For the year ended December 31, 2016

SAMSUNG ELECTRONICS Co., Ltd.

2016 Business Report

For the year ended December 31, 2016

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 II. Business Overview.

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Table of Contents

Certification......................................................................................................................................................................... 3 I. Corporate Overview ........................................................................................................................................................ 4 II. Businesses Overview .................................................................................................................................................. 22 III. Financial Affairs........................................................................................................................................................... 62 IV. Auditor's Report ........................................................................................................................................................ 165 V. Management Discussion and Analysis.................................................................................................................... 167 VI. Corporate Governance ............................................................................................................................................. 175 VII. Information on Shareholders.................................................................................................................................. 186 VIII. Executives and Employees.................................................................................................................................... 192 IX. Affiliates and Subsidiaries ....................................................................................................................................... 200 X. Related Party Transactions....................................................................................................................................... 230 XI. Other Information...................................................................................................................................................... 234

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Certification

Letter of Certification

We, Oh-Hyun Kwon and Sang-Hoon Lee, as CEO and executive of the company in charge of reporting, certify that we have reviewed the annual business report of Samsung Electronics Co., Ltd. for the year ended December 31, 2016.

Based on our knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary that would be misleading with respect to the period covered by this report.

Based on our knowledge, the financial statements, and other financial information included in the report, fairly present in all materials respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report.

We confirm that Samsung Electronics operates an Internal Accounting Management System, responsible for establishing and maintaining disclosure controls and procedures and internal controls over financial reporting, as defined in Article 2.2 and 2.3 of the External Audit Act. We have disclosed our most recent evaluation of internal controls over financial reporting to the Company's auditors and to the audit committee of the Company's board of directors.

Date: 2017. 4. 28

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I. Corporate Overview

1. Overview

A. Legal, Commercial Name:

- Samsung Electronics Co., Ltd.

B. Date of Establishment:

- Samsung Electronics Co., Ltd. ("SEC") 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 of Shareholders on February 28, 1984.

C. Address, Phone Number, and English Language Website of the Corporate Headquarter

- Address: 129, Samsung-ro, Yeongtong-gu, Suwon, Gyeonggi-do, Korea - Phone Number: 82-31-200-1114 - Website: http:// sec

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

E. Core Businesses

- The Company (defined below) separately oversees three independent self-determining divisions (each a "Division"), CE (Consumer Electronics), IM (Information Technology & Mobile Communications), and DS (Device Solutions).

Products in each Division are presented below:

Division CE IM DS

Products TV, Monitor, Refrigerator, Washing Machine, Air Conditioner, Medical Devices, etc.

HHP, Network System, Computer, etc. DRAM, NAND Flash, Mobile AP, LCD panel, OLED panel, etc.

The Company is a global electronics company comprised of the headquarters in Korea and 169 subsidiaries (SEC and its subsidiaries collectively, "Samsung Electronics" or the "Company") across the world including nine (9) regional headquarters for the CE and IM Divisions and five (5) regional headquarters for the DS Division.

[CE Division]

The CE Division is leading the global digital era by continuously offering new products with innovative technology, unique design, and enhanced value propositions.

TV is the core product of CE. The Company has maintained its market leadership position for the past eleven (11) consecutive years by leveraging competitive advantages in hardware such as LCD/LED TVs as well as software driven product features within our Smart TV product portfolio.

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[IM Division]

The IM Division is at the forefront of mobile lifestyle innovation with consumer-friendly products such as the premium `GALAXY' series, while driving the paradigm shift in the market beyond mobile convergence to focus on software.

The IM Division is focused on meeting market demand by enhancing mobile product differentiation through seamless integration of key features from various product categories.

The IM Division expects increased convergence of mobile phones, digital media devices and personal computers, cameras and other devices in smartphones and tablets, with both serving as replacements for certain devices. As a result, the IM Division has made, and will continue to make, significant investments in research and development of new technologies, products and services.

In addition to handheld phone ("HHP") products including smartphones, the IM Division is also leading technological development and standardization in the global networks system market including Long Term Evolution ("LTE").

[DS Division]

The DS Division is comprised of the semiconductor sub-division and the display panel business. The semiconductor sub-division ("Semiconductor Sub-Division") is further divided into the memory business and the system LSI business. The Company's memory business unit ("Memory" or "Memory Business Unit") manufactures and sells DRAM and NAND products. The Company's system LSI business unit ("System LSI") manufactures mobile application processors ("Mobile APs" or "APs") and customized logic products. The display business ("DP Business Unit") manufactures and sells display panels ("DP").

The Company is constantly working to increase its influence on end-product manufacturers and create new demand by developing high quality components and through technological breakthroughs, as it has done with high-end 3D TV panels and in memory components like DRAM by increasing capacity by increasing density.

The Memory Business Unit produces differentiated products and has maintained the top position in the global memory market by continuously applying the latest advanced process technology ahead of the competition with each technological iteration. The system LSI market is shifting from PCs to mobile devices and like its sibling, the System LSI business unit plans to stay at the forefront of this market by offering differentiated products created using the latest advanced process technology and through efficient inventory management.

The Company's TFT-LCD business has been maintaining its position as a leader in the global flat panel display market by developing evermore higher resolution panels that are more energy efficient and by producing these panels more cost efficiently with a higher yield rate.

OLED is increasingly and rapidly replacing TFT-LCD in smart phones and other IT devices. The Company is also a market leader in the OLED displays, reaping the benefits of its continued investment and technological breakthroughs.

See II. Businesses Overview, for more details about each Division.

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F. Affiliates

SEC is an affiliate of the Samsung group as defined under Korea's Monopoly Regulation and Fair Trade Act ("Samsung Group").

As of December 31, 2016, Samsung Group had a total of fifty-eight (58) domestic affiliates, reduction of seven (7) affiliates (Nuri Solution, Samsung Fine Chemicals, S-EnPol, Hantok Chemicals, SDI-Chemical Co., Ltd., Jeongahm Wind Power, Allat) and addition of three (3) affiliates (Samsung Fire & Marine Insurance Financial Service, SDI-Chemical Co., Ltd., S-Printing Solution Co., Ltd.) when compared to December 31, 2015. Among the Samsung Group's fifty-eight (58) domestic affiliates, sixteen (16) affiliates including Samsung Electronics are listed, and forty-two (42) affiliates are unlisted.

[As of December 31, 2016] No. of affiliates

Listed

16

Name of affiliates

Samsung C&T, Samsung Electronics, Samsung SDI, SEMCO, Samsung Fire & Marine Insurance, Samsung Heavy Industries, Samsung Life Insurance, MULTICAMPUS,

Samsung Securities, Samsung SDS, Samsung Card, Samsung Engineering, S1, Cheil Worldwide, Hotel Shilla, Samsung Biologics

Unlisted

Seoul Lakeside CC, Samwoo Architects & Engineers, CVnet Corporation,

Samsung Bioepis, Samsung Display, Samsung Corning Advanced Glass, SU Materials,

STECO, SEMES, Samsung Electronics Service, Samsung Electronics Sales,

Samsung Electronics Logitech, Suwon Samsung Bluewings FC, Samsung Medison,

Samsung Claim Adjustment Service, Samsung Fire & Marine Insurance Service,

42

Samsung Fire & Marine Insurance Financial Service, Daejung Offshore Wind Power Co., Ltd.,

Samsung Futures, Samsung Asset Management, Saengbo, Samsung Life Service,

Samsung SRA Asset Management, Samsung Life Financial Service, SD Flex, Cheil Fashion Retail Co., Ltd.,

Natural9, Samsung Welstory, S-Printing Solution, SECUI, STM, S-Core, OpenHands,

Miracom, Samsung Card Customer Service, Human TSS, S-1CRM, Shilla Stay,

HDC Shilla Duty Free LTD, SERI, Samsung Lions, Samsung Venture Investment Corporation

Total

58

Effective March 11, 2016, CREDU changed its name to Multicampus Co., Ltd. Effective April 1, 2016, Colombo Korea changed its name to Cheil Fashion Retail Co., Ltd. Effective December 15, 2016, Allat was excluded from the Company group (sold its shares on September 30, 2016)

See IX. Affiliates and Subsidiaries for more details about domestic and overseas affiliates.

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G. Subsidiaries Subject to Consolidated Financial Statements

As of December 31, 2016, Samsung Electronics' consolidated subsidiaries totaled 169 with the addition of twenty (20) newly established or acquired subsidiaries and the subtraction of ten (10) subsidiaries when compared to December 31, 2015. Below is the list of consolidated subsidiaries.

Name of Subsidiaries

Samsung Electronics America Inc. NexusDX Inc.

NeuroLogica Corp. Samsung Receivables Corporation

Dacor Holdings, Inc. Dacor

Dacor Canada Co. , Inc. Distinctive Appliances of California, Inc.

Quietside LLC SmartThings, Inc. Samsung Oak Holdings, Inc.

Joyent, Inc. Samsung Pay, Inc. Stellus Technologies, Inc. Prismview, LLC (formerly YESCO Electronics LLC) Samsung Semiconductor Inc. Samsung Electronics Canada Inc.

PrinterOn Inc. PrinterOn America Corporation

AdGear Technologies Inc. Viv Labs, Inc.

NewNet Communication Technologies(Canada), Inc. RT SV CO-INVEST, LP

Samsung Research America, Inc Samsung Next LLC

Samsung Next Fund LLC Samsung International Inc. Samsung Mexicana S.A. de C.V Samsung Austin Semiconductor LLC.

Date of Establishment

1978.07 2009.07 2004.02 1998.03 1998.12 1965.03 2001.06 2006.06 2014.06 2001.07 2012.04 2016.06 2005.03 2006.03 2015.11 2007.10 1983.07 1980.07 2000.04 1986.04 2010.08 2012.09 2009.07 2014.02 1988.10 2016.08 2016.08 1983.10 1988.03 1996.02

Major business

Sale of electronic goods

Medical equipment

Medical equipment

Receivable management

Holding Company Production and sale of home

appliances Sale of home appliances

Sale of home appliances

Sale of home appliances

Sale of Air-conditioner

Sale of smart-home devices

Holding company

Cloud services Develop and provide mobile

payment services Production and sales of storage

systems LED display panel production and

sales Sale of semiconductors and

display panels Sale of electronic goods

Sale of printing solutions

Sale of printing solutions

Digital advertising platform

Artificial Intelligence platform

Develop text messaging services

Investment in venture firms

R&D

Holding company Investment in venture firms

and new technologies Production of TVs and monitors

Production of electronic goods

Production of semiconductors

Dec 31, 2015 Assets

14,875,687

(Unit: KRW million)

% ownership

Classified as major

subsidiary (Y/N)

Over 50%

Y

9,513 Over 50%

N

210,095 Over 50%

Y

2,627,030 Over 50%

Y

21,928 Over 50%

N

21,603 Over 50%

N

515 Over 50%

N

313 Over 50%

N

389 Over 50%

N

23,837 Over 50%

N

214,616 Over 50%

Y

0 Over 50%

N

12,583 Over 50%

N

300,278 Over 50%

Y

0 Over 50%

N

47,294 Over 50%

N

8,288,391 Over 50%

Y

465,801 Over 50%

Y

6,773 Over 50%

N

74 Over 50%

N

5,585 Over 50%

N

24,582 Over 50%

N

4,756 Over 50%

N

13,557 Over 50%

N

274,403 Over 50%

Y

0 Over 50%

N

0 Over 50%

N

51,164 Over 50%

N

884,512 Over 50%

Y

6,179,289 Over 50%

Y

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Name of Subsidiaries

Samsung Electronics Mexico S.A. De C.V. SEMES America Inc.

Samsung Electronics Digital Appliance Mexico, SA de CV Samsung Electronics Latinoamerica Miami, Inc. Samsung Electronics Latinoamerica (Zona Libre) Samsung Electronics Venezuela, C.A. Samsung Electronica Colombia S.A. Samsung Electronics Panama. S.A. Samsung Electronica da Amazonia Ltda. Simpress Comercio, Locacao e Servicos S.A. Samsung Electronics Argentina S.A. Samsung Electronics Chile Limitada Samsung Electronics Peru S.A.C.

Beijing Integrated Circuit Industry International Fund, L.P Samsung Electronics (UK) Ltd.

Samsung Electronics(London) Ltd. Samsung Electronics Holding GmbH Samsung Semiconductor Europe GmbH

Samsung Electronics GmbH Samsung Electronics Iberia, S.A. Samsung Electronics France S.A.S Samsung Electronics Hungarian Private Co. Ltd. Samsung Electronics Czech and Slovak s.r.o. Samsung Electronics Italia S.P.A. Samsung Electronics Europe Logistics B.V. Samsung Electronics Benelux B.V. Samsung Display Slovakia s.r.o. Samsung Electronics Romania LLC Samsung Electronics Polska, SP.Zo.o Samsung Electronics Portuguesa S.A. Samsung Electronics Nordic Aktiebolag Samsung Semiconductor Europe Ltd. Samsung Electronics Austria GmbH Samsung Electronics Switzerland GmbH Samsung Electronics Slovakia s.r.o

Date of Establishment

1995.07 1998.10 2012.12 1995.05 1989.04 2010.05 1997.03 2012.07 1995.01 2005.02 1996.06 2002.12 2010.04 2014.12 1995.07 1999.01 1982.02 1987.12 1984.12 1989.01 1988.01 1989.10 2010.01 1991.04 1991.05 1995.07 2007.03 2007.09 1996.04 1982.09 1992.03 1997.04 2002.01 2013.05 2002.06

Major business

Sale of electronic goods Semiconductor equipment Production of electronic goods Sale of electronic goods Sale of electronic goods

Marketing and services Sale of electronic goods

Consulting Production and sale of

electronic goods Sale of printing solutions Marketing and services Sale of electronic goods Sale of electronic goods Investment in venture firms Sale of electronic goods

Holding company Holding company Sale of semiconductors and

display panels Sale of electronic goods Sale of electronic goods Sale of electronic goods Production and sale of

electronic goods Sale of electronic goods Sale of electronic goods

Logistics Sale of electronic goods Display panel processing Sale of electronic goods Sale of electronic goods Sale of electronic goods Sale of electronic goods Sale of semiconductors and

display panels Sale of electronic goods Sale of electronic goods Production of TVs and monitors

Dec 31, 2015 Assets

1,030,161

% ownership

Over 50%

Classified as major

subsidiary (Y/N)

Y

1,050 Over 50%

N

435,513 Over 50%

Y

194,088 Over 50%

Y

318,028 Over 50%

Y

4,599 Over 50%

N

376,453 Over 50%

Y

9,529 Over 50%

N

3,114,334 Over 50%

Y

130,007 Over 50%

Y

40,459 Over 50%

N

345,850 Over 50%

Y

206,571 Over 50%

Y

18,707 Over 50%

N

1,125,885 Over 50%

Y

7,627 Over 50%

N

383,777 Over 50%

Y

904,359 Over 50%

Y

1,820,922 Over 50%

Y

642,393 Over 50%

Y

908,971 Over 50%

Y

1,254,673 Over 50%

Y

133,947 Over 50%

Y

768,278 Over 50%

Y

1,894,614 Over 50%

Y

1,264,497 Over 50%

Y

156,256 Over 50%

Y

188,451 Over 50%

Y

457,516 Over 50%

Y

155,940 Over 50%

Y

701,525 Over 50%

Y

90,287 Over 50%

Y

289,807 Over 50%

Y

145,143 Over 50%

Y

1,888,341 Over 50%

Y

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