Overview Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign exchange rates, of financial instruments. We are exposed to various financial market risks in our ordinary course of business transactions, primarily from changes in interest rates and foreign exchange rates. We utilize various financial derivatives, including forward and swap contracts to mitigate such risks as well as manage our exposure associated with net asset and liability positions and cash flows denominated in foreign currencies. We have used, and intend to continue to use, these financial derivatives only for hedging purposes and not for speculative purposes. Our primary market risk exposures relate to interest rate movements on floating rate borrowings and exchange rate movements on foreign currency denominated accounts receivable, as well as foreign currency denominated future cash flows from sales, mostly denominated in U.S. dollars and foreign currency denominated accounts payable for purchases of raw materials and supplies, primarily denominated in U.S. dollars and, to a lesser extent, Chinese Yuan and Japanese Yen. The fair value of our financial instruments has been determined as the price, as of the applicable measurement date, that we would receive when selling an asset or that we would pay when transferring a liability, in an orderly transaction between market participants. Fair value is based on quoted market prices where available. For a further discussion of our market risk and fair value of our financial assets and liabilities, see Note 25 of the notes to our financial statements. 86 Table of Contents Interest Rate Risks Our exposure to interest rate risks relates primarily to our short-term and long-term debt obligations, which are typically incurred to fund capital expenditures and repay maturing debt, as well as for working capital and other general corporate purposes. As of December 31, 2025, we had outstanding short-term and long-term debt, including current portion and prior to deducting discounts on bonds, in the aggregate amount of W12,665 billion (US$8,767 million). See Note 25(a) of the notes to our financial statements. From time to time, we may enter into interest rate swap contracts to hedge against the effects of interest rate fluctuations of certain of our floating rate long-term debt. As of December 31, 2025, W2,280 billion (US$1,578 million) of our Korean Won denominated floating rate long-term borrowings were hedged against interest rate fluctuations using variable-to-fixed interest rate swap contracts that expire in between 2026 and 2028, and US$250 million of our U.S. dollar-denominated floating rate long-term borrowings were hedged against interest rate fluctuations using variable-to-fixed interest rate swap contracts that expire in 2027. In connection with such contracts, we recognized a gain on valuation of derivatives of W16 billion (US$11 million) in 2025. The table below provides information about our interest rate swap contracts. The table presents notional amounts used to calculate the contractual payments to be exchanged under such contracts. Expected Maturity Dates Fair Value at 2026 2027 2028 2029 2030 Thereafter Total December 31, 2025 (in billions of Won and millions of US$, except for interest rate percentages) Interest rate swaps Variable to fixed (W)(1) W 575 W 775 W 930 — — — W 2,280 W 2,280 Average pay rate 4.29 % 4.25 % 4.23 % — — — Average receive rate 4.32 % 4.60 % 4.79 % — — — Variable to fixed (US$)(1) — US$ 250 — — — — US$ 250 US$ 250 Average pay rate 4.89 % 4.89 % — — — — Average receive rate 4.89 % 4.56 % — — — — (1)Average pay rates and average receive rates are applicable to the total notional amounts outstanding until maturity. We may be exposed to interest rate risks on additional debt financing that we may periodically undertake to fund capital expenditures required for our capacity expansion. Upward fluctuations in interest rates increase the cost of new debt. The interest rate that we will be able to obtain in a new debt financing will depend on market conditions at that time and may differ from the rates we have secured on our current debt. As of December 31, 2025, we had US$565 million aggregate principal amount of U.S. dollar denominated short-term loans, US$2,350 million aggregate principal amount of U.S. dollar denominated long-term loans, CNY19,332 million aggregate principal amount of CNY denominated long-term loans, and W4,000 billion aggregate principal amount of Korean Won denominated long-term loans. As of December 31, 2025, the interest rates for our U.S. dollar denominated loans ranged from 4.51% to 6.27%, the interest rates for our CNY denominated loans ranged from 2.03% to 3.06%, and the interest rates for our Korean Won denominated loans ranged from 3.46% to 5.65%. See Note 12 of the notes to our financial statements. If interest rates on borrowings with floating rates had been 1% higher or lower with all other variables held constant, the impact on the profit or loss before income tax of the applicable period would be as follows: For the Years Ended December 31, 2023 2024 2025 Increase Decrease Increase Decrease Increase Decrease (In billions of Won) Increase or decrease in profit or loss before income tax(1) W (102 ) W 102 W (98 ) W 98 W (101 ) W 101 (1)Includes financial instruments subject to interest rate swap transactions not designated as hedging instruments The table below provides information about our financial instruments that are sensitive to changes in interest rates. 87 Table of Contents Expected Maturity Dates 2026 2027 2028 2029 2030 Thereafter Total Fair Value at December 31, 2025 (in billions of Won, except for interest rate percentages) Debt obligations Fixed rate (W) W 630 W 475 — — — — W 1,105 W 1,109 Average interest rate 4.6 % 3.8 % — — — — Variable rate (W) W 815 W 1,185 1,205 50 25 — W 3,280 W 3,280 Average interest rate 4.4 % 4.4 % 4.3 % 4.5 % 4.5 % — Fixed rate (CNY) W 2 W 276 — — — — W 279 W 274 Average interest rate 2.5 % 2.5 % — — — — Variable rate (CNY) W 926 W 630 2,124 — — — W 3,680 W 3,680 Average interest rate 2.4 % 2.3 % 2.7 % — — — Fixed rate (US$) W 595 W 574 — — — — W 1,169 W 1,196 Average interest rate 4.3 % 5.9 % — — — — Variable rate (US$) W 646 W 1,471 725 326 — — W 3,168 W 3,168 Average interest rate 5.1 % 5.4 % 5.2 % 4.9 % — — For a further discussion of our interest rate risk exposures, including a further sensitivity analysis on our interest rate risk exposures, see Notes 12 and 25 of the notes to our financial statements. Foreign Currency Risk The primary foreign currency to which we are exposed is the U.S. dollar. We are also exposed, to a lesser extent, to other foreign currencies, including the Japanese Yen as well as the Chinese Yuan, and the Vietnamese Dong. For a further discussion of our net exposure to U.S. dollar and Japanese Yen, see Note 25 of the notes to our financial statements. From time to time, we hedge against the effect of exchange rate fluctuations of the U.S. dollar and Chinese Yuan against the Korean Won on our U.S. dollar and Chinese Yuan debt exposure using cross-currency swap contracts. The table below sets forth our outstanding cross currency interest rate swap contracts as of December 31, 2025. Cross Currency Interest Rate Swap Contracts: Contracts to sell Korean (Won)/buy US$: Outstanding contract amount US$ 1,600 million Average contractual exchange rate (Won) 1,371.4/US$ Change in fair value (Won) (133.1) billion Contracts to sell Korean (Won)/buy CNY: Outstanding contract amount CNY 380 million Average contractual exchange rate (Won) 199.1/CNY Change in fair value (Won) (5.9) billion In addition to relying on natural hedges created by foreign currency assets and liabilities, from time to time we have entered, and may in the future enter, into forward exchange contracts with major financial institutions to minimize the impact of foreign currency fluctuations on our foreign currency liabilities. Gains and losses on forward exchange contracts are recorded in the period of the exchange rate changes as foreign exchange gain or loss. As of December 31, 2025, we did not have any outstanding forward exchange contracts. Our foreign currency exposure and changes in profit or loss before income tax resulting from a 5% foreign exchange rate change of each of the U.S. dollar and the Japanese Yen against the Korean Won are as follows: 88 Table of Contents For the Years Ended December 31, 2023 2024 2025 Profit or Loss Before Income Tax Profit or Loss Before Income Tax Profit or Loss Before Income Tax (In billions of Won) U.S. Dollars (5% weakening) W 58 W (36 ) W 21 U.S. Dollars (5% strengthening) (58 ) 36 (21 ) Japanese Yen (5% weakening) (11 ) (7 ) (5 ) Japanese Yen (5% strengthening) 11 7 5 Other Risks We are exposed to credit risk in the event of non-performance by the counterparties under our forward exchange contracts at maturity. In order to minimize this risk, we limit the transaction amount with any one party and continually monitor the credit quality of the counterparties to these financial instruments. We do not anticipate any material losses from these contracts, and we believe the risk of non-performance by the counterparties under these contracts is remote. A substantial portion of our sales is attributable to a limited number of our end-brand customers. Our top ten end-brand customers, including our largest shareholder as an end-brand customer, together accounted for a substantial majority of our sales in each of 2023, 2024 and 2025. While we negotiate directly with our end-brand customers concerning the price and quantity of the sales, for some sales transactions we invoice the end-brand customers’ designated system integrators. As a result of our significant dependence on a concentrated group of end-brand customers and their designated system integrators, we are exposed to credit risks associated with these entities. We have established certain measures, such as factoring arrangements and requirement of credit insurance from customers, to protect us from excessive exposure to such credit risks. We manage our accounts receivable and credit exposure to customers by establishing credit limits for each customer to whom we supply products on an open account basis in accordance with our internal credit guidelines. We assess credit risk through quantitative and qualitative analysis, and based on this analysis, we establish credit limits and determine whether we will seek to use one or more credit support devices, such as obtaining some form of third-party guaranty or stand-by letter of credit, obtaining credit insurance or through factoring of all or part of accounts receivables. Our credit policy does not require credit limits on accounts receivable created on letters of credit. To date, we have not experienced any material problems relating to customer payments. For a further discussion of our credit risk exposures, see Note 25 of the notes to our financial statements.