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

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

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

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

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 $ % 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

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

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 $ /21/13 © 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 7

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DE DIOS & ASSOCIATES Focused on our clients’ objectives  Strong smartphone DRAM demand but growth rate slowing in 2H Inventory correction of low-cost China smartphones  Tablet memory core shifting to <$ ” display products - Branded and MID price competition - Issues adding HW features in low cost, low form-factor product - Positioning of the PC tablet and the 9-10” media tablets  Expect wide range of LPDDR3 prices because of pervasive use in high-end and low-end of smartphone market  More aggressive LPDDR3 prices in mid-range tablets in Slowing mobile-DRAM demand growth: 42% from ‘13-’14 - Excess overall DRAM supply environment in 1H Dependence on mobile DRAM for >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

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

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

DE DIOS & ASSOCIATES Focused on our clients’ objectives  In <$200 segment, branded price average list price of $189 v. MID avg. of $154  MID competing against “razor/razor-blade” pricing?  Issues advancing HW features in low-cost, small form-factor product <$200 7”: Core of the Media Tablet Market 3/21/13 <$200 $200 - $299$300 - $399 © 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 26

DE DIOS & ASSOCIATES Focused on our clients’ objectives  LPDDR2 vs. DDR3/L decision based on: cost, PCB space constraints, power & bandwidth needs  DDR3/L usage in MIDs and <$300 media tablets (cost)  DDR3/L usage in >$800 PC tablets (bandwidth) Current DRAM Technology Use in Tablets LPDDR3 3/21/13 Source: March 2013 Tablet Database, DE DIOS & ASSOC. © 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 27

DE DIOS & ASSOCIATES Focused on our clients’ objectives  LPDDR2 flattens out as volumes decrease unless costs match LPDDR3  DDR3L decreases with excess production conditions in 1H 2014  DDR3L-RS premium of 20  15% for x32 and 10  5% for x16  LPDDR3 decreases aggressively to compete with DDR3L-RS x32 Price Trend of DRAMs for Tablets 4Gb Equivalent Price of DRAMs for Tablets 3/21/13 © 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 28

DE DIOS & ASSOCIATES Focused on our clients’ objectives Relative Operating Margins of DRAMs 3/21/13 © 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 29 Supplier Operating Margins: LPDDR3 vs. DDR3/L x16

DE DIOS & ASSOCIATES Focused on our clients’ objectives Projected 2014 DRAM by Tablet Segment 3/19/2013 © 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 30

DE DIOS & ASSOCIATES Focused on our clients’ objectives Price Forecast of DRAMs for Tablets 3/21/13 © 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 31

DE DIOS & ASSOCIATES Focused on our clients’ objectives  We are now again in the pricing frenzy stage of a supply-driven price upturn. Will DRAM companies overdo it once more? - Risks of weaker demand  With buy ahead inventory, there is probably enough supply for all OEMs in the 2H market - Perception and weak demand can change direction and momentum of prices  The peak price is not as big a problem for the DRAM industry as the rate of price increase  DRAM companies need to decide on whether they want a new pricing system or more of the old Conclusions 3/21/13 © 2013 DE DIOS & ASSOCIATES. ALL RIGHTS RESERVED. Reproduction prohibited without prior permission. 32