Presentation AgendaPresentation Agenda

� Samsung Electronics Overview

� NAND Flash Evolution

� Flash Market Overview

� NAND Dichotomy: Disruptor + Enabler

� SSD Opportunity and Outlook

� Concluding Remarks

MCPMCPMCPMCPMCPMCPMCPMCP

MEMORYMEMORYMEMORYMEMORYMEMORYMEMORYMEMORYMEMORY 14 years14 years14 years14 years14 years14 years14 years14 years

DRAMDRAMDRAMDRAMDRAMDRAMDRAMDRAM 15 years15 years15 years15 years15 years15 years15 years15 years

SRAMSRAMSRAMSRAMSRAMSRAMSRAMSRAM 12 years12 years12 years12 years12 years12 years12 years12 years

NANDNANDNANDNANDNANDNANDNANDNAND 4 years4 years4 years4 years4 years4 years4 years4 years

FLASHFLASHFLASHFLASHFLASHFLASHFLASHFLASH 3 years3 years3 years3 years3 years3 years3 years3 years

DDIDDIDDIDDIDDIDDIDDIDDI 4 years4 years4 years4 years4 years4 years4 years4 years

39%39%39%39%39%39%39%39%

11%11%11%11%11%11%11%11% 30%30%30%30%30%30%30%30%

14%14%14%14%14%14%14%14% 30%30%30%30%30%30%30%30%

11%11%11%11%11%11%11%11% 45%45%45%45%45%45%45%45%

60%60%60%60%60%60%60%60% 46%46%46%46%46%46%46%46%

16%16%16%16%16%16%16%16% 33%33%33%33%33%33%33%33%

16%16%16%16%16%16%16%16% 22%22%22%22%22%22%22%22%

���� ����

Source : SECSource : SECSource : SECSource : SEC2 years2 years2 years2 years2 years2 years2 years2 years

Market Share % Growing

Samsung #1 Semiconductor Position(s)Samsung #1 Semiconductor Position(s)

#1 For

SEC Revenue and CAPEX OverviewSEC Revenue and CAPEX OverviewSEC Revenue and CAPEX Overview

Largest CAPEX in Semiconductor Industry: >$7B in 2007

New Austin Fab is Largest US Foreign Investment Ever…

41.8

5.6

55.2

7.4

56.7

9.9

63.2

10.7

0

10

20

30

40

50

60

70

2003 2004 2005 2006

Revenue CapEx ($B)

$B

NAND Flash Evolution:Enabling New Market Creation

NAND Flash Evolution:Enabling New Market Creation

$1

$10

$100

$1,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

0

8

16

24

32

40

48

56

64

72

Cost Decreasing

~50% / GB / Year

NAND Cost/GB

Component Density, Gb

Density Increasing

2X per Year

NAND Flash Evolution:Enabling New Market Creation

NAND Flash Evolution:Enabling New Market Creation

$1

$10

$100

$1,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

0

8

16

24

32

40

48

56

64

72

Cost Decreasing

~50% / GB / YearDensity Increasing

2X per Year

USB Drive64MB ~ 4GBDSC Card

32MB ~ 4GB

MP3 Player512MB ~ 8GB

Cell Phone512MB ~ 8GB

SSD32GB ~ 64GB

NAND Fueling New Applications…

NAND Cost/GB

Component Density, Gb

Seasonal Imbalance Due to 2H CE Demand

Source: WSTS

NAND Industry Quarterly Revenue HistoryNAND Industry Quarterly Revenue History

$B

2000 2001 2002 2003 2004 2005 2006

Q/Q

0

1.0

2.0

3.0

4.0

1H 2H 1H 2H 1H 2H 1H 2H 1H 2H

-20%

0%

20%

40%

60%

80%

100%

NAND $ Q/Q Growth

1H 2H 1H 2H

Source : WSTS

NAND Application Trends: 2006NAND Application Trends: 2006

46%

23%

15%

8%8%

Card

MP3 & PMP

USB Drive

Phone

Other

20062006

2006 NAND Market

Dominated by Card and MP3: 70%

Over-dependence on CE, Black Friday…

Source : WSTS

NAND Application Trends: 2011NAND Application Trends: 2011

46%

30%

23%

15%

8%8%

13%

8%

27%

13%

9%

Card

MP3 & PMP

USB Drive

Phone

Other

20062006

20112011

2011 NAND Market

Market is Diversifying

PC Category Emerging

Less CE-centric

Reduced Seasonality

PC: SSD

SSD Will Dampen Seasonal Volatility…

NAND: Enabling as it Disrupts…NAND: Enabling as it Disrupts…Removable Storage: Floppy ���� USB

>10,000X Higher Capacity (1.44MB vs 16GB)

Faster Performance, Superior Industrial Design

MP3: µµµµHDD ���� NAND Superior ID � NAND Based MP3 now >85%

Phenomenal Segment Growth

Camcorder: Analog ���� Digital ���� NAND

Superior Industrial Design

Huge Potential Segment Growth…

Primary Storage: 100% HDD ���� SSDHigh Reliability, High Performance

Superior Industrial Design

Source: SEC

MP3: NAND Driving Category GrowthMP3: NAND Driving Category Growth

0

50

100

150

200

250

300

2003 2004 2005 2006 2007 2008 2009 2010

Flash

HDD

M units13M

221M

- NAND Dominating MP3 Segment with Industrial Design- NAND MP3: More than 17X Growth in 7 Years

2005: Disruptive ID- Less Density: 6����4GB- Volume Inflection

4X Increase

Camcorder: Inflection Point with IDCamcorder: Inflection Point with ID

Analog Era

Beta

VHS � VHS-C

Total US Annual Sales:

3~5M / Yr

Digital Era

DVD

HDD

Total US Annual Sales:

3~5M / Yr

Solid State Era

NAND

NAND

NAND Catalyst:

Form Factor / ID, Mobility, Cost

Video Market Rapidly EmergingVideo Market Rapidly EmergingVideo Market Rapidly Emerging

� Camcorder is an Under-Capitalized Market

� Annual US Sales: 5M (vs 27M for DSC)

� US HH Penetration: 25% (vs 75% for DSC)

� Flat Sales Despite 25% Price Decline Since ‘01

� Online Video Capturing / Sharing Growth

� 122M Unique US Users Viewed Video Online in Jan ‘07

� Social Networking: >150M People by 2010…

0

50

100

150

200

2003 2004 2005 2006 2007 2008 2009 2010

US Online Video Viewers (M)

Source: ComScore, eMarketer

“Jedi Knight” Video

Social Networking

Pure Digital- Flip Video Camcorder

#1 Best-Selling Camcorder at

30/60 Minutes of VGA Video: $129/$149

512MB, 1GB Embedded NAND

NAND + Video = SymbiosisNAND + Video = Symbiosis

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2005 2006 2007 2008 2009 2010

Tape

DVD

HDD

NAND

3M

24M

SLR Point &Shoot

$437 $179

Still Camera:US Sales, ASP

5M

Traditional DVC

Point & Shoot Potential

Camcorder Projections:US Sales, ASP

$450 $129

Source: ComScore; eMarketer

Camcorder Storage Trends

Extrapolate

24M

Solid State Drive uses NAND Flash

Memory to Store Digital Data

Consists Entirely of NAND FLASH Memory.

Can Functionally and Physically Replace HDD.

The Next Killer App: SSD.Product Definition

SSD Benefits (1/2) SSD Benefits (1/2)

High ReliabilityHigh Reliability

• Resistance Against Extreme Impact:

1,500G ↑↑↑↑

• MTBF: 2M Hours

• No Mechanical parts

• No Noise, Virtually No Heat

• Light Weight

SSD Benefits (2/2)SSD Benefits (2/2)

Excellent PerformanceExcellent Performance

• Sequential Read Speeds:

57MB/s (PATA)���� 100MB/s (SATA-2)

• Sequential Write Speeds:

34MB/s (PATA)���� 80MB/s (SATA-2)

• Low Power Consumption:

Operation: 0.5W, Sleep: 0.06W

“The advantages of solid state storage became evident as soon as I turned on the machine…”

0 30 60 90 120 150 180 210 240 270

(minutes)

0 10 20 30 40 50 60 70 80 90

(seconds)

� SSD Optimizes Mobile User Experience

- Fast Booting / Resume / Application launching

- Longer battery life with SSD

PowerPoint(17MB, 135 slides)

Outlook(650 mails)

Searching filesincluding “a”

in C: Drive

Windows XP Boot

0 10 20 30 40 50 60 70 80 90

(seconds)

0 30 60 90 120 150 180 210 240 270

(minutes)

Battery Life

Samsung Q1 Sony UMPC UX

1.8” HDDSSD 1.5x

2.3x

4.1x

2.9x

1.9x

3.5x

6.0x

3.8x

1.3x 1.2x

Source: Nikkei Electronics

1.8” HDDSSD

1.8” HDDSSD

1.8” HDDSSD

SSD User Benefits ComparisonSSD User Benefits Comparison

SSD is Ready for VistaSSD is Ready for Vista

� Window Express Index*

Standard Performance Diagnostic for Vista OS

System: Sony VAIO type G

CPU: Core Solo U1400(1.2 GHz),

OS: Windows Vista Business

SSD: 32GB, HDD: 1.8” 60GB

Test Environment

3.4

1 6.0

Primary Hard Disk Score

1.8” SSD

1.8” HDD

� Boot Time Comparison

All Task Tray Ready

1.8” HDD

1.8” SSD

Windows Front Page Appearance

50sec

1min 40sec

1min 30sec

3 min

�50% Improvement on Windows Front Page Appearance

�50% Improvement on All Task Ready Tray

(Source : Itmedia.co.jp)

5.2

0

1

2

3

4

5

6

7

8

9

10

4200 5400 7200 10000 15000 SSD

PATA

SSD

SATA

0

2

4

6

8

10

12

14

16

4200 5400 7200 10000 15000 SSD

PATA

SSD

SATA

Seagate Cheetah 15K.415000

Seagate Savvio 10K.110000

Hitachi GST Travelstar 7k1007200

Toshiba MK1032GSX5400

Hitachi GST Travelstar 4k1204200

DriveRPM

* HDD DATA

� HDD: Higher RPM = Higher Performance� Downside: Higher Power, More Heat

� SSD: Less Power, Cooler = Lifetime Energy Cost Savings

SSD Power Savings Comparison

Watts - Operation Mode Watts - Idle Mode

HDD RPM HDD RPM

Samsung SSD Form Factors

CustomUMPCDVC/GPS/

UMPC

Sub-Note / Tablet

NotebookMarket

Weight

Connector

Dimension

(H x W x T)

Density

TBD20gTBD46g44g

Standard FF

IDE 44pin

100.2x70x9.5

4~64GB

2.5’’

200pin

53.6x70.6x3.0

8~16GB

So DIMM

ZIF 40pin

70.6x53.6x:

3.0: 16/32GB

2.5: 4~8GB

4~64GB

SLIM

Special FF

4~16GB4~64GB

ZIF 35pinZIF/IDE 50pin

30x40x4.078.5x54x8.0

1.0’’1.8’’

SSD is Form-factor Agnostic…

Long-Term: New ID to Redefine Aesthetics

Addressing SSD F.U.D. FactorsAddressing SSD F.U.D. Factors

� Barrier #1:

“SSD Density Points are too Low”

� Barrier #2:

“SSD Costs too Much”

HDD Capacity GrowthHDD Capacity Growth

10

100

1000

10000

100000

1000000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: IBM, Intel, Samsung

2.5”

3.5”100GB

HDD MB per Platter

Increased 35M Times Over 35 years…

Diminishing Marginal Returns?

Who Wants to De-Frag 1TB?

0%

20%

40%

60%

80%

100%

120%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Unique User Data

Office + Productivity

OS + Swap

How Much Storage is Needed?How Much Storage is Needed?

Why the Need for so Much Capacity?

Video Photos Music

% of HDD Capacity Used

Business Notebook Challenge…Business Notebook Challenge…

Jim Elliott’s Work Notebook� 17.5GB Used Total

� Windows XP + Office

� 6+ Years at Samsung

� Extensive Presentations

MIS Prefers:� Centralized Data Storage

HR Prefers:� No Personal Files: Video,

Music, Photos, etc.

64GB is Sufficient for Most

Business Notebooks

Source: Jim Elliott - June ‘07

“Hybrid” SSD Concept“Hybrid” SSD Concept

� Concept: Mixed Composition of SLC + MLC NAND

� Meet High Endurance Requirements for PC Storage

� SLC � Write-intensive data, High Performance

� MLC � Read-intensive data, Cost Reduction

SSD-Aware File System Driver

SLC MLC

Hybrid SSD

File Operation

Hot Data

(Write Intensive)

Cold Data

(Read Intensive)

Combo SSD System ArchitectureCombo SSD System Architecture

Price Impact:Up to 50% Reduction

Introducing “TCO” ConceptIntroducing “TCO” Concept

� Hybrid Automobiles

� Acquisition Cost is Higher, but…

� Total Cost of Ownership Benefits:

� Less Gas at ~$3.50 per Gallon

� “Solo” Carpool Lane � Time = $Money

� Prius is #1 in Santa Clara County

NYC Hybrid Cabs

SSD Business Notebook TCO SSD Business Notebook TCO

Source: McKinsey Study

Higher reliability

Higher performance

Other benefits

Benefits of SSD Laptops Actual NB Capacity Requirements

39% <20GB

18% 20-40GB

13% 40-60GB

29% >60GBAnnual HDD failure rate

Laptop Annual HDD Failures

18%

<5%

44%

5-10%

19%

11-20%

9%

21-30%

9%

>31%

Business Notebook: IT Survey Results

Pain Points:

HDD Field Failure Rates

Associated Downtime Costs

SSD Value Proposition:

Reduce TCO of Laptop Fleet

Improve Productivity

SSD Business Notebook TCO SSD Business Notebook TCO

Typical Corporate Notebook Scenario:1000’s of NB’s Deployed for Mobile Workforce50X Failure rate reduction over 3 years w/SSDEfficiency / Productivity GainsTCO Savings: Downtime, MIS, Data Recovery, etc…

Source: McKinsey Study

Higher reliability

Higher performance

Other benefits

Benefits of SSD Laptops Actual NB Capacity Requirements

39% <20GB

18% 20-40GB

13% 40-60GB

29% >60GBAnnual HDD failure rate

Laptop Annual HDD Failures

18%

<5%

44%

5-10%

19%

11-20%

9%

21-30%

9%

>31%

Business Notebook: IT Survey Results

Pain Points:

HDD Field Failure Rates

Associated Downtime Costs

SSD Value Proposition:

Reduce TCO of Laptop Fleet

Improve Productivity

SSD Business Notebook TCO SSD Business Notebook TCO

Typical Corporate Notebook Scenario:1000’s of NB’s Deployed for Mobile Workforce50X Failure rate reduction over 3 years w/SSDEfficiency / Productivity GainsTCO Savings: Downtime, MIS, Data Recovery

$110

$60HDD Failure

Reduction

Work Efficiency,Productivity

$300TCO Savings

$130CPU trade-off

Imm

ed

iate

Ben

efi

t

Lif

eti

me

Ben

efi

t

SSD TCO for NB, $

Source: McKinsey Study

Higher reliability

Higher performance

Other benefits

Benefits of SSD Laptops Actual NB Capacity Requirements

39% <20GB

18% 20-40GB

13% 40-60GB

29% >60GBAnnual HDD failure rate

Laptop Annual HDD Failures

18%

<5%

44%

5-10%

19%

11-20%

9%

21-30%

9%

>31%

Business Notebook: IT Survey Results

Pain Points:

HDD Field Failure Rates

Associated Downtime Costs

SSD Value Proposition:

Reduce TCO of Laptop Fleet

Improve Productivity

0

50

100

150

200

250

300

350

400

450

2004 2005 2006 2007 2008 2009 2010

HDD Based

MLC Based

Delta: ~10x

Comparing $70 NB Storage Budget:SSD Closing the GAP

Comparing $70 NB Storage Budget:SSD Closing the GAP

Avg GB

Delta: 3x

Delta: Insurmountable

Source: Citigroup, McKinsey

0

50

100

150

200

250

300

350

400

450

2004 2005 2006 2007 2008 2009 2010

HDD Based

MLC with TCO

Comparing $70 NB Storage Budget:SSD Cross-Over Factoring $300 TCO

Comparing $70 NB Storage Budget:SSD Cross-Over Factoring $300 TCO

TCO Price Cross-Over!

Avg GB

Source: Citigroup, McKinsey

Wasted Biz NB Capacity; Functional

Cross-Over for <60GB~60GB is Sufficient For Most Business

NotebooksDelta: 2.5x

* Source : IDC (2006.12), SEC Marketing

0

20

40

60

80

100

120

140

160

180

2004 2005 2006 2007 2008 2009 2010 2011

NB Units

DT Units

PC Shipments, WW, M Units

NB Altering PC Market DynamicsNB Altering PC Market Dynamics

Notebook ASP: 50% more than DTSub $600 PC Category: > 50% by 2010Need Ways to Differentiate…

WW UnitCross-Over

RevenueCross-Over

‘07

‘11

NB Unit CrossoverJapan in ’06USA / EU in ’08BRIC: Later…

0

5

10

15

20

25

30

35

40

2007 2008 2009 2010

Gartner

iSuppli

FCR

WFR

* EDP Market ONLY

M Units,SSD

Mass Market• Some Desktop PC • Consumer NB

Premium Market • Mid ~ High-end NB• Ent. Server, Cache

Early Adopter Market• Business Notebook• Road Warrior…

SSD Market PotentialSSD Market Potential

$100M+

$2.5B+

$5B+

$1B+

SSD TAM:>100% Y/Y

~64GB SLC ~128GB Combo ~256GB Combo

� NAND Will Catalyze New Markets� Camcorder for Video

� SSD for Notebook, PC, Server / Cache

� New Markets Temper NAND Seasonality� Less Seasonality � Market Stability

� NAND Will Continue to Disrupt / Enable…� Higher Reliability

� Better ID / Form Factor

� Lower Power

� Superior Performance

� Extrapolate NAND Cost, Density Curves

Concluding ThoughtsConcluding Thoughts

NAND Value Prop

PC Storage Attribute ModelPC Storage Attribute Model

Entitlements

Needs

Wants

Source: John Squire, Founder of Conner Peripherals, 1989

Notebook Storage Attribute ModelNotebook Storage Attribute Model

Entitlements

Needs:

- NB is New Standard

- New Buying Criteria

- ID Key Differentiator

SSD Value Prop

Thank You!Thank You!