BrazilU.S. Investment Forum

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Brazil-U.S. Investment Forum

• INVESTING FOR GROWTH AND COMPETITVENESS
• Serving the Domestic Market
• and Expanding Exports
• JOHN I. TAYLOR
• Vice President, LG Electronics
• Board Member, ATSC Forum
• September 28, 2005

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LG Electronics at a Glance

• Global force in electronics, information and
  communications
• US 38 billion in annual revenues (2004)
• 66,000 employees
• 76 global subsidiaries
• 39 countries
• Four business companies
• Mobile Communications
• Digital Appliance
• Digital Display
• Digital Media

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LG Electronics at a Glance

• Fast Growth, Fast Execution Strategy
• Technology and Market Leadership
• Flat-panel (plasma and LCD) TV
• Digital HDTV
• Mobile Phones
• Premium Appliances
• US 1.1 Billion in RD Investment (2004)
• Global Top 3 by 2010

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LG Brasil at a Glance

• Fast growth in just 8 years
• Goal of market leadership in key areas
• 1 TV brand in Brazil
• First to produce plasma displays in Brazil
• Manaus (AM) factories
• TVs, VCRs, DVD Players, Audio, Home Theater
• Room Air Conditioners
• Taubate (SP) factories
• Monitors, Optical Devices, Mobile Phones
• Employment doubled since 2000 up 50 since last
  year

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Brazil Strategic Market

• Brazil is key to LG Electronics B R I C
  strategy
• Brazil
• Russia
• India
• China
• Strong market growth potential
• Localization of production, marketing, technical
  support
• New job creation
• Technology transfer
• Major contributor to economic growth

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LG Electronics Investments in Brazil

• Hundreds of millions of US dollars of investment
  in past 4 years
• Recent investments
• US 60 million in mobile phone factory, Taubate
• US 40 million in plasma display factory, Manaus
• US 30 million in new product launches
• US 5 million GSM line, US 3 million LCD
  Monitors
• Investments support growth, boost competitiveness
  through lower production costs and increased
  exports

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LG Electronics Investments in Brazil
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LG Electronics Investments in Brazil

• We Brazilians feel this facility will be
  particularly important in strengthening our
  countrys national economic competitiveness. We
  believe that LGEs new mobile phone factory will
  provide a great boost to the Brazilian economy,
  and we look forward to LGEs continuing local
  investment and growth.
• President Lula
• Dedicating the LG Taubate factory, July 21, 2005

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LG Electronics Exports from Brazil

• In addition to leadership in domestic market, LG
  is focused on exports
• Brazil is gateway to other key Latin American
  markets
• Export to other South American countries,
  including Argentina, Venezuela, Peru, Chile and
  Bolivia
• Already the biggest TV exporter from Brazil
  (Manaus)
• Digital Television will mean further growth, more
  exports, more employment

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Digital Television Overview

• Quantum improvement in the technical quality of
  free, over-the-air television (HDTV,
  multi-channel surround sound)
• Dramatic increase in the quantity of conventional
  television programs (HD SD, SD multicasting)
• Quantum improvement in the information
  infrastructure
• Providing revolutionary improvement in the
  delivery of information services
• Promoting digital inclusion, bridging the digital
  divide
• ATSC DTV Standard offers compelling technical and
  economic advantages
• Tremendous DTV momentum in USA
• 1,500 DTV stations in 211 cities, reaching
  99.99 of US homes
• 20 million DTV products in consumer homes 31
  billion consumer investment

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ATSC Forum at a Glance

• International organization
• Educate policymakers, broadcasters, manufacturers
  and others about benefits of digital television
• Advocate adoption of ATSC DTV Standard for free
  over-the-air TV broadcasts
• Create a hemispheric DTV standard

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Benefits of a Hemispheric DTV Standard

• The Americas represent a common market of 830
  million people, offering significant economies of
  scale
• Justifies more research and development
• Means more equipment on the market from more
  suppliers
• Drives consumer prices much lower
• Accelerates the DTV transition for all countries
  using the standard
• Benefits consumers, broadcasters, manufacturers,
  program suppliers and governments throughout the
  region
• Brazilian adoption of ATSC will
• Ensure a hemispheric standard
• Increase Brazilian exports, jobs and economic
  growth

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DTV Investments in Brazil

• Following significant work for many years, the
  DTV broadcast standard decision expected in early
  2006
• ATSC Forum has encouraged cooperative RD
  ventures, building on the ATSC Standard
• U.S. Overseas Private Investment Corporation has
  committed 150 million for IT development
  projects in Brazil, highlighting DTV
• Transmission equipment
• Set-top box technologies
• Chip packaging
• Antennas

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DTV Investments in Brazil

• ATSC Forum working with US Export-Import Bank to
  support broadcasters investments in DTV
  transmission and studio equipment
• Borrow up to 85 of cost of equipment
• Very low interest rates (3-3.2) compared with
  Brazilian commercial rates of 20
• Interest only payments during two-year
  construction phase
• Repay principal over 5- to 7-year period
• Broadcasters also can borrow 15 of contract
  price for local costs associated with imported US
  equipment

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DTV Investments in Brazil

• ATSC Forum is spearheading joint research
  projects among Brazilian, US and Korean
  researchers on DTV technologies
• New ATSC ACAP Interactive DTV Standard provides a
  technology platform for Brazilian middleware and
  software developers
• Opportunity for Brazilian, Korean and US
  companies to collaborate on development of
  compelling applications for Brazilian viewers
• Interactive DTV applications represent a fertile
  area for Brazilian researchers to extend the
  state of the art in DTV technology
• Opportunity for Brazilian researchers to
  contribute to the continuing evolution of the
  ATSC family of DTV standards

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Brazils Adoption of ATSC Standard

• PROMOTES ECONOMIC GROWTH, prosperity, democracy
  and security throughout Latin America and the
  Caribbean.
• Provides a tangible, substantial example of
  U.S.-Brazilian cooperation, bolstering the
  leadership positions of both nations.
• MAKES DTV AFFORDABLE for all socio-economic
  classes in Brazil, by taking advantage of
  extremely low prices for ATSC consumer products,
  including set-top boxes that can be used with
  existing analog TV sets.

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Brazils Adoption of ATSC Standard

• PROMOTES SOCIAL INCLUSION, enabling broadcasters
  to deliver education, health care and other
  government services to all segments of Brazilian
  society, including those who may never own
  personal computers.
• INCREASES BRAZILIAN EXPORTS, positioning Brazil
  as the supplier of choice for digital TV sets and
  set-top boxes to South America and the Caribbean,
  and also increasing such exports to North
  America.
• Increased exports will bring high-skill, high-pay
  jobs, economic growth and development, and growth
  of Brazilian RD expertise.