LG "Recognition of Intellectual Property Rights" - SK "Expansion of Investment"

Settlement Payment of 2 Trillion Won Confirmed
500 Billion Won Cash Paid Annually Until Next Year
1.5% Royalty on Sales for 5-6 Years
Moon "Expect to Lead Eco-Friendly Electric Vehicle Industry"

[Asia Economy Reporter Choi Dae-yeol] LG Energy Solution and SK Innovation, which concluded a battery war lasting over two years, finalized the payment method for a settlement amount worth approximately 2 trillion won on the 12th. SK Innovation will pay a total of 1 trillion won in settlement money by paying 500 billion won annually from this year through next year, and from 2023 onwards, will pay a certain portion of sales as royalties.

LG Energy Solution and SK Innovation disclosed the payment method related to the battery dispute settlement through their respective public announcements. ▷Related article on page 5

According to the disclosures made by the two companies on the day, SK agreed to pay LG 2 trillion won on the condition of withdrawing all domestic and international disputes, including the U.S. International Trade Commission (ITC) lawsuit, and not filing any lawsuits for the next 10 years. Based on current value, SK will pay 500 billion won each in this year and next year, and from 2023, will pay royalties annually calculated as a certain portion of global sales in the battery sector.

Regarding the royalties, based on the 2023 monetary value, the industry expects it to take about 5 to 6 years to reach 1 trillion won. Although the specific royalty calculation method was not disclosed, considering that the company's battery order backlog was estimated at about 70 trillion won as of early this year, it is presumed that the payment is around 1.5% of sales.

Kim Jong-hyun, President of LG Energy Solution, stated in an internal message on the day, "Being recognized for the battery intellectual property accumulated through over 30 years of investment and being legally protected is above all a great achievement."

Kim Jun, CEO of SK Innovation, also said in an email to employees, "This agreement has resolved uncertainties regarding the growth of the battery business and the U.S. market," adding, "We can now accelerate the construction of the U.S. Georgia plant."