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DE DIOS & ASSOCIATES Focused on our clients objectives DRAM MARKET UPDATE March 2013 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 1

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DE DIOS & ASSOCIATES Focused on our clients objectives PC-DRAM March price increases are too steep and can upset the market balance. - Negative channel profit margins and demand elasticity can lead to lower spot prices - Buy ahead demand activity will slow - PC OEM profit margins at risk Evaluating the risks of a 2H seasonal downturn of PC-DRAM prices - Importance of perceptions of demand and price momentum PC Market Conditions 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 2

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DE DIOS & ASSOCIATES Focused on our clients objectives Revised 2013 bit production growth from 17% to 13-15% - Longer 2Xnm throughput reduces effective wafer capacity - 2Xnm ramp plateaus in Feb/Mar Revised demand growth for PCs and servers downward - Reduced PC-DRAM bit demand growth from 12% to 6-8% due to weaker Q213 PC builds - Reduced server-DRAM bit demand growth from 27% to 23% due to delay in Ivy Bridge platform release Mobile DRAM production crosses over PC-DRAM by mid-year - Mobile DRAM 2013 share: 34%, PC-DRAM share: 36% Higher prices and capital spending can change trend Market Developments 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 3

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DE DIOS & ASSOCIATES Focused on our clients objectives Spot price (channel cost) up 105% from Nov bottom to Mar 18 Run-rate profit margin down to -2% as of Mar 15 vs. recent high of 23% in Feb Resale Price up 45% since early Jan to compensate for higher cost Channel must return quickly to profit margin combination of higher resale and lower cost How inelastic is demand through channel? Spot Price Increases & DRAM Channel Margins Branded Module Cost, Resale & Profit Margin in DRAM Channel (Run Rate Basis) 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 4

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DE DIOS & ASSOCIATES Focused on our clients objectives Spot price can drop 10%-15% to $2.80-$3.00 (4Gb) just above current equiv. 4GB SODIMM OEM price Further spot price hikes raise risk of margin squeeze and elasticity Channel prices can cap rate of PC-DRAM price increase in Q213 Scenario of Return to Positive Channel Margins DRAM Channel Resale & Spot Price Trend To Return to Reasonable Profit Margins 23% 0.8% increase or 18 cents per day 0.8% increase or 23 cents per day Reach resale price of $31.90 10% up from Mar 18 by Apr 3 Last reached in Aug 11 (42% margin) 33 cents per day increase since low margins 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 5

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DE DIOS & ASSOCIATES Focused on our clients objectives Scenarios and Risks ELASTICITY RISK MARGIN RISK 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 6

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DE DIOS & ASSOCIATES Focused on our clients objectives OEM and spot price hit relative parity since steep spot-price increase Deviation in March Spot price > OEM price Correction of spot price might cap OEM price increase in April PC-DRAM OEM vs. Spot Price Trends Trend of OEM and Channel Spot Price $23.40 $24.35 $26.00 $24.65 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 7

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DE DIOS & ASSOCIATES Focused on our clients objectives Current DRAM supplier concerns First, will prices drop by mid-year as in past 3 years? - Market inventory, weak demand If not, will capital spending increase and boost 2Xnm ramp and bit production growth? - How much capex and how soon will be effect? - 2Xnm ramps: faster Hynix, Elpida, Powerchip, Inotera, and Micron Will 2013 Price Trend Break 3-Year Seasonality? Index of PC-DRAM Price/GB (Base = Jan) 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 8

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DE DIOS & ASSOCIATES Focused on our clients objectives Updated Forecast of DRAM Market Conditions ALL DRAM Demand & Production Trend PC DRAM Demand & Production Trend Potential D-P Ratio Downward Revision: Weaker Demand, Stronger Production Inventory release 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9 Does not include Inventory and Buy Ahead Activity

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DE DIOS & ASSOCIATES Focused on our clients objectives Scenario 1: Estimated DRAM Inventory Est. PC DRAM Supplier Inventory Trend, 2012-2013 Est. PC DRAM Market Inventory Trend, 2012-2013 OEMs + DRAM Channel Inventory release Buy Ahead Maintain 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 10

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DE DIOS & ASSOCIATES Focused on our clients objectives Scenario 1: DRAM Market Conditions ALL DRAM Market Conditions With Buy Ahead and Inventory Considerations PC DRAM Market Conditions With Buy Ahead and Inventory Considerations Market Inventory release Buy Ahead Supplier Inventory release 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 11

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DE DIOS & ASSOCIATES Focused on our clients objectives Scenario 2: DRAM Market Conditions ALL DRAM Market Conditions With Buy Ahead and Inventory Considerations PC DRAM Market Conditions With Buy Ahead and Inventory Considerations Buy Ahead Market Inventory release 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 12

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DE DIOS & ASSOCIATES Focused on our clients objectives Scenario 2: Estimated DRAM Inventory Est. PC DRAM Supplier Inventory Trend, 2012-2013Est. PC DRAM Market Inventory Trend, 2012-2013 OEMs + DRAM Channel Inventory release Buy Ahead 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 13

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DE DIOS & ASSOCIATES Focused on our clients objectives Forecast of 4GB SODIMM Price Scenario 1 Forecast of 4GB SODIMM Price, US$ Forecast of 4GB SODIMM Operating & Cash Margins CASH MARGIN OPERATING MARGIN 10%-27% Q213 25%-35% Q413 Boost Capex 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 14

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DE DIOS & ASSOCIATES Focused on our clients objectives Impact of PC-DRAM Price Forecast Average DRAM Cost/PC and its % of PC BOM PC-DRAM Spend, Millions of USD 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 15

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DE DIOS & ASSOCIATES Focused on our clients objectives PC-DRAM Price Tables 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 16

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DE DIOS & ASSOCIATES Focused on our clients objectives DRAM Industry Financial Trends 3/21/13 DRAM Operating Profit, 2006-2013 Millions of US$ 2013 is a forecast. DRAM Revenue and Capital Spending, 2004-2013 20% 19%. 22%. 42%. 67%. 49%. 58%. 44% of Revenue. 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 17

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DE DIOS & ASSOCIATES Focused on our clients objectives Revised server DRAM demand growth down to 23% - Delayed and slow releases of Ivy Bridge platforms DRAM demand at parity w/ production in Q213 and above production in 2H13 - Server DRAMs feed off the production line, not inventory - Compete with profit margins of PC & mobile DRAMs Short term 4Gb supply issues due to mobile and GDDR5 demand 8GB and 16GB RDIMM prices likely to be higher than previous forecast to compete against PC and mobile allocations 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 18 Major Server DRAM Developments

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DE DIOS & ASSOCIATES Focused on our clients objectives 8GB 2Rx4 RDIMM Prices Scenario 1 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 19 Forecast of 2Gb-based 8GB RDIMM Prices Operating Margins: 8GB 2R RDIMM v. 4GB SODIMM

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DE DIOS & ASSOCIATES Focused on our clients objectives 16GB & 32GB RDIMM Prices Scenario 1 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 20 Forecast of 16GB RDIMM Prices vs. other RDIMMs Operating Margins: 8GB 2R RDIMM v. 16GB RDIMM

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DE DIOS & ASSOCIATES Focused on our clients objectives The Premium for Performance & Chipkill 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 21 Premium for System Memory Bandwidth & ChipkillComparison of Supplier Operating Margins

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DE DIOS & ASSOCIATES Focused on our clients objectives RDIMM Price Tables 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 22

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DE DIOS & ASSOCIATES Focused on our clients objectives Strong smartphone DRAM demand but growth rate slowing in 2H 2013 - Inventory correction of low-cost China smartphones Tablet memory core shifting to 40% of bit shipments - Competition from DDR3L-RS Mobile DRAM Market Developments 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 23

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DE DIOS & ASSOCIATES Focused on our clients objectives Smartphone DRAM Demand Trend 3/21/13 Components of Smartphone DRAM DemandGbit Demand from Smartphones 17% Q/Q 23% Q/Q 12% Q/Q 26% Q/Q 54% Q/Q 5% Q/Q 10% Q/Q 11% Q/Q 37% Q/Q 22% Q/Q 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 24

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DE DIOS & ASSOCIATES Focused on our clients objectives Limited Sources of S-Phone DRAM Demand Growth 3/21/13 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 25

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DE DIOS & ASSOCIATES Focused on our clients objectives In