Global Technology| July 22, 2015 KKoorreeaa TTeecchhnnoollooggyy Industry View: In-Line SK Hynix (000660.KS, UW): The company generates around 20% of revenues and ~25% profits from server DRAM. The 20% premium for DDR4 products over DDR3 at the beginning of the year has eroded to 10% in Q2 and we expect to quickly disappear entering Q3. We have recently lowered our DRAM revenue estimates to reflect a shortfall in demand growth from the server market in each of the next four quarters. We continue to have significant fundamental concerns, as we think PC DRAM oversupply has spread to both servers and mobile. SK Hynix is starting to price in the reality of weaker end-demand, but DRAM prices remain under pressure in Q3, which means underlying downgrades are likely to continue and sustain the recent share weakness. We are well below consensus, which keeps us UW the name. For Samsung Electronics (005930.KS, OW), the impact is less meaningful as exposure to server is ~3% of revenues with the bulk for its own mobile IM division and the stock is largely driven by mobile market share and margins. 20