QLED TV; Lifestyle TVs that align with the lifestyles of customers who

value experiences; and Bespoke products, which are customized to satisfy various needs of our customers. The Company

has maintained its position as the leader in the TV market for 17 straight years. Moreover, for smartphones, a core product

of the Division, we have developed a broad lineup ranging from low-end right through to premium models with the Galaxy

series. Samsung will continue to innovate in the premium and Lifestyle TV markets while strengthening global sales of

Bespoke products.

Samsung Electronics

Business

Report-XBRL

Through the Galaxy Ecosystem, we will deliver top-notch Multi-Device experiences, allowing convenient and seamless use

of not just mobile products, but also TV and home appliance products. At the same time, we will keep fortifying our status

and market dominance as a global brand by continually releasing new products that reflect the needs of consumers and

current trends; and we will lead the global 5G market based on our end-to-end solutions, which encompass handsets, chipsets,

as well as our experience in commercializing 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; and the Foundry Business is in charge

of consignment production of semiconductors.

The Memory Business continues to maintain its position at the top of the global memory market by focusing on qualitative

growth, including by applying advanced process technology in DRAM and NAND Flash products; differentiating our

products via centering our business portfolio on high-value solutions; and enhancing cost competitiveness.

The System LSI Business has not been complacent, extending its focus from mobile to include automotive chips, and it is

expanding its market power through actions such as satisfying demand with differentiated products—such as APs and

CISs—based on its advanced manufacturing process technology, and by diversifying foundry suppliers.

The Foundry Business is expanding by securing competitiveness via adopting core technologies and new structures in

advanced processes, securing supply continuity of semiconductors amid global supply shortage and actively addressing

continued strong demand for legacy processes.

[SDC]

In SDC, the mobile panel business’s differentiated technology is a key factor behind the increased adoption of OLED panels,

while our release of products in new applications—such as foldable devices, rollable devices, and automotives—has

expanded the overall market. Meanwhile, the large panel business is focusing on premium products such as high-definition,

ultra-large, Quantum Dot TVs and is enhancing its competitiveness through continuous improvements in technology and

productivity.

[Harman]

Harman consists of the automotive component business, which designs and develops connected products and solutions for

automakers; and the lifestyle audio business, which provides consumer audio products and professional audio solutions.

Harman, as a leader in the automotive component market, supplies car manufacturers with products that apply innovative

technologies. And in the audio market, it has been firmly establishing the brand reputation among consumers and audiophiles.

Harman has established an internationally renowned brand and it offers diverse product lines, using internal development

and strategic acquisitions to strengthen competitiveness in each business area.

☞

See

『

II. Businesses Overview

』

for more details about each Division.

E. Subsidiaries subject to consolidated accounting (summary)

As of December 31, 2022, and in accordance with Korean International Financial Reporting Standards (K-IFRS) 1110,

Consolidated Financial Statements

, Samsung Electronics, the controlling company, had 232 consolidated subsidiaries, with

the addition of 8 subsidiaries and reduction of 4 subsidiary when compared to totals as of December 31, 2021.

Samsung Electronics

Business

Report-XBRL

Classification

Number of subsidiaries subject to consolidated accounting

Number of major

subsidiaries

As of January 1,

2022

Added

Removed

As of December

31, 2022

Listed

Unlisted

228

232

141

Total

228

232

141

See

『

Appendix-1. Subsidiaries subject to consolidated accounting (detailed)

』

for details.

[1H22: Changes in subsidiaries subject to consolidated accounting]

Classification

Subsidiary

Reason

Newly

consolidated

Samsung R&D Institute Ukraine (SRUKR)

Establishment

Samsung Electronics Uzbekistan Ltd. (SEUZ)

Establishment

Apostera GmbH

Acquisition of shares

Apostera UA, LLC

Acquisition of shares

DOWOOINSYS VINA COMPANY LIMITED

Establishment

Red Brick Lane Marketing Solutions Pvt. Ltd.

Acquisition of shares

SVIC #57 Venture Capital Union

Establishment

Stellarforest

Establishment

No longer

consolidated

Dacor Canada Co

Liquidation

AMX UK Limited

Liquidation

Harman International s.r.o

Liquidation

Apostera GmbH

Merger

Samsung Electronics

Business

Report-XBRL

F. Whether the Company is an SME

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

Small and medium enterprise

Venture company

Medium-sized enterprise

G. Credit rating

SEC’s credit rating is assessed by two external credit ratings agencies. As of December 31, 2022, SEC’s credit ratings were

Aa2 with a stable investment outlook as rated by Moody’s (US); and AA- with a stable investment outlook as rated by S&P

(US).

Securities

Date

Ratings

Credit rating agency

Note

Corporate bond

(USD denominated; issued in

1997 and expire in 2027)

Jul 2020

AA-

S&P

Regular review

Sep 2020

Aa3

Moody’s

Jul 2021

AA-

S&P

Aug 2021

Aa3

Moody’s

Aug 2022

AA-

S&P

Sep 2022

Aa2

Moody’s

Credit rating range: Moody’s (Aaa

-C), S&P (AAA-D)

[Credit ratings definitions]

Moody’s

Definition

S&P

Definition

Investment

grade

Aaa

Superior ability to repay debt obligations;

lowest level of credit risk

AAA

Extremely strong ability to meet financial

commitments; highest rating

Aa1/Aa2/Aa3

High ability to repay debt obligations; very

low credit risk

AA+/AA/AA-

Very strong capacity to meet financial

commitments

A1/A2/A3

Upper-medium ability to repay debt

obligations; low credit risk

A+/A/A-

Strong capacity to meet financial commitments;

susceptible to adverse effects of changes in

economic conditions

Baa1/Baa2/Baa3

Medium ability to repay debt obligations;

moderate credit risk, speculative factors

BBB+/BBB/BBB-

Adequate capacity to meet financial

commitments; relatively more susceptible to

adverse economic conditions

Speculative

grade

Ba1/Ba2/Ba3

Speculative; substantial credit risk

BB+/BB/BB-

Major ongoing uncertainties; exposure to

adverse business, financial, or economic

conditions can impair ability to meet financial

commitments

B1/B2/B3

Speculative; high credit risk

B+/B/B-

More vulnerable to nonpayment than those

rated BB; has capacity to meet financial

commitments but adverse financial or economic

conditions are likely to impair ability to continue

doing so

Caa

Speculative; very high credit risk

CCC

Vulnerable to nonpayment; dependent upon

favorable business, financial, and economic

conditions

Highly speculative; likelihood of being in

or near default; some prospect for

recovery of principal and interest

Highly vulnerable to nonpayment; default has

not yet occurred but expected to be a virtual

certainty

Typically in default; little prospect for

recovery of principal or interest

Highly vulnerable to nonpayment; obligation is

expected to have lower ultimate recovery vis-à-

vis higher rated obligations

In default or in breach of imputed promises,

upon the filing of a bankruptcy petition or the

taking of a similar action

Please refer to

『

III. Financial Affairs-7. Matters about financing through the issuance of securities

』

for credit ratings on corporate bonds and

commercial paper issued by the Company’s subsidiaries.

Samsung Electronics

Business

Report-XBRL

H. Whether the Company is listed (or registered or designated) and matters related to special listed companies

The Company listed on the Korea Stock Exchange on June 11, 1975.

Listed

(or registered or designated)

Date listed

(or registered or designated)

Special listed company

Subject to regulations for

special exception companies

Stock market (KOSPI)

June 11, 1975

2. Company history

A. Company history

Jan 13, 1969

Samsung Electronics Manufacturing Incorporated

Jun 11, 1975

Listed on the Korea Stock Exchange

Feb 28, 1984

Renamed as Samsung Electronics

Nov 1, 1988

Merged with Samsung Semiconductor and Communications

Apr 1, 2012

Spun off the LCD division (established Samsung Display)

Mar 5, 2017

Released advanced Quantum dot-based QLED TV

Mar 10, 2017

SEA acquired shares of Harman International Industries, Inc. (100%)

Jul 4, 2017

Started operations at semiconductor production fab in Pyeongtaek, the largest such facility in the world

Nov 1, 2017

Sold Printing Solution business

Aug 30, 2018

Launched QLED 8K TVs with Quantum Dot technology

Apr 3, 2019

Launched Galaxy S10 5G, a 5G smartphone

Jun 4, 2019

Released Bespoke, a refrigerator customized to customers’ lifestyles

Sep 4, 2019

Unveiled Exynos 980, 5G mobile processor

Sep 6, 2019

Unveiled Galaxy Fold, a foldable phone with a new form factor

Jan 29, 2020

Launched AI-technology-based Grande AI washer/dryer

Feb 4, 2020

Launched world’s first ultra-high speed DRAM for AI and next-generation super computers

Feb 11, 2020

Unveiled Galaxy Z Flip, a foldable model with a new form factor

Aug 30, 2020

Started operation of Pyeongtaek Line 2, the world’s largest semiconductor line

Jan 7, 2021

Unveiled Neo QLED TV

May 11, 2021

Announced expansion to the global market for Bespoke Home

Jun 3, 2021

Received certification for reducing carbon emissions, water use, and waste discharge for all of our

semiconductor worksites, a first in the global semiconductor industry

Aug 11, 2021

Unveiled Galaxy Z Fold 3 and Galaxy Z Flip 3

Oct 12, 2021

Started mass producing highly advanced 14-nano EUV DDR5 DRAM

Nov 9, 2021

Developed industry’s first LPDDR5X DRAM

Nov 24, 2021

Announced investment in a new foundry production site in Taylor, Texas, USA

Feb 10, 2022

Unveiled the Galaxy S22 series

Feb 17, 2022

Unveiled the Bespoke Infinite Line

Jun 30, 2022

Began mass production of the world’s first 3-nano GAA chips

Aug 10, 2022

Unpacked Galaxy Z Fold 4 and Flip 4

Aug 19, 2022

Held a groundbreaking ceremony for the next-generation semiconductor R&D complex

Sep 15, 2022

Announced a new environmental strategy

Nov 7, 2022

Mass produced 1Tb 8th-generation V-NAND

Dec 21, 2022

Developed highly advanced 12nm-class 16Gb DDR5 DRAM

B. Company location and changes

The Company’s head office is located at 129, Samsung-ro, Yeongtong-gu, Suwon, Gyeonggi-do. There were no changes

in the Company’s head office location over the past five fiscal years.

Samsung Electronics

Business

Report-XBRL

C. Important changes in management executives

As of December 31, 2022, SEC’s Board consisted of five Executive Directors (Jong-hee Han, Kye-hyun Kyung, Tae-

moon Roh, Hark-kyu Park and Jung-bae Lee) and six Independent Directors (Han-jo Kim, Sun-uk Kim, Jeong Kim

and Jun-sung Kim, Eun-nyeong Heo, Myung-hee Yoo).

Date of

change

Type of

shareholder

meeting

Appointed

Terms expired

or dismissed

Newly appointed

Reappointed

Mar 23, 2018

AGM

Executive Director Sang-hoon Lee

Executive Director Ki-nam Kim

Executive Director Hyun-suk Kim

Executive Director Dong-jin Koh

Independent Director Jeong Kim

Independent Director Sun-uk Kim

Independent Director Byung-gook Park

Executive Director Oh-hyun Kwon

Executive Director Boo-keun Yoon

(resigned)

Executive Director Jong-kyun Shin

(resigned)

Independent Director Han-joong Kim

Independent Director Byeong-gi Lee

Mar 23, 2018

CEO Ki-nam Kim

CEO Hyun-suk Kim

CEO Dong-jin Koh

Mar 20, 2019

AGM

Independent Director Han-jo Kim

Independent Director Curie Ahn

Independent Director Jae-wan Bahk

Independent Director In-ho Lee

Independent Director Kwang-soo

Song

Oct 26, 2019

Executive Director Jae-yong Lee

Feb 14, 2020

Executive Director Sang-hoon Lee

(resigned)

Mar 18, 2020

AGM

Executive Director Jong-hee Han

Executive Director Yoon-ho Choi

Mar 17, 2021

AGM

Executive Director Ki-nam Kim

Executive Director Hyun-suk Kim

Executive Director Dong-jin Koh

Independent Director Byung-gook

Park

Independent Director Jeong Kim

Independent Director Sun-uk Kim

Mar 17, 2021

CEO Ki-nam Kim

CEO Hyun-suk Kim

CEO Dong-jin Koh

Dec 31, 2021

Executive Director Yoon-ho Choi

(resigned)

Feb 15, 2022

CEO Jong-hee Han

CEO Ki-nam Kim (resigned)

CEO Hyun-suk Kim (resigned)

CEO Dong-jin Koh (resigned)

Mar 16, 2022

AGM

Executive Director Kye-hyun Kyung

Executive Director Tae-moon Roh

Executive Director Hark-kyu Park

Executive Director Jung-bae Lee

Independent Director Wha-jin Han

Independent Director Jun-sung Kim

Independent Director Han-jo Kim

Mar 16, 2022

Executive Director Ki-nam Kim

(resigned)

Executive Director Hyun-suk Kim

(resigned)

Executive Director Dong-jin Koh

(resigned)

Mar 16, 2022

CEO Kye-hyun Kyung

Mar 19, 2022

Independent Director Jae-wan Bahk

Independent Director Curie Ahn

Samsung Electronics

Business

Report-XBRL

Date of

change

Type of

shareholder

meeting

Appointed

Terms expired

or dismissed

Newly appointed

Reappointed

Apr 20, 2022

Independent Director Wha-jin Han

(resigned)

May 17, 2022

Independent Director Byung-gook

Park (position vacated)

Nov 3, 2022

EGM

Independent Director Eun-nyeong Heo

Independent Director Myung-Hee Yoo

Mar 23, 2018: Executive Directors Ki-nam Kim, Hyun-suk Kim, and Dong-jin Koh were newly appointed as CEOs at the Board meeting.

Mar 17, 2021: Ki-nam Kim, Hyun-suk Kim, and Dong-jin Koh were appointed as CEO at the Board meeting.

Dec 31, 2021: Yoon-ho Choi resigned from his position as Executive Director.

Feb 15, 2022: Executive Directors Ki-nam Kim, Hyun-suk Kim, and Dong-jin Koh resigned from their positions as CEO; and Executive Director Jong-

hee Han was appointed as CEO at the Board meeting held on the same date.

Mar 16, 2022: Kye-hyun Kyung, Tae-moon Roh, Hark-kyu Park, and Jung-bae Lee were newly appointed as Executive Directors; Wha-jin Han and

Jun-sung Kim as Independent Directors; and Han-jo Kim was reappointed as Independent Director at the Annual General Meeting of the shareholders.

Mar 16, 2022: Ki-nam Kim, Hyun-suk Kim, and Dong-jin Koh resigned from their position as Executive Director.

Mar 16, 2022: Executive Director Kye-hyun Kyung was appointed as CEO at the Board meeting.

Mar 19, 2022: Jae-wan Bahk and Curie Ahn's terms as Independent Directors expired.

Apr 20, 2022: Wha-jin Han resigned from her position as Independent Director.

May 17, 2022: Independent Director Byung-gook Park passed away.

Nov 3, 2022: Eun-nyeong Heo and Myung-hee Yoo were newly appointed as Independent Directors at the Extraordinary General Meeting of the

shareholders.

D. Changes in the major shareholder

The major shareholder changed to Samsung Life Insurance as the shares of the previous major shareholder were

inherited by beneficiaries on April 29, 2021.

[ As of December 31, 2022]

Date of Change

Name of major

shareholder

Number of shares

owned

Share ratio

Reason for change

Note

Apr 29, 2021

Samsung Life

Insurance

1,263,050,053

21.16%

Shares of the previous major shareholder

were inherited by beneficiaries

Number of shares owned and share ratio are the sum of those of major shareholder and its related parties, and the number of shares is based on shares

with voting rights (including those with limited voting rights in accordance with relevant laws).

☞

Please refer to

『

VII. Information on Shareholders

』

for details on the major shareholder.

E. Company name changes

In 2018, Harman Connected Services Finland OY, and Harman Professional Singapore Pte. Ltd changed their names

to Harman Finland Oy, and Harman Singapore Pte. Ltd., respectively.

In 2019, Samsung Electronics Greece S.A. (SEGR) changed its name to Samsung Electronics Greece S.M.S.A. (SEGR).

In 2021, Samsung Electronics Portuguesa

S.A.

(SEP)

changed its name to

Samsung Electronics Portuguesa, Unipessoal,

Lda.

(SEP).

☞

Details are for SEC and major subsidiaries of SEC.

See

『

1. Subsidiaries subject to consolidated accounting (detailed)

』

『

XII.

Appendix

』

for details.

F. Mergers and acquisitions

In 2018, Samsung Electronics America, Inc. merged with Samsung Pay, Inc.; and Harman Connected Services, Inc.

merged with Harman Connected Services Holding Corp. In the same year, SEA sold its full stake in NexusDX, Inc.

Samsung Electronics

Business

Report-XBRL

In 2019, Samsung Electronics Benelux B.V. (SEBN) acquired shares of Corephotonics Ltd. In the same year, SEC

acquired a PLP business from affiliate Samsung Electro-Mechanics. In addition, Harman Becker Automotive Systems

Manufacturing Kft merged with Duran Audio B.V.; and Samsung (China) Investment Co., Ltd. (SCIC) merged with

Samsung Electronics (Beijing) Service Company Limited (SBSC).

In 2021, Samsung Research America, Inc. (SRA) merged with Viv Labs, Inc. Furthermore, Samsung Electronics

America, Inc. (SEA) merged with Prismview, LLC.

☞

Details are for SEC and major subsidiaries of SEC.

See

『

1. Subsidiaries subject to consolidated accounting (detailed)

』

『

XII.

Appendix

』

for details.

G. Important changes in the Company’s business

There were no changes over the past five fiscal years.

H. Other important matters related to the Company’s business

In December 2021, the Company merged its CE and IM Divisions to form the DX Division and changed the Mobile

Communications Business to the MX Division.

Also, the Company separated SDC and the DS Division in alignment with the corporate organizational structure.

[As of December 2021]

Before

After

Business

organization

CE Division (Visual Display, Digital Appliances,

Medical Devices)

DX Division (Visual Display, Digital Appliances,

Medical Devices, Mobile eXperience, Network)

IM Division (Mobile, Network)

DS Division (Memory, System LSI, Foundry, DP)

DS Division (Memory, System LSI, Foundry)

SDC (DP)

Harman Division

Harman

Regional

headquarters

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Korea, North America, Latin America, Europe, CIS,

Southwest Asia, Southeast Asia, China, Middle East, Africa

Americas (DS), Europe (DS), China (DS), Southeast Asia (DS),

Japan (DS)

Americas (DS), Europe (DS), China (DS), Southeast Asia

(DS), Japan (DS)

3. Changes in paid-in capital

There were no changes in paid-in capital over the past five fiscal years.

Due to the retirement of shares, the total par value of the shares issued is KRW 679,267 million (KRW 596,978 million

in common stock and KRW 82,289 million in preferred stock), which is not equivalent to paid-in capital of KRW

897,514 million.

(KRW, shares)

Type of stock

Classification

December 31, 2022

Common

Number of issued shares

5,969,782,550

Par value

100

Paid-in capital

596,978,255,000

Preferred

Number of issued shares

822,886,700

Par value

100

Samsung Electronics

Business

Report-XBRL

Type of stock

Classification

December 31, 2022

Paid-in capital

82,288,670,000

Total

Paid-in capital

679,266,925,000

4. Stock information

A. Total number of shares

As of December 31, 2022, SEC’s issued shares on a cumulative basis totaled 7,780,466,850 registered common shares

and 1,194,671,350 registered, non-voting preferred shares;

and the Company had canceled 1,810

,684,300

common

shares and

371,784,650

preferred shares

in accordance with resolutions of the Board of Directors (the Board). As of

the same date, issued shares and shares outstanding totaled 5,969,782,550 for common shares and 822,886,700 for

preferred shares.

[As of December 31, 2022]

(Shares)

Classification

Type of stocks

Note

Common

Preferred

Total

I. Authorized shares

20,000,000,000

5,000,000,000

25,000,000,000

II. Issued shares (cumulative)

7,780,466,850

1,194,671,350

8,975,138,200

III. Decrease in number of shares (cumulative)

1,810,684,300

371,784,650

2,182,468,950

1. Capital reduction

2. Cancellation

1,810,684,300

371,784,650

2,182,468,950

Treasury shares

3. Redemption

4. Other

IV. Issued shares (II-III)

5,969,782,550

822,886,700

6,792,669,250

V. Treasury shares

VI. Outstanding shares

5,969,782,550

822,886,700

6,792,669,250

Post-split basis; SEC conducted a 50:1 stock split effective from May 3, 2018, lowering par value of every common and preferred share from KRW

5,000 to KRW 100.

Samsung Electronics

Business

Report-XBRL

B. Treasury shares

In 2018, SEC completed the cancellation of all shares held in treasury as a part of its shareholder return policy, and no

acquisition/disposal transaction of treasury shares was made during the reporting period.

[As of Dec 31, 2022]

(Shares)

Acquisition method

Share type

Period-

start

Change

Period-end

Acquisition

(+)

Disposal

(-)

Cancellation

(-)

Intra-market direct acquisition

(within dividend related capital gains limit)

Common

Preferred

Acquisition from a trust agreement

(within dividend related capital gains limit)

Common

Preferred

Total

Common

Preferred

C. Types of registered stock

SEC has two types of registered equity securities: 1) common stock; 2) non-voting and non-cumulative preferred stock.

The shareholders of preferred stock are entitled to dividend payments of an additional 1% of par value compared to

shareholders of common stock.

As of December 31, 2022, the number of issued non-cumulative and non-voting preferred stock totaled 822,886,700.

[Current status of issued preferred stock]

(KRW, Shares)

Classification

Contents

Issued date

Aug 25, 1989 (first issued date)

Par value per share

100

Total amount issued (based on par value) / total number of shares issued

to date

119,467,000,000

1,194,671,350

Amount to date / number of shares to date

82,289,000,000

822,886,700

Details

on stock

Matters on dividend

Entitled to dividend payments of an additional 1% of

par value compared to common shares

Matters on residuary distribution

Matters on

redemption

Redemption conditions

Redemption method

Redemption period

Samsung Electronics

Business

Report-XBRL

Classification

Contents

Redemption value per share

Redemption expected within a year

Matters on

conversion

Conversion conditions (including changes in

conversion ratio)

Conversion period

Types of shares to be issued with the

conversion

Number of shares to be issued after the

conversion

Matters on voting rights

No voting rights

Other factors to consider when making investment decisions (matters on

shareholders’ agreement and financial covenants, etc.)

Due to the cancellation of shares, the total par value of issued stocks is KRW 82,289 million and is thus different from the paid-in capital (KRW

119,467 million).

The total number of shares issued to date and the number of shares to date above reflect the changes in the number of shares due to the stock split in

2018.

Samsung Electronics

Business

Report-XBRL

[Preferred stock, by issued date]

(KRW, shares)

Date

Change

Details of increase/decrease

Type

Number of

Par value per

Total par value

Issue price

per share

Total issue price

Aug 25, 1989

Rights issue

Preferred

3,400,000

5,000

17,000,000,000

28,800

97,920,000,000

Aug 25, 1989

Bonus issue

Preferred

340,000

5,000

1,700,000,000

5,000

1,700,000,000

Oct 29, 1990

Exercise of

conversion rights

Preferred

371,620

5,000

1,858,100,000

29,600

10,999,952,000

Mar 19, 1991

Exercise of

conversion rights

Preferred

40,898

5,000

204,490,000

29,341

1,199,988,218

Mar 30, 1991

Exercise of

conversion rights

Preferred

5,112

5,000

25,560,000

29,341

149,991,192

Apr 8, 1991

Exercise of

conversion rights

Preferred

1,704

5,000

8,520,000

29,341

49,997,064

May 17, 1991

DR issuance

Preferred

1,907,671

5,000

9,538,355,000

37,973

72,439,990,883

Jul 24, 1991

Exercise of

conversion rights

Preferred

34,081

5,000

170,405,000

29,341

999,970,621

Jul 30, 1991

Exercise of

conversion rights

Preferred

20,449

5,000

102,245,000

29,341

599,994,109

Jul 31, 1991

Exercise of

conversion rights

Preferred

64,754

5,000

323,770,000

29,341

1,899,947,114

Samsung Electronics

Business

Report-XBRL

Date

Change

Details of increase/decrease

Type

Number of

Par value per

Total par value

Issue price

per share

Total issue price

Aug 30, 1991

Exercise of

conversion rights

Preferred

214,716

5,000

1,073,580,000

29,341

6,299,982,156

Sep 30, 1991

Exercise of

conversion rights

Preferred

20,448

5,000

102,240,000

29,341

599,964,768

Jun 17, 1993

DR issuance

Preferred

2,542,372

5,000

12,711,860,000

47,312

120,284,704,064

Oct 29, 1993

Exercise of

conversion rights

Preferred

105,999

5,000

529,995,000

28,302

2,999,983,698

Nov 12, 1993

DR issuance

Preferred

2,158,273

5,000

10,791,365,000

55,975

120,809,331,175

Nov 29, 1993

Exercise of

conversion rights

Preferred

58,295

5,000

291,475,000

28,302

1,649,865,090

Nov 30, 1993

Exercise of

conversion rights

Preferred

19,079

5,000

95,395,000

28,302

539,973,858

Apr 6, 1994

DR issuance

Preferred

1,086,956

5,000

5,434,780,000

74,502

80,980,395,912

Jun 3, 1994

Exercise of

conversion rights

Preferred

16,027

5,000

80,135,000

25,809

413,640,843

Jun 6, 1994

Exercise of

conversion rights

Preferred

9,072

5,000

45,360,000

25,809

234,139,248

Jun 13, 1994

Exercise of

conversion rights

Preferred

17,236

5,000

86,180,000

25,809

444,843,924

Samsung Electronics

Business

Report-XBRL

Date

Change

Details of increase/decrease

Type

Number of

Par value per

Total par value

Issue price

per share

Total issue price

Jun 22, 1994

Exercise of

conversion rights

Preferred

1,209

5,000

6,045,000

25,809

31,203,081

Jun 27, 1994

Exercise of

conversion rights

Preferred

16,632

5,000

83,160,000

25,809

429,255,288

Jun 28, 1994

Exercise of

conversion rights

Preferred

54,131

5,000

270,655,000

25,809

1,397,066,979

Jun 29, 1994

Exercise of

conversion rights

Preferred

292,127

5,000

1,460,635,000

25,809

7,539,505,743

Jun 30, 1994

Exercise of

conversion rights

Preferred

52,922

5,000

264,610,000

25,809

1,365,863,898

Jul 1, 1994

Exercise of

conversion rights

Preferred

232,854

5,000

1,164,270,000

25,809

6,009,728,886

Jul 4, 1994

Exercise of

conversion rights

Preferred

116,426

5,000

582,130,000

25,809

3,004,838,634

Jul 5, 1994

Exercise of

conversion rights

Preferred

188,401

5,000

942,005,000

25,809

4,862,441,409

Jul 6, 1994

Exercise of

conversion rights

Preferred

686,164

5,000

3,430,820,000

25,809

17,709,206,676

Samsung Electronics

Business

Report-XBRL

Date

Change

Details of increase/decrease

Type

Number of

Par value per

Total par value

Issue price

per share

Total issue price

Jul 7, 1994

Exercise of

conversion rights

Preferred

270,349

5,000

1,351,745,000

25,809

6,977,437,341

Jul 8, 1994

Exercise of

conversion rights

Preferred

977,068

5,000

4,885,340,000

25,809

25,217,148,012

Jul 12, 1994

Exercise of

conversion rights

Preferred

6,048

5,000

30,240,000

25,809

156,092,832

Jul 19, 1994

Exercise of

conversion rights

Preferred

68,040

5,000

340,200,000

25,809

1,756,044,360

Jul 20, 1994

Exercise of

conversion rights

Preferred

4,232

5,000

21,160,000

25,809

109,223,688

Aug 12, 1994

Exercise of

conversion rights

Preferred

944

5,000

4,720,000

25,502

24,073,888

Mar 13, 1995

Bonus issue

Preferred

3,028,525

5,000

15,142,625,000

5,000

15,142,625,000

Mar 13, 1996

Bonus issue

Preferred

5,462,593

5,000

27,312,965,000

5,000

27,312,965,000

Apr 14, 2003

Share cancellation

Preferred

-470,000

5,000

-2,350,000,000

Jan 15, 2004

Share cancellation

Preferred

-330,000

5,000

-1,650,000,000

May 4, 2004

Share cancellation

Preferred

-260,000

5,000

-1,300,000,000

Jan 15, 2016

Share cancellation

Preferred

-1,240,000

5,000

-6,200,000,000

Samsung Electronics

Business

Report-XBRL

Date

Change

Details of increase/decrease

Type

Number of

Par value per

Total par value

Issue price

per share

Total issue price

Apr 20, 2016

Share cancellation

Preferred

-530,000

5,000

-2,650,000,000

Jul 19, 2016

Share cancellation

Preferred

-320,000

5,000

-1,600,000,000

Sep 28, 2016

Share cancellation

Preferred

-230,000

5,000

-1,150,000,000

Apr 12, 2017

Share cancellation

Preferred

-255,000

5,000

-1,275,000,000

May 2, 2017

Share cancellation

Preferred

-1,614,847

5,000

-8,074,235,000

Jul 24, 2017

Share cancellation

Preferred

-225,000

5,000

-1,125,000,000

Oct 25, 2017

Share cancellation

Preferred

-168,000

5,000

-840,000,000

Jan 30, 2018

Share cancellation

Preferred

-178,000

5,000

-890,000,000

May 3, 2018

Stock split

Preferred

885,556,420

100

Dec 4, 2018

Share cancellation

Preferred

-80,742,300

100

-8,074,230,000

Preferred stock total

822,886,700

82,288,670,000

642,261,376,652

Samsung Electronics

Business

Report-XBRL

5. Changes to Articles of Incorporation

The most recent changes to the Articles of Incorporation took place on March 23, 2018. There were no other changes in the

Articles of Incorporation in the past three fiscal years or in 2022 as of the disclosure date of the Korean version of this report.

Moreover, changes to the Articles of Incorporation were not included in the agenda for the 54th AGM, which was scheduled

to be held after the disclosure date of the Korean version of this report.

For details of the agenda items for the 54th AGM, please refer to the “Announcement of Shareholders’ Meeting” disclosed

on Financial Supervisory Service’s DART (https://dart.fss.or.kr) on February 14, 2023.

Samsung Electronics

Business

Report-XBRL

II. Businesses Overview

1. Overview

In addition to our headquarters in Korea, Samsung Electronics consists of 232 subsidiaries across the world responsible for

sales and production, which include 9 regional headquarters for the Device eXperience (DX) Division, 5 regional

headquarters for the Device Solutions (DS) Division, and subsidiaries of Samsung Display (SDC) and Harman.

The Company’s business divisions are organized in a two-pronged framework consisting of finished products and

component businesses. The finished product business consists of the DX Division, which is responsible for the production

and sales of TVs, monitors, refrigerators, washing machines, air conditioners, HHPs, which includes smartphones, as well

as network systems, and computers. The component business consists of the DS Division, which manufactures and sells

DRAM, NAND flash, and mobile APs, and SDC, which manufactures and sells display panels (DPs), including mobile

OLED panels. Harman (acquired in 2017) manufactures and sells products such as Digital cockpits, telematics, and speakers.

In December 2021, the Company merged and restructured the CE and IM Divisions to form the DX Division and renamed

the Mobile Communications Business to the Mobile eXperience (MX) Business. Also, SDC and the DS Division have been

separated to align with the corporate organizational structure.

☞

See C. Current status of each division and D. Financial summary by organization in

『

7. Other information

』

for more details

about each Division.

The Company’s corporate headquarters—which oversees the DX and DS Divisions—as well as 33 consolidated subsidiaries

are located in Korea. The Company’s corporate headquarters is divided along Divisions and/or Businesses, which are located

in Suwon, Gumi, Gwangju, Giheung, Hwaseong, Pyeongtaek, etc. The Company’s unlisted domestic subsidiaries include

Samsung Display for display panel production, Samsung Electronics Sales for domestic retail sales, Samsung Electronics

Service for after-sales services, and Samsung Electronics Logitech for logistics.

We have 199 unlisted overseas subsidiaries for product manufacturing, sales, and R&D, with locations in the US,

Europe/CIS, Middle East/Africa, and Asia, etc.

We have 45 subsidiaries in North America, including SEA (New Jersey; responsible for the sales of finished products

including TV and HHPs), SII (California; manufacturing of TVs), SSI (California; sales of semiconductors and DPs), SAS

(Texas; manufacturing of semiconductor products), SEDA (Brazil; manufacturing of multiple finished products) and

Harman (Connecticut; automotive components) in the US.

In Europe and CIS, we operate 72 subsidiaries. These include SEUK (UK), SEG (Germany), SEF (France), SEI (Italy),

SERC (Russia) for sales of finished products; SEH (Hungary) and SERK (Russia) for manufacturing TVs, and SEPM

(Poland) for manufacturing home appliances.

We have 20 subsidiaries in Middle East and Africa, including SGE (UAE) and SSA (South Africa) for sales of finished

products and SEEG (Egypt) and SSAP (South Africa) for manufacturing TVs.

We have 32 subsidiaries in Asia (ex China), including SESP (Singapore), SEAU (Australia), SEPCO (Philippines), and

SME (Malaysia), which are responsible for regional sales. In addition, we operate numerous production sites including SEV

and SEVT (Vietnam) for HHPs, SEHC (Vietnam) for TVs, SDV (Vietnam) for DPs, and SIEL (India) for multiple products.

We operate 30 subsidiaries in China, including SCIC (Beijing) and SEHK (Hong Kong) for the sales of finished products

in those regions; and SSS (Shanghai) and SSCX (Xian) for semiconductors and DPs sales. Production sites for finished

Samsung Electronics

Business

Report-XBRL

products include SSEC (Suzhou) and semiconductor production facilities are located in SCS (Xian) among others.

The Company' recorded total revenue of KRW 302,231.4 billion as of the year end, is an increase of 8.1% year-on-year.

Major customers (listed in alphabetical order) included Apple, Best Buy, Deutsche Telekom, Qualcomm and Verizon.

2. Key products and services

A. Revenue

SEC is involved in the production and sales of finished products, including TVs, refrigerators, washers, air conditioners,

HHPs and components such as semiconductors (DRAM, NAND Flash, mobile APs) and display panels. Through Harman,

the Company also produces and sells products such as digital cockpits and telematics.

In 2022, reported revenue was KRW 182,489.7 billion (60.4% of total net sales) for DX; KRW 98,455.3 billion (32.6%) for

DS; KRW 34,382.6 billion (11.4%) for SDC; and KRW 13,213.7 billion (4.4%) for Harman.

(KRW 100 mil)

Organization

Major products

Revenue

Portion

DX Division

TVs, monitors, refrigerators, washing machines, air conditioners,

HHPs, network systems, computers, etc.

1,824,897

60.4%

DS Division

DRAM, NAND flash, mobile APs, etc.

984,553

32.6%

SDC

OLED smartphone panels, etc.

343,826

11.4%

Harman

Digital cockpit, telematics, speakers, etc.

132,137

4.4%

Others

Overlapping internal transactions between Divisions

-263,099

-8.8%

Total

3,022,314

100.0%

Includes inter-divisional transactions.

☞

See

『

4. Revenue and long-term contracts

』

for information by each product.

B. Average selling price changes

In 2022, TV ASP decreased approximately 7% and HHP ASP increased approximately 5% year-on-year. Memory-product

ASP fell approximately 17% year-on-year, and display panel (OLED panels for smartphones) ASP increased approximately

20%. The ASP of digital cockpits declined approximately 0.5% year-on-year.

3. Production materials and production facilities

A. Key production materials

For the DX Division, key materials include mobile AP and camera modules, which are supplied by Qualcomm, Semco, etc.,

and display panels for TVs and monitors, which are supplied by CSOT, etc. For the DS Division, key materials include

chemicals and wafers, supplied by Soulbrain, SK Siltron, etc., and for SDC, key materials include FPCAs and windows,

with suppliers such as BH, Apple, etc. For Harman, key materials include SoC (system-on-chip) products and memory

products for in-vehicle solutions, which are supplied by Nvidia, Arrow, etc.

(KRW 100 mil)

Organization

Type of

purchase

Item

Specific usage

Purchase price

Portion

Main

supplier(s)

DX Division

Production

materials

Mobile AP

CPU

93,138

12.8%

Qualcomm,

MediaTek, etc.

Production

Camera module

Camera for HHP

61,180

8.4%

Semco,

Samsung Electronics

Business

Report-XBRL

Organization

Type of

purchase

Item

Specific usage

Purchase price

Portion

Main

supplier(s)

materials

CammSys, etc

Production

materials

Display panel

Color picture signaler

for TV, monitor

60,224

8.3%

CSOT, AUO,

BOE, etc.

Production

materials

Others

513,278

70.5%

Sub total

727,820

100.0%

DS Division

Production

materials

Chemical

Disk processing

28,708

14.7%

Soulbrain,

DongWoo Fine-

Chem, etc.

Production

materials

Wafer

Semiconductor disk

28,157

14.4%

SK Siltron,

Sumco etc.

Production

materials

Others

138,263

70.9%

Sub total

195,128

100.0%

SDC

Production

materials

FPCA

Circuit

29,795

23.6%

BH, YP

Electronics,

etc.

Production

materials

Window

Tempered glass

19,367

15.3%

Apple, Biel, etc.

Production

materials

Others

77,155

61.1%

Sub total

126,317

100.0%

Harman

Production

materials

SoC

Chips for vehicles

8,625

10.7%

Nvidia, Intel,

etc.

Production

materials

Others

72,038

89.3%

Sub total

80,663

100.0%

Others

Production

materials

589

Total

1,130,517

Purchase price does not include sales between Divisions.

Semco is a subsidiary.

1) Portion of purchase price of each item compared to total purchase price for each Division’s raw materials.

Samsung Electronics

Business

Report-XBRL

B. Production material price trends

On a year-on-year basis, the price of mobile AP and camera modules, which are major production materials for the DX

Division, increased approximately 77% and 13%, respectively. The price of TV and monitor display panels, which are also

major production materials for the DX Division, decreased approximately 51% year-on-year. The price of wafers for

semiconductor disks, which are major production materials for the DS Division, was similar compared to the previous year,

and FPCAs for SDC increased approximately 37% year-on-year, respectively. Prices of tempered glass windows also

increased approximately 10% compared to last year. For Harman, the price of SoCs decreased approximately 3% and

memory for vehicles increased approximately 10%.

C. Production capacity, output, utilization rate

(Capacity)

(1,000 units)

Organization

Item

Capacity

2022

2021

2020

DX Division

Image devices

55,747

54,235

51,538

HHP

332,170

319,550

321,600

DS Division

Memory

1,905,731,836

1,756,009,941

1,230,287,321

SDC

Display panel

2,700

3,604

7,274

Harman

Digital cockpit

11,257

9,066

9,362

Production capacity for major product categories on a consolidated basis.

The DX Divisions’ production capacity, by major product, is calculated as follows:



the average number of lines (x) the average output per hour (x) the average operation hours per day (x) standard days of operation

Memory production capacity for the DS Division is calculated as follows:



converted output (after packaging, 1Gb equivalent) ÷ the utilization rate

SDC’s production capacity is calculated as follows:



the total producible panel surface area ÷ the dimensions of eighth generation glass (2,200x2,500mm)

Harman’s production capacity for Digital cockpit is calculated as follows:



the number of production (assembly and test) cells for each customer/product (x) the production capacity per hour by production

cell (x) the standard operation hours per day (x) standard days of operation

Samsung Electronics

Business

Report-XBRL

(Output)

In 2022, the DX Division’s image device output was 41,802 thousand units (major production sites: Mexico, Vietnam,

Brazil, and Hungary), and HHP output was 229,180 thousand units (major production sites: Korea [Gumi], Vietnam, India,

and Brazil). The DS Division’s memory output (1Gb equivalent) was 1,905,732 million (major production sites: Korea

[Hwaseong, Pyeongtaek, etc.] and China). SDC’s output of display panels was 2,008 thousand units (major production sites:

Korea [Cheonan, Asan]). Harman’s Digital cockpit output was 8,334 thousand units.

(1,000 units)

Organization

Item

Output

2022

2021

2020

DX Division

Image devices

41,802

44,133

48,244

HHP

229,180

260,501

249,218

DS Division

Memory

1,905,731,836

1,756,009,941

1,230,287,321

SDC

Display panel

2,008

2,849

5,977

Harman

Digital cockpit

8,334

6,928

6,116

Output for major product categories on a consolidated basis.

(Utilization rate)

DX utilization rates in 2022 were calculated as actual output relative to production capacity. The utilization rates were 75.0%

for Image

devices and 69.0% for HHPs.

(1,000 units)

Organization

Item

2022

Production capacity

Output

Utilization rate

DX Division

Image devices

55,747

41,802

75.0%

HHP

332,170

229,180

69.0%

The DS Division and SDC respectively operate memory and display panel production in three shifts (24 hours a day).

Cumulative operating days including holidays were 365 days in 2022. The utilization rate was calculated as the actual

production time relative to the potential production capacity [operating days (x) number of production lines (x) 24 hours].

(Hours)

Organization

Item

2022

Potential production time

Actual production time

Utilization rate

DS Division

Memory

83,016

100%

SDC

Display panel

47,280

100%

In 2022, Harman’s utilization rate was 74.0% and was calculated as actual output relative to production capacity.

(1,000 units)

Organization

Item

2022

Production capacity

Output

Utilization rate

Harman

Digital cockpit

11,257

8,334

74.0%

Samsung Electronics

Business

Report-XBRL

D. Production facilities and investment

(Key facilities for production and operation)

The Company’s operational activities include production, development, marketing, and sales. In Korea, operations are

located in Suwon, Gumi, Gwangju, Hwaseong, Pyeongtaek, and Asan. Overseas operations in North America, Europe, and

China include a total of nine regional headquarters under the DX Division, five regional headquarters under the DS Division,

and subsidiaries of SDC and Harman.

[Operations]

Region

Operations

Location

Korea

(DX Division, DS Division,

SDC – 12 work sites)

Suwon

Seocho

Seoul

Woomyeon

Seoul

Giheung

Yongin

Hwaseong

Pyeongtaek

Cheonan

Onyang

Asan

Gumi1

Gumi

Gumi2

Gumi

Gwangju

Overseas

(DX Division - 9 regional

headquarters)

North America

New Jersey, US

Europe

Surrey, UK

China

Beijing, China

Southeast Asia

Singapore, Singapore

Southwest Asia

Haryana, India

CIS

Moscow, Russia

Middle East

Dubai, UAE

Africa

Johannesburg, South Africa

Latin America

Sao Paolo, Brazil

Overseas

(DS Division - 5 regional

headquarters)

Americas

San Jose, US

Europe

Eschborn, Germany

China

Shanghai, China

Southeast Asia

Singapore, Singapore

Japan

Tokyo, Japan

Harman

North America HQ

Connecticut, US

Harman’s automotive business is mainly based in the US (Novi, MI) and in Germany (Garching), and its Lifestyle business is lo

cated in the US

(Northridge, CA)

Samsung Electronics

Business

Report-XBRL

The Company’s property, plant and equipment include land, buildings and structures, machinery and equipment, and

construction in progress. As of December 31, 2022, the total book value was KRW 168,045.4 billion, which is an increase

of KRW 18,116.9 billion from year-end 2021.

(KRW 100 mil)

Classification

Land

Buildings and

structures

Machinery and

equipment

Under

construction

Other tangible

assets

Total

Dec 31,

2021

Book value

98,302

388,694

795,263

180,093

36,933

1,499,285

- Acquisition cost

99,436

626,515

2,749,096

180,093

119,580

3,774,720

- Accumulated

depreciation (including

impairment loss)

-1,134

-237,821

-1,953,833

-82,647

-2,275,435

Change

General acquisition and

capital expenditure

1,389

53,021

310,101

166,757

21,002

552,270

Depreciation

-495

-35,339

-307,617

-16,070

-359,521

Disposal/discard/impair

ment

-576

-1,302

-469

-2

-465

-2,814

Others

302

1,995

-132

-10,772

-159

-8,766

Dec 31,

2022

Book value

98,922

407,069

797,146

336,076

41,241

1,680,454

- Acquisition cost

100,246

677,138

3,030,006

336,076

132,485

4,275,951

- Accumulated

depreciation

(including impairment

loss)

-1,324

-270,069

-2,232,860

-91,244

-2,595,497

Market value of major tangible assets is omitted as objective assessment is difficult.

1) Land-depreciation is depreciation expense of right-of-use asset as per K-IFRS 1116 (Lease).

2) Includes effects of FX rates and government subsidies.

(Capex)

The Company’s capex in 2022 was KRW 53.1 trillion, with investments concentrating on capacity expansions and migration

of advanced nodes as well as on infrastructure for the DS Division and SDC. Amid market uncertainties in 2023, the

Company will continue to invest to secure competitiveness for next-generation technology and to prepare for future demand,

at the same time, the Company will concentrate on boosting investment efficiency to ensure stable growth.

[Capex, by organization]

(KRW 100 mil)

Organization

Purpose

Period

Assets

Investment

DS division

Establishment, addition, upgrade

January–December 2022

Buildings, facilities, etc.

478,717

SDC

Establishment, addition, upgrade

January–December 2022

Buildings, facilities, etc.

24,958

Other

Establishment, addition, upgrade

January–December 2022

Buildings, facilities, etc.

27,478

Total

531,153

Samsung Electronics

Business

Report-XBRL

4. Revenue and long-term contracts

A. Revenue

In 2022, the Company recorded total revenue of KRW 302,231.4 billion, an increase of 8.1% year-on-year. By organization,

when compared to the same period last year, revenue of the DX Division, DS Division, SDC, and Harman increased by

9.8%, 3.2%, 8.4% and 31.6%, respectively.

(KRW 100 mil)

Organization

Revenue

types

Product categories

2022

2021

2020

DX Division

Goods,

products,

services,

other

TVs, monitors, refrigerators,

washing machines, air

conditioners, HHPs, Network

systems, computers, etc.

1,824,897

1,662,594

1,489,135

DS Division

Goods,

products,

services,

other

DRAM, NAND flash, mobile APs,

etc.

984,553

953,872

740,540

SDC

Goods,

products,

services,

other

OLED panels for smartphones,

etc.

343,826

317,125

305,857

Harman

Goods,

products,

services,

other

Digital cockpit, telematics,

speakers, etc.

132,137

100,399

91,837

Others

Overlapping internal transactions between

Divisions

-263,099

237,942

-259,299

Total

3,022,314

2,796,048

2,368,070

Includes inter-divisional transactions.

Figures for 2020 and 2021 were adjusted to align with those of 2022, reflecting the organizational changes in December 2021.

(1) Sales, by major product (on a consolidated basis)

(KRW 100 mil)

Classification

2022

2021

2020

Image devices

332,795

314,974

277,118

Mobile devices

1,154,254

1,046,806

960,217

Memory

685,349

726,022

555,442

Display panels

343,826

317,125

305,857

Includes inter-divisional transactions.

Samsung Electronics

Business

Report-XBRL

(2) Revenue, by type

(KRW 100 mil)

Classification

2022

2021

2020

Products

2,903,461

2,658,785

2,235,963

Services and other revenue

118,853

137,263

132,107

Total

3,022,314

2,796,048

2,368,070

Other revenue consists of royalty income, etc.

(3)

Revenue, by region (on a separate basis)

(KRW 100 mil)

Classification

2022

2021

2020

Domestic

221,799

221,497

198,331

Export

Americas

659,617

583,805

476,768

Europe

265,147

258,227

235,012

Asia and Africa

425,114

336,671

315,598

China

546,998

597,247

437,403

Total

2,118,675

1,997,447

1,663,112

Domestic consumption and exports on a separate basis.

B. Sales channels

(1) Domestic

Seller

Sales channel

Consumer

Manufacturer and

buyer

Exclusive agencies

Consumer

Distributor

(general merchandise stores, discount stores, department stores, home-shopping, online, etc.)

Telecommunication service provider (SKT Co., Ltd., KT Corp., LG Uplus Corp.)

Direct Sales (B2B and online channels)

(2) Overseas

Seller

Sales channel

Consumer

Production

subsidiaries

Regional sales office

Retailer

Consumer

Dealer

Retailer

Distributor

Dealer

Retailer

Telecommunication service provider, automotive OEM

Direct sales (B2B and online channels)

Regional distribution office

Regional

sales office

Retailer

Dealer

Retailer

Distributor

Dealer

Retailer

Samsung Electronics

Business

Report-XBRL

(3) Sales ratio (global), by channel

Channel

Wholesale

Retail

Special/direct sales

Others

Ratio

19%

27%

51%

C. Sales methods and conditions

(1) Domestic

Classification

Channel

Collection

Incidental expense sharing

Exclusive

Retailer

Credit specific

Case specific cost sharing as determined

by mutual agreement

Distributor

General merchandise store,

discount store, department store,

home shopping, online, etc.

Case specific and contract specific

Case specific cost sharing as determined

by mutual agreement

Telecommunication

service provider

SKT Co., Ltd., KT Corp.

LG Uplus Corp.

Case specific and contract specific

Case specific cost sharing as determined

by mutual agreement (joint marketing)

B2B and online

channels

Corporate clients, etc.

Case specific and contract specific

N/A

(2) Overseas

Classification

Channel

Collection

Incidental expense sharing

Retailer

Retail store

Case specific and contract specific

Case specific cost sharing as determined

by mutual agreement

Dealer

General merchandise store,

discount store, department store

Case specific and contract specific

Case specific cost sharing as determined

by mutual agreement

Distributor

Direct sales to local distributors

Case specific and contract specific

Case specific cost sharing as determined

by mutual agreement

B2B and online

channels

Corporate clients, etc.

Case specific and contract specific

N/A

D. Sales strategy

- Expand market leadership based on premium products

- Provide differentiated value to customers through brand, products, and services

- Strengthen marketing activities to boost demand from customer/market

E. Major customers

In 2022, major customers (listed alphabetically) included Apple, Best Buy, Deutsche Telekom, Qualcomm, and Verizon.

Sales to the five major customers accounted for approximately 16% of total sales.

F. Long-term contracts

As of December 31, 2022, there were no long-term contracts that have a significant impact on the Company’s financial

statement.

Samsung Electronics

Business

Report-XBRL

5. Risk management and derivative trading

A. Financial risk management policy

The Company’s financial risk management focuses on minimizing market risk, credit risk, and liquidity risk arising from

operating activities. To mitigate these risks, the Company closely monitors each risk factor and operates corresponding

financial risk management policies and program. The Company’s use of derivative instruments for hedging risks are

included in this program.

The finance team mainly carries out the Company’s financial risk management. After implementing the global financial risk

management policies, the finance team periodically measures, evaluates, and hedges financial risks.

Meanwhile, the Company manages exchange rate risk via monitoring exchange rates and conducting transactions through

local finance centers in each major region (United States, United Kingdom, Singapore, China, Brazil, and Russia). Liquidity

risk is managed by managing capital as a whole by each region.

The Company’s assets that are under financial risk management consist of cash and cash equivalents, short-term financial

instruments, financial assets at amortized cost, trade receivables and others. The Company’s liabilities under financial risk

management consist of trade payables, borrowings, and others.

B. Major financial risks

(1) Market risk

(Foreign exchange risk)

The Company operates internationally and is exposed to foreign exchange risks as it conducts transactions in currencies

other than the functional currency. Major currencies that are exposed to foreign exchange risk include USD, EUR, INR, and

others.

The Company focuses on minimizing the impact of foreign exchange fluctuation by maintaining the equal amount of assets

and liabilities denominated in each foreign currency, irrespective of foreign exchange fluctuation considerations. To prevent

exchange position, the Company’s foreign exchange management polic

y requires normal business transactions, including

import and export, as well as financing transactions such as depositing and borrowing, to be in local currency or for the

cash-in currency to be matched up with the cash-out currency.

In order to effectively manage foreign exchange risk, the Company periodically monitors and evaluates exchange rate risk

and strictly prohibits speculative foreign exchange transactions.

The impacts of a 5% change in currency rates on the profits or losses (before income tax) arising from financial assets and

liabilities denominated in foreign currencies other than functional currency as of the reporting date are as follows:

(KRW mil)

Classification

December 31, 2022

December 31, 2021

Increase

Decrease

Increase

Decrease

USD

258,655

-258,655

250,489

-250,489

EUR

92,546

-92,546

107,519

-107,519

INR

52,096

-52,096

24,216

-24,216

Samsung Electronics

Business

Report-XBRL

(Interest rate risk)

Risk of changes in interest rates for floating interest rate financial instruments is defined as the risk that the fair value of

components of the consolidated statement of financial position, and future cash flows of interest income (expenses) of a

financial instrument, will fluctuate because of changes in market interest rates. The Company’s position with regard to

interest rate risk exposure is mainly driven by its floating interest rate debt obligations and interest-bearing deposits. The

Company implemented policies and operates to minimize uncertainty arising from changes in interest rates and financial

expenses.

The impacts of a 1% change in interest rates on profit or loss (before income tax) arising from floating-rate financial

assets and liabilities as of the reporting date are as follows:

(KRW mil)

Classification

December 31, 2022

December 31, 2021

Increase

Decrease

Increase

Financial assets

72,750

-72,750

71,131

-71,131

Financial liabilities

-8,427

8,427

-18,779

18,779

Net effect

64,323

-64,323

52,352

-52,352

(Price risk)

The Company’s investment portfolio consists

of direct and indirect investments in equity securities classified as financial

assets at fair value through other comprehensive income and financial assets at fair value through profit or loss, which is in

line with the Company’s strategy.

As of December 31, 2022, a price fluctuation of marketable equity securities (listed stocks) of 1% changes ‘other

comprehensive income’ (before income tax) by KRW 92,073 million and ‘profit before tax’ by KRW 3,144 million. The

figures as of the same date in 2021 were KRW 116,087 million and KRW 4,784 million, respectively.

(2) Credit risk

Credit risk arises during the normal course of transactions and investing activities where clients or other parties fail to

discharge an obligation. The Company sets and manages the client’s and counterparty’s credit limit, and evaluates their

financial credit rating on a periodic basis based on the client’s and counterparty’s financial conditions, default history and

other important factors. Adequate insurance coverage is maintained for trade receivables related to trading partners situated

in higher risk countries.

Credit risk can arise from transactions with financial institutions, which include financial instrument transactions such as

cash and cash equivalents, savings, and derivative instruments. To minimize such risk, the Company transacts only with

banks which have strong international credit rating (S&P A and above), and all new transactions with financial institutions

with no prior transaction history are approved, managed and monitored by the Company’s finance team and the local finance

center. The Company generally enters into a financial agreement with no restrictions, such as debt ratio covenants, provision

of collateral, and loans or borrowings repayment. The Company requires separate approval for contracts with restrictions.

Samsung Electronics

Business

Report-XBRL

The Company estimates that its maximum exposure to credit risk is the carrying amount of its financial assets, net of

impairment losses.

(3) Liquidity risk

Due to the nature of the Company’s business that requires making large investments, maintaining adequate level of liquidity

risk is crucial. The Company maintains and manages adequate level of liquidity by periodically forecasting its capital

balances, estimating required cash, managing income and expenses, and others.

The Company effectively manages its liquidity risk by periodically forecasting projected cash flows and by utilizing regional

cash pooling, which allows for the use of internal funds when an entity in a region lacks liquidity. The cash-pooling program

allows sharing of surplus funds among entities and contributes to minimizing liquidity risk and strengthening the Company’s

competitive position by reducing capital operation expenses and financial expenses.

In addition, the Company’s headquarters provides payment guarantees to overseas subsidiaries to secure credit limit to brace

for potential large-scale liquidity needs.

The following table is an undiscounted cash flow analysis for financial liabilities according to their remaining contractual

maturity from the end of the reporting date to the contractual maturity date.

(1) As of December 31, 2022

(KRW mil)

Less than 3 months

~6 months

~12 months

1—5 years

More than 5 years

Financial liabilities

42,990,570

733,984

1,925,448

5,402,672

1,562,274

(2) As of December 31, 2021

(KRW mil)

Less than 3 months

~6 months

~12 months

1—5 years

More than 5 years

Financial liabilities

55,185,809

1,814,271

1,674,980

5,462,057

944,232

Samsung Electronics

Business

Report-XBRL

(4) Capital risk

The purpose of capital management is to protect our capability of continuously providing profit to our shareholders and

stakeholders and to maintain a sound capital structure. To this end, the Company monitors capital on the basis of credit

rating and the ratio of total liabilities to total equity.

As of December 31, 2022, the Company has an AA- and Aa2 credit rating from S&P and Moody’s, respectively, and the

figures for total liabilities and total equity are as follows:

(KRW mil)

Dec 31, 2022

Dec 31, 2021

Total liabilities

93,674,903

121,721,227

Total equity

354,749,604

304,899,931

Total liabilities to equity ratio

26.4%

39.9%

C. Derivative instruments and put options

The Company hedges foreign currency positions by trading currency forward contracts of currencies other than won for the

purpose of managing foreign exchange risk. Currency forwards are bought through a bank in the purpose of trade and

hedging.

As of December 31, 2022, the Company had 2,545 currency forward contracts involving 35 foreign currencies, including

USD,EUR, JPY and the book value of assets and liabilities as well as valuation gain and loss were as follows:

(KRW mil)

Assets

Liabilities

Valuation gain

Valuation loss

Currency forwards

166,087

158,686

1,351,390

1,450,638

Samsung Display (a subsidiary of the Company) may exercise its put option to sell part of its shares of Corning

Incorporated back to Corning, according to the stock trade contract with Corning on April 8, 2021.

Furthermore, Samsung Display may exercise its put option to sell all or part of its shares of TCL China Star

Optoelectronics Technology Co. Ltd. (CSOT) to TCL Technology Group Corporation (TCL), if CSOT remains

unlisted within the listing period, according to the shareholders’ agreement executed with TCL and CSOT on April 1,

2021.

Fair value of the above put option as of December 31, 2022 was evaluated by Earnest & Young Global Limited.

Samsung Electronics

Business

Report-XBRL

6. Major contracts and research and development activities

A. Major contracts

Account

Contract information

Contents

Cisco

Type

Patent cross-license agreement

Date

Jan 23, 2014

Purpose and contents

Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Google

Type

Patent cross-license agreement

Date

Jan 25, 2014 / indefinite term

Purpose and contents

Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Other

Permanent license contract (including patent applications in the next 10 years)

GlobalFoundries

Inc.

Type

Process technology license agreement

Date

Feb 28, 2014

Purpose and contents

Expand customer base of 14nm process

InterDigital

Type

Patent license agreement

Date

Jun 3, 2014

Purpose and contents

Eliminate risk of patent disputes and lawsuits through patent licensing

Qualcomm

Type

Patent cross-license agreement

Date

Jan 1, 2018–Dec 31, 2023

Purpose and contents

Eliminate risk of patent disputes and lawsuits through mutual patent licensing and signing of

covenant not to sue

Apple

Type

Withdrawal of lawsuit agreement

Date

Jun 26, 2018

Purpose and contents

Withdraw from all lawsuits in the United States

Nokia

Type

Patent license agreement

Date

Oct 19, 2018

Purpose and contents

Eliminate risk of patent disputes and lawsuits through patent licensing

Microsoft

Type

Patent cross-license agreement

Date

Feb 11, 2019

Samsung Electronics

Business

Report-XBRL

Account

Contract information

Contents

Purpose and contents

Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Google

Type

EMADA

Date

Feb 27, 2019–Dec 31, 2022 (extended)

Purpose and contents

Licensing agreement for using Google apps (Play Store, YouTube, etc.) in 31 European

countries (EEA)

Huawei

Type

Patent cross-license agreement

Date

Feb 28, 2019

Purpose and contents

Eliminate risk of patent disputes and lawsuits through mutual patent licensing

AMD

Type

Technology licensing agreement

Date

May 30, 2019

Purpose and contents

Secure mobile graphics design for mobile products and other applications

Sharp

Type

Patent cross-license agreement

Date

July 30, 2019

Purpose and contents

Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Ericsson

Type

Patent cross-license agreement

Date

May 7, 2021

Purpose and contents

Eliminate risk of patent disputes and lawsuits through mutual patent licensing

Information that may be referenced or used in other IP disputes, including contract amount, is excluded.

Samsung Electronics

Business

Report-XBRL

B. Summary of R&D activities and expenditures

The Company is leading the global market by continuously developing creative and innovative products and the future

technology through shifting its way of thinking and understanding customer demand. The Company is doing its utmost to

cement its position in the global IT industry and become a worldwide leader in industrial technology by creating and securing

next-generation technology.

As of December 31, 2022, the Company’s R&D expenses were KRW 24,929.2 billion year-to-date. Among this, KRW

24,919.2 billion was recognized as expenditures, excluding government subsidies and capitalized expenses.

(R&D expenses)

(KRW mil)

2022

2021

2020

Total R&D expenditures

24,929,171

22,596,487

21,229,200

(Government subsidies)

-9,973

-1,053

-8,228

R&D expenditures

24,919,198

22,595,434

21,220,972

Accounting

Capitalization of development

expenses (intangible asset)

-193,708

-109,482

R&D costs (expenses)

24,919,198

22,401,726

21,111,490

R&D expenses/revenue ratio

8.2%

8.1%

9.0%

On a consolidated basis.

1) Calculated using total R&D expenditures, which includes government subsidies.

C. R&D organization and operations

(Domestic)

The Company operates three levels of R&D organizations: R&D teams of business units under each Division that develop

market-ready technologies with a 1

–

2 year outlook; research institutes of each Division that develop mid- to long-term

technology with a 3

–

5 year outlook; and the Samsung Advanced Institute of Technology, which develops core technology

as seeds for future growth engines.

Samsung Advanced Institute of Technology is the central research institute of Samsung Electronics that has been established

to lead the Company into the future and serve as an incubator of cutting-edge technology. It has a creative R&D system and

provides R&D direction for promising growth sectors at the Company level, exploring future growth engines and

strengthening technological competitiveness of core businesses.

(Overseas)

The Company operates R&D organizations in the US (SRA), China (SSCR, SRC-Beijing, SRC-Nanjing, SRC-Guangzhou,

SRC-Shenzen), India (SRI-Bangalore and SRI-Delhi), Bangladesh (SRBD), Israel (SRIL and SIRC), Russia (SRR), and

Japan (SRJ), to carry out research activities for product development and basic technological research.

The Company has established AI centers in Cambridge (United Kingdom), Moscow (Russia), Toronto (Canada), Montreal

(Canada), and New York (United States), so our global team of researchers can collaborate with international experts to

strengthen capabilities in AI technology.

Samsung Electronics

Business

Report-XBRL

As of December 31, 2022.

☞

See

『

1. Subsidiaries subject to consolidated financial statements (detailed)

』

『

XII. Appendix

』

for more details about the

current status of the overseas R&D (companies).

D. R&D results

The Company’s key R&D results by organization in 2022 are as follows:

DX Division

Research project

Details

Neo QLED 8K

•

Release of ultra-high-definition, slim 8K TV based on mini LED

Neo QLED 4K

•

Rollout of three series and seven sizes based on mini LED

Grande AI Washer

•

Release of 24kg Grande AI Washer that features a pet-care cycle / 20kg Grande AI Dryer

Galaxy Foldable

•

Launch of Galaxy Z Fold 4

•

Release of Galaxy Z Flip 4

Galaxy S22

•

Rollout of Galaxy S22

ㆍ

S22+

ㆍ

S22 Ultra

Galaxy Tab

•

Release of Galaxy Tab S8

ㆍ

S8+

ㆍ

S8 Ultra

Galaxy A

•

Rollout of A73 5G

•

Release of A53 5G

•

Launch of A33 5G

•

Release of Galaxy A23 LTE

ㆍ

•

Launch of Galaxy A13 LTE

ㆍ

Galaxy Book

•

Rollout of Galaxy Book2 Pro 360

•

Release of Galaxy Book2 Pro

•

Launch of Galaxy Book2 Go 5G

Display

Research Lab

SIRC, SRIL

SRR

SRJ

LED

Research Lab

Innovation Center

Research Lab

SRC-Beijing

SRC-Nanjing

SSCR

SRC-Guangzhou

SRC-Shenzhen

PKG

Research Lab

SRI-Bangalore,

Delhi

SRBD

Samsung Advanced

Institute of

Technology

SRA

CEO

Design

Research Lab

Production Technology

Research Lab

Semiconductor

Research Lab

Equipment Technology

Research Lab

M emory

Research Lab

Samsung Research

Digital Image

Research Lab

Digital Appliances

Research Lab 1

Digital Appliances

Research Lab 2

Health & M edical

Research Lab

M obile

Research Lab

M obile

Communication

Research Lab

Network

Research Lab

System LSI

Research Lab

Foundry

Research Lab

Reliability

Research Lab

Environment & Safety

Research Center

Samsung Electronics

Business

Report-XBRL

Wearable

•

Rollout of Galaxy Watch 5

•

Release of Galaxy Buds 2 Pro

DS Division

Research project

Details

DRAM for mobile

•

Development of industry’s first LPDDR5X DRAM

Exynos

•

Release of Exynos 2200, a premium mobile AP

LSI

•

Release of single-chip fingerprint security IC (S3B512C) for biometric payment cards

Foundry

•

Adoption of GAA for the 3-nano process for the first time in the world

SDC

Research project

Details

QD-Display

•

QD-Display (55" UHD, 65" UHD) for TV

•

QD-Display (34" QHD) for monitor

Please refer to

『

Appendix-4. R&D results (detailed)

』

for more details.

Samsung Electronics

Business

Report-XBRL

7. Other information

A. Intellectual property

Intellectual property activities are an integral part of our R&D strategies—SEC registered its first US patent in 1984 and

currently holds 225,910 patents around the world. The Company holds the highest number of its patents in the US and aims

to address conflicts in the US more effectively.

(Number of patents registered in each country)

[

As of December 31, 2022]

(Unit: No. of patents)

Korea

Europe

China

Japan

Others

Total

Number

52,044

88,024

41,915

20,762

8,901

14,264

225,910

In 2022, the Company invested KRW 24.9 trillion in R&D and registered 9,136 domestic and 8,490 US patents.

(Number of patent registrations per year)

(Unit: No. of patents)

2022

2021

2020

Korea

9,136

8,437

6,648

8,490

8,565

8,520

These patents are mostly related to smartphones, smart TVs, memory, and system LSI products for the Company’s strategic

business products or for future use. These patents not only protect the Company’s business but also play a role in keeping

similar technology and patents, as well as competitors, in check. Additionally, the Company is focusing on securing early

patents in new technologies ahead of others, in order to protect opportunities and have the freedom to operate when entering

new businesses.

The Company has signed licensing agreements with Cisco (signed in January 2014), Google (January 2014), Qualcomm

(January 2018), Nokia (October 2018), Microsoft (February 2019), Sharp (July 2019), and Ericsson (May 2021) through

which the Company has secured an extensive patent protection in mainstay businesses as well as in the fields of new business.

The Company has also been focusing on securing design patents to protect its original design applied to smartphones and

smart TVs. In 2022, the Company acquired 468 US design patents, in part for the aforementioned purposes.

B. Environmental regulations

The Company strictly abides by environmental regulations on products and in the workplace, as prescribed by law. In

addition, in accordance with “the low carbon green growth policy” of the Korean government, the Company reports “the

amount of greenhouse gas emission and energy use” to the government and provides related information to stakeholders by

providing various reports, including the Samsung Sustainability Report.

Samsung Electronics

Business

Report-XBRL

(Environmental regulation of products)

Environmental regulation of products are becoming stricter, reflecting the concerns of governments and regulators about

potential direct and indirect impact of products to consumers’ health and safety as consumers. Accordingly, the Company is

working to minimize the environmental impact throughout the entire life cycle of products from the development stage of

components and products to manufacturing, distribution, use, and disposal. The Company offers “Eco-Partner Certification”

to suppliers for components free of harmful substances, and runs an “eco-design evaluation” system to reflect eco-friendly

elements on products (reduced use of resources, energy and harmful substances, and the use of eco-friendly materials) at

the development stage, and operates a “waste electronics collection recycle system” in Europe, North America, Korea, and

India for collecting and recycling waste electronics. These activities are in line with domestic and foreign environmental

laws on electronics and are a differentiation factor for the Company and its products.

Relevant laws are as follows:

law on collection and· recycle of waste electronics (e.g., EU WEEE Directive)

limit on the use of harmful substances (e.g., EU RoHS Directive, REACH Regulation)

regulation on energy efficiency (e.g., EU ErP Directive)

(Environmental regulations in the workplace)

The Company operates environmental pollution prevention facilities to reduce air pollution, water pollution, and waste

disposal, and to minimize the discharge of pollutants, thereby minimizing impact on the surrounding environment.

Environmental management of workplace is supervised by the relevant government authorities. All production facilities,

domestic and overseas, have acquired the International Occupational Health and Safety Management System Certification

(ISO 14001, ISO 45001) to strengthen compliance.

Major Relevant Domestic and International Laws are as follows:

Regulations related to emission of pollutants: Water Quality and Ecosystem Conservation Act, Clean Air

Conservation Act, Wastes Control Act, Noise and Vibration Control Act, Environmental Impact Assessment Act

Management of greenhouse gas emission: Act on Allocation and Trading of Greenhouse Gas Emission, Framework

Act on Low Carbon, Green Growth

Others: Toxic Chemicals Control Act, Act on the Registration and Evaluation, etc. of Chemical Substances, Odor

Control Law, Soil Environment Conservation Act

Samsung Electronics

Business

Report-XBRL

(Greenhouse gas emission and energy consumption management)

The Company is a “controlled entity” according to Article 42 (Coping with Climate Change and Management of Targets for

Energy) Paragraph 6 of Korea’s “Framework Act on Low Carbon, Green Growth”. Thus, the Company has been reporting

the amount of greenhouse gas emission and energy consumption, verified by a third-party, to the authorities and disclosing

it to stakeholders according to Article 44 (Reporting on Quantity of Greenhouse Gases Emitted and Quantity of Energy

Consumed) of the same Act since May 2011.

The reported amount of greenhouse gas emission and energy use are provided below:

(Unit: tCO

-eq, TJ)

2022

2021

2020

Greenhouse gas (tCO

-eq)

19,566,237

19,267,835

17,234,522

Energy (TJ)

277,270

274,298

255,990

On a consolidated basis.

Domestic manufacturing facilities, office buildings, buildings owned by the Company, leased buildings, etc.

Reported Greenhouse gas emission excludes ozone depletion substances (ODS).

Amounts may differ based on results of governmental evaluations on emissions.

From 2015, in accordance with the Article 8 (Designation of Business Entities Eligible for Allocation) of the Act on the

Allocation and Trading of Greenhouse-Gas Emission Permits, the Company is an eligible business entity under the Act.

C. Current status of each division

[DX Division]



Industry overview

TVs are key products of the DX Division, and the TV industry went through continual technological developments. The

black-and-white TV was first developed in 1926, and in 1954, RCA started mass production and sales of 21" color TVs.

Such developments have led to the creation of products such as the Trinitron CRT (1967) and flat CRT (1996). As the

penetration rate in major countries reached over 90%, the growth of the CRT TV industry stagnated. The industry regained

strong growth momentum following the launch of flat panel TVs (“FPTVs”) like LCDs and PDPs, especially with the

expansion of digital broadcasting. FPTVs replaced CRT sets on the back of their enhanced design, picture quality, etc.,

combined with releases of competitively priced products.

The year 2010 saw the launch of 3D TVs, and the rise of internet video services along with increased consumer interest in

smart devices from 2011 to 2012 led to the birth of the smart TV market. The evolution continued with the launches of

Quantum Dot QLED TVs in 2017, boasting significantly enhanced resolution and picture quality, and with

commercialization of 8K and Micro LED TVs.

The mobile phone industry started with first generation analogue devices in the early 1980s that only supported voice

communication and evolved to second generation digital ones, using technology such as CDMA and GSM, where users

could send voice and text messages. Third generation mobile communication standards such as WCDMA allowed users to

send photos and videos. Today, fourth generation LTE mobile communication technology with ultra-high-speed data

transmission is becoming commonplace and was used in 75% of phones sold in 2021 (

Strategy Analytics

, November 2022).

Fifth generation mobile communication services, which will lead innovation alongside the fourth industrial revolution, was

successfully launched in Korea and the US, and is now commercialized globally. As a result, 5G smartphones are

accelerating the development of an ecosystem of mashup services and related industries, with the sales increasing sharply

to 610 million units in 2021 from 270 million units in 2020 (

Strategy Analytics

, November 2022).

Samsung Electronics

Business

Report-XBRL

The smartphone industry has grown significantly since 2007. In 2021, the smartphone

portion of total HHP sales volume

was approximately 77%, and the feature phone portion of the total was approximately 23%, with the latter related to demand

in emerging markets

(

Strategy Analytics

, December 2022).

For 2022, the penetration rate of smartphones is expected to

have reached 52%, rising slightly from 51% in 2021 (

Strategy Analytics

, December 2022).

Also, as the smartphone market shows high saturation, the importance of competitive software for applications, UX, games,

media, advertisements, digital wallets, AI, security, etc., is rising alongside that of competitive hardware, which includes

high-performance APs, large screen AMOLED displays, foldable form factors, multiple cameras, sensors, waterproof &

dustproof features, biometric recognition, and more.



Market condition

In 2021, market players continued to strive for innovations in picture quality, sound, and form factor to create demand for

premium TVs, but TV demand decreased year-on-year to approximately 213.54 million units due to the impacts of

disruptions in global supply chains and logistics. Moreover, in 2022, TV demand declined compared to the previous year,

falling to 203.26 million units sold due to the impacts of a decline in real household income triggered by the

Russia-Ukraine

war,

increased supply instability of raw materials and energy, and expanded global inflation (

Omdia

, February 2023).

< Market share of TV >

Product

2022

2021

2020

29.7%

29.5%

31.9%

Global market share in revenue; from Omdia

Moreover, the smartphone market is expected to have declined from 1.36 billion units in 2021 to 1.22 billion units in 2022

due to uncertainties such as continued geopolitical instability and inflation (

Strategy Analytics

, December 2022). Meanwhile,

the tablet market grew to 180 million units in 2021 thanks to an increase in contactless demand triggered by COVID-19. It

then started trending downward due to weak replacement demand, and it is expected to have dropped slightly to 160 million

units in 2022 (

Strategy Analytics

, November 2022).

< Market share of Smartphone >

Product

2022

2021

2020

Smartphone

21.8%

20.0%

19.6%

Global market share in quantity; data from research firm

Strategy Analytics

. (Figure for 2022 is estimate from

Strategy Analytics.

)



Business condition

We have maintained the top position in the overall TV market for seventeen straight years since claiming the number one

spot in 2006.

In 2018, we released world’s first 8K TV in the global market, once again leading the premium segment in the TV industry.

Our QLED lineup includes sizes ranging from mid-sized to ultra-large screens, giving customers a variety of choices. In

addition, the significantly improved picture quality was well received by consumers and experts alike. We achieved solid

results by introducing ultra-large screens in the UHD lineup as well as in the QLED lineup.

In 2020, we enhanced our leadership and dominance in the market with 4K and 8K QLED TVs and new Lifestyle TVs such

as The Terrace, The Premiere and The Sero despite a global economic crisis due to COVID-19.

Samsung Electronics

Business

Report-XBRL

In 2021, we expanded our premium product lineup by launching Neo QLED TVs featuring significantly upgraded contrast

and picture quality. Moreover, the sales portion of Lifestyle products and sound bars has increased, and a rising number of

companies have participated in various smart ecosystems, including

TV plus, home training, and games. Since 2021, we

have been particularly strengthening our efforts toward becoming a more eco-friendly business, from raw materials to

packaging, and we are enhancing accessibility to help the visually impaired and hard of hearing to conveniently use our

products.

In 2022, we increased our market share in the premium, ultra-large, over 75” TV market centering on innovative Neo QLED

8K technologies and further reinforced our Lifestyle TV lineups by introducing The Freestyle.

In 2023, we will increase our market share by focusing on premium, flagship products, such as Neo QLED and Super Big

TVs; and for Lifestyle TVs, we will expand our lineups and improve product performance to continue to provide our

customers with products tailored to their needs. Furthermore, in line with the Company’s new environmental strategy, we

will increase adoption of recycled plastic materials in our eco-friendly remote controls and roll out TV products that apply

ultra-low power technologies.

Furthermore, SEC has always been at forefront of the HHP market, and for smartphones in particular, we have maintained

leadership in the global market for eleven consecutive years.

To solidify our status in the overall mobile market, we always strive to improve our current products—including tablets,

wearables, and accessories—while growing businesses in areas with high potential, such as digital health, digital wallet, etc.

For smartphones, we are establishing optimal portfolios for each region, accounting for varying market conditions and the

competitive environment, offering a wide smartphone lineup ranging from mass-market to premium devices. We have been

providing premium smartphones and delivering differentiated user experiences that can meet customer needs via our cutting-

edge technology, which includes Dynamic AMOLED 2X (120Hz) displays, digital key and content sharing using UWB

(ultra wideband), water- and dust-proofing, high-speed cable and wireless charging, ultrasonic fingerprint-on-display (FoD),

high-resolution and optical zoom/night mode camera with AI technology, 8K video recording, on top of large-screen Infinity

Displays.

In 2019, we secured early leadership in the 5G market with the release of the world’s first 5G smartphone while also creating

a new market with Galaxy Fold, enabled by foldable displays. In 2020, we continued to lead the foldable market with the

launch of Galaxy Z Flip, a new form factor that folds from top down, and a further evolved edition Galaxy Z Fold 2. In

2021, we released the third generation Galaxy Z Series with significantly enhanced durability based on unrivaled

craftsmanship, leading the foldable market.

In 2022, the market embraced the releases of Galaxy Z Fold 4 and Galaxy Z Flip 4, which featured further enhancements

to the completeness of their respective core experiences—multi-tasking and Flex Mode. We continue to target achieving

higher sales of foldable products relative to previous releases of Note models, with our mainstreaming of the new foldable

series.

To respond to an ever-changing market as well as customer needs, we are strengthening product competitiveness by

introducing innovative features such as 5G, quad cameras, large infinity displays, and high-capacity batteries even to mid-

range-and-below products.

In addition, we provide richer experiences for our smartphone users with our Galaxy Eco products, including tablets that

help boost productivity via virtual meetings, multitasking, and note-taking with large-screen display and S Pen; and

wearables such as smart watches that provide sophisticated fitness and wellness functions—thanks to the adoption of

innovative biosensor technologies—and wireless earphones that provide rich, clear sound.

Not content to dwell on our achievements in hardware, we have been focusing on delivering new and helpful services like

Samsung Electronics

Business

Report-XBRL

Samsung Pay, Samsung Health, and SmartThings. To deliver a consistent and high-quality Multi-Device Experience, we

are adding Bixby features to a suite of products in addition to smartphones, including TVs, refrigerators, air conditioners,

etc.

Moreover, we are strengthening strategic partnerships to expand our ecosystem

, and we are securing new and innovative

technologies by sustaining investments in fields with growth potential, including digital health and digital wallets, by

utilizing SmartThings, Bixby, and Cloud, and by reinforcing our Service Business.

Furthermore, we continue to innovate eco-friendly technologies, including ones to expand adoption of recycled materials

in our products. A prime example is the adoption of materials repurposed from discarded fishing nets in our key products,

including Galaxy S22 and S23 series and Galaxy Z Fold 4.

We will continue to leverage our superior R&D capabilities to be fully prepared to keep delivering new value to

customers.

Samsung Electronics

Business

Report-XBRL

[DS Division]



Industry overview

In general, our Semiconductor business is divided into Memory (storage) and System LSI (logical processing). Memory

semiconductor is divided into RAM products (random access memory, ones that can be both written on and read) and ROM

products (read only memory).

RAM is called volatile memory as the information is deleted when the power is turned off. It is used for temporary loading

and storage of application programs. ROM is nonvolatile and holds memory even when power is removed; it is used in

input/output system, IC cards, and more.

For System LSI products, there are many categories for various applications. SoCs for mobile devices that are equipped

with CPUs, GPUs, ISPs (image signal processors), and modems are our major products. The Company manufactures mobile

SoCs for smartphones and tablets, image sensors, and DDIs (display driver ICs) for OLED.

The Foundry Business makes customized semiconductors for other companies based on customer designs. The business

resembles OEMs in the traditional manufacturing industry in the sense that companies consign the manufacturing of their

products to fabrication plants, also called foundries or fabs. Due to increasing difficulty in semiconductor process and

growing investment cost, the number of fabless semiconductor companies is growing, and the Foundry Business is in charge

of consignment semiconductor production for such fabless companies.



Market condition

For the memory market, overall memory demand remained weak, as our customers further constrained their spending due

to concerns over shrinking consumer sentiment as a result of persistent external uncertainties, such as potential for a global

economic recession. Demand from consumer products such as PC and mobile continued to contract, and demand from

servers was partially weak due to delays in set builds and an inventory reduction trend.

Amid a likely further slowdown in memory demand led by a the sluggish macro economy, the Company will focus on

securing profitability by selling high-value-added, high-capacity products and continuing to lead the memory market with

our differentiated, next-generation solution products.

The foundry market was expected to gradually recover from the beginning of 2022 on the back of the alleviated pandemic

and easing of COVID-19 restrictions, but growth has been slower than expected in the second half of the year due to the

Russia-Ukraine War, China’s large-scale lockdown, and accelerated rate hikes in the US. As a result, growth in 1Q23 is

projected to decelerate in consideration of weak demand, but we expect the market to gradually rebound from 2H thanks to

a boost in demand, including ones related to alleviated monetary tightening in major economies and normalized conditions

in the supply chain. Growth in the mid to long term is likely to continue thanks to increased penetration of 5G for mobile

and heightened demand for high performance automotive-use SoCs and high performance computing.

< Market share of DRAM >

Product

2022

2021

2020

DRAM

43.0%

42.7%

Global market share in revenue; data from research firm

DRAMeXchange

. (Data for 2022 is an estimate from the Company.

)



Business condition

In the memory business, in 1Q23, customers may continue to adjust inventories due to weak seasonality and persistent

global macro uncertainties. In response, we are thoroughly preparing for DDR5 demand for server and PC following the

release of a new CPU and actively addressing demand for high-density products for server and mobile applications. Also,

Samsung Electronics

Business

Report-XBRL

we are strengthening our competitiveness by increasing the portion of high-value products centering on profitability.

Furthermore, we preemptively established mass production of DRAM featuring multi-layer EUV, and by strengthening cost

competitiveness via our lineups of advanced products, such as SSDs with 8th-generation V-NAND, we will further solidify

our market leadership in next-generation growth sectors.

System LSI is

striving to overcome the global market slowdown

via stronger cooperation with customers, and it is endeavoring

to enhance its technological capabilities and product competitiveness through advanced development of next-generation

products. For SoCs, we are strengthening the development of products that apply mobile 5G SoCs and those from advanced

nodes based on our technological capabilities in AP and modem. We are expanding our lineups via custom SoCs for mobile

and SoCs for automotives; and we are bolstering cooperation with customers for the development of next-generation

products.

In the Foundry business, we are leveraging the recent downturn as an opportunity to strengthen our business structure and

enable continued growth and to improve our fundamentals. For advanced nodes, aiming to enhance completeness and to

increase competitiveness in technology services for our customers, we are focusing our capabilities on the timely

development of 2nd generation 3-nano products, and we are preparing to mass produce 2nd and 3rd generation 4-nano

products in the first half of 2023 by securing stable yield. Moreover, we will address customer demand through timely

additions of capacity via establishing new fabs, including in Pyeongtaek and Taylor, and by improving our supply

capabilities. For mature nodes, we are working to enhance the performance, power efficiency, size, and cost efficiency of

8-nano and 14-nano products to upgrade technological competitiveness and leverage the nodes for the long term.

Furthermore, along with improving our technological competitiveness, we are increasing penetration into the market for

high-performance, low-power semiconductors for HPC, automotives, 5G, IoT, etc. by developing specialty processes that

our customers need. Finally, we are reinforcing the structure of the business overall by pushing to diversify our non-mobile

customer base to bolster stability and sustain growth in all market conditions.

[SDC]



Industry overview

Display refers to screens in electronic devices. Active matrix technology is most commonly used in displays, including

OLED (organic light emitting diode), QD-OLED (quantum dot organic light emitting diode), and TFT-LCD (thin film

transistor liquid crystal display).

OLED panels use organic materials, which offer sharp contrast and color, high color gamut, and fast response rates. Such

differentiating features provide advantages for use in smartphones where display features (multimedia contents, online

experience, etc.) are important, and as a result, OLED adoption in the smartphone market is growing rapidly.

The market had raised concerns over the production of high-resolution, durable panels, but we overcame various

technological challenges and advanced the business. OLED panels make up for the shortcomings of LCD panels, and they

can be increasingly adopted into other applications in foldables, rollables, automotives, etc. The OLED market is forecasted

to keep growing. QD-OLED, a self-emissive display with quantum dots (semiconductor particles a few nanometers in size)

in the panel to maximize color gamut and viewing angle, is capturing attention under expectations that it will lead the

premium TV and monitor markets.



Market condition

The market for smartphone display panels is expected to have decreased to 1.38 billion units in 2022 from 1.75 billion units

in 2021 due to weakening consumer sentiment triggered by inflation and concerns over an economic slowdown. For

smartphone-use OLED panels, the market is expected to have declined to 0.57 billion units in 2022 from 0.62 billion units

in 2021, but the OLED portion of smartphone panels in 2022 likely increased to 41% from 35% in 2021 (

Omdia January

2023

Samsung Electronics

Business

Report-XBRL

The market size for large display panels is also expected to have declined, falling from 0.98 billion units in 2021 to 0.88

billion units in 2022 amid a slumping market (

Omdia

, January 2023).

< Market share of smartphone panel >

Product

2022

2021

2020

Smartphone panels

56.7%

51.4%

44.8%

Global market share in revenue; figure for 2022 is estimate from research firm

Omdia.



Business condition

The Company has continued to stay atop the mobile OLED market in terms of market share since it successfully

commercialized OLED products in 2007, marking a world’s first. We diversified our product group to include displays for

foldable products, tablets, watches, laptops, and automotive applications, solidifying our position as the top player in the

OLED display market.

With both flexible and rigid OLED, our optimal smartphone product portfolio ranges from mass-market to premium devices

as we proactively address customers’ specific needs; and we are recognized as having best-in-class technology through our

introduction of foldable and OLED IT products with differentiated technologies and designs.

In 2022, a decline in the smartphone market was inevitable due to persistent macro uncertainties. We endeavored to expand

the application of new technologies, such as UPC (under panel camera), high refresh rate, and tech related to energy

efficiency and performance, in line with the needs of our customers while also enhancing cost competitiveness to continue

to increase adoption of OLED panels.

Furthermore, we are diversifying our mobile panel business, which is concentrated on smartphones, to expand into IT,

gaming, and automotive products and further solidify our business leadership.

In the large panel business, we will continue to increase our market share in the premium market by expanding the lineup

of QD-OLED products and diversifying distributors.

[Harman]



Industry overview

Harman competes in the automotive and lifestyle audio industries.

As consumers want cutting-edge technologies for automotive components (digital cockpit, telematics, car audio, etc.), car

makers demand latest technologies in areas such as car sharing and autonomous driving. As a result, competition is

particularly fierce in the connectivity and entertainment solution markets between dominant players (e.g., Alpine, Aptiv,

Continental, Mitsubishi, and Panasonic).

Harman provides not only system solutions but also audio components (including speakers and amplifiers), and it is another

segment where fierce competition between several major players (e.g., Bose, Pioneer, and Panasonic) is expected to drive

technological advances as each firm introduces unique sound-management solutions. Competition is expected to remain

intense.

Lifestyle audio business has two segments: consumer audio and professional audio solutions. Consumer audio (portable

speakers, headphones, connected audio solutions, etc.) is fragmented and a handful of companies (Amazon, Beats, Bose,

Ultimate Ears, etc.) are showing early signs of dominance. We expect competition to remain intense as new players try to

make inroads, given the saturated market for connected homes and smart speakers. In particular, for True Wireless

headphones, for which smartphone manufacturers dominate market share, is expected to grow explosively.

The professional audio solution industry (commercial audio, audio for large venues, etc., special lighting, video control

solutions, etc.), led by QSC and Yamaha, is segmented by product and has seen the entrance of numerous companies offering

Samsung Electronics

Business

Report-XBRL

a wide range of products and applications.



Market condition

The COVID-19 pandemic was projected to ease gradually into the end of 2022, but progress has been slower than expected,

while business uncertainties have been mounting due to impacts of the

Russia-Ukraine war

. Against this backdrop,

uncertainties in the macro economy were extremely high in 2022, including increased economic risks stemming from

tightened monetary policies from central banks.

Considering such factors, global automobile production in 2023 is forecast to grow 4% year-on-year (

S&P Global Light

Vehicle Production Forecast,

December 2022).

< Market share of digital cockpit >

Product

2022

2021

2020

Digital cockpits

24.7%

25.3%

27.5%

Digital cockpits refer to the digital automotive component which enables safe driving environment via infotainment system, etc.

Company estimates based on I.H.S and LMC data (by unit).



Business condition

Harman is positioned to stay at the forefront of the automotive market and plans to continue to leverage its wide variety of

brands to outfit vehicles ranging from mass-market thorough to luxury models, while also maintaining the quality that is

synonymous with Harman brands. Additionally, Harman’s relentless pursuit of innovation in the audio and connectivity

spaces will help ensure the development of thriving relationships with automakers.

The same factors that Harman relies on within the automotive market will also be used in the consumer audio and

professional audio solution market. Having won three Grammy Awards and two Academy Awards, Harman’s brands have

earned a strong reputation amongst everyday consumers and audiophiles alike. New offerings in up-and-coming segments

such as connected wireless and smart audio continue to help bring in new consumers and further enhance brand reputation.

The COVID-19 pandemic created a challenging business environment, marked by halt in automobile production, a decline

in daily travel and thus potential consumers, the closing of retailers, etc. The professional audio solution business, in

particular, had adverse impacts of a reduction in the number of large-scale gatherings and events. Harman has adopted

various ways to reduce costs from the onset of the COVID-19 pandemic, and we will redirect savings to other investments

to compete more effectively in the market.

Samsung Electronics

Business

Report-XBRL

D. Financial summary, by organization

In 2022 by organization, DX accounted for 60.4% of revenue with reported revenue of KRW

182,489.7 billion; DS

contributed approximately 32.6% with revenue of KRW 98,455.3 billion; SDC was responsible for 11.4% with revenue of

KRW 34,382.6 billion; and Harman contributed 4.4% with revenue of KRW 13,213.7 billion.

In 2022, DX accounted for 29.4% of total operating profit with an operating profit of KRW 12,746.1 billion; DS contributed

54.9% with KRW 23,815.8 billion; SDC accounted for 13.7% with a total operating profit of KRW 5,953.0 billion; and

Harman contributed 2.0% with an operating profit of KRW 880.5 billion.

(KRW 100 mil)

Organization

Classification

2022

2021

2020

Amount

Portion of

corresponding

total

Amount

Portion of

corresponding

total

Amount

Portion of

corresponding

total

DX Division

Revenue

1,824,897

60.4%

1,662,594

59.5%

1,489,135

62.9%

Operating

profit

127,461

29.4%

173,866

33.7%

151,520

42.1%

Total assets

2,279,669

38.6%

2,479,832

42.0%

2,303,623

43.6%

DS Division

Revenue

984,553

32.6%

953,872

34.1%

740,540

31.3%

Operating

profit

238,158

54.9%

291,920

56.5%

188,062

52.2%

Total assets

2,620,558

44.3%

2,258,223

38.3%

1,885,692

35.7%

SDC

Revenue

343,826

11.4%

317,125

11.3%

305,857

12.9%

Operating

profit

59,530

13.7%

44,574

8.6%

22,369

6.2%

Total assets

737,798

12.5%

668,836

11.3%

661,929

12.5%

Harman

Revenue

132,137

4.4%

100,399

3.6%

91,837

3.9%

Operating

profit

8,805

2.0%

5,991

1.2%

555

0.2%

Total assets

171,023

2.9%

158,874

2.7%

147,020

2.8%

Includes inter-divisional transactions.

Figures for 2020 and 2021 were adjusted to align with those of 2022, reflecting the organizational changes in December 2021.



Reasonable allocation of common SG&A (selling general & administrative) expenses and assets

(1) For common SG&A expenses, specific expenses that are allocable to a specific product/model are allocated to Divisions

that are responsible for such product/model. However, common expenses that cannot be attributed to a specific

product/model category are reasonably allocated throughout the Company based on an allocation standard (expense-to-

revenue ratio, number of personnel, etc.).

(2) For common assets, assets that can be directly allocated (inventory assets, fixed assets, investment assets, etc.) are

allocated to the corresponding organizational unit. Assets that are commonly managed and cannot be directly allocated are

allocated to each Division based on an allocation standard (expense-to-revenue ratio, pre-tax profit, etc.)

Samsung Electronics

Business

Report-XBRL

III. Audited Financial Statements

1. Introduction

Deloitte Anjin conducted audits on the consolidated/separate financial statements of financial position of the Company as

of December 31, 2022, December 31, 2021, and December 31, 2020, and the related consolidated/separate statements of

profit or loss, comprehensive income, changes in equity and cash flows for the years then ended and expressed an

unqualified opinion on those financial statements.

All of the Company’s subsidiaries received unqualified opinion for the years ended December 31, 2022, 2021, and 2020.

Period end

Company Auditor

Audit Opinion

Emphasis of Matter

Key Audit Matter(s)

Dec 31, 2022

Deloitte Anjin

Unqualified

Not applicable

(Consolidated)

1. Sales deduction related to the sales promotion

activities of products

(Separate)

1. Sales deduction related to the sales promotion

activities of products

Dec 31, 2021

Deloitte Anjin

Unqualified

Not applicable

(Consolidated)

1. Sales deduction related to the sales promotion

activities of products

(Separate)

1. Sales deduction related to the sales promotion

activities of products

Dec 31, 2020

Deloitte Anjin

Unqualified

Not applicable

(Consolidated)

1. Sales deduction related to the sales promotion

activities of products

2. Impairment of goodwill and intangible assets

with indefinite useful lives

(Separate)

1. Sales deduction related to the sales promotion

activities of products

※

Audit opinion on both separate and consolidated financial statements.

2. Auditor's report

A. Consolidated financial statements

Auditor’s report of consolidated financial statements start from the next page.

CONSOLIDATED FINANCIAL STATEMENTS OF

SAMSUNG ELECTRONICS CO., LTD. AND ITS SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

Page

Independent

Auditor’s

Report

1-4

Consolidated Financial Statements

Consolidated Statements of Financial Position

5-7

Consolidated Statements of Profit or Loss

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Equity

10-13

Consolidated Statements of Cash Flows

14-15

Notes to the Consolidated Financial Statements

Independent Auditor

’s

Report

To the Shareholders and the Board of Directors of Samsung Electronics Co., Ltd.

Audit Opinion

We have audited the accompanying consolidated financial statements of Samsung Electronics Co., Ltd. and

its

subsidiaries (the “Company”), which comprise the consolidated statement

s of financial position as of

December 31, 2022 and 2021, and the consolidated statements of profit or loss, the consolidated statements

of comprehensive income, the consolidated statements of changes in equity and the consolidated statements

of cash flows, for the years then ended, and notes to the consolidated financial statements, including a

summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material

respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and its

consolidated financial performance and its consolidated cash flows for the years then ended in accordance

with Korean International Financial Reporting

Standards (“K

IFRS”).

Basis for Audit Opinion

We conducted our audits in accordance with the International

Standards on Auditing (“

SAs”). Our

responsibilities under those standards are further described in the

Auditor’s Responsibilities for the

Audit of

the Consolidated Financial Statements

section of our report. We are independent of the Company in

accordance with the International Ethics Standards Board for Accountants’

Code of Ethics for Professional

Accountants

(

“

IESBA Code

”

) together with the ethical requirements that are relevant to our audit of the

financial statements, and we have fulfilled our other ethical responsibilities in accordance with the IESBA

Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our audit opinion.

Key Audit Matter

The key audit matter is a matter that, in our professional judgment, was of most significance in our audit of

the consolidated financial statements of the current period. This matter was addressed in the context of our

audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not

provide a separate opinion on this matter.

(A) Sales deduction related to sales promotion activities

Reasons why the matter was determined to be a key audit matter:

The Device eXperience (DX) business division performs sales promotion activities, such as price or volume

discounts and incentives, based on explicit or implicit agreements with customers, including retail and

telecommunication companies. As disclosed in Notes 2 (Significant Accounting Policies) and 3 (Critical

Accounting Estimates and Assumptions), these activities are recognized as deductions from revenue at the

expected payment amount.

As for the appropriateness of the revenue deduction amounts, such amounts may involve significant

management estimates and judgments. In addition, we believe that those amounts could be material to

the consolidated financial statements. As such, we determined the sales deduction related to sales

promotion activities as a key audit matter.

Deloitte Anjin LLC

9F., One IFC,

10, Gukjegeumyung-ro,

Youngdeungpo-gu, Seoul

07326, Korea

Tel: +82 (2) 6676 1000

Fax: +82 (2) 6674 2114

www.deloitteanjin.co.kr

How the Key Audit Matter was addressed in the audit:

Our audit procedures with respect to the Company’s sales promotion activities related to the sales of

products included, but were not limited to the following:

•

Obtained an understanding of management’s accounting policies, processes and internal

controls

related to the sales deduction.

•

Obtained an understanding and evaluated the Company’s

information technology system related to

the sales deduction.

•

Assessed

the Company’s internal controls relating to the approval process of the sales

deduction

policy.

•

Evaluated the Company’s internal

controls relating to the approval process of the sales deduction

estimation and post-settled amounts.

•

Evaluated the estimates and accompanying assumptions by inspecting supporting documentation

relating to the sales deduction transactions.

•

Examined the sales deduction amount by comparing the sales deduction estimates to post-settled

amounts and inspecting supporting documentation.

Responsibilities of Management and Those Charged with Governance for the Consolidated

Financial Statements

Management is responsible for the preparation and fair presentation of the accompanying consolidated

financial statements in accordance with K-IFRS, and for such internal control as they determine is

necessary to enable the preparation of consolidated financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management of the Company is responsible for

assessing the Company’s ability to continue as a going concern,

disclosing, as applicable, matters

related to going concern and using the going concern basis of accounting unless management either

intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with

governance are responsible for overseeing the Company’s financial reporting

process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements

as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s

report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee

that an audit conducted in accordance with ISAs will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the

basis of these consolidated financial statements.

-2-

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain

professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the consolidated financial statements,

whether due to fraud or error, design and perform audit procedures responsive to those risks, and

obtain audit evidence that is sufficient and appropriate to provide a basis for our audit opinion. The

risk of not detecting a material misstatement resulting from fraud is higher than for one resulting

from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or

the override of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal cont

rol.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

•

Conclude on the appropriateness of the management’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related

to events or conditions that may cast significant doubt on the Company’s ability to

continue as a

going concern. If we conclude that a material uncertainty exists, we are required to draw attention

in our auditor’s report to the related disclosures in the consolidated financial

statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence

obtained up to the date of

our auditor’s report. However, future

events or conditions may cause the

Company to cease to continue as a going concern.

•

Evaluate the overall presentation, structure and content of the consolidated financial statements,

including the disclosures, and whether the consolidated financial statements represent the

underlying transactions and events in a manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Company to express an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and performance of the group audit.

We are solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and to communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, related

safeguards.

From the matters communicated with those charged with governance, we determine those matters that

were of most significance in the audit of the consolidated financial statements of the current period and

are therefore the

key audit matters. We describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in our report because the adverse consequences of

doing so would reasonably be expected to outweigh the public interest benefits of such communication.

-3-

The engagement partner on the audit resulting in this independent auditor

’s

report is Byung Moon Yoo.

Seoul, Korea

February 15, 2023

Notice to Readers

This report is effective as of February 15, 2023, the auditor

’s

report date. Certain subsequent events or

circumstances may have occurred between the auditor

’

s report date and the time the auditor

’s

report is

read. Such events or circumstances could significantly affect the financial statements and may result

in modifications to the auditor

’s

report.

-4-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

The above consolidated statements of financial position should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

December 31,

Notes

2022

2021

2022

2021

KRW

USD

Assets

Current assets

Cash and cash equivalents

4, 28

49,680,710

39,031,415

38,477,921

30,229,997

Short-term financial instruments

4, 28

65,102,886

81,708,986

50,422,462

63,283,957

Short-term financial assets at amortized cost

4, 28

414,610

3,369,034

321,117

2,609,331

Short-term financial assets at fair value

through profit or loss

4, 6, 28

29,080

40,757

22,523

31,566

Trade receivables

4, 5, 7, 28

35,721,563

40,713,415

27,666,503

31,532,713

Non-trade receivables

4, 7, 28

6,149,209

4,497,257

4,762,589

3,483,145

Prepaid expenses

2,867,823

2,336,252

2,221,141

1,809,437

Inventories

52,187,866

41,384,404

40,419,724

32,052,397

Other current assets

4, 28

6,316,834

5,081,665

4,892,415

3,935,772

218,470,581

218,163,185

169,206,395

168,968,315

Non-current assets

Financial assets at fair value

through other comprehensive income

4, 6, 28

11,397,012

13,965,839

8,827,034

10,816,602

Financial assets at fair value

through profit or loss

4, 6, 28

1,405,468

1,525,344

1,088,541

1,181,385

Investment in associates and joint ventures

10,893,869

8,932,251

8,437,348

6,918,066

Property, plant and equipment

168,045,388

149,928,539

130,151,868

116,120,291

Intangible assets

20,217,754

20,236,244

15,658,737

15,673,057

Net defined benefit assets

5,851,972

2,809,590

4,532,377

2,176,039

Deferred income tax assets

5,101,318

4,261,214

3,950,992

3,300,328

Other non-current assets

4, 7, 28

7,041,145

6,798,952

5,453,397

5,265,819

229,953,926

208,457,973

178,100,294

161,451,587

Total assets

448,424,507

426,621,158

347,306,689

330,419,902

-5-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

The above consolidated statements of financial position should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

December 31,

Notes

2022

2021

2022

2021

KRW

USD

Liabilities and Equity

Current liabilities

Trade payables

4, 28

10,644,686

13,453,351

8,244,355

10,419,678

Short-term borrowings

4, 5, 12, 28

5,147,315

13,687,793

3,986,617

10,601,254

Other payables

4, 28

17,592,366

15,584,866

13,625,362

12,070,545

Advances received

1,314,934

1,224,812

1,018,422

948,622

Withholdings

4, 28

1,298,244

1,294,052

1,005,496

1,002,249

Accrued expenses

4, 17, 28

29,211,487

27,928,031

22,624,421

21,630,379

Current income tax liabilities

4,250,397

6,749,149

3,291,951

5,227,245

Current portion of long-term liabilities

4, 12, 13, 28

1,089,162

1,329,968

843,561

1,030,066

Provisions

5,844,907

5,372,872

4,526,905

4,161,312

Other current liabilities

4, 17, 28

1,951,354

1,492,239

1,511,331

1,155,744

78,344,852

88,117,133

60,678,421

68,247,094

Non-current liabilities

Debentures

4, 13, 28

536,093

508,232

415,206

393,628

Long-term borrowings

4, 12, 28

3,560,672

2,866,156

2,757,756

2,219,850

Long-term other payables

4, 28

2,753,305

2,991,440

2,132,446

2,316,883

Net defined benefit liabilities

268,370

465,884

207,854

360,829

Deferred income tax liabilities

5,111,332

23,198,205

3,958,748

17,967,108

Long-term provisions

1,928,518

2,306,994

1,493,645

1,786,777

Other non-current liabilities

4, 17, 28

1,171,761

1,267,183

907,535

981,439

15,330,051

33,604,094

11,873,190

26,026,514

Total liabilities

93,674,903

121,721,227

72,551,611

94,273,608

-6-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

The above consolidated statements of financial position should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

December 31,

Notes

2022

2021

2022

2021

KRW

USD

Equity attributable to owners of the Company

Preference shares

119,467

92,528

Ordinary shares

778,047

602,601

Share premium

4,403,893

3,410,834

Retained earnings

337,946,407

293,064,763

261,740,930

226,979,906

Other components of equity

1,938,328

(2,128,473)

1,501,243

(1,648,512)

345,186,142

296,237,697

267,348,136

229,437,357

Non-controlling interests

9,563,462

8,662,234

7,406,942

6,708,937

Total equity

354,749,604

304,899,931

274,755,078

236,146,294

Total liabilities and equity

448,424,507

426,621,158

347,306,689

330,419,902

-7-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

The above consolidated statements of profit or loss should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

For the years ended December 31,

Notes

2022

2021

2022

2021

KRW

USD

Revenue

302,231,360

279,604,799

234,079,475

216,555,107

Cost of sales

190,041,770

166,411,342

147,188,160

128,886,293

Gross profit

112,189,590

113,193,457

86,891,315

87,668,814

Selling and administrative expenses

21, 22

68,812,960

61,559,601

53,295,930

47,678,173

Operating profit

43,376,630

51,633,856

33,595,385

39,990,641

Other non-operating income

1,962,071

2,205,695

1,519,632

1,708,320

Other non-operating expense

1,790,176

2,055,971

1,386,499

1,592,358

Share of net profit of associates and joint ventures

1,090,643

729,614

844,708

565,089

Financial income

20,828,995

8,543,187

16,132,145

6,616,735

Financial expense

19,027,689

7,704,554

14,737,026

5,967,210

Profit before income tax

46,440,474

53,351,827

35,968,345

41,321,217

Income tax expense

(9,213,603)

13,444,377

(7,135,975)

10,412,727

Profit for the year

55,654,077

39,907,450

43,104,320

30,908,490

Profit attributable to

Owners of the Company

54,730,018

39,243,791

42,388,632

30,394,483

Non-controlling interests

924,059

663,659

715,688

514,007

Earnings per share

(in Korean won, in US dollars)

- Basic

8,057

5,777

6.24

4.47

- Diluted

8,057

5,777

6.24

4.47

-8-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

The above consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

For the years ended December 31,

Notes

2022

2021

2022

2021

KRW

USD

Profit for the year

55,654,077

39,907,450

43,104,320

30,908,490

Other comprehensive income (loss)

Items that will not be reclassified subsequently to

profit or loss:

Gain (loss) on valuation of financial assets at fair

value through other comprehensive income, net

of tax

6, 20

(1,969,498)

2,980,896

(1,525,385)

2,308,717

Share of other comprehensive income (loss) of

associates and joint ventures, net of tax

9, 20

(6,318)

51,816

(4,893)

40,132

Remeasurement of net defined benefit liabilities

(assets), net of tax

14, 20

1,153,679

(524,606)

893,529

(406,310)

Items that may be reclassified subsequently to

profit or loss:

Share of other comprehensive income (loss) of

associates and joint ventures, net of tax

9, 20

(44,192)

160,163

(34,227)

124,047

Gain on overseas business translation,

net of tax

4,884,886

7,283,620

3,783,365

5,641,195

Gain (loss) on valuation of cash flow hedge

derivatives

(12,893)

50,410

(9,986)

39,043

Other comprehensive income (loss) for the year,

net of tax

4,005,664

10,002,299

3,102,403

7,746,824

Total comprehensive income for the year

59,659,741

49,909,749

46,206,723

38,655,314

Comprehensive income attributable to:

Owners of the Company

58,745,107

49,037,912

45,498,335

37,980,071

Non-controlling interests

914,634

871,837

708,388

675,243

-9-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.

(In millions of Korean won)

2021 KRW

Notes

Preference

Ordinary

premium

Retained

earnings

Other

components

of equity

Accumulated

other

comprehensive

income

attributable to

assets held-

for-sale

Equity

attributable

to owners of

the parent

company

Non-

controlling

interests

Total

Balance as of January 1, 2021

119,467

778,047

4,403,893

271,068,211

(8,687,155)

(12,132)

267,670,331

8,277,685

275,948,016

Profit for the year

39,243,791

663,659

39,907,450

Gain (loss) on valuation of financial assets at fair

value through other comprehensive income,

net of tax

6, 20

3,232,934

(359,117)

2,873,817

107,079

2,980,896

Share of other comprehensive income (loss) of

associates and joint ventures, net of tax

9, 20

225,464

(13,485)

211,979

Gain on overseas business translation, net of tax

7,164,982

118,638

7,283,620

Remeasurement of net defined benefit liabilities,

net of tax

14, 20

(520,552)

(4,054)

(524,606)

Gain on valuation of cash flow hedge derivatives

50,410

Reclassification to held-for-sale

(12,132)

12,132

Total comprehensive income for the year

42,476,725

6,549,055

12,132

49,037,912

871,837

49,909,749

Dividends declared

(20,480,721)

(32,005)

(20,512,726)

Capital transaction under common control

12,553

Changes in consolidated entities

(477,617)

Other

548

9,627

10,175

9,781

19,956

Total transactions with owners

(20,480,173)

9,627

(20,470,546)

(487,288)

(20,957,834)

Balance as of December 31, 2021

119,467

778,047

4,403,893

293,064,763

(2,128,473)

296,237,697

8,662,234

304,899,931

-10-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.

(In thousands of US dollars (Note 2.29))

2021 USD

Notes

Preference

Ordinary

premium

Retained

earnings

Other

components

of equity

Accumulated

other

comprehensive

income

attributable to

assets held-

for-sale

Equity

attributable

to owners of

the parent

company

Non-

controlling

interests

Total

Balance as of January 1, 2021

92,528

602,601

3,410,834

209,943,483

(6,728,239)

(9,396)

207,311,811

6,411,102

213,722,913

Profit for the year

30,394,483

514,007

30,908,490

Gain (loss) on valuation of financial assets at fair

value through other comprehensive income,

net of tax

6, 20

2,503,921

(278,138)

2,225,783

82,934

2,308,717

Share of other comprehensive income (loss) of

associates and joint ventures, net of tax

9, 20

174,623

(10,444)

164,179

Gain on overseas business translation, net of tax

5,549,309

91,886

5,641,195

Remeasurement of net defined benefit liabilities,

net of tax

14, 20

(403,170)

(3,140)

(406,310)

Gain on valuation of cash flow hedge derivatives

39,043

Reclassification to held-for-sale

(9,396)

9,396

Total comprehensive income for the year

32,898,404

5,072,271

9,396

37,980,071

675,243

38,655,314

Dividends declared

(15,862,406)

(24,788)

(15,887,194)

Capital transaction under common control

9,722

Changes in consolidated entities

(369,916)

Other

425

7,456

7,881

7,574

15,455

Total transactions with owners

(15,861,981)

7,456

(15,854,525)

(377,408)

(16,231,933)

Balance as of December 31, 2021

92,528

602,601

3,410,834

226,979,906

(1,648,512)

229,437,357

6,708,937

236,146,294

-11-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.

(In millions of Korean won)

2022 KRW

Notes

Preference

Ordinary

premium

Retained

earnings

Other

components

of equity

Accumulated

other

comprehensive

income

attributable to

assets held-

for-sale

Equity

attributable

to owners of

the parent

company

Non-

controlling

interests

Total

Balance as of January 1, 2022

119,467

778,047

4,403,893

293,064,763

(2,128,473)

296,237,697

8,662,234

304,899,931

Profit for the year

54,730,018

924,059

55,654,077

Gain (loss) on valuation of financial assets

at fair value through other comprehensive

income, net of tax

6, 20

(38,937)

(1,867,530)

(1,906,467)

(63,031)

(1,969,498)

Share of other comprehensive income (loss)

of associates and joint ventures, net of tax

9, 20

(51,848)

1,338

(50,510)

Gain on overseas business translation, net of tax

4,863,930

20,956

4,884,886

Remeasurement of net defined benefit

liabilities, net of tax

14, 20

1,122,367

31,312

1,153,679

Loss on valuation of cash flow hedge

derivatives

(12,893)

Total comprehensive income for the year

54,691,081

4,054,026

58,745,107

914,634

59,659,741

Dividends declared

(9,809,437)

(5,523)

(9,814,960)

Capital transactions under common control

(176)

Changes in consolidated entities

124

Others

12,775

(7,831)

4,944

Total transactions with owners

(9,809,437)

12,775

(9,796,662)

(13,406)

(9,810,068)

Balance as of December 31, 2022

119,467

778,047

4,403,893

337,946,407

1,938,328

345,186,142

9,563,462

354,749,604

-12-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.

(In thousands of US dollars (Note 2.29))

2022 USD

Notes

Preference

Ordinary

premium

Retained

earnings

Other

components

of equity

Accumulated

other

comprehensive

income

attributable to

assets held-

for-sale

Equity

attributable

to owners of

the parent

company

Non-

controlling

interests

Total

Balance as of January 1, 2022

92,528

602,601

3,410,834

226,979,906

(1,648,512)

229,437,357

6,708,937

236,146,294

Profit for the year

42,388,632

715,688

43,104,320

Gain (loss) on valuation of financial assets

at fair value through other comprehensive

income, net of tax

6, 20

(30,157)

(1,446,410)

(1,476,567)

(48,818)

(1,525,385)

Share of other comprehensive income (loss)

of associates and joint ventures, net of tax

9, 20

(40,156)

1,036

(39,120)

Gain on overseas business translation, net of tax

3,767,134

16,231

3,783,365

Remeasurement of net defined benefit

liabilities, net of tax

14, 20

869,278

24,251

893,529

Loss on valuation of cash flow hedge

derivatives

(9,986)

Total comprehensive income for the year

42,358,475

3,139,860

45,498,335

708,388

46,206,723

Dividends declared

(7,597,451)

(4,277)

(7,601,728)

Capital transactions under common control

(136)

Changes in consolidated entities

Others

9,895

(6,066)

3,829

Total transactions with owners

(7,597,451)

9,895

(7,587,556)

(10,383)

(7,597,939)

Balance as of December 31, 2022

92,528

602,601

3,410,834

261,740,930

1,501,243

267,348,136

7,406,942

274,755,078

-13-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

For the years ended December 31,

Notes

2022

2021

2022

2021

KRW

USD

Operating activities

Profit for the year

55,654,077

39,907,450

43,104,320

30,908,490

Adjustments

33,073,439

49,055,633

25,615,519

37,993,797

Changes in assets and liabilities arising

from operating activities

(16,998,948)

(16,286,884)

(13,165,758)

(12,614,262)

Cash generated from operations

71,728,568

72,676,199

55,554,081

56,288,025

Interest received

2,136,795

1,406,706

1,654,957

1,089,500

Interest paid

(714,543)

(434,441)

(553,417)

(336,476)

Dividends received

529,421

299,033

410,039

231,602

Income tax paid

(11,498,895)

(8,842,049)

(8,905,943)

(6,848,204)

Net cash from operating activities

62,181,346

65,105,448

48,159,717

50,424,447

Investing activities

Net decrease in short-term financial instruments

15,214,321

10,917,128

11,783,556

8,455,362

Net decrease (increase) in short-term financial assets

at amortized cost

3,050,104

(336,959)

2,362,319

(260,976)

Net decrease in short-term financial assets at fair value

through profit or loss

11,677

30,694

9,044

23,773

Disposal of long-term financial instruments

8,272,909

10,216,082

6,407,403

7,912,399

Acquisition of long-term financial instruments

(4,393,754)

(6,981,810)

(3,402,981)

(5,407,442)

Disposal of financial assets at fair value

through other comprehensive income

496,090

2,919,888

384,224

2,261,466

Acquisition of financial assets at fair value

through other comprehensive income

(37,687)

(1,121,201)

(29,189)

(868,375)

Disposal of financial assets at fair value through profit or loss

166,315

350,212

128,812

271,241

Acquisition of financial assets at fair value

through profit or loss

(158,244)

(208,262)

(122,561)

(161,300)

Disposal of investment in associates and joint ventures

13,233

19,169

10,249

14,846

Acquisition of investment in associates and joint ventures

(907,958)

(47,090)

(703,217)

(36,471)

Disposal of property, plant and equipment

217,878

358,284

168,747

277,492

Acquisition of property, plant and equipment

(49,430,428)

(47,122,106)

(38,284,077)

(36,496,272)

Disposal of intangible assets

23,462

1,752

18,171

1,357

Acquisition of intangible assets

(3,696,304)

(2,706,915)

(2,862,803)

(2,096,517)

Cash outflow from business combinations

(31,383)

(5,926)

(24,306)

(4,590)

Cash inflow from sale of assets-held-for-sale

661,168

512,077

Cash inflow (outflow) from other investing activities

(413,035)

8,129

(319,897)

6,296

Net cash used in investing activities

(31,602,804)

(33,047,763)

(24,476,506)

(25,595,633)

-14-

Samsung Electronics Co., Ltd. and its subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

For the years ended December 31,

Notes

2022

2021

2022

2021

KRW

USD

Financing activities

Net decrease in short-term borrowings

(8,339,149)

(2,616,943)

(6,458,706)

(2,026,833)

Increase in long-term borrowings

271,997

58,279

210,663

45,137

Repayment of debentures and long-term borrowings

(1,508,465)

(894,749)

(1,168,313)

(692,987)

Dividends paid

(9,814,426)

(20,510,350)

(7,601,315)

(15,885,353)

Net decrease in non-controlling interests

(6)

(27,270)

(5)

(21,121)

Net cash used in financing activities

(19,390,049)

(23,991,033)

(15,017,676)

(18,581,157)

Reclassification to assets held-for-sale

139

108

Effect of foreign exchange rate changes

(539,198)

1,582,046

(417,611)

1,225,300

Net increase in cash and cash equivalents

10,649,295

9,648,837

8,247,924

7,473,065

Cash and cash equivalents

Beginning of the year

39,031,415

29,382,578

30,229,997

22,756,932

End of the year

49,680,710

39,031,415

38,477,921

30,229,997

-15-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2022 and 2021, and

For the years ended December 31, 2022 and 2021

1. General Information

1.1 Company Overview

Samsung Electronics Co., Ltd. (“SEC”) was incorporated under the laws of the Republic of Korea in 1969 and listed its shares

on the Korea Stock Exchange in 1975. SEC and its subsidiaries (collectively referred to as the “Company”) operate four

business divisions: DX, DS, SDC and Harman. DX (Device eXperience) division includes digital TVs, refrigerators, mobile

phones and communication systems. DS (Device Solutions) division includes memory, foundry, and system LSI. SDC

includes display panels products. Harman division includes connected car systems, audio and visual products, enterprise

automation solutions and connected services. The Company is domiciled in the Republic of Korea and is located in Suwon,

the Republic of Korea.

These consolidated financial statements have been prepared in accordance with Korean International Financial Reporting

Standards (“

Korean IFRS

”) 1110,

Consolidated Financial Statements

. SEC, as the controlling company, consolidates its 232

subsidiaries, including Samsung Display and Samsung Electronics America. The Company also applies the equity method of

accounting for its 37 associates and joint ventures, including Samsung Electro-Mechanics Co., Ltd.

1.2 Consolidated Subsidiaries

The consolidated subsidiaries as of December 31, 2022 are as follows:

Area

Subsidiaries

Industry

Percentage of

ownership (%)

America

Samsung Electronics America, Inc. (SEA)

Sale of electronic devices

100.0

Samsung International, Inc. (SII)

Manufacture of electronic devices

100.0

Samsung Mexicana S.A. de C.V (SAMEX)

Manufacture of electronic devices

100.0

Samsung Electronics Home Appliances America, LLC (SEHA)

Manufacture of home appliances

100.0

Samsung Research America, Inc. (SRA)

R&D

100.0

Samsung Next LLC (SNX)

Management of overseas subsidiaries

100.0

Samsung Next Fund LLC (SNXF)

Technology business, venture capital investments

100.0

NeuroLogica Corp.

Manufacture and sale of medical equipment

100.0

Samsung HVAC America, LLC

Sale of air conditioning products

100.0

Joyent, Inc.

Cloud services

100.0

Dacor Holdings, Inc.

Management of overseas subsidiaries

100.0

Dacor, Inc.

Manufacture and sale of home appliances

100.0

SmartThings, Inc.

Sale of smart home electronics

100.0

TeleWorld Solutions, Inc. (TWS)

Installation & optimization of network devices

100.0

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

-16-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

America

Samsung Semiconductor, Inc. (SSI)

Sale of semiconductor and display panels

100.0

Samsung Austin Semiconductor LLC. (SAS)

Manufacture of semiconductors

100.0

Samsung Oak Holdings, Inc. (SHI)

Management of overseas subsidiaries

100.0

SEMES America, Inc.

Semiconductor equipment services

100.0

Samsung Electronics Canada, Inc. (SECA)

Sale of electronic devices

100.0

AdGear Technologies Inc.

Digital advertising platforms

100.0

Samsung Electronica da Amazonia Ltda. (SEDA)

Manufacture and sale of electronic devices

100.0

Samsung Electronics Mexico S.A. de C.V. (SEM)

Sale of electronic devices

100.0

SamsungElectronicsDigital ApplianceMexico,S.A. deC.V.(SEDAM)

Manufacture of home appliances

100.0

Samsung Electronics Latinoamerica (Zona Libre), S. A. (SELA)

Sale of electronic devices

100.0

Samsung Electronics Latinoamerica Miami, Inc. (SEMI)

Sale of electronic devices

100.0

Samsung Electronica Colombia S.A. (SAMCOL)

Sale of electronic devices

100.0

Samsung Electronics Argentina S.A. (SEASA)

Marketing and services

100.0

Samsung Electronics Chile Limitada (SECH)

Sale of electronic devices

100.0

Samsung Electronics Peru S.A.C. (SEPR)

Sale of electronic devices

100.0

Samsung Electronics Venezuela, C.A. (SEVEN)

Marketing and services

100.0

Samsung Electronics Panama. S.A. (SEPA)

Consulting

100.0

Harman International Industries, Inc.

Management of overseas subsidiaries

100.0

Harman Becker Automotive Systems, Inc.

Manufacture and sale of audio products, R&D

100.0

Harman Connected Services, Inc.

Connected service provider

100.0

Harman Connected Services Engineering Corp.

Connected service provider

100.0

Harman da Amazonia Industria Eletronica e Participacoes Ltda.

Manufacture and sale of audio products

100.0

Harman de Mexico, S. de R.L. de C.V.

Manufacture of audio products

100.0

Harman do Brasil Industria Eletronica e Participacoes Ltda.

Sale of audio products, R&D

100.0

Harman Financial Group LLC

Management company

100.0

Harman International Industries Canada Ltd.

Sale of audio products

100.0

Harman International Mexico, S. de R.L. de C.V.

Sale of audio products

100.0

Harman KG Holding, LLC

Management of overseas subsidiaries

100.0

Harman Professional, Inc.

Sale of audio products, R&D

100.0

Beijing Integrated Circuit Industry International Fund, L.P

Venture capital investments

61.4

China Materialia New Materials 2016 Limited Partnership

Venture capital investments

99.0

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

-17-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

Europe &

CIS

Samsung Electronics (UK) Ltd. (SEUK)

Sale of electronic devices

100.0

Samsung Electronics Ltd. (SEL)

Management of overseas subsidiaries

100.0

Samsung Semiconductor Europe Limited (SSEL)

Sale of semiconductor and display panels

100.0

Samsung Electronics GmbH (SEG)

Sale of electronic devices

100.0

Samsung Electronics Holding GmbH (SEHG)

Management of overseas subsidiaries

100.0

Samsung Semiconductor Europe GmbH (SSEG)

Sale of semiconductor and display panels

100.0

Samsung Electronics France S.A.S (SEF)

Sale of electronic devices

100.0

Samsung Electronics Italia S.P.A. (SEI)

Sale of electronic devices

100.0

Samsung Electronics Iberia, S.A. (SESA)

Sale of electronic devices

100.0

Samsung Electronics Portuguesa, Unipessoal, Lda. (SEP)

Sale of electronic devices

100.0

Samsung Electronics Hungarian Private Co., Ltd. (SEH)

Manufacture and sale of electronic devices

100.0

Samsung Electronics Europe Logistics B.V. (SELS)

Logistics

100.0

Samsung Electronics Benelux B.V. (SEBN)

Sale of electronic devices

100.0

Samsung Electronics Europe Holding Cooperatief U.A. (SEEH)

Management of overseas subsidiaries

100.0

Samsung Electronics Nordic Aktiebolag (SENA)

Sale of electronic devices

100.0

Samsung Electronics Slovakia s.r.o. (SESK)

Manufacture of TV and monitors

100.0

Samsung Display Slovakia, s.r.o. (SDSK)

Toll processing of display panels

100.0

Samsung Electronics Polska, SP.Zo.o (SEPOL)

Sale of electronic devices

100.0

Samsung Electronics Poland Manufacturing SP.Zo.o (SEPM)

Manufacture of home appliances

100.0

Samsung Electronics Romania LLC (SEROM)

Sale of electronic devices

100.0

Samsung Electronics Austria GmbH (SEAG)

Sale of electronic devices

100.0

Samsung Electronics Switzerland GmbH (SESG)

Sale of electronic devices

100.0

Samsung Electronics Czech and Slovak s.r.o. (SECZ)

Sale of electronic devices

100.0

Samsung Electronics Baltics SIA (SEB)

Sale of electronic devices

100.0

Samsung Electronics Greece S.M.S.A (SEGR)

Sale of electronic devices

100.0

Samsung Electronics Air Conditioner Europe B.V. (SEACE)

Sale of air conditioning products

100.0

Samsung Nanoradio Design Center (SNDC)

R&D

100.0

Samsung Denmark Research Center ApS (SDRC)

R&D

100.0

Samsung Cambridge Solution Centre Limited (SCSC)

R&D

100.0

SAMSUNG Zhilabs, S.L.

Development and sale of network solutions

100.0

Foodient Ltd.

R&D

100.0

Samsung Electronics Rus Company LLC (SERC)

Sale of electronic devices

100.0

Samsung Electronics Rus Kaluga LLC (SERK)

Manufacture of TV

100.0

Samsung Electronics Ukraine Company LLC (SEUC)

Sale of electronic devices

100.0

Samsung R&D Institute Ukraine (SRUKR)

R&D

100.0

Samsung Electronics Central Eurasia LLP (SECE)

Sale of electronic devices

100.0

Samsung Electronics Overseas B.V. (SEO)

Sale of electronic devices

100.0

Samsung R&D Institute Rus LLC (SRR)

R&D

100.0

Samsung Electronics Caucasus Co., Ltd. (SECC)

Marketing

100.0

Samsung Electronics Uzbekistan Ltd. (SEUZ)

Marketing

100.0

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

-18-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

Europe &

CIS

AKG Acoustics GmbH

Manufacture and sale of audio products

100.0

Apostera UA, LLC

Connected Service Provider

100.0

Harman Audio Iberia Espana Sociedad Limitada

Sale of audio products

100.0

Harman Automotive UK Limited

Manufacture of audio products

100.0

Harman Becker Automotive Systems GmbH

Manufacture and sale of audio products, R&D

100.0

Harman Becker Automotive Systems Italy S.R.L.

Sale of audio products

100.0

Harman Becker Automotive Systems Manufacturing Kft

Manufacture of audio products, R&D

100.0

Harman Belgium SA

Sale of audio products

100.0

Harman Connected Services AB.

Connected service provider

100.0

Harman Finland Oy

Connected service provider

100.0

Harman Connected Services GmbH

Connected service provider

100.0

Harman Connected Services Poland Sp.zoo

Connected service provider

100.0

Harman Connected Services UK Ltd.

Connected service provider

100.0

Harman Consumer Nederland B.V.

Sale of audio products

100.0

Harman Deutschland GmbH

Sale of audio products

100.0

Harman Finance International GP S.a.r.l

Management of overseas subsidiaries

100.0

Harman France SNC

Sale of audio products

100.0

Harman Holding GmbH & Co. KG

Management company

100.0

Harman Hungary Financing Ltd.

Financing company

100.0

Harman Inc. & Co. KG

Management of overseas subsidiaries

100.0

Harman International Estonia OU

R&D

100.0

Harman International Industries Limited

Sale of audio products, R&D

100.0

Harman International Romania SRL

R&D

100.0

Harman Finance International, SCA

Financing company

100.0

Harman Management GmbH

Management of overseas subsidiaries

100.0

Harman Professional Kft

Manufacture of audio products, R&D

100.0

Harman Professional Denmark ApS

Sale of audio products, R&D

100.0

Red Bend Software Ltd.

Software design

100.0

Red Bend Software SAS

Software design

100.0

Studer Professional Audio GmbH

Sale of audio products, R&D

100.0

Harman Connected Services OOO

Connected service provider

100.0

Harman RUS CIS LLC

Sale of audio products

100.0

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

-19-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

Middle East

& Africa

Samsung Gulf Electronics Co., Ltd. (SGE)

Sale of electronic devices

100.0

Samsung Electronics Turkiye (SETK)

Sale of electronic devices

100.0

Samsung Electronics Industry and Commerce Ltd. (SETK-P)

Manufacture of electronic devices

100.0

Samsung Electronics Levant Co.,Ltd. (SELV)

Sale of electronic devices

100.0

Samsung Electronics Maghreb Arab (SEMAG)

Sale of electronic devices

100.0

Samsung Electronics Egypt S.A.E (SEEG)

Manufacture and sale of electronic devices

100.0

Samsung Electronics Israel Ltd. (SEIL)

Marketing

100.0

Samsung Electronics Tunisia S.A.R.L (SETN)

Marketing

100.0

Samsung Electronics Pakistan (Private) Ltd. (SEPAK)

Marketing

100.0

Samsung Electronics Saudi Arabia Ltd. (SESAR)

Sale of electronic devices

100.0

Samsung Semiconductor Israel R&D Center, Ltd. (SIRC)

R&D

100.0

Corephotonics Ltd.

R&D

100.0

Samsung Electronics South Africa (Pty) Ltd. (SSA)

Sale of electronic devices

100.0

Samsung Electronics South Africa Production (Pty) Ltd. (SSAP)

Manufacture of TV and monitors

100.0

Samsung Electronics West Africa Ltd. (SEWA)

Marketing

100.0

Samsung Electronics East Africa Ltd. (SEEA)

Marketing

100.0

Global Symphony Technology Group Private Ltd.

Management of overseas subsidiaries

100.0

Harman Connected Services Morocco

Connected service provider

100.0

Harman Industries Holdings Mauritius Ltd.

Management of overseas subsidiaries

100.0

Red Bend Ltd.

Manufacture of audio products

100.0

Asia

(Excluding

China)

Samsung Asia Pte. Ltd. (SAPL)

Management of overseas subsidiaries

100.0

Samsung Electronics Singapore Pte. Ltd. (SESP)

Sale of electronic devices

100.0

Samsung Malaysia Electronics (SME) Sdn. Bhd. (SME)

Sale of electronic devices

100.0

Samsung Electronics Display (M) Sdn. Bhd. (SDMA)

Manufacture of electronic devices

100.0

Samsung Electronics (M) Sdn. Bhd. (SEMA)

Manufacture of home appliances

100.0

Samsung Vina Electronics Co., Ltd. (SAVINA)

Sale of electronic devices

100.0

Samsung Electronics Vietnam Co., Ltd. (SEV)

Manufacture of electronic devices

100.0

Samsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT)

Manufacture of communication equipment

100.0

Samsung Electronics HCMC CE Complex Co., Ltd. (SEHC)

Manufacture and sale of electronic devices

100.0

Samsung Display Vietnam Co., Ltd. (SDV)

Manufacture of display panels

100.0

DOWOOINSYS VINA COMPANY LIMITED

Manufacture of display components

100.0

PT Samsung Electronics Indonesia (SEIN)

Manufacture and sale of electronic devices

100.0

PT Samsung Telecommunications Indonesia (STIN)

Sale of electronic devices and services

100.0

Thai Samsung Electronics Co., Ltd. (TSE)

Manufacture and sale of electronic devices

91.8

Laos Samsung Electronics Sole Co., Ltd. (LSE)

Marketing

100.0

Samsung Electronics Philippines Corporation (SEPCO)

Sale of electronic devices

100.0

Samsung Electronics Australia Pty. Ltd. (SEAU)

Sale of electronic devices

100.0

Samsung Electronics New Zealand Limited (SENZ)

Sale of electronic devices

100.0

Samsung India Electronics Private Ltd. (SIEL)

Manufacture and sale of electronic devices

100.0

Red Brick Lane Marketing Solutions Pvt. Ltd.

Marketing

100.0

Samsung Display Noida Private Limited (SDN)

Manufacture of display panels

100.0

Samsung R&D Institute India-Bangalore Private Limited (SRI-B)

R&D

100.0

Samsung R&D Institute BanglaDesh Limited (SRBD)

R&D

100.0

Samsung Nepal Services Pvt, Ltd. (SNSL)

Service

100.0

Samsung Japan Corporation (SJC)

Sale of semiconductor and display panels

100.0

Ownership represents the Company’s ownership of the voting

rights in each entity, including subsidiaries’ ownerships.

-20-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

Asia

(Excluding

China)

Samsung R&D Institute Japan Co., Ltd. (SRJ)

R&D

100.0

Samsung Electronics Japan Co., Ltd. (SEJ)

Sale of electronic devices

100.0

Harman International Industries PTY Ltd.

Management of overseas subsidiaries

100.0

Harman Connected Services Corp. India Pvt. Ltd.

Connected service provider

100.0

Harman International (India) Private Limited

Sale of audio products, R&D

100.0

Harman International Japan Co., Ltd.

Sale of audio products, R&D

100.0

Harman Singapore Pte. Ltd.

Sale of audio products

100.0

China

Samsung (CHINA) Investment Co., Ltd. (SCIC)

Sale of electronic devices

100.0

Samsung Electronics Hong Kong Co., Ltd. (SEHK)

Sale of electronic devices

100.0

Samsung Electronics Taiwan Co., Ltd. (SET)

Sale of electronic devices

100.0

Tianjin Samsung Electronics Co., Ltd. (TSEC)

Manufacture of TV and monitors

91.2

Suzhou Samsung Electronics Co., Ltd. (SSEC)

Manufacture of home appliances

88.3

Samsung Suzhou Electronics Export Co., Ltd. (SSEC-E)

Manufacture of home appliances

100.0

Samsung Electronics Suzhou Computer Co., Ltd. (SESC)

R&D

100.0

Tianjin Samsung Telecom Technology Co., Ltd. (TSTC)

Manufacture of communication equipment

90.0

Beijing Samsung Telecom R&D Center (SRC-Beijing)

R&D

100.0

Samsung Electronics China R&D Center (SRC-Nanjing)

R&D

100.0

Samsung Mobile R&D Center China-Guangzhou (SRC-Guangzhou)

R&D

100.0

Samsung R&D Institute China-Shenzhen (SRC-Shenzhen)

R&D

100.0

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

Sale of semiconductor and display panels

100.0

Samsung (China) Semiconductor Co., Ltd. (SCS)

Manufacture of semiconductors

100.0

Samsung SemiConductor Xian Co., Ltd. (SSCX)

Sale of semiconductor and display panels

100.0

Samsung Electronics Suzhou Semiconductor Co., Ltd. (SESS)

Toll processing of semiconductors

100.0

Tianjin Samsung LED Co., Ltd. (TSLED)

Manufacture of LED

100.0

Samsung Semiconductor (China) R&D Co., Ltd. (SSCR)

R&D

100.0

Samsung Display Dongguan Co., Ltd. (SDD)

Manufacture of display panels

100.0

Samsung Display Tianjin Co., Ltd. (SDT)

Manufacture of display panels

95.0

SEMES (XIAN) Co., Ltd.

Semiconductor equipment services

100.0

Samsung Semiconductor Investment L.P.

Technology business, Venture capital investments

99.0

Harman (China) Technologies Co., Ltd.

Manufacture of audio products

100.0

Harman (Suzhou) Audio and Infotainment Systems Co., Ltd.

Sale of audio products

100.0

Harman Automotive Electronic Systems (Suzhou) Co., Ltd.

Manufacture of audio products, R&D

100.0

Harman Commercial (Shanghai) Co., Ltd.

Sale of audio products

100.0

Harman Connected Services Solutions (Chengdu) Co., Ltd.

Connected service provider

100.0

Harman Holding Limited

Sale of audio products

100.0

Harman International (China) Holdings Co., Ltd.

Sale of audio products, R&D

100.0

Harman Technology (Shenzhen) Co., Ltd.

Sale of audio products, R&D

100.0

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

-21-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

Domestic

Samsung Display Co., Ltd.

Manufacture and sale of display panels

84.8

SU Materials

Manufacture of display components

50.0

STECO Co., Ltd.

Manufacture of semiconductor components

70.0

SEMES Co., Ltd.

Manufacture and sale of semiconductor/FPD

91.5

Samsung Electronics Service Co., Ltd.

Repair services for electronic devices

99.3

Samsung Electronics Service Customer Satisfaction Co., Ltd.

Call center for repair services for electronic devices

100.0

Samsung Electronics Sales Co., Ltd.

Sale of electronic devices

100.0

Samsung Electronics Logitech Co., Ltd.

General logistics agency

100.0

Samsung Medison Co., Ltd.

Manufacture and sale of medical equipment

68.5

Stella Forest of Hope

Manufacture of food

100.0

Mirero System Co., Ltd.

Development and supply of semiconductor

process defect and quality control software

99.9

Dowooinssys Co., Ltd.

Manufacture of display components

69.0

Gf-System Co., Ltd.

Manufacture of display components

100.0

Harman International Korea

Software development and supply, etc.

100.0

Samsung Venture Capital Union #21

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #22

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #26

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #28

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #29

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #32

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #33

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #37

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #40

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #42

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #43

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #45

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #48

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #52

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #55

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #56

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #57

Technology business, Venture capital investments

99.0

Growth type private equity trust specialized in semiconductors

Investment on semiconductor industry

66.7

System LSI Mutual benefit private equity trust

Investment on semiconductor industry

62.5

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

-22-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.3 Summary of Financial Data of Major Consolidated Subsidiaries

Summary of financial data of major consolidated subsidiaries is as follows:

(1)

2022

(In millions of Korean won)

As of December 31, 2022

For the year ended December 31, 2022

Major subsidiaries

Assets

Liabilities

Sales

Profit (loss)

for the year

Samsung Display

57,302,567

7,282,718

30,779,405

4,365,588

Samsung Electronics America, Inc. (SEA)

37,883,156

12,258,315

46,738,920

219,670

Samsung Asia Pte. Ltd. (SAPL)

26,894,611

2,678,285

8,699,679

Harman and its subsidiaries

17,102,324

6,380,456

13,211,151

631,019

Samsung (China) Semiconductor Co., Ltd. (SCS)

17,095,000

2,970,835

9,679,757

638,385

Samsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT)

15,718,299

2,358,140

36,336,963

2,721,701

Samsung (CHINA) Investment Co., Ltd. (SCIC)

13,830,988

9,764,636

2,865,831

257,878

Samsung Semiconductor, Inc. (SSI)

12,199,102

5,930,369

43,009,331

88,467

Samsung Electronics Vietnam Co., Ltd. (SEV)

10,931,037

1,408,387

23,667,565

1,646,165

Samsung Electronics Europe Holding Cooperatief U.A. (SEEH)

10,841,515

6,272,800

57,997

Samsung Austin Semiconductor LLC. (SAS)

9,301,017

828,494

3,663,909

208,879

Samsung Display Vietnam Co., Ltd. (SDV)

7,471,680

1,608,448

25,773,970

1,301,926

Samsung India Electronics Private Ltd. (SIEL)

6,772,537

3,571,863

16,180,492

508,510

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

5,067,891

2,858,382

21,370,622

318,578

Samsung Eletronica da Amazonia Ltda. (SEDA)

4,600,508

1,342,517

7,485,104

(38,490)

Samsung Electronics HCMC CE Complex Co., Ltd. (SEHC)

3,732,057

980,448

6,253,401

386,119

Thai Samsung Electronics Co., Ltd. (TSE)

3,263,473

486,820

4,824,734

168,524

Samsung Electronics (UK) Ltd. (SEUK)

2,819,792

1,708,064

5,929,357

243,396

Samsung Electronics Benelux B.V. (SEBN)

2,377,730

597,044

2,834,008

25,411

Samsung Electronics Hungarian Private Co. Ltd. (SEH)

2,374,317

452,628

3,935,745

199,742

Samsung Electronics Europe Logistics B.V. (SELS)

2,194,975

2,021,491

15,409,984

20,347

Samsung Display Dongguan Co., Ltd. (SDD)

2,135,132

265,835

2,556,608

111,643

SEMES Co., Ltd.

2,065,558

602,323

2,889,238

185,762

Samsung Electronics GmbH (SEG)

1,968,273

1,907,132

6,567,011

3,695

Samsung Electronics Mexico S.A. De C.V. (SEM)

1,816,895

996,002

3,270,016

110,386

Summary of condensed financial information is based on separate financial statements of each subsidiary.

Consolidated financial data of an intermediate company that includes Harman International Industries, Inc. and its subsidiaries.

-23-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(2)

2021

(In millions of Korean won)

As of December 31, 2021

For the year ended December 31, 2021

Major subsidiaries

Assets

Liabilities

Sales

Profit (loss)

for the year

Samsung Display

54,967,156

9,081,737

28,755,975

2,770,060

Samsung Electronics America, Inc. (SEA)

42,982,054

19,246,751

42,325,524

823,914

Samsung (China) Semiconductor Co., Ltd. (SCS)

19,049,536

5,168,738

7,341,018

1,708,832

Samsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT)

17,521,446

3,425,127

32,184,024

2,298,273

Harman and its subsidiaries

15,887,380

6,104,012

10,015,092

357,612

Samsung Asia Pte. Ltd. (SAPL)

14,683,789

58,381

4,668,478

Samsung Electronics Europe Holding Cooperatief U.A. (SEEH)

14,651,496

8,998,502

24,527

Samsung Semiconductor, Inc. (SSI)

13,744,799

7,955,060

33,895,805

74,531

Samsung (CHINA) Investment Co., Ltd. (SCIC)

13,599,093

9,685,278

2,615,685

451,062

Samsung Electronics Vietnam Co., Ltd. (SEV)

13,023,272

2,085,411

21,583,038

1,455,704

Samsung Austin Semiconductor LLC (SAS)

8,705,085

958,537

3,703,472

759,206

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

7,765,126

5,799,690

31,326,186

325,397

Samsung India Electronics Private Ltd. (SIEL)

7,765,019

3,236,745

12,222,643

522,672

Samsung Display Vietnam Co., Ltd. (SDV)

6,821,066

2,486,703

21,722,446

981,311

Samsung Eletronica da Amazonia Ltda. (SEDA)

4,589,505

1,671,097

6,020,523

490,202

Samsung Electronics HCMC CE Complex Co., Ltd. (SEHC)

3,129,104

919,721

6,551,242

472,666

Thai Samsung Electronics Co., Ltd. (TSE)

3,018,358

474,223

4,443,031

142,191

Samsung Electronics (UK) Ltd. (SEUK)

2,925,062

1,992,367

5,621,922

241,403

Samsung Electronics Benelux B.V. (SEBN)

2,612,357

766,034

2,569,603

284,816

Samsung Electronics Hungarian Private Co., Ltd. (SEH)

2,504,075

641,004

4,357,137

157,616

Samsung Electronics Europe Logistics B.V. (SELS)

2,305,275

2,144,805

14,700,517

13,943

Samsung Electronics GmbH (SEG)

2,289,391

2,228,650

6,385,080

2,158

Samsung Display Dongguan Co., Ltd. (SDD)

2,149,277

339,425

3,987,674

163,637

Samsung International, Inc. (SII)

2,125,719

1,041,168

7,948,982

105,444

Samsung Electronics Taiwan Co., Ltd. (SET)

2,033,992

1,459,353

5,638,204

50,966

Summary of condensed financial information is based on separate financial statements of each subsidiary.

Consolidated financial data of an intermediate company that includes Harman International Industries, Inc. and its subsidiaries.

-24-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.4 Changes in Consolidation Scope

Changes in consolidation scope during the year ended December 31, 2022 are as follows:

Change

Area

Subsidiary

Description

Included

Europe & CIS

Samsung R&D Institute Ukraine (SRUKR)

Establishment

Samsung Electronics Uzbekistan Ltd. (SEUZ)

Establishment

Apostera GmbH

Acquisition

Apostera UA, LLC

Acquisition

Asia

(Excluding China)

DOWOOINSYS VINA COMPANY LIMITED

Establishment

Red Brick Lane Marketing Solutions Pvt. Ltd.

Acquisition

Domestic

Samsung Venture Capital Union #57

Establishment

Stella Forest of Hope

Establishment

Excluded

America

Dacor Canada Co.

Liquidation

Europe & CIS

AMX UK Limited

Liquidation

Harman International s.r.o

Liquidation

Apostera GmbH

Merger

2. Significant Accounting Policies

2.1 Basis of Presentation

The principal accounting policies used to prepare the consolidated financial statements are set out below. Except for the effect

of the amendments to the Korean IFRS and new interpretations set out below, the principal accounting policies used to prepare

the consolidated financial statements as of and for the year ended December 31, 2022 are consistent with those used to prepare

the consolidated financial statements as of and for the year ended December 31, 2021.

The Company maintains its accounting records in Korean won and prepares the statutory financial statements in Korean

language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea

(“Korean IFRS”).

The accompanying consolidated financial statements have been restructured, and translated into English

from the Korean language financial statements.

Certain information attached to the Korean language financial statements that are not required for a fair presentation of the

Company’s

financial position, financial performance or cash flows, are not presented in the accompanying consolidated

financial statements.

The consolidated financial statements of the Company have been prepared in accordance with Korean IFRS. These are the

standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board (IASB)

that have been adopted by the Republic of Korea.

Korean IFRS permits the use of critical accounting estimates in the preparation of the consolidated financial statements and

requires management judgments in applying the accounting policies. The areas involving a higher degree of judgment or

complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in

Note 3.

-25-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.2 Changes in Accounting Policies and Disclosures

(A)

New and amended standards adopted by the Company

The Company applied the following amended and/or enacted standards for the first time for their annual reporting period

commencing on January 1, 2022:

Amendments to Korean IFRS 1116, Lease

The amendments to Korean IFRS 1116 introduced a practical expedient that provided practical relief to lessees in accounting

for rent concessions occurring as a direct consequence of COVID-19. The amendments extend the practical expedient to apply

to reduction in lease payments originally due on or before June 30, 2022. The application of amendments does not have a

significant impact on the Company’s

year-end consolidated financial statements.

Amendments to Korean IFRS 1103, Business Combinations

The amendments update Korean IFRS 1103 so that it refers to the amended conceptual framework for financial reporting for

assets and liabilities recognized upon business combination, along with adding requirement that for transactions and other

events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 to identify the liabilities it has assumed

in a business combination. The amendments also add an explicit statement that an acquirer does not recognize contingent

assets acquired in a business combination. The application of amendments does not have a significant impact on the

Company’s

year-end consolidated financial statements.

Amendments to Korean IFRS 1016, Property, Plant and Equipment

The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items

produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner

intended by management. Instead, an entity recognizes the proceeds from selling such items, and the cost of producing those

items, in profit or loss. The application of amendments does not have a significant impact on the Company’s

year-end

consolidated financial statements.

Amendments to Korean IFRS 1037, Provisions, Contingent Liabilities and Contingent Assets

The amendments specify that the cost of fulfilling a contract comprises the costs that relate directly to the contract, and that

costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract and an allocation of other

costs that relate directly to fulfilling contracts.

The application of the amendments does not have a significant impact on the

Company’s

year-end consolidated financial statements.

-26-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(B)

New and amended standards not yet adopted by the Company

The amended accounting standards issued that are not mandatory for the annual reporting periods commencing on January 1,

2022 and has not been early adopted by the Company are as follows:

Amendments to Korean IFRS 1001 Presentation of Financial Statements

The amendments clarify that the classification of liabilities as current or non-current is based on the rights that are in existence

at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise

its right to defer settlement of a liability, and elucidate that settlement refers to the transfer to the counterparty of cash, equity

instruments, other assets or services. The amendments are effective for annual reporting periods beginning on or after January

1, 2023, with earlier application permitted.

Amendments to Korean IFRS 1001 Presentation of Financial Statements

The amendments require companies to define and disclose their 'material' accounting policy information instead of its

'significant' accounting policies. The amendments explain how an entity can identify material accounting policy information.

The amendments to K-IFRS 1001 are effective for annual periods beginning on or after January 1, 2023, with earlier

application permitted and are applied prospectively.

Amendments to Korean IFRS 1008 Accounting Policies, Changes in Accounting Estimates and Errors

The amendments clarify the definition of a change in accounting estimates, and specify how to distinguish from a change in

accounting policies. The amendments are effective for annual periods beginning on or after January, 1 2023 to changes in

accounting policies and changes in accounting estimates that occur on or after the beginning of that period, with earlier

application permitted.

Amendments to Korean IFRS 1012, Income Taxes

The amendments add to the initial recognition exemption that the initial recognition exemption does not apply to transactions

in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The amendments are

effective for annual reporting periods beginning on or after January 1, 2023, with earlier application permitted.

-27-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.3 Consolidation

The Company prepares the consolidated financial statements in accordance with Korean IFRS 1110

Consolidated Financial

Statements.

(A)

Subsidiaries

Subsidiaries are all entities (including the special purpose entities) over which the Company has control. The Company

controls the corresponding investee when it is exposed, or has rights, to variable returns from its involvement with the investee

and has the ability to affect those returns through its power over the investee. Consolidation of a subsidiary begins from the

date the Company obtains control of a subsidiary and ceases when the Company loses control of the subsidiary.

The Company applies the acquisition method to account for business combinations. The consideration transferred is measured

at the fair values of the assets transferred, and identifiable assets acquired and liabilities and contingent liabilities assumed in

a business combination are initially measured at their fair values at the acquisition date. The Company recognizes any non-

controlling interest in the acquiree on an acquisition-by-acquisition basis in the event of liquidation at the non-controlling

interest’s proportionate share of the recognized amounts of acquiree’s identifiable net assets. Acquisition

-related costs are

expensed as incurred.

The excess of consideration transferred, of any non-controlling interest in the acquired entity, and acquisition-date fair value

of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as

goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is

recognized directly in the profit or loss as a bargain purchase.

Balances of receivables and payables, income and expenses and unrealized gains or losses on transactions between the entities

within the Company are eliminated. Accounting policies of subsidiaries are changed where necessary to ensure consistency

with the policies adopted by the Company.

(B)

Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions

–

that

is, as transactions with the owners in their capacity as owners. The difference between the fair value of any consideration paid

and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on

disposals of non-controlling interests are also recorded in equity.

(C)

Disposal of subsidiaries

If the Company loses control of a subsidiary, any investment continuously retained in the subsidiary is re-measured at its fair

value at the date when control is lost and any resulting differences are recognized in profit or loss. Such fair value becomes

the initial carrying amount for the subsequent measurement of the retained interest accounted for as an associate, joint venture,

or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of such entity are

accounted as if the Company had directly disposed of the related assets or liabilities. As a result, the previously recognized

other comprehensive income are reclassified into profit or loss or equity.

(D)

Non-controlling interests

Each component of profit or loss and other comprehensive income is attributed to owners of the parent and to non-controlling

interests. Total comprehensive income is attributed to owners of the parent and to non-controlling interests even if this results

in a negative balance of non-controlling interests.

-28-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(E)

Associates

Associates are all entities over which the Company has significant influence but does not have control, generally investees of

which from 20% to 50% voting shares are owned by the Company. Investments in associates are accounted for using the

equity method of accounting, after initially being recognized at cost. Unrealized gains on transactions between the Company

and its associates are eliminated to the extent of the Company’s interest in the associates. If the Company’s share of losses of

an associate equals or exceeds its interest in the associate (including long-term interests that, in substance, form part of the

Company’s net investment in the associate), the Company discontinues recogni

zing its share of further losses. After the

Company’s interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent

that

the Company has incurred legal or constructive obligations or made payments on behalf of the associate. If there is objective

evidence of impairment for the investment in the associate, the Company recognizes the difference between the recoverable

amount of the associate and its carrying amount as an impairment loss. If an associate uses accounting policies other than

those of the Company for like transactions and events in similar circumstances, adjustments shall be made, if necessary, to

make the associate’s accounting policies conform to those of the Company when the associate’s finan

cial statements are used

by the entity in applying the equity method.

(F)

Joint arrangements

A joint arrangement of which two or more parties have joint control is classified as either a joint operation or a joint venture.

A joint operator has rights to the assets, and obligations for the liabilities, relating to the joint operation and recognizes the

assets, liabilities, revenues and expenses relating to its interest in a joint operation. A joint venturer has rights to the net assets

relating to the joint venture and accounts for that investment using the equity method.

2.4 Foreign Currency Translation

(A)

Functional and presentation currency

Items included in the consolidated financial statements of each of

the Company’s

entities are measured using the currency of

the primary economic environment in which each entity operates

(the “functional currency”). The consolidated financial

statements are presented in Korean won, which is the parent company

’

s functional and presentation currency.

(B)

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the

transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of

such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign

currencies are recognized in profit or loss. Exchange differences arising on non-monetary financial assets and liabilities such

as equity instruments at fair value through profit or loss and equity instruments at fair value through other comprehensive

income are recognized in profit or loss and other comprehensive income, respectively, as part of the fair value gain or loss.

(C)

Translation into the presentation currency

The results and financial position of all the foreign entities that have a functional currency different from the presentation

currency of the Company are translated into the presentation currency as follows:



Assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate at

the end of the reporting date.



Income and expenses for each consolidated statement of profit or loss are translated at average exchange rates, unless

this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates,

in which case income and expenses are translated at the as-of rate on the dates of the transactions.



All resulting exchange differences are recognized in other comprehensive income.

-29-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.5 Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, and other short-term investment assets with

high liquidity that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

2.6 Financial Assets

(A)

Classification

From January 1, 2018, the initial application date for Korean IFRS 1109

Financial Instruments,

the Company classifies its

financial assets in the following measurement categories:

Financial assets measured at fair value (changes in fair value recognized in either other comprehensive income, or profit or loss)

Financial assets measured at amortized cost.

The classification depends on the Company’s business model for managing the financial assets and the contractual

terms of

the cash flows.

For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive

income. For investments in debt instruments, this will depend on the business model in which the investment is held. The

Company reclassifies debt investments only when its business model for managing those assets changes.

For investments in equity instruments that are not held for trading, classification will depend on whether the Company has

made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other

comprehensive income. Changes in fair value of the investments in equity instruments that are not elected to be accounted for

as other comprehensive income are recognized in profit or loss.

(B)

Measurement

At initial recognition, the Company measures a financial asset at its fair value. In the case of financial asset not measured at

fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset or the

issuance of the financial liabilities are added to its fair value. Transaction costs of financial assets carried at fair value through

profit or loss are expensed in profit or loss.

Hybrid (combined) contracts with embedded derivatives are considered in their entirety when determining whether their cash

flows solely consist of the payments of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash

flow characteristics of the asset. The Company classifies its debt instruments into one of the following three measurement

categories:

①

Financial assets measured at amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely the payments of principal

and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized

cost and is not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest

income from these financial assets is included in ‘financial income’ using the effective interest rate method.

-30-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

②

Financial assets measured at fair value through other comprehensive income

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash fl

ows

represent solely the payments of principal and interest, are measured at fair value through other comprehensive income.

Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment

loss (reversal of impairment loss), interest income and foreign exchange gains and losses which are recognized in profit or

loss. When the financial assets are derecognized, the cumulative gain or loss previously recognized in other comprehensive

income is reclassified from equity to profit or loss. Interest income from these financial assets is included in ‘financial income’

using the effective

interest rate method. Foreign exchange gains and losses are presented in ‘financial income’ or ‘financial

expenses’ and impairment losses are presented in ‘other non

operating expenses’.

③

Financial assets measured at fair value through profit or loss

Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income are measured at fair

value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or

loss and is not part of a hedging relationship is recognized in profit or loss and presented in the consolidated statement of

profit or loss within ‘other non

operating income’ or ‘other non

operating expenses’ in the year in which it arises.

Equity instruments

The Company subsequently measures all equity investments at fair value. Where the Company’s management has elected to

present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent

reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. When the financial

asset is derecognized, the cumulative gain or loss on valuation of financial assets at fair value through other comprehensive

income recognized in equity is reclassified to retained earnings. Dividend income from such investments continue to be

recognized in profit or loss as ‘other non

operating income’ when the right to receive

the payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in ‘other non

operating income’

r ‘other non

operating expenses’ in the consolidated statement

s of profit or loss as applicable.

(C)

Impairment

The Company assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at

amortized cost and fair value through other comprehensive income. The impairment methodology applied depends on whether

there has been a significant increase in credit risk. For trade receivables, the Company applies the simplified approach, which

requires expected lifetime losses to be recognized from initial recognition of the receivables.

(D)

Recognition and derecognition

Regular way purchases and sales of financial assets are recognized or derecognized on a trade date basis. Financial assets are

derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the

Company has transferred substantially all the risks and rewards of ownership. If a transfer does not result in derecognition

because the Company has retained substantially all the risks and rewards of ownership of the transferred asset, the Company

continues to recognize the transferred asset in its entirety and recognizes a financial liability for the consideration received.

The Company classifies

the financial liability as ‘borrowings’ in the consolidated statement of financial position.

-31-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(E)

Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount is reported in the statements of financial position when there is a

legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets

and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be

enforceable in the normal course of business, even in the event of default, insolvency or bankruptcy of the Company or the

counterparty.

2.7 Trade Receivables

Trade receivables are amounts due from customers for inventories sold or services performed in the ordinary course of business.

If collection is expected within one year or less, they are classified as current assets. If collection is expected beyond one year,

they are presented as non-current assets. Trade receivables are recognized initially at transaction price and subsequently

measured at amortized cost using the effective interest method, less loss allowance, unless the trade receivables bear significant

financial component.

2.8 Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the average cost method, except

for materials in transit. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct

costs and related production overheads (based on normal operating capacity). It excludes costs of idle plant and abnormal

waste. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling

expenses.

The Company regularly estimates the changes in future customer demand in the products that may cause a significant change

in the valuation allowance and recognizes the valuation allowance if there is any case such as excess, obsolescence and decline

in market value. Loss on valuation of inventories is recorded as cost of sales.

2.9 Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Historical

cost includes expenditures that are

directly attributable to the acquisition. Subsequent costs are included in the asset’s carrying

amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated

with the cost will flow to the Company and the cost can be measured reliably. The carrying amounts of the replaced parts are

derecognized and the repairs and maintenance expenses are recognized in profit or loss in the period they are incurred.

Depreciation on tangible assets is calculated using the straight-line method to allocate the difference between their cost and

their residual values over their estimated useful lives. Land is not depreciated. Costs that are directly attributable to the

acquisition, construction or production of a qualifying asset, including capitalized interest costs, form part of the cost of that

asset and are amortized over the estimated useful lives.

The Company’s

policy is that property, plant and equipment should be depreciated over the following estimated useful lives:

Estimated useful lives

Buildings and structures

15, 30 years

Machinery and equipment

5 years

Other

5 years

-32-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The depreciation method, residual values and useful lives of property, plant and equipment are reviewed, and adjusted if

appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable

amount if the asset’s carrying amount is greater than its estimated r

ecoverable amount. Gains and losses on disposals are

determined by comparing the proceeds with the carrying amount and are recognized within the consolidated statement of

profit or loss as ‘other

non-operating

income’ or ‘other non

operating expenses’.

2.10 Borrowing Costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying

asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Investment

income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted

from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in which they are

incurred.

2.11 Intangible Assets

Goodwill represents the excess of the cost of acquisition over the fair value of

the Company’s

share of the net identifiable

assets of the acquired subsidiaries, associates, joint ventures and businesses at the date of acquisition. Goodwill on an

acquisition of businesses is included in intangible assets and goodwill on an acquisition of associates

and joint ventures’ shares

is included in the investments in associates and joint ventures.

Intangible assets, except for goodwill, are initially recognized at their historical cost and carried at cost less accumulated

amortization and accumulated impairment losses.

Internally generated development costs are the aggregate costs recognized after meeting the asset recognition criteria,

including technical feasibility, and determined to have future economic benefits. Membership rights and certain trademarks

are regarded as intangible assets with an indefinite useful life and not amortized because there is no foreseeable limit to the

period over which the assets are expected to be utilized. However, the Company records impairment based on its reasonable

estimation of the benefits associated with the membership rights and assessment of impairment indicators, such as a decline

in the market value. Intangible assets with definite useful lives such as trademarks, licenses, and other intangible assets, are

amortized using the straight-line method over their estimated useful lives.

The Company’s

policy is that intangible assets should be amortized over the following estimated useful lives:

Estimated useful lives

Development costs

2 years

Trademarks, licenses and other intangible assets

3 - 25 years

2.12 Impairment of Non-Financial Assets

Goodwill or intangible assets with indefinite useful lives are not subject to amortization and are tested annually for impairment.

Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that

the carrying amount may not be re

coverable. An impairment loss is recognized for the amount by which the asset’s carrying

amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and

value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately

identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are

reviewed for possible reversal of the impairment at the end of each reporting period.

-33-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.13 Assets Held-for-Sale (Disposal Group)

Non-current assets (or disposal groups) are classified as assets held-for-sale when their carrying amount is to be recovered

principally through a sale transaction and the sale is considered highly probable. The assets are measured at the lower of their

carrying amount and the fair value less costs to sell. Gain or loss on disposal is determined by comparing the proceeds with

the carrying amount of relevant assets, and is recognized in the

statements of profit or loss as ‘other non

operating income’

‘other non

operating expenses’.

2.14 Financial Liabilities

(A)

Classification and measurement

The Company shall classify all financial liabilities as financial liabilities measured subsequently at amortized cost, except for

the following:

Financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be

subsequently measured at fair value.

Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing

involvement approach applies. Such financial liabilities are measured based on the methodology described in Note 2.6

Financial Assets.

Financial guarantee contracts. After the initial recognition, an issuer of such a contract shall subsequently measure it at

the higher of:

(a)

The amount of the loss allowance determined based on the expected credit losses.

(b)

The amount initially recognized less the cumulative amount of income recognized in accordance with the principles

of Korean IFRS 1115

Revenue from Contracts with Customers,

when appropriate

Commitments to provide loan at below-market interest rate. An issuer of such a commitment shall subsequently measure

it at the higher of:

(a)

The amount of the loss allowance determined based on the expected credit losses.

(b)

The amount initially recognized less the cumulative amount of income recognized in accordance with the principles

of Korean IFRS 1115

Revenue from Contracts with Customers

, when appropriate

Contingent consideration recognized by an acquirer in a business combination to which Korean IFRS 1103

Business

Combinations

applies. Such contingent consideration shall subsequently be measured at fair value with changes

recognized in profit or loss.

(B)

Derecognition

Financial liabilities are removed from the consolidated statements of financial position when it is extinguished; for example,

when the obligation specified in the contract is discharged or cancelled or expired or when the terms of an existing financial

liability are substantially modified. The difference between the carrying amount of a financial liability extinguished or

transferred to another party and the consideration paid (including any non-cash assets transferred or liabilities assumed) is

recognized in profit or loss.

2.15 Trade Payables

Trade payables are amounts due to suppliers for inventories purchased or services received in the ordinary course of business.

If payment is expected to be made within 12 months, they are classified as current liabilities. If not, they are presented as non-

current liabilities. Non-current trade payables are recognized initially at fair value and subsequently measured at amortized

cost using the effective interest method.

-34-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.16 Borrowings

Borrowings are recognized initially at fair value, net of transaction costs, and are subsequently measured at amortized cost.

Any difference between cost and the redemption value is recognized in the consolidated statement of profit or loss over the

period of the borrowings using the effective interest method. If the Company has an indefinite right to defer payment for a

period longer than 12 months after the end of the reporting date, such liabilities are recorded as non-current liabilities,

otherwise, they are recorded as current liabilities.

2.17 Provisions and Contingent Liabilities

A provision is recognized when the Company has present legal or constructive obligation as a result of a past event, it is

probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable

estimate can be made of the amount of the obligation. Provisions are not recognized for future operating losses.

Provisions are measured at present value of the expenditures expected to be required to settle the obligation using a pre-tax

rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. The increase

in the provision due to the passage of time is recognized as interest expense.

The Company discloses a contingent liability if there is a possible obligation from past events in which the existence may only

be identified through the occurrence of uncertain future events; or there is a present obligations that the possibility on the

outflow of economic resources is uncertain; or the amount of economic resources required to settle the present obligation

cannot be reasonably estimated.

2.18 Employee Benefits

The Company has a variety of retirement pension plans including a defined benefit plan and a defined contribution plan.

A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate fund. The

Company has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay

all employees the benefits relating to employee service received in the current and prior periods. For a defined contribution

plans, the Company pays contributions to annuity plans that are managed either publicly or privately on a mandatory,

contractual or voluntary basis. The Company has no further future payment obligations once the contributions have been paid.

The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an

asset to the extent that a cash refund or a reduction in the future payments is available.

A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, a defined benefit plan establishes

an amount of pension benefit that an employee will receive upon retirement, usually dependent on one or more factors such

as age, years of service and compensation. The liability (asset) recognized in the consolidated statement of financial position

with respect to the defined benefit pension plan is the present value of the defined benefit obligation at the end of the reporting

period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using

the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated

future cash outflows using the interest rates of high-quality corporate bonds that are denominated in the currency in which the

benefits will be paid and that have the terms to maturity approximating to the terms of the related pension obligation.

Actuarial gains and losses resulting from the changes in actuarial assumptions, and the differences between the previous

actuarial assumptions and what has actually occurred, are recognized in other comprehensive income in the period in which

they were incurred. When plan amendments, curtailments and settlements occur, past service costs or gain or loss from

settlements are immediately recognized in profit or loss.

-35-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.19 Financial Guarantee Contract

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a

loss it incurs because a specified debtor fails to make payments when due.

The liability is initially measured at fair value and then subsequently measured at the higher of the following, and is recognized

in the consolidated statements of financial position within ‘other financial liabilities’:

the amount determined in accordance with the expected credit loss model and

the amount initially recognized less the cumulative amount of income recognized in accordance with Korean IFRS 1115

Revenue from Contracts with Customers

, where appropriate

2.20 Current and Deferred Tax

The tax expense for the year comprises current and deferred tax. Current and deferred tax is recognized in profit or loss, except

to the extent that it relates to the items recognized in other comprehensive income or directly in equity. The tax expense is

calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period.

Deferred tax is recognized for temporary differences arising between the tax bases of assets and liabilities and their carrying

amounts as expected tax consequences at the recovery or settlement of the carrying amounts of those assets and liabilities.

However, deferred tax assets and liabilities are not recognized if they arise from initial recognition of an asset or liability in a

transaction other than a business combination that, at the time of the transaction, affects neither the accounting nor taxable

profit. Deferred tax assets are recognized only to the extent that it is probable that a future taxable profit will be available

against which the temporary differences can be utilized.

A deferred tax liability is recognized for taxable temporary differences associated with investments in subsidiaries, associates,

and interests in joint ventures, except to the extent that the Company is able to control the timing of the reversal of the

temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. In addition, a

deferred tax asset is recognized for deductible temporary differences arising from such investments to the extent that it is

probable the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the

temporary difference can be utilized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset the current tax assets against the

current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation

authority on either the same taxable entity or different taxable entities with an intention to settle the balances on a net basis.

2.21 Derivative Instruments

The Company initially recognizes rights and obligations from derivative contracts as assets and liabilities at fair value. Gain

or loss arising from these contracts are recognized in profit or loss. Qualified hedged amount from cash flow hedge and hedge

of a net investment in a foreign operation is deferred in equity.

The Company applies cash flow hedge accounting to hedge the price risk associated with inventory purchase and other. The

effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges is recognized in

other comprehensive income, and the ineffective portion is recognized in financial income or expenses.

2.22 Dividend

Dividend is recognized as a liability when approved by the

Company’s

shareholders.

-36-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.23 Share Capital

Ordinary shares and preference shares with no repayment obligations are classified as equity. When the Company or a

subsidiary acquires

the Company’s ordinary shares, the acquisition costs, including direct transaction costs, are deducted from

equity until the redemption or reissuance as treasury shares. Consideration received on the reissuance of treasury shares is

credited to equity attributable to owners of the parent company.

2.24 Revenue Recognition

Revenue mainly comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary

course of

the Company’s

activities. Revenue is shown net of value-added tax, returns, sales incentives and discounts and after

eliminating intercompany transactions.

The Company applied Korean IFRS 1115

Revenue from Contracts with Customers

to the annual period beginning January 1,

2018. The Company shall recognize revenue in accordance with Korean IFRS 1115

Revenue from Contracts with Customers

by applying the following 5 steps:

①

Identify the contracts with the customers,

②

Identify the separate performance

obligations,

③

Determine the transaction price of the contract,

④

Allocate the transaction price to each of the separate

performance obligations, and

⑤

Recognize the revenue as each performance obligation is satisfied.

(A)

Identification of performance obligations

The Company exports various products and merchandise in accordance with Incoterms Group C trading conditions (Incoterms

CIF and other). Since the seller provides the shipping service after the control of the product or merchandise has been

transferred to the customer, the shipping service (including insurance) is recognized as a separate performance obligation.

(B)

Performance obligations satisfied over time

The Company delivers products to customers and installs them in accordance with the system air conditioner contracts awarded

by the Public Procurement Service. According to Korean IFRS 1115

Revenue from Contracts with Customers

the Company

should recognize revenue over time if the Company creates or enhances an asset (for example, work in progress) that the

customer controls as the asset is created or enhanced. The Company recognizes the revenue from system air conditioner

installation over time as the customer controls the outcome of the service.

(C)

Variable consideration

The Company estimates amount of variable consideration by using the

‘

expected value

method’

or the

‘

most likely amount

method

’

, depending on which method the Company expects to better predict the amount of consideration. The Company

recognizes revenue only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue

recognized will not occur, and classifies the amount which the Company does not expect to be entitled as contract liabilities.

The Company measures refund liability at the amount of consideration received for which the Company does not expect to be

entitled. The Company has a right to recover the product from the customer when the customer exercises his right of return

and recognizes an asset and a corresponding adjustment to cost of sales. The asset is measured with reference to the former

carrying amount of the product less the costs to recover the products.

(D)

Allocation of the transaction price

The transaction price in an arrangement must be allocated to each separate performance obligation based on the relative

standalone selling prices of the goods or services being provided to a customer. The Company determines the standalone

selling price for each separate performance obligation by using methods such as the ‘adjusted market assessment approach’.

-37-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.25 Leases

A lease is a contract, whereby the lessor conveys to the lessee, the right to control the use of an identified asset for a period

of time in exchange for consideration.

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. However, the Company did not

reassess all contracts at initial application of Korean IFRS 1116

Leases

because the Company applied the practical expedient

to contracts entered into before January 1, 2019.

For a contract that is, or contains, a lease, both lessee and lessor account for each lease component within the contract as a

lease separately from the non-lease components of the contract. In lessee accounting, however, the Company does not account

for them separately but instead applies the practical expedient to account for each lease component and any associated non-

lease components as a single lease component.

(A)

Lessee accounting

The Company recognizes a right-of-use asset representing its right to use the underlying leased asset and a lease liability

representing its obligation to make lease payments at the commencement date of the lease.

The right-of-use asset is initially measured at cost and subsequently measured at cost less accumulated depreciation and

accumulated impairment losses, adjusted for the remeasurement of lease liability. The right-of-use asset is depreciated over

the shorter of

the asset’s useful life and the lease term from the commencement date of the lease and is classified as ‘property,

plant and equipment’ in the

consolidated financial statements.

At the commencement date, the lease liability is measured at the present value of the lease payments that are not paid at that

date. When measuring the present value, the lease payments are discounted using the interest rate implicit in the lease. If such

implicit rate cannot be readily determined, the Company uses the Company’s

incremental borrowing rate. The lease liability

is subsequently increased by the amount of interest expenses recognized on the lease liability and reduced by the lease

payments made. Lease liabilities are remeasured when the future lease payments are changed due to the following:



Changes in an index or rate



Changes in amounts expected to be payable by the lessee under the residual value guarantees



Changes in the assessment of whether a purchase option or an option to renew is reasonably certain to be exercised, or



Changes in the assessment of whether it is reasonably certain that an option to terminate the lease will not be exercised.

Lease liabilities are classified as ‘current portion of long

term liabilities’

and/

or ‘long

term borrowings’ in the

consolidated

financial statements.

The Company elected the practical expedient for short-term leases (leases that have a lease term of 12 months or less at the

commencement date) and leases of low-value assets (leases for which the underlying asset is valued at USD 5,000 or less),

and the lease payments are recognized as an expense on a straight-line basis over the lease term.

(B)

Lessor accounting

The accounting treatment as a lessor did not change significantly from the Korean IFRS 1116

Leases

initially applied on

January 1, 2019.

The Company classifies a lease as a finance lease if it transfers substantially all the risks and rewards incidental to ownership

at the inception of the lease. A lease other than a finance lease is classified as an operating lease. Lease income from operating

leases is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred by the lessor in

negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized as an expense

over the lease term on the same basis as the lease income.

-38-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.26 Government Grants

Government grants are recognized at their fair values when there is reasonable assurance that the grant will be received and

the Company will comply with the conditions attached to it. Government grants relating to costs are deferred and recognized

in the consolidated statements of profit or loss over the period necessary to match the costs they are intended to compensate.

Government grants relating to assets are recognized in liabilities as deferred income government grants, and depreciated over

the expected lives of the related assets, and are credited to the consolidated statements of profit or loss.

2.27 Earnings per Share

Basic earnings per share is calculated by dividing the net profit for the period available to the ordinary shareholders by the

weighted-average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the profit for the year attributable to owners of the parent company from

the consolidated statements of profit or loss by the weighted-average number of ordinary shares outstanding and potential

dilutive shares. Potential dilutive shares are used in the calculation of dilutive earnings per share only when they have dilutive

effects.

2.28 Reportable Segments

Reportable segments are disclosed in a manner consistent with the reporting provided to the chief operating decision-maker.

The chief operating decision-maker is responsible for making strategic decisions on resource allocation and assessing

performance of the reportable segments. The Management Committee, which makes strategic decisions, is regarded as the

chief operating decision-maker.

2.29 Convenience Translation into United States Dollar Amounts

The Company operates primarily in Korean won and its official accounting records are maintained in Korean won. The US

dollar amounts provided in the consolidated financial statements represent supplementary information solely for the

convenience of the reader. All Korean won amounts are expressed in US dollar at the rate of W 1,291.1 to USD 1, the average

exchange rate for the year ended December 31, 2022. Such presentation is not in accordance with generally accepted

accounting principles, and should not be construed as a representation that the Korean won amounts shown could be readily

converted, realized or settled in US dollar at this or at any other rate.

2.30 Approval of the Consolidated Financial Statements

These consolidated financial statements were approved by the Board of Directors on January 31, 2023, and may be modified

and approved at the Annual General

Shareholders’

Meetings.

-39-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3. Critical Accounting Estimates and Assumptions

The Company makes estimates and assumptions concerning the future. The estimates and assumptions are continuously

assessed, considering historical experience and other factors, including expectations of future events that are believed to be

reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual

results. In particular, the spread of COVID-19 in the year ended December 31, 2020

may result in changes to the Company’s

assumptions and estimates but its potential financial impact cannot be reasonably estimated as of the reporting date.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets

and liabilities within the next financial year are addressed below.

(A)

Revenue recognition

A refund liability and a right to the returned goods are recognized for the products expected to be returned at the time of sale.

Accumulative experience is used to estimate such returns at the time of sale at a portfolio level (through expected value

method), and the Co

mpany’s revenue is affected by

the changes in expected return rate.

Sales of goods are recognized based on the considerations specified in the contract, net of sales incentives, when control of

the products has transferred. The sales deduction, which affects the Company’s revenue, is reasonably estimated based on

the

historical experience and past contracts.

(B)

Provision for warranty

The Company recognizes provision for warranty on products sold. The Company accrues provision for warranty based on the

best estimate of amounts necessary to settle future and existing claims at the end of each reporting period. The amounts are

estimated based on the past experience.

(C)

Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using a variety of methods and

assumptions that are mainly based on market conditions existing at the end of each reporting period.

(D)

Impairment of financial assets

The loss allowance for financial assets are based on assumptions about risk of default and expected loss rates. The Company

uses judgement in making these assu

mptions and selecting the inputs to the impairment calculation based on the Company’s

past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

(E)

Lease

In determining the lease term, the Company considers all facts and circumstances that create an economic incentive to exercise

an extension option, or not to exercise a termination option. Extension options (or periods after termination options) are only

included in the lease term if the lease is reasonably certain to be extended (or not terminated).

The lease term is reassessed if an option is actually exercised (or not exercised) or the Company becomes obliged to exercise

(or not exercise) it. The Company reassesses whether it is reasonably certain to exercise an extension option (or not to exercise

such option) upon the occurrence of either a significant event or a significant change in circumstances that is within the control

of the lessee.

-40-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(F)

Net defined benefit liabilities (assets)

The net defined benefit liabilities (assets) depend on a number of factors that are determined on an actuarial basis using a

number of assumptions including the discount rate. Any changes in these assumptions will impact the carrying amount of the

net defined benefit liability. The Company, in consideration of the interest rates of high-quality corporate bonds, determines

the appropriate discount rate at the end of each year. This is the interest rate that is used to determine the present value of

estimated future cash outflows expected to be required to settle the net defined benefit liabilities (assets). The principal

actuarial assumptions associated with the net defined benefit liabilities (assets) are based on the current market expectations.

(G)

Impairment of goodwill and intangible assets that have an indefinite useful life

At the end of each reporting period, the Company tests whether goodwill and intangible assets that have an indefinite useful

life have become impaired by comparing the carrying amounts of assets or cash-generating units to the recoverable amounts.

The recoverable amounts of assets or cash-generating units have been determined based on value-in-use calculations, and

these calculations are based on estimates.

(H)

Income taxes

Income taxes on the Company

’s

taxable income from operating activities are subject to various tax laws and determinations

of each tax authority across various countries throughout the world. There is uncertainty in determining the eventual tax effects

on the taxable income from operating activities. The Company has recognized current tax and deferred tax at the end of the

fiscal year based on the best estimate of future taxes payable as a result of operating activities. However, the resulting deferred

income tax assets and liabilities may not equal the actual future taxes payable and such difference may impact the current tax

and deferred income tax assets and liabilities upon the determination of eventual tax effects.

Regarding taxes payable in Korea, if a certain portion of taxable income is not used for investments or for increases in wages

or dividends, in accordance with the

Tax System For Recirculation of Corporate Income

, the Company is liable to pay

additional income tax calculated based on the Korean tax law. The current and deferred taxes at the end of the fiscal year are

based on the best estimate of future taxes payable, which can differ from the actual future taxes payable as a result of changes

in investments, wages and dividends; this results in an additional uncertainty in measuring the final tax effects.

The Company assesses uncertainty over a tax treatment. When the Company concludes it is not probable that the taxation

authority will accept an uncertain tax treatment, the Company will reflect the effect of uncertainty for each uncertain tax

treatment by using either of the following methods, depending on which method the Company expects to better predict the

resolution of the uncertainty:

The most likely amount: the single most likely amount in a range of possible outcomes.

The expected value: the sum of the probability-weighted amounts in a range of possible outcomes.

-41-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4. Financial Instruments by Category

(A) Categorizations of financial assets and liabilities as of December 31, 2022 and 2021 are as follows:

(1) As of December 31, 2022

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at fair

value through

other

comprehensive

income

Financial assets

measured at fair

value through

profit or loss

Other

financial assets

Total

Financial assets

Cash and cash equivalents

49,680,710

Short-term financial instruments

65,102,886

Short-term financial assets at

amortized cost

414,610

Short-term financial assets at

fair value through profit or loss

29,080

Trade receivables

35,721,563

Financial assets at fair value through

other comprehensive income

11,397,012

Financial assets at fair value through

profit or loss

1,405,468

Other

9,945,209

334,263

61,404

10,340,876

Total

160,864,978

11,397,012

1,768,811

61,404

174,092,205

Other financial assets include derivatives designated as hedging instruments which are not subject to categorizations.

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Financial liabilities

measured at

fair value through

profit or loss

Other financial

liabilities

Total

Financial liabilities

Trade payables

10,644,686

Short-term borrowings

1,577,958

3,569,357

5,147,315

Other payables

16,328,237

Current portion of long-term liabilities

215,143

874,019

1,089,162

Debentures

536,093

Long-term borrowings

33,846

3,526,826

3,560,672

Long-term other payables

2,289,236

Other

12,047,761

334,415

27,353

12,409,529

Total

43,672,960

334,415

7,997,555

52,004,930

Other financial liabilities include collateralized borrowings, lease liabilities and derivatives designated as hedging instruments,

which are not subject to categorizations.

-42-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(2) As of December 31, 2021

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at

fair value

through other

comprehensive

income

Financial assets

measured at

fair value

through profit

or loss

Other

financial assets

Total

Financial assets

Cash and cash equivalents

39,031,415

Short-term financial instruments

81,708,986

Short-term financial assets at

amortized cost

3,369,034

Short-term financial assets at

fair value through profit or loss

40,757

Trade receivables

40,713,415

Financial assets at fair value through

other comprehensive income

13,965,839

Financial assets at fair value through

profit or loss

1,525,344

Other

8,711,973

279,127

49,089

9,040,189

Total

173,534,823

13,965,839

1,845,228

49,089

189,394,979

Other financial assets include derivatives designated as hedging instruments which are not subject to categorizations.

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Financial liabilities

measured at

fair value through

profit or loss

Other financial

liabilities

Total

Financial liabilities

Trade payables

13,453,351

Short-term borrowings

2,131,692

11,556,101

13,687,793

Other payables

14,126,970

Current portion of long-term liabilities

518,065

811,903

1,329,968

Debentures

508,232

Long-term borrowings

1,500

2,864,656

2,866,156

Long-term other payables

2,562,158

Others

10,444,290

323,526

13,868

10,781,684

Total

43,746,258

323,526

15,246,528

59,316,312

Other financial liabilities include collateralized borrowings, lease liabilities, and derivatives designated as hedging instruments,

which are not subject to categorizations.

-43-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(B) Net gains or losses on each category of financial assets and liabilities for the years ended December 31, 2022 and 2021 are

as follows:

(1)

2022

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured

at fair value

through other

comprehensive

income

Financial assets

measured

at fair value

through

profit or loss

Other financial

assets

Total

Financial assets

Gain (loss) on valuation

(other comprehensive income)

(1,969,498)

53,180

(1,916,318)

Gain (loss) on valuation/disposal

(profit or loss)

(36,550)

83,332

474

47,256

Reclassification from

other comprehensive income

to profit or loss

310

Interest income

2,720,213

266

2,720,479

Foreign exchange differences

(profit or loss)

(822,011)

Dividend income

413,467

1,134

414,601

Impairment/reversal

(profit or loss)

(19,124)

Other financial assets include derivatives designated as hedging instruments which are not subject to categorizations.

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Financial liabilities

measured at

fair value through

profit or loss

Other financial

liabilities

Total

Financial liabilities

Gain (loss) on valuation

(other comprehensive income)

(10,621)

Gain (loss) on valuation/disposal

(profit or loss)

(91,056)

(45)

(91,101)

Reclassification from

other comprehensive income

to profit or loss

Interest expense

(322,529)

(440,486)

(763,015)

Foreign exchange differences

(profit or loss)

574,771

155,952

730,723

Other financial liabilities include collateralized borrowings, lease liabilities, and derivatives designated as hedging instruments,

which are not subject to categorizations.

-44-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(2)

2021

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured

at fair value

through other

comprehensive

income

Financial assets

measured

at fair value

through

profit or loss

Other financial

assets

Total

Financial assets

Gain (loss) on valuation

(other comprehensive income)

2,980,896

27,715

3,008,611

Gain (loss) on valuation/disposal

(profit or loss)

(1,969)

420,100

437

418,568

Reclassification from

other comprehensive income

to profit or loss

(148)

Interest income

1,278,051

227

1,278,278

Foreign exchange differences

(profit or loss)

29,834

Dividend income

133,532

2,308

135,840

Impairment/reversal

(profit or loss)

(27,194)

Other financial assets include derivatives designated as hedging instruments which are not subject to categorizations.

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Financial liabilities

measured at

fair value through

profit or loss

Other financial

liabilities

Total

Financial liabilities

Gain on valuation

(other comprehensive loss)

22,695

Gain (loss) on valuation/disposal

(profit or loss)

(65,368)

Reclassification from

other comprehensive income

to profit or loss

(121)

Interest expense

(213,477)

(218,063)

(431,540)

Foreign exchange differences

(profit or loss)

362,820

3,447

366,267

Other financial liabilities include collateralized borrowings, lease liabilities, and derivatives designated as hedging instruments,

which are not subject to categorizations.

-45-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5. Transfer of Financial Assets

Trade receivables of the Company have been discounted through factoring agreements with banks during the years ended

December 31, 2022 and 2021. Trade receivables provided as collaterals in such factoring transactions do not meet the

requirements for asset derecognition as risks and rewards are not

substantially transferred in the event of a debtor default due

to the recourse obligation, etc. Financial liabilities recognized in relation to these transaction

s are included as ‘short

-term

borrowings’

on the consolidated statements of financial position (refer to Note 12).

The following table presents a breakdown of discounted trade receivables as of December 31, 2022 and 2021:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Carrying amount of the discounted trade receivables

3,569,357

11,556,101

Carrying amount of the related borrowings

3,569,357

11,556,101

The discounted trade receivables include the intercompany balances.

6. Financial Assets at Fair Value

(A)

Details of financial assets at fair value as of December 31, 2022 and 2021 are as follows:

(1)

Financial assets at fair value through other comprehensive income

(In millions of Korean won)

December 31, 2022

December 31, 2021

Non-current portion

Equity instruments

11,397,012

13,965,839

(2)

Financial assets at fair value through profit or loss

(In millions of Korean won)

December 31, 2022

December 31, 2021

Current portion

Debt instruments

29,080

40,757

Non-current portion

Equity instruments

773,063

905,094

Debt instruments

632,405

620,250

Subtotal

1,405,468

1,525,344

Total

1,434,548

1,566,101

-46-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(B)

Changes in financial assets at fair value for the years ended December 31, 2022 and 2021 are as follows:

(1)

Financial assets at fair value through other comprehensive income

(In millions of Korean won)

2022

2021

Balance as of January 1

13,965,839

12,575,216

Acquisition

35,013

1,146,868

Disposal

(20,913)

(3,551,604)

Fair value valuation gain (loss)

(2,636,448)

3,653,253

Other

53,521

142,106

Balance as of December 31

11,397,012

13,965,839

(2)

Financial assets at fair value through profit or loss

(In millions of Korean won)

2022

2021

Balance as of January 1

1,525,344

1,202,969

Acquisition

158,244

208,262

Disposal

(80,718)

(142,406)

Fair value valuation gain (loss)

(198,594)

275,447

Other

1,192

(18,928)

Balance as of December 31

1,405,468

1,525,344

(C)

Changes in gain (loss) on valuation of financial assets at fair value through other comprehensive income for the years

ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

6,222,980

7,071,415

Fair value valuation gain (loss)

(2,636,448)

3,653,253

Reclassification to retained earnings due to disposals

49,946

(4,501,688)

Balance as of December 31

3,636,478

6,222,980

Income tax effects on equity and non-controlling interests

(887,369)

(1,606,341)

Total

2,749,109

4,616,639

-47-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(D)

Details of listed equity securities of financial assets at fair value as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won,

number of shares and percentage)

December 31, 2022

December 31, 2021

Number of

shares owned

Percentage of

ownership

(%)

Acquisition cost

Carrying amount

(Market value)

Carrying amount

(Market value)

Samsung Heavy Industries

134,027,281

15.2

932,158

684,879

759,935

Hotel Shilla

2,004,717

5.1

13,957

166,592

156,368

iMarket Korea

647,320

1.9

324

6,538

6,926

SFA

3,644,000

10.2

38,262

132,642

131,366

Wonik Holdings

3,518,342

4.6

30,821

13,536

17,521

Wonik IPS

3,701,872

7.5

32,428

91,621

156,589

ASML Holding N.V.

6,297,787

1.5

363,012

4,287,121

5,974,280

Wacom Co., Ltd.

8,398,400

5.1

62,013

46,750

79,256

BYD Company Limited

2,380,100

0.1

79,049

110,971

118,862

Corning Incorporated

80,000,000

9.5

3,980,636

3,238,205

3,530,893

Other

563,635

742,890

1,155,113

Total

6,096,295

9,521,745

12,087,109

Ownership represents the Company’s ownership of

the total ordinary shares issued by each entity.

7. Trade and Non-Trade Receivables

(A)

Trade and non-trade receivables as of December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Receivables

36,238,032

7,051,536

41,250,034

5,572,176

Less: Loss allowance

(312,221)

(78,101)

(310,880)

(72,805)

Subtotal

35,925,811

6,973,435

40,939,154

5,499,371

Less: Non-current portion

(204,248)

(824,226)

(225,739)

(1,002,114)

Current portion

35,721,563

6,149,209

40,713,415

4,497,257

(B)

Movements in the loss allowance for receivables for the years ended December 31, 2022 and 2021 are as follows:

2022

2021

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Balance as of January 1

310,880

72,805

318,731

59,487

Bad debt expense (reversal)

8,784

7,312

17,990

9,009

Write-off

(3,557)

(6,154)

(19,095)

(2,424)

Other

(3,886)

4,138

(6,746)

6,733

Balance as of December 31

312,221

78,101

310,880

72,805

-48-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(C)

The details of trade and non-trade receivables classified by past due date to measure expected credit losses as of

December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Receivables not past due

33,177,298

5,890,018

39,677,264

5,125,414

Past due

Less than 31 days overdue

2,206,622

981,889

1,229,479

196,783

31 days to 90 days overdue

642,859

52,972

36,545

51,804

Over 90 days overdue

211,253

126,657

306,746

198,175

Subtotal

3,060,734

1,161,518

1,572,770

446,762

Total

36,238,032

7,051,536

41,250,034

5,572,176

The Company does not consider trade and non-trade receivables that are overdue for less than or equal to 31 days as impaired.

(D)

The maximum exposure to current credit risk is equivalent to the carrying amount of receivables as of December 31,

2022. The Company

has in place insurance contracts covering the Company’s major receivables.

8. Inventories

Inventories as of December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

(In millions of Korean

won)

Gross

amount

Valuation

allowance

Carrying

amount

Gross

amount

Valuation

allowance

Carrying

amount

Finished goods

17,526,178

(1,493,952)

16,032,226

13,000,200

(719,621)

12,280,579

Work in process

21,612,965

(1,535,446)

20,077,519

13,967,331

(493,713)

13,473,618

Raw materials and supplies

16,268,974

(1,289,694)

14,979,280

14,864,486

(679,645)

14,184,841

Materials in transit

1,098,841

1,445,366

Total

56,506,958

(4,319,092)

52,187,866

43,277,383

(1,892,979)

41,384,404

The inventories recognized as expense for the year ended December 31, 2022, amount to W 186,396,549 million

(2021: W 164,319,031 million). The amount includes loss on valuation of inventories.

-49-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

9. Investments in Associates and Joint Ventures

(A)

Changes in investments in associates and joint ventures for the years ended December 31, 2022 and 2021 are as

follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

8,932,251

8,076,779

Acquisition

1,006,998

47,090

Disposal

(20,894)

(34,664)

Share of profit

1,090,643

729,614

Other

(115,129)

113,432

Balance as of December 31

10,893,869

8,932,251

Other consists of dividends, impairment, and reclassification.

(B)

Major investments in associates and joint ventures as of December 31, 2022 are as follows:

(1)

Investments in associates

Investee

Nature of relationship with associate

Percentage of

ownership (%)

Principal

business

location

Fiscal

period-end

Samsung Electro-

Mechanics Co., Ltd.

Manufacture and supply electronic components

including passive components, circuit boards,

and modules

23.7

Korea

December

Samsung SDS Co., Ltd.

Provide IT services including computer

programming, system integration and management

and logistical services

22.6

Korea

December

Samsung Biologics Co., Ltd.

New business investment

31.2

Korea

December

Samsung SDI Co., Ltd.

Manufacture and supply electronic components

including secondary cell batteries

19.6

Korea

December

Cheil Worldwide, Inc.

Advertising agency

25.2

Korea

December

Ownership represents the Company’s ownership of

the total ordinary shares issued by each entity.

The Company’s ownership of ordinary shares outstanding is 20.6%.

(2)

Investments in joint ventures

Investee

Nature of relationship with joint venture

Percentage of

ownership (%)

Principal

business

location

Fiscal

period-end

Samsung Corning

Advanced Glass, LLC

Manufacture and supply industrial glass devices

50.0

Korea

December

Ownership represents the Company’s ownership of

the total ordinary shares issued by each entity.

-50-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(C)

Details of investments in associates and joint ventures as of December 31, 2022 and 2021 are as follows:

(1)

Investments in associates

(In millions of Korean won)

December 31, 2022

Investee

Acquisition cost

Net asset value of

equity shares

Carrying amount

Samsung Electro-Mechanics

359,237

1,765,507

1,764,249

Samsung SDS

147,963

1,857,481

1,870,338

Samsung Biologics

1,424,358

2,804,547

2,808,673

Samsung SDI

1,242,605

3,318,875

2,691,223

Cheil Worldwide

506,162

347,510

649,161

Other

645,255

718,801

907,333

Total

4,325,580

10,812,721

10,690,977

The Company’s portion of net asset value of associates is based on the Company’s percentage of ownership.

(In millions of Korean won)

December 31, 2021

Investee

Acquisition cost

Net asset value of

equity shares

Carrying amount

Samsung Electro-Mechanics

359,237

1,573,570

1,556,386

Samsung SDS

147,963

1,632,847

1,652,155

Samsung Biologics

443,193

1,571,809

1,577,664

Samsung SDI

1,242,605

2,960,235

2,529,650

Cheil Worldwide

506,162

320,301

621,292

Other

644,903

578,547

793,748

Total

3,344,063

8,637,309

8,730,895

The Company’s portion of net asset value of associates is based on the Company’s percentage of ownership.

(2)

Investments in joint ventures

(In millions of Korean won)

December 31, 2022

Investee

Acquisition cost

Net asset value of

equity shares

Carrying amount

Samsung Corning Advanced Glass

215,000

137,727

137,745

Other

259,994

67,632

65,147

Total

474,994

205,359

202,892

The Company’s portion of net asset value of joint ventures is based on the Company’s percentage of ownership.

(In millions of Korean won)

December 31, 2021

Investee

Acquisition cost

Net asset value of

equity shares

Carrying amount

Samsung Corning Advanced Glass

215,000

135,584

135,580

Other

259,994

67,517

65,776

Total

474,994

203,101

201,356

The Company’s

portion of net asset value of joint ventures is based on the

Company’s

percentage of ownership.

-51-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(D)

Details of the valuation of investments in associates and joint ventures using the equity method are as follows:

(1)

For the year ended December 31, 2022

(In millions of Korean won)

Balance as of

January 1

Share of profit

(loss)

Share of other

comprehensive

income

Other

Balance as of

December 31

Samsung Electro-Mechanics

1,556,386

242,139

2,880

(37,156)

1,764,249

Samsung SDS

1,652,155

241,962

18,154

(41,933)

1,870,338

Samsung Biologics

1,577,664

250,028

(183)

981,164

2,808,673

Samsung SDI

2,529,650

194,242

(19,207)

(13,462)

2,691,223

Cheil Worldwide

621,292

55,476

1,140

(28,747)

649,161

Samsung Corning Advanced Glass

135,580

1,999

144

137,745

Other

859,524

104,797

(53,438)

61,597

972,480

Total

8,932,251

1,090,643

(50,510)

921,485

10,893,869

Other consists of acquisitions, disposals, dividends, impairment and

reclassification.

(2)

For the year ended December 31, 2021

(In millions of Korean won)

Balance as of

January 1

Share of profit

Share of other

comprehensive

income

Other

Balance as of

December 31

Samsung Electro-Mechanics

1,333,819

207,949

51,702

(37,084)

1,556,386

Samsung SDS

1,525,857

137,926

30,305

(41,933)

1,652,155

Samsung Biologics

1,453,012

124,979

(327)

1,577,664

Samsung SDI

2,326,037

128,483

88,594

(13,464)

2,529,650

Cheil Worldwide

586,057

47,619

12,008

(24,392)

621,292

Samsung Corning Advanced Glass

123,356

12,376

(129)

(23)

135,580

Other

728,641

70,282

29,826

30,775

859,524

Total

8,076,779

729,614

211,979

(86,121)

8,932,251

Other consists of acquisitions, disposals, dividends, impairment, and reclassification.

-52-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(E)

Summary of the condensed financial information of major associates and joint ventures

(1)

Summary of condensed financial information of major associates and dividends received from associates as of

December 31, 2022 and 2021, and for the years ended December 31, 2022 and 2021 are as follows:

2022

(In millions of Korean won)

Samsung

Electro-

Mechanics

Samsung

SDS

Samsung

Biologics

Samsung

SDI

Cheil

Worldwide

1. Condensed financial information

Condensed statements of financial position :

Current assets

4,888,319

8,005,764

6,457,657

9,651,702

2,193,979

Non-current assets

6,108,852

3,946,660

10,124,394

20,605,823

557,466

Current liabilities

2,525,123

2,493,323

4,181,542

8,006,939

1,335,643

Non-current liabilities

778,563

992,132

3,416,034

5,033,084

194,373

Non-controlling interests

154,991

243,777

731,779

9,388

Condensed statements of comprehensive income:

Revenue

9,441,276

17,234,750

3,001,295

20,124,070

4,253,367

Profit from continuing operations, net of tax

993,519

1,099,745

798,056

1,952,149

193,732

Profit from discontinued operation, net of tax

Other comprehensive income (loss)

(9,601)

80,368

6,995

(139,877)

(1,122)

Total comprehensive income

983,918

1,180,113

805,051

1,812,272

192,610

2. Details of adjustments from the carrying amount of investments in associates

Net assets (a)

7,538,494

8,223,192

8,984,475

16,485,723

1,212,041

Ownership percentage (b)

23.4%

22.6%

31.2%

20.1%

28.7%

Net assets of equity shares (a x b)

1,765,507

1,857,481

2,804,547

3,318,875

347,510

Goodwill

7,081

26,801

3,645

298,779

Intercompany transactions and other

(8,339)

(13,944)

481

(627,652)

2,872

Carrying amount of associates

1,764,249

1,870,338

2,808,673

2,691,223

649,161

3. Dividends from associates

Dividends

37,155

41,933

13,463

28,748

Profit (loss) attributable to owners of the investee

Ownership percentage includes ordinary and preference shares.

Consists of unrealized gains and losses and other differences.

-53-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2021

(In millions of Korean won)

Samsung

Electro-

Mechanics

Samsung SDS

Samsung

Biologics

Samsung

SDI

Cheil

Worldwide

1. Condensed financial information

Condensed statements of financial position:

Current assets

4,598,269

7,575,968

2,823,175

7,444,907

2,018,598

Non-current assets

5,343,105

2,941,464

5,146,835

18,388,286

523,513

Current liabilities

2,234,657

2,370,290

1,107,295

6,461,286

1,224,222

Non-current liabilities

835,592

703,442

1,871,614

4,175,208

190,622

Non-controlling interests

152,177

214,980

492,435

10,125

Condensed statements of comprehensive income:

Revenue

9,675,036

13,630,002

1,568,007

13,553,220

3,325,712

Profit from continuing operations, net of tax

1,055,411

611,171

393,589

1,169,801

165,485

Loss from discontinued operation, net of tax

(162,966)

Other comprehensive income (loss)

151,809

134,163

(1,270)

623,792

32,535

Total comprehensive income

1,044,254

745,334

392,319

1,793,593

198,020

2. Details of adjustments from the carrying amount of investments in associates

Net assets (a)

6,718,948

7,228,720

4,991,101

14,704,264

1,117,142

Ownership percentage (b)

23.40%

22.60%

31.50%

20.10%

28.70%

Net assets of equity shares (a x b)

1,573,570

1,632,847

1,571,809

2,960,235

320,301

Goodwill

7,081

26,801

3,645

298,779

Intercompany transactions and other

(24,265)

(7,493)

2,210

(430,585)

2,212

Carrying amount of associates

1,556,386

1,652,155

1,577,664

2,529,650

621,292

3. Dividends from associates

Dividends

24,770

41,933

13,463

24,392

Profit (loss) attributable to owners of the investee.

Ownership percentage includes ordinary and preference shares.

Consists of unrealized gains and losses and other differences.

-54-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(2)

Summary of condensed financial information of major joint ventures and dividends received from joint ventures as

of December 31, 2022 and 2021, and for the years ended December 31, 2022 and 2021 are as follows:

Samsung Corning Advanced Glass

(In millions of Korean won)

2022

2021

1. Condensed financial information

Condensed statements of financial position:

Current assets

170,103

163,083

Non-current assets

125,507

141,411

Current liabilities

19,794

31,779

Non-current liabilities

363

1,547

Condensed statements of comprehensive income:

Revenue

133,634

204,130

Profit from continuing operations, net of tax

3,998

24,753

Profit (loss) from discontinued operations, net of tax

Other comprehensive income (loss)

288

(305)

Total comprehensive income

4,286

24,448

2. Details of adjustments from the carrying amount of investments in joint ventures

Net assets (a)

275,453

271,168

Ownership percentage (b)

50.00%

Net assets of equity shares (a x b)

137,727

135,584

Intercompany transactions and other

(4)

Carrying amount of joint ventures

137,745

135,580

3. Dividends from joint ventures

Dividends

Profit (loss) attributable to owners of the parent company.

Consists of unrealized gains and losses and other differences.

(3)

Profit (loss) attributable to owners of the parent company from associates and joint ventures which are not individually

material for the years ended December 31, 2022 and 2021 are as follows:

2022

2021

(In millions of Korean won)

Associates

Joint ventures

Associates

Joint ventures

Profit from continuing operations

102,930

1,867

68,646

1,636

Other comprehensive income (loss)

(50,761)

(2,677)

29,258

568

Total comprehensive income (loss)

52,169

(810)

97,904

2,204

-55-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(F)

Details of marketable investments in associates as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won

and number of shares)

December 31, 2022

December 31, 2021

Number of shares held

Market value

Samsung Electro-Mechanics

17,693,084

2,308,947

3,494,384

Samsung SDS

17,472,110

2,149,070

2,734,385

Samsung Biologics

22,217,309

18,240,411

18,815,659

Samsung SDI

13,462,673

7,956,440

8,818,051

Cheil Worldwide

29,038,075

669,328

663,520

(G)

Other matters

On July 12, 2018, the Korea Securities and Futures Commission determined an initial measure following an investigation

relating to Samsung Biologics Co., Ltd., an associate of the Company, and its accounting for its investment in Samsung

Bioepis Co., Ltd, a joint venture between Biogen Therapeutics Inc. and Samsung Biologics Co., Ltd. This measure included

a recommendation to dismiss the director in charge, prosecution charges, and external auditor designation by the regulator,

on the basis that the Joint Venture Agreement was not disclosed in the notes to the financial statements. On November 14,

2018, the Korea Securities and Futures Commission determined a second measure which included a penalty of W

8,000

million, a recommendation to dismiss the CEO, a requirement to restate its financial statements, and further prosecution

charges.

To prove justification of its accounting treatment, Samsung Biologics Co., Ltd. filed a suit for cancellation of the

aforementioned measures to the Seoul Administrative Court, which is currently in progress. On September 24, 2021, the

Seoul Administrative Court announced a decision to cancel the first measure charged by the Korea Securities and Futures

Commission, and suspended its execution until the final rulings of the appeal. On October 16, 2021, the Korea Securities and

Futures Commission appealed and the litigation is in progress at Seoul High Court. Samsung Biologics Co., Ltd. also filed

for suspending the execution of the initial and second measures. On January 22, 2019 and February 19, 2019, the Seoul

Administrative Court pronounced decisions to suspend the second and initial measure, respectively, until the final rulings.

The Korea Securities and Futures Commission immediately appealed against the decisions but the appeals were dismissed

by the Seoul High Court on May 13, 2019 and May 24, 2019, in relation to the second and first measures, respectively. On

May 23, 2019 and June 10, 2019, the Korea Securities and Futures Commission re-appealed against the dismissals relating

to the second and first measures, respectively. On September 6, 2019 and October 11, 2019, the Supreme Court of Korea

dismissed the Korea Securities and Futures Commission’s re

-appeal relating to the second and first measures, respectively,

and confirmed the decision to suspend the execution of these measures.

Although the future outcome of the administrative litigation cannot be estimated, should Samsung Biologics Co., Ltd. be

required to restate its financial statements to amend its historical accounting treatment relating to its investment in Samsung

Bioepis Co., Ltd., the Company’s share of profit or loss relating to its equity

method investment, the amount of investment

in associates, and retained earnings, for the years ended December 31, 2015 and onwards, and the profit on disposal of

investment for the year ended December 31, 2016, may be impacted. Given the timing of completion and the final result of

the administrative litigation between Samsung Biologics Co., Ltd. and the Korea Securities and Futures Commission is

uncertain and cannot currently be estimated, it is not possible for the Company to recognize the effects of these proceedings

in the current period consolidated financial statements.

-56-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

10. Property, Plant and Equipment

(A)

Changes in property, plant and equipment for the years ended December 31, 2022 and 2021 are as follows:

2022

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and equipment

Construction in

progress

Other

Total

Balance as of January 1

9,830,154

38,869,440

79,526,297

18,009,324

3,693,324

149,928,539

Acquisition cost

9,943,570

62,651,459

274,909,571

18,009,324

11,958,070

377,471,994

Accumulated depreciation

and impairment

(113,416)

(23,782,019)

(195,383,274)

(8,264,746)

(227,543,455)

Acquisitions and capital

expenditures

138,925

5,302,095

31,010,080

16,675,741

2,100,119

55,226,960

Depreciation

(49,516)

(3,533,917)

(30,761,685)

(1,606,980)

(35,952,098)

Disposals/scrap

(57,596)

(127,935)

(35,098)

(193)

(34,208)

(255,030)

Impairment (reversal)

(2,255)

(11,815)

(12,323)

(26,393)

Other

30,200

199,490

(13,148)

(1,077,308)

(15,824)

(876,590)

Balance as of December 31

9,892,167

40,706,918

79,714,631

33,607,564

4,124,108

168,045,388

Acquisition cost

10,024,569

67,713,808

303,000,627

33,607,564

13,248,490

427,595,058

Accumulated depreciation

and impairment

(132,402)

(27,006,890)

(223,285,996)

(9,124,382)

(259,549,670)

The capitalized borrowing costs are W 41,634 million and interest rate used to calculate the borrowing costs eligible for capitalization is 2.1%~4.1%.

Other includes effects of changes in foreign currency exchange rates and effects of the offset related to government grants.

2021

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and equipment

Construction in

progress

Other

Total

Balance as of January 1

9,772,156

34,552,004

60,994,130

20,175,917

3,458,685

128,952,892

Acquisition cost

9,850,942

55,026,369

233,056,501

20,175,917

10,496,584

328,606,313

Accumulated depreciation

and impairment

(78,786)

(20,474,365)

(172,062,371)

(7,037,899)

(199,653,421)

Acquisitions and capital

expenditures

117,933

6,608,620

43,862,769

(2,320,520)

1,696,362

49,965,164

Depreciation

(47,517)

(3,174,672)

(26,552,958)

(1,510,062)

(31,285,209)

Disposals, scrap

(49,683)

(91,964)

(18,307)

(469)

(6,200)

(166,623)

Impairment (reversal)

(12,135)

(131,985)

(7,082)

(151,202)

Other

37,265

987,587

1,372,648

154,396

61,621

2,613,517

Balance as of December 31

9,830,154

38,869,440

79,526,297

18,009,324

3,693,324

149,928,539

Acquisition cost

9,943,570

62,651,459

274,909,571

18,009,324

11,958,070

377,471,994

Accumulated depreciation

and impairment

(113,416)

(23,782,019)

(195,383,274)

(8,264,746)

(227,543,455)

The capitalized borrowing costs are W

24,908 million and interest rate used to calculate the borrowing costs eligible for capitalization is 0.3~1.1%.

Other includes effects of changes in foreign currency exchange rates and effects of the offset related to government grants.

-57-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(B)

Changes in the right-of-use assets included in the property, plant and equipment for the years ended December 31, 2022

and 2021 are as follows:

2022

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and equipment

Other

Total

Balance as of January 1

525,954

2,841,970

191,059

391,584

3,950,567

Acquisition

32,632

1,542,889

29,098

507,041

2,111,660

Depreciation

(49,516)

(823,543)

(58,000)

(116,287)

(1,047,346)

Cancellation of contracts

(13,741)

(111,145)

(263)

(4,220)

(129,369)

Other

7,874

1,425

13,257

9,541

32,097

Balance as of December 31

503,203

3,451,596

175,151

787,659

4,917,609

Other includes effects of changes in foreign currency exchange rates.

2021

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and equipment

Other

Total

Balance as of January 1

441,603

2,105,360

109,372

313,538

2,969,873

Acquisition

112,419

1,326,322

136,680

173,490

1,748,911

Depreciation

(57,699)

(553,324)

(54,233)

(66,868)

(732,124)

Cancellation of contracts

(398)

(60,742)

(1,265)

(4,790)

(67,195)

Other

30,029

24,354

505

(23,786)

31,102

Balance as of December 31

525,954

2,841,970

191,059

391,584

3,950,567

Other includes effects of changes in foreign currency exchange rates.

(C)

Details of depreciation of property, plant and equipment for the years ended December 31, 2022 and 2021 are as

follows:

(In millions of Korean won)

2022

2021

Cost of sales

32,285,800

27,868,090

Selling and administrative expenses, and etc.

3,666,298

3,417,119

Total

35,952,098

31,285,209

-58-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

11. Intangible Assets

(A)

Changes in intangible assets for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

Intellectual

property rights

Development

cost

Membership

Goodwill

Other

Total

Balance as of January 1

4,153,236

236,910

241,219

5,844,259

9,760,620

20,236,244

External acquisitions

299,484

8,905

2,375,986

2,684,375

Internally generated/developed

Amortization

(268,070)

(151,892)

(2,735,599)

(3,155,561)

Disposals/scrap

(50,979)

(417)

(402)

(51,798)

Impairment (reversal)

(509)

(5,753)

(6,262)

Other

145,079

4,356

170,163

191,158

510,756

Balance as of December 31

4,278,750

85,018

253,554

6,014,422

9,586,010

20,217,754

Other includes the cumulative effect of changes in foreign currency exchange rates and others.

(In millions of Korean won)

2021

Intellectual

property rights

Development

cost

Membership

Goodwill

Other

Total

Balance as of January 1

4,033,904

371,391

229,987

5,673,642

8,159,578

18,468,502

External acquisitions

333,073

8,757

3,648,484

3,990,314

Internally generated/developed

193,708

Amortization

(278,288)

(321,608)

(2,362,256)

(2,962,152)

Disposals/scrap

(51,236)

(195)

(1,696)

(53,127)

Impairment (reversal)

(52,101)

(1,586)

(53,687)

Other

167,884

(6,581)

4,256

170,617

316,510

652,686

Balance as of December 31

4,153,236

236,910

241,219

5,844,259

9,760,620

20,236,244

Other includes effects of reclassification of licenses and changes in foreign currency exchange rates.

-59-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(B)

Goodwill

Goodwill is allocated to each cash-generating unit. Details of goodwill as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

DX segment

1,249,290

1,214,730

DS segment

159,359

160,026

SDC segment

138,754

138,061

Harman segment

4,466,339

4,330,139

Other

680

1,303

Total

6,014,422

5,844,259

Goodwill impairment reviews are performed annually, and the recoverable amounts of cash-generating units have been

determined based on the value-in-use calculations, etc. These calculations generally use the pre-tax cash flow projections

based on the financial budgets approved by management covering a five-year period, unless it is reasonable to use long-term

financial budgets longer than five years in the new technology business. Perpetual cash flows beyond the five-year period are

extrapolated using a constant growth rate assumption. The growth rate applied was capped at the long-term average growth

rate for the industry

(C)

Details of amortization of intangible assets for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Cost of sales

2,211,481

2,136,937

Selling and administrative expenses and other

944,080

825,215

Total

3,155,561

2,962,152

-60-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

12. Borrowings

(A) Details of the carrying amounts of borrowings as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

Financial institutions

Interest rates (%)

as of Dec 31, 2022

December 31, 2022

December 31, 2021

Short-term borrowings

Collateralized borrowings

Woori Bank and others

0.1~16.7

3,569,357

11,556,101

Non-collateralized borrowings

Citibank and others

0.1~38.5

1,577,958

2,131,692

Total

5,147,315

13,687,793

Current portion of long-term borrowings

Bank borrowings

BNP and others

38.9~53.2

208,915

40,415

Lease liabilities

CSSD and others

3.5

874,019

811,902

Total

1,082,934

852,317

Long-term borrowings

Bank borrowings

Industrial Bank of Korea

and others

1.6~5.9

33,846

1,500

Lease liabilities

CSSD and others

3.5

3,526,826

2,864,656

Total

3,560,672

2,866,156

Collateralized borrowings are secured by trade receivables.

Interest expenses arising from the lease liabilities for the years ended December 31, 2022 and 2021 amount to W 140,111 million and

W 106,877 million, respectively, which were determined using the weighted average incremental borrowing rate. The right-of-use assets

are pledged as collateral to the lessor in the event of default. Short-term lease payments and low- valued asset lease payments that are

not included in measurement of lease liabilities during the years ended December 31, 2022 and 2021 amount to W 211,283 million and

W 129,686 million, respectively.

(B) Maturities of

long-term borrowings

outstanding as of December 31, 2022 are as follows:

(In millions of Korean won)

Long-term borrowings

Repayment terms

2023

208,915

2024

1,000

2025

31,346

2026

2027 and thereafter

1,500

Total

242,761

(In millions of Korean won)

Lease liabilities

Repayment terms

2023

1,021,767

2024

866,188

2025

690,763

2026

582,745

2027 and thereafter

1,905,034

Total

5,066,497

-61-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13. Debentures

(A) Details of the carrying amounts of debentures as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

Issue date

Due date

Interest rates (%)

as of Dec 31, 2022

December 31, 2022

December 31, 2021

US dollar denominated straight bonds

1997.10.2

2027.10.1

7.7

31,683

35,565

(US$ 25 million)

(US$ 30 million)

US dollar denominated debenture bonds

2015.5.11

2025.5.15

4.2

506,920

474,200

(US$ 400 million)

EURO denominated debenture bonds

2015.5.27

2022.5.27

2.0

469,819

(EUR 350 million)

Less: Discounts

(543)

(708)

Add: Premium

4,261

7,007

Less: Current portion

(6,228)

(477,651)

Total

536,093

508,232

US dollar denominated straight bonds are repaid annually for twenty years after a ten-year grace period from the date of issuance.

Interest is paid semi-annually.

Harman International Industries, Inc. issued US dollar denominated debenture bonds. These debentures are repaid on the date of 10 years

maturity and interest is paid semi-annually.

Harman Finance International, SCA issued Euro denominated debenture bonds. These debentures are repaid on the date of 7 years

maturity and interest is paid annually. These debentures were fully repaid early on March 1, 2022.

(B) Maturities of debentures outstanding as of December 31, 2022 are as follows:

(In millions of Korean won)

Debentures

Repayment terms

2023

6,337

2024

6,337

2025

513,257

2026

6,337

2027 and thereafter

6,335

Total

538,603

-62-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

14. Net Defined Benefit Liabilities (Assets)

(A)

Details of net defined benefit liabilities (assets) recognized in the statements of financial position as of December 31,

2022 and 2021 are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Present value of funded defined benefit obligations

13,639,460

14,391,209

Present value of unfunded defined benefit obligations

370,848

266,976

Subtotal

14,010,308

14,658,185

Fair value of plan assets

(19,593,910)

(17,001,891)

Total

(5,583,602)

(2,343,706)

(B)

The components of defined benefit costs recognized in profit or loss for the years ended December 31, 2022 and 2021

are as follows:

(In millions of Korean won)

2022

2021

Current service cost

1,365,600

1,247,857

Net interest income

(99,356)

(38,326)

Past service cost

(253)

2,718

Other

28,713

3,847

Total

1,294,704

1,216,096

The amount recognized as an expense of defined contribution plans for the years ended December 31, 2022 and 2021 are

145,395 million and W 144,248 million, respectively.

(C)

The expenses related to the defined benefit plans recognized in the statements of profit or loss for the years ended

December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Cost of sales

514,589

480,331

Selling and administrative expenses and other

780,115

735,765

Total

1,294,704

1,216,096

-63-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(D)

Changes in the defined benefit obligations for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

14,658,185

12,948,999

Current service cost

1,365,600

1,247,857

Interest cost

528,884

396,730

Past service cost

(253)

2,718

Remeasurement:

Actuarial gains or losses arising from changes in demographic assumptions

34,917

(34,014)

Actuarial gains or losses arising from changes in financial assumptions

(2,496,879)

126,297

Other

521,452

473,668

Benefits paid

(630,019)

(519,043)

Other

28,421

14,973

Balance as of December 31

14,010,308

14,658,185

Other includes effects of changes in foreign currency exchange rates and business combinations.

(E)

Changes in the fair value of plan assets for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

17,001,891

13,840,043

Interest income on plan assets

628,240

435,056

Remeasurement of plan assets

(312,565)

(146,239)

Contributions by employer

2,741,417

3,263,765

Benefits paid

(498,246)

(397,678)

Other

33,173

6,944

Balance as of December 31

19,593,910

17,001,891

Other includes effects of changes in foreign currency exchange rates and business combinations.

Expected contributions to post-employment benefit plans to be paid in 2023 as of December 31, 2022 are

W 1,940,341 million.

(F)

Plan assets as of December 31, 2022 and 2021 consist of the following:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Principal guaranteed fixed income financial instruments and other

18,766,006

16,935,143

Other

827,904

66,748

Total

19,593,910

17,001,891

Plan assets are mostly invested in instruments which have a quoted price in active markets.

-64-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(G)

The principal actuarial assumptions as of December 31, 2022 and 2021 are as follows:

(In percentage)

December 31, 2022

December 31, 2021

Discount rate

4.3~6.4

0.2~7.2

Salary growth rate (including the effects of inflation)

2.0~6.4

1.5~10.0

(H)

The sensitivity analysis of the defined benefit obligations as of December 31, 2022 and 2021 to changes in the weighted

principal assumptions is as follows:

(In percentage)

December 31, 2022

December 31, 2021

Discount rate

1% p increase

1% p decrease

109

110

Salary growth rate

1% p increase

109

110

1% p decrease

(I)

The weighted average maturity of the defined benefit obligations is 8.38 years as of December 31, 2022.

15. Provisions

Changes in provisions for the year ended December 31, 2022 are as follows:

(In millions of Korean won)

Warranty (A)

Royalty

expenses (B)

Long-term

incentives (C)

Other

(D, E)

Total

Balance as of January 1

1,978,294

1,561,809

734,283

3,405,480

7,679,866

Charged to profit or loss

2,186,312

629,713

302,229

759,669

3,877,923

Payment

(1,873,519)

(712,635)

(255,658)

(1,070,410)

(3,912,222)

Other

18,639

67,719

2,409

39,091

127,858

Balance as of December 31

2,309,726

1,546,606

783,263

3,133,830

7,773,425

Other includes effects of changes in foreign currency exchange rates.

(A)

The Company accrues warranty reserves for estimated costs of quality assurance, exchanges, repairs, recalls, and future

services based on historical experience and terms of warranty programs.

(B)

The Company recognizes provisions for the estimated royalty expenses that are under negotiation with counterparties.

The timing and amount of payment depend on the settlement of the negotiation.

(C)

The Company has a long-term incentive plan for its executives based on a three-year management performance criteria

and recognizes a provision for the estimated incentive cost for the accrued period.

(D)

The Company records provisions for future expenses expected to be incurred for products that have been discontinued

from manufacturing and sales.

-65-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(E)

The Company makes provisions for the carrying amounts of emission rights held by the Company and the emission in

excess of the emission rights for the applicable years. Details of emission rights and liabilities as of December 31, 2022

are as follows:

(1)

The amount of emission rights allocated free of charge in the current commitment period and the estimated amount

of emission as of December 31, 2022 are as follows:

(In ten thousand metric tons)

December 31, 2022

Allocated emission permits

1,754

Estimated volume of emission

1,957

As of December 31, 2022, emission permits allocated to the Company for the remaining plan periods are 4,905 ten thousand tons.

(2023: 1,645 ten thousand, 2024: 1,630 ten thousand, 2025: 1,630 ten thousand)

(2)

Changes in the emission rights for the year ended December 31, 2022 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

46,073

44,865

Increase

1,872

1,422

Decrease

(28,378)

(214)

Balance as of December 31

19,567

46,073

The quantity of emission right is 6,742 ten thousand ton and there is no emission rights provided as provision of collateral

as of December 31, 2022.

(3)

Changes in emissions liabilities for the year ended December 31, 2022 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

45,049

31,876

Charged to profit or loss

16,167

13,374

Submission

(28,378)

(201)

Balance as of December 31

32,838

45,049

16. Commitments and Contingencies

(A)

Litigation

As of December 31, 2022, the Company is involved in various claims, disputes, and investigations conducted by regulatory

bodies that arose during the normal course of business with numerous entities. Although the outflow of resources and timing

of these matters are uncertain, the Company believes the outcome will not have a material impact on the financial position

of the Company.

(B)

Other commitments

(1)

As of December 31, 2022, the Company has trade financing agreements, trade notes receivable discounting facilities,

and loan facilities with accounts receivable pledged as collateral with 26 financial institutions including Woori Bank,

with a combined limit of up to W 21,609,679 million. In addition, the Company has a trade financing agreement (up

to W 16,020,930 million) with 23 financial institutions including Shinhan Bank and loan facilities with accounts

receivable pledged as collateral and other financial agreements (up to W 1,589,717 million).

(2)

As of December 31, 2022, unfulfilled agreements relating to the acquisition of property, plant and equipment and

intangible assets amount to W 8,553,336 million.

-66-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

17. Contract Liabilities

The Company has recognized contract liabilities related to contracts with customers as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Contract liabilities

13,255,682

13,235,108

Contract liabilities include advances received, accrued expenses, other current liabilities and others.

The revenue recognized during the year ended December 31, 2022 in relation to carried-forward contract liabilities as of

January 1, 2022 amounts to W 1,051,027 million.

18. Share Capital

As of December 31, 2022, the Company

’s total number of authorized shares is 25,000,000,000 shares

(W 100 per share). The

Company has issued 5,969,782,550 shares of ordinary shares and 822,886,700 shares of preference shares as of December 31,

2022, excluding the retired shares. As of the December 31, 2022, the number of shares outstanding is the same as the number

of shares issued above, and no changes were made to the number of shares outstanding during the years ended December 31,

2022 and 2021. Due to the retirement of shares, the total par value of the shares issued is W 679,267 million (ordinary shares

of W 596,978 million and preference shares of W 82,289 million), which does not agree with paid-in capital of W 897,514

million.

-67-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

19. Retained Earnings

(A)

Retained earnings as of December 31, 2022 and 2021 consist of the following:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Discretionary reserve, etc.

192,294,496

170,814,107

Unappropriated retained earnings

145,651,911

122,250,656

Total

337,946,407

293,064,763

(B)

Details of interim and year-end dividends are as follows:

(1) Interim dividends (Record date: March 31, June 30 and September 30, 2022 and 2021)

(In millions of Korean won and number of shares)

2022

2021

Quarter

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par value)

361%

Dividend amount

Ordinary shares

2,155,092

Preference shares

297,062

Total

2,452,154

Quarter

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par value)

361%

Dividend amount

Ordinary shares

2,155,092

Preference shares

297,062

Total

2,452,154

Quarter

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par value)

361%

Dividend amount

Ordinary shares

2,155,092

Preference shares

297,062

Total

2,452,154

(2) Year-end dividends (Record date: December 31, 2022 and 2021)

(In millions of Korean won and number of shares)

2022

2021

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par value)

Ordinary shares

361%

Preference shares

362%

Dividend amount

Ordinary shares

2,155,092

Preference shares

297,884

Total

2,452,976

-68-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

20. Other Components of Equity

Other components of equity as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Gain on valuation of financial assets at fair value through other comprehensive income

2,749,109

4,616,639

Share of other comprehensive income of associates and joint ventures

114,987

166,835

Gain (loss) on overseas business translation

1,039,197

(3,824,733)

Remeasurement of net defined benefit liabilities (assets)

(2,051,610)

(3,173,977)

Other

86,645

86,763

Total

1,938,328

(2,128,473)

21. Expenses by Nature

Expenses by nature for the years ended December 31, 2022 and 2021 consist of the following:

(In millions of Korean won)

2022

2021

Changes in finished goods, work in process, and other

(10,355,548)

(4,517,560)

Raw materials used, merchandise purchased, and other

112,591,917

95,625,437

Wages and salaries

30,078,623

28,207,782

Post-employment benefit

1,440,099

1,360,344

Depreciation

35,952,098

31,285,209

Amortization

3,155,561

2,962,152

Welfare

6,091,626

5,073,002

Utilities

6,142,317

4,928,929

Outsourcing

6,597,467

5,594,602

Advertising

6,112,951

5,376,015

Sales promotion expenses

7,110,649

6,286,159

Other

53,936,970

45,788,872

Total

258,854,730

227,970,943

Equal to the sum of cost of sales and selling and administrative expenses in the consolidated statements of profit or loss.

-69-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

22. Selling and Administrative Expenses

Selling and administrative expenses for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Selling and administrative expenses

Wages and salaries

7,763,588

7,245,981

Post-employment benefit

330,115

310,823

Commissions and service charges

7,457,896

6,192,568

Depreciation

1,574,757

1,529,507

Amortization

664,346

543,544

Advertising

6,112,951

5,376,015

Sales promotion expenses

7,110,649

6,286,159

Transportation

3,214,301

2,792,690

Service charges

3,671,913

4,039,642

Other

5,993,246

4,840,946

Subtotal

43,893,762

39,157,875

Research and development expenses

Total expenses

24,919,198

22,595,434

Capitalized expenses

(193,708)

Subtotal

24,919,198

22,401,726

Total

68,812,960

61,559,601

23. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Other non-operating income

Dividend income

414,601

135,840

Rental income

140,908

132,801

Gain on disposal of property, plant and equipment

159,123

340,400

Other

1,247,439

1,596,654

Total

1,962,071

2,205,695

(In millions of Korean won)

2022

2021

Other non-operating expenses

Loss on disposal of property, plant and equipment

61,256

75,586

Donations

305,941

270,927

Other

1,422,979

1,709,458

Total

1,790,176

2,055,971

-70-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

24. Financial Income and Expenses

Details of financial income and expenses for the years ended December 31, 2022 and 2021 are as follows:

(

In millions of Korean won

)

2022

2021

Financial income

Interest income

2,720,479

1,278,278

Interest income from financial assets measured at amortized cost

2,720,213

1,278,051

Interest income from financial assets measured at fair value through profit or loss

266

227

Foreign exchange differences

16,537,855

6,525,676

Gains from derivatives

1,570,661

739,233

Total

20,828,995

8,543,187

(

In millions of Korean won

)

2022

2021

Financial expenses

Interest expenses

763,015

431,540

Interest expenses from financial liabilities measured at amortized cost

322,529

213,477

Other financial liabilities

440,486

218,063

Foreign exchange differences

16,809,703

6,486,093

Losses from derivatives

1,454,971

786,921

Total

19,027,689

7,704,554

The Company recognizes foreign exchange gains and losses arising from foreign currency transactions and translation as

financial income and expenses.

-71-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

25. Income Tax Expense

(A)

Income tax expense for the years ended December 31, 2022 and 2021 consists of the following:

(In millions of Korean won)

2022

2021

Current taxes

Current tax on profits for the year

7,391,099

11,135,521

Adjustments recognize in the current year

(501,683)

(195,237)

Subtotal

6,889,416

10,940,284

Deferred taxes

Changes in deferred taxes arising from unused tax credits

(1,080,068)

(332,975)

Changes in deferred taxes arising from temporary differences

(15,407,692)

2,172,312

Changes in deferred taxes arising from unused tax losses

160,123

507,313

Other

224,618

157,443

Subtotal

(16,103,019)

2,504,093

Items charged directly to equity

Income tax expense

(9,213,603)

13,444,377

(B)

The tax on the Company’s profit before income tax differs from the theoretical amount that would arise using the

weighted-average statutory tax rate applicable to profits of the Company as follows:

(In millions of Korean won)

2022

2021

Profit before income tax

46,440,474

53,351,827

Tax calculated at weighted average of applicable tax rates

13,652,900

15,760,775

Adjustments

Permanent differences

(2,090,031)

(464,839)

Temporary differences for which no deferred income tax was recognized

769,211

(80,250)

Tax credits and exemptions

(5,185,576)

(4,627,136)

Results of interest in subsidiaries, etc.

(16,186,745)

2,267,026

Impact of changes in tax rates

(376)

8,691

Other

(172,986)

580,110

Subtotal

(22,866,503)

(2,316,398)

Income tax expense

(9,213,603)

13,444,377

The weighted average of statutory tax rates are applied to the respective profits of the Company applicable to each tax authority as of

December 31, 2022 and 2021.

-72-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(C)

The movement in deferred income tax assets and liabilities resulting from the tax effect of temporary differences

for the years ended December 31, 2022 and 2021 are as follows:

(1)

2022

Temporary differences

Deferred income tax assets (liabilities)

(In millions of Korean won)

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Deferred tax arising from temporary differences

Revaluation of land

(3,406,625)

3,195

(3,403,430)

(936,822)

38,317

(898,505)

Investments in subsidiaries, associates and

joint ventures

(126,816,779)

(18,391,837)

(145,208,616)

(20,614,554)

15,654,307

(4,960,247)

Accumulated depreciation and other

(3,814,598)

(3,782,747)

(7,597,345)

(1,771,793)

(794,742)

(2,566,535)

Accrued income

(22,153)

108,861

86,708

6,853

32,827

39,680

Provisions, accrued expenses and other

15,979,455

2,799,841

18,779,296

4,560,874

658,256

5,219,130

Foreign currency translation

62,615

670,489

733,104

12,076

173,824

185,900

Asset impairment losses

1,134,048

(69,523)

1,064,525

258,886

(24,152)

234,734

Other

(492,225)

(1,356,462)

(1,848,687)

(638,757)

(330,945)

(969,702)

Subtotal

(117,376,262)

(20,018,183)

(137,394,445)

(19,123,237)

15,407,692

(3,715,545)

Deferred tax arising from tax losses

Unused tax losses

2,015,448

(520,129)

1,495,319

436,481

(160,123)

276,358

Deferred tax arising from tax credits

Unused tax credits

1,687,065

1,243,873

2,930,938

1,666,362

1,080,068

2,746,430

Deferred tax recognized in equity

Loss (gain) on valuation of financial assets

at fair value through other

comprehensive income and other

(3,575,094)

(61,384)

(3,636,478)

(3,155,310)

3,104,918

(50,392)

Remeasurement of

net defined benefit liabilities (assets)

4,447,510

(1,627,945)

2,819,565

1,238,713

(505,578)

733,135

Subtotal

872,416

(1,689,329)

(816,913)

(1,916,597)

2,599,340

682,743

Deferred tax assets

4,261,214

840,104

5,101,318

Deferred tax liabilities

(23,198,205)

18,086,873

(5,111,332)

Total

(18,936,991)

18,926,977

(10,014)

Deferred tax assets are not recognized if it is probable that the temporary differences will not reverse in the foreseeable future for

investments in subsidiaries, associates and joint ventures.

-73-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(2)

2021

Temporary differences

Deferred income tax assets (liabilities)

(In millions of Korean won)

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Balance as of

January 1

Increase

(Decrease)

Balance as of

December 31

Deferred tax arising from temporary differences

Revaluation of land

(3,420,886)

14,261

(3,406,625)

(940,744)

3,922

(936,822)

Investments in subsidiaries, associates and

joint ventures

(111,924,859)

(14,891,920)

(126,816,779)

(19,172,409)

(1,442,145)

(20,614,554)

Accumulated depreciation and other

(2,285,841)

(1,528,757)

(3,814,598)

(992,777)

(779,016)

(1,771,793)

Accrued income

(139,406)

117,253

(22,153)

(31,486)

38,339

6,853

Provisions, accrued expenses and other

13,121,416

2,858,039

15,979,455

3,764,808

796,066

4,560,874

Foreign currency translation

(24,683)

87,298

62,615

(10,077)

22,153

12,076

Asset impairment losses

1,855,765

(721,717)

1,134,048

453,486

(194,600)

258,886

Other

562,628

(1,054,853)

(492,225)

(21,726)

(617,031)

(638,757)

Subtotal

(102,255,866)

(15,120,396)

(117,376,262)

(16,950,925)

(2,172,312)

(19,123,237)

Deferred tax arising from tax losses

Unused tax losses

3,618,601

(1,603,153)

2,015,448

943,794

(507,313)

436,481

Deferred tax arising from tax credits

Unused tax credits

1,328,527

358,538

1,687,065

1,333,387

332,975

1,666,362

Deferred tax recognized in equity

Loss on valuation of financial assets at

fair value through other comprehensive

income and other

(1,660,421)

(1,914,673)

(3,575,094)

(909,176)

(2,246,134)

(3,155,310)

Remeasurement of

net defined benefit liabilities (assets)

3,735,320

712,190

4,447,510

1,047,075

191,638

1,238,713

Subtotal

2,074,899

(1,202,483)

872,416

137,899

(2,054,496)

(1,916,597)

Deferred tax assets

4,275,000

(13,786)

4,261,214

Deferred tax liabilities

(18,810,845)

(4,387,360)

(23,198,205)

Total

(14,535,845)

(4,401,146)

(18,936,991)

Deferred tax assets are not recognized if it is probable that the temporary differences will not reverse in the foreseeable future for

investments in subsidiaries, associates and joint ventures.

The Company assessed that the deferred tax asset is realizable as the estimated average annual taxable income in future years

exceeds the tax loss carry forwards and tax credit carry forwards to be reversed in each accounting period. Temporary

differences in which deferred tax effects were not recognized due to uncertainty regarding the ultimate realizability of such

assets as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Unused tax losses

594,798

706,512

Unused tax credits

46,550

47,929

Expected expiry dates of unused tax losses and credits for which no deferred tax asset is recognized are as follows:

(In millions of Korean won)

2022

2023

2024

2025 and after

Unused tax losses

69,464

1,776

523,558

Unused tax credits

7,466

4,157

29,972

4,955

-74-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(D)

Details of the period when the deferred tax assets (liabilities) are recovered (settled) as of December 31, 2022 and 2021

are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Deferred tax assets

Deferred tax assets to be recovered within 12 months

3,249,661

2,999,046

Deferred tax assets to be recovered after more than 12 months

1,851,657

1,262,168

Subtotal

5,101,318

4,261,214

Deferred tax liabilities

Deferred tax liabilities to be settled after more than 12 months

(5,111,332)

(23,198,205)

Total

(10,014)

(18,936,991)

26. Earnings per Share

(A)

Basic earnings per share

Basic earnings per share for the years ended December 31, 2022 and 2021 are calculated as follows:

(1)

Ordinary shares

(In millions of Korean won, thousands of number of shares)

2022

2021

Profit for the year attributable to owners of the parent company

54,730,018

39,243,791

Profit for the year available for ordinary shares

48,099,117

34,488,944

Weighted-average number of ordinary shares outstanding

5,969,783

Basic earnings per ordinary share

(in Korean won)

8,057

5,777

(2)

Preference shares

(In millions of Korean won, thousands of number of shares)

2022

2021

Profit for the year attributable to owners of the parent company

54,730,018

39,243,791

Profit for the year available for preference shares

6,630,901

4,754,847

Weighted-average number of preference shares outstanding

822,887

Basic earnings per preference share

(in Korean won)

8,058

5,778

(B)

Diluted earnings per share

The Company does not have dilutive potential ordinary shares and as a result, basic earnings per share and diluted earnings

per share are the same for the years ended December 31, 2022 and 2021.

-75-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

27. Statements of Cash Flows

(A) The Company used the indirect method to present cash flows from operating activities. Adjustments and changes in assets

and liabilities arising from operating activities for the years ended December 31, 2022 and 2021 are as follows:

Adjustments

(In millions of Korean won)

2022

2021

Adjustments:

Income tax expense

(9,213,603)

13,444,377

Financial income

(5,778,279)

(2,485,679)

Financial expenses

4,336,254

1,917,705

Post-employment benefits

1,440,099

1,360,344

Depreciation

35,952,098

31,285,209

Amortization

3,155,561

2,962,152

Bad debt expenses

8,784

17,990

Dividend income

(414,601)

(135,840)

Share of profit of associates and joint ventures

(1,090,643)

(729,614)

Gain on disposal of property, plant and equipment

(159,123)

(340,400)

Loss on disposal of property, plant and equipment

61,256

75,586

Loss on valuation of inventories

4,408,767

1,735,741

Others

366,869

(51,938)

Total

33,073,439

49,055,633

Changes in assets and liabilities arising from operating activities

(In millions of Korean won)

2022

2021

Changes in assets and liabilities :

Decrease (increase) in trade receivables

7,856,258

(7,302,604)

Increase in non-trade receivables

(1,524,173)

(204,348)

Decrease (increase) in prepaid expenses

3,506

(204,971)

Increase in inventories

(13,311,072)

(9,712,379)

Increase (decrease) in trade payables

(5,298,547)

1,027,017

Increase (decrease) in other payables

(1,443,409)

1,516,076

Increase (decrease) in advances received

106,977

(24,371)

Increase in withholdings

25,392

275,998

Increase in accrued expenses

919,271

3,340,697

Increase (decrease) in provisions

(34,298)

1,862,320

Payment of post-employment benefits

(707,887)

(606,870)

Increase in plan assets

(2,243,171)

(2,866,087)

Other

(1,347,795)

(3,387,362)

Total

(16,998,948)

(16,286,884)

-76-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(B)

Significant non-cash investing and financing transactions for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Valuation of financial assets at fair value through other comprehensive income

(2,636,448)

3,653,253

Valuation of investments in associates and joint ventures

(50,510)

211,979

Reclassification of construction in progress to property, plant and equipment

36,047,916

50,451,574

Acquisition of right-of-use assets (New lease contracts established)

2,111,660

1,748,911

Reclassification of current portion of debentures

6,228

477,651

Reclassification of current portion of long-term borrowings

1,082,934

852,317

(C)

Changes in liabilities arising from financing activities for the years ended December 31, 2022 and 2021 are as follows:

(1)

2022

(In millions of Korean won)

As of

January 1

Cash flows from

financing

activities

Non-cash transactions

New lease

contracts

Other

As of

December 31

Short-term borrowings

13,687,793

(8,339,149)

(201,329)

5,147,315

Debentures and long-term borrowings

4,704,356

(1,236,468)

2,111,660

(393,621)

5,185,927

Total

18,392,149

(9,575,617)

2,111,660

(594,950)

10,333,242

Other includes amortization and effects of changes in foreign currency exchange rates.

(2)

2021

(In millions of Korean won)

As of

January 1

Cash flows from

financing

activities

Non-cash transactions

New lease

contracts

Other

As of

December 31

Short-term borrowings

16,553,429

(2,616,943)

(248,693)

13,687,793

Debentures and long-term borrowings

3,663,952

(836,470)

1,748,912

127,962

4,704,356

Total

20,217,381

(3,453,413)

1,748,912

(120,731)

18,392,149

Other includes amortization, effects of changes in foreign currency exchange rates.

For the years ended December 31, 2022 and 2021, cash outflows from principal repayment (financial activities) amount to

W 998,531 million and W 876,437 million, respectively, and cash outflows due to interest expenses (operating activities)

in relation to the lease liabilities amount to W 140,111 million and W 106,877 million, respectively.

(D)

The Company reported cash receipts and payments arising from transactions occurring frequently, of large gross amounts,

and with short-term maturities, such as short-term financial instruments, borrowings and other, on a net basis. As of

December 31, 2022, mo

st of the Company’s cash and cash equivalents consist of

bank deposits.

-77-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

28. Financial Risk Management

The Company’s financial risk management focuses on minimizing

the market risk, credit risk, and liquidity risk arising from

operating activities. To mitigate these risks, the Company implements and operates a financial risk policy and program that

closely monitors and manages such risks. In addition, the Company uses derivatives to hedge certain risk exposure.

The finance team mainly carries out the Company

’s financial risk management.

After implementing the global financial risk

management policies, the finance team periodically measures, evaluates, and hedges the financial risk and also establishes and

implements the global financial risk management policy.

The Company also manages the foreign exchange risk by monitoring the foreign exchange rate fluctuations at local finance

centers across major regions (United States, United Kingdom, Singapore, China, Brazil, and Russia) and acting as an agent of

foreign exchange transactions. In addition, the Company manages the liquidity risk by utilizing a globally integrated finance

structure.

The Company’s financial assets

that are under the financial risk management are comprised of cash and cash equivalents,

short-term financial instruments, financial assets at amortized cost,

trade receivables and others. The Company’s financial

liabilities under financial risk management are comprised of trade payables, borrowings, and others.

(A)

Market risk

(1)

Foreign exchange risk

The Company is exposed to the foreign exchange risk arising from its global operations performed in currencies other than

its functional currency. The major currencies that are exposed to the foreign exchange risk are the US dollar, Euro, and

Indian Rupee.

The Company focuses on minimizing the impact of the foreign exchange fluctuation by maintaining the equal amount of

assets and liabilities denominated in each foreign currency, irrespective of the foreign exchange fluctuation considerations.

To prevent the

exchange position, the Company’s foreign exchange management policy requires

the normal business

transactions, including imports and exports, as well as the financing transactions such as depositing and borrowing, to be in

local currency or for the cash-in currency to be matched up with the cash-out currency. Moreover, the Company periodically

evaluates and monitors the foreign exchange risk to efficiently mitigate such risk, and the speculative foreign exchange

transactions are strictly prohibited.

As of December 31, 2022 and 2021, when the currency rates change by 5%, the impact on profit or loss (before income tax

effects) arising from financial assets and liabilities denominated in foreign currencies other than the functional currency are

as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Increase

Decrease

Increase

Decrease

USD

258,655

(258,655)

250,489

(250,489)

EUR

92,546

(92,546)

107,519

(107,519)

INR

52,096

(52,096)

24,216

(24,216)

-78-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(2)

Interest rate risk

Risk of changes in interest rates for floating interest rate financial instruments is defined as the risk that the fair value of

components of the statements of financial position, and future cash flows of interest income (expenses) of a financial

instrument, will fluctuate because of the

changes in market interest rates. The Company’s position with regard to interest

rate risk exposure is mainly driven by its floating interest rate debt obligations and interest-bearing deposits. The Company

implemented policies and operates to minimize uncertainty arising from changes in interest rates and financial expenses.

As of December 31, 2022 and 2021, changes in profit or loss (before income tax effects) as a result of a 1%p change in

interest rates on floating interest rate financial assets and liabilities are presented below:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Increase

Decrease

Increase

Decrease

Financial assets

72,750

(72,750)

71,131

(71,131)

Financial liabilities

(8,427)

8,427

(18,779)

18,779

Net effect

64,323

(64,323)

52,352

(52,352)

(3)

Price risk

The Company’s investment portfolio consists of direct and indirect investments in equity instruments classified as financial

assets at fair value through other comprehensive income and financial assets at fair value through profit or loss, which is in

line with the Company’s strategy.

As of December 31, 2022 and 2021, price fluctuation of marketable equity securities (listed stocks) by 1% would result in

changes in other comprehensive income (before income tax) of W 92,073 million and W 116,087 million, respectively, and

changes in profit before tax of W 3,144 million and W 4,784 million, respectively.

(B)

Credit risk

Credit risk arises during the normal course of transactions and investing activities where clients or other parties fail to discharge

an obligation. The Company monitors and sets the client’s and

the

counterparty’s credit limit

s on a periodic basis based on

the client’s and counterparty’s financial conditions, default histor

ies and other important factors. Adequate insurance coverage

is maintained for trade receivables related to the trading partners situated in higher risk countries.

Credit risk can arise from transactions with financial institutions which include financial instrument transactions such as cash

and cash equivalents, deposits, and derivative instruments. To minimize such risk, the Company transacts only with banks

which have strong international credit ratings (S&P A and above), and all new transactions with financial institutions with no

prior transaction history are approved, managed and monitored by the Company’s finance team and the local finance center.

The Company generally enters into a financial agreement with no restrictions, such as debt ratio covenants, provision of

collateral and/or repayment of loans/ borrowings. The Company requires separate approvals for contracts with restrictions.

As of December 31, 2022 and 2021, the Company estimates that its maximum exposure to credit risk is the carrying amount

of its financial assets, net of impairment losses.

-79-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(C)

Liquidity risk

Due to large investments made by the Company, maintaining adequate levels of liquidity risk is critical. The Company strives

to achieve this goal by periodically forecasting its capital balance, estimating the required cash levels, and managing income

and expenses.

The Company manages its liquidity risk by periodically forecasting the projected cash flows. If abnormal signs are identified,

the Company works with the local finance center and provides liquidity support by utilizing a globally integrated finance

structure, such as Cash Pooling. In addition, the Company maintains a liquidity management process which provides an

additional financial support from the local finance center and the Company. The Cash Pooling program allows the sharing of

surplus funds among the entities and contributes to minimizing the

liquidity risk and strengthening the Company’s competit

ive

position by reducing capital operation expenses and financial expenses.

For the need of large scale of liquidity, the Company secures the credit limit for overseas subsidiaries through payment

guarantees.

As of December 31, 2022 and 2021, the following table is an undiscounted cash flow analysis for financial liabilities according

to their remaining contractual maturity.

December 31, 2022

(In millions of Korean won)

Less than

3 months

4 - 6 months

–

12 months

1 - 5 years

More than

5 years

Financial liabilities

42,990,570

733,984

1,925,448

5,402,672

1,562,274

December 31, 2021

(In millions of Korean won)

Less than

3 months

–

6 months

7 - 12 months

1 - 5 years

More than

5 years

Financial liabilities

55,185,809

1,814,271

1,674,980

5,462,057

944,232

The table above shows the Company’s financial liabilities based on the remaining period at the consolidated statement

s of

financial position date until the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted

cash flows.

The Company

’s derivative financial liabilities of

W 119,061 million (December 31, 2021: W

113,590 million) has been

included within the less than 3 months bucket.

These are the Company’s trading portfolio of

derivative instruments, on a net

settlement term, of which the contractual maturities are not essential for understanding its cash flows. These contracts are

managed on a net fair value basis rather than by the maturity date. Net settled derivatives consist of forwards on currency rates

used by the Company to manage the exchange rate profile.

Derivatives that are settled on a gross basis by the delivery of underlying items, including derivatives for hedging, will be

settled within the next 60 months from the end of the reporting period. These derivatives are not included in the table above.

There is no maximum liquidity risk exposure from those other than the above financial liabilities (e.g., payment and

performance guarantees) as of December 31, 2022.

-80-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(D)

Derivative financial instruments

The Company applies cash flow hedge accounting to hedge the foreign currency risk of forecasted transaction including

hedging the price risk associated with inventory. Details of derivative financial instruments that qualify as cash flow hedges

as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Assets

Liabilities

Assets

Liabilities

Currency forward exchange contracts

Current items

44,567

11,035

34,075

11,090

Non-current items

15,703

15,813

16,790

3,280

Total

60,270

26,848

50,865

14,370

For the years ended December 31, 2022 and 2021, the Company recognizes the gains and losses relating to the effective

portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges in other comprehensive

income, which amount to the loss of W 12,893 million (after tax) and gain of W 50,410 million (after tax), respectively, and

recognizes the gains and losses relating to the ineffective portion in profit or loss, which amount to the gain of W 611 million

(before tax) and loss of W 451 million (before tax), respectively. For the years ended December 31, 2022 and 2021, gains and

losses reclassified directly from other comprehensive income to profit or loss amount to the loss of W 4,602 million (after tax)

and the gain of W 1,117 million (after tax), respectively and the gains reclassified from other comprehensive income to the

carrying amount of inventory amount to the gain of W 55,856 million (after tax) and the gain of W 1,539 million (after tax),

respectively.

(E)

Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising

the return to shareholders through the optimisation of the debt and equity balance.

The Company’s capital risk management policy has not changed since the prior reporting periods. The Company has

maintained an AA- and Aa2 credit ratings

from S&P and Moody’s, respectively.

The total liabilities to equity ratios as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Total liabilities

93,674,903

121,721,227

Total equity

354,749,604

304,899,931

Debt ratio

26.4%

39.9%

-81-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(F)

Fair value estimation

(1)

Carrying amounts and fair values of financial instruments by category as of December 31, 2022 and 2021 are as

follows:

December 31, 2022

December 31, 2021

(In millions of Korean won)

Carrying amount

Fair value

Carrying amount

Fair value

Financial assets

Cash and cash equivalents

49,680,710

(*1)

39,031,415

(*1)

Short-term financial instruments

65,102,886

(*1)

81,708,986

(*1)

Short-term financial assets at amortized cost

414,610

(*1)

3,369,034

(*1)

Short-term financial assets at fair value

through profit or loss

29,080

40,757

Trade receivables

35,721,563

(*1)

40,713,415

(*1)

Financial assets at fair value through

other comprehensive income

11,397,012

13,965,839

Financial assets at fair value through

profit or loss

1,405,468

1,525,344

Other

(

10,340,876

395,667

9,040,189

328,216

Total financial assets

174,092,205

189,394,979

Financial liabilities

Trade payables

10,644,686

(*1)

13,453,351

(*1)

Short-term borrowings

5,147,315

(*1)

13,687,793

(*1)

Other payables

16,328,237

(*1)

14,126,970

(*1)

Current portion of long-term liabilities

1,089,162

6,580

1,329,968

554,106

- Current portion of long-term borrowing

1,082,934

(*1)(*3)

852,317

(*1)(*3)

- Current portion of debentures

6,228

6,580

477,651

554,106

Debentures

536,093

521,129

508,232

546,339

Long-term borrowings

3,560,672

(*1)(*3)

2,866,156

(*1)(*3)

Long-term other payables

(

2,289,236

(*1)

2,562,158

(*1)

Other

(

12,409,529

361,768

10,781,684

337,394

Total financial liabilities

52,004,930

59,316,312

(*1)

Assets and liabilities whose carrying amount is a reasonable approximation of fair value are excluded from the fair value disclosures.

(*2)

Assets measured at the cost of W 9,945,209 million (December 31, 2021: W 8,711,973 million) and liabilities measured at the cost of

W 12,047,761 million (December 31, 2021: W 10,444,290 million) are excluded as the carrying amount is a reasonable estimation of fair

value.

(*3)

Lease liabilities, classified under the current portion of long-term liabilities and long-term borrowings, are excluded from the fair value

disclosures in accordance with

Korean IFRS 1107.

-82-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(2)

Fair value hierarchy classifications of the financial instruments that are measured or disclosed at fair value as of

December 31, 2022 and 2021 are as follows:

December 31, 2022

(In millions of Korean won)

Level 1

Level 2

Level 3

Total balance

1) Assets

Short-term financial assets at fair value

through profit or loss

29,080

Financial assets at fair value through

other comprehensive income

9,207,295

2,189,717

11,397,012

Financial assets at fair value through

profit or loss

314,449

1,091,019

1,405,468

Other

373,176

22,491

395,667

2) Liabilities

Current portion of debentures

6,580

Debentures

521,129

Other

354,364

7,404

361,768

December 31, 2021

(In millions of Korean won)

Level 1

Level 2

Level 3

Total balance

1) Assets

Short-term financial assets at fair value

through profit or loss

35,620

5,137

40,757

Financial assets at fair value through

other comprehensive income

11,608,708

2,357,131

13,965,839

Financial assets at fair value through

profit or loss

478,401

1,046,943

1,525,344

Other

307,213

21,003

328,216

2) Liabilities

Current portion of debentures

554,106

Debentures

546,339

Other

331,956

5,438

337,394

The levels of the fair value hierarchy and its application to financial assets and liabilities are described below.

ㆍ

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

ㆍ

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly or indirectly

ㆍ

Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)

The fair value of financial instruments traded in active markets is based on quoted market prices at the statements of financial

position date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer,

broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring

market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Company is the

current bid price. These instruments are included in Level 1. The instruments included in Level 1 are listed equity

investments, most of which are classified as financial assets at fair value through other comprehensive income.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is

determined by using valuation techniques. These valuation techniques maximize the use of observable market data where

it is available and rely as little as possible on the entity-specific estimates. If all significant inputs required for a fair value

of an instrument are observable, the instrument is included in Level 2.

If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3.

-83-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company performs the fair value measurements required for financial reporting purposes, including Level 3 fair values

and discusses valuation processes and results at least once every quarter in line with the Company’s quarterly reporting

dates. The

Company’s policy is to recognize transfers between levels at the end of the reporting period, if corresponding

events or changes in circumstances have occurred.

Specific valuation techniques used to value financial instruments include:

ㆍ

Quoted market prices or dealer quotes for similar instruments

ㆍ

The fair value of forward foreign exchange contracts is determined using forward exchange rates at the statements of

financial position date, with the resulting value discounted back to present value

Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial

instruments. For trade and other receivables that are classified as current assets, the book value approximates a reasonable

estimate of fair value.

(3)

Valuation technique and the inputs

The Company utilizes a present value technique to discount cash flow and others using a proper interest rate for corporate

bonds, government and public bonds, and bank debentures that are classified as Level 2 in the fair value hierarchy.

The following table presents the valuation technique and the inputs used for major financial instruments classified as Level

3 as of December 31, 2022.

(In millions of Korean won and percentage)

Classification

Fair

value

Valuation technique

Level 3 inputs

Input range

(Weighted average)

Financial assets at fair value through other comprehensive income

Samsung Venture Investment

32,073

Discounted cash flow

Permanent growth rate

-1.0%~1.0%(0.0%)

Weighted average cost of capital

15.8%~17.8%(16.8%)

MiCo Ceramics Co., Ltd.

29,385

Discounted cash flow

Permanent growth rate

0.0%~1.0%(0.5%)

Weighted average cost of capital

13.1%~15.1%(14.1%)

TCL China Star Optoelectronics

Technology Co., Ltd. (CSOT)

1,244,889

Discounted cash flow

and others

Permanent growth rate

-1.0%~1.0%(0.0%)

Weighted average cost of capital

10.6%~12.6%(11.6%)

China Star Optoelectronics

Semiconductor Display

Technology Ltd. (CSOSDT)

230,263

Discounted cash flow

Permanent growth rate

-1.0%~1.0%(0.0%)

Weighted average cost of capital

10.6%~12.6%(11.6%)

Others

Put option on equity instruments

22,491

Binomial model

Risk-free discount rate

4.0%~4.5%, 2.5%

Price volatility

22.3%~32.3%(27.3%)

25.3%~35.3%(30.3%)

-84-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(4)

Changes in Level 3 instruments for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Financial assets

Balance as of January 1

3,430,214

6,449,139

Acquisitions

207,730

1,075,389

Disposals

(207,252)

(402,782)

Amount recognized in profit or loss

73,782

463,818

Amount recognized in other comprehensive income (loss)

(197,830)

1,543,511

Other

(3,417)

(5,698,861)

Balance as of December 31

3,303,227

3,430,214

(In millions of Korean won)

2022

2021

Financial liabilities

Balance as of January 1

5,438

9,248

Amount recognized in profit or loss

1,966

(784)

Other

(3,026)

Balance as of December 31

7,404

5,438

(5)

Sensitivity analysis for recurring fair value measurements categorized within Level 3

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value of

financial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair value

is affected by more than two input parameters, the amounts represent the most favorable or unfavorable.

The results of the sensitivity analysis for the effect on profit or loss (before tax amount for other comprehensive income or

loss) from changes in inputs for major financial instruments which are categorized within Level 3 and subject to sensitivity

analysis are as follows:

(In millions of Korean won)

Favorable changes

Unfavorable changes

Classification

Profit or loss

Equity

Profit or loss

Equity

Financial assets at fair value through

other comprehensive income

112,515

(79,168)

Others

2,669

(3,750)

For equity securities, changes in fair value are calculated with the correlation between the growth rate (-1%~1%) and the discount rate,

which are significant unobservable inputs.

Changes were calculated based on the correlation between the fair value and price volatility (-5%~5%), which is a significant

unobservable input.

-85-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

29. Segment Information

(A)

Operating segment information

The chief operating decision-maker has been identified as the Management Committee. The Company determines operating

segments based on the units reported to the Management Committee. The Management Committee reviews the operating

profits of each operating segment in order to assess the performance and to make strategic decisions regarding the allocation

of resources to the segments.

Sales revenue consists mostly of product sales. The operating segments are product-based and are identified based on the

internal organization and revenue streams. As of the reporting date, the operating segments are comprised of DX, DS, SDC,

Harman, and others.

The segment information for each reporting period is prepared after allocating the intercompany reconciliations to depreciation,

amortization of intangible assets and operating profits. Total assets and liabilities of each operating segment are excluded from

the disclosure as these have not been provided regularly to the Management Committee.

(1)

For the year ended December 31, 2022

(In millions of Korean won)

SDC

Harman

Total

Net revenue

182,489,720

98,455,270

34,382,619

13,213,694

302,231,360

Depreciation

2,520,708

28,196,959

4,768,498

331,342

35,952,098

Amortization

1,678,572

809,270

237,182

211,549

3,155,561

Operating profit

12,746,074

23,815,810

5,952,973

880,548

43,376,630

Other operating segments are not separately disclosed.

Net revenue by major product for the year ended December 31, 2022 are as follows:

(In millions of Korean won)

Image devices

Mobile devices

Memory

Display panels

Total

Net revenue

33,279,488

115,425,375

68,534,930

34,382,619

302,231,360

Other products are not separately disclosed.

-86-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(2)

For the year ended December 31, 2021

(In millions of Korean won)

SDC

Harman

Total

Net revenue

166,259,437

95,387,173

31,712,526

10,039,922

279,604,799

Depreciation

2,373,076

22,848,912

5,504,216

311,237

31,285,209

Amortization

1,435,220

939,922

239,821

229,772

2,962,152

Operating profit

17,386,554

29,192,021

4,457,365

599,097

51,633,856

Other operating segments are not separately disclosed.

Net revenue by major product for the year ended December 31, 2021 are as follows:

(In millions of Korean won)

Image devices

Mobile devices

Memory

Display panels

Total

Net revenue

31,497,420

104,680,574

72,602,237

31,712,526

279,604,799

Other products are not separately disclosed.

(B)

Regional information

The regional segment information provided to the Management Committee for the reportable segments as of and for the years

ended December 31, 2022 and 2021 are as follows:

(1)

As of and for the year ended December 31, 2022

(In millions of Korean won)

Korea

America

Europe

Asia

and Africa

China

Intercompany

elimination

Consolidated

Net revenue

48,654,656

118,974,561

50,283,975

48,692,399

35,625,769

302,231,360

Non-current assets

144,936,912

14,022,225

5,839,813

9,056,272

15,338,153

(930,233)

188,263,142

Financial instruments, deferred tax assets, investments in associates and joint ventures, and others are excluded from non-current assets.

(2)

As of and for the year ended December 31, 2021

(In millions of Korean won)

Korea

America

Europe

Asia

and Africa

China

Intercompany

elimination

Consolidated

Net revenue

43,971,631

97,903,868

50,323,287

41,834,609

45,571,404

279,604,799

Non-current assets

127,116,179

10,758,956

5,951,905

9,088,409

18,244,469

(995,135)

170,164,783

Financial instruments, deferred tax assets, investments in associates and joint ventures, and others are excluded from non-current assets.

-87-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

30. Related Party Transactions

(A)

Sale and purchase transactions

Sale and purchase transactions with related parties for the years ended December 31, 2022 and 2021 are as follows:

2022

(In millions of

Korean won)

Name of company

Sales

Disposal of

non-current

assets

Purchases

Purchase of

non-current

assets

Associates and

joint ventures

Samsung SDS

214,105

1,865,588

378,770

Samsung Electro-Mechanics

62,274

767

1,401,483

120

Samsung SDI

82,062

803,556

24,926

Cheil Worldwide

31,782

964,096

361

Other

1,353,769

15,158,969

125,053

Total

1,743,992

767

20,193,692

529,230

Other related

parties

Samsung C&T

51,447

433,100

7,423,404

Other

345,901

188

1,595,487

1,910,813

Total

397,348

188

2,028,587

9,334,217

Other

Samsung Engineering

1,666

53,793

3,249,254

S-1

13,634

510,311

54,069

Other

166,052

550,757

746,749

Total

181,352

1,114,861

4,050,072

Transactions with separate entities that are related parties of the Company.

Although these entities are not related parties of the Company in accordance with

Korean IFRS 1024

, they belong to the same large

enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

2021

(In millions of

Korean won)

Name of company

Sales

Disposal of

non-current

assets

Purchases

Purchase of

non-current

assets

Associates and

joint ventures

Samsung SDS

142,435

1,732,273

569,840

Samsung Electro-Mechanics

47,031

1,525,854

Samsung SDI

76,160

269

671,169

36,180

Cheil Worldwide

27,740

758,877

Other

1,288,094

12,361,130

118,099

Total

1,581,460

337

17,049,303

724,135

Other related

parties

Samsung C&T

79,183

32,705

334,386

4,045,297

Other

352,919

1,608,435

633,109

Total

432,102

32,705

1,942,821

4,678,406

Other

Samsung Engineering

787

48,284

2,404,314

S-1

13,819

469,979

35,762

Other

129,439

2,371

496,451

261,614

Total

144,045

2,371

1,014,714

2,701,690

Transactions with separate entities that are related parties of the Company.

Although these entities are not related parties of the Company in accordance with

Korean IFRS 1024

, they belong to the same large

enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

-88-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(B)

Balances of receivables and payables

Balances of receivables and payables arising from the sales and purchases of goods and services as of December 31, 2022

and 2021 are as follows:

December 31, 2022

(In millions of Korean won)

Name of company

Receivables

Payables

Associates and

joint ventures

Samsung SDS

49,792

512,022

Samsung Electro-Mechanics

385

133,952

Samsung SDI

121,605

92,452

Cheil Worldwide

223

453,545

Other

371,575

1,236,016

Total

543,580

2,427,987

Other related parties

Samsung C&T

217,818

2,783,240

Other

20,830

250,103

Total

238,648

3,033,343

Othe

Samsung Engineering

331

1,251,039

S-1

3,839

73,102

Other

15,647

545,684

Total

19,817

1,869,825

Balances due from and to separate entities that are related parties of the Company.

Payables and others include lease liabilities.

Although these entities are not related parties of the Company in accordance with

Korean IFRS 1024

, they belong to the same large

enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

December 31, 2021

(In millions of Korean won)

Name of company

Receivables

Payables

Associates and

joint ventures

Samsung SDS

64,521

616,949

Samsung Electro-Mechanics

3,659

176,549

Samsung SDI

130,638

100,835

Cheil Worldwide

206

428,090

Other

397,709

1,361,554

Total

596,733

2,683,977

Other related parties

Samsung C&T

220,550

1,739,997

Other

20,306

251,766

Total

240,856

1,991,763

Other

Samsung Engineering

338

1,151,536

S-1

2,423

40,558

Other

48,703

185,256

Total

51,464

1,377,350

Balances due from and to separate entities that are related parties of the Company.

Payables and others include lease liabilities.

Although these entities are not related parties of the Company in accordance with

Korean IFRS 1024

, they belong to the same large

enterprise group in accordance with the Monopoly Regulation and Fair Trade Act.

-89-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(C)

For the years ended December 31, 2022 and 2021, the Company invested W 907,958 million and W 47,090 million,

respectively, in associates and joint ventures. In addition, the Company recovered W 13,087 million and W 19,169

million of investments in associates and joint ventures for the years ended December 31, 2022 and 2021.

(D)

For the year ended December 31, 2022, the Company declared W 1,663,149 million of dividends (W 3,527,449 million

for the year ended December 31, 2021) to the related parties. In addition, for the year ended December 31, 2022, the

Company declared W 128,232 million (W 267,738 million for the year ended December 31, 2021) of dividends to the

entities that are not related parties of the Company in accordance with

Korean IFRS 1024

, but belong to the same

conglomerate according to the Monopoly Regulation and Fair Trade Act. As of December 31, 2022 and 2021, there is

no dividend payables to the entities that are not in scope of Korean IFRS 1024.

(E)

For the year ended December 31, 2022, the Company entered into lease agreements with its related parties amounted to

W 25,243 million (W 12,602 million for the year ended December 31, 2021), and the lease payments made to the related

parties for the years ended December 31, 2022 and 2021 amounted to W 22,607 million and W 31,893 million,

respectively.

(F)

Key management compensation

The compensation paid or payable to key management (executive directors) for their services for the years ended December

31, 2022 and 2021 consists of:

(In millions of Korean won)

2022

2021

Short-term employee benefits

14,768

20,370

Post-employment benefits

612

886

Other long-term employee benefits

5,434

8,092

-90-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

31. Information for Non-Controlling Interests

(A)

Changes in accumulated non-controlling interests

The profit or loss allocated to non-controlling interests and accumulated non-controlling interests of subsidiaries that are

material to the Company for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

Samsung Display Co., Ltd. and its subsidiaries

2022

2021

Percentage of non-controlling interests

15.2%

Balance as of January 1

8,028,555

7,723,784

Profit for the year

853,290

580,164

Dividends

(3,947)

(3,123)

Other

(24,186)

(272,270)

Balance as of December 31

8,853,712

8,028,555

(B)

The summarized financial information for each subsidiary with non-controlling interests that are material to the Company

before the intercompany eliminations for the years December 31, 2022 and 2021 are as follows:

(1)

Summarized consolidated statements of financial position

(In millions of Korean won)

Samsung Display Co., Ltd. and its subsidiaries

December 31, 2022

December 31, 2021

Current assets

42,082,412

35,220,985

Non-current assets

23,070,658

24,773,119

Current liabilities

6,294,310

7,539,403

Non-current liabilities

1,220,097

1,359,478

Equity attributable to:

57,638,663

51,095,223

Owners of the parent company

57,552,528

51,012,895

Non-controlling interests

86,135

82,328

(2)

Summarized consolidated statements of comprehensive income

(In millions of Korean won)

Samsung Display Co., Ltd. and its subsidiaries

2022

2021

Sales

34,298,283

31,557,504

Profit for the year

6,614,496

3,511,314

Other comprehensive income (loss)

(67,942)

1,256,904

Total comprehensive income attributable to:

6,546,554

4,768,218

Owners of the parent company

6,539,633

4,752,963

Non-controlling interests

6,921

15,255

-91-

Samsung Electronics Co., Ltd. and its subsidiaries

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(3)

Summarized consolidated statements of cash flows

(In millions of Korean won)

Samsung Display Co., Ltd. and its subsidiaries

2022

2021

Cash flows from operating activities

11,395,827

10,943,029

Cash flows from investing activities

(8,654,933)

(9,927,110)

Cash flows from financing activities

(1,146,117)

(1,284,749)

Effect of exchange rate changes on cash and cash equivalents

(44,426)

52,154

Increase (decrease) in cash and cash equivalents

1,550,351

(216,676)

Cash and cash equivalents at beginning of the year

758,859

975,535

Cash and cash equivalents at end of year

2,309,210

758,859

-92-

Samsung Electronics

Business

Report-XBRL

B. Separate financial statements

Auditor’s report of separate financial statements start from the next page.

SEPARATE FINANCIAL STATEMENTS OF

SAMSUNG ELECTRONICS CO., LTD.

INDEX TO FINANCIAL STATEMENTS

Page

Independent Auditor’s Report

1-4

Separate Financial Statements

Separate Statements of Financial Position

5-7

Separate Statements of Profit or Loss

Separate Statements of Comprehensive Income

Separate Statements of Changes in Equity

10-13

Separate Statements of Cash Flows

14-15

Notes to the Separate Financial Statements

Independent Auditor

’s

Report

To the Shareholders and the Board of Directors of Samsung Electronics Co., Ltd.

Audit Opinion

We have audited the accompanying financial statements of Samsung Electronics Co., Ltd. (the

“Company”),

which comprise the separate statements of financial position as of December 31, 2022 and

2021, and the separate statements of profit or loss, the separate statements of comprehensive income, the

separate statements of changes in equity and the separate statements of cash flows, for the years then

ended, and notes to the separate financial statements, including a summary of significant accounting

policies.

In our opinion, the accompanying separate financial statements present fairly, in all material respects,

the separate financial position of the Company as of December 31, 2022 and 2021, and its separate

financial performance and its separate cash flows for the years then ended in accordance with Korean

International Financial Reporting

Standards (“K

IFRS”).

Basis for Audit Opinion

We conducted our audits in accordance with the

International Standards on Auditing (“

ISAs

”)

. Our

responsibilities under those standards are further described in the

Auditor’s Responsibilities for the Audit of

the Separate Financial Statements

section of our report. We are independent of the Company in accordance

with the International Ethics Standards Board for Accountants’

Code of Ethics for Professional Accountants

(

“

IESBA Code

”

) together with the ethical requirements that are relevant to our audit of the financial

statements, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We

believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion.

Key Audit Matter

The key audit matter is a matter that, in our professional judgment, was of most significance in our audit of

the separate financial statements of the current period. This matter was addressed in the context of our

audit of the separate financial statements as a whole, and in forming our opinion thereon, and we do not

provide a separate opinion on this matter.

(A) Sales deduction related to sales promotion activities

Reasons why the matter was determined to be a key audit matter:

The Device eXperience (DX) business division performs sales promotion activities, such as price or

volume discounts and incentives, based on explicit or implicit agreements with customers, including retail

and telecommunication companies. As disclosed in Notes 2 (Significant Accounting Policies) and 3

(Critical Accounting Estimates and Assumptions), these activities are recognized as deductions from

revenue at the expected payment amount.

As for the appropriateness of the revenue deduction amounts, such amounts may involve significant

management estimates and judgments. In addition, we believe that those amounts could be material to

the separate financial statements. As such, we determined the sales deduction related to sales promotion

activities as a key audit matter.

Deloitte Anjin LLC

9F., One IFC,

10, Gukjegeumyung-ro,

Youngdeungpo-gu, Seoul

07326, Korea

Tel: +82 (2) 6676 1000

Fax: +82 (2) 6674 2114

www.deloitteanjin.co.kr

How the Key Audit Matter was addressed in the audit:

Our audit procedures with respect to the Company’s sales promotion activities related to the sales of

products included, but were not limited to the following:

•

Obtained

an understanding of management’s accounting policies, processes

, and internal controls

related to the sales deduction.

•

Obtained an

understanding and evaluated the Company’s

information technology system related to

the sales deduction.

•

Assessed

the Company’s internal controls relating to the approval process of the sales

deduction

policy.

•

Evaluated

the Company’s internal controls relating to the approval process of the sales

deduction

estimation and post-settled amounts.

•

Evaluated the estimates and accompanying assumptions by inspecting supporting documentation

relating to the sales deduction transactions.

•

Examined the sales deduction amount by comparing the sales deduction estimates to post-settled

amounts and inspecting supporting documentation.

Responsibilities of Management and Those Charged with Governance for the Separate Financial

Statements

Management is responsible for the preparation and fair presentation of the accompanying separate

financial statements in accordance with K-IFRS, and for such internal control as they determine is

necessary to enable the preparation of separate financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the separate financial statements, management of the Company is responsible for assessing

the Company’s ability to continue as a going concern, disclosing, as a

pplicable, matters related to going

concern and using the going concern basis of accounting unless management either intends to liquidate

the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are r

esponsible for overseeing the Company’s financial reporting

process.

Auditor’s Responsibilities for the Audit of the Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the separate financial statements as a

whol

e are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report

that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that

an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the

basis of these separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain

professional skepticism throughout the audit. We also:

-2-

•

Identify and assess the risks of material misstatement of the separate financial statements, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and obtain

audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

•

Conclude on the appropriateness of the management’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related

to events or conditions that may cast significant doubt on the C

ompany’s ability to

continue as a

going concern. If we conclude that a material uncertainty exists, we are required to draw attention

in our auditor’s report to the related disclosures in the separate financial

statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence

obtained up to the date of our auditor’s report. However, future

events or conditions may cause the

Company to cease to continue as a going concern.

•

Evaluate the overall presentation, structure and content of the separate financial statements,

including the disclosures, and whether the separate financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Company to express an opinion on the financial statements. We are

responsible for the direction, supervision and performance of the group audit. We are solely

responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope

and timing of the audit and significant audit findings, including any significant deficiencies in internal

control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and to communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, related

safeguards.

From the matters communicated with those charged with governance, we determine those matters that

were of most significance in the audit of the separate financial statements of the current period and are

therefore the key audit matters. We describe these matters

in our auditor’s report unless law or regulation

precludes public disclosure about the matter or when, in extremely rare circumstances, we determine

that a matter should not be communicated in our report because the adverse consequences of doing so

would reasonably be expected to outweigh the public interest benefits of such communication.

-3-

The engagement partner on the audit resulting in this independent

auditor’s

report is Byung Moon Yoo.

Seoul, Korea

February 15, 2023

Notice to Readers

This report is effective as of February 15, 2023, the auditor

’s

report date. Certain subsequent events or

circumstances may have occurred between the auditor

’s

report date and the time the auditor

’s

report is

read. Such events or circumstances could significantly affect the financial statements and may result

in modifications to the auditor

’s

report.

-4-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF FINANCIAL POSITION

The above separate statements of financial position should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

December 31,

Notes

2022

2021

2022

2021

KRW

USD

Assets

Current assets

Cash and cash equivalents

4, 28

3,921,593

3,918,872

3,037,290

3,035,183

Short-term financial instruments

4, 28

137

15,000,576

106

11,618,010

Trade receivables

4, 5, 7, 28

20,503,223

33,088,247

15,879,833

25,626,988

Non-trade receivables

4, 7, 28

2,925,006

1,832,488

2,265,430

1,419,270

Prepaid expenses

1,047,900

817,689

811,603

633,304

Inventories

27,990,007

15,973,053

21,678,380

12,371,198

Other current assets

4, 28

2,674,792

2,922,491

2,071,638

2,263,481

59,062,658

73,553,416

45,744,280

56,967,434

Non-current assets

Financial assets at fair value through

other comprehensive income

4, 6, 28

1,364,325

1,662,532

1,056,676

1,287,638

Financial assets at fair value through

profit or loss

4, 6, 28

283

2,135

219

1,654

Investments in subsidiaries, associates

and joint ventures

57,397,249

56,225,599

44,454,414

43,546,966

Property, plant and equipment

123,266,986

103,667,025

95,470,805

80,290,552

Intangible assets

8,561,424

8,657,456

6,630,859

6,705,237

Net defined benefit assets

4,410,223

2,324,291

3,415,736

1,800,173

Deferred income tax assets

2,142,512

1,211,100

1,659,385

938,002

Other non-current assets

4, 7, 28

3,878,090

3,808,630

3,003,597

2,949,799

201,021,092

177,558,768

155,691,691

137,520,021

Total assets

260,083,750

251,112,184

201,435,971

194,487,455

-5-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF FINANCIAL POSITION

The above separate statements of financial position should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

December 31,

Notes

2022

2021

2022

2021

KRW

USD

Liabilities and Equity

Current liabilities

Trade payables

4, 28

8,729,315

11,557,441

6,760,892

8,951,287

Short-term borrowings

4, 5, 12, 28

2,381,512

9,204,268

1,844,491

7,128,745

Other payables

4, 28

18,554,543

13,206,753

14,370,573

10,228,686

Advances received

320,689

474,731

248,375

367,681

Withholdings

4, 28

523,354

624,585

405,340

483,744

Accrued expenses

4, 17, 28

8,359,296

8,275,410

6,474,310

6,409,340

Current income tax liabilities

2,533,481

5,599,896

1,962,192

4,337,143

Current portion of long-term liabilities

4, 12, 13, 28

135,753

139,328

105,141

107,910

Provisions

4,059,491

3,643,853

3,144,093

2,822,180

Other current liabilities

488,613

341,038

378,433

264,135

46,086,047

53,067,303

35,693,840

41,100,851

Non-current liabilities

Debentures

4, 13, 28

24,912

29,048

19,294

22,498

Long-term borrowings

4, 12, 28

654,979

431,915

507,284

334,520

Long-term other payables

4, 28

2,439,232

2,653,715

1,889,196

2,055,314

Long-term provisions

1,423,165

1,659,774

1,102,247

1,285,502

Other non-current liabilities

39,224

76,697

30,378

59,401

4,581,512

4,851,149

3,548,399

3,757,235

Total liabilities

50,667,559

57,918,452

39,242,239

44,858,086

-6-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF FINANCIAL POSITION

The above separate statements of financial position should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

December 31,

Notes

2022

2021

2022

2021

KRW

USD

Equity

Preference shares

119,467

92,528

Ordinary shares

778,047

602,601

Share premium

4,403,893

3,410,834

Retained earnings

204,388,016

188,774,335

158,299,388

146,206,526

Other components of equity

(273,232)

(882,010)

(211,619)

(683,120)

Total equity

209,416,191

193,193,732

162,193,732

149,629,369

Total liabilities and equity

260,083,750

251,112,184

201,435,971

194,487,455

-7-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF PROFIT OR LOSS

The above separate statements of profit or loss should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

For the years ended December 31,

Notes

2022

2021

2022

2021

KRW

USD

Revenue

211,867,483

199,744,705

164,092,267

154,703,124

Cost of sales

152,589,393

135,823,433

118,181,134

105,195,827

Gross profit

59,278,090

63,921,272

45,911,133

49,507,297

Selling and administrative expenses

21, 22

33,958,761

31,928,110

26,301,205

24,728,457

Operating profit

25,319,329

31,993,162

19,609,928

24,778,840

Other non-operating income

4,576,378

7,359,004

3,544,424

5,699,580

Other non-operating expense

296,344

745,978

229,520

577,762

Financial income

9,734,299

3,796,979

7,539,256

2,940,776

Financial expense

9,641,742

3,698,675

7,467,570

2,864,640

Profit before income tax

29,691,920

38,704,492

22,996,518

29,976,794

Income tax expense

4,273,142

7,733,538

3,309,566

5,989,658

Profit for the year

25,418,778

30,970,954

19,686,952

23,987,136

Earnings per share

(in Korean won, in US dollars)

- Basic

3,742

4,559

2.90

3.53

- Diluted

3,742

4,559

2.90

3.53

-8-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF COMPREHENSIVE INCOME

The above separate statements of comprehensive income should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

For the years ended December 31,

Notes

2022

2021

2022

2021

KRW

USD

Profit for the year

25,418,778

30,970,954

19,686,952

23,987,136

Other comprehensive income (loss)

Items that will not be reclassified subsequently to

profit or loss:

Loss on valuation of financial assets at

fair value through other comprehensive income,

net of tax

6, 20

(208,883)

(99,916)

(161,781)

(77,385)

Remeasurement of net defined benefit assets,

net of tax

14, 20

822,001

(513,309)

636,643

(397,560)

Items that may be reclassified subsequently to

profit or loss

Other comprehensive income (loss) for the year,

net of tax

613,118

(613,225)

474,862

(474,945)

Total comprehensive income for the year

26,031,896

30,357,729

20,161,814

23,512,191

-9-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF CHANGES IN EQUITY

The above separate statements of changes in equity should be read in conjunction with the accompanying notes.

(In millions of Korean won)

2021 KRW

Notes

Preference

Ordinary

premium

Retained

earnings

Other

components of

equity

Total

Balance as of January 1, 2021

119,467

778,047

4,403,893

178,284,102

(268,785)

183,316,724

Profit for the year

30,970,954

Loss on valuation of financial assets at fair value through

other comprehensive income, net of tax

6, 20

(99,916)

Remeasurement of net defined benefit assets, net of tax

14, 20

(513,309)

Total comprehensive income (loss) for the year

30,970,954

(613,225)

30,357,729

Dividends declared

(20,480,721)

Total transactions with owners

(20,480,721)

Balance as of December 31, 2021

119,467

778,047

4,403,893

188,774,335

(882,010)

193,193,732

-10-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF CHANGES IN EQUITY

The above separate statements of changes in equity should be read in conjunction with the accompanying notes.

(In thousands of US dollars (Note 2.29))

2021 USD

Notes

Preference

Ordinary

premium

Retained

earnings

Other

components of

equity

Total

Balance as of January 1, 2021

92,528

602,601

3,410,834

138,081,796

(208,175)

141,979,584

Profit for the year

23,987,136

Loss on valuation of financial assets at fair value through

other comprehensive income, net of tax

6, 20

(77,385)

Remeasurement of net defined benefit assets, net of tax

14, 20

(397,560)

Total comprehensive income (loss) for the year

23,987,136

(474,945)

23,512,191

Dividends declared

(15,862,406)

Total transactions with owners

(15,862,406)

Balance as of December 31, 2021

92,528

602,601

3,410,834

146,206,526

(683,120)

149,629,369

-11-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF CHANGES IN EQUITY

The above separate statements of changes in equity should be read in conjunction with the accompanying notes.

(In millions of Korean won)

2022 KRW

Notes

Preference

Ordinary

premium

Retained

earnings

Other

components of

equity

Total

Balance as of January 1, 2022

119,467

778,047

4,403,893

188,774,335

(882,010)

193,193,732

Profit for the year

25,418,778

Gain (loss) on valuation of financial assets at fair value through

other comprehensive income, net of tax

6, 20

4,340

(213,223)

(208,883)

Remeasurement of net defined benefit assets, net of tax

14, 20

822,001

Total comprehensive income for the year

25,423,118

608,778

26,031,896

Dividends declared

(9,809,437)

Total transactions with owners

(9,809,437)

Balance as of December 31, 2022

119,467

778,047

4,403,893

204,388,016

(273,232)

209,416,191

-12-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF CHANGES IN EQUITY

The above separate statements of changes in equity should be read in conjunction with the accompanying notes.

(In thousands of US dollars (Note 2.29))

2022 USD

Notes

Preference

Ordinary

premium

Retained

earnings

Other

components of

equity

Total

Balance as of January 1, 2022

92,528

602,601

3,410,834

146,206,526

(683,120)

149,629,369

Profit for the year

19,686,952

Gain (loss) on valuation of financial assets at fair value through

other comprehensive income, net of tax

6, 20

3,361

(165,142)

(161,781)

Remeasurement of net defined benefit assets, net of tax

14, 20

636,643

Total comprehensive income for the year

19,690,313

471,501

20,161,814

Dividends declared

(7,597,451)

Total transactions with owners

(7,597,451)

Balance as of December 31, 2022

92,528

602,601

3,410,834

158,299,388

(211,619)

162,193,732

-13-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF CASH FLOWS

The above separate statements of cash flows should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

For the years ended December 31,

Notes

2022

2021

2022

2021

KRW

USD

Operating activities

Profit for the year

25,418,778

30,970,954

19,686,952

23,987,136

Adjustments

31,039,388

25,168,062

24,040,138

19,492,771

Changes in assets and liabilities arising from

operating activities

(6,868,269)

(5,781,655)

(5,319,504)

(4,477,916)

Cash generated from operations

49,589,897

50,357,361

38,407,586

39,001,991

Interest received

339,560

282,918

262,991

219,121

Interest paid

(287,488)

(125,036)

(222,661)

(96,841)

Dividends received

3,551,435

6,560,011

2,750,602

5,080,756

Income tax paid

(8,404,655)

(5,825,185)

(6,509,441)

(4,511,631)

Net cash from operating activities

44,788,749

51,250,069

34,689,077

39,693,396

Investing activities

Net decrease in short-term financial instruments

15,000,439

13,600,708

11,617,904

10,533,806

Disposal of financial assets at fair value

through other comprehensive income

10,976

8,501

Acquisition of financial assets at fair value

through other comprehensive income

(234,975)

(181,989)

Disposal of financial assets at fair value

through profit or loss

1,744

912

1,351

706

Disposal of investments in subsidiaries, associates

and joint ventures

165,089

605,607

127,862

469,045

Acquisition of investments in subsidiaries, associates

and joint ventures

(1,001,723)

(138,858)

(775,839)

(107,546)

Disposal of property, plant and equipment

288,684

408,560

223,587

316,431

Acquisition of property, plant and equipment

(39,160,176)

(36,021,504)

(30,329,723)

(27,898,808)

Disposal of intangible assets

6,242

5,809

4,834

4,499

Acquisition of intangible assets

(3,298,378)

(2,459,929)

(2,554,608)

(1,905,225)

Cash outflow from other investing activities

(136,783)

(201,537)

(105,939)

(156,091)

Net cash used in investing activities

(28,123,886)

(24,435,207)

(21,782,070)

(18,925,172)

-14-

Samsung Electronics Co., Ltd.

SEPARATE STATEMENTS OF CASH FLOWS

The above separate statements of cash flows should be read in conjunction with the accompanying notes.

(In millions of Korean won, in thousands of US dollars (Note 2.29))

For the years ended December 31,

Notes

2022

2021

2022

2021

KRW

USD

Financing activities

Net decrease in short-term borrowings

(6,700,826)

(3,288,858)

(5,189,818)

(2,547,235)

Repayment of debentures and long-term borrowings

(155,264)

(117,963)

(120,253)

(91,363)

Dividends paid

(9,808,974)

(20,478,233)

(7,597,092)

(15,860,478)

Net cash used in financing activities

(16,665,064)

(23,885,054)

(12,907,163)

(18,499,076)

Effect of foreign exchange rate changes

2,922

2,263

Net increase in cash and cash equivalents

2,721

2,929,827

2,107

2,269,163

Cash and cash equivalents

Beginning of the year

3,918,872

989,045

3,035,183

766,020

End of the year

3,921,593

3,918,872

3,037,290

3,035,183

-15-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

As of December 31, 2022 and 2021, and

For the years ended December 31, 2022 and 2021

1. General Information

Samsung Electronics Co., Ltd. (the “Company”) was incorporated under the laws of the Republic of Korea in 1969 and

listed its shares on the Korea Stock Exchange in 1975. The Company operates two business divisions: Device eXperience

(“DX”) and Device Solutions (“DS”). DX division includes digital TVs, refrigerators, mobile phones, and communication

systems. DS division includes semiconductor products such as memory, foundry and system LSI. The Company is

domiciled in the Republic of Korea and is located in Suwon, the Republic of Korea.

These financial statements have been prepared in accordance with

Korean IFRS 1027, Separate Financial Statements

2. Significant Accounting Policies

2.1 Basis of Presentation

The principal accounting policies used to prepare the separate financial statements are set out below. Except for the effect

of the amendments to the Korean IFRS and new interpretations set out below, the principal accounting policies used to

prepare the separate financial statements as of and for the year ended December 31, 2022 are consistent with those used to

prepare the separate financial statements as of and for the year ended December 31, 2021.

The Company maintains its accounting records in Korean won and prepares the statutory financial statements in Korean

language (Hangul) in accordance with International Financial Reporting Standards as adopted by the Republic of Korea

(“Korean IFRS”). The a

ccompanying separate financial statements have been restructured and translated into English from

the Korean language financial statements.

Certain information attached to the Korean language financial statements that are not required for a fair presentation of the

Company’s

financial position, financial performance, or cash flows, are not presented in the accompanying separate

financial statements.

The separate financial statements of the Company have been prepared in accordance with Korean IFRS. These are the

standards, subsequent amendments and related interpretations issued by the International Accounting Standards Board

(IASB) that have been adopted by the Republic of Korea.

Korean IFRS permits the use of critical accounting estimates in the preparation of the separate financial statements and

requires management judgments in applying the accounting policies. The areas involving a higher degree of judgment or

complexity, or areas where assumptions and estimates are significant to the separate financial statements, are disclosed in

Note 3.

-16-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

2.2 Changes in Accounting Policies and Disclosures

(A)

New and amended standards adopted by the Company

The Company applied the following amended and/or enacted standards for the first time for their annual reporting period

commencing on January 1, 2022:

Amendments to Korean IFRS 1116, Lease

The amendments to Korean IFRS 1116 introduced a practical expedient that provided practical relief to lessees in

accounting for rent concessions occurring as a direct consequence of COVID-19. The amendments extend the practical

expedient to apply to reduction in lease payments originally due on or before 30 June 2022. The application of amendments

does not have a sig

nificant impact on the Company’s year

-end financial statements.

Amendments to Korean IFRS 1103, Business Combinations

The amendments update Korean IFRS 1103 so that it refers to the amended conceptual framework for financial reporting

for assets and liabilities recognized upon business combination, along with adding requirement that for transactions and

other events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 to identify the liabilities it

has assumed in a business combination. The amendments also add an explicit statement that an acquirer does not recognize

contingent assets acquired in a business combination. The application of amendments does not have a significant impact

on the Company’s

year-end financial statements.

Amendments to Korean IFRS 1016, Property, Plant and Equipment

The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling

items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the

manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the cost of

producing those items, in profit or loss. The application of amendments does not have a significant impact on the

Company’s year

-end financial statements.

Amendments to Korean IFRS 1037, Provisions, Contingent Liabilities and Contingent Assets

The amendments specify that the cost of fulfilling a contract comprises the costs that relate directly to the contract, and

that costs that relate directly to a contract consist of both the incremental costs of fulfilling that contract and an allocation

of other costs that relate directly to fulfilling contracts. The application of the amendments does not have a significant

impact on the Company’s

year-end financial statements.

(B)

New and amended standards not yet adopted by the Company

The amended accounting standards issued that are not mandatory for the annual reporting period commencing on January

1, 2022 and have not been early adopted by the Company are as follows:

Amendments to Korean IFRS 1001, Presentation of Financial Statements

The amendments clarify that the classification of liabilities as current or non-current is based on the rights that are in

existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity

will exercise its right to defer settlement of a liability, and elucidate that settlement refers to the transfer to the counterparty

of cash, equity instruments, other assets or services. The amendments are effective for annual reporting periods beginning

on or after January 1, 2023, with earlier application permitted.

-17-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

Amendments to Korean IFRS 1001, Presentation of Financial Statements

The amendments require companies to define and disclose their 'material' accounting policy information instead of its

'significant' accounting policies. The amendments explain how an entity can identify material accounting policy

information. The amendments to K-IFRS 1001 are effective for annual periods beginning on or after January 1, 2023, with

earlier application permitted and are applied prospectively.

Amendments to Korean IFRS 1008, Accounting Policies, Changes in Accounting Estimates and Errors

The amendments clarify the definition of a change in accounting estimates, and specify how to distinguish from a change

in accounting policies. The amendments are effective for annual periods beginning on or after January, 1 2023 to changes

in accounting policies and changes in accounting estimates that occur on or after the beginning of that period, with earlier

application permitted.

Amendments to Korean IFRS 1012, Income Taxes

The amendments add to the initial recognition exemption that the initial recognition exemption does not apply to

transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The

amendments are effective for annual reporting periods beginning on or after January 1, 2023, with earlier application

permitted.

2.3 Subsidiaries, Associates and Joint Ventures

The Company, as the ultimate controlling company in accordance with Korean IFRS 1110

Consolidated Financial

Statements

recognizes investments in subsidiaries, associates and joint ventures under the cost method in accordance with

Korean IFRS 1027

Separate Financial Statements

on the Company’s separate financial statemen

ts.

If there is any objective evidence that the investment in the subsidiaries, associates and joint ventures is impaired, the

Company recognizes the difference between the recoverable amount and its carrying amount as an impairment loss.

2.4 Foreign Currency Translation

(A)

Functional and presentation currency

Items included in the separate financial statements of each of

the Company’s

entities are measured using the currency of

the primary economic environment in which each entity operates

(the “functional currency”). The separate financial

statements are presented in Korean won, which is the parent company

’

s functional and presentation currency.

(B)

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates

of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the

settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities

denominated in foreign currencies are recognized in profit or loss. Exchange differences arising on non-monetary financial

assets and liabilities such as equity instruments at fair value through profit or loss and equity instruments at fair value

through other comprehensive income are recognized in profit or loss and other comprehensive income, respectively, as

part of the fair value gain or loss.

-18-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

2.5 Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, and other short-term investment assets

with high liquidity that are readily convertible to a known amount of cash and are subject to an insignificant risk of change

in value.

2.6 Financial Assets

(A)

Classification

From January 1, 2018, the initial application date for Korean IFRS 1109

Financial Instruments,

the Company classifies its

financial assets in the following measurement categories:

Financial assets measured at fair value (changes in fair value recognized in either other comprehensive income, or

profit or loss).

Financial assets measured at amortized cost.

The classification depends on the Company’s business model for managing the financial assets and the contractual terms

of the cash flows.

For financial assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive

income. For investments in debt instruments, this will depend on the business model in which the investment is held. The

Company reclassifies debt investments only when its business model for managing those assets changes.

For investments in equity instruments that are not held for trading, classification will depend on whether the Company has

made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through

other comprehensive income. Changes in fair value of the investments in equity instruments that are not elected to be

accounted for as other comprehensive income are recognized in profit or loss.

-19-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(B)

Measurement

At initial recognition, the Company measures a financial asset at its fair value. In the case of financial asset not measured

at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset or

the issuance of the financial liabilities are added to its fair value. Transaction costs of financial assets carried at fair value

through profit or loss are expensed in profit or loss.

Hybrid (combined) contracts with embedded derivatives are considered in their entirety when determining whether their

cash flows solely consist of the payments of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the

cash flow characteristics of the asset. The Company classifies its debt instruments into one of the following three

measurement categories:

①

Financial assets measured at amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely the payments of

principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at

amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or

impaired. Interest income from these financial assets is included in ‘financial income’ using the effective interest rate

method.

②

Financial assets measured at fair value through other comprehensive income

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash fl

ows

represent solely the payments of principal and interest, are measured at fair value through other comprehensive income.

Movements in the carrying amount are taken through other comprehensive income, except for the recognition of

impairment loss (reversal of impairment loss), interest income and foreign exchange gains and losses which are recognized

in profit or loss. When the financial assets are derecognized, the cumulative gain or loss previously recognized in other

comprehensive income is reclassified from equity to profit or loss. Interest income from these financial assets is included

in ‘financial income’ using the effective interest rate method. Foreign exchange gains and losses are presented in ‘financial

income’ or ‘financial expenses’ and impairment losses are presented in ‘other non

operating expenses’.

③

Financial assets measured at fair value through profit or loss

Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income are measured at

fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through

profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented in the separate statement

of profit or l

oss within ‘other non

operating income’ or ‘other non

operating expenses’ in the year in which it arises.

-20-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

Equity instruments

The Company subsequently measures all equity investments at fair value. Where the Company’s management has elected

to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent

reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. When the

financial asset is derecognized, the cumulative gain or loss on valuation of financial assets at fair value through other

comprehensive income recognized in equity is reclassified to retained earnings. Dividend income from such investments

continue to be recognized in profit or loss

as ‘other non

operating income’ when the right to receive

the payments is

established.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in ‘other non

-operating

income’ or ‘other non

operating expenses’ in

the separate statements of profit or loss as applicable.

(C)

Impairment

The Company assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried

at amortized cost and fair value through other comprehensive income. The impairment methodology applied depends on

whether there has been a significant increase in credit risk. For trade receivables, the Company applies the simplified

approach, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

(D)

Recognition and derecognition

Regular way purchases and sales of financial assets are recognized or derecognized on a trade date basis. Financial assets

are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and

the Company has transferred substantially all the risks and rewards of ownership. If a transfer does not result in

derecognition because the Company has retained substantially all the risks and rewards of ownership of the transferred

asset, the Company continues to recognize the transferred asset in its entirety and recognizes a financial liability for the

consideration received. The Company classifies

the financial liability as ‘borrowings’ in the separate statement of financial

position.

(E)

Offsetting of financial instruments

Financial assets and liabilities are offset and the net amount is reported in the statements of financial position when there

is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or, realize

the assets and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and

must be enforceable in the normal course of business, even in the event of default, insolvency or bankruptcy of the

Company or the counterparty.

2.7 Trade Receivables

Trade receivables are amounts due from customers for inventories sold or services performed in the ordinary course of

business. If collection is expected within one year or less, they are classified as current assets. If collection is expected

beyond one year, they are presented as non-current assets. Trade receivables are recognized initially at transaction price

and subsequently measured at amortized cost using the effective interest method, less loss allowance, unless the trade

receivables bear significant financial component.

-21-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

2.8 Inventories

Inventories are stated at lower of the cost and net realizable value. Cost is determined using the average cost method,

except for materials in transit. The cost of finished goods and work in progress comprises raw materials, direct labor, other

direct costs and related production overheads (based on normal operating capacity). It excludes costs of idle plant and

abnormal waste. Net realizable value is the estimated selling price in the ordinary course of business, less applicable

variable selling expenses.

The Company regularly estimates the changes in future customer demand in the products that may cause a significant

change in the valuation allowance and recognizes the valuation allowance if there is any case such as excess, obsolescence

and decline in market value. Loss on valuation of inventories is recorded as cost of sales.

2.9 Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Historical cost includes expenditures that are directly attributable to the acquisition. Subsequent costs are included in the

asset’s carrying amount or recognized as a separate asset, as approp

riate, only when it is probable that future economic

benefits associated with the cost will flow to the Company and the cost can be measured reliably. The carrying amounts

of the replaced parts are derecognized and the repairs and maintenance expenses are recognized in profit or loss in the

period they are incurred.

Depreciation on tangible assets is calculated using the straight-line method to allocate the difference between their cost

and their residual values over their estimated useful lives. Land is not depreciated. Costs that are directly attributable to

the acquisition, construction or production of a qualifying asset, including capitalized interest costs, form part of the cost

of that asset and are amortized over the estimated useful lives.

The Com

pany’s

policy is that property, plant and equipment should be depreciated over the following estimated useful

lives:

Estimated useful lives

Buildings and structures

15, 30 years

Machinery and equipment

5 years

Other

5 years

The depreciation method, residual values and useful lives of property, plant and equipment are reviewed, and adjusted if

appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable

amount if the asset’s carrying amoun

t is greater than its estimated recoverable amount. Gains and losses on disposals are

determined by comparing the proceeds with the carrying amount and are recognized in the separate statements of profit or

loss as ‘other non

operating income’ or ‘other no

operating expenses’.

2.10 Borrowing Costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a

qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended

use. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying

assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are expensed in the period in

which they are incurred.

-22-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

2.11 Intangible Assets

Goodwill represents the excess of the cost of acquisition over the fair value of the Company’s share of the net identifiable

assets of the acquired subsidiaries, associates, joint ventures and businesses at the date of acquisition. Goodwill on an

acquisition of businesses is included in intangible assets and goodwill on an acquisition of subsidiaries, associates and joint

ventures’ shares is included in the investments in

subsidiaries, associates and joint ventures.

Intangible assets, except for goodwill, are initially recognized at their historical cost and carried at cost less accumulated

amortization and accumulated impairment losses.

Internally generated development costs are the aggregate costs recognized after meeting the asset recognition criteria,

including technical feasibility, and determined to have future economic benefits. Membership rights and certain trademarks

are regarded as intangible assets with an indefinite useful life and not amortized because there is no foreseeable limit to

the period over which the assets are expected to be utilized. However, the Company records impairment based on its

reasonable estimation of the benefits associated with the membership rights and assessment of impairment indicators, such

as a decline in the market value. Intangible assets with definite useful lives such as trademarks, licenses, and other

intangible assets, are amortized using the straight-line method over their estimated useful lives.

The Company’s

policy is that intangible assets should be amortized over the following estimated useful lives:

Estimated useful lives

Development costs

2 years

Trademarks, licenses and other intangible assets

5 - 10 years

2.12 Impairment of Non-Financial Assets

Goodwill or intangible assets with indefinite useful lives are not subject to amortization and are tested annually for

impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount

by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s

fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest

level for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill

that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

2.13 Assets Held-for-Sale (Disposal Group)

Non-current assets (or disposal groups) are classified as assets held-for-sale when their carrying amount is to be recovered

principally through a sale transaction and the sale is considered highly probable. The assets are measured at the lower of

carrying amount and the fair value less costs to sell. Gain or loss on disposal is determined by comparing the proceeds

with the carrying amount of relevant assets, and is recognized in the statements of profit or loss as

‘

other non-operating

income’ or ‘

other non-operating

expenses’.

-23-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

2.14 Financial Liabilities

(A)

Classification and measurement

The Company shall classify all financial liabilities as financial liabilities measured subsequently at amortized cost, except

for the following:

Financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall

be subsequently measured at fair value.

Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the

continuing involvement approach applies. Such financial liabilities are measured based on the methodology described

in Note 2.6 Financial Assets.

Financial guarantee contracts. After the initial recognition, an issuer of such a contract shall subsequently measure it

at the higher of:

(a)

The amount of the loss allowance determined based on the expected credit losses.

(b)

The amount initially recognized less the cumulative amount of income recognized in accordance with the

principles of Korean IFRS 1115

Revenue from Contracts with Customers

, when appropriate

Commitments to provide loan at below-market interest rate. An issuer of such a commitment shall subsequently

measure it at the higher of:

(a)

The amount of the loss allowance determined based on the expected credit losses.

(b)

The amount initially recognized less the cumulative amount of income recognized in accordance with the

principles of Korean IFRS 1115

Revenue from Contracts with Customers

, when appropriate

Contingent consideration recognized by an acquirer in a business combination to which Korean IFRS 1103

Business

Combinations

applies. Such contingent consideration shall subsequently be measured at fair value with changes

recognized in profit or loss.

(B)

Derecognition

Financial liabilities are removed from the separate statements of financial position when it is extinguished; for example,

when the obligation specified in the contract is discharged or cancelled or expired or when the terms of an existing financial

liability are substantially modified. The difference between the carrying amount of a financial liability extinguished or

transferred to another party and the consideration paid (including any non-cash assets transferred or liabilities assumed) is

recognized in profit or loss.

2.15 Trade Payables

Trade payables are amounts due to suppliers for inventories purchased or services received in the ordinary course of

business. If payment is expected to be made within 12 months, they are classified as current liabilities. If not, they are

presented as non-current liabilities. Non-current trade payables are recognized initially at fair value and subsequently

measured at amortized cost using the effective interest method.

2.16 Borrowings

Borrowings are recognized initially at fair value, net of transaction costs, and are subsequently measured at amortized cost.

Any difference between cost and the redemption value is recognized in the separate statement of profit or loss over the

period of the borrowings using the effective interest method. If the Company has an indefinite right to defer payment for

a period longer than 12 months after the end of the reporting date, such liabilities are recorded as non-current liabilities,

otherwise, they are recorded as current liabilities.

-24-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

2.17 Provisions and Contingent Liabilities

A provision is recognized when the Company has present legal or constructive obligation as a result of a past event, it is

probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable

estimate can be made of the amount of the obligation. Provisions are not recognized for future operating losses.

Provisions are measured at present value of the expenditures expected to be required to settle the obligation using a pre-

tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. The

increase in the provision due to the passage of time is recognized as interest expense.

The Company discloses a contingent liability if there is a possible obligation from past events in which the existence may

only be identified through the occurrence of uncertain future events; or there is a present obligation that the possibility on

the outflow of economic resources is uncertain; or the amount of economic resources required to settle the present

obligation cannot be reasonably estimated.

2.18 Employee Benefits

The Company has a variety of retirement pension plans including a defined benefit plan and a defined contribution plan.

A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate fund. The

Company has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to

pay all employees the benefits relating to employee service received in the current and prior periods. For a defined

contribution plans, the Company pays contributions to annuity plans that are managed either publicly or privately on a

mandatory, contractual or voluntary basis. The Company has no further future payment obligations once the contributions

have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions

are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, a defined benefit plan establishes

an amount of pension benefit that an employee will receive upon retirement, usually dependent on one or more factors

such as age, years of service and compensation. The liability (asset) recognized in the separate statements of financial

position with respect to the defined benefit pension plan is the present value of the defined benefit obligation at the end of

the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent

actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by

discounting the estimated future cash outflows using the interest rates of high-quality corporate bonds that are denominated

in the currency in which the benefits will be paid and that have the terms to maturity approximating to the terms of the

related pension obligation.

Actuarial gains and losses resulting from the changes in actuarial assumptions, and the differences between the previous

actuarial assumptions and what has actually occurred, are recognized in other comprehensive income in the period in which

they were incurred. When plan amendments, curtailments and settlements occur, past service costs or gain or loss from

settlements are immediately recognized in profit or loss.

-25-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

2.19 Financial Guarantee Contract

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for

a loss it incurs because a specified debtor fails to make payments when due.

The liability is initially measured at fair value and then subsequently measured at the higher of the following, and is

recognized in the separate statements of financial p

osition within ‘other financial liabilities’:

the amount determined in accordance with the expected credit loss model and

the amount initially recognized less the cumulative amount of income recognized in accordance with Korean IFRS

1115

Revenue from Contracts with Customers

, where appropriate.

2.20 Current and Deferred Tax

The tax expense for the year comprises current and deferred tax. Current and deferred tax is recognized in profit or loss,

except to the extent that it relates to the items recognized in other comprehensive income or directly in equity. The tax

expense is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period.

Deferred tax is recognized for temporary differences arising between the tax bases of assets and liabilities and their carrying

amounts as expected tax consequences at the recovery or settlement of the carrying amounts of those assets and liabilities.

However, deferred tax assets and liabilities are not recognized if they arise from initial recognition of an asset or liability

in a transaction other than a business combination that at the time of the transaction affects neither the accounting nor

taxable profit. Deferred tax assets are recognized only to the extent that it is probable that a future taxable profit will be

available against which the temporary differences can be utilized.

A deferred tax liability is recognized for taxable temporary differences associated with investments in subsidiaries,

associates, and interests in joint ventures, except to the extent that the Company is able to control the timing of the reversal

of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. In

addition, a deferred tax asset is recognized for deductible temporary differences arising from such investments to the extent

that it is probable the temporary difference will reverse in the foreseeable future and taxable profit will be available against

which the temporary difference can be utilized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset the current tax assets against

the current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same

taxation authority on either the same taxable entity or different taxable entities with an intention to settle the balances on

a net basis.

2.21 Derivative Instruments

The Company initially recognizes rights and obligations from derivative contracts as assets and liabilities at fair value.

Gain or loss arising from these contracts are recognized in profit or loss. Qualified hedged amount from cash flow hedge

and hedge of a net investment in a foreign operation is deferred in equity.

The Company applies cash flow hedge accounting to hedge the price risk associated with inventory purchase and other.

The effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges is

recognized in other comprehensive income, and the ineffective portion is recognized in financial income or expenses.

2.22 Dividend

Dividend is recognized as a liability when approved by the Company’s shareholders.

-26-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

2.23 Share Capital

Ordinary shares and preference shares with no repayment obligations are classified as equity. When the Company acquires

its ordinary shares, the acquisition costs, including direct transaction costs, are deducted from equity until the redemption

or reissuance as treasury shares. Consideration received on the reissuance of treasury shares is credited to equity

attributable to owners of the parent company.

2.24 Revenue Recognition

Revenue mainly comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary

course of

the Company’s

activities. Revenue is shown net of value-added tax, returns, sales incentives and discounts and

after eliminating intercompany transactions.

The Company applied Korean IFRS 1115

Revenue from Contracts with Customers

to the annual period beginning January

1, 2018. The Company shall recognize revenue in accordance with Korean IFRS 1115

Revenue from Contracts with

Customers

by applying the following 5 steps:

①

Identify the contracts with the customers,

②

Identify the separate

performance obligations,

③

Determine the transaction price of the contract,

④

Allocate the transaction price to each of

the separate performance obligations, and

⑤

Recognize the revenue as each performance obligation is satisfied.

(A)

Identification of performance obligations

The Company exports various products and merchandise in accordance with Incoterms Group C trading conditions

(Incoterms CIF, and other). Since the seller provides the shipping service after the control of the product or merchandise

has been transferred to the customer, the shipping service (including insurance) is recognized as a separate performance

obligation.

(B)

Performance obligations satisfied over time

The Company delivers products to customers and installs them in accordance with the system air conditioner contracts

awarded by the Public Procurement Service. According to Korean IFRS 1115

Revenue from Contracts with Customers

the Company should recognize revenue over time if the Company creates or enhances an asset (for example, work in

progress) that the customer controls as the asset is created or enhanced. The Company recognizes the revenue from system

air conditioner installation over time as the customer controls the outcome of the service.

(C)

Variable consideration

The Company estimates amount of variable consideration by

using the ‘

expected value

method’

or the

‘

most likely amount

method’

, depending on which method the Company expects to better predict the amount of consideration. The Company

recognizes revenue only to the extent that it is highly probable that a significant reversal in the amount of cumulative

revenue recognized will not occur, and classifies the amount which the Company does not expect to be entitled as contract

liabilities.

The Company measures refund liability at the amount of consideration received for which the Company does not expect

to be entitled. The Company has a right to recover the product from the customer when the customer exercises his right of

return and recognizes an asset and a corresponding adjustment to cost of sales. The asset is measured with reference to the

former carrying amount of the product less the costs to recover the products.

-27-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(D)

Allocation of the transaction price

The transaction price in an arrangement must be allocated to each separate performance obligation based on the relative

standalone selling prices of the goods or services being provided to a customer. The Company determines the standalone

selling price for each separate performance obligation by using methods such as the ‘adjusted market assessment

approach’.

2.25 Leases

A lease is a contract, whereby the lessor conveys to the lessee, the right to control the use of an identified asset for a

period of time in exchange for consideration.

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. However, the Company did

not reassess all contracts at initial application of Korean IFRS 1116

Leases

because the Company applied the practical

expedient to contracts entered into before January 1, 2019.

For a contract that is, or contains, a lease, both lessee and lessor account for each lease component within the contract as a

lease separately from the non-lease components of the contract. In lessee accounting, however, the Company does not

account for them separately but instead applies the practical expedient to account for each lease component and any

associated non-lease components as a single lease component.

(A)

Lessee accounting

The Company recognizes a right-of-use asset representing its right to use the underlying leased asset and a lease liability

representing its obligation to make lease payments at the commencement date of the lease.

The right-of-use asset is initially measured at cost and subsequently measured at cost less accumulated depreciation and

accumulated impairment losses, adjusted for the remeasurement of lease liability. The right-of-use asset is depreciated

over the shorte

r of the asset’s useful life and the lease term from the commencement date of the lease and is classified as

‘property, plant and equipment’ in the separate financial statements.

At the commencement date, the lease liability is measured at the present value of the lease payments that are not paid at

that date. When measuring the present value, the lease payments are discounted using the interest rate implicit in the lease.

If such implicit rate cannot be readily determined, the Company uses the Company’s

incremental borrowing rate. The lease

liability is subsequently increased by the amount of interest expenses recognized on the lease liability and reduced by the

lease payments made. Lease liabilities are remeasured when the future lease payments are changed due to the following:



Changes in an index or rate



Changes in amounts expected to be payable by the lessee under the residual value guarantee



Changes in the assessment of whether a purchase option or an option to renew is reasonably certain to be exercised, or



Changes in the assessment of whether it is reasonably certain that an option to terminate the lease will not be exercised.

Lease liabilities are classified as ‘current portion of long

term liabilities’

and/

or ‘long

term borrowings’ in the separat

financial statements.

The Company elected the practical expedient for short-term leases (leases that have a lease term of 12 months or less at

the commencement date) and leases of low-value assets (leases for which the underlying asset is valued at USD 5,000 or

less), and the lease payments are recognized as an expense on a straight-line basis over the lease term.

-28-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(B)

Lessor accounting

The accounting treatment as a lessor did not change significantly from the accounting treatment applied before the initial

application of the Korean IFRS 1116

Leases

on January 1, 2019.

The Company classifies a lease as a finance lease if it transfers substantially all the risks and rewards incidental to

ownership at the inception of the lease. A lease other than a finance lease is classified as an operating lease. Lease income

from operating leases is recognized in income on a straight-line basis over the lease term. Initial direct costs incurred by

the lessor in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and

recognized as an expense over the lease term on the same basis as the lease income.

2.26 Government Grants

Government grants are recognized at their fair values when there is reasonable assurance that the grant will be received

and the Company will comply with the conditions attached to it. Government grants relating to costs are deferred and

recognized in the separate statements of profit or loss over the period necessary to match the costs they are intended to

compensate. Government grants relating to assets are recognized in liabilities as deferred income government grants, and

are depreciated over the expected lives of the related assets, and credited to the statements of profit or loss.

2.27 Earnings per Share

Basic earnings per share is calculated by dividing the net profit for the period available to the ordinary shareholders by the

weighted-average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the profit for the year attributable to the Company from the separate

statements of profit or loss by the weighted-average number of ordinary shares outstanding and potential dilutive shares.

Potential dilutive shares are used in the calculation of dilutive earnings per share only when they have dilutive effects.

2.28 Reportable Segments

Reportable segments are disclosed in a manner consistent with the reporting provided to the chief operating decision-

maker. The chief operating decision-maker is responsible for making strategic decisions on resource allocation and

assessing performance of the reportable segments. The Management Committee, which makes strategic decisions, is

regarded as the chief operating decision-maker.

2.29 Convenience Translation into United States Dollar Amounts

The Company operates primarily in Korean won and its official accounting records are maintained in Korean won. The

US dollar amounts provided in the separate financial statements represent a supplementary information solely for the

convenience of the reader. All Korean won amounts are expressed in U.S. dollar at the rate of W 1,291.2 to USD 1, the

average exchange rate for the year ended December 31, 2022. Such presentation is not in accordance with generally

accepted accounting principles, and should not be construed as a representation that the Korean won amounts shown could

be readily converted, realized or settled in US dollar at this or at any other rate.

2.30 Approval of the Separate Financial Statements

These separate financial statements were approved by the Board of Directors on January 31, 2023, and may be modified

and approved at the Annual General

Shareholders’

Meetings.

-29-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

3. Critical Accounting Estimates and Assumptions

The Company makes estimates and assumptions concerning the future. The estimates and assumptions are continuously

assessed, considering historical experience and other factors, including expectations of future events that are believed to

be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom equal the related

actual results. In particular, the spread of COVID-19 since 2020

may result in changes to the Company’s assumptions and

estimates but its potential financial impact cannot be reasonably estimated as of the reporting date.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of

assets and liabilities within the next financial year are addressed below.

(A)

Revenue recognition

A refund liability and a right to the returned goods are recognized for the products expected to be returned at the time of

sale. Accumulative experience is used to estimate such returns at the time of sale at a portfolio level (through expected

value method), and the Company’s revenue is affected by

the changes in expected return rate.

Sales of goods are recognized based on the considerations specified in the contract, net of sales incentives, when control

of the

products has transferred. The sales deduction, which affects the Company’s revenue, is reasonably estimated based

on the historical experience and past contracts.

(B)

Provision for warranty

The Company recognizes provision for warranty on products sold. The Company accrues provision for warranty based on

the best estimate of amounts necessary to settle future and existing claims at the end of each reporting period. The amounts

are estimated based on the past experience.

(C)

Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using a variety of methods

and assumptions that are mainly based on market conditions existing at the end of each reporting period.

(D)

Impairment of financial assets

The loss allowance for financial assets are based on assumptions about risk of default and expected loss rates. The

Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on the

Company’s p

ast history, existing market conditions as well as forward looking estimates at the end of each reporting

period.

(E)

Lease

In determining the lease term, the Company considers all facts and circumstances that create an economic incentive to

exercise an extension option, or not to exercise a termination option. Extension options (or periods after termination options)

are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

The lease term is reassessed if an option is actually exercised (or not exercised) or the Company becomes obliged to

exercise (or not exercise) it. The Company reassesses whether it is reasonably certain to exercise an extension option (or

not to exercise such option), upon the occurrence of either a significant event or a significant change in circumstances that

is within the control of the lessee.

-30-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(F)

Net defined benefit liabilities (assets)

The net defined benefit liabilities (assets) depend on a number of factors that are determined on an actuarial basis using a

number of assumptions including the discount rate. Any changes in these assumptions will impact the carrying amount of

the net defined benefit liability. The Company, in consideration of the interest rates of high-quality corporate bonds,

determines the appropriate discount rate at the end of each year. This is the interest rate that is used to determine the present

value of the estimated future cash outflows expected to be required to settle the net defined benefit liabilities (assets). The

principal actuarial assumptions associated with the net defined benefit liabilities (assets) are based on the current market

expectations.

(G)

Impairment of goodwill and intangible assets that have an indefinite useful life

At the end of each reporting period, the Company tests whether goodwill and intangible assets that have an indefinite

useful life have become impaired by comparing the carrying amounts of assets or cash-generating units to the recoverable

amounts. The recoverable amounts of assets or cash-generating units have been determined based on the value-in-use

calculations, and these calculations are based on estimates.

(H)

Income taxes

Income taxes on

the Company’s

taxable income from operating activities are subject to various tax laws and determinations

of each tax authority across various countries throughout the world. There is uncertainty in determining the eventual tax

effects on the taxable income from operating activities. The Company has recognized current tax and deferred tax at the

end of the fiscal year based on the best estimate of future taxes payable as a result of operating activities. However, the

resulting deferred income tax assets and liabilities may not equal the actual future taxes payable and such difference may

impact the current tax and deferred income tax assets and liabilities upon the determination of eventual tax effects.

Regarding taxes payable in Korea, if a certain portion of taxable income is not used for investments or for increases in

wages or dividends, in accordance with the

Tax System for Recirculation of Corporate Income

, the Company is liable to

pay additional income tax calculated based on the Korean tax law. The current and deferred taxes at the end of the fiscal

year are based on the best estimate of future taxes payable, which can differ from the actual future taxes payable as a result

of changes in investments, wages and dividends; this results in an additional uncertainty in measuring the final tax effects.

The Company

assesses uncertainty over a tax treatment

When the Company concludes it is not probable that the taxation

authority will accept an uncertain tax treatment,

the Company will reflect the effect of uncertainty for each uncertain tax

treatment by using either of the following methods, depending on which method the Company expects to better predict the

resolution of the uncertainty:

The most likely amount: the single most likely amount in a range of possible outcomes.

The expected value: the sum of the probability-weighted amounts in a range of possible outcomes.

-31-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

4. Financial Instruments by Category

(A) Categorizations of financial assets and liabilities as of December 31, 2022 and December 31, 2021 are as follows:

(1) As of December 31, 2022

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at fair

value through

other

comprehensive

income

Financial assets

measured at fair

value through

profit or loss

Total

Financial assets

Cash and cash equivalents

3,921,593

Short-term financial instruments

137

Trade receivables

20,503,223

Financial assets at fair value

through other comprehensive

income

1,364,325

Financial assets at fair value

through profit or loss

283

Other

5,470,355

Total

29,895,308

1,364,325

283

31,259,916

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Other financial

liabilities

Total

Financial liabilities

Trade payables

8,729,315

Short-term borrowings

2,381,512

Other payables

18,324,604

Current portion of long-term liabilities

6,228

129,525

135,753

Debentures

24,912

Long-term borrowings

654,979

Long-term other payables

2,083,790

Other

3,145,473

Total

32,314,322

3,166,016

35,480,338

Other financial liabilities include collateralized borrowings and lease liabilities which are not subject to categorizations.

-32-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(2) As of December 31, 2021

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at fair

value through

other

comprehensive

income

Financial assets

measured at fair

value through

profit or loss

Total

Financial assets

Cash and cash equivalents

3,918,872

Short-term financial instruments

15,000,576

Trade receivables

33,088,247

Financial assets at fair value

through other comprehensive

income

1,662,532

Financial assets at fair value

through profit or loss

2,135

Other

5,076,418

Total

57,084,113

1,662,532

2,135

58,748,780

(In millions of Korean won)

Financial liabilities

measured at

amortized cost

Other financial

liabilities

Total

Financial liabilities

Trade payables

11,557,441

Short-term borrowings

9,204,268

Other payables

12,948,960

Current portion of long-term liabilities

5,810

133,518

139,328

Debentures

29,048

Long-term borrowings

431,915

Long-term other payables

2,335,218

Others

3,056,156

Total

29,932,633

9,769,701

39,702,334

Other financial liabilities include collateralized borrowings and lease liabilities which are not subject to categorizations.

-33-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(B)

Net gains or net losses on each category of financial assets and liabilities for the years ended December 31, 2022 and

2021 are as follows:

(1)

For the year ended December 31, 2022

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at fair

value through other

comprehensive

income

Financial assets

measured at fair

value through

profit or loss

Total

Financial assets

Gain (loss) on valuation

(other comprehensive income)

(208,883)

Gain on valuation/disposal

(profit or loss)

271,057

Interest income

339,242

Foreign exchange differences

(profit or loss)

(668,955)

Dividend income

3,594

Impairment/reversal (profit or loss)

(2,130)

(In millions of Korean won)

Financial liabilities

measured

at amortized cost

Other financial

liabilities

Total

Financial liabilities

Interest expense

(45,883)

(244,200)

(290,083)

Foreign exchange differences (profit or loss)

477,397

132,902

610,299

Other financial liabilities include collateralized borrowings, lease liabilities which are not subject to categorizations.

-34-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(2)

For the year ended December 31, 2021

(In millions of Korean won)

Financial assets

measured at

amortized cost

Financial assets

measured at fair

value through other

comprehensive

income

Financial assets

measured at fair

value through profit

or loss

Total

Financial assets

Gain (loss) on valuation

(other comprehensive income)

(99,916)

Gain on valuation/disposal

(profit or loss)

14,003

Interest income

260,396

Foreign exchange differences

(profit or loss)

69,874

Dividend income

3,118

593

3,711

Impairment/reversal (profit or loss)

(17,144)

(In millions of Korean won)

Financial liabilities

measured

at amortized cost

Other financial

liabilities

Total

Financial liabilities

Interest expense

(49,982)

(100,002)

(149,984)

Foreign exchange differences (profit or loss)

317,176

(21,167)

296,009

Other financial liabilities include collateralized borrowings, lease liabilities which are not subject to categorizations.

5. Transfer of Financial Assets

Trade receivables of the Company have been discounted through factoring agreements with banks during the years ended

December 31, 2022 and 2021. Trade receivables provided as collaterals in such factoring transactions do not meet the

requirements for asset derecognition as risks and rewards are not substantially transferred in the event of a debtor default

due to the recourse obligation, etc.

Financial liabilities recognized in relation to these transactions are included as ‘short

term borrowings’ on the separate statement

s of financial position (refer to Note 12).

The following table presents a breakdown of discounted trade receivables as of December 31, 2022 and 2021:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Carrying amount of the discounted trade receivables

2,381,512

9,204,268

Carrying amount of the related borrowings

2,381,512

9,204,268

-35-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

6. Financial Assets at Fair Value

(A)

Details of financial assets at fair value as of December 31, 2022 and December 31, 2021 are as follows:

(1)

Financial assets at fair value through other comprehensive income

(In millions of Korean won)

December 31, 2022

December 31, 2021

Equity instruments

1,364,325

1,662,532

(2)

Financial assets at fair value through profit or loss

(In millions of Korean won)

December 31, 2022

December 31, 2021

Debt instruments

283

2,135

(B)

Changes in financial assets at fair value for the years ended December 31, 2022 and 2021 are as follows:

(1)

Financial assets at fair value through other comprehensive income

(In millions of Korean won)

2022

2021

Balance as of January 1

1,662,532

1,539,659

Acquisition

260,642

Disposal

(10,976)

Fair value valuation loss

(285,585)

(137,815)

Other

(1,646)

Balance as of December 31

1,364,325

1,662,532

(2)

Financial assets at fair value through profit or loss

(In millions of Korean won)

2022

2021

Balance as of January 1

2,135

3,107

Disposal

(1,744)

(912)

Other

(108)

(60)

Balance as of December 31

283

2,135

-36-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(C)

Changes in gain (loss) on valuation of financial assets at fair value through other comprehensive income for the

years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

124,937

262,752

Fair value valuation loss

(285,585)

(137,815)

Reclassification to retained earnings due to disposal

(5,987)

Balance as of December 31

(166,635)

124,937

Income tax effects on equity

43,991

(34,358)

Total

(122,644)

90,579

(D)

Details of listed equity securities of financial assets at fair value as of December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

(In millions of Korean won,

number of shares and percentage)

Number of

shares owned

Percentage of

ownership

(%)

Acquisition

cost

Carrying amount

(Market value)

Carrying amount

(Market value)

Samsung Heavy Industries

134,027,281

15.2

932,158

684,879

759,935

Hotel Shilla

2,004,717

5.1

13,957

166,592

156,368

iMarket Korea

647,320

1.9

324

6,538

6,926

Skylife

240,000

0.5

3,344

1,954

2,194

Yongpyong Resort

400,000

0.8

1,869

1,412

1,958

A-Tech Solution

1,592,000

15.9

26,348

12,879

26,188

Wonik Holdings

1,759,171

2.3

15,410

5,972

8,761

Wonik IPS

1,850,936

3.8

16,214

45,811

78,295

Dongjin Semichem

2,467,894

4.8

48,277

73,913

125,863

Soulbrain Holdings

461,741

2.2

30,752

10,989

15,976

Soulbrain

373,368

4.8

24,866

81,357

103,983

S&S Tech

1,716,116

8.0

65,933

45,220

63,153

YIK Corp

9,601,617

11.7

47,336

26,933

59,530

Kctech

1,022,216

4.9

20,720

15,129

24,584

Lotvacuum

1,267,668

7.1

18,990

14,326

21,805

Newpower

2,140,939

4.9

12,739

7,579

13,723

Fine Semitech

1,522,975

7.0

43,009

23,758

38,607

DNF

810,030

7.0

20,964

10,692

18,509

Marvell

173,187

0.0

11,705

8,129

17,962

SoundHound

1,702,957

0.9

13,719

3,820

Total

1,368,634

1,247,882

1,544,320

Ownership represents the Company’s ownership of

the total ordinary shares issued by each entity.

-37-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

7. Trade and Non-Trade Receivables

(A)

Trade and non-trade receivables as of December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Receivables

20,720,707

2,945,898

33,353,467

1,855,136

Less: Loss allowance

(56,432)

(6,387)

(56,610)

(4,397)

Subtotal

20,664,275

2,939,511

33,296,857

1,850,739

Less: Non-current portion

(161,052)

(14,505)

(208,610)

(18,251)

Current portion

20,503,223

2,925,006

33,088,247

1,832,488

As of December 31, 2022, trade receivables discounted through factoring agreements were accounted for as collateral

borrowings and amount of the trade receivables were

2,381,512 million (as of December 31, 2021,

9,204,268

million) (refer to Note 12).

(B)

Movements in the loss allowance for receivables for the years ended December 31, 2022 and 2021 are as follows:

2022

2021

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Balance as of January 1

56,610

4,397

37,469

7,014

Bad debt expense (reversal)

(178)

1,994

19,235

(1,998)

Write-off

(4)

(94)

(619)

Balance as of December 31

56,432

6,387

56,610

4,397

(C)

The details of trade and non-trade receivables classified by past due date to measure expected credit losses as of

December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

(In millions of Korean won)

Trade

Non-trade

Trade

Non-trade

Receivables not past due

19,948,076

2,237,287

32,986,766

1,640,450

Past due

Less than 31 days overdue

581,231

651,489

181,986

31,420

31 days to 90 days overdue

89,722

30,611

26,727

17,586

Over 90 days overdue

101,678

26,511

157,988

165,680

Subtotal

772,631

708,611

366,701

214,686

Total

20,720,707

2,945,898

33,353,467

1,855,136

The Company does not consider trade and non-trade receivables that are overdue for less than or equal to 31 days as impaired.

(D)

The maximum exposure to current credit risk is equivalent to the carrying amount of receivables as of December 31,

2022

. The Company has in place insurance contracts covering the Company’s major receivables.

-38-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

8. Inventories

Inventories as of December 31, 2022 and 2021 are as follows:

December 31, 2022

December 31, 2021

(In millions of Korean won)

Gross

amount

Valuation

allowance

Carrying

amount

Gross

amount

Valuation

allowance

Carrying

amount

Finished goods

8,589,879

(956,427)

7,633,452

3,884,713

(366,987)

3,517,726

Work in process

16,738,121

(1,216,059)

15,522,062

9,384,285

(222,291)

9,161,994

Raw materials and supplies

4,891,951

(492,006)

4,399,945

3,211,380

(258,464)

2,952,916

Materials in transit

434,548

340,417

Total

30,654,499

(2,664,492)

27,990,007

16,820,795

(847,742)

15,973,053

The inventories recognized as expense for the year ended December 31, 2022, amount to W 151,436,315 million (2021:

W 135,609,737 million). The amount includes loss on valuation of inventories.

-39-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

9. Investments in Subsidiaries, Associates and Joint Ventures

(A)

Changes in investments in subsidiaries, associates and joint ventures for the years ended December 31, 2022 and

2021 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

56,225,599

56,587,548

Acquisition

1,272,296

138,858

Disposal

(164,503)

(567,693)

Impairment (reversal)

63,857

66,886

Balance as of December 31

57,397,249

56,225,599

(B)

Major investments in associates as of December 31, 2022 are as follows:

(refer to Note 30 for list of the Company

’

s subsidiaries)

Investee

Nature of relationship with associate

Percentage of

ownership (%)

Principal

business

location

Fiscal

period-end

Samsung Electro-

Mechanics Co., Ltd.

Manufacture and supply electronic components

including passive components, circuit boards,

and modules

23.7

Korea

December

Samsung SDS Co., Ltd.

Provide IT services including computer

programming, system integration and

management, and logistical services

22.6

Korea

December

Samsung Biologics Co., Ltd.

New business investment

31.2

Korea

December

Samsung SDI Co., Ltd.

Manufacture and supply electronic components

including secondary cell batteries

19.6

Korea

December

Cheil Worldwide, Inc.

Advertising agency

25.2

Korea

December

Ownership represents the Company’s ownership of

the total ordinary shares issued by each entity.

The Company’s ownership of ordinary shares outstanding is 20.6%.

-40-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(C)

A summary of the condensed financial information of major subsidiaries and associates as of and for the years ended

December 31, 2022 and 2021 is as follows:

(1) Major subsidiaries

(In millions of Korean won)

2022

Assets

Liabilities

Sales

Profit (loss)

for the year

Samsung Display Co., Ltd. (SDC)

57,302,567

7,282,718

30,779,405

4,365,588

Samsung Electronics America, Inc. (SEA)

37,883,156

12,258,315

46,738,920

219,670

Samsung Asia Pte. Ltd. (SAPL)

26,894,611

2,678,285

8,699,679

Samsung (China) Semiconductor Co., Ltd. (SCS)

17,095,000

2,970,835

9,679,757

638,385

Samsung (CHINA) Investment Co., Ltd. (SCIC)

13,830,988

9,764,636

2,865,831

257,878

Samsung Electronics Europe Holding Cooperatief U.A. (SEEH)

10,841,515

6,272,800

57,997

Samsung India Electronics Private Ltd. (SIEL)

6,772,537

3,571,863

16,180,492

508,510

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

5,067,891

2,858,382

21,370,622

318,578

Samsung Eletronica da Amazonia Ltda. (SEDA)

4,600,508

1,342,517

7,485,104

(38,490)

Thai Samsung Electronics Co., Ltd. (TSE)

3,263,473

486,820

4,824,734

168,524

Samsung Electronics (UK) Ltd. (SEUK)

2,819,792

1,708,064

5,929,357

243,396

Samsung Electronics Benelux B.V. (SEBN)

2,377,730

597,044

2,834,008

25,411

Samsung Electronics Hungarian Private Co. Ltd. (SEH)

2,374,317

452,628

3,935,745

199,742

Samsung Electronics Europe Logistics B.V. (SELS)

2,194,975

2,021,491

15,409,984

20,347

SEMES Co., Ltd.

2,065,558

602,323

2,889,238

185,762

The above summary of condensed financial information is based on separate financial statements of each subsidiary.

(In millions of Korean won)

2021

Assets

Liabilities

Sales

Profit

for the year

Samsung Display Co., Ltd. (SDC)

54,967,156

9,081,737

28,755,975

2,770,060

Samsung Electronics America, Inc. (SEA)

42,982,054

19,246,751

42,325,524

823,914

Samsung (CHINA) Investment Co., Ltd. (SCIC)

13,599,093

9,685,278

2,615,685

451,062

Samsung (China) Semiconductor Co., Ltd. (SCS)

19,049,536

5,168,738

7,341,018

1,708,832

Samsung Electronics Europe Holding Cooperatief U.A. (SEEH)

14,651,496

8,998,502

24,527

Samsung Asia Private Ltd. (SAPL)

14,683,789

58,381

4,668,478

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

7,765,126

5,799,690

31,326,186

325,397

Samsung Eletronica da Amazonia Ltda. (SEDA)

4,589,505

1,671,097

6,020,523

490,202

Samsung India Electronics Private Ltd. (SIEL)

7,765,019

3,236,745

12,222,643

522,672

Thai Samsung Electronics Co., Ltd. (TSE)

3,018,358

474,223

4,443,031

142,191

Samsung Electronics (UK) Ltd. (SEUK)

2,925,062

1,992,367

5,621,922

241,403

Samsung Electronics GmbH (SEG)

2,289,391

2,228,650

6,385,080

2,158

Samsung Electronics Hungarian Private Co., Ltd. (SEH)

2,504,075

641,004

4,357,137

157,616

Samsung Electronics Benelux B.V. (SEBN)

2,612,357

766,034

2,569,603

284,816

Samsung Electronics Europe Logistics B.V. (SELS)

2,305,275

2,144,805

14,700,517

13,943

The above summary of condensed financial information is based on separate financial statements of each subsidiary.

-41-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(2)

Major associates

2022

(In millions of Korean won)

Samsung

Electro-

Mechanics

Samsung

SDS

Samsung

Biologics

Samsung

SDI

Cheil

Worldwide

Current assets

4,888,319

8,005,764

6,457,657

9,651,702

2,193,979

Non-current assets

6,108,852

3,946,660

10,124,394

20,605,823

557,466

Current liabilities

2,525,123

2,493,323

4,181,542

8,006,939

1,335,643

Non-current liabilities

778,563

992,132

3,416,034

5,033,084

194,373

Revenue

9,441,276

17,234,750

3,001,295

20,124,070

4,253,367

Profit from continuing operations

993,519

1,099,745

798,056

1,952,149

193,732

Profit or loss from discontinued operation, net of tax

Other comprehensive income (loss)

(9,601)

80,368

6,995

(139,877)

(1,122)

Total comprehensive income

983,918

1,180,113

805,051

1,812,272

192,610

Profit (loss) attributable to owners of the parent company.

2021

(In millions of Korean won)

Samsung

Electro-

Mechanics

Samsung

SDS

Samsung

Biologics

Samsung

SDI

Cheil

Worldwide

Current assets

4,598,269

7,575,968

2,823,175

7,444,907

2,018,598

Non-current assets

5,343,105

2,941,464

5,146,835

18,388,286

523,513

Current liabilities

2,234,657

2,370,290

1,107,295

6,461,286

1,224,222

Non-current liabilities

835,592

703,442

1,871,614

4,175,208

190,622

Revenue

9,675,036

13,630,002

1,568,007

13,553,220

3,325,712

Profit from continuing operations

1,055,411

611,171

393,589

1,169,801

165,485

Loss from discontinued operation, net of tax

(162,966)

Other comprehensive income (loss)

151,809

134,163

(1,270)

623,792

32,535

Total comprehensive income

1,044,254

745,334

392,319

1,793,593

198,020

Profit (loss) attributable to owners of the parent company.

-42-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(D)

Fair value of marketable investments in associates as of December 31, 2022 and are 2021 as follows:

December 31, 2022

December 31, 2021

(In millions of Korean won

and number of shares)

Number of

shares held

Market value

Carrying

amount

Market value

Carrying

amount

Samsung Electro-Mechanics

17,693,084

2,308,947

445,244

3,494,384

445,244

Samsung SDS

17,472,110

2,149,070

560,827

2,734,385

560,827

Samsung Biologics

22,217,309

18,240,411

1,595,892

18,815,659

443,193

Samsung SDI

13,462,673

7,956,440

1,242,605

8,818,051

1,242,605

Cheil Worldwide

29,038,075

669,328

491,599

663,520

491,599

-43-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

10. Property, Plant and Equipment

(A)

Changes in property, plant and equipment for the years ended December 31, 2022 and 2021 are as follows:

2022

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and

equipment

Construction

in progress

Other

Total

Balance as of January 1

7,780,994

21,841,816

57,135,313

15,307,502

1,601,400

103,667,025

Acquisition cost

7,782,125

33,244,532

175,487,461

15,307,502

4,022,759

235,844,379

Accumulated depreciation

and impairment

(1,131)

(11,402,716)

(118,352,148)

(2,421,359)

(132,177,354)

Acquisitions and capital

expenditures

154

3,246,081

26,182,600

13,481,591

1,085,750

43,996,176

Depreciation

(439)

(1,827,588)

(21,889,623)

(594,290)

(24,311,940)

Disposals/scrap

(27,720)

(20,264)

(137,496)

(8,247)

(193,727)

Other

6,577

135,746

(20,729)

(12,142)

109,452

Balance as of December 31

7,752,989

23,246,622

61,426,540

28,768,364

2,072,471

123,266,986

Acquisition cost

7,754,559

36,449,026

199,823,339

28,768,364

4,886,059

277,681,347

Accumulated depreciation

and impairment

(1,570)

(13,202,404)

(138,396,799)

(2,813,588)

(154,414,361)

The capitalized borrowing costs are ₩

40,577 million, and interest rate used to calculate the borrowing costs eligible for capitalization is 4.1%.

2021

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and

equipment

Construction

in progress

Other

Total

Balance as of January 1

7,800,435

19,087,134

43,749,609

13,994,259

1,535,487

86,166,924

Acquisition cost

7,801,259

28,992,675

146,778,918

13,994,259

3,535,985

201,103,096

Accumulated depreciation

and impairment

(824)

(9,905,541)

(103,029,309)

(2,000,498)

(114,936,172)

Acquisitions and capital

expenditures

5,295

4,385,819

31,501,402

1,339,173

607,076

37,838,765

Depreciation

(406)

(1,614,006)

(18,016,803)

(532,894)

(20,164,109)

Disposals/scrap

(24,319)

(5,104)

(108,737)

(5,402)

(143,562)

Other

(11)

(12,027)

9,842

(25,930)

(2,867)

(30,993)

Balance as of December 31

7,780,994

21,841,816

57,135,313

15,307,502

1,601,400

103,667,025

Acquisition cost

7,782,125

33,244,532

175,487,461

15,307,502

4,022,759

235,844,379

Accumulated depreciation

and impairment

(1,131)

(11,402,716)

(118,352,148)

(2,421,359)

(132,177,354)

The capitalized borrowing costs are ₩

21,911 million, and interest rate used to calculate the borrowing costs eligible for capitalization is 1.1%.

-44-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(B)

Changes in the right-of-use assets included in the property, plant and equipment for the years ended December 31,

2022 and 2021 are as follows:

2022

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and equipment

Other

Total

Balance as of January 1

2,279

510,528

39,038

178,480

730,325

Acquisition

261,999

1,380

410,088

673,493

Depreciation

(439)

(128,754)

(23,276)

(19,120)

(171,589)

Cancellation of contract

(1,070)

(737)

(1,807)

Other

(3)

4,993

601

5,591

Balance as of December 31

1,866

642,700

22,135

569,312

1,236,013

2021

(In millions of Korean won)

Land

Buildings and

structures

Machinery

and equipment

Other

Total

Balance as of January 1

2,593

144,615

70,429

188,236

405,873

Acquisition

446,071

4,674

992

451,828

Depreciation

(405)

(80,085)

(36,065)

(9,617)

(126,172)

Disposals/scrap

(28)

(1,131)

(1,159)

Other

(45)

Balance as of December 31

2,279

510,528

39,038

178,480

730,325

(C)

Details of depreciation of property, plant and equipment for the years ended December 31, 2022 and 2021 are as

follows:

(In millions of Korean won)

2022

2021

Cost of sales

22,486,452

18,479,655

Selling and administrative expenses and other

1,825,488

1,684,454

Total

24,311,940

20,164,109

-45-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

11. Intangible Assets

(A)

Changes in intangible assets for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

Intellectual

property rights

Development

cost

Membership

Other

Total

Balance as of January 1

1,226,241

236,910

195,135

6,999,170

8,657,456

External acquisitions

232,768

5,795

2,315,598

2,554,161

Internally generated/ developed

Amortization

(217,808)

(151,892)

(2,235,367)

(2,605,067)

Disposals/scrap

(47,915)

(197)

(48,112)

Impairment

(863)

Other

3,849

Balance as of December 31

1,193,286

85,018

199,870

7,083,250

8,561,424

(In millions of Korean won)

2021

Intellectual

property rights

Development

cost

Membership

Other

Total

Balance as of January 1

1,195,319

371,392

194,277

5,241,660

7,002,648

External acquisitions

286,963

4,329

3,610,518

3,901,810

Internally generated/ developed

193,708

Amortization

(218,754)

(321,608)

(1,851,408)

(2,391,770)

Disposals/scrap

(42,031)

(557)

(42,588)

Impairment

(3,471)

Other

4,744

(6,582)

(1,043)

(2,881)

Balance as of December 31

1,226,241

236,910

195,135

6,999,170

8,657,456

(B)

Details of amortization of intangible assets for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Cost of sales

2,006,928

1,931,598

Selling and administrative expenses and other

598,139

460,172

Total

2,605,067

2,391,770

-46-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

12. Borrowings

(A)

Details of the carrying amounts of borrowings as of December 31, 2022 and December 31, 2021 are as follows:

(In millions of Korean won)

Financial

institutions

Interest rate (%)

as of Dec 31, 2022

December 31, 2022

December 31, 2021

Short-term borrowings

Collateralized borrowings

Woori Bank and other

0.0~16.7

2,381,512

9,204,268

Current portion of

long-term borrowings

Lease liabilities

1.6

129,525

133,518

Long-term borrowings

Lease liabilities

1.6

654,979

431,915

Collateralized borrowings are secured by trade receivables.

Interest expenses arising from the lease liabilities for the years ended December 31, 2022 and 2021 amount to W 10,876 million

and W 4,939 million, respectively, which were determined using the weighted average incremental borrowing rate. The right-

of-use assets are pledged as collateral to lessors in the event of default. Short-term lease payments and low- valued asset lease

payments that are not included in measurement of lease liabilities during the years ended December 31, 2022 and 2021 amount

to W 63,103 million and W 56,750 million, respectively.

(B)

Maturities of lease liabilities outstanding as of December 31, 2022 are as follows:

(In millions of Korean won)

Lease liabilities

Repayment terms

2023

149,150

2024

151,838

2025

146,916

2026

131,801

2027 and thereafter

303,645

Total

883,350

-47-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

13. Debentures

(A)

Details of the carrying amounts of debentures as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

Issue date

Due date

Interest rate (%)

as of Dec 31, 2022

December 31, 2022

December 31, 2021

US dollar denominated

straight bonds

Oct 2, 1997

Oct 1, 2027

7.7

31,683

35,565

(USD 25 million)

(USD 30 million)

Less: Discounts

(543)

(707)

Less: Current Portion

(6,228)

(5,810)

Total

24,912

29,048

US dollar denominated straight bonds are repaid annually for twenty years after a ten-year grace period from the date of issuance.

Interest is paid semi-annually.

(B)

Maturities of debentures outstanding as of December 31, 2022 are as follows:

(In millions of Korean won)

Debentures

Repayment terms

2023

6,337

2024

6,337

2025

6,337

2026

6,337

2027 and thereafter

6,335

Total

31,683

-48-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

14. Net Defined Benefit Liabilities (Assets)

(A)

Details of net defined benefit liabilities (assets) recognized in the statements of financial position as of December

31, 2022 and 2021 are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Present value of funded defined benefit obligations

10,729,126

11,155,187

Present value of unfunded defined benefit obligations

29,546

18,449

Subtotal

10,758,672

11,173,636

Fair value of plan assets

(15,168,895)

(13,497,927)

Total

(4,410,223)

(2,324,291)

(B)

The components of defined benefit costs recognized in profit or loss for the years ended December 31, 2022 and

2021 are as follows:

(In millions of Korean won)

2022

2021

Current service cost

1,030,033

907,450

Net interest income

(91,902)

(40,104)

Total

938,131

867,346

(C)

The expenses related to the defined benefit plans recognized in the

statements of profit or loss for the years ended

December 31, 2022 and 2021 are as follows :

(In millions of Korean won)

2022

2021

Cost of sales

373,835

341,934

Selling and administrative expenses and other

564,296

525,412

Total

938,131

867,346

(D)

Changes in the defined benefit obligations for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

11,173,636

9,754,082

Current service cost

1,030,033

907,450

Interest cost

401,973

296,029

Remeasurement:

Actuarial gains or losses arising from

changes in demographic assumptions

Actuarial gains or losses arising from

changes in financial assumptions

(1,779,803)

150,624

Other

356,672

429,051

Benefits paid

(455,787)

(374,416)

Other

31,948

10,816

Balance as of December 31

10,758,672

11,173,636

-49-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(E)

Changes in the fair value of plan assets for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

13,497,927

10,916,538

Interest income on plan assets

493,875

336,133

Remeasurement of plan assets

(249,943)

(128,336)

Contributions by employer

1,757,800

2,640,100

Benefits paid

(355,311)

(276,733)

Other

24,547

10,225

Balance as of December 31

15,168,895

13,497,927

Expected contributions to post-employment benefit plans to be paid in 2023 as of December 31, 2022 are W 1,451,728

million.

(F)

As of December 31, 2022, plan assets are invested in principal guaranteed fixed income financial instruments and

others.

(G)

The principal actuarial assumptions as of December 31, 2022 and 2021 are as follows:

(In percentage)

December 31, 2022

December 31, 2021

Discount rate

6.1

3.8

Salary growth rate (including the effects of inflation)

5.8

5.3

(H)

The sensitivity analysis of the defined benefit obligations as of December 31, 2022 and 2021 to changes in the

weighted principal assumptions is as follows:

(In percentage)

December 31, 2022

December 31, 2021

Discount rate

1%p increase

1%p decrease

109

110

Salary growth rate

1%p increase

109

110

1%p decrease

(I)

The weighted average maturity of the defined benefit obligations is 8.1 years as of December 31, 2022.

-50-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

15. Provisions

Changes in provisions for the year ended December 31, 2022 are as follows:

(In millions of Korean won)

Warranty (A)

Royalty

expenses (B)

Long-term

incentives (C)

Other (D, E)

Total

Balance as of January 1

386,713

1,496,525

558,982

2,861,407

5,303,627

Charged to profit or loss

764,209

590,483

184,480

865,232

2,404,404

Payment

(563,257)

(608,120)

(194,281)

(964,082)

(2,329,740)

Other

67,718

36,647

104,365

Balance as of December 31

587,665

1,546,606

549,181

2,799,204

5,482,656

(A)

The Company accrues warranty reserves for estimated costs of quality assurance, exchanges, repairs, recalls, and

future services based on historical experience and terms of warranty programs.

(B)

The Company recognizes provisions for the estimated royalty expenses that are under negotiation with counterparties.

The timing and amount of payment depend on the settlement of the negotiation.

(C)

The Company has a long-term incentive plan for its executives based on a three-year management performance

criteria and

recognizes

a provision for the estimated incentive cost for the accrued period.

(D)

The Company records provisions for future expenses expected to be incurred for products that have been

discontinued from manufacturing and sales.

-51-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(E)

The Company makes provisions for the carrying amounts of emission rights held by the Company and the emission

in excess of the emission rights for the applicable years. Details of emission rights and liabilities as of December 31,

2022 are as follows:

(1)

The amount of emission rights allocated free of charge in the current commitment period and the estimated

amount of emission as of December 31, 2022 are as follows:

(In ten thousand metric tons)

December 31, 2022

Allocated emission rights

1,147

Estimated volume of emission

1,521

The quantity of allocated emission right for the remaining planned period is 3,361 ten thousand metric ton

(2023: 1,127 ten thousand, 2024: 1,117 ten thousand, 2025: 1,117 ten thousand).

(2)

Changes in the emission rights for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

46,073

44,865

Acquisition

1,872

1,312

Submission

(28,378)

(104)

Balance as of December 31

19,567

46,073

The quantity of emission right is 4,589 ten thousand metric ton and

no emission rights is provided as collateral as of December

31, 2022

(3)

Changes in the emission liabilities for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Balance as of January 1

45,049

31,777

Charged to the statement of profit or loss

16,154

13,376

Submission

(28,378)

(104)

Balance as of December 31

32,825

45,049

-52-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

16. Commitments and Contingencies

(A)

Guarantees

(1)

Debt guarantees provided by the Company for overseas subsidiaries as of December 31, 2022 are as follows:

(In millions of Korean won and thousands of US dollars)

Debtor

Creditor

Period

Actual

indebtedness

Guaranteed

amount

SETK

BNP and others

Dec 16, 2023

303,386

984,692

SEDAM

Citibank and others

Dec 16, 2023

197,405

680,540

SETK-P

BNP and others

Dec 16, 2023

32,506

164,749

SEIL

Citibank

Dec 16, 2023

12,248

19,770

Other

Others

8,474,399

Total

545,545

10,324,150

USD 430,476

USD 8,146,572

(2)

The ceiling amount of guarantees provided by the Company for the execution of contracts by overseas subsidiaries

is W 469,262 million as of December 31, 2022.

(3)

The Company has not been provided any collateral or guarantees from its related parties as of December 31, 2022.

(B)

Litigation

As of December 31, 2022, the Company is involved in various claims, disputes, and investigations conducted by

regulatory bodies that arose during the normal course of business with numerous entities. Although the outflow of

resources and timing of these matters are uncertain, the Company believes the outcome will not have a material impact

on the financial position of the Company.

(C)

Joint liabilities related to the divestiture

The Company, Samsung Display Co., Ltd. and others are jointly and severally liable to fulfill the debts of Samsung

Display Co., Ltd. and others

which relate to the periods prior to Samsung Display Co., Ltd.’s separation from the

Company.

(D)

Other commitments

(1)

As of December 31, 2022, the Company has trade financing agreements, trade notes receivable discounting

facilities, and loan facilities with accounts receivable pledged as collateral with 5 financial institutions including

Woori Bank, with a combined limit of up to W 10,411,963 million. In addition, the Company has a trade financing

agreement (up to USD 8,950 million) with 19 financial institutions including Shinhan Bank, and loan facilities

with accounts receivable pledged as collateral related to purchase payments with 4 financial institutions including

Industrial Bank of Korea (up to W 415,048 million).

(2)

As of December 31, 2022, unfulfilled agreements relating to the acquisition of property, plant and equipment and

intangible assets amount to W 7,191,569 million.

-53-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

17. Contract Liabilities

The Company has recognized contract liabilities related to contracts with customers as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Contract liabilities

1,133,426

1,104,756

Contract liabilities include advances received, accrued expenses, other current liabilities and others.

The revenue recognized during the year ended December 31, 2022 in relation to carried-forward balance of contract

liabilities as of January 1, 2022 amounts to W 361,591 million.

18. Share Capital

As of December 31, 2022

, the Company’s total number of authorized shares is 25,000,000,000 shares

(W 100 per share).

The Company has issued 5,969,782,550 shares of ordinary shares and 822,886,700 shares of preference shares as of

December 31, 2022, excluding the retired shares. As of the December 31, 2022, the number of shares outstanding is the

same as the number of shares issued above, and no changes were made to the number of shares outstanding during the

years ended December 31, 2022 and 2021. Due to the retirement of shares, the total par value of the shares issued is W

679,267 million (ordinary shares of W

596,978 million and preference shares of W

82,289 million), which does not agree

with paid-in capital of W

897,514 million.

-54-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

19. Retained Earnings

(A)

Retained earnings as of December 31, 2022 and 2021 consist of the following:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Appropriated retained earnings

Legal reserves:

Earned profit reserves

450,789

Discretionary reserves

185,870,540

164,709,023

Subtotal

186,321,329

165,159,812

Unappropriated retained earnings

18,066,687

23,614,523

Total

204,388,016

188,774,335

The Commercial Code of the Republic of Korea requires the Company to appropriate as a legal reserve, an amount equal to a

minimum of 10% of annual cash dividends declared, until the reserve equals 50% of its issued capital stock. As of December 31,

2022,

since the Company’s profit reserves reached 50% of its capital stock, the Company has no obligation for additional reserves.

-55-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(B)

Separate statements of appropriation of retained earnings for the years ended December 31, 2022 and 2021 are as

follows:

The appropriation of retained earnings for the year ended December 31, 2022, is expected to be appropriated at the

shareholders’ meeting. The appropriation date for the year ended December 31,

2021 was March 16, 2022.

(In millions of Korean won)

2022

2021

Retained earnings before appropriations

Unappropriated retained earnings carried over from prior year

Interim dividends:

In 2022 - W 1,083 (dividend rate: 1083%)

(7,356,461)

In 2021 - W 1,083 (dividend rate: 1083%)

Profit for the year

25,418,778

30,970,954

Disposal of financial assets measured at fair value through profit or loss

4,340

Retained earnings available for appropriation

18,066,687

23,614,523

Transfers from other reserves

Appropriations of retained earnings

Cash dividends:

2,452,976

In 2022:

Ordinary shares - W 361 (dividend rate: 361%)

Preference shares - W 362 (dividend rate: 362%)

In 2021:

Ordinary shares - W 361 (dividend rate: 361%)

Preference shares - W 362 (dividend rate: 362%)

Reserve for research and human resources development

15,613,681

21,161,517

Total appropriations of retained earnings

18,066,657

23,614,493

Unappropriated retained earnings to be carried forward

-56-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(C)

Details of interim and year-end dividends are as follows:

(1)

Interim dividends (Record date: March 31, June 30 and September 30, 2022 and 2021)

(In millions of Korean won and number of shares)

2022

2021

Quarter

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par value)

361%

Dividend amount

Ordinary shares

2,155,092

Preference shares

297,062

Total

2,452,154

Quarter

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par value)

361%

Dividend amount

Ordinary shares

2,155,092

Preference shares

297,062

Total

2,452,154

Quarter

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par value)

361%

Dividend amount

Ordinary shares

2,155,092

Preference shares

297,062

Total

2,452,154

(2)

Year-end dividends (Record date: December 31, 2022 and 2021)

(In millions of Korean won and number of shares)

2022

2021

Number of shares eligible for dividends

Ordinary shares

5,969,782,550

Preference shares

822,886,700

Dividend rate (based on par value)

Ordinary shares

361%

Preference shares

362%

Dividend amount

Ordinary shares

2,155,092

Preference shares

297,884

Total

2,452,976

-57-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

20. Other Components of Equity

Other components of equity as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Gain (loss) on valuation of financial assets at fair value

through other comprehensive income

(122,644)

90,579

Remeasurement of net defined benefit assets

(1,910,996)

(2,732,997)

Others

1,760,408

Total

(273,232)

(882,010)

21. Expenses by Nature

Expenses by nature for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Changes in finished goods, work in process, and other

(10,475,794)

(1,423,122)

Raw materials used, merchandise purchased, and other

107,383,581

90,519,249

Wages and salaries

14,861,811

14,870,760

Post-employment benefit

974,711

898,132

Depreciation

24,311,940

20,164,109

Amortization

2,605,067

2,391,770

Welfare

3,220,421

2,630,171

Utilities

3,779,467

2,903,838

Outsourcing

3,623,225

3,106,610

Advertising

1,662,135

1,945,358

Sales promotion expenses

1,385,835

1,066,434

Other

33,215,755

28,678,234

Total

186,548,154

167,751,543

Equal to sum of cost of sales and selling and administrative expenses in the separate statements of profit or loss.

-58-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

22. Selling and Administrative Expenses

Selling and administrative expenses for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Selling and administrative expenses

Wages and salaries

2,308,767

2,396,978

Post-employment benefit

171,358

163,395

Commissions

2,652,491

2,397,640

Depreciation

412,787

396,881

Amortization

361,653

220,616

Advertising

1,662,135

1,945,358

Sales promotion expenses

1,385,835

1,066,434

Transportation

790,774

907,948

Service charges

935,838

1,675,628

Other

2,333,072

1,911,866

Subtotal

13,014,710

13,082,744

Research and development expenses

Total expenses

20,944,051

19,039,074

Capitalized expenses

(193,708)

Subtotal

20,944,051

18,845,366

Total

33,958,761

31,928,110

-59-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

23. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Other non-operating income

Dividend income

3,952,338

6,560,011

Rental income

173,719

164,197

Gain on disposal of property, plant and equipment

115,861

278,849

Other

334,460

355,947

Total

4,576,378

7,359,004

(In millions of Korean won)

2022

2021

Other non-operating expenses

Loss on disposal of property, plant and equipment

18,842

13,366

Donations

220,309

195,457

Other

57,193

537,155

Total

296,344

745,978

-60-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

24. Financial Income and Expenses

Details of financial income and expenses for the years ended December 31, 2022 and 2021 are as follows:

(

In millions of Korean won

)

2022

2021

Financial income

Interest income

339,242

260,396

Interest income from financial assets measured at amortized cost

339,242

260,396

Foreign exchange differences

9,124,484

3,497,401

Gain from derivatives

270,573

39,182

Total

9,734,299

3,796,979

(

In millions of Korean won

)

2022

2021

Financial expenses

Interest expenses

290,083

149,984

Interest expenses from financial liabilities measured at amortized cost

45,883

49,982

Other financial liabilities

244,200

100,002

Foreign exchange differences

9,351,659

3,485,602

Losses from derivatives

63,089

Total

9,641,742

3,698,675

The Company recognizes foreign exchange gains and losses arising from foreign currency transactions and translation

as financial income and expenses.

-61-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

25. Income Tax Expense

(A)

Income tax expense for the years ended December 31, 2022 and 2021 consists of the following:

(In millions of Korean won)

2022

2021

Current taxes

Current tax on profits for the year

5,926,928

8,041,604

Adjustments recognized in the current year

(449,536)

(321,952)

Subtotal

5,477,392

7,719,652

Deferred taxes

Changes in deferred taxes arising from unused tax credits

(1,010,632)

(332,351)

Changes in deferred taxes arising from temporary differences

(193,618)

346,237

Subtotal

(1,204,250)

13,886

Items charged directly to equity

Income tax expense

4,273,142

7,733,538

(B)

The tax on the Company’s profit before income tax differs from the theoretical amount that would arise using the

tax rate applicable to profits of the Company as follows:

(In millions of Korean won)

2022

2021

Profit before income tax

29,691,920

38,704,492

Tax calculated at tax rates applicable to profits

8,165,278

10,643,735

Adjustments:

Non-taxable income

(47,446)

(34,706)

Disallowed expense

507,992

651,517

Tax credits

(4,133,747)

(3,420,702)

Other

(218,935)

(106,306)

Subtotal

(3,892,136)

(2,910,197)

Income tax expense

4,273,142

7,733,538

The statutory tax rate regulated by tax law as of December 31, 2022 and 2021 is applied.

-62-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(C)

The movement in deferred income tax assets and liabilities resulting from the tax effect of temporary differences for

the years ended December 31, 2022 and 2021 are as follows:

(1)

2022

Temporary differences

Deferred tax assets (liabilities)

(In millions of Korean won)

Balance

as of

January 1

Increase

(Decrease)

Balance

as of

December 31

Balance

as of

January 1

Increase

(Decrease)

Balance

as of

December 31

Deferred tax arising from temporary differences

Revaluation of land

(3,406,625)

3,195

(3,403,430)

(936,822)

38,317

(898,505)

Investments in subsidiaries, associates

and joint ventures

(3,837,368)

(853,165)

34,127

(819,038)

Accumulated depreciation and other

(2,456,302)

(3,733,239)

(6,189,541)

(675,483)

(958,555)

(1,634,038)

Accrued income

(54,107)

44,687

(9,420)

(14,879)

12,392

(2,487)

Provisions, accrued expenses, and other

11,098,305

2,589,469

13,687,774

3,052,034

561,538

3,613,572

Foreign currency translation

(5,313)

562,866

557,553

(1,461)

148,655

147,194

Asset impairment losses

1,096,297

(105,290)

991,007

220,916

(36,634)

184,282

Post-employment benefits

(6,093,355)

685,667

(5,407,688)

(1,675,673)

248,043

(1,427,630)

Valuation effects from spin-off

10,586,822

Other

3,897,591

624,521

4,522,112

478,445

145,735

624,180

Subtotal

10,825,945

671,876

11,497,821

(406,088)

193,618

(212,470)

Deferred tax arising from unused tax credits

Unused tax credits

672,053

1,153,334

1,825,387

614,893

1,010,632

1,625,525

Deferred tax recognized in equity

Loss (gain) on valuation of financial assets at fair value

through other comprehensive income and other

(124,938)

291,573

166,635

(34,358)

78,349

43,991

Remeasurement of net defined benefit assets

3,769,652

(1,173,189)

2,596,463

1,036,653

(351,187)

685,466

Subtotal

3,644,714

(881,616)

2,763,098

1,002,295

(272,838)

729,457

Total

1,211,100

931,412

2,142,512

Deferred tax assets are not recognized if it is probable that the temporary differences will not reverse in the foreseeable future for

investments in subsidiaries, associates and joint ventures.

Difference in carrying amount for accounting and tax purposes for the shares of Samsung Display Co., Ltd.

, the Company’s subsidiary,

acquired through spin-off of the LCD division in the past. As of the reporting date, the Company does not have plans to dispose of its

investments in Samsung Display Co., Ltd. As it is probable that the temporary differences will not reverse in the foreseeable future,

deferred tax assets were not recognized.

-63-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(2)

2021

Temporary differences

Deferred tax assets (liabilities)

(In millions of Korean won)

Balance

as of

January 1

Increase

(Decrease)

Balance

as of

December 31

Balance

as of

January 1

Increase

(Decrease)

Balance

as of

December 31

Deferred tax arising from temporary differences

Revaluation of land

(3,420,886)

14,261

(3,406,625)

(940,744)

3,922

(936,822)

Investments in subsidiaries, associates

and joint ventures

(3,994,444)

157,076

(3,837,368)

(909,018)

55,853

(853,165)

Accumulated depreciation and other

(514,103)

(1,942,199)

(2,456,302)

(141,379)

(534,104)

(675,483)

Accrued income

(112,810)

58,703

(54,107)

(31,023)

16,144

(14,879)

Provisions, accrued expenses, and other

9,540,744

1,557,561

11,098,305

2,623,704

428,330

3,052,034

Foreign currency translation

(51,955)

46,642

(5,313)

(14,288)

12,827

(1,461)

Asset impairment losses

1,744,851

(648,554)

1,096,297

399,268

(178,352)

220,916

Post-employment benefits

(4,223,358)

(1,869,997)

(6,093,355)

(1,161,424)

(514,249)

(1,675,673)

Valuation effects from spin-off

10,586,822

Other

1,038,962

2,858,629

3,897,591

115,053

363,392

478,445

Subtotal

10,593,823

232,122

10,825,945

(59,851)

(346,237)

(406,088)

Deferred tax arising from unused tax credits

Unused tax credits

282,542

389,511

672,053

282,542

332,351

614,893

Deferred tax recognized in equity

Loss on valuation of financial assets at fair value

through other comprehensive income and other

(262,753)

137,815

(124,938)

(72,257)

37,899

(34,358)

Remeasurement of net defined benefit assets

3,061,640

708,012

3,769,652

841,951

194,702

1,036,653

Subtotal

2,798,887

845,827

3,644,714

769,694

232,601

1,002,295

Total

992,385

218,715

1,211,100

Deferred tax assets are not recognized if it is probable that the temporary differences will not reverse in the foreseeable future for

investments in subsidiaries, associates and joint ventures.

Difference in carrying amount for accounting and tax purposes for the shares of Samsung Display Co., Ltd.,

the Company’s subsidiary

acquired through a spin-off of the LCD division in the past. As of the reporting date, the Company does not have plans to dispose of its

investments in Samsung Display Co., Ltd. As it is probable that the temporary differences will not reverse in the foreseeable future,

deferred tax assets were not recognized.

(D)

Details of the period when the deferred tax assets (liabilities) are recovered (settled) as of December 31, 2022 and

2021 are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Net deferred tax assets (liabilities) to be recovered (settled) within 12 months

2,267,807

2,837,162

Net deferred tax assets (liabilities) to be recovered (settled) after more than 12 months

(125,295)

(1,626,062)

Total

2,142,512

1,211,100

-64-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

26. Earnings per Share

(A)

Basic earnings per share

Basic earnings per share for the years ended December 31, 2022 and 2021 are calculated as follows:

(1)

Ordinary shares

(In millions of Korean won, thousands of number of shares)

2022

2021

Profit for the year

25,418,778

30,970,954

Profit for the year available for ordinary shares

22,338,739

27,218,306

Weighted-average number of ordinary shares outstanding

5,969,783

Basic earnings per ordinary share

(in Korean won)

3,742

4,559

(2)

Preference shares

(In millions of Korean won, thousands of number of shares)

2022

2021

Profit for the year

25,418,778

30,970,954

Profit for the year available for preference shares

3,080,039

3,752,648

Weighted-average number of preference shares outstanding

822,887

Basic earnings per preference share

(in Korean won)

3,743

4,560

(B)

Diluted earnings per share

The Company does not have dilutive potential ordinary shares and as a result, basic earnings per share and diluted earnings

per share are the same for the years ended December 31, 2022 and 2021.

-65-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

27. Statements of Cash Flows

(A)

The Company used the indirect method to present cash flows from operating activities. Adjustments and changes in

assets and liabilities arising from operating activities for the years ended December 31, 2022 and 2021 are as follows:

Adjustments

(In millions of Korean won)

2022

2021

Adjustments :

Income tax expense

4,273,142

7,733,538

Financial income

(1,224,148)

(514,303)

Financial expenses

1,565,955

636,934

Post-employment benefits

974,711

898,132

Depreciation

24,311,940

20,164,109

Amortization

2,605,067

2,391,770

Bad debt expenses (reversal)

(178)

19,235

Dividends income

(3,952,338)

(6,560,011)

Gain on disposal of property, plant and equipment

(115,861)

(278,849)

Loss on disposal of property, plant and equipment

18,842

13,366

Loss on valuation of inventories and others

2,529,351

696,536

Others

52,905

(32,395)

Total

31,039,388

25,168,062

Changes in assets and liabilities arising from operating activities

(In millions of Korean won)

2022

2021

Changes in assets and liabilities :

Decrease (increase) in trade receivables

12,354,628

(8,102,318)

Decrease (increase) in non-trade receivables

(711,933)

54,306

Decrease (increase) in prepaid expenses

11,033

(198,371)

Increase in inventories

(14,337,291)

(2,732,143)

Increase (decrease) in trade payables

(2,494,560)

4,935,529

Increase in other payables

1,522,457

1,004,128

Increase (decrease) in advances received

(154,042)

50,363

Increase (decrease) in withholdings

(101,231)

191,872

Increase in accrued expenses

88,828

920,919

Increase in provisions

74,664

1,570,118

Payment of post-employment benefits

(492,366)

(405,203)

Increase in plan assets

(1,402,489)

(2,363,367)

Other

(1,225,967)

(707,488)

Total

(6,868,269)

(5,781,655)

-66-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(B)

Significant non-cash investing and financing transactions for the years ended December 31, 2022 and 2021 are as

follows:

(In millions of Korean won)

2022

2021

Valuation of financial assets at fair value through other comprehensive income

(285,585)

(137,815)

Reclassification of construction in progress to property, plant and equipment

30,539,179

36,663,946

Acquisition of right-of-use assets (new lease contracts established)

673,493

451,828

Reclassification of current portion of debentures

6,228

5,810

Reclassification of current portion of long-term borrowings

129,525

133,518

(C)

Changes in liabilities arising from financing activities for the years ended December 31, 2022 and 2021 are as follows:

(1)

2022

Cash flows from

financing

activities

Non-cash transactions

(In millions of Korean won)

As of January 1

New lease

contracts

Other

As of

December 31

Short-term borrowings

9,204,268

(6,700,826)

(121,930)

2,381,512

Debentures and long-term borrowings

600,291

(155,264)

673,493

(302,876)

815,644

Total

9,804,559

(6,856,090)

673,493

(424,806)

3,197,156

Other includes amortization and effects of changes in foreign currency exchange rates.

(2)

2021

Cash flows from

financing

activities

Non-cash transactions

(In millions of Korean won)

As of January 1

New lease

contracts

Other

As of

December 31

Short-term borrowings

12,520,367

(3,288,858)

(27,241)

9,204,268

Debentures and long-term borrowings

269,877

(117,963)

451,828

(3,451)

600,291

Total

12,790,244

(3,406,821)

451,828

(30,692)

9,804,559

Other includes amortization and effects of changes in foreign currency exchange rates.

(D)

For the years ended December 31, 2022 and 2021, cash outflows from repayment of the principal (financial activities)

were W 149,337 million and W 112,523 million, respectively, while cash outflows due to interest expenses (operating

activities) in relation to the lease liabilities amount to W 10,876 million and W 4,939 million, respectively.

(E)

The Company reported cash receipts and payments arising from transactions occurring frequently, of large gross

amounts, and with short-term maturities, such as short-term financial instruments, borrowings and other, on a net basis.

As of December 31, 2022

, most of the Company’s cash and cas

h equivalents consist of bank deposits.

-67-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

28. Financial Risk Management

The Company’s financial risk management focuses on minimizing

the market risk, credit risk, and liquidity risk arising

from operating activities. To mitigate these risks, the Company implements and operates a financial risk policy and

program that closely monitors and manages such risks. In addition, the Company uses derivatives to hedge certain risk

exposure.

The finance team mainly carries out the Company’s financial risk management. After implementing the global financial

risk management policies, the finance team periodically measures, evaluates, and hedges the financial risk and also

establishes and implements the global financial risk management policy.

The Company also manages the foreign exchange risk by monitoring the foreign exchange rate fluctuations at local finance

centers across major regions (United States, United Kingdom, Singapore, China, Brazil, and Russia) and acting as an agent

of foreign exchange transactions. In addition, the Company manages the liquidity risk by utilizing a globally integrated

finance structure.

The Company’s financial assets that are under

the financial risk management are comprised of cash and cash equivalents,

short-

term financial instruments, trade receivables and others. The Company’s financial liabilities under financial risk

management are comprised of trade payables, borrowings, and others.

(A)

Market risk

(1)

Foreign exchange risk

The Company is exposed to the foreign exchange risk arising from its global operations performed in currencies other

than its functional currency. The major currencies that are exposed to the foreign exchange risk are the US dollar, Euro,

and Indian Rupee.

The Company focuses on minimizing the impact of the foreign exchange fluctuation by maintaining the equal amount

of assets and liabilities denominated in each foreign currency, irrespective of the foreign exchange fluctuation

considerations. To prevent the

exchange position, the Company’s foreign exchange management policy requires

the

normal business transactions, including imports and exports, as well as the financing transactions such as depositing and

borrowing, to be in local currency or for the cash-in currency to be matched up with the cash-out currency. Moreover,

the Company periodically evaluates and monitors the foreign exchange risk to efficiently mitigate such risk, and the

speculative foreign exchange transactions are strictly prohibited.

As of December 31, 2022 and 2021, when the currency rates change by 5%, the impact on profit or loss (before income

tax effects) arising from financial assets and liabilities denominated in foreign currencies other than the functional

currency are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Increase

Decrease

Increase

Decrease

USD

77,795

(77,795)

119,312

(119,312)

EUR

(53,114)

53,114

(33,776)

33,776

INR

52,012

(52,012)

25,057

(25,057)

-68-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(2)

Interest rate risk

Risk of changes in interest rates for floating interest rate financial instruments is defined as the risk that the fair value of

components of the statements of financial position, and future cash flows of interest income (expenses) of a financial

instrument, will fluctuate because of the chan

ges in market interest rates. The Company’s position with regard to interest

rate risk exposure is mainly driven by its floating interest rate debt obligations and interest-bearing deposits. The

Company implemented policies and operates to minimize uncertainty arising from changes in interest rates and financial

expenses.

(3)

Price risk

The Company’s investment portfolio consists of direct and indirect investments in equity instruments classified as

financial assets at fair value through other comprehensive

income, which is in line with the Company’s strategy.

As of December 31, 2022 and 2021, price fluctuation of marketable equity securities (listed stocks) by 1% would result

in changes in other comprehensive income (before income tax) of W 12,479 million and W 15,443 million, respectively.

(B)

Credit risk

Credit risk arises during the normal course of transactions and investing activities where clients or other parties fail to

discharge an obligation. The Company monitors and sets the client’s and

the count

erparty’s credit limit

s on a periodic

basis based on the client’s and counterparty’s financial conditions, default histor

ies and other important factors. Adequate

insurance coverage is maintained for trade receivables related to the trading partners situated in higher risk countries.

Credit risk can arise from transactions with financial institutions which include financial instrument transactions such as

cash and cash equivalents, deposits, and derivative instruments. To minimize such risk, the Company transacts only with

banks which have strong international credit ratings (S&P A and above), and all new transactions with financial institutions

with no prior transaction history are approved, managed and monitored by the Company’s finance team

and the local

finance center. The Company generally enters into a financial agreement with no restrictions, such as debt ratio covenants,

provision of collateral and/or repayment of loans/ borrowings. The Company requires separate approvals for contracts with

restrictions.

As of December 31, 2022 and 2021, the Company estimates that its maximum exposure to credit risk is the carrying amount

of its financial assets, net of impairment losses.

(C)

Liquidity risk

Due to large investments made by the Company, maintaining adequate levels of liquidity risk is critical. The Company

strives to achieve this goal by periodically forecasting its capital balance, estimating the required cash levels, and managing

income and expenses.

The Company manages its liquidity risk by periodically forecasting the projected cash flows. If abnormal signs are

identified, the Company works with the local finance center and provides liquidity support by utilizing a globally integrated

finance structure, such as Cash Pooling. In addition, the Company maintains a liquidity management process which

provides an additional financial support from the local finance center and the Company. The Cash Pooling program allows

the sharing of surplus funds among the entities and contributes to minimizing the liquidity risk and strengthening the

Company’s competitive position by reducing capital operation expenses and financial expenses.

For the need of large scale of liquidity, the Company secures the credit limit for overseas subsidiaries through payment

guarantees.

-69-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

As of December 31, 2022 and 2021, the following table is an undiscounted cash flow analysis for financial liabilities

according to their remaining contractual maturity.

December 31, 2022

(In millions of Korean won)

Less than

3 months

–

6 months

–

12 months

1 - 5 years

More than

5 years

Financial liabilities

31,354,944

316,725

1,096,183

2,431,415

472,135

December 31, 2021

(In millions of Korean won)

Less than

3 months

–

6 months

–

12 months

1 - 5 years

More than

5 years

Financial liabilities

35,764,225

435,581

728,627

2,798,560

87,798

The table above shows the Company’s financial liabilities based on the remaining period at the separate statement

s of

financial position date until the contractual maturity date. The amounts disclosed in the table are the contractual

undiscounted cash flows.

The maximum liquidity risk exposure from those other than the above financial liabilities (e.g., payment guarantees for

affiliated companies, performance bonds, and other) as of December 31, 2022 and 2021 are W 10,793,412 million and

W 10,211,619 million, respectively.

(D)

Capital risk management

The purpose of capital management is to maintain a sound capital structure. The Company monitors capital on the basis of

credit ratings and debt ratio. Debt ratio is calculated by dividing the total liabilities by total equity in the financial statements.

The Company has maintained an AA- and Aa2 credit ratings

from S&P and Moody’s, respectively.

The debt ratio as of December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

December 31, 2022

December 31, 2021

Total liabilities

50,667,559

57,918,452

Total equity

209,416,191

193,193,732

Debt ratio

24.2%

30.0%

-70-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(E)

Fair values estimation

(1)

Carrying amounts and fair value of financial instruments by category as of December 31, 2022 and 2021 are as

follows:

December 31, 2022

December 31, 2021

(In millions of Korean won)

Carrying amount

Fair value

Carrying amount

Fair value

Financial assets

Cash and cash equivalents

3,921,593

(*1)

3,918,872

(*1)

Short-term financial instruments

137

(*1)

15,000,576

(*1)

Trade receivables

20,503,223

(*1)

33,088,247

(*1)

Financial assets at fair value through

other comprehensive income

1,364,325

1,662,532

Financial assets at fair value through

profit or loss

283

2,135

Other

5,470,355

(*1)

5,076,418

(*1)

Total financial assets

31,259,916

58,748,780

Financial liabilities

Trade payables

8,729,315

(*1)

11,557,441

(*1)

Short-term borrowings

2,381,512

(*1)

9,204,268

(*1)

Other payables

18,324,604

(*1)

12,948,960

(*1)

Current portion of long-term liabilities

135,753

6,580

139,328

6,276

- Current portion of long-term borrowing

129,525

(*2)

133,518

(*2)

- Current portion of debentures

6,228

6,580

5,810

6,276

Debentures

24,912

27,845

29,048

35,863

Long-term borrowings

654,979

(*2)

431,915

(*2)

Long-term other payables

2,083,790

(*1)

2,335,218

(*1)

Other

3,145,473

(*1)

3,056,156

(*1)

Total financial liabilities

35,480,338

39,702,334

(*1)

Assets and liabilities whose carrying amount is a reasonable approximation of fair value are excluded from the fair value disclosures.

(*2)

Lease liabilities, classified under the current portion of long-term liabilities and long-term borrowings, are excluded from the fair

value disclosures in accordance with

Korean IFRS 1107.

-71-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(2)

Fair value hierarchy classifications of the financial instruments that are measured at fair value or its fair value

disclosed as of December 31, 2022 and 2021 are as follows:

December 31, 2022

(In millions of Korean won)

Level 1

Level 2

Level 3

Total balance

1) Assets

Financial assets at fair value through

other comprehensive income

1,247,882

116,443

1,364,325

Financial assets at fair value through

profit or loss

283

2) Liabilities

Current portion of debentures

6,580

Debentures

27,845

December 31, 2021

(In millions of Korean won)

Level 1

Level 2

Level 3

Total balance

1) Assets

Financial assets at fair value through

other comprehensive income

1,544,320

118,212

1,662,532

Financial assets at fair value through

profit or loss

2,135

2) Liabilities

Current portion of debentures

6,276

Debentures

35,863

The levels of the fair value hierarchy and its application to financial assets and liabilities are described below.

ㆍ

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

ㆍ

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,

either directly or indirectly

ㆍ

Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable

inputs)

The fair value of financial instruments traded in active markets is based on quoted market prices at the statements of

financial position date. A market is regarded as active if quoted prices are readily and regularly available from an

exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and

regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held

by the Company is the current bid price. These instruments are included in Level 1. The instruments included in Level

1 are listed equity investments, most of which are classified as financial assets at fair value through other comprehensive

income.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives)

is determined by using valuation techniques. These valuation techniques maximize the use of observable market data

where it is available and rely as little as possible on the entity-specific estimates. If all significant inputs required for a

fair value of an instrument are observable, the instrument is included in Level 2.

If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3.

-72-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

The Company performs the fair value measurements required for financial reporting purposes, including Level 3 fair

values and discusses valuation processes and results at least once every quarter in line with the Company’s quarterly

reporting dates. The Company’s policy is to recognize transfers between levels at t

he end of the reporting period, if

corresponding events or changes in circumstances have occurred.

Specific valuation techniques used to value financial instruments include:

ㆍ

Quoted market prices or dealer quotes for similar instruments

ㆍ

The fair value of forward foreign exchange contracts is determined using forward exchange rates at the

statements of financial position date, with the resulting value discounted back to present value

Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial

instruments. For trade and other receivables that are classified as current assets, the book value approximates a

reasonable estimate of fair value.

(3)

Valuation technique and the inputs

The Company utilizes a present value technique to discount future cash flows using a proper interest rate for corporate

bonds, government and public bonds, and bank debentures that are classified as Level 2 in the fair value hierarchy.

The following table presents the valuation technique and the inputs used for major financial instruments classified as

Level 3 as of December 31, 2022.

(In millions of Korean won, and percentage)

Classification

Fair value

Valuation

technique

Level 3 inputs

Input range

(Weighted average)

Financial assets at fair value through other comprehensive income

Samsung Venture Investment

32,073

Discounted cash

flow

Permanent growth rate

-1.0%~1.0%(0.0%)

Weighted average cost

of capital

15.8%~17.8%(16.8%)

MiCo Ceramics Co., Ltd.

29,385

Discounted cash

flow and other

Permanent growth rate

0.0%~1.0%(0.5%)

Weighted average cost

of capital

13.1%~15.1%(14.1%)

(4)

Changes in Level 3 instruments for the years ended December 31, 2022 and 2021 are as follows:

(In millions of Korean won)

2022

2021

Financial assets

Balance as of January 1

120,347

130,242

Disposals

(12,720)

(912)

Amount recognized in profit or loss for the year

(108)

Amount recognized in other comprehensive income

22,926

2,736

Other

(13,719)

(11,719)

Balance as of December 31

116,726

120,347

-73-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(5)

Sensitivity analysis for recurring fair value measurements categorized within Level 3

Sensitivity analysis of financial instruments is performed to measure favorable and unfavorable changes in the fair value

of financial instruments which are affected by the unobservable parameters, using a statistical technique. When the fair

value is affected by more than two input parameters, the amounts represent the most favorable or unfavorable.

The results of the sensitivity analysis for the effect on other comprehensive income or loss (before-tax amount for other

comprehensive income or loss) from changes in inputs for major financial instruments which are categorized within

Level 3 and subject to sensitivity analysis are as follows:

(In millions of Korean won)

Favorable changes

Unfavorable changes

Classification

Profit or loss

Equity

Profit or loss

Equity

Financial assets at fair value through

other comprehensive income

2,970

(2,374)

For equity securities, changes in fair value are calculated with the correlation between the growth rate (-1% ~1%) and the discount

rate, which are significant unobservable inputs.

-74-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

29. Segment Information

The chief operating decision-maker has been identified as the Management Committee. The Company determines

operating segments based on the units reported to the Management Committee. The Management Committee reviews the

operating profits of each operating segment in order to assess the performance and to make strategic decisions regarding

the allocation of resources to the segment.

Sales revenue consists mostly of product sales. The operating segments are product-based and are identified based on the

internal organization and revenue streams. As of the reporting date, the operating segments are comprised of DX, DS, and

others.

Total assets and liabilities of each operating segment are excluded from the disclosure as these have not been provided

regularly to the Management Committee.

(1) For the year ended December 31, 2022

(In millions of Korean won)

Total

Sales

117,257,647

97,102,386

211,867,483

Depreciation

542,437

23,589,388

24,311,940

Amortization

1,631,289

754,791

2,605,067

Operating profit

3,083,254

22,232,180

25,319,329

Other operating segments are not separately disclosed.

(2) For the year ended December 31, 2021

(In millions of Korean won)

Total

Sales

107,675,342

94,373,136

199,744,705

Depreciation

537,479

19,457,650

20,164,109

Amortization

1,382,922

891,431

2,391,770

Operating profit

6,389,720

25,592,201

31,993,162

Other operating segments are not separately disclosed.

-75-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

30. Related Party Transactions

(A)

Subsidiaries

List of subsidiaries as of December 31, 2022 are as follows:

Area

Subsidiaries

Industry

Percentage of

ownership (%)

America

Samsung Electronics America, Inc. (SEA)

Sale of electronic devices

100.0

Samsung International, Inc. (SII)

Manufacture of TV and monitors

100.0

Samsung Mexicana S.A. de C.V (SAMEX)

Manufacture of electronic devices

100.0

Samsung Electronics Home Appliances America, LLC (SEHA)

Manufacture of home appliances

100.0

Samsung Research America, Inc (SRA)

R&D

100.0

Samsung Next LLC (SNX)

Management of overseas subsidiaries

100.0

Samsung Next Fund LLC (SNXF)

Technology business, venture capital investments

100.0

NeuroLogica Corp.

Manufacture and sale of medical equipment

100.0

Samsung HVAC America, LLC

Sale of air conditioning products

100.0

Joyent, Inc.

Cloud services

100.0

Dacor Holdings, Inc.

Management of overseas subsidiaries

100.0

Dacor, Inc.

Manufacture and sale of home appliances

100.0

SmartThings, Inc.

Sale of smart home electronics

100.0

TeleWorld Solutions, Inc. (TWS)

Installation and optimization of network devices

100.0

Samsung Semiconductor, Inc. (SSI)

Sale of semiconductor and display panels

100.0

Samsung Austin Semiconductor LLC. (SAS)

Manufacture of semiconductors

100.0

Samsung Oak Holdings, Inc. (SHI)

Management of overseas subsidiaries

100.0

SEMES America, Inc.

Semiconductor equipment services

100.0

Samsung Electronics Canada, Inc. (SECA)

Sale of electronic devices

100.0

AdGear Technologies Inc.

Digital advertising platforms

100.0

Samsung Eletronica da Amazonia Ltda. (SEDA)

Manufacture and sale of electronic devices

100.0

Samsung Electronics Mexico S.A. de C.V. (SEM)

Sale of electronic devices

100.0

Samsung Electronics Digital Appliance Mexico, S.A. de C.V. (SEDAM)

Manufacture of home appliances

100.0

Samsung Electronics Latinoamerica (Zona Libre), S. A. (SELA)

Sale of electronic devices

100.0

Samsung Electronics Latinoamerica Miami, Inc. (SEMI)

Sale of electronic devices

100.0

Samsung Electronica Colombia S.A. (SAMCOL)

Sale of electronic devices

100.0

Samsung Electronics Argentina S.A. (SEASA)

Marketing and services

100.0

Samsung Electronics Chile Limitada (SECH)

Sale of electronic devices

100.0

Samsung Electronics Peru S.A.C. (SEPR)

Sale of electronic devices

100.0

Samsung Electronics Venezuela, C.A. (SEVEN)

Marketing and services

100.0

Samsung Electronics Panama. S.A. (SEPA)

Consulting

100.0

Harman International Industries, Inc.

Management of overseas subsidiaries

100.0

Harman Becker Automotive Systems, Inc.

Manufacture and sale of audio products, R&D

100.0

Harman Connected Services, Inc.

Connected service provider

100.0

Harman Connected Services Engineering Corp.

Connected service provider

100.0

Harman da Amazonia Industria Eletronica e Participacoes Ltda.

Manufacture and sale of audio products

100.0

Harman de Mexico, S. de R.L. de C.V.

Manufacture of audio products

100.0

Harman do Brasil Industria Eletronica e Participacoes Ltda.

Sale of audio products, R&D

100.0

Harman Financial Group LLC

Management company

100.0

Harman International Industries Canada Ltd.

Sale of audio products

100.0

Harman International Mexico, S. de R.L. de C.V.

Sale of audio products

100.0

Harman KG Holding, LLC

Management of overseas subsidiaries

100.0

Harman Professional, Inc.

Sale of audio products, R&D

100.0

Beijing Integrated Circuit Industry International Fund, L.P

Venture capital investments

61.4

China Materialia New Materials 2016 Limited Partnership

Venture capital investments

99.0

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

-76-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

Europe

& CIS

Samsung Electronics (UK) Ltd. (SEUK)

Sale of electronic devices

100.0

Samsung Electronics Ltd. (SEL)

Management of overseas subsidiaries

100.0

Samsung Semiconductor Europe Limited (SSEL)

Sale of semiconductor and display panels

100.0

Samsung Electronics GmbH (SEG)

Sale of electronic devices

100.0

Samsung Electronics Holding GmbH (SEHG)

Management of overseas subsidiaries

100.0

Samsung Semiconductor Europe GmbH (SSEG)

Sale of semiconductor and display panels

100.0

Samsung Electronics France S.A.S (SEF)

Sale of electronic devices

100.0

Samsung Electronics Italia S.P.A. (SEI)

Sale of electronic devices

100.0

Samsung Electronics Iberia, S.A. (SESA)

Sale of electronic devices

100.0

Samsung Electronics Portuguesa, Unipessoal, Lda. (SEP)

Sale of electronic devices

100.0

Samsung Electronics Hungarian Private Co. Ltd. (SEH)

Manufacture and sale of electronic devices

100.0

Samsung Electronics Europe Logistics B.V. (SELS)

Logistics

100.0

Samsung Electronics Benelux B.V. (SEBN)

Sale of electronic devices

100.0

Samsung Electronics Europe Holding Cooperatief U.A. (SEEH)

Management of overseas subsidiaries

100.0

Samsung Electronics Nordic Aktiebolag (SENA)

Sale of electronic devices

100.0

Samsung Electronics Slovakia s.r.o (SESK)

Manufacture of TV and monitors

100.0

Samsung Display Slovakia, s.r.o. (SDSK)

Toll processing of display panels

100.0

Samsung Electronics Polska, SP.Zo.o (SEPOL)

Sale of electronic devices

100.0

Samsung Electronics Poland Manufacturing SP.Zo.o (SEPM)

Manufacture of home appliances

100.0

Samsung Electronics Romania LLC (SEROM)

Sale of electronic devices

100.0

Samsung Electronics Austria GmbH (SEAG)

Sale of electronic devices

100.0

Samsung Electronics Switzerland GmbH (SESG)

Sale of electronic devices

100.0

Samsung Electronics Czech and Slovak s.r.o. (SECZ)

Sale of electronic devices

100.0

SAMSUNG ELECTRONICS BALTICS SIA (SEB)

Sale of electronic devices

100.0

Samsung Electronics Greece S.M.S.A (SEGR)

Sale of electronic devices

100.0

Samsung Electronics Air Conditioner Europe B.V. (SEACE)

Sale of air conditioning products

100.0

Samsung Nanoradio Design Center (SNDC)

R&D

100.0

Samsung Denmark Research Center ApS (SDRC)

R&D

100.0

Samsung Cambridge Solution Centre Limited (SCSC)

R&D

100.0

SAMSUNG Zhilabs, S.L.

Development and sale of network solutions

100.0

FOODIENT LTD.

R&D

100.0

Samsung Electronics Rus Company LLC (SERC)

Sale of electronic devices

100.0

Samsung Electronics Rus Kaluga LLC (SERK)

Manufacture of TV

100.0

Samsung Electronics Ukraine Company LLC (SEUC)

Sale of electronic devices

100.0

Samsung R&D Institute Ukraine (SRUKR)

R&D

100.0

Samsung Electronics Central Eurasia LLP (SECE)

Sale of electronic devices

100.0

Samsung Electronics Overseas B.V. (SEO)

Sale of electronic devices

100.0

Samsung R&D Institute Rus LLC (SRR)

R&D

100.0

Samsung Electronics Caucasus Co. Ltd (SECC)

Marketing

100.0

Samsung Electronics Uzbekistan Ltd. (SEUZ)

Marketing

100.0

Ownership represents the Company’s ownership of the voting rights in

each entity, including subsidiaries’ ownerships.

-77-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

Europe

& CIS

AKG Acoustics Gmbh

Manufacture and sale of audio products

100.0

Apostera UA, LLC

Connected service provider

100.0

Harman Audio Iberia Espana Sociedad Limitada

Sale of audio products

100.0

Harman Automotive UK Limited

Manufacture of audio products

100.0

Harman Becker Automotive Systems GmbH

Manufacture and sale of audio products, R&D

100.0

Harman Becker Automotive Systems Italy S.R.L.

Sale of audio products

100.0

Harman Becker Automotive Systems Manufacturing Kft

Manufacture of audio products, R&D

100.0

Harman Belgium SA

Sale of audio products

100.0

Harman Connected Services AB.

Connected service provider

100.0

Harman Finland Oy

Connected service provider

100.0

Harman Connected Services GmbH

Connected service provider

100.0

Harman Connected Services Poland Sp.zoo

Connected service provider

100.0

Harman Connected Services UK Ltd.

Connected service provider

100.0

Harman Consumer Nederland B.V.

Sale of audio products

100.0

Harman Deutschland GmbH

Sale of audio products

100.0

Harman Finance International GP S.a.r.l

Management of overseas subsidiaries

100.0

Harman France SNC

Sale of audio products

100.0

Harman Holding Gmbh & Co. KG

Management company

100.0

Harman Hungary Financing Ltd.

Financing company

100.0

Harman Inc. & Co. KG

Management of overseas subsidiaries

100.0

Harman International Estonia OU

R&D

100.0

Harman International Industries Limited

Sale of audio products, R&D

100.0

Harman International Romania SRL

R&D

100.0

Harman Finance International, SCA

Financing company

100.0

Harman Management Gmbh

Management of overseas subsidiaries

100.0

Harman Professional Kft

Manufacture of audio products, R&D

100.0

Harman Professional Denmark ApS

Sale of audio products, R&D

100.0

Red Bend Software Ltd.

Software design

100.0

Red Bend Software SAS

Software design

100.0

Studer Professional Audio GmbH

Sale of audio products, R&D

100.0

Harman Connected Services OOO

Connected service provider

100.0

Harman RUS CIS LLC

Sale of audio products

100.0

Middle

East

& Africa

Samsung Gulf Electronics Co., Ltd. (SGE)

Sale of electronic devices

100.0

Samsung Electronics Türkiye (SETK)

Sale of electronic devices

100.0

Samsung Electronics Industry and Commerce Ltd. (SETK-P)

Manufacture of electronic devices

100.0

Samsung Electronics Levant Co.,Ltd. (SELV)

Sale of electronic devices

100.0

Samsung Electronics Maghreb Arab (SEMAG)

Sale of electronic devices

100.0

Samsung Electronics Egypt S.A.E (SEEG)

Manufacture and sale of electronic devices

100.0

Samsung Electronics Israel Ltd. (SEIL)

Marketing

100.0

Samsung Electronics Tunisia S.A.R.L (SETN)

Marketing

100.0

Samsung Electronics Pakistan(Private) Ltd. (SEPAK)

Marketing

100.0

Samsung Electronics Saudi Arabia Ltd. (SESAR)

Sale of electronic devices

100.0

Samsung Semiconductor Israel R&D Center, Ltd. (SIRC)

R&D

100.0

Corephotonics Ltd.

R&D

100.0

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

-78-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

Samsung Electronics South Africa(Pty) Ltd. (SSA)

Sale of electronic devices

100.0

Samsung Electronics South Africa Production (pty) Ltd. (SSAP)

Manufacture of TV and monitors

100.0

Samsung Electronics West Africa Ltd. (SEWA)

Marketing

100.0

Samsung Electronics East Africa Ltd. (SEEA)

Marketing

100.0

Global Symphony Technology Group Private Ltd.

Management of overseas subsidiaries

100.0

Harman Connected Services Morocco

Connected service provider

100.0

Harman Industries Holdings Mauritius Ltd.

Management of overseas subsidiaries

100.0

Red Bend Ltd.

Manufacture of audio products

100.0

Asia

(Excluding

China)

Samsung Asia Pte. Ltd. (SAPL)

Management of overseas subsidiaries

100.0

Samsung Electronics Singapore Pte. Ltd. (SESP)

Sale of electronic devices

100.0

Samsung Malaysia Electronics (SME) Sdn. Bhd. (SME)

Sale of electronic devices

100.0

Samsung Electronics Display (M) Sdn. Bhd. (SDMA)

Manufacture of electronic devices

100.0

Samsung Electronics (M) Sdn. Bhd. (SEMA)

Manufacture of home appliances

100.0

Samsung Vina Electronics Co., Ltd. (SAVINA)

Sale of electronic devices

100.0

Samsung Electronics Vietnam Co., Ltd. (SEV)

Manufacture of electronic devices

100.0

Samsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT)

Manufacture of communication equipment

100.0

Samsung Electronics HCMC CE Complex Co., Ltd. (SEHC)

Manufacture and sale of electronic devices

100.0

Samsung Display Vietnam Co., Ltd. (SDV)

Manufacture of display panels

100.0

DOWOOINSYS VINA COMPANY LIMITED

Manufacture of display components

100.0

PT Samsung Electronics Indonesia (SEIN)

Manufacture and sale of electronic devices

100.0

PT Samsung Telecommunications Indonesia (STIN)

Sale of electronic devices and services

100.0

Thai Samsung Electronics Co., Ltd. (TSE)

Manufacture and sale of electronic devices

91.8

Laos Samsung Electronics Sole Co., Ltd (LSE)

Marketing

100.0

Samsung Electronics Philippines Corporation (SEPCO)

Sale of electronic devices

100.0

Samsung Electronics Australia Pty. Ltd. (SEAU)

Sale of electronic devices

100.0

Samsung Electronics New Zealand Limited (SENZ)

Sale of electronic devices

100.0

Samsung India Electronics Private Ltd. (SIEL)

Manufacture and sale of electronic devices

100.0

Red Brick Lane Marketing Solutions Pvt. Ltd.

Marketing

100.0

Samsung Display Noida Private Limited (SDN)

Manufacture of display panels

100.0

Samsung R&D Institute India-Bangalore Private Limited (SRI-Bangalore)

R&D

100.0

Samsung R&D Institute BanglaDesh Limited (SRBD)

R&D

100.0

Samsung Nepal Services Pvt, Ltd (SNSL)

Service

100.0

Samsung Japan Corporation (SJC)

Sale of semiconductor and display panels

100.0

Samsung R&D Institute Japan Co. Ltd. (SRJ)

R&D

100.0

Samsung Electronics Japan Co., Ltd. (SEJ)

Sale of electronic devices

100.0

Harman Connected Services Corp. India Pvt. Ltd.

Connected service provider

100.0

Harman International (India) Private Limited

Sale of audio products, R&D

100.0

Harman International Industries PTY Ltd.

Management of overseas subsidiaries

100.0

Harman International Japan Co., Ltd.

Sale of audio products, R&D

100.0

Harman Singapore Pte. Ltd.

Sale of audio products

100.0

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’

ownerships.

-79-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

China

Samsung (CHINA) Investment Co., Ltd. (SCIC)

Sale of electronic devices

100.0

Samsung Electronics Hong Kong Co., Ltd. (SEHK)

Sale of electronic devices

100.0

Samsung Electronics Taiwan Co., Ltd. (SET)

Sale of electronic devices

100.0

Tianjin Samsung Electronics Co., Ltd. (TSEC)

Manufacture of TV and monitors

91.2

Suzhou Samsung Electronics Co., Ltd. (SSEC)

Manufacture of home appliances

88.3

Samsung Suzhou Electronics Export Co., Ltd. (SSEC-E)

Manufacture of home appliances

100.0

Samsung Electronics Suzhou Computer Co., Ltd. (SESC)

R&D

100.0

Tianjin Samsung Telecom Technology Co., Ltd. (TSTC)

Manufacture of communication equipment

90.0

Beijing Samsung Telecom R&D Center (SRC-Beijing)

R&D

100.0

Samsung Electronics China R&D Center (SRC-Nanjing)

R&D

100.0

Samsung Mobile R&D Center China-Guangzhou (SRC-Guangzhou)

R&D

100.0

Samsung R&D Institute China-Shenzhen (SRC-Shenzhen)

R&D

100.0

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

Sale of semiconductor and display panels

100.0

Samsung (China) Semiconductor Co., Ltd. (SCS)

Manufacture of semiconductors

100.0

Samsung SemiConductor Xian Co., Ltd. (SSCX)

Sale of semiconductor and display panels

100.0

Samsung Electronics Suzhou Semiconductor Co., Ltd. (SESS)

Toll processing of semiconductors

100.0

Tianjin Samsung LED Co., Ltd. (TSLED)

Manufacture of LED

100.0

Samsung Semiconductor (China) R&D Co., Ltd. (SSCR)

R&D

100.0

Samsung Display Dongguan Co., Ltd. (SDD)

Manufacture of display panels

100.0

Samsung Display Tianjin Co., Ltd. (SDT)

Manufacture of display panels

95.0

SEMES (XIAN) Co., Ltd.

Semiconductor/FPD equipment services

100.0

Samsung Semiconductor Investment L.P.Ⅰ

Technology business, venture capital investments

99.0

Harman (China) Technologies Co., Ltd.

Manufacture of audio products

100.0

Harman (Suzhou) Audio and Infotainment Systems Co., Ltd.

Sale of audio products

100.0

Harman Automotive Electronic Systems (Suzhou) Co., Ltd.

Manufacture of audio products, R&D

100.0

Harman Commercial (Shanghai) Co., Ltd.

Sale of audio products

100.0

Harman Connected Services Solutions (Chengdu) Co., Ltd.

Connected service provider

100.0

Harman Holding Limited

Sale of audio products

100.0

Harman International (China) Holdings Co., Ltd.

Sale of audio products, R&D

100.0

Harman Technology (Shenzhen) Co., Ltd.

Sale of audio products, R&D

100.0

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

-80-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

Area

Subsidiaries

Industry

Percentage of

ownership (%)

Domestic

Samsung Display Co., Ltd.

Manufacture and sale of display panels

84.8

SU Materials

Manufacture of display components

50.0

STECO Co., Ltd.

Manufacture of semiconductor components

70.0

SEMES Co., Ltd.

Manufacture and sale of semiconductor/FPD

91.5

Samsung Electronics Service Co., Ltd.

Repair services for electronic devices

99.3

Samsung Electronics Service Customer Satisfaction Co., Ltd.

Call center for repair services for electronic devices

100.0

Samsung Electronics Sales Co., Ltd.

Sale of electronic devices

100.0

Samsung Electronics Logitech Co., Ltd.

General logistics agency

100.0

Samsung Medison Co., Ltd.

Manufacture and sale of medical equipment

68.5

Stella Forest of Hope

Manufacture and production of food

100.0

Mirero System Co., Ltd.

Development and supply of semiconductor process

defect and quality control software

99.9

Dowooinssys Co., Ltd.

Manufacture of display components

69.0

Gf-System Co., Ltd.

Manufacture of display components

100.0

Harman International Korea

Software development and supply, etc.

100.0

Samsung Venture Capital Union #21

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #22

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #26

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #28

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #29

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #32

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #33

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #37

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #40

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #42

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #43

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #45

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #48

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #52

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #55

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #56

Technology business, Venture capital investments

99.0

Samsung Venture Capital Union #57

Technology business, Venture capital investments

99.0

Growth type private equity trust specialized in semiconductors

Investment on semiconductor industry

66.7

System LSI mutual benefit private equity trust

Investment on semiconductor industry

62.5

Ownership represents the Company’s ownership of the voting rights in each entity, including subsidiaries’ ownerships.

-81-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(B)

Sale and purchase transactions

Sale and purchase transactions with related parties for the years ended December 31, 2022 and 2021 are as follows:

(In millions

of Korean

won

)

2022

Name of company

Sales and

other

Disposal

of non-

current

assets

Purchases

and other

Purchase

of non-

current

assets

Subsidiaries

Samsung Display Co., Ltd.

283,011

981,927

Samsung Electronics America, Inc. (SEA)

35,303,291

632

209,912

Samsung Asia Pte. Ltd. (SAPL)

30,982

Harman and its subsidiaries

76,891

Samsung (China) Semiconductor Co., Ltd. (SCS)

184,796

10,644

9,679,473

5,534

Samsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT)

8,668,668

25,941,259

831

Samsung (CHINA) Investment Co., Ltd. (SCIC)

1,588,710

9,035

Samsung Semiconductor, Inc. (SSI)

40,907,261

532,962

Samsung Electronics Vietnam Co., Ltd. (SEV)

5,804,935

256

16,441,332

Samsung Electronics Europe Holding Cooperatief U.A. (SEEH)

Samsung Austin Semiconductor LLC. (SAS)

1,053

3,663,909

2,457

Samsung Display Vietnam Co., Ltd. (SDV)

2,073,972

Samsung India Electronics Private Ltd. (SIEL)

7,439,341

112

5,798,974

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

16,490,821

Samsung Eletronica da Amazonia Ltda. (SEDA)

1,262,369

2,174

Samsung Electronics HCMC CE Complex Co., Ltd. (SEHC)

628,854

2,791

4,830,861

1,680

Thai Samsung Electronics Co., Ltd. (TSE)

1,578,349

2,615,512

Samsung Electronics (UK) Ltd. (SEUK)

1,529,791

98,891

Samsung Electronics Benelux B.V. (SEBN)

788,385

2,333

Samsung Electronics Hungarian Private Co. Ltd. (SEH)

408,409

141

2,191

Samsung Electronics Europe Logistics B.V. (SELS)

4,772,554

5,104

Samsung Display Dongguan Co., Ltd. (SDD)

249,142

SEMES Co., Ltd.

8,224

2,283,556

Samsung Electronics GmbH (SEG)

3,865,859

6,948

Samsung Electronics Mexico S.A. De C.V. (SEM)

2,442,869

6,950

Other

58,705,560

4,198

23,123,295

2,213

Total

194,986,266

18,774

96,344,518

12,765

Associates

and

joint

ventures

Samsung SDS Co., Ltd

212,376

1,672,853

348,752

Samsung Electro-Mechanics Co., Ltd

60,343

767

919,709

120

Samsung SDI Co., Ltd

60,325

422,836

24,874

Cheil Worldwide Inc.

31,194

931,489

361

Other

617,779

881,585

10,224

Total

982,017

767

4,828,472

384,331

Other

parties

Samsung C&T Corporation

44,359

84,635

7,018,252

Other

283,122

188

602,014

132,512

Total

327,481

188

686,649

7,150,764

Other

Samsung Engineering Co., Ltd

1,490

32,677

3,106,154

S-1 Corporation

7,530

428,907

45,864

Other

136,969

251,907

540,591

Total

145,989

713,491

3,692,609

Transactions with separate entities that are related parties of the Company.

Transactions with the intermediate parent company, including Harman International Industries, Inc. and its subsidiaries.

Although these entities are not related parties of the Company in accordance with

Korean IFRS 1024

, they belong to the same large

enterprise group according to the Monopoly Regulation and Fair Trade Act.

-82-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(In millions

of Korean

won

)

2021

Name of company

Sales and other

Disposal

of non-

current

assets

Purchases

and other

Purchase

of non-

current

assets

Subsidiaries

Samsung Display Co., Ltd.

234,883

2,475

916,709

Samsung Electronics America, Inc. (SEA)

32,860,328

165,629

Samsung (China) Semiconductor Co., Ltd. (SCS)

167,937

190,056

7,340,085

9,857

Samsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT)

9,380,604

686

21,146,962

1,111

Harman and its subsidiaries

48,387

Samsung Electronics Vietnam Co., Ltd. (SEV)

6,652,988

1,716

15,387,219

317

Samsung (CHINA) Investment Co., Ltd. (SCIC)

1,525,639

9,019

Samsung Semiconductor, Inc. (SSI)

31,894,007

409,852

Samsung Asia Pte. Ltd. (SAPL)

22,855

Samsung Austin Semiconductor LLC (SAS)

598

1,183

3,703,472

7,511

Samsung India Electronics Private Ltd. (SIEL)

4,327,075

2,609

3,373,962

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

25,683,936

3,885

Samsung Display Vietnam Co., Ltd. (SDV)

1,314,121

Samsung Eletronica da Amazonia Ltda. (SEDA)

3,151,503

403

8,600

Samsung Electronics (UK) Ltd. (SEUK)

1,535,053

91,821

Samsung International, Inc. (SII)

417,680

7,721,915

Thai Samsung Electronics Co., Ltd. (TSE)

1,459,938

2,489,534

Samsung Electronics HCMC CE Complex Co., Ltd. (SEHC)

652,277

3,222

5,183,912

900

Samsung Electronics Taiwan Co., Ltd. (SET)

4,853,191

674

Samsung Electronics Hungarian Private Co., Ltd. (SEH)

547,190

547

Samsung Electronics Europe Logistics B.V. (SELS)

4,294,662

11,007

Samsung Electronics Benelux B.V. (SEBN)

365,818

2,695

Samsung Electronics GmbH (SEG)

3,332,793

7,646

Samsung Display Dongguan Co., Ltd. (SDD)

288,980

Other

53,602,392

10,982

15,648,603

3,784

Total

188,543,676

213,332

83,694,990

23,481

Associates

and

joint

ventures

Samsung SDS Co., Ltd

141,014

1,542,039

530,412

Samsung Electro-Mechanics Co., Ltd

45,303

975,086

Samsung SDI Co., Ltd

49,995

269

360,350

30,627

Cheil Worldwide Inc.

26,794

720,533

Other

595,551

773,381

8,011

Total

858,657

337

4,371,389

569,066

Other

parties

Samsung C&T Corporation

66,745

78,054

3,902,417

Other

303,093

564,706

92,577

Total

369,838

642,760

3,994,994

Other

Samsung Engineering Co., Ltd

598

38,556

2,106,166

S-1 Corporation

7,132

401,224

27,744

Other

106,714

2,371

200,387

38,531

Total

114,444

2,371

640,167

2,172,441

Transactions with separate entities that are related parties of the Company.

Transactions with the intermediate parent company, including Harman International Industries, Inc. and its subsidiaries.

Although these entities are not related parties of the Company in accordance with

Korean IFRS 1024

, they belong to the same large

enterprise group according to the Monopoly Regulation and Fair Trade Act.

-83-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(C)

Balances of receivables and payables

Balances of receivables and payables arising from the sales and purchases of goods and services as of December 31, 2022

and December 31, 2021 are as follows:

(In millions

of Korean

won)

December 31, 2022

Name of company

Receivables

and other

Payables

and other

Subsidiaries

Samsung Display Co., Ltd.

32,521

108,011

Samsung Electronics America, Inc. (SEA)

868,937

983,709

Samsung Asia Pte. Ltd. (SAPL)

1,604

1,812

Harman and its subsidiaries

6,537

Samsung (China) Semiconductor Co., Ltd. (SCS)

57,423

751,693

Samsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT)

606,030

2,396,411

Samsung (CHINA) Investment Co., Ltd. (SCIC)

131,285

283,459

Samsung Semiconductor, Inc. (SSI)

4,700,427

263,757

Samsung Electronics Vietnam Co., Ltd. (SEV)

369,380

1,748,670

Samsung Electronics Europe Holding Cooperatief U.A. (SEEH)

693

Samsung Austin Semiconductor LLC. (SAS)

21,309

386,640

Samsung Display Vietnam Co., Ltd. (SDV)

196,643

Samsung India Electronics Private Ltd. (SIEL)

1,219,298

312,243

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

1,623,968

Samsung Eletronica da Amazonia Ltda. (SEDA)

227,180

3,037

Samsung Electronics HCMC CE Complex Co., Ltd. (SEHC)

234,870

358,082

Thai Samsung Electronics Co., Ltd. (TSE)

115,103

379,098

Samsung Electronics (UK) Ltd. (SEUK)

76,264

Samsung Electronics Benelux B.V. (SEBN)

18,403

Samsung Electronics Hungarian Private Co. Ltd. (SEH)

11,449

Samsung Electronics Europe Logistics B.V. (SELS)

273,816

506,872

Samsung Display Dongguan Co., Ltd. (SDD)

20,177

SEMES Co., Ltd.

54,327

561,368

Samsung Electronics GmbH (SEG)

10,607

Samsung Electronics Mexico S.A. De C.V. (SEM)

230,508

1,093

Other

6,565,258

2,226,116

Total

17,667,480

11,278,703

Associates

and

joint ventures

Samsung SDS Co., Ltd

49,439

468,830

Samsung Electro-Mechanics Co., Ltd

385

101,960

Samsung SDI Co., Ltd

114,618

51,199

Cheil Worldwide Inc.

444,017

Other

203,575

159,668

Total

368,060

1,225,674

Other related

parties

Samsung C&T Corporation

194,539

2,718,294

Other

14,679

160,305

Total

209,218

2,878,599

Other

Samsung Engineering Co., Ltd

286

1,181,947

S-1 Corporation

3,085

59,352

Other

4,113

478,136

Total

7,484

1,719,435

Transactions with separate entities that are related parties of the Company.

The Company has not recognized bad debt allowance in relation to the receivables due from subsidiaries as of December 31, 2022.

Payables and others include lease liabilities.

Transactions with the intermediate parent company, including Harman International Industries, Inc. and its subsidiaries.

Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to the same large

enterprise group according to the Monopoly Regulation and Fair Trade Act.

-84-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(In millions

of Korean

won)

December 31, 2021

Name of Company

Receivables

and other

Payables

and other

Subsidiaries

Samsung Display Co., Ltd.

23,791

119,401

Samsung Electronics America, Inc. (SEA)

4,708,011

143,310

Samsung (China) Semiconductor Co., Ltd. (SCS)

59,110

726,945

Samsung Electronics Vietnam THAINGUYEN Co., Ltd. (SEVT)

734,283

4,049,400

Harman and its subsidiaries

7,541

Samsung Electronics Vietnam Co., Ltd. (SEV)

414,781

2,301,949

Samsung (CHINA) Investment Co., Ltd. (SCIC)

138,307

77,540

Samsung Electronics Europe Holding Cooperatief U.A. (SEEH)

316

Samsung Semiconductor, Inc. (SSI)

7,320,890

123,555

Samsung Asia Pte. Ltd. (SAPL)

1,736

2,164

Samsung Austin Semiconductor LLC (SAS)

4,645

277,682

Samsung India Electronics Private Ltd. (SIEL)

1,099,927

463,652

Shanghai Samsung Semiconductor Co., Ltd. (SSS)

4,337,520

217

Samsung Display Vietnam Co., Ltd. (SDV)

161,441

Samsung Eletronica da Amazonia Ltda. (SEDA)

258,490

1,040

Samsung Electronics (UK) Ltd. (SEUK)

201,717

19,595

Samsung International, Inc. (SII)

32,564

259,847

Thai Samsung Electronics Co., Ltd. (TSE)

132,508

334,943

Samsung Electronics HCMC CE Complex Co., Ltd. (SEHC)

167,225

430,960

Samsung Electronics Taiwan Co., Ltd. (SET)

372,716

32,145

Samsung Electronics Hungarian Private Co., Ltd. (SEH)

58,694

Samsung Electronics Europe Logistics B.V. (SELS)

629,882

1,715

Samsung Electronics Benelux B.V. (SEBN)

45,171

3,351

Samsung Electronics GmbH (SEG)

223,603

2,272

Samsung Display Dongguan Co., Ltd. (SDD)

18,025

Other

9,220,424

2,284,643

Total

30,365,777

11,663,966

Associates

and

joint ventures

Samsung SDS Co., Ltd

64,364

574,443

Samsung Electro-Mechanics Co., Ltd

2,415

108,103

Samsung SDI Co., Ltd

113,845

54,076

Cheil Worldwide Inc.

421,901

Other

192,550

166,311

Total

373,233

1,324,834

Other related

parties

Samsung C&T Corporation

195,355

1,640,615

Other

15,839

125,470

Total

211,194

1,766,085

Other

Samsung Engineering Co., Ltd

289

1,099,881

S-1 Corporation

2,058

29,620

Other

4,286

56,476

Total

6,633

1,185,977

Transactions with separate entities that are related parties of the Company.

The Company has not recognized any bad debt allowance in relation to the receivables due from subsidiaries as of December 31, 2021.

Payables and others include lease liabilities.

Transactions with the intermediate parent company, including Harman International Industries, Inc. and its subsidiaries.

Although these entities are not related parties of the Company in accordance with Korean IFRS 1024, they belong to the same large

enterprise group according to the Monopoly Regulation and Fair Trade Act.

-85-

Samsung Electronics Co., Ltd.

NOTES TO THE SEPARATE FINANCIAL STATEMENTS

(D)

For the years ended December 31, 2022 and 2021, the Company invested W 119,598 million and

W 138,858 million, respectively, in subsidiaries, and received W 164,503 million and W 592,520 million in return of

investments, respectively. In addition, the Company invested W 882,125 million in associates and joint ventures for

the year ended December 31, 2022, but there was no additional investment in associates and joint ventures for the year

ended December 31, 2021 or return of those investments for the years ended December 31, 2022 and 2021,

respectively.

(E)

For the years ended December 31, 2022 and 2021, the Company declared dividend of W 1,663,149 million and W

3,527,449 million, respectively, to related parties. In addition, for the years ended December 31, 2022 and 2021, the

Company declared dividends of W 128,232 million and W 267,738 million, respectively, to the entities that are not

related parties of the Company in accordance with

Korean IFRS 1024

, but belong to the same conglomerate according

to the Monopoly Regulation and Fair Trade Act. As of December 31, 2022 and December 31, 2021, no dividends

declared remains unpaid.

(F)

For the years ended December 31, 2022 and 2021, assets leased from related parties amounted to

W 20 million and W 63,887 million, respectively, and lease payments made to the related parties amounted to

W 46,819 million and W 51,703 million, respectively.

(G)

As of December 31, 2022, the Company provides guarantees in relation to borrowings of the related parties (refer to Note

13).

(H)

Key management compensation

The compensation paid or payable to key management (executive directors) for their services for the years ended

December 31, 2022 and 2021 consists of:

(In millions of Korean won)

2022

2021

Short-term employee benefits

14,768

20,370

Post-employment benefits

612

886

Other long-term employee benefits

5,434

8,092

31. Subsequent Event

In accordance to the resolution of the Board of Directors on February 14, 2023, the Company concluded a W 20 trillion

loan agreement with Samsung Display Co., Ltd., the subsidiary, on February 16, 2023.

-86-

Samsung Electronics

Business

Report-XBRL

IV. Other Financial matters

1. Financial statements

A. Consolidated financial statements

(KRW mil)

Classification

54th

53rd

52nd

December 31, 2022

December 31, 2021

December 31, 2020

Current assets

218,470,581

218,163,185

198,215,579

- Cash and cash equivalents

49,680,710

39,031,415

29,382,578

- Short-term financial instruments

65,102,886

81,708,986

92,441,703

- Other current financial assets

414,610

3,409,791

2,828,562

- Trade receivables

35,721,563

40,713,415

30,965,058

- Inventories

52,187,866

41,384,404

32,043,145

- Others

15,362,946

11,915,174

10,554,533

Non-current assets

229,953,926

208,457,973

180,020,139

- Other non-current financial assets

12,802,480

15,491,183

13,778,185

- Investment in associates and joint ventures

10,893,869

8,932,251

8,076,779

- Property, plant, and equipment

168,045,388

149,928,539

128,952,892

- Intangible assets

20,217,754

20,236,244

18,468,502

- Others

17,994,435

13,869,756

10,743,781

Total assets

448,424,507

426,621,158

378,235,718

Current liabilities

78,344,852

88,117,133

75,604,351

Non-current liabilities

15,330,051

33,604,094

26,683,351

Total liabilities

93,674,903

121,721,227

102,287,702

Equity attributable to owners of the parent company

345,186,142

296,237,697

267,670,331

- Capital stock

897,514

- Share premium

4,403,893

- Retained earnings

337,946,407

293,064,763

271,068,211

- Others

1,938,328

-2,128,473

-8,699,287

Non-controlling interests

9,563,462

8,662,234

8,277,685

Total Equity

354,749,604

304,899,931

275,948,016

Jan–Dec 2022

Jan–Dec 2021

Jan–Dec 2020

Revenue

302,231,360

279,604,799

236,806,988

Operating profit

43,376,630

51,633,856

35,993,876

Profit for the period

55,654,077

39,907,450

26,407,832

- Owners of the parent company

54,730,018

39,243,791

26,090,846

- Non-controlling interests

924,059

663,659

316,986

Basic earnings per share (KRW)

8,057

5,777

3,841

Diluted earnings per share (KRW)

8,057

5,777

3,841

Number of companies subject to consolidation

accounting

232

229

242

Data shown in conformity with K-IFRS.

Please refer to the footnotes of the 52nd

–

54th Consolidated Audit Report for the calculation of basic earnings per share (ordinary shares).

Samsung Electronics

Business

Report-XBRL

B. Separate financial statements

(KRW mil)

Classification

54th

53rd

52nd

December 31, 2022

December 31, 2021

December 31, 2020

Current assets

59,062,658

73,553,416

73,798,549

- Cash and cash equivalents

3,921,593

3,918,872

989,045

- Short-term financial instruments

137

15,000,576

29,101,284

- Trade receivables

20,503,223

33,088,247

24,736,740

- Inventories

27,990,007

15,973,053

13,831,372

- Others

6,647,698

5,572,668

5,140,108

Non-current assets

201,021,092

177,558,768

155,865,878

- Other non-current financial assets

1,364,608

1,664,667

1,542,766

- Subsidiary, associate, and joint venture investments

57,397,249

56,225,599

56,587,548

- Property, plant and equipment

123,266,986

103,667,025

86,166,924

- Intangible assets

8,561,424

8,657,456

7,002,648

- Others

10,430,825

7,344,021

4,565,992

Total assets

260,083,750

251,112,184

229,664,427

Current liabilities

46,086,047

53,067,303

44,412,904

Non-current liabilities

45,81,512

4,851,149

1,934,799

Total liabilities

50,667,559

57,918,452

46,347,703

- Capital stock

897,514

- Share premium

4,403,893

- Retained earnings

204,388,016

188,774,335

178,284,102

- Others

-273,232

-882,010

-268,785

Total Equity

209,416,191

193,193,732

183,316,724

Evaluation method of subsidiary, associate, and joint

venture investment securities

Cost methods

Jan–Dec 2022

Jan–Dec 2021

Jan–Dec 2020

Revenue

211,867,483

199,744,705

166,311,191

Operating profit

25,319,329

31,993,162

20,518,974

Profit for the period

25,418,778

30,970,954

15,615,018

Basic earnings per share (KRW)

3,742

4,559

2,299

Diluted earnings per share (KRW)

3,742

4,559

2,299

Data shown in conformity with K-IFRS.

Please refer to the footnotes of the 52nd

–

54th Consolidated Audit Report for the calculation of basic earnings per share (ordinary shares).

Samsung Electronics

Business

Report-XBRL

2. Dividends

We continue to work to enhance shareholder value alongside our efforts to strengthen competitiveness of our products and

businesses. We utilized 50% of the free cash flow as the shareholder return pool for 2018 to 2020 as part of our shareholder

return policy for 2018 to 2020 and paid annual, regular dividends of KRW 9.6 trillion. A special cash dividend of KRW 10.7

trillion was paid out at the same time as the 2020 end-year, regular dividend. The shareholder return policy for 2021 to 2023

was announced in January 2021. For this term, we kept the shareholder return pool at 50% of the free cash flow, but increased

the annual, regular dividend to KRW 9.8 trillion. Any remaining portion of the 50% of the free cash flow will be paid out

to shareholders.

Dividends paid in the three most recent fiscal years are as follows:

[Key dividend indices]

Classification

2022

2021

2020

Par value per share (KRW)

100

Consolidated net profit

(KRW mil)

54,730,018

39,243,791

26,090,846

Separate net profit (KRW mil)

25,418,778

30,970,954

15,615,018

EPS

(KRW)

8,057

5,777

3,841

Total cash dividend (KRW mil)

9,809,438

20,338,075

Total stock dividend (KRW mil)

Dividend payout ratio (%)

17.9

25.0

78.0

Cash dividend yield (%)

Common

2.5

1.8

4.0

Preferred

2.7

2.0

4.2

Stock dividend yield (%)

Common

Preferred

Cash dividend per share (KRW)

Common

1,444

2,994

Preferred

1,445

2,995

Stock dividend per share (share)

Common

Preferred

Total cash dividend for 2022 in the above table is a figure prior to the approval at the AGM, and if the amount is rejected or adjusted at the AGM, the

details will be published in future reports.

Dividends were KRW 2,452,154 million or KRW 361 per share in the first three quarters of 2022 and the first three quarters of 2021,

and KRW

2,404,605 million or KRW 354 per share in each of the first three quarters of 2020. For further information relating to total cash dividend, see retained

earnings in

『

3. Note to Consolidated Financial Statements

』

『

Ⅲ. Financial

Affairs

』

1) Equity attributable to owners of the parent.

2) Basic earnings per common share on a consolidated basis. For further information relating to the calculation of basic EPS,

see Earnings Per Share in

『

3. Note to Consolidated Financial Statements

』

『

Ⅲ. Financial

Affairs

』

Samsung Electronics

Business

Report-XBRL

History of dividend payouts is as follows:

Number of continuous dividend payments

Average dividend yield

Quarterly/biannual dividends

End-year dividends

Past 3 years

Past 5 years

2.7%

2.9%

The number of continuous dividend payments includes the quarterly dividend for the quarter and the end-year dividend for the recent business year.

Continuous payment of the end-year dividend started in 1981, biannual dividend in 1999, and quarterly dividend in 2017.

The average dividend yield is based on common shares. The average dividend yield of preferred shares for the past 3 years and past 5 years are 3.0%

and 3.3% respectively.

The

“

past 3 years

”

refers to the period from 2020 to 2022, and the

“

past 5 years

”

refers to the period from 2018 to 2022. For the dividend yield of 2022,

please refer to the table of key dividends above (common shares at 2.5%, preferred shares at 2.7%).

Samsung Electronics

Business

Report-XBRL

3. Matters about financing through the issuance of securities

3-1 Financing through the issuance of securities

[Issuance of equity securities]

N/A

[Issuance of debt securities]

A. List of issued debt securities

(As of December 31, 2022)

(KRW mil, %)

Issuing company

Type of

securities

Issuance

method

Date of

Issuance

Total nominal

amount

Interest

rate

Rating

(rating institution)

Maturity

date

Payment

status

Management

company

Samsung Electronics

Corporate bonds

Public offering

Oct 2,1997

126,730

7.7

Aa2(Moody's),

AA-(S&P)

Oct 1, 2027

Partial

redemption

Goldman Sachs et al.

Harman International Industries, Inc

Corporate bonds

Public offering

May 11, 2015

506,920

4.2

Baa1 (Moody's),

A- (S&P)

May 15, 2025

Unredeemed

J.P.Morgan et al.

Harman Finance International, SCA (*1)

Corporate bonds

Public offering

May 27, 2015

469,819

2.0

Baa1 (Moody's),

A- (S&P)

May 27, 2022

Redeemed

HSBC et al.

Dowinsys Co., Ltd

Corporate bonds

Private

placement

Feb 28, 2020

23,000

0.5

Feb 28, 2025

Unredeemed

Dowinsys Co., Ltd

Corporate bonds

Private

placement

Dec 8, 2022

42,000

0.5

Dec 8, 2027

Unredeemed

SEMES

Commercial paper

Private

placement

Jul 28, 2022

80,000

3.0

Aug 26, 2022

Redeemed

SEMES

Commercial paper

Private

placement

Aug 30, 2022

30,000

3.3

Sep 29, 2022

Redeemed

Total

1,278,469

※

The rating institutions of Commercial paper are NICE Investors Service and Korea Ratings Corporation.

(*1) The corporate bonds were redeemed on March 1st, 2022, prior to the original maturity date.

Samsung Electronics

Business

Report-XBRL

B. Commercial Paper Unredeemed Balance

Not Applicable

(Reporting Date: December 31, 2022)

(KRW mil)

Maturity

Under 10 days

Above 10 days

/ under 30 days

Above 30 days

/ under 90 days

Above 90 days /

under 180 days

Above 180 days

/ under 1 year

Above 1 year

/ under 2 years

Above 2 years

/ under 3 years

Above 3 years

Total

Unredeemed

balance

Public

Private

Total

C. Short-term Bond Unredeemed Balance

Not Applicable

(Reporting Date: December 31, 2022)

(KRW mil)

Maturity

Under 10 days

Above 10 days

/ under 30 days

Above 30 days

/ under 90 days

Above 90 days

/ under 180 days

Above 180 days

/ under 1 year

Total

Issue limit

Balance limit

Unredeemed

balance

Public

Private

Total

Samsung Electronics

Business

Report-XBRL

D. Corporate Bond Unredeemed Balance

(Reporting Date: December 31, 2022)

(KRW mil)

Maturity

Under 1 year

Above 1 year

/ under 2 years

Above 2 years

/ under 3 years

Above 3 years

/ under 4 years

Above 4 years

/ under 5 years

Above 5 years

/ under 10 years

Above 10 years

Total

Unredeemed

balance

Public

6,337

513,257

6,337

6,335

538,790

Private

23,000

42,000

65,000

Total

6,337

536,257

6,337

48,335

603,603

※

Based on consolidated financial statements.

※

The exchange rate as of the reporting date has been applied.

※

Unredeemed balance of corporate bonds of Dowinsys are intercompany balances eliminated in consolidated financial statements.

- Corporate Bond Unredeemed Balance (Samsung Electronics)

(Reporting Date: December 31, 2022)

(KRW mil)

Maturity

Under 1 year

Above 1 year

/ under 2 years

Above 2 years

/ under 3 years

Above 3 years

/ under 4 years

Above 4 years

/ under 5 years

Above 5 years

/ under 10 years

Above 10 years

Total

Unredeemed

balance

Public

6,337

6,335

31,683

Total

6,337

6,335

31,683

※

The exchange rate as of the reporting date has been applied

- Corporate Bond Unredeemed Balance (Harman)

(Reporting Date: December 31, 2022)

(KRW mil)

Maturity

Under 1 year

Above 1 year

/ under 2 years

Above 2 years

/ under 3 years

Above 3 years

/ under 4 years

Above 4 years

/ under 5 years

Above 5 years

/ under 10 years

Above 10 years

Total

Unredeemed

balance

Public

506,920

Total

506,920

※

The exchange rate as of the reporting date has been applied.

Samsung Electronics

Business

Report-XBRL

- Corporate Bond Unredeemed Balance (Dowinsys)

(Reporting Date: December 31, 2022)

(KRW mil)

Maturity

Under 1 year

Above 1 year

/ under 2 years

Above 2 years

/ under 3 years

Above 3 years

/ under 4 years

Above 4 years

/ under 5 years

Above 5 years

/ under 10 years

Above 10 years

Total

Unredeemed

balance

Private

23,000

42,000

65,000

Total

23,000

42,000

65,000

※

Unredeemed balance of corporate bonds of Dowinsys are intercompany balances eliminated in consolidated financial statements.

E. Hybrid Bond Unredeemed Balance

Not Applicable

(Reporting Date: December 31, 2022)

(KRW mil)

Maturity

Under 1 year

Above 1 year

/ under 5 years

Above 5 years

/ under 10 years

Above 10 years

/ under 15 years

Above 15 years

/ under 20 years

Above 20 years

/ under 30 years

Above 30 years

Total

Unredeemed

balance

Public

Private

Total

Samsung Electronics

Business

Report-XBRL

F. Contingent Convertible Bond Unredeemed Balance

Not Applicable

(Reporting Date: December 31, 2022)

(KRW mil)

Maturity

Under 1 year

Above 1 year /

under 2 years

Above 2 years

/ under 3 years

Above 3 years

/ under 4 years

Above 4 years

/ under 5 years

Above 5 years

/ under 10 years

Above 10 years

/ under 20 years

Above 20 years

/ under 30 years

Above 30

years

Total

Unredeemed

balance

Public

Private

Total

Samsung Electronics

Business

Report-XBRL

G. Details and Compliance of the Bond Management Contract (Samsung Electronics)

(Reporting Date: December 31, 2022)

(KRW mil, %)%

Name of security

Date of issuance

Maturity date

Issued amount

Settlement date of

bond management contract

Debenture management company

US$ 100,000,000

7.7% debenture

Oct 2, 1997

Oct 1, 2027

126,730

Oct 2, 1997

The Bank of New York Mellon

Trust Company, N.A.

(Reporting Date: December 31, 2022)

Financial ratios

Contract details

Not applicable

Implementation status

Not applicable

Constraint on collateral

Contract details

Less than 10% of net tangible assets

Implementation status

Compliant (there is no collateral for the relevant assets)

Constraint on disposal of assets

Contract details

Certain requirements, such as transfer of obligations on the bond,

must be satisfied to dispose all or most of an asset

Implementation status

Compliant (disposed assets accounted for 0.2% of the total assets during 2022)

Constraint on governance

Contract Details

Not applicable

Implementation status

Not applicable

Submission of implementation report

Implementation status

Not applicable

※

The exchange rate as of the base date has been applied.

※

The date of the bond management contract was signed on the same day as the Fiscal Agency Agreement; accordingly, the Bank of New York Mellon Trust

Company, N.A. is under the authority of the Fiscal Agent.

※

The net tangible assets subjected to the limitation of collaterals are production facilities and stocks owned by the Company.

※

The reporting date is the date when most recent financial statements were prepared, which are used to determine the status of implementation.

※

The constraint on governance is as of

the reporting date.

Samsung Electronics

Business

Report-XBRL

3-2 Use of funds financed through the issuance of securities

Not applicable

Samsung Electronics

Business

Report-XBRL

4. Other financial information

A. Restatement of financial statements and other matters to note

(1) Restatement of financial statements: Not Applicable

(2) Acquisition, divestment, asset sales, and sale of business

The major acquisition,

divestment and

transfer of business

during past three years

are as follows.

[Sale of SSL, SSM]

On August 28, 2020,

Samsung Display Co., Ltd.,

the Company’s subsidiary, decided to sell its 100% ownership in

Samsung Suzhou Module Co., Ltd. (“SSM”) and 60% ownership in Samsung Suzhou LCD Co., Ltd. (“SSL”) to TCL

China Star Optoelectronics Technologies Co. Ltd. (“CSOT”). The sales were completed on April 1, 2021.

(3)

Information on the accounting treatment of the sales of assets related to asset backed securities and contingent liabilities

Accounting Treatment of the sale of assets related to asset backed securities:

Not applicable

Litigation

The Company is involved in various claims, disputes, and investigations conducted by regulatory bodies, which arose

during the normal course of business with numerous entities. Although the outflow of resources and timing of these

matters are uncertain, as of the reporting date, the Company believes the outcome will not have a material impact on

the financial position of the Company.

Debt guarantee

- Domestic: Not applicable

Samsung Electronics

Business

Report-XBRL

- Overseas:

(USD thousand)

Company

Relationship

Creditor

Guarantee

Transactions

Limit of

guarantee

Expiry date

Beginning of

period

Increase/

decrease

End of

period

SEA

Subsidiary

BOA etc.

Dec 16, 2023

1,278,000

SEM

Subsidiary

BBVA etc.

Nov 08, 2023

715,000

SAMCOL

Subsidiary

Citibank etc.

Dec 16, 2023

210,000

SEDA

Subsidiary

BRADESCO etc.

Dec 16, 2023

409,000

SECH

Subsidiary

Citibank etc.

Dec 16, 2023

62,000

SEPR

Subsidiary

BBVA etc.

Dec 16, 2023

150,000

SSA

Subsidiary

SCB etc.

Dec 16, 2023

318,000

SEMAG

Subsidiary

SocGen etc.

Dec 16, 2023

110,000

SETK

Subsidiary

BNP etc.

Dec 16, 2023

102,275

137,120

239,395

777,000

SETK-P

Subsidiary

BNP etc.

Dec 16, 2023

33,334

-7,685

25,649

130,000

SECE

Subsidiary

Citibank

Dec 16, 2023

60,000

SEEG

Subsidiary

HSBC

Jun 13, 2023

85,000

SEIN

Subsidiary

BNP etc.

Nov 08, 2023

70,000

SJC

Subsidiary

Mizuho Bank etc.

Dec 16, 2023

832,572

SEUC

Subsidiary

Credit Agricole etc.

Dec 16, 2023

150,000

SEDAM

Subsidiary

Citibank etc.

Dec 16, 2023

155,768

537,000

SECA

Subsidiary

BoA

Nov 08, 2023

70,000

SELA

Subsidiary

Citibank

Dec 16, 2023

60,000

SEEH

Subsidiary

HSBC etc.

Dec 16, 2023

888,400

SERK

Subsidiary

SMBC etc.

Dec 16, 2023

45,000

SELV

Subsidiary

Citibank

Dec 16, 2023

10,000

SEIL

Subsidiary

Citibank

Dec 16, 2023

10,947

-1,283

9,664

15,600

SAPL

Subsidiary

BOA etc.

Dec 16, 2023

404,000

SAVINA

Subsidiary

HSBC

Jun 13, 2023

51,000

SCIC

Subsidiary

HSBC etc.

Dec 16, 2023

300,000

SME

Subsidiary

SCB

Nov 08, 2023

110,000

SAMEX

Subsidiary

Citibank

Dec 16, 2023

5,000

SEASA

Subsidiary

Citibank

Dec 16, 2023

2,000

SSAP

Subsidiary

SCB

Nov 08, 2023

35,000

SEPM

Subsidiary

HSBC

Jun 13, 2023

35,000

SESAR

Subsidiary

HSBC

Jun 13, 2023

20,000

AdGear Technologies Inc.

Subsidiary

BOA

Nov 08, 2023

2,000

Harman International Industries, Inc.

Subsidiary

JP Morgan

Jun 13, 2023

100,000

Harman International Japan Co., Ltd.

Subsidiary

MUFG

Nov 08, 2023

25,000

Harman RUS CIS LLC

Subsidiary

SocGen

May 31, 2022

Harman Holding Limited

Subsidiary

HSBC

Jun 13, 2023

30,000

Harman do Brasil Industria Eletronica e Participacoes Ltda.

Subsidiary

SocGen

Nov 08, 2023

15,000

Harman da Amazonia Industria Eletronica e Participacoes Ltda.

Harman International Industries Limited

Subsidiary

HSBC

Jun 13, 2023

30,000

Harman Finance International, SCA

Subsidiary

JP Morgan etc.

Mar 01, 2022

396,304

-396,304

SDN

Subsidiary

SIEL

Nov 22, 2024

571,121

-57,755

513,366

603,960

SAS

Subsidiary

Epcor

The date of

debt expiration

340,000

DOWOOINSYS VINA COMPANY LIMITED

Subsidiary

ANZ

Nov 09, 2025

20,000

Total

1,113,981

-150,139

963,842

9,110,532

※ Information above are prepared on a consolidated basis. Debt guarantees for Harman Finance International, SCA are provided by

Harman International Industries, Inc., SDN by Samsung Display Co., Ltd., SAS by SEA, and DOWOOINSYS VINA COMPANY

LIMITED by

Dowinsys

, respectively.

※ SEC requires Board approval for individual guarantees exceeding 2.5% of total equity. When the guarantee amount is between 0.1%

and/or less than 2.5%, the approval decision is delegated to the Management Committee. Samsung Display Co., Ltd requires Board

approval for individual guarantees over KRW 10,000 million.

※ SEC claims fees on the debt guarantees depending on the maturity date of each debt guarantee, general loan interest rate, etc.

In 2022, the Company claimed approximately USD 547,000 in guarantee fees and, as of the reporting date, has not collected the amount.

Samsung Electronics

Business

Report-XBRL

In 2022, Samsung Display Co., Ltd. claimed approximately USD 3,080,000 in guarantee fees to SDN and, as of the reporting date,

has not collected the amount.

Refer to the notes to the consolidated financial statements for the information on contingent liabilities.

(4) Other matters requiring attention in relation to the use of the financial statements

A. Emphasis of matter and key audit matter in Independent auditor’s report

Period

Emphasis of matter

Key audit matter

2022

Not applicable

(Consolidated financial statement)

1. Sales deduction related to the Sales promotion activities of products

(Separate financial statement)

1. Sales deduction related to the Sales promotion activities of products

2021

Not applicable

(Consolidated financial statement)

1. Sales deduction related to the Sales promotion activities of products

(Separate financial statement)

1. Sales deduction related to the Sales promotion activities of products

2020

Not applicable

(Consolidated financial statement)

1. Sales deduction related to the Sales promotion activities of products

2. Impairment of goodwill and intangible assets with indefinite useful lives

(Separate financial statement)

1. Sales deduction related to the Sales promotion activities of products

Samsung Electronics

Business

Report-XBRL

B. Allowance for bad debt

The allowances for bad debt by account over the past 3 years are as follows:

(KRW mil, %)

Period

Account

Receivables amount

Allowance amount

Allowance

2022

Trade receivables

36,033,784

312,221

0.9%

Short-term loans

22,403

215

1.0%

Other receivables

6,227,068

77,859

1.3%

Advances

1,741,031

3,965

0.2%

Trade receivables (long-term)

204,248

0.0%

Other receivables (long-term)

824,468

242

0.0%

Advances (long-term)

2,382,711

10,969

0.5%

Long-term loans

225,983

1,206

0.5%

Total

47,661,696

406,677

0.9%

2021

Trade receivables

41,024,295

310,880

0.8%

Short-term loans

17,895

0.4%

Other receivables

4,569,772

72,515

1.6%

Advances

1,122,660

3,847

0.3%

Trade receivables (long-term)

225,739

0.0%

Other receivables (long-term)

1,002,404

290

0.0%

Advances (long-term)

1,770,999

9,003

0.5%

Long-term loans

199,577

917

0.5%

Total

49,933,341

397,525

0.8%

2020

Trade receivables

31,283,789

318,731

1.0%

Short-term loans

7,813

0.9%

Other receivables

3,663,822

59,283

1.6%

Advances

890,413

3,371

0.4%

Trade receivables (long-term)

85,575

0.0%

Other receivables (long-term)

401,582

204

0.1%

Advances (long-term)

1,397,698

5,972

0.4%

Long-term loans

113,944

1,309

1.1%

Total

37,844,636

388,943

1.0%

※ Based on consolidated financial statements.

※ Receivables amount represents the value after deducting present value discount account.

Samsung Electronics

Business

Report-XBRL

Allowance for bad debt by year

(KRW mil)

2022

2021

2020

1. Allowance for bad debt

(beginning balance)

397,525

388,943

411,310

2. Net bad debt expense (

①

②

③

)

16,658

25,926

65,575

①

Bad debt expense, etc (Write-off)

9,711

22,400

40,487

②

Bad debt recovered

745

③

Others

6,947

3,526

25,833

3. Bad debts expense

25,810

34,508

43,208

4. Allowance for bad debts

(Ending balance)

406,677

397,525

388,943

※

Based on consolidated financial statements.

The guideline for bad debt allowances for trade receivables

(1) Calculation of bad debt allowance



Bad debt allowance is calculated using an expected credit loss impairment model which is based on write-off

experience rate and future expected bad debt amount.

(2) Calculation basis of write-off experience rate and future expected bad debt:



Write-off experience rate for each aging group of receivables is calculated based on the actual rate of credit losses to

three-year average receivables balance.



Future expected bad debt is determined taking into consideration cases of debtor bankruptcy, compulsory execution,

death, disappearance, credit information of debtor and forward-looking information.

[Bad debt allowance by circumstance]

Circumstance

Rate of allowance

Dispute or conflict

25%

Receivable through utilization of third party collection agency

50%

Receivable under litigation

75%

Customer filed or in the process of filing bankruptcy

100%

Samsung Electronics

Business

Report-XBRL

(3) Instruction: Write-off is recorded when trade receivables contain the following characteristics:

ㆍ

Objective proof of bad debts, such as bankruptcy, compulsory execution, discontinuance of business, debtor’s death

or disappearance

ㆍ

Legal action has failed or the right of collection has been extinguished.

ㆍ

When the third party collection agency notifies that collection is not possible.

ㆍ

When the collateral is sold or insurance is received.

ㆍ

When collection expense exceeds receivables amount.

The outstanding period of trade receivables

(Reporting Date: December 31, 2022)

(KRW mil, %)

Less than

6 months

6 months ~

1 year

1 year ~

3 years

More than

3 years

Total

Amount

36,067,812

4,549

68,147

97,524

36,238,032

Ratio

99.5%

0.0%

0.2%

0.3%

100.0%

※ Base on consolidated financial statements.

※ Receivables amount represents the value after deducting present value discount account.

Samsung Electronics

Business

Report-XBRL

C. Inventory

- The inventory status by Division over the last three years is as follows:

(

KRW mil, %

)

※

Based on consolidated financial statements

Division

Category

2022

2021

2020

Note

Finished goods

7,712,885

8,894,766

7,088,063

Work in process

1,013,606

799,218

592,903

Raw material

10,520,293

11,384,887

7,862,310

Material in transit

943,322

1,299,624

876,270

Total

20,190,106

22,378,495

16,419,546

Finished goods

6,601,087

2,490,097

1,719,095

Work in process

18,756,104

11,809,911

10,639,866

Raw material

3,639,061

2,118,424

1,674,081

Material in transit

61,352

36,685

46,587

Total

29,057,604

16,455,117

14,079,629

SDC

Finished goods

811,518

294,777

134,963

Work in process

542,473

874,229

650,762

Raw material

788,521

810,325

603,779

Material in transit

23,626

48,253

33,271

Total

2,166,138

2,027,584

1,422,775

Harman

Finished goods

799,919

533,008

502,117

Work in process

119,890

105,271

80,237

Raw material

913,085

736,109

337,386

Material in transit

269,715

321,128

224,961

Total

2,102,609

1,695,516

1,144,701

Total

Finished goods

16,032,226

12,280,579

9,387,886

Work in process

20,077,519

13,473,618

11,818,090

Raw material

14,979,280

14,184,841

9,790,766

Material in transit

1,098,841

1,445,366

1,046,403

Total

52,187,866

41,384,404

32,043,145

Inventory ratio (%)

[Inventory ÷ Total Assets]

ⅹ

100

11.6%

9.7%

8.5%

Inventory turnover (x)

[ Yearly COGS ÷ {(Beginning of inventory + End of

inventory)÷2}]

4.1

4.5

4.9

Samsung Electronics

Business

Report-XBRL

Inventory counts

(1) Inspection date

ㆍ

End of May and November (twice a year)

ㆍ

For the difference in inventories between the inspection date and at the end of the year, the Company checks

all the warehouse record during the period in order to confirm the existence of the inventories as of the date of

the financial statements.

(2) Inspection method

ㆍ

Internal warehouse: Closed & entire quantity inspection

※

Sample inspection for semi-conductor and DP work-in-progress inventories, SVC materials

ㆍ

Outside warehouse

Perform check for the possession confirmation documents and sample tests at the third party warehouse and inventory-

in-transit.

ㆍ

External auditors join and observe the inspection and carry out sample tests to check the existence and completeness.

※

For the HQ, the most recent inventory inspection was conducted from May 29 to June 5, 2022, and the subsidiaries

conducted the inventory inspection during the same period as HQ.

Inventory aging and valuation

Inventories are stated at the lower of cost or net realizable value. Inventory as of December 31, 2022 are as follows:

(

KRW mil

)

Category

Acquisition

cost

Inventory

valuation reserve

Balance

Note

Finished goods

17,526,178

-1,493,952

16,032,226

Work in process

21,612,965

-1,535,446

20,077,519

Raw material

16,268,974

-1,289,694

14,979,280

Material in transit

1,098,841

Total

56,506,958

-4,319,092

52,187,866

※

Based on consolidated financial statements

D. Fair value estimation

Refer to 3. Financial

Instruments by Category and 25. Financial Risk Management in

『Ⅲ

. Financial Affairs

』

Samsung Electronics

Business

Report-XBRL

V. Management Discussion and Analysis

1. Note on forward-looking statements

This annual report includes forward-looking statements that relate to future events and can be generally identified by phrases

containing words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases

of similar meaning. These forward-looking statements are not guarantees of future performance and may involve known

and unknown risks, uncertainties and other factors that may affect our actual results, performance, achievements or financial

position, making them materially different from the actual future results, performance, achievements or financial position

expressed or implied by these forward-looking statements. Unless otherwise specified, all data presented in this report is

from our consolidated financial statements.

Uncertain events that could positively or negatively affect the Company’s management condition and financial performance

include, but are not limited to:

•

Trends of financial markets domestically and abroad, including changes in exchange rates and interest rates

•

The Company’s strategic decision making, including disposals and purchases of businesses

•

Unexpected sudden changes in core businesses within DX, DS, SDC and Harman

•

Other changes domestically and abroad that can affect management condition and financial performance

The Company assumes no obligation to revise or update this report to reflect risks or uncertainties that arise after the

reporting period.

(Responsibility statement)

In accordance with article 3(2) c) of the Transparency Law (Luxembourg), Jong-Hee Han and Hark-kyu Park, as a CEO

and the executive in charge of reporting confirm that, to the best of their knowledge, the consolidated financial statements

and the statutory non-consolidated financial statements prepared in accordance with the applicable set of accounting

standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the

undertakings included in the consolidation taken as a whole and that the management report includes a fair review of the

development and performance of the business and the position of the Company and the undertakings included in the

consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

2. Overview

The business environment remained challenging in 2022 as uncertainties in the global economy intensified due to

increasingly aggressive monetary tightening globally, the Russia-Ukraine war, and supply

issues involving

raw materials

and energy. Despite the formidable economic conditions, Samsung Electronics achieved a total revenue of KRW 302 trillion

and operating profit of KRW 43 trillion on a consolidated basis and a total revenue of KRW 212 trillion and operating profit

of KRW 25 trillion on a standalone basis.

Our financial structure remained sound—we recorded a debt ratio of 26.4%, capital adequacy ratio of 79.1%, and ROE of

16.9% on a consolidated basis. On a standalone basis, the respective figures were 24.2%, 80.5%, and 12.6%. Our brand

value in 2022 was evaluated at an all-time high of USD 87.7 billion (

Interbrand

; November 2022), up 17% from last year’s

figure and maintaining our position as the world’s fifth most valuable brand.

On the business side, we further solidified our market power and industry leadership by launching the Galaxy Z Fold 4 and

Z Flip 4 while strengthening our lineup of Neo QLED TVs and Bespoke products; and we further

enhanced the

profitability

and cost competitiveness of the component business based on our capabilities in core technologies,

which include the

world’s first adoption of multi-step EUV technology.

In 2023, global economic uncertainties, such as continued monetary tightening and prolonged supply issues for raw

Samsung Electronics

Business

Report-XBRL

paradigm in the IT industry will present numerous hurdles. However, we will leverage such challenges as opportunities and

devote all our energy—via relentless innovations and thorough preparations—to improve our earnings and ensure swift

responses to future opportunities.

Samsung Electronics

Business

Report-XBRL

3. Financial position and performance (consolidated)

A. Financial position

(KRW mil)

Classification

2022

2021

Increase/decrease

change

Current assets

218,470,581

218,163,185

307,396

0.1%

- Cash and cash

equivalents

49,680,710

39,031,415

10,649,295

27.3%

- Short-term financial

instruments

65,102,886

81,708,986

-16,606,100

-20.3%

- Other current

financial

assets

443,690

3,409,791

-2,966,101

-87.0%

- Trade and other

receivables

35,721,563

40,713,415

-4,991,852

-12.3%

- Inventories

52,187,866

41,384,404

10,803,462

26.1%

- Other current assets

15,333,866

11,915,174

3,418,692

28.7%

Non-current assets

229,953,926

208,457,973

21,495,953

10.3%

- Other non-current

financial assets

12,802,480

15,491,183

-2,688,703

-17.4%

- Associates and joint

ventures

10,893,869

8,932,251

1,961,618

22.0%

- Property, plant and

equipment

168,045,388

149,928,539

18,116,849

12.1%

- Intangible assets

20,217,754

20,236,244

-18,490

-0.1%

- Other non-current

assets

17,994,435

13,869,756

4,124,679

29.7%

Total assets

448,424,507

426,621,158

21,803,349

5.1%

Current liabilities

78,344,852

88,117,133

-9,772,281

-11.1%

Non-current liabilities

15,330,051

33,604,094

-18,274,043

-54.4%

Total liabilities

93,674,903

121,721,227

-28,046,324

-23.0%

Equity attributable to

owners of the parent

345,186,142

296,237,697

48,948,445

16.5%

Non-controlling

interest

9,563,462

8,662,234

901,228

10.4%

Total equity

354,749,604

304,899,931

49,849,673

16.3%

Total liabilities and

equity

448,424,507

426,621,158

21,803,349

5.1%

Capital adequacy ratio

79.1%

71.5%

7.6%p

Debt-to-equity ratio

26.4%

39.9%

-13.5%p

Inventory turnover

4.1

4.5

-0.4

Presented in accordance with K-IFRS.

If the agenda item related to the approval of financial statements is rejected or adjusted at the AGM, the details will be published in future reports.

Samsung Electronics

Business

Report-XBRL

Samsung Electronics’ total assets in 2022 were KRW 448.4245 trillion, an increase of KRW 21.8033 trillion (5.1%) from

the previous year. The increase is mainly attributable to inventories, which increased by KRW 10.8035 trillion, and to an

increase in tangible assets caused by facility investments worth KRW 18.1168 trillion for the semiconductor and DP

businesses.

Total liabilities were KRW 93.6749 trillion, a decrease of KRW 28.0463 trillion (23.0%) from the previous year. This

includes a decrease of KRW 9.7723 trillion (11.1%) in current liabilities and a decrease of KRW 18.2740 trillion (54.4%)

in non-current liabilities. The changes are attributable to the KRW 8.5405 trillion and KRW 18.0869 trillion decreases in

short-term borrowings and deferred income tax liabilities, respectively.

Total equity was KRW 354.7496 trillion, an increase of KRW 49.8497 trillion (16.3%) from the previous year. Retained

earnings grew by KRW 44.8816 trillion year-on-year from net income of KRW 54.7300 trillion and dividends of KRW

9.8094 trillion. Other components of equity increased by KRW 4.0668 trillion due to factors such as the overseas operations

translation difference.

In terms of financial ratios, the Company maintained a sound financial structure as the capital adequacy ratio increased by

7.6%pts from the previous year to 79.1% and the debt-to-equity ratio decreased by 13.5%pts from the previous year to

26.4%.

B. Performance

(KRW mil)

Classification

2022

2021

Increase/decrease

Change

Sales

302,231,360

279,604,799

22,626,561

8.1%

Cost of sales

190,041,770

166,411,342

23,630,428

14.2%

Gross profit

112,189,590

113,193,457

-1,003,867,

-0.9%

Selling and administrative

expenses

68,812,960

61,559,601

7,253,359

11.8%

Operating profit

43,376,630

51,633,856

-8,257,226

-16.0%

Other income

1,962,071

2,205,695

-243,624

-11.0%

Other expenses

1,790,176

2,055,971

-265,795

-12.9%

Gain on valuation using the

equity method of accounting

1,090,643

729,614

361,029

49.5%

Financial income

20,828,995

8,543,187

12,285,808

143.8%

Financial expenses

19,027,689

7,704,554

11,323,135

147.0%

Income before income tax

expense

46,440,474

53,351,827

-6,911,353

-13.0%

Income tax expense

-9,213,603

13,444,377

-22,657,980

-168.5%

Net income

55,654,077

39,907,450

15,746,627

39.5%

Equity attributable to owners

of the parent

54,730,018

39,243,791

15,486,227

39.5%

Non-controlling interests

924,059

663,659

260,400

39.2%

Presented in accordance with K-IFRS.

If the agenda item related to the approval of financial statements is rejected or adjusted at the AGM, the details will be published in future reports.

In 2022, revenue increased year-on-year by KRW 22.6266 trillion (8.1%) to an all-time annual high of KRW 302.2314

trillion, driven by expanding sales of premium products, such as Neo QLED TV, Bespoke, and flagship smartphones, as

Samsung Electronics

Business

Report-XBRL

well as currency effects on the DS Division. However, operating profit decreased year-on-year by KRW 8.2572 trillion

(16.0%) to KRW 43.3766 trillion due to a decline in semiconductor ASP and the impacts of increased logistics costs from

the finished product businesses.

Income before income taxes decreased year-on-year by KRW 6.9114 trillion (13.0%) to KRW 46.4405 trillion, and net

income increased by KRW 15.7466 trillion (39.5%) to KRW 55.6541 trillion.

We continued to maintain a sound financial structure, highlighted by a year-on-year increase in ROE of 3.2%pts to 16.9%,

and an increase in net profit ratio of 4.1%pts to 18.4%.

Samsung Electronics

Business

Report-XBRL

[Performance by division]

(

KRW

mil

)

Classification

Division

2022

2021

Change

Amount

(%)

Revenue

DX Division

182,489,720

60.4%

166,259,437

59.5%

16,230,283

9.8%

DS Division

98,455,270

32.6%

95,387,173

34.1%

3,068,097

3.2%

SDC

34,382,619

11.4%

31,712,526

11.3%

2,670,093

8.4%

Harman

13,213,694

4.4%

10,039,922

3.6%

3,173,772

31.6%

Overall revenue

302,231,360

100.0%

279,604,799

100.0%

22,626,561

8.1%

Operating profit

DX Division

12,746,074

29.4%

17,386,554

33.7%

-4,640,480

-26.7%

DS Division

23,815,810

54.9%

29,192,021

56.5%

-5,376,211

-18.4%

SDC

5,952,973

13.7%

4,457,365

8.6%

1,495,608

33.6%

Harman

880,548

2.0%

599,097

1.2%

281,451

47.0%

Overall operating profit

43,376,630

100.0%

51,633,856

100.0%

-8,257,226

-16.0%

Includes inter-divisional revenue and operating profit.

(DX Division)

The DX Division’s revenue in 2022 increased by KRW 16.2303 trillion (9.8%) from the previous year to

KRW

182.4897

trillion, but operating profit decreased by KRW 4.6405 trillion (26.7%) to KRW 12.7461 trillion. Revenue

growth was driven by sales of premium products, which include Neo QLED TVs, Bespoke products, and flagship

smartphones, but operating profit declined due to the impacts of increased logistics costs.

In the DX Division, the VD/DA businesses are sustaining growth led by sales of premium products, including those for Neo

QLED TVs featuring premium technology, as well as for products tailored to experience-oriented lifestyles, such as our

Lifestyle TVs, Bespoke products, and new home appliance products.

In the Visual Display Business, we are expanding our leadership in the premium, ultra-large, over 75” TV market with

QLED TVs featuring quantum dot technology, and we are growing market power with continued releases of new Lifestyle

TV products, such as The Terrace and The Premier. In addition, we keep pushing the boundary of the overall market with

diverse new products such as The Wall micro LED TV, soundbars, and LED signage.

Based on positive responses for our new products, Samsung has remained atop the global TV market for 17 consecutive

years, spanning from 2006 to 2022, fortifying our industry leadership.

In 2023, the Company will continue to innovate to lift demand for premium TVs and sales of Lifestyle products. We will

leverage micro LED technology to lead form factor in the industry; and we will present new lifestyles through additional

design differentiations, which include an expansion of our lineup of lifestyle products that reflect changing patterns of how

consumers use screens, including the way they connect mobile devices and content and how they interact with fitness

training and gaming at home. Furthermore, as part of our Company’s new environmental strategy, we will strive to ensure

sustainable growth by adopting more components made from recycled plastic in our eco-friendly remote controls and by

releasing new TV products that offer ultra-low-power technology.

In the Digital Appliance Business, we continue to launch products and services that not only offer advanced functions based

on highly-efficient, eco-friendly technologies, but also increase convenience in our consumers’ lives, all based on a deep

understanding of the changing life patterns of our consumers. We are also creating new value with smart appliances that

connect with various devices as well as a suite of services centering on Bixby and SmartThings.

In 2023, we aim to keep innovating user experiences by expanding global sales through differentiated Bespoke product

Samsung Electronics

Business

Report-XBRL

lineups. For our high margin B2B businesses, which include system air conditioners and built-in home appliances, we will

strengthen our competitiveness to win more orders and maintain growth momentum by offering differentiated eco-friendly

features and adopting customized products, for example. In addition, we will offer customized services by connecting

products so our consumers can enjoy unparalleled user experiences; and we will fortify our status as a global brand in home

appliances by strengthening activities that promote ESG by reducing energy use and expanding adoption of eco-friendly

materials, to name a few.

Even amid challenging market conditions, including prolonged geopolitical issues and effects of inflation and the economic

downturn, the DX Division’s MX Business achieved solid results, including an increase in market share in the flagship

smartphone market on the back of bolstered product competitiveness.

In the premium segment, following the launch of the Galaxy Z Flip and Galaxy Z Fold 2 in 2020, we released the S-series

in 2021 to deliver experiences tailored to the various lifestyles of our users, further expanding our premium user base.

Foldables, along with S-series models, are spearheading growth of our flagship products by offering unique user experiences.

Moreover, the Galaxy Ecosystem allowed customers to experience expanded connectivity between various products and

services and take advantage of collaborations with global partners, leading growth in the tablet, PC, and wearables

businesses to exceed market and thus highlight strength in this segment in 2021. In 2022, facing heightened market

uncertainties, including geopolitical issues, and stagnant demand, we focused our capabilities on our flagship products,

increasing the sales portion and ensuring smooth supply of S22 Ultra—the top model in the S-series—thereby fortifying

our status in the flagship market.

In 2023, we will aggressively pursue strategies to overcome challenges in the mobile market, which is expected to contract.

We will push to expand our premium customer base by promoting the S23 and S23 Ultra to strengthen our leadership in the

flagship market; and for foldables, we will stay atop the global market by further fortifying our market-leading position via

our technology and broad cooperation with partners. In addition, we will actively address demand to transition to 5G via

mass-market products in emerging markets, such as Southeast Asia and Latin America, to pursue overall growth in

smartphones. Furthermore, by closely collaborating with the DX Division, the MX Business will expand our Multi Device

experience, which enables convenient use of not only mobile products, but also TVs and home appliances, enabling our

customers to enjoy an ultimate experience via the Galaxy Ecosystem.

Under a management philosophy that prioritizes future-oriented values and customer experiences, we will continue to

preemptively address changing market landscapes and diversifying customer needs. We are endeavoring to preemptively

secure core technologies and platforms—such as eXtended Reality (XR), chipsets, and digital health/wallets—that will

power next-gen growth engines based on open cooperation; all while continuing to achieve solid results and lead the mobile

market.

(DS Division)

In the DS Division, revenue in 2022 increased by KRW 3.0681 trillion (3.2%) year-on-year to KRW 98.4553 trillion, but

operating profit decreased by KRW 5.3762 trillion (18.4%) to KRW 23.8158 trillion compared to the prior year due to the

repercussions of a decline in semiconductor ASP in the second half of the year.

The Memory Business is focusing on bolstering competitive edges by maintaining its dominant position in cost

competitiveness via technology leadership and through timely responses to market demand, even amid challenging business

conditions that include a global economic slowdown and sluggish demand. In 2023, we expect customer inventory

adjustments to continue and macro factors to keep dampening consumer sentiment in the short-term, and we will prepare

for various scenarios—including a potential demand recovery in the second half—and continue to monitor market

conditions to proactively address changes.

For DRAM, we further strengthened our technological competitiveness by preemptively establishing a DRAM mass

production system that applies multi-step EUV technology—a world’s first. We are focusing on qualitative growth by

Samsung Electronics

Business

Report-XBRL

operating portfolios centered on high-value and high-capacity products. Furthermore, we will actively address DDR5

demand from server and PC resulting from full-fledged adoption of a new CPU while ensuring timely responses to growing

demand centering on high-capacity server and mobile products via an optimized product mix.

For NAND, we will work toward bolstering cost competitiveness and fortifying market leadership by securing a lineup of

advanced products via promoting the full-fledged adoption of 8th-generation V-NAND in 2023, and by migrating to 7th-

generation V-NAND products, which demonstrates our exceptional technological capabilities.

System LSI is sustaining growth momentum by maximizing revenue with the goal of transforming into a platform supplier

by fully realizing synergies among various application products. Moreover, based on our product competitiveness, we will

continue to expand our customer base and actively secure new technologies to prepare for market changes. For SoCs, we

are securing additional customers, including for mobile- and automotive-use SoCs, while reinforcing our product lineup by

leveraging our 5G technology, and we are continuing to prepare for the future by developing next-generation IP technologies.

For image sensors, we launched 200MP sensors for mobile products for the first time in the world, leveraging our

technological capabilities in micro-pixel ISOCELL; and for automotive image sensors, we continue to increase orders.

For Foundry in 2023, we expect growth to slow with the depressed market carried forth from 2H22 likely to keep weighing

on demand and influencing inventory adjustments at customers, so we aim to use the year as an opportunity to sharpen our

competitive edges by improving our fundamentals while working to overcome the downturn. For advanced nodes, we are

concentrating on an early ramp of the 2nd generation 3nm GAA process and on the development of the next-generation 2nm

process. For matured nodes, we aim to develop specialty processes that are customized to customer needs and expand our

customer base to include various industries by diversifying within applications, including HPC, automotives, and IoT. In

addition, we will endeavor to strengthen our services that promote shared growth with our customers by providing a platform

offering customer-centric design and improved VoC functionality.

(SDC)

SDC’s revenue in 2022 was KRW 34.3826 trillion, up KRW 2.6701 trillion (8.4%) from the previous year, and operating

profit increased by KRW 1.4956 trillion (33.6%) to KRW 5.9530 trillion. Both revenue and operating profit increased on

the back of expanded sales of value-added OLED panels and currency effects.

The mobile display business achieved solid earnings, led mainly by high-end products, despite a decline in smartphone

demand due to weakened consumer sentiment caused by concerns over inflation, rate hikes, and the economic downturn.

We actively addressed our customers’ increasingly sophisticated needs by establishing an optimal product portfolio that

ranges from mass-market through to premium products with our Flexible and Rigid OLED panels. Indeed, our industry-

leading technological capabilities have been recognized based on our products’ differentiated technologies and performance.

In the large display business, we delivered tangible achievements with our preemptive business restructuring, which includes

the transition to QD-OLED. We have commenced our QD-OLED business in earnest and it is operating seamlessly, with

stable mass production via the early securing of yields and a successful entry into the premium market.

In 2023, we expect the business landscape to remain challenging due to unstable market conditions triggered by inflation

and tight monetary policies and as our peers enter the market in earnest. For the mobile panel business, we will leverage our

technological gap in the high-end smartphone market, which is likely to stay relatively solid; and we will strengthen our

market dominance through our superior cost competitiveness. Moreover, we will further solidify our leadership by

diversifying our product portfolio by expanding into IT, gaming, and automotive products.

In the large panel business, amid expectations for sluggish demand due to prolonged economic uncertainties, we will keep

enhancing profitability by strengthening sales foundations in the premium market based on a stabilized yield.

Samsung Electronics

Business

Report-XBRL

(Harman)

For Harman in 2022, revenue increased by KRW 3.1738 trillion (31.6%) to KRW 13.2137 trillion and operating profit

increased by KRW 0.2815 trillion (47.0%) to KRW 0.8805 trillion. Both revenue and operating profit grew thanks to

improved earnings from the automotive sector on the back of alleviated chip supply issues and as consumer audio sales

remained strong.

Harman recorded its strongest results since its acquisition in the automotive components, consumer audio, and professional

solution markets, despite a challenging business environment marked by disruptions in global logistics. Harman was able

to expand its business capabilities through internal innovations as well as synergies with mobile, IT, display, and

semiconductor technologies from various businesses of Samsung Electronics.

As a leader in the car component market, we supply car manufacturers with products that apply innovative technologies, all

while maintaining quality at a level befitting a premium brand. In the infotainment market, we gained early dominance by

preemptively addressing the transition to digital cockpits, and we won the industry’s first order for 5G Telematics Control

Units (TCUs) via our development of differentiated technologies. We will focus our capabilities on providing a more

convenient, pleasant, and safe in-cabin experience by preparing for the era of autonomous vehicles based on such

technological innovations.

In the consumer audio market, we have used our innovative technologies to firmly establish the brand’s reputation among

consumers and audiophiles. In particular, JBL has sold the most Bluetooth speakers in the global market for seven

consecutive years, and it is sustaining notable growth momentum in the wireless earphone market.

In 2023, we expect to see a significant decline in global GDP growth compared to 2022 and additional deterioration of the

business environment, including stagnant automotive and audio markets. However, we will strive to secure product and cost

competitiveness via thorough preparations and technology innovations while remaining committed to enhancing

shareholder value by achieving solid earnings.

C. New and closed businesses

N/A

Samsung Electronics

Business

Report-XBRL

D. Changes in organizational structure

In December 2021, the Company merged and restructured the CE and IM Divisions to form the DX Division and renamed

the Mobile Communications Business to the Mobile eXperience (MX) Business.

Also, SDC and the DS Division have been

separated to align with the corporate organizational structure.

[

As of December 2021]

Before

After

Business

organization

CE Division (Visual Display, Digital Appliances, Health &

Medical Equipment)

DX Division (Visual Display, Digital Appliances, Health &

Medical Equipment, Mobile eXperience, Network)

IM Division (Mobile, Network)

DS Division (Memory, System LSI, Foundry, DP)

DS Division (Memory, System LSI, Foundry)

SDC (DP)

Harman Division

Harman

Regional

headquarters

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Korea, North America, Latin America, Europe, CIS, Southwest

Asia, Southeast Asia, China, Middle East, Africa

Americas (DS), Europe (DS), China (DS), Southeast Asia (DS),

Japan (DS)

Americas (DS), Europe (DS), China (DS), Southeast Asia

(DS), Japan (DS)

Samsung Electronics

Business

Report-XBRL

E. Foreign exchange risk

The Company experiences currency gains and losses based on the different functional currency of each entity due to global

operations. As such, the Company is exposed to foreign currency volatility from exchange positions of currencies, especially

related to the US dollar, Euro and Indian rupee.

(closing rate end at year-end by currency)

Currency

2022

2021

Change

Change (%)

USD

1,267.30

1,185.50

81.80

6.9%

EUR

1,351.20

1,342.34

8.86

0.7%

INR

15.31

15.93

-0.62

-3.9%

The foreign currency exposure to financial assets and liabilities of a 5% currency rate change against the Korean won (before

income tax) are presented below:

(KRW mil)

Currency

December 31, 2022

December 31, 2021

Increase

Decrease

Increase

Decrease

USD

258,655

-258,655

250,489

-250,489

EUR

92,546

-92,546

107,519

-107,519

INR

52,096

-52,096

24,216

-24,216

To minimize foreign exchange risk arising from operating activities, the Company maintains the same level of equity and

liability in each currency regardless of foreign exchange fluctuations. The Company’s foreign exchange management policy

requires normal business transactions (including imports and exports) to be conducted in the local currency or for the cash-

in currency to be matched with the cash-out currency.

The Company effectively manages its foreign exchange risk by regular monitoring foreign exchange rates and limits all

foreign exchange transactions besides the purpose of hedging risks.

F. Recognition of asset impairment loss

The Company conducts an annual review on asset impairment of CGUs (cash generating unit). The recoverable amount of

a CGU is based on the calculation of value in use, and the value in use is calculated using a BTCF (before tax cash flow)

assumption that based on the financial budget for the next five years (or longer if mid- to long-term plans for new businesses

with emerging technologies are deemed appropriate) approved by the management committee. In calculating terminal-year

cash flow for period that exceeds the term, assumption of fixed average growth (does not exceed industry average) was

used.

Impairment losses are recognized to the extent the carrying amount exceeds the recoverable amount of a CGU. The

recoverable amount is determined by choosing the greater figure between the use-value and fair-value, which deducts the

disposal amount per cost. Recognized impairment gains or losses in 2022 reached KRW 26.4 billion for tangible assets and

KRW 6.3 billion for intangible assets.

Refer to

『

3. Notes to consolidated financial statements

』

『

III. Financial Affairs

』

and

『

B. Equity Investments in other

corporations

』

『

IX. Affiliates and Subsidiaries

』

for more details about asset impairment loss.

Samsung Electronics

Business

Report-XBRL

4. Liquidity, financing, and expenditure

Due to large investments made by the Company, maintaining adequate levels of liquidity is critical. The Company strives

to achieve this goal by periodically forecasting its cash flow, estimating required cash levels, and managing income and

expenses.

The Company preemptively manages risks by predicting cash flow on a regular basis. We efficiently manage liquidity risk

through cash pooling by region, which allows the use of internal funds in case of lack of funds in the region. The cash

pooling program allows sharing of surplus funds among entities and contributes to minimizing liquidity risk and

strengthening the Company’s competitive position by reducing capital operating expenses and finance expenses.

In addition, the Company provides payment guarantees, securing the limit of borrowing for overseas subsidiaries to prepare

for any potential need for large-scale liquidity.

A. Current status of liquidity

The Company has ample liquidity, and its cash coverage (liquid funds/borrowings) is 1,115%.

2022

2021

Cash coverage

(liquid funds/borrowings)

1,115%

675%

The Company’s liquidity as of December 31, 2022, is presented below:

(KRW mil)

Classification

2022

2021

Change

Liquid funds

Cash and cash equivalents

49,680,710

39,031,415

10,649,295

Short-term financial instruments

65,102,886

81,708,986

-16,606,100

Short-term financial assets at amortized

cost

414,610

3,369,034

-2,954,424

Financial assets at fair value through profit

or loss

29,080

40,757

-11,677

Total financial assets

115,227,286

124,150,192

-8,922,906

Borrowings

Short-term borrowings

5,147,315

13,687,793

-8,540,478

Current portion of long-term liabilities

1,089,162

1,329,968

-240,806

Debentures

536,093

508,232

27,861

Long-term borrowings

3,560,672

2,866,156

694,516

Total financial liabilities

10,333,242

18,392,149

-8,058,907

Net cash (liquid funds – borrowings)

104,894,044

105,758,043

-863,999

Current portion of long-term liabilities is current portion of long-term borrowings and current portion of debentures.

Samsung Electronics

Business

Report-XBRL

As of the end of 2022, the Company had KRW 115.2273 trillion of financial assets. These liquid funds include: i) cash and

cash equivalents; ii) short-term financial instruments; iii) short-term financial assets at amortized cost; and iv)

financial

assets at fair value through other comprehensive income. This balance decreased by KRW 8.9229 trillion from KRW

124.1502 trillion at the end of the previous year.

The Company’s borrowings (including debentures) are KRW 10.3332 trillion, a decrease of KRW 8.0589 trillion from KRW

18.3921 trillion at the end of the previous year.

The Company’s liquidity includes an inflow of KRW 62.1813 trillion in cash flows from operating activities and an outflow

of KRW 53.1267 trillion in acquisition of tangible and intangible assets, and KRW 9.8144 in dividends. The Company’s net

cash (liquid funds – borrowings) in 2022 is KRW 104.8940 trillion, which is a decrease of KRW 0.8640 trillion from KRW

105.7580 trillion at the end of the previous year.

B. Financing and expenditures

(Borrowings)

As of December 31, 2022, the Company’s borrowings (including debentures) are presented below:

(KRW mil)

Classification

Creditor

Annual interest rate

(%)

2022

2021

Short-term borrowings

Collateralized borrowings

Woori Bank, etc.

0.0–16.7

3,569,357

11,556,101

Non-collateralized borrowings

CitiBank, etc.

0.1–38.5

1,577,958

2,131,692

Total short-term borrowings

5,147,315

13,687,793

Liquid long-term borrowings

Bank borrowings

BNP, etc.

38.9

–

53.2

208,915

40,415

Capital lease liabilities

CSSD, etc.

3.5

874,019

811,902

Total liquid long-term borrowings

1,082,934

852,317

Long-term borrowings

Bank borrowings

Industrial Bank of

Korea, etc.

1.6–5.9

33,846

1,500

Capital lease liabilities

CSSD, etc.

3.5

3,526,826

2,864,656

Total long-term borrowings

3,560,672

2,866,156

(KRW mil)

Classification

Issuance date

Maturity date

Annual

interest rate

(%)

2022

2021

Debentures

USD

denominated

straight bonds

Oct 2, 1997

Oct 1, 2027

7.7

31,683

(USD 25,000,000)

35,565

(USD 30,000,000)

Samsung Electronics

Business

Report-XBRL

USD

denominated

debenture bonds

May 11,

2015

May 15,

2025

4.2

506,920

(USD 400,000,000)

474,200

(USD 400,000,000)

EUR

denominated

debenture bonds

May 27,

2015

May 27,

2022

2.0

469,819

(EUR 350,000,000)

Sub Total

538,603

979,584

Premium on bonds payable (discount on bonds payable)

3,718

6,299

Total

542,321

985,883

Deduction: Current debentures

(6,228)

(477,651)

Non-current debentures

536,093

508,232

(Borrowings and payment of borrowings)

The Company’s short-term borrowing increases or decreases depending on the discount amount of trade receivables. In

2022, short-term borrowing decreased by KRW 8.5405 trillion, while KRW 0.4816 trillion of long-term borrowing increased

due to increased capital lease liabilities.

(Plan for payment of borrowings)

The Company’s plan for payment of borrowings (including debentures) is presented below:

(KRW mil)

Year of payment

Amount of payment

2023

6,384,334

2024

873,525

2025

1,235,366

2026

589,082

2027~

1,912,869

Total

10,995,176

Amount calculated excluding bond discount, premium on bonds payable, and present value of bonds payable discount.

(Compliance to bond management contract conditions)

The Company’s bonds are subject to conditions to protect investors such as constraint on collateral, constraint on disposal

of assets, etc., and the Company complies with these conditions.

5. Off-balance sheet activities

- Refer to

『

2. Notes to consolidated financial statements

』

『

III. Financial Affairs

』

Samsung Electronics

Business

Report-XBRL

6. Other information for investment decision making

A. Significant accounting policies and estimation

- The Company applied the following major amended and enacted standards for the annual period beginning on January 1,

2022:

Amendments to Korean IFRS 1116, Lease

During the year ended December 31, 2020, the amendments to Korean IFRS 1116 introduced a practical expedient that

provided practical relief to lessees in accounting for rent concessions occurring as a direct consequence of COVID-19.

The amendments extend the practical expedient to apply to reduction in lease payments originally due on or before 30

June 2022. The application of the amendments does not have a significant impact on the consolidated financial statements.

Amendments to Korean IFRS 1103, Business Combinations

The amendments add to Korean IFRS 1103 a requirement that, for obligations within the scope of IAS 37, an acquirer

applies Korean IFRS 1037 Provisions, Contingent Liabilities and Contingent Assets or Korean IFRS 2121 Levies to

determine whether at the acquisition date a present obligation exists as a result of the past events. The amendments also

add an explicit statement that an acquirer does not recognize contingent assets acquired in a business combination. The

application of the amendments does not have a significant impact on the consolidated financial statements.

Amendments to Korean IFRS 1016 Property, Plant and Equipment

The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling

items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the

manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the cost of

producing those items, in profit or loss. The application of the amendments does not have a significant impact on the

consolidated financial statements.

Amendments to Korean IFRS 1037 Provisions, Contingent Liabilities and Contingent Assets

The amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs

that relate directly to a contract consist of both the incremental costs of fulfilling that contract and an allocation of other

costs that relate directly to fulfilling the contract. The application of the amendments does not have a significant impact on

the consolidated financial statements.

B. Environment and employees

- Refer to

『

3. Matters related to sanctions

』

『

XI. Other information

』

for environmental sanctions or administrative

actions.

- No significant changes in employee positions during this period.

C. Legal regulations

- Refer to

『

3. Matters related to sanctions

』

『

XI. Other information

』

for major legal regulations on the Company’s

businesses.

Samsung Electronics

Business

Report-XBRL

D. Derivatives and risk management policy

- To manage exchange rate risk, overseas companies hedge by buying or selling currency forwards for a foreign currency

position that is not among the companies' functional currencies.

- Refer to

『

5. Risk management and derivative trading

』

『

II. Businesses Overview

』

and

『

3. Notes to Financial

Statements

』

『

III. Financial Affairs

』

for the Company’s key derivatives and risk management policy.

Samsung Electronics

Business

Report-XBRL

VI. Appendix

A. TCFD Recommendations and Recommended Disclosures

- The Company included in Sustainability Report climate-related financial disclosures consistent with the TCFD

Recommendations and Recommended Disclosures.