2011 02-15 6665.t (goldman sachs) asia technology- integrated electricals_ dram game rul...t mobile...

February 15, 2011

Asia: Technology: Integrated Electricals

Equity Research

DRAM game rules: A close look at mobile DRAM implications

Rapid mobile DRAM volume growth to benefit Elpida, Hynix & SEC

We continue to expect mobile DRAM (narrowly defined, 1GB equivalent) to

grow to 2.0 bn in 2011 and 3.8 bn in 2012 from 0.9 bn in 2010 driven by

adoption into high-grade CPU smartphones and tablet PCs. Mobile DRAM

prices are stable, which is likely to be positive for the share prices of DRAM

makers with higher mobile DRAM exposure in DRAM down-cycles and

early stages of recovery. We see the best gains going to Elpida Memory

(6665.T, Buy), Samsung Electronics (005930.KS, Buy), and Hynix

(000660.KS, Neutral).

We think mobile DRAM standardization is about two years off

Unlike the PC CPU market, there are no dominant CPU suppliers yet for

smartphones and tablet PCs. Our view is it will take another two years for a

mobile DRAM standard to emerge (for a spot market to be established and

expand). Yet we think the needs of end-product and memory module

makers will spur CPU makers to gradually gravitate around a standard, and

so the mobile DRAM market will come to resemble the PC DRAM market.

Overall DRAM supply/demand may be a little tighter than market expects in 2012

We estimate mobile DRAM made up 4% of total DRAM supply in 2010. In

the next two years, we think total DRAM bit supply will grow only 40%-50%

yoy, and on this basis, we expect mobile DRAM demand to make up 7% of

total demand in 2011 and 12% in 2012. In this scenario, our calculations

show 45% growth in DRAM supply outside of mobile DRAM in 2011 and

37% growth in 2012, so while mobile DRAM is unlikely to be the driver of

overall DRAM supply/demand, it may well be a supportive factor.

Long-run, above-market mobile DRAM growth scenario not viable

Some believe mobile DRAM demand will enjoy self-sustained rapid

growth, but we think growth may well return to the level of other DRAM

uses after a rapid-growth stage in the next few years. Mobile DRAM

capacity per end-product tends to grow in conjunction with increases in

CPU processing power, but we think this upward trend in CPU processing

power could slow if handsets and tablets are more regularly used in a

cloud environment. From a systemic standpoint, we think handset

development is unsustainable if it is not accompanied by development in

mobile networks and data centers.

RATING AND TARGET PRICE

Note: Stock price as of 2/14/2011

Source: GS Research estimates

WHAT IS MOBILE DRAM?

Mobile DRAM is used in mobile phones in ways that are

different from the memory modules in conventional

notebook PCs. In this report, we use mobile DRAM in the

narrowly defined sense of low-power DRAM, which differs

technically from PC DRAM.

RELATED RESEARCH

Elpida Memory (6665.T) Buy: Confirming DRAM game rules:

timeframe important (Apr. 7, 2008)

Elpida Memory (6665.T) Buy: Up to Buy on view that 3Q3/11

was the earnings floor (Jan. 21, 2011)

Ikuo Matsuhashi, CMA +81(3)6437-9860 [email protected] Goldman Sachs Japan Co., Ltd.

The Goldman Sachs Group, Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification, see the end of the text. Other important disclosures follow the Reg AC certification, or go to www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Michael Bang +82(2)3788-1655 [email protected] Goldman Sachs (Asia) L.L.C., Seoul BranchTaichi Yoneya +81(3)6437-9976 [email protected] Goldman Sachs Japan Co., Ltd. Marcus Shin +82(2)3788-1154 [email protected] Goldman Sachs (Asia) L.L.C., Seoul Branch

The Goldman Sachs Group, Inc. Global Investment Research

Rating Stock Price Target Price

6665.T Elpida Memory B ¥ 1,262 ¥ 1,400005930.KS Samsung Electronics B W 953,000 W 1,110,000000660.KS Hynix Semiconductor N W 29,700 W 25,000

February 15, 2011 Asia: Technology: Integrated Electricals

Goldman Sachs Global Investment Research 2

Summary

• Mobile DRAM is garnering more attention than ever.

• Sustainability of growth: We think the next year or two will be a period of high growth

for mobile DRAM given the increasingly high performance of cellphone CPUs and the

use of mobile DRAM in tablet PCs. Medium term, we think mobile DRAM growth may

fall into line with demand for other products once this high-growth period ends.

• Pricing: We expect mobile DRAM pricing to vary from PC DRAM pricing over the next

two years or so. We think mobile DRAM pricing will be determined through

transactions between DRAM and finished equipment makers, not on a spot market.

This means that DRAM makers should be able to secure stable margins by lowering

prices nearly in line with the cost-cutting curve. We note, however, that prices may

standardize over the medium term.

• Impact on overall DRAM market supply/demand: Mobile DRAM is beginning to have a

positive impact on overall DRAM supply/demand, though we do not see it having a

decisive impact.

• The view on mobile DRAM in the capital markets: We see the capital markets’ view of

mobile DRAM gradually becoming more fixed. Specifically, we think high exposure to

mobile DRAM will be a positive for the share prices of DRAM makers during a

downward trend in the mainstream PC DRAM cycle and the initial stages of a recovery.

If a full-scale recovery in PC DRAM were to occur, the market’s focus would

presumably shift to margin expansion, and as a result mobile DRAM stability might

not be seen as that important.

• We highlight Elpida, Hynix, & SEC: Among major DRAM makers, Elpida and Hynix

have the highest exposure to mobile DRAM, which accounted for roughly 20% of

overall sales in 3Q3/11 (or 4QCY10). Although we estimate that SEC accounted for

50% of mobile DRAM supply in 2H10, the diversified nature of SEC’s earnings

structure limits overall revenue and earnings contribution from mobile DRAM (we

estimate that mobile DRAM accounted 2.5% overall revenue in 4QCY10). Nevertheless,

robust mobile DRAM growth should be positive for SEC but as a supplementary driver

of earnings rather than a decisive driver.

Elpida Memory: Scope to price in earnings recovery momentum and spot price improvement

We reiterate our Buy rating on Elpida. We expect a sharp earnings recovery and see scope

for this to be priced into the shares. We see a good likelihood that the shares will rebound

in 1Q2011 on a combination of: (1) changes in the company’s product mix (a shift to 40-nm

products and mobile DRAM); (2) other company-specific factors we see driving profit

growth, including the waning impact of inventory valuation losses and the disappearance

of the need to post allowances for uncollectable accounts; and (3) the likelihood that DRAM

spot prices have already hit bottom. Our 12-month price target of ¥1,400 is based on a P/B

of 1.1X, derived from P/B-ROE correlation, and our FY3/12 estimate. Risks include DRAM

spot price trends and a capital raise in the event of a negative market reaction to the

announcement of losses.

Samsung Electronics: Staying bullish based on a diversified earnings model, new earnings growth potential

We reiterate our Buy rating and bullish stance on Samsung Electronics in light of its

diversified earnings model, which is not limited to DRAM but also encompasses NAND,

AM OLED, smartphones, and Digital Media. Our Buy also takes into consideration its

potential for new earnings growth. Our Director’s Cut-based 12-month price target is



W1,110,000, which equals an EV/EBITDA of 6.1X and P/B of 1.9X on our FY12/11 estimates.

Risks include DRAM spot price trends, lower smartphone margins, and new business

execution risk.

Hynix: Share price could rise on near-term DRAM price bottom

We maintain our Neutral rating, but note that the shares could rise near term on signs that

DRAM prices have bottomed. Our Director’s Cut-based 12-month price target is W25,000,

which equals an EV/EBITDA of 4.2X and P/B of 1.7X on our FY12/11 estimates. Risks include

DRAM spot price trends, changes in the rate of growth in DRAM capacity per PC, and sharp

forex swings.

Our view on DRAM spot prices

As of January 28, DRAM spot prices had rebounded over 20% from a January 24 low. This

is in line with our view that DRAM spot prices tend to rebound during periods of low PC

demand contrary to most expectations. This was noted in our January 21 report (Up to Buy on view that 3Q3/11 was the earnings floor), and we expect a rebound in 1Q2011.

We expect an extremely brief leveling off in DRAM prices after the Chinese New Year

holidays, but see scope for a more bullish stance in February-March.

Exhibit 1: Spot prices rebounded over 20% from mid-January low

1Gb DDR2/DDR3 ETT/UTT DRAM spot prices

Source: DRAMeXchange(Trendforce), Goldman Sachs

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1Gb DDR2 ETT/UTT 1Gb DDR3 ETT/UTT

DDR2 1Gb ETT/UTT

180-day mov. ave.

DDR3 1Gb ETT/UTT

180-day mov. ave.

48% rebound 35%

rebound

(US$)

100% rebound

72% rebound

150% rebound

51% rebound



1. Mobile DRAM commoditization is probably still two years off

(1) Industry standard for mobile DRAM looks to be some way off

Emergence of a mobile DRAM standard looks to be some way off: In mainstream PCs, Intel

is the dominant CPU supplier and sets the standards for PC DRAM. All PC makers are

comfortable using any Intel-certified DRAM product. Unlike the mainstream PC market,

however, the mobile CPU market for smartphones and tablet PCs are still far from

becoming dominated by a few major CPU suppliers. Considering this, we believe an

industry-wide standard for mobile DRAM is unlikely to emerge soon.

Spot markets are often not viable without a commoditization: One way to view the PC

DRAM market is to recognize the importance of standards in enabling suppliers to produce

DRAM and sell to buyers. Put differently, the PC DRAM market is not one where there is

much risk of DRAM suppliers running out of product supply. In markets where there are

customized and semi-customized products, however, spot markets are usually not viable.

Less price volatility than PC DRAM: As mobile DRAM products are non-standard, we think

prices will be set through negotiations with specific clients, sheltering prices from the

impact of spot price and outside transaction price effects and reducing price volatility. On

the flipside, mobile DRAM is unlikely to earn operating margins close to the nearly 40% on

PC DRAM at the peak of the PC cycle. While there are fewer uncontrollable price declines

with this structure, there are also fewer double-digit (%, yoy) price increases.

Exhibit 2: Market share of CPUs for smartphone less concentrated vs. PCs

CPU shares: PCs vs. mobile phones (2010 estimates)

Source: Goldman Sachs Research

Intel

AMDOthers

PC

Apple/Samsung

Qualcomm

Texas Instruments

Marvell Infineon Broadcom Nvidia

Tablet PC

Qualcomm

Texas Instruments

MediatekST-Ericsson

Infinion

Broadcom

Samsung

MarvelRenesas

NvidiaOthers

All handsets (inc. baseband)

Texas Instruments

Samsung

Qualcomm

MarvelRenesas

NvidiaOthers

Smartphone (excl. baseband)



(2) Mobile DRAM unlikely to remain customized in longer run

However, we think mobile DRAM standards will gain traction over time for three reasons.

a) Clients favor standardized products: Dealing with custom products is time consuming

for end-product makers. In particular, we think it is easier for the Taiwanese EMS

companies to use standard products.

b) Memory board makers aim to strike back: An increase in direct shipments by DRAM

makers to end-product makers would likely mean fewer business opportunities for

memory board makers in Taiwan and elsewhere. We think memory board makers will

seek to counter this by procuring CPUs and DRAMs on their own and supplying end-

product makers with package-on-package (PoP) products. We would consider such a

scenario to be a move toward a de facto standard in mobile DRAM.

c) Emergence of dominant mobile CPU suppliers would likely lead to standardization:

We think a standardized mobile DRAM could emerge if market share became much

more concentrated among a few mobile application CPU suppliers, such as Qualcom.

Nevertheless, we think it will take around two years before the aforementioned dynamics

form the mainstream in mobile DRAM.

Exhibit 3: Elpida and Samsung Electronics are ahead of the pack

DRAM majors – progress with mobile DRAM

Note: The definition of mobile DRAM may not be consistent across companies.

Source: Discussions with companies.

Company Status

Elpida

Elpida currently produce non-PC DRAM (including mobile DRAM) in Hiroshima plant (130K/mo). In Oct-Dec 2010, 50%+ wafer input in the plant (65-70K/mo) was for mobile DRAM. Elpida expects this to rise to 60-70% by mid-2011. Once mobile DRAM production reaches the maximum capacity at the Hiroshima plant, it's likely to produce mobile DRAM at Rexchip in Taiwan.

Samsung ElecSEC produces mobile DRAM in line 13 and some other lines. Mobile DRAM accounts for high-teen%+ of SEC's total wafer wafer input (65-70K/mo) in Oct-Dec 2010. It expects the ratio to be around 20% in Mar 2011 Q and mid-20% by the end of Dec-2011.

HynixHynix produces mobile DRAM in M10. Mobile DRAM accounts for mid-teen%+ of Hynix's total wafer wafer input (40-50K/mo) in Oct-Dec 2010. It expects the ratio to be mid-20% by the end of Dec-2011.

Micron

Micron produces mobile DRAM in Japan and Verginia. Mobile DRAM accounts for 8-10%+ of SEC's total wafer wafer input (around 20K/mo) in Oct-Dec 2010. It doesn't disclose the target % in 2011, though it plans to increase mobile DRAM production in its Virginia plnat and Inotera in Taiwan.



2. Long-run outlook for mobile DRAM demand

(1) Mobile DRAM to grow to 3.8 bn 1GB-equivalent units in 2012

We continue to expect mobile DRAM (low-power DRAM) in 1GB equivalent units to grow to

2.0 bn in 2011 and 3.8 bn in 2012 from an estimated 0.9 bn in 2010. We think the main

drivers of this growth will be the use of mobile DRAM in cell phones with high-

performance CPUs and tablet PCs.

Mobile DRAM is used in mobile phones in ways that are different from the memory

modules in conventional notebook PCs. In this report, we use mobile DRAM in the

narrowly defined sense of low-power DRAM, which differs technically from PC DRAM.

Exhibit 4: DRAM Market by Application

Differences between broadly and narrowly defined mobile DRAM

Source: IDC, Goldman Sachs

(2) Mobile DRAM growth to be supportive of PC DRAM prices

We estimate mobile DRAM will consume about 4% of total DRAM supply in 2010. In the

next one or two years, we think total DRAM bit supply is likely to grow only 40%-50%. On

this basis, we think mobile DRAM demand could make up 7% of the overall DRAM market

in 2011 and 12% in 2012. In this scenario, our calculations show 45% bit supply growth in

DRAM supply outside of mobile DRAM in 2011 and 37% growth in 2012. We do not think

mobile DRAM will determine overall DRAM supply/demand, but it may well be supportive.

GS Est. (CY2010)

IDC Est.(CY2010)

Gartner Est.(CY2010)

DRAMeXchange Est.(CY2010)

PC/Server

Mobile

Tablet PC

Others



Exhibit 5: Mobile DRAM may account for 12% of total DRAM supply in 2012

Comparison of mobile DRAM demand and total DRAM supply

Note: DRAM total supply = 100%

Source: WSTS (SIA), Goldman Sachs Research estimates.

(3) Our longer-run view

We think mobile DRAM demand growth will taper off after a while for two reasons.

• Slower mobile CPU spec upgrade cycles: Processing power in CPUs for cell

phones/smartphones is rapidly catching up to that of PC CPUs and moving closer to

the cutting-edge. By contrast, we expect mobile CPU advances to be slow. Use of cell

phones/smartphones in a cloud environment would mean less pressure to keep

upgrading CPU processing power at the current pace, and we think consumers would

instead be likely to seek improved battery life. We think the smartphone segment is

moving toward a phase where the frequency of Android OS upgrades will slow down

(they are currently almost non-stop).

• Mobile phones are unlikely to advance alone without attendant advances in computer

and network systems: One feature common to all kinds of systems is that overall

system performance does not improve with a partial system upgrade. A lopsided

approach creates bottlenecks that need to be eliminated. We therefore think mobile

networks and data center (server) specifications will need to be upgraded over time to

keep up with rapid handset advances. As a result, we think the ratio of mobile DRAM

to total DRAM shipments is unlikely to continue climb over the longer term.

0%

20%

40%

60%

80%

100%

DRAM supply Mobile DRAM demand



2010 2011 2012



Exhibit 6: Scenario analysis: Mobile DRAM demand

Scenario analysis: mobile DRAM demand

Source: Goldman Sachs Investment Research

Exhibit 7: Mobile DRAM to grow sharply in 2011-2012, and then move in line with average of PC DRAM growth

Main scenario for mobile (low-power) DRAM unit demand growth (1GB equivalent basis)

Source: Company Data, Goldman Sachs Research estimates

Exhibit 8 shows our forecasts and Elpida’s projection of potential mobile DRAM demand.

Smartphone (mn unit) 300 400 500 600

Tablet PC (mn unit) 20 60 80 100

↓ ↓ ↓ ↓

Average Volume Mobile DRAM Demand (per 1Gb)

1Gb = 0.125GB 320 460 580 700 ←DRAM contents in 1st generation iPad

2Gb = 0.250GB 640 920 1160 1400 ←DRAM contents in iPhone4

3Gb = 0.375GB 960 1380 1740 2100

4Gb = 0.500GB 1280 1840 2320 2800

6Gb = 0.750GB 1920 2760 3480 4200

8Gb = 1.000GB 2560 3680 4640 5600 ←DRAM contents in netbook in 2010

12Gb = 1.500GB 3840 5520 6960 8400

16Gb = 2.000GB 5120 7360 9280 11200 ←DRMA contents in low-end PC In 2010

CY2010CY2011

CY2012

OptimisticScenario

Main Scenario

(Exhibit) Mobile DRAM Market Size

(CY) 2010 2011 2012 2013-15

Mobile DRAM demand(mn, 1Gb based)...(a) 852 1,980 132% 3,830 93%

Smartphone (mn unit) 280 400 43% 500 25%

DRAM contents per box (GB) 0.36 0.53 45% 0.78 48%

Tablet PC (mn unit) 20 60 200% 100 67%

DRAM contents per box (GB) 0.25 0.63 150% 0.91 46%

*DRAM Production Volume (mn, 1Gb based)...(b) 15,145 22,718 50% 32,940 45%

(a)÷(b) 6% 9% 12%

Contents per box growth could potentially slow down. As a result, its growth rate will normalize to DRAM industry average.



Exhibit 8: Mobile DRAM demand forecasts

Our 2010-2012 forecasts and Elipda’s projections of potential mobile DRAM demand

Source: Company data, Goldman Sachs Research estimates.

3. Mobile DRAM technology

MCP are being joined by combinations of a NAND stacked chip with

a CPU/DRAM PoP

Cellphone DRAM usage entered its initial growth phase around late-1990s, spurred by

second-generation multichip packages (MCPs). The takeoff of smartphones has accelerated

the process. Current high-end smartphones use package on package (PoP), where CPU

chips (packages) and DRAM chips (packages) are incorporated in a third package.

Exhibit 4 shows the example of a NAND stacked chip with a PoP incorporating a CPU and

low-power DRAM. Other patterns include a high-capacity NAND stacked chip, which is

what the iPhone uses. Many other smartphones use a low-capacity NOR flash with a NAND

memory card. By using a memory card, a cellphone maker can avoid NAND price risk and

hold down the total product cost.

0

100

200

300

400

500

600

700

800

GS Elpida GS Elpida GS Elpida

2010E 2011E 2012E

(CY2010=100)



Exhibit 9: Requirements changing as cellphones become more sophisticated and shift to smartphones

Differences between MCPand PoP

Note: Boxes in dotted line are bear die. Boxes in straight line are single-unit chip.

Source: Goldman Sachs Research

Exhibit 10: MCP stacks die chips in one package. PoP stacks packages.

MCP and PoP comparison

Source: Elpida Memory

LPDRAM (Low-power DRAM) features

Mobile DRAM generally has the following features.

• Partial Array Self Refresh: Only the DRAM memory cells that need to retain data

are refreshed. A mobile RAM usually has four banks, of which two, or one, are

refreshed. This reduces the electric current. However, data is not saved in cells that

are not refreshed.

High Functioning Trend

MCP MCP POP +

1st Generation 2nd Generation NOR&Memory Card Stack chip

NOR(Bear die)

NAND(Bear die)

NORMemory

cardLayer of multiple

NAND chips

Pseudo SRAM(Bear die)

DRAM(Bear die)

LP DRAM

CPU CPU CPU

POP +

LP DRAM

CPU

PoP(Package on

Stacked chip

MCP(Multi chip Package)

MCP(Multi chip Package) PoP(Package on Package)



• Deep Power Down (DPD): When a device is not being accessed for a long time,

power consumption can be reduced by the use of DPD mode, which turns off all

input buffers except the clock and clock enable.

• Temperature Compensated Self Refresh (TCSR): The surrounding temperature is

gauged by temperature sensors in the device, which make adjustments at

appropriate intervals for the temperature level, thus curbing electric power

consumption. Previously, temperature resistors had to be reprogrammed from

outside to change the refresh cycle.

LP DRAM advantage depends on shrinkage and cost factors such as

yield

Mobile DRAM catalog specs are broadly similar. Ultimate competitive advantage will

depend on progress in areas such as shrinkage. The custom specifications of mobile DRAM

are mostly similar. What ultimately decides which product succeeds and which do not is

the speed of migration to finer design rules. As of end-2010, Elpida’s chip volume

shipments in 4Xnm mobile DRAM were roughly 16% and 32% greater than its two largest

rivals, respectively.

Exhibit 11: DRAM demand outlook by application

Comparison of our estimates and research company forecasts

GS est. to be updated.

Source: Goldman Sachs Research, IDC, Gartner

70% 67% 67%75% 74% 74% 75% 72% 73% 75% 76%

6% 8% 9%

9% 9% 10% 8% 13% 13% 13% 16%

0.4% 1.2% 1.2%

0.2% 0.3% 0.3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011E 2012E 2010 2011E 2012E 2010 2011E 2012E 2010 2011E 2012E

GS Est. IDC (12/2010 Est.) Gartner (11/2010 Est.)* Tablet Breakdown

Not Available

DRAMeXchange(1/2011 Est.)

* Tablet BreakdownNot Available

Others

Tablet PC

Mobile

PC/Server



Reg AC

We, Ikuo Matsuhashi, CMA and Michael Bang, hereby certify that all of the views expressed in this report accurately reflect our personal views about

the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly,

related to the specific recommendations or views expressed in this report.

Investment Profile

The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and

market. The four key attributes depicted are: growth, returns, multiple and volatility. Growth, returns and multiple are indexed based on composites

of several methodologies to determine the stocks percentile ranking within the region's coverage universe.

The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows:

Growth is a composite of next year's estimate over current year's estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate

of various return on capital measures, e.g. CROCI, ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividend

yield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book. Volatility is measured as trailing twelve-month volatility adjusted for dividends.

Quantum

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Disclosures

Coverage group(s) of stocks by primary analyst(s)

Ikuo Matsuhashi, CMA: Japan-Integrated Elec./Semicon, Japan-Telecom & IT Services. Michael Bang: Korea Technology.

Japan-Integrated Elec./Semicon: Elpida Memory, Fujikura, Fujitsu, Furukawa Electric, Hitachi, Hitachi Cable, Mitsubishi Electric, NEC, Oki Electric

Industry, Renesas Electronics, Rohm, Sumitomo Electric Industries, Toshiba, Yamaha.

Japan-Telecom & IT Services: Itochu Techno Solutions, Jupiter Telecommunications, KDDI, Nippon Telegraph & Telephone, Nomura Research

Institute, NS Solutions, NTT Data, NTT DoCoMo, Softbank.

Korea Technology: Hynix Semiconductor, LG Display, LG Electronics, LG Innotek Co., Samsung Electro-Mechanics, Samsung Electronics, Samsung

SDI Co., Samsung Techwin, Seoul Semiconductor.

Company-specific regulatory disclosures

The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companies

covered by the Global Investment Research Division of Goldman Sachs and referred to in this research.

Goldman Sachs beneficially owned 1% or more of common equity (excluding positions managed by affiliates and business units not required to be

aggregated under US securities law) as of the month end preceding this report: Hynix Semiconductor (W29,700)

Goldman Sachs has received compensation for investment banking services in the past 12 months: Hynix Semiconductor (W29,700) and Samsung

Electronics (W953,000)

Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Elpida Memory (¥1,278),

Hynix Semiconductor (W29,700) and Samsung Electronics (W953,000)

Goldman Sachs has received compensation for non-investment banking services during the past 12 months: Elpida Memory (¥1,278)

Goldman Sachs had an investment banking services client relationship during the past 12 months with: Elpida Memory (¥1,278), Hynix

Semiconductor (W29,700) and Samsung Electronics (W953,000)

Goldman Sachs had a non-investment banking securities-related services client relationship during the past 12 months with: Hynix Semiconductor

(W29,700) and Samsung Electronics (W953,000)

Goldman Sachs had a non-securities services client relationship during the past 12 months with: Elpida Memory (¥1,278), Hynix Semiconductor

(W29,700) and Samsung Electronics (W953,000)

Goldman Sachs has managed or co-managed a public or Rule 144A offering in the past 12 months: Hynix Semiconductor (W29,700)

Goldman Sachs (Asia) L.L.C., Seoul Branch is a liquidity provider for Equity Linked Warrants which has the company's stock as the underlier: Hynix

Semiconductor (W29,700) and Samsung Electronics (W953,000)

Goldman Sachs (Asia) L.L.C., Seoul Branch beneficially owned 0 Equity Linked Warrants which has the company's stock as the underlier as of the

close of business two business days prior to the current date for which it is acting as a liquidity provider: HANA DAETOO SECURITIES CO., LTD 0087

SAMSUNG ELECTRONICS CO., LTD. CALL.



Goldman Sachs (Asia) L.L.C., Seoul Branch beneficially owned 3529970 Equity Linked Warrants which has the company's stock as the underlier as of

the close of business two business days prior to the current date for which it is acting as a liquidity provider: HANA DAETOO SECURITIES CO., LTD

0801 SAMSUNG ELECTRONICS CO., LTD. CALL.








close of business two business days prior to the current date for which it is acting as a liquidity provider: DAISHIN SECURITIES CO., LTD. 0456



the close of business two business days prior to the current date for which it is acting as a liquidity provider: DAISHIN SECURITIES CO., LTD. 0C04



the close of business two business days prior to the current date for which it is acting as a liquidity provider: DAISHIN SECURITIES CO., LTD. 0E48



the close of business two business days prior to the current date for which it is acting as a liquidity provider: DAISHIN SECURITIES CO., LTD. 0G09












the close of business two business days prior to the current date for which it is acting as a liquidity provider: DAISHIN SECURITIES CO., LTD. 0H00















the close of business two business days prior to the current date for which it is acting as a liquidity provider: DAISHIN SECURITIES CO., LTD. 0C03










HYNIX SEMICONDUCTOR INC. CALL.


the close of business two business days prior to the current date for which it is acting as a liquidity provider: DAISHIN SECURITIES CO., LTD. 0D57



close of business two business days prior to the current date for which it is acting as a liquidity provider: HANWHA SECURITIES CO., LTD. 0059





the close of business two business days prior to the current date for which it is acting as a liquidity provider: HANWHA SECURITIES CO., LTD. 0273










0814 HYNIX SEMICONDUCTOR INC. CALL.


close of business two business days prior to the current date for which it is acting as a liquidity provider: DAISHIN SECURITIES CO., LTD. 0805 HYNIX

SEMICONDUCTOR INC. CALL.





the close of business two business days prior to the current date for which it is acting as a liquidity provider: DAISHIN SECURITIES CO., LTD. 0607









close of business two business days prior to the current date for which it is acting as a liquidity provider: DAISHIN SECURITIES CO., LTD. 0871 HYNIX

SEMICONDUCTOR INC. CALL.













Distribution of ratings/investment banking relationships

Goldman Sachs Investment Research global coverage universe

Rating Distribution Investment Banking Relationships

Buy Hold Sell Buy Hold Sell

Global 31% 54% 15% 50% 42% 37%

As of January 1, 2011, Goldman Sachs Global Investment Research had investment ratings on 3,137 equity securities. Goldman Sachs assigns stocks

as Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell

for the purposes of the above disclosure required by NASD/NYSE rules. See 'Ratings, Coverage groups and views and related definitions' below.



Price target and rating history chart(s)

Regulatory disclosures

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See company-specific regulatory disclosures above for any of the following disclosures required as to companies referred to in this report: manager

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Distribution of ratings: See the distribution of ratings disclosure above. Price chart: See the price chart, with changes of ratings and price targets in

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Goldman Sachs International on request.

Elpida Memory (6665.T)

950

9801050

12001350

160024002200

15501500

14001500

950850

500

950

1750

1900

3300

3500

4200

4600

0

1,000

2,000

3,000

4,000

5,000

600

800

1,000

1,200

1,400

1,600

Goldman Sachs rating and stock price target history

Stock Price Currency : Japanese Yen

Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 12/31/2010.

The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.

Rating

Price target

Price target at removal

Covered by Ikuo Matsuhashi

Not covered by current analyst

TOPIX

Inde

x P

rice

Sto

ck P

rice Nov 18 Jan 14 Jul 30

B N BF

NM A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

2008 2009 2010

Samsung Electronics (005930.KS)

1020000

950000

925000932000

918000

915000

910000

887000

870000824000

814000845000

570000583000

602000741000

821000

848000730000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

500

1,000

1,500

2,000

2,500


Stock Price Currency : South Korean Won



Rating

Price target


Covered by Michael Bang,as of Nov 22, 2010


Aug 28, 2008 to N from B Mar 22, 2009 to N from NA

Jan 14, 2010 to N from B Nov 22, 2010 to B from CS

Korea SE Composite (KOSPI)

Inde

x P

rice

Sto

ck P

rice Nov 6 Apr 26 Mar 21

B NA B CSF M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

2008 2009 2010

Hynix Semiconductor (000660.KS)

23500

26000

30200

29600

2120020300

1810017100

1320013000

6000

1940027400

2600029000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

500

1,000

1,500

2,000

2,500


Stock Price Currency : South Korean Won



Rating

Price target


Covered by Michael Bang,as of Nov 22, 2010


Aug 28, 2008 to B from N Mar 22, 2009 to S from NA

Jan 14, 2010 to B from N Nov 22, 2010 to N from CS

Korea SE Composite (KOSPI)

Inde

x P

rice

Sto

ck P

rice Nov 6 Apr 26 Mar 21

N NA N CSF M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

2008 2009 2010



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price target, if any, are no longer in effect for this stock and should not be relied upon. Coverage Suspended (CS). Goldman Sachs has suspended

coverage of this company. Not Covered (NC). Goldman Sachs does not cover this company. Not Available or Not Applicable (NA). The information

is not available for display or is not applicable. Not Meaningful (NM). The information is not meaningful and is therefore excluded.

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