Intangible Assets

12 Months Ended

Dec. 31, 2024

Intangible Assets

10.

Intangible Assets

(a)

Changes in intangible assets for the years ended December 31, 2023 and 2024 are as follows:

(i)

2023


(In millions of won)
	Intellectual property rights			Software			Member- ships			Development costs			Construction- in-progress			Technology			Good-will			Total
Acquisition cost as of January 1, 2023	₩	2,074,083			1,340,637			27,170			2,016,477			28,169			12,763			108,519			5,607,818
Accumulated amortization as of January 1, 2023		(1,115,014	)		(1,108,459	)		—			(1,358,446	)		—			(11,411	)		—			(3,593,330	)
Accumulated impairment loss as of January 1, 2023		(61,413	)		(20,605	)		(1,700	)		(92,812	)		—			(43	)		(84,958	)		(261,531	)
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 generated		—			—			—			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 (*2)		(1,633	)		(425	)		242			(52,775	)		—			—			—			(54,591	)
Others (*3)		—			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			12,763			109,115			6,066,073
Accumulated amortization as of December 31, 2023	₩	(1,299,655	)		(1,160,702	)		—			(1,509,575	)		—			(11,574	)		—			(3,981,506	)
Accumulated impairment loss as of December 31, 2023	₩	(60,637	)		(19,001	)		(1,541	)		(144,432	)		—			(43	)		(84,958	)		(310,612	)

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

(*2) The Group recognized an impairment loss amounting to W52,775 million for development projects which are not likely to generate probable future economic benefits.

(*3) Others mainly represent the reclassification of construction-in-progress to intangible assets.

(ii)

2024


(In millions of won)
	Intellectual property rights			Software			Member- ships			Development costs			Construction -in-progress			Technology			Good-will			Total
Acquisition cost as of January 1, 2024	₩	2,189,071			1,403,157			23,463			2,295,468			33,036			12,763			109,115			6,066,073
Accumulated amortization as of January 1, 2024		(1,299,655	)		(1,160,702	)		—			(1,509,575	)		—			(11,574	)		—			(3,981,506	)
Accumulated impairment loss as of January 1, 2024		(60,637	)		(19,001	)		(1,541	)		(144,432	)		—			(43	)		(84,958	)		(310,612	)
Book value as of January 1, 2024	₩	828,779			223,454			21,922			641,461			33,036			1,146			24,157			1,773,955
Additions - internally generated		—			—			—			548,224			—			—			—			548,224
Additions - external purchases		49,818			—			—			—			110,616			—			—			160,434
Amortization (*1)		(188,058	)		(122,539	)		—			(546,377	)		—			(164	)		—			(857,138	)
Disposals		—			(187	)		(6,433	)		—			—			—			—			(6,620	)
Impairment loss (*2)		(1,931	)		(4,517	)		—			(66,028	)		—			—			—			(72,476	)
Others (*3)		—			128,986			—			—			(128,148	)		—			—			838
Effect of movements in exchange rates		1,224			5,568			73			—			24			—			5,076			11,965
Classified as held for sale		—			(775	)		—			—			—			—			—			(775	)
Book value as of December 31, 2024	₩	689,832			229,990			15,562			577,280			15,528			982			29,233			1,558,407
Acquisition cost as of December 31, 2024	₩	2,275,735			1,482,559			15,562			2,357,041			15,528			12,763			114,191			6,273,379
Accumulated amortization as of December 31, 2024	₩	(1,525,276	)		(1,228,377	)		—			(1,715,408	)		—			(11,738	)		—			(4,480,799	)
Accumulated impairment loss as of December 31, 2024	₩	(60,627	)		(24,192	)		—			(64,353	)		—			(43	)		(84,958	)		(234,173	)

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

(*2) The Group recognized an impairment loss amounting to W66,028 million for development projects which are not likely to generate probable future economic benefits.

(*3) Others mainly represent the reclassification of construction-in-progress to intangible assets.

10.

Intangible Assets, Continued

(b)

The book value and remaining amortization period of development costs and intellectual property rights as of December 31, 2023 and 2024 are as follows:

Development costs

(i)

As of December 31, 2023


(In millions of won and in years)
Classification	Category	Book Value		Remaining amortization period(*)
	TV	₩	43,956		0.8
Development completed	IT		63,049		0.6
	Mobile and others		190,487		3.0
	Subtotal	₩	297,492
	TV	₩	46,368		—
Development in process	IT		175,023		—
	Mobile and others		122,578		—
	Subtotal	₩	343,969
	Total	₩	641,461

(*) Weighted average of the remaining useful life based on the book value at the end of the reporting period as each product has a different remaining amortization period.

(ii) As of December 31, 2024


(In millions of won and in years)
Classification	Category	Book Value		Remaining amortization period(*)
	TV	₩	49,705		0.8
Development completed	IT		49,615		0.7
	Mobile and others		255,128		2.7
	Subtotal	₩	354,448
	TV	₩	14,802		—
Development in process	IT		37,737		—
	Mobile and others		170,293		—
	Subtotal	₩	222,832
	Total	₩	577,280

(*) Weighted average of the remaining useful life based on the book value at the end of the reporting period as each product has a different remaining amortization period.

10.

Intangible Assets, Continued

Intellectual property rights

(i)

As of December 31, 2023


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

(*1) Weighted average of the remaining useful life based on the book value 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, 2024


(In millions of won and in years)
Classification	Category	Book Value		Remaining amortization period (*1)
Patent	Direct additions	₩	237,364		7.0
	Licenses agreement (*2)		449,617		5.1
	Subtotal	₩	686,981
Other			2,851		3.7
	Total	₩	689,832

(*1) Weighted average of the remaining useful life based on the book value 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

(c)

The total amount of research and development expenditure recognized as an expense for the year ended December 31, 2024 is W1,447,706 million (2022: W1,382,406 million, 2023: W1,379,653 million).

(d)

Details of impairment assessment on CGU as of December 31, 2023

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 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 operating performance 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 the future operating performance for the forecast period and discount rate. Terminal growth rate and the discount rate used in the estimation of value in use are as follows:

10.

Intangible Assets, Continued

(d)

Details of impairment assessment on CGU as of December 31, 2023, Continued


Classification	Pre-tax discount rate(*)			Post-tax discount rate(*)			Terminal growth rate
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.

As a result of impairment assessment for Display CGU to which goodwill is allocated, the recoverable amount exceeded its carrying amount by W975,459 million. Management has identified that a reasonably possible change in certain key assumption could cause the carrying amount to exceed the recoverable amount. The value in use determined for this CGU is sensitive to the discount rate used in the discounted cash flow model. Specifically, the discount rate would need to increase by 0.92% (holding all the other assumptions constant) for the estimated recoverable amount to be equal to the carrying amount.

(e)

Details of impairment assessment on CGU, as of December 31, 2024

As of December 31, 2024, the Group’s cash-generating units consist of Display CGU, Display (Large OLED) CGU and Display (AD PO) CGU. As of December 31, 2024, the Group performed impairment assessment for Display CGU, Display (Large OLED) CGU and Display (AD PO) CGU. All the goodwill balance as of December 31, 2024 is allocated to the Display CGU.

The recoverable amount of 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 operating performance 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 each Display CGU include the future operating performance for the forecast period and discount rate. Terminal growth rate and the discount rate used in the estimation of value in use are as follows:


Classification	Pre-tax discount rate(*)			Post-tax discount rate(*)			Terminal growth rate
Display CGU		9.3	%		7.6	%		1.0	%
Display (Large OLED) CGU		9.5	%		7.6	%		1.0	%
Display (AD PO) CGU		9.9	%		7.6	%		0.0	%

(*) 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 seven 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 seven 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.

As a result of impairment assessment for Display CGU to which goodwill is allocated, the recoverable amount exceeded its carrying amount by W1,250,028 million. Management has identified that a reasonably possible change in certain key assumption could cause the carrying amount to exceed the recoverable amount. The value

in use determined for this CGU is sensitive to the discount rate used in the discounted cash flow model. Specifically, the discount rate would need to increase by 0.98% (holding all the other assumptions constant) for the estimated recoverable amount to be equal to the carrying amount.

On the other hand, as a result of impairment assessment for Display (Large OLED) CGU and Display (AD PO) CGU, the recoverable amount exceeded its carrying amount by W1,463,528 million and W2,734,516 million, respectively.