Questions and Answers

Q1. In the explanation of 3Q results, the section titled "Outline of material events relating to assumed going concern" mentions that Elpida is currently confirming with the Ministry of Economy, Trade and Industry, the Development Bank of Japan, core banks and other related parties the basic conditions for future support measures. What are those basic conditions?
A1. The basic conditions are to stabilize the business and improve financial results going forward, which are being discussed with the relevant parties. We believe that the refinancing of debt will be the outcome.

Q2. It seems that discussions with banks and other parties are taking a lot of time.
A2. Time is needed to devise a future-oriented scheme for achieving steady profitability even under the strong yen.

Q3. Please comment on reports that a tie-up with Micron is one of the conditions for refinancing debt.
A3. In a situation of big losses, success cannot be achieved just by tying up with another company. Reducing losses and enabling independent survival is the first priority. After that is when a tie-up should be considered.

Q4. At the previous quarterly results meeting you mentioned the possibility of investments from customers and receiving advance payments. What progress has been made?
A4. About 50 billion yen is almost coming. Once the refinancing of our bank loans is confirmed it will be easier to raise money by issuing straight bonds or getting more support from our customers. So we want to move ahead with refinancing as fast as possible.

Q5. Are you considering selling the Hiroshima Plant or any other moves?
A5. The Hiroshima Plant is where we do development and where we produce mobile DRAMs. We're not thinking about selling it at this time.

Q6. How long will you continue production cuts? Where does the PC DRAM inventory level in the market stand compared to the end of September 2011?
A6. Right now, since cash is more important than profits and losses, production cuts will continue until market prices improve. We believe the PC DRAM inventory level is lower now compared to the end of September, but it is still higher than the optimum level.

Q7. Does room still exist to reduce costs?
A7. There is still room to lower back-end costs for PoP products installed in mobile devices. These back-end costs account for about 35% of our total manufacturing costs.

Q8. What is the target market for ReRAM?
A8. Since there is strong demand among customers who want faster speed and lots of write durability above what SLC NAND can deliver, we think replacement demand for SLC NAND will happen first. It seems that we will get involved in the area of SSD (solid state drives), which erases the difference in performance between DRAM and NAND. Also, since we have no flash memory, we didn't get much business for MCP (multi-chip packages) for mobile devices. But we want to use ReRAM as replacement for NAND or NOR flash used in MCP. The start of ReRAM volume production is planned for 2013.

Q9. Please comment on customer inquiries after the Chinese New Year and Ultrabook-related demand.
A9. Server-related demand is very strong. Demand in other areas is not as strong. Although there are differences among customers, mobile DRAM demand is pretty strong from customers doing well. We are still not totally relieved In the PC field, tight HDD supplies are leading to HDD price increases of 30-40%. Therefore, we think that demand for Ultrabooks, which use SSD, will increase. If Ultrabook sales grow, this will be a plus for us, as we hold a high share in the Ultrabook market.

Q10. What is the breakdown of 3Q sales?
A10. Sales were roughly divided half and half between Premier DRAMs and Computing DRAMs.

Q11. Assuming 4Q sales are equal with 3Q sales, how much might operating losses be reduced?
A11. Assuming no price increases from today, the amount of losses will be reduced, not by half, but meaningfully, since 30nm shipments will increase.