Intangible Assets and Non-financial Assets Impairment (Tables)

12 Months Ended

Dec. 31, 2023

Textblock 1 [Abstract]

Changes in Intangible Assets

(a)Changes in intangible assets for the year ended December 31, 2022 are as follows:

(In millions of won)
	Intellectual property rights			Software			Member- ships			Development costs			Construction- in-progress			Customer relationships			Technology			Good- will			Others (*2)			Total
Acquisition cost as of January 1, 2022	₩	1,873,027			1,261,232			30,742			1,771,383			19,562			59,176			12,763			106,334			13,081			5,147,300
Accumulated amortization as of    January 1, 2022		(915,764	)		(1,023,062	)		—			(1,318,476	)		—			(37,491	)		(11,243	)		—			(13,081	)		(3,319,117	)
Accumulated impairment loss as of    January 1, 2022		(28,945	)		(9,309	)		(1,659	)		(63,692	)		—			(21,685	)		—			(57,995	)		—			(183,285	)
Book value as of January 1, 2022	₩	928,318			228,861			29,083			389,215			19,562			—			1,520			48,339			—			1,644,898
Additions - internally developed		—			—			—			502,755			—			—			—			—			—			502,755
Additions - external purchases		187,114			24,741			7,004			—			95,179			—			—			—			—			314,038
Amortization (*1)		(192,983	)		(105,615	)		—			(272,102	)		—			—			(168	)		—			—			(570,868	)
Disposals		—			(977	)		(10,608	)		—			—			—			—			—			—			(11,585	)
Impairment loss (*3)(*4)		(34,901	)		(17,799	)		(42	)		(54,649	)		—			—			(43	)		(26,963	)		—			(134,397	)
Transfer from construction-in-progress		—			85,319			—			—			(85,319	)		—			—			—			—			—
Effect of movements in exchange rates		10,108			(2,957	)		33			—			(1,253	)		—			—			2,185			—			8,116
Book value as of December 31, 2022	₩	897,656			211,573			25,470			565,219			28,169			—			1,309			23,561			—			1,752,957
Acquisition cost as of December 31, 2022	₩	2,074,083			1,340,637			27,170			2,016,477			28,169			59,176			12,763			108,519			13,081			5,680,075
Accumulated amortization as of    December 31, 2022	₩	(1,115,014	)		(1,108,459	)		—			(1,358,446	)		—			(37,491	)		(11,411	)		—			(13,081	)		(3,643,902	)
Accumulated impairment loss as of    December 31, 2022	₩	(61,413	)		(20,605	)		(1,700	)		(92,812	)		—			(21,685	)		(43	)		(84,958	)		—			(283,216	)

(*1) The Group has classified the amortization as manufacturing overhead costs, selling expenses, administrative expenses and research and development expenses.

(*2) Others mainly consist of rights to use electricity and gas supply facilities.

(*3) During 2022, Display (Large OLED) CGU was assessed for impairment, and impairment losses amounting to W93,966 million are recognized as other expenses. The impairment amount is allocated to goodwill, development costs, intellectual property rights and others.

(*4) The Group recognized an impairment loss amounting to W33,386 million for development projects which are not likely to generate revenue.

10.Intangible Assets and Non-financial Assets Impairment, Continued

(b)Changes in intangible assets for the year ended December 31, 2023 are as follows:

(In millions of won)
	Intellectual property rights			Software			Member- ships			Development costs			Construction- in-progress			Customer relationships			Technology			Good- will			Others (*2)			Total
Acquisition cost as of January 1, 2023	₩	2,074,083			1,340,637			27,170			2,016,477			28,169			59,176			12,763			108,519			13,081			5,680,075
Accumulated amortization as of    January 1, 2023		(1,115,014	)		(1,108,459	)		—			(1,358,446	)		—			(37,491	)		(11,411	)		—			(13,081	)		(3,643,902	)
Accumulated impairment loss as of    January 1, 2023		(61,413	)		(20,605	)		(1,700	)		(92,812	)		—			(21,685	)		(43	)		(84,958	)		—			(283,216	)
Book value as of January 1, 2023	₩	897,656			211,573			25,470			565,219			28,169			—			1,309			23,561			—			1,752,957
Additions - internally developed		—			—			—			493,608			—			—			—			—			—			493,608
Additions - external purchases		118,344			—			—			—			117,443			—			—			—			—			235,787
Amortization (*1)		(187,819	)		(105,285	)		—			(363,162	)		—			—			(163	)		—			—			(656,429	)
Disposals		(202	)		(396	)		(3,796	)		—			—			—			—			—			—			(4,394	)
Impairment loss (*3)		(1,633	)		(425	)		—			(52,775	)		—			—			—			—			—			(54,833	)
Reversal of impairment loss		—			—			242			—			—			—			—			—			—			242
Transfer from construction-in-progress		—			115,275			—			(1,429	)		(112,568	)		—			—			—			—			1,278
Effect of movements in exchange rates		2,433			2,712			6			—			(8	)		—			—			596			—			5,739
Book value as of December 31, 2023	₩	828,779			223,454			21,922			641,461			33,036			—			1,146			24,157			—			1,773,955
Acquisition cost as of December 31, 2023	₩	2,189,071			1,403,157			23,463			2,295,468			33,036			59,176			12,763			109,115			13,081			6,138,330
Accumulated amortization as of    December 31, 2023	₩	(1,299,655	)		(1,160,702	)		—			(1,509,575	)		—			(37,491	)		(11,574	)		—			(13,081	)		(4,032,078	)
Accumulated impairment loss as of    December 31, 2023	₩	(60,637	)		(19,001	)		(1,541	)		(144,432	)		—			(21,685	)		(43	)		(84,958	)		—			(332,297	)

(*1) The Group has classified the amortization as manufacturing overhead costs, selling expenses, administrative expenses and research and development expenses.

(*2) Others mainly consist of rights to use electricity and gas supply facilities.

(*3) The Group recognized an impairment loss amounting to W52,775 million for development projects which are not likely to generate revenue.

Summary of Development Costs and Intellectual Property Rights

(c)Development costs and Intellectual property rights as of December 31, 2022 and 2023 are as follows:

Development costs

(i)As of December 31, 2022

(In millions of won)
Classification	Product type	Book Value
	TV	₩	55,187
Development completed	IT		24,684
	Mobile and others		199,552
		₩	279,423
	TV	₩	60,376
Development in process	IT		100,380
	Mobile and others		125,040
		₩	285,796
		₩	565,219

(ii)As of December 31, 2023

(In millions of won)
Classification	Product type	Book Value
	TV	₩	43,956
Development completed	IT		63,049
	Mobile and others		190,487
		₩	297,492
	TV	₩	46,368
Development in process	IT		175,023
	Mobile and others		122,578
		₩	343,969
		₩	641,461

10.Intangible Assets and Non-financial Assets Impairment, Continued

Intellectual property rights

(i)As of December 31, 2022

(In millions of won and in years)
Classification	Category	Book Value		Remaining amortization period (*1)
	Direct additions	₩	198,136	7.2
Patent	Licenses agreement(*2)		697,605		6.0
		₩	895,741
Other			1,915	3.6
		₩	897,656

(*1) Weighted average of the remaining useful life at the end of the reporting period as each patent has a different remaining amortization period.

(*2) The Group’s rights under contracts with the patent company.

(ii)As of December 31, 2023

(In millions of won and in years)
Classification	Category	Book Value		Remaining amortization period (*1)
	Direct additions	₩	214,634	7.1
Patent	Licenses agreement(*2)		611,801		5.5
		₩	826,435
Other			2,344	3.6
		₩	828,779

(*1) Weighted average of the remaining useful life at the end of the reporting period as each patent has a different remaining amortization period.

(*2) The Group’s rights under contracts with the patent company.

Schedule of inputs used in measurement of CGU

As of December 31, 2022, the Group’s cash-generating units consist of Display CGU, Display (Large OLED) CGU and Display (AD PO) CGU. Changes in the carrying amount of goodwill allocated to the related CGUs are as follows:

(In millions of won)
			2022
	December 31, 2021		Effect of movements in exchange rates		Changes in CGU (*)			Impairment			December 31, 2022
Display CGU	₩	48,339		2,185		(26,963	)		—			23,561
Display (Large OLED) CGU		—		—		26,963			(26,963	)		—
	₩	48,339		2,185		—			(26,963	)		23,561

(*) During 2022, a portion of goodwill allocated to Display CGU as of December 31, 2021 was re-allocated to Display (Large OLED) CGU.

(ii) Impairment assessment on CGU

As of December 31, 2022, the Group performed impairment tests for Display CGU and Display (Large OLED) CGU. No impairment test was performed for Display (AD PO) CGU, impairment loss for which was initially recognized in 2019, as there was no indicator of impairment or reversal identified during 2022.

10. Intangible Assets and Non-financial Assets Impairment, Continued

(d)Impairment assessment on CGU as of December 31, 2022, Continued

The recoverable amount of each CGU is determined based on its value in use. Value in use is calculated using the estimated cash flow based on 5-year business plan approved by management. The estimated revenue and operating expenditures of the Group’s products used in the forecast was determined considering external sources and the Group’s past experience. Management estimated the future cash flows based on its past performance and forecasts on market growth. The key assumptions used in the estimation of value in use for Display CGU and Display (Large OLED) CGU include revenue and operating expenditures for the forecast period, growth rates for subsequent years (“terminal growth rate”), and discount rate. Terminal growth rate and the discount rate used in the estimation of value in use are as follows.

	Pre-tax discount rate(*)	Post-tax discount rate(*)	Terminal growth rate
2021
Display CGU	10.5%	8.4%	1.0%
2022
Display CGU	10.8%	9.0%	1.0%
Display (Large OLED) CGU	10.5%	9.0%	1.0%

(*) The discount rate was calculated using the weighted average cost of equity capital and debt and the beta of equity capital was calculated as the average of five global listed companies in the same industry and the Group. Cost of debt was calculated using the yield rate of non-guaranteed corporate bond considering the Group's credit rating and debt ratio was determined using the average of the debt ratios of the five global listed companies in the same industry and the Group. The Group calculates the value in use of each CGU using post-tax cash flows and a post-tax discount rate, and the result is not significantly different from the value in use calculated using pre-tax cash flows and pre-tax discount rate.

As of December 31, 2023, the Group’s cash-generating units consist of Display CGU, Display (Large OLED) CGU and Display (AD PO) CGU. As of December 31, 2023, the Group performed impairment assessment for Display CGU. All the goodwill balance as of December 31, 2023 is allocated to the Display CGU.

The recoverable amount of Display CGU is determined based on its value in use. Value in use is calculated using the estimated cash flow based on 5-year business plan approved by management. The estimated revenue and operating expenditures of the Group’s products used in the forecast was determined considering external sources and the Group’s historical experience. Management estimated the future cash flows based on its past performance and forecasts on market growth. The key assumptions used in the estimation of value in use for Display CGU include revenue and operating expenditures for the forecast period and discount rate. Growth rates for subsequent years(“Terminal growth rate”) and the discount rate used in the estimation of value in use are as follows.

	Pre-tax discount rate(*)	Post-tax discount rate(*)	Terminal growth rate
2022
Display CGU	10.8%	9.0%	1.0%
2023
Display CGU	10.9%	9.0%	1.0%

(*) The discount rate was calculated using the weighted average cost of equity capital and debt and the beta of equity capital was calculated as the average of five global listed companies in the same industry and the Group. Cost of debt was calculated using the yield rate of non-guaranteed corporate bond considering the Group's credit rating and debt ratio was determined using the average of the debt ratios of the five global listed companies in the same industry and the Group. The Group calculates the value in use of the CGU using post-tax cash flows and a post-tax discount rate, and the result is not significantly different from the value in use calculated using pre-tax cash flows and pre-tax discount rate.