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Samsung Electronics

Harvard Business School Case #705-508

Case Software #XLS-318

Copyright © 2011 President and Fellows of Harvard College. No part of this product may be reproduced, stored in a retrieval system or transmitted in any form or by any means—electronic, mechanical, photocopying, recording or otherwise—without the permission of Harvard Business School.

Exhibit 1

Exhibit 1 Financial Results (USD, millions)
	1985	1986	1987	1988	1989	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003
Samsung*
Net Revenues	1903	2271	3006	4427	5896	6298	6871	7741	10091	14604	20898	18804	13048	16629	22802	27216	24418	33167	36385
Cost of Goods Sold	1652	1954	2586	3735	4550	4836	4997	5634	6874	9150	12112	14123	8975	11571	15419	17459	18486	21910	24644
R&D	11	14	22	38	136	231	371	443	678	1392	1454	1512	896	1378	1390	1603	1824	2451	2947
Net Income	24	37	44	149	233	102	90	92	191	1198	3234	194	87	259	2768	4775	2222	5875	4975
Cashflow from Operation	75	116	143	371	1115	1074	947	1177	2050	3925	6069	1978	1967	4426	6179	7506	4744	9325	8222
Cash & Equivalents(a)	49	45	103	199	80	149	222	355	539	1149	1509	1141	966	983	1026	1534	2129	4734	6667
Long&Short-term Debt(b)	435	467	598	1786	2019	3086	4034	4758	4040	4658	6054	9276	9171	8461	5016	3224	2040	1355	968
Net Debt (b-a)	386	422	495	1587	1940	2938	3812	4402	3501	3509	4546	8135	8205	7477	3990	1690	-89	-3379	-5699
Interest Expense/Debt	48	51	61	89	194	302	414	445	433	394	482	480	536	924	630	273	155	84	80
Total Assets	748	991	1383	3370	4334	5731	7568	8102	8296	11314	17589	19680	24251	14852	20774	23788	21629	27437	32892
Micron
Net Revenues	76	49	91	301	446	333	425	506	828	1629	2953	3654	3516	3012	3764	7336	3936	2589	3091
Cost of Goods Sold	46	43	69	100	192	178	242	285	378	608	1130	1835	2078	2125	2107	2963	1984	1146	1895
R&D	7	3	5	9	21	36	36	48	57	83	129	192	209	272	322	428	490	561	656
Net Income	0	-34	-23	98	106	5	5	7	104	401	844	594	332	-234	-69	1548	-521	-907	-1280
Cashflow from Operation	18	-13	-1	142	165	84	98	121	231	611	1092	1055	990	242	827	2629	1578	698	447
Cash & Equialents(a)	1	5	9	164	161	77	68	73	186	433	556	287	988	649	1614	2466	1678	986	922
Long&Short-term Debt(b)	36	44	45	24	51	99	93	89	80	155	156	480	889	865	1639	982	531	454	1086
Net Debt (b-a)	34	39	35	-141	-110	22	26	16	-106	-279	-400	193	-99	215	26	-1485	-1147	-532	164
Interest Expense/Debt	2	0	5	1	-15	11	11	9	8	8	7	9	31	65	132	111	27	27	40
Total Assets	133	132	129	388	625	697	706	724	966	1530	2775	3752	4851	4688	6965	9632	8363	7431	7075
Infineon
Net Revenues	0	0	0	0	0	0	0	0	0	0	0	0	2885	3175	4208	7757	6371	4966	4884
Cost of Goods Sold	0	0	0	0	0	0	0	0	0	0	0	0	1623	2149	2421	3492	4245	3085	2522
R&D	0	0	0	0	0	0	0	0	0	0	0	0	457	637	733	1092	1336	1011	864
Net Income	0	0	0	0	0	0	0	0	0	0	0	0	-95	-775	60	1199	-663	-974	-345
Cashflow from Operation	0	0	0	0	0	0	0	0	0	0	0	0	615	-232	613	2077	287	73	757
Cash & Equivalents(a)	0	0	0	0	0	0	0	0	0	0	0	0	340	906	878	1074	955	1847	2185
Long&Short-term Debt(b)	0	0	0	0	0	0	0	0	0	0	0	0	1139	1253	996	284	414	1745	1978
Net Debt (b-a)	0	0	0	0	0	0	0	0	0	0	0	0	799	347	118	-791	-541	-102	-207
Interest Expense/Debt	0	0	0	0	0	0	0	0	0	0	0	0	22	94	22	0	1	24	41
Total Equity	0	0	0	0	0	0	0	0	0	0	0	0	3205	3078	3861	6368	8093	7735	6539
Total Assets	0	0	0	0	0	0	0	0	0	0	0	0	4402	4471	6088	9254	10483	9662	8018
Hynix
Net Revenues	0	0	0	0	0	0	0	0	0	0	0	4537	6201	6288	8035	9489	4097	3739	4030
Cost of Goods Sold	0	0	0	0	0	0	0	0	0	0	0	2721	3959	4739	6584	4648	3011	2015	2272
R&D	0	0	0	0	0	0	0	0	0	0	0	0	21	29	68	254	264	338	296
Net Income	0	0	0	0	0	0	0	0	0	0	0	-474	-599	-129	167	-2280	-3844	-1560	-1770
Cashflow from Operation	0	0	0	0	0	0	0	0	0	0	0	966	1192	338	1607	2788	-69	933	1171
Cash & Equivalents(a)	0	0	0	0	0	0	0	0	0	0	0	346	611	578	811	280	452	255	529
Long&Short-term Debt(b)	0	0	0	0	0	0	0	0	0	0	0	6045	13775	8966	10379	10545	4910	3414	3231
Net Debt (b-a)	0	0	0	0	0	0	0	0	0	0	0	5699	13165	8388	9568	10265	4458	3159	2702
Interest Expense/Debt	0	0	0	0	0	0	0	0	0	0	0	411	651	941	1055	1222	846	434	253
Total Equity	0	0	0	0	0	0	0	0	0	0	0	1449	-1662	1096	9204	7097	7892	24813	4267
Total Assets	0	0	0	0	0	0	0	0	0	0	0	9910	14768	11742	20911	18217	11165	8891	7218
Source: Thomson Datastream.
Note: Hyundai Semiconductor went public in December 1996. It acquired LG Semiconductor in 1999 and changed its name to Hynix. Micron was incorporated in 1978. Infineon was founded in April 1999, when the semiconductor operations of parent company Siemens AG were spun off to form a separate legal entity. In March 2000, the company went public and is now listed on the Stock Exchanges of Frankfurt and New York. For 1985 to 1998, Siemens AG data were used.
*Parent only

Exhibit 3

Exhibit 3 DRAM Average Selling Price (ASP), Operating Cost, and Operating Margin (256Mbit equivalent)
	1Q00	2Q00	3Q00	4Q00	1Q01	2Q01	3Q01	4Q01	1Q02	2Q02	3Q02	4Q02	1Q03	2Q03	3Q03	4Q03	1Q04	Average
Samsung
Average Selling Price($)	39.08	38.44	43.79	33.42	20.82	13.24	4.86	5.16	9.31	7.75	6.86	7.58	5.76	5.27	5.79	5.90	6.15	15.25
Operating Cost($)	16.95	13.64	14.41	15.70	12.36	12.02	9.53	7.46	5.72	5.33	4.92	5.33	4.77	4.60	4.00	3.82	3.92	8.50
Operating Margin	57%	65%	67%	53%	41%	9%	-96%	-45%	39%	31%	28%	30%	17%	13%	31%	35%	36%	44%
Micron
Average Selling Price($)	32.49	25.13	30.83	25.65	12.59	8.30	3.76	2.85	5.01	7.48	5.25	4.99	5.10	4.33	4.97	5.32	4.51	11.09
Operating Cost($)	34.75	24.00	20.31	19.65	15.81	15.96	12.01	6.67	8.28	8.98	7.97	7.25	7.96	6.65	6.06	5.57	4.75	12.51
Operating Margin	-7%	4%	34%	23%	-26%	-92%	-219%	-134%	-65%	-20%	-52%	-45%	-56%	-53%	-22%	-5%	-5%	-13%
Infineon
Average Selling Price($)	26.62	26.5	30.93	16.01	10.58	7.98	4.20	4.38	8.90	7.20	5.50	5.90	4.89	4.69	5.41	5.21	4.95	10.58
Operating Cost($)	18.11	16.69	10.88	14.14	13.46	13.76	12.00	11.00	9.80	8.20	7.50	7.96	5.62	5.10	4.69	4.69	4.75	9.90
Operating Margin	32%	37%	65%	12%	-27%	-73%	-186%	-151%	-10%	-14%	-36%	-35%	-15%	-9%	13%	10%	4%	6%
Hynix
Average Selling Price($)	28.72	29.83	37.76	20.95	12.42	7.35	3.86	3.73	8.56	6.30	4.71	4.92	4.57	4.50	5.46	5.36	5.16	11.42
Operating Cost($)	22.21	24.68	23.94	17.40	11.82	8.73	9.33	9.38	6.08	9.15	7.47	6.56	6.16	5.61	4.82	4.37	3.89	10.68
Operating Margin	23%	17%	37%	17%	5%	-19%	-142%	-152%	29%	-45%	-59%	-33%	-35%	-24%	12%	18%	25%	6%
Worldwide
Average Selling Price($)	36	33.8	36.5	22.9	14.30	9.02	4.8	3.49	8.58	7.36	6.21	6.14	5.12	4.62	5.47	5.37	5.06	12.63
ASP Quarterly Change		-6%	8%	-37%	-37%	-37%	-47%	-27%	146%	-14%	-16%	-1%	-17%	-10%	19%	-2%	-6%	-5%
Price Premium of Samsung ASP over Competitors' ASP	33%	42%	32%	60%	75%	68%	23%	41%	24%	11%	33%	44%	19%	17%	10%	11%	26%	34%
Operating Margin of (Samsung - Competitors' Average)	41%	45%	22%	36%	57%	70%	86%	101%	54%	57%	77%	68%	53%	42%	30%	27%	28%	53%
Source: Merrill Lynch.

Exhibit 4

Exhibit 4 DRAM Production Volume by Density in 2003
	Production Volume (million unit, 256Mbit equiv.)
	Samsung		Micron		Infineon		Hynix		SMIC
4Mbit	--	--	--	--	--	--	--	--	-	-
16Mbit	1.3	0.1%	1.0	0.2%	0.0	0.0%	10.0	1.9%	-	-
64Mbit	16.4	1.8%	29.7	4.4%	0.0	0.0%	33.6	6.4%	-	-
128Mbit	151.6	16.9%	88.1	13.1%	43.7	8.2%	96.8	18.6%	-	-
256Mbit	695.8	77.6%	540.1	80.3%	479.5	89.6%	374.2	71.8%	68.2	100.0%
512Mbit	30.4	3.4%	13.7	2.0%	11.5	2.1%	6.8	1.3%	-	-
1Gbit	1.0	0.1%	0.1	0.0%	0.6	0.1%	0.0	0.0%	-	-
Total	896.4	100.0%	672.8	100.0%	535.3	100.0%	521.5	100.0%	68.2	100.0%
Source: "DRAM Supply and Demand Quarterly Statistics: Worldwide, 2003-2005," Gartner, Inc. As the research is over 12 months old, Gartner deems it to be a historical perspective.

Exhibit 5

Exhibit 5 DRAM Production Volume by Product Line in 2003 (million, 256 Mbit equivalent)
	Production Volume (million unit, 256Mbit equiv.)
	Samsung		Micron		Infineon		Hynix		Worldwide
SDRAM	206.1	23.0%	191.8	28.5%	79.1	14.8%	117.5	22.5%	0.0	0.0%
DDR SDRAM	585.3	65.3%	475.6	70.7%	437.8	81.8%	401.4	77.0%	68.2	100.0%
DDR2 SDRAM	40.4	4.5%	0.0	0.0%	1.7	0.3%	0.0	0.0%	0.0	0.0%
RDRAM	37.9	4.2%	0.0	0.0%	2.4	0.4%	0.0	0.0%	0.0	0.0%
Other DRAM	25.9	2.9%	5.4	0.8%	14.3	2.7%	1.3	0.2%	0.0	0.0%
Total	896.4	100%	672.8	100%	535.3	100%	521.5	100%	68.2	100%
Source: "DRAM Supply and Demand Quarterly Statistics: Worldwide, 2003-2005," Gartner, Inc. As the research is over 12 months old, Gartner deems it to be a historical perspective.

Exhibit 6

Exhibit 6 Worldwide DRAM Average Selling Price History and Forecast, 2000-2010 (Dollars)
	2000	2001	2002	2003	2004	2005(E)	2006(E)	2007(E)	2008(E)	2009(E)	2010(E)
1Mbit	1.51	1.06	1.10	-	-	-	-	-	-	-	-
4Mbit	1.90	1.34	1.28	0.97	0.79	0.51	0.40	-	-	-	-
16Mbit	3.42	1.88	1.61	1.19	0.90	0.62	0.50	0.50	-	-	-
64Mbit	7.18	1.88	1.55	1.88	2.13	1.39	0.74	0.70	0.62	-	-
128Mbit	14.41	2.99	3.30	2.75	3.48	2.41	1.28	1.01	0.90	0.66	-
256Mbit	48.59	6.73	6.22	4.68	4.88	3.67	1.64	1.21	1.10	0.84	0.68
512Mbit	-	150.00	42.11	21.70	12.76	6.75	3.12	2.79	2.53	1.78	1.25
1Gbit	-	-	-	83.57	40.76	18.04	7.29	5.54	4.81	2.22	1.55
2Gbit	-	-	-	-	-	82.93	21.29	11.70	9.68	3.99	3.08
4Gbit	-	-	-	-	-	-	-	125.15	47.00	13.02	7.50
8Gbit	-	-	-	-	-	-	-	-	-	-	93.18
ASP per Megabyte	0.99	0.22	0.21	0.16	0.17	0.11	0.05	0.04	0.04	0.02	0.01
ASP per 256Mbit Equiv.	31.63	7.08	6.76	5.19	5.49	3.66	1.65	1.42	1.28	0.58	0.42
Annual ASP growth	-17.3%	-77.6%	-4.5%	-23.3%	5.8%	-33.3%	-55.1%	-13.7%	-9.9%	-54.4%	-28.3%
Source: "Forecast: DRAM Market Statistics, Worldwide, 2000-2010 (1Q05 Update)," Gartner, Inc.

Exhibit 7a

Exhibit 7a Comparison of Operating Profit of DRAM in 2003 (256Mbit equivalenta)
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average	Samsung -Competitors' Weighted Average	Competitors' Weighted Average/Samsung
Average Selling Price	$5.68	$4.93	$5.05	$4.97	$4.43	$4.96	$0.72	87.3%
Fully loaded costs	$4.31	$6.61	$5.02	$5.33	$4.84	$5.70	-$1.39	132.2%
Raw materials	1.18	1.93	1.58	1.93	1.84	1.83	-0.65	155.1%
Labor	0.54	0.94	0.76	0.51	0.23	0.74	-0.19	137.0%
Depreciation	1.35	1.88	1.50	1.48	1.63	1.64	-0.29	121.5%
R&D	0.60	0.57	0.71	0.58	0.80	0.62	-0.02	103.3%
SG&A	0.65	1.28	0.46	0.83	0.34	0.87	-0.22	133.8%
Operating Profit (a)	$1.37	-$1.68	$0.02	-$0.36	-$0.41	-$0.74
Operating Margin	24.1%	-34.1%	0.5%	-7.3%	-9.3%	-15.0%
Production Volume in 256Mbit equiv. (b) (millions)	896.4	672.8	535.3	521.5	68.2
Operating Profit in $Million (a × b)	$1,224.3	-$1,129.5	$12.9	-$188.1	-$28.1
aExplanation of "256Mbit equivalent" term used above: Each company in the industry uses a slightly different design rule and process technology for each product, along with producing a different mixture of architectures and memory sizes. So that makes it very difficult to do an apples-to-apples comparison for even the same exact product. Therefore the industry analysts have settled on a common approach for comparing the overall cost competitiveness of a company. The company's total sales and production costs are weighted by memory generation, with the 256Mbit generation given a weight of 1.00, the generations above 256Mbit given a weighting above 1.00 that is proportional to 256Mbit, and the generations below 256Mbit given a weighting below 1.00 that is proportional to 256Mbit.
bTotal production volume is the sum of DRAM production volumes across all density levels (including 16Mb, 64Mb, 128Mb, 256Mb, 512Mb, and 1Gb).

Exhibit 7b

Exhibit 7b Cost Breakdown of 64Mbit DRAM in 2003 (256Mbit equivalent)
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average
Average Selling Price	$8.63	$7.88	-	$8.10		$8.00
Fully loaded costs	$2.99	$4.19	-	$3.98	-	$4.07
Raw materials	0.99	0.98	-	1.67	-	1.35
Labor	0.54	0.76	-	0.51	-	0.63
Depreciation	0.35	0.42	-	0.43	-	0.42
R&D	0.15	0.13	-	0.17	-	0.15
SG&A	0.96	1.90	-	1.20	-	1.53
Operating Profit	$5.64	$3.69	-	$4.13	-	$3.92
Operating Margin	65.4%	46.9%	-	50.9%	-	49.0%
Production Volume Units (million)	16.4	29.7	0.0	33.6	0.0	63.3
Production Volume/Total Production Volume	1.8%	4.4%	0.0%	6.4%	0.0%	3.5%

Exhibit 7c

Exhibit 7c Cost Breakdown of 128Mbit DRAM in 2003 (256Mbit equivalent)
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average
Average Selling Price	$6.45	$5.56	$6.34	$5.45	-	$5.66
Fully loaded costs	$3.89	$6.22	$4.49	$5.08	-	$5.40
Raw materials	1.09	1.81	1.43	1.83	-	1.75
Labor	0.54	0.94	0.75	0.51	-	0.72
Depreciation	1.09	1.60	1.21	1.33	-	1.41
R&D	0.48	0.48	0.57	0.52	-	0.52
SG&A	0.70	1.39	0.52	0.88	-	1.01
Operating Profit	$2.56	-$0.66	$1.85	$0.37	-	$0.25
Operating Margin	39.6%	-11.9%	29.2%	6.8%	-	3.9%
Production Volume Units (million)	151.6	88.1	43.7	96.8	0.0	228.6
Production Volume/Total Production Volume	16.9%	13.1%	8.2%	18.6%	0.0%	12.7%
a128Mbit DRAM production volume includes production volumes of various 128Mbit DRAM product lines (such as SDRAM, DDR, DDR2, and Rambus DRAM).

Exhibit 7d

Exhibit 7d Cost Breakdown of 256Mbit DRAM in 2003 (256Mbit equivalent)
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average
Average Selling Price	$5.08	$4.48	$4.73	$4.58	$4.43	$4.57
Fully loaded costs	$4.15	$6.52	$4.84	$5.42	$4.84	$5.61
Raw materials	1.19	1.98	1.57	2.01	1.84	1.84
Labor	0.54	0.94	0.75	0.51	0.23	0.74
Depreciation	1.27	1.86	1.41	1.56	1.63	1.63
R&D	0.56	0.56	0.67	0.61	0.80	0.62
SG&A	0.59	1.18	0.44	0.74	0.34	0.79
Operating Profit	$0.94	-$2.04	-$0.11	-$0.85	-$0.41	-$1.04
Operating Margin	18.4%	-45.5%	-2.2%	-18.5%	-9.3%	-22.8%
Production Volume Units (million)	695.8	540.1	479.5	374.2	68.2	1462.1
Production Volume/Total Production Volume	77.6%	80.3%	89.6%	71.8%	100.0%	81.3%
a256Mbit DRAM production volume includes production volumes of various 256Mbit DRAM product lines (such as SDRAM, DDR, DDR2, and Rambus DRAM).

Exhibit 7e

Exhibit 7e Cost Breakdown of 512Mbit DRAM in 2003 (256Mbit equivalent)
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average
Average Selling Price	$14.21	$12.11	$13.60	$11.99	-	$12.62
Fully loaded costs	$10.52	$17.58	$13.26	$13.81	-	$15.22
Raw materials	1.29	3.17	2.47	2.97	-	2.87
Labor	0.80	1.52	1.20	0.77	-	1.25
Depreciation	4.89	7.78	5.82	6.00	-	6.70
R&D	2.16	2.36	2.74	2.34	-	2.49
SG&A	1.38	2.75	1.02	1.73	-	1.91
Operating Profit	$3.69	-$5.47	$0.34	-$1.82	-	-$2.60
Operating Margin	26.0%	-45.1%	2.5%	-15.2%	-	-21.6%
Production Volume Units (million)	30.4	13.7	11.5	6.8	0.0	32.0
Production Volume/Total Production Volume	3.4%	2.0%	2.1%	1.3%	0.0%	1.8%

Exhibit 7f

Exhibit 7f Cost Breakdown of 256Mbit SDRAM in 2003
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average
Average Selling Price	$4.95	$4.56	$5.00	$4.58	-	$4.67
Fully loaded costs	$4.16	$6.62	$4.97	$5.54	-	$5.95
Raw materials	1.20	2.01	1.61	2.05	-	1.92
Labor	0.54	0.95	0.77	0.52	-	0.80
Depreciation	1.28	1.89	1.45	1.59	-	1.71
R&D	0.57	0.57	0.68	0.62	-	0.61
SG&A	0.58	1.21	0.46	0.74	-	0.91
Operating Profit	$0.79	-$2.06	$0.03	-$0.95	-	-$1.28
Operating Margin	15.9%	-45.2%	0.5%	-20.8%	-	-28.0%
Production Volume Units (million)	160.0	162.0	76.7	84.2	0.0	323.0
Production Volume/Total Production Volume	17.9%	24.1%	14.3%	16.1%	0.0%	18.0%

Exhibit 7g

Exhibit 7g Cost Breakdown of 256Mbit DDR SDRAM in 2003
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average
Average Selling Price	$4.72	$4.45	$4.65	$4.57	$4.43	$4.55
Fully loaded costs	$4.06	$6.48	$4.81	$5.39	$4.84	$5.51
Raw materials	1.18	1.97	1.56	1.99	1.84	1.82
Labor	0.53	0.93	0.75	0.51	0.23	0.72
Depreciation	1.25	1.85	1.41	1.55	1.63	1.60
R&D	0.55	0.56	0.66	0.60	0.80	0.62
SG&A	0.55	1.17	0.43	0.74	0.34	0.75
Operating Profit	$0.66	-$2.03	-$0.16	-$0.82	-$0.41	-$0.96
Operating Margin	13.9%	-45.6%	-3.4%	-18.0%	-9.3%	-21.2%
Production Volume Units (million)	485.0	378.1	399.7	290.0	68.2	1136.0
Production Volume/Total Production Volume	54.1%	56.2%	74.7%	55.6%	100.0%	63.2%

Exhibit 7h

Exhibit 7h Cost Breakdown of 256Mbit DDR2 SDRAM in 2003
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average
Average Selling Price	$8.83	-	$8.67	-	-	$8.67
Fully loaded costs	$4.93	-	$5.72	-	-	$5.72
Raw materials	1.31	-	1.75	-	-	1.75
Labor	0.59	-	0.84	-	-	0.84
Depreciation	1.39	-	1.58	-	-	1.58
R&D	0.62	-	0.74	-	-	0.74
SG&A	1.03	-	0.80	-	-	0.80
Operating Profit	$3.90	-	$2.95	-	-	$2.95
Operating Margin	44.1%	-	34.0%	-	-	34.0%
Production Volume Units (million)	25.7	0.0	1.2	0.0	0.0	1.2
Production Volume/Total Production Volume	2.9%	0.0%	0.2%	0.0%	0.0%	0.1%

Exhibit 7i

Exhibit 7i Cost Breakdown of 256Mbit Rambus DRAM in 2003
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average
Average Selling Price	$9.21		$8.45			$8.45
Fully loaded costs	$4.89	-	$5.59	-	-	$5.59
Raw materials	1.28	-	1.71	-	-	1.71
Labor	0.57	-	0.82	-	-	0.82
Depreciation	1.36	-	1.55	-	-	1.55
R&D	0.60	-	0.73	-	-	0.73
SG&A	1.07	-	0.78	-	-	0.78
Operating Profit	$4.32	-	$2.86	-	-	$2.86
Operating Margin	46.9%	-	33.8%	-	-	33.8%
Production Volume Units (million)	25.0	0.0	1.7	0.0	0.0	1.7
Production Volume/Total Production Volume	2.8%	0.0%	0.3%	0.0%	0.0%	0.3%

Exhibit 7j

Exhibit 7j Cost Breakdown of 128Mbit DDR2 SDRAM in 2003 (256Mbit equivalent)
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average
Average Selling Price	$11.30		$9.74			$9.74
Fully loaded costs	$4.49	-	$5.27	-	-	$5.27
Raw materials	1.13	-	1.58	-	-	1.58
Labor	0.55	-	0.83	-	-	0.83
Depreciation	1.12	-	1.34	-	-	1.34
R&D	0.50	-	0.63	-	-	0.63
SG&A	1.19	-	0.89	-	-	0.89
Operating Profit	$6.81	-	$4.47	-	-	$4.47
Operating Margin	60.3%	-	45.9%	-	-	45.9%
Production Volume Units (million)	7.1	0.0	0.4	0.0	0.0	0.4
Production Volume/Total Production Volume	0.79%	0.00%	0.08%	0.00%	0.00%	0.08%

Exhibit 7k

Exhibit 7k Cost Breakdown of 128Mbit Rambus DRAM in 2003 (256Mbit equivalent)
	Samsung	Micron	Infineon	Hynix	SMIC	Competitors' Weighted Average
Average Selling Price	$11.06		$9.64			$9.64
Fully loaded costs	$4.65	-	$5.26	-	-	$5.26
Raw materials	1.19	-	1.58	-	-	1.58
Labor	0.58	-	0.83	-	-	0.83
Depreciation	1.18	-	1.34	-	-	1.34
R&D	0.52	-	0.63	-	-	0.63
SG&A	1.17	-	0.88	-	-	0.88
Operating Profit	$6.41	-	$4.38	-	-	$4.38
Operating Margin	58.0%	-	45.5%	-	-	45.5%
Production Volume Units (million)	5.5	0.0	0.5	0.0	0.0	0.5
Production Volume/Total Production Volume	0.61%	0.00%	0.10%	0.00%	0.00%	0.10%
Source: Casewriters' estimates based on Merrill Lynch report.

Exhibit 8

Exhibit 8 Samsung's Manufacturing Line Sharing (Line A)
	1998	1999	2000	2001	2002
DRAM	78%	45%	28%	40%	27%
Graphic	19%	13%	3%	2%	0%
SRAM	3%	41%	52%	46%	44%
Flash	0%	2%	15%	8%	24%
MROM	0%	0%	2%	5%	5%
Total	100%	100%	100%	100%	100%
Source: Company data.

Exhibit 9

Exhibit 9 Cost Breakdown of NAND Flash (512Mbit equivalent, 1Q 2004)
	Toshiba (a)	Samsung (b)	(a)/(b)	Toshiba	Samsung
Average Selling Price ($)	9.51	9.48	100.3%
Fully loaded cost	4.55	3.28	138.5%	100.0%	100.0%
Raw materials	1.15	0.79	144.8%	25.2%	24.1%
Labour	0.74	0.45	165.3%	16.3%	13.6%
Utilities	0.13	0.10	138.5%	2.9%	2.9%
SG&A	0.28	0.24	119.3%	6.2%	7.2%
Depreciation	1.10	1.19	92.8%	24.2%	36.1%
R&D	0.51	0.30	170.9%	11.3%	9.1%
Others	0.63	0.22	281.4%	13.9%	6.9%
Operating Profit	4.97	6.20	80.1%
Source: Merrill Lynch.

Exhibit 10a

Exhibit 10a Comparison of 8-inch Wafer vs. 12-inch Wafer
	8-inch Wafer	12-inch Wafer	12-inch Wafer/ 8-inch Wafer
Net Die per Wafera	257	616	240%
Assumed Yield Rate	87%	87%	100%
Good Die per Wafer	224	536	240%
Production Cost per Wafer			210%
Depreciation per Wafer	n/a	n/a	200%
Material Cost per Wafer	n/a	n/a	270%
Cost per Chip	n/a	n/a	90%
Source: Company data and casewriters' estimates.
aNet Dice per Wafer is based on 0.13μm process technology.

Exhibit 10b

Exhibit 10b Process Technology, Wafer Size, and Net Dice Output
Process Technology (Design Rule)	0.25μm	0.18μm	0.15μm	0.13μm	0.11μm
Chip Size	208.9 mm2	159.4 mm2	120.9 mm2	91.3 mm2	68.6 mm2
Number of Net Die out of 8-inch Wafer	100	137	188	257	352
Number of Net Die out of 12-inch Wafer	240	329	451	616	845
Source: Casewriters' estimates.
aDesign rule is the minimum feature width of the chip, which indicates the level of process technology.

Exhibit 10c

Exhibit 10c Comparison of Production by Wafer Size, Design Rule, and Yield Rate
	Production Volume by Wafer Size			Process Technology		Yield Ratea
	8-inch Wafer	12-inch Wafer	Total	Main Design Rule (μm)	% of Usage
Samsung	88%	12%	100%	0.11	67%	80%
Micron	97%	3%	100%	0.13	80%	60%
Infineon	67%	33%	100%	0.14	80%	67%
Hynix	100%	0%	100%	0.13	72%	50%
Source: Casewriters' estimates based on Gartner, Inc. report (February 2004)
aYield rate is based on 0.11μm process technology for 256Mbit.