DRAM MARKET UPDATE September 2014 © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Major Market Developments Strange situation: demand is weakening while supply remains tight Weakening PC-DRAM demand and supply mix issues in 2H14 Downward revisions of previously strong 2H14 PC unit builds PC OEMs have enough support Falling channel prices – excess supply in secondary PC market More difficult mix decisions for suppliers in 1H 2015 Uncertain application markets and changing customer ranking Market conditions in the new stage of the DRAM market Return of bit growth momentum New stage/ conditions  new pricing trends A © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Change in PC Unit Builds Changes in PC Unit Build Forecast Trend of PC Unit Builds (Sep ‘14 forecast) Q214  Q314 Change in growth From 14%  10%  8% © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

PC OEM Inventory Has Bottomed Est. PC OEM DRAM Inventory Indicates that PC companies have enough 2H14 supply Borderline supply chain efficiency Not enough user inventory to direct DRAM prices Falling channel prices indicate excess supply in some PC markets © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Falling 4GB SODIMM Channel Prices 14% reduction of channel cost from 2H Jul to 2H Sep No major change in resale prices No significant changes in reseller shares KTC, others still short shipping orders Limited uneven supply to resellers – falling reseller inventory Excess supply in secondary PC market © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Channel Prices Have Fallen to OEM Levels Channel prices have fallen to and below many OEM contract prices Resellers forced to respond to lower Kingston prices Lower prices force resellers to trim inventory and reduce purchases Reaction of OEM prices High prices moving down Low prices affected by demand Supplier production growth still slow and inventory low Limits to profit-based allocation methods by suppliers © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Other DRAM Demand Markets Server DRAM demand still increasing linearly Cautious buildup of DDR3 user inventory as market shifts to DDR4 Higher Q414 DDR4 prices for upsides, order changes, and new orders Attempting to raise DDR3 prices to reduce DDR4 premium Mobile DRAM market: Minor changes in outlook but uncertainty still high Potential overbuild of China phones – lower production/cut set prices iPhone 6 – strong initial orders with IOS-8 issues Seasonally slowing graphics and consumer demand in Nov/Dec DRAM companies will have a more difficult time managing mix © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

DRAM Production Changes DRAM Production Change: Quality of Supplier Base Support Growth momentum returning to DRAM supply SK Hynix supply improvement within Q414 – 25nm transition Micron supply improvement between Q414 (25nm) and Q1/Q215 (20nm) Samsung slowing maturing transition. Improvement in Q215 with 21 nm and L17 start © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Allocating Supply to a Changing User Base Top Users’ Demand Share of 2014 DRAM Industry Production Top 5 users make up 40% of supplier allocations Next shift in user ranking Low cost China phone makers Hyperscale datacenter cos. And specialized server OEMs Greater concentration of users in future with industry consolidations © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Near Term Outlook of DRAM Market Conditions All DRAM Market Conditions Trend of All DRAM Supplier Inventory D/P Ratio assumes perfect product-mix, deliveries, and quality and excludes effect of inventory. Real balance is approximately at ratio of 0.95 © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

DRAM Market Conditions – Major Products PC/Server DRAM Market Conditions Mobile DRAM Market Conditions © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Price Changes PC DRAM Prices RDIMM prices LPDDRx prices Differences in price plans across suppliers Pressure on high end and low end Encountering elasticity issues RDIMM prices Reconciliation of relative prices of a 4Gb in RDIMM v. SODIMM Price for transition to DDR4 while preserving profit margin Price to set up 32GB (DDR4) as mainstream density LPDDRx prices Return to price reductions Reconcile profit margins of LPDDRx v. DDR3 Transition to the LPDDR4 © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

4GB SODIMM Price Outlook 4GB SODIMM OEM Price Forecast High end prices pressured by competitive channel prices Low-end prices pressured by weakening PC builds and adequate user inventory © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Interaction of LPDDRx & SODIMM Prices Mainstream LPx v. SODIMM Price Equivalency Green arrows represent market tendency. Weaker SODIMM prices in 1H15 justify lower LP3 price to where LP2 is today LP4 likely to occupy previous LP3 price position relative to SODIMM price range CURRENT 8GB LP3 PRICE RANGE CURRENT 8Gb LP2 PRICE RANGE CURRENT 4GB SODIMM PRICE RANGE © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

8Gb LPDDR2 and LPDDR3 Price Forecast 8Gb LPDDR3 & LPDDR2 Average Price Trend 8Gb LPDDR3 & LPDDR2 Low Price Trend © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

16Gb LPDDR2 and LPDDR3 Price Forecast 16Gb LPDDR3 & LPDDR2 Average Price Trend 16Gb LPDDR3 & LPDDR2 Low Price Trend © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Interaction of RDIMM & SODIMM Prices Mainstream RDIMM v. SODIMM Price Equivalency Blue arrow represents supplier intention. Green arrows represent market tendency. Weaker SODIMM prices shift more mix to DDR3 RDIMM Lower DDR4 prices shift more mix to DDR4 RDIMM Q414 DDR4 RDIMM PRICE RANGE CURRENT DDR3 RDIMM PRICE RANGE CURRENT SODIMM PRICE RANGE © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

16GB DDR3 RDIMM Price Outlook 16GB DDR3 RDIMM OEM Price Forecast Relative 4Gb Price in RDIMM v. SODIMM © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

16GB DDR4 RDIMM Price Outlook 16GB DDR4 RDIMM OEM Price Forecast DDR4 v. DDR3 RDIMM Operating Margins 16GB DDR4 RDIMM Average and Range of OEM Contract Prices 10-15% Premium 24-35% Premium 10% Premium 16GB DDR3 RDIMM Average Contract Price © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

32GB DDR4 RDIMM Price Outlook 32GB DDR4 RDIMM OEM Price Forecast DDR4 v. DDR3 32GB RDIMM Operating Margins 32GB DDR4 LRDIMM Average and Range of Contract Prices 8Gb-based In 1H15 10% premium Q115 2 x 16GB DDR4 RDIMM Avg. Contract Price 32GB DDR3 LRDIMM Average Contract Price © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Forecast of DRAM Market Conditions 32% Growth ‘15-’16 27% Growth ‘14-’15 24% Growth ‘13-’14 21% Growth ‘15-’16 23% Growth ‘14-’15 24% Growth ‘13-’14 Ratios assume perfect mix, deliveries, and quality. Real market can balance at a ratio around 0.95. © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014

Major DRAM Market Drivers DRAM Bit Production Drivers DRAM Bit Demand Drivers © 2014 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 9/30/2014