Silicon Image Reports Record Revenues and Significant Increase in Pre-Tax Income for the Third Quarter 2005

SUNNYVALE, Calif., October 26, 2005 – Silicon Image, Inc. (Nasdaq: SIMG), a leader in the secure distribution, presentation and storage of high definition content, today reported financial results for its third quarter ended September 30, 2005.

• Revenue for the third quarter was at a record $56.0 million, an increase of 10.4% from $50.7 million in the second quarter of 2005 and an increase of 17.0% from $47.9 million in the third quarter of 2004.
• Revenue from Consumer Electronics IC’s grew 23% from the prior quarter to $31 million
• Licensing revenue increased 65% from the prior quarter to $5.6 million
• IC bookings grew to a record of over $76 million
• HDMI signed 49 new adopters to a total of over 290
• Bill George, VP of Operations at On Semiconductor, joined the Silicon Image board of directors
• Pre-tax income for the third quarter was $15.7 million, an increase of 47.0% from $10.7 million in the second quarter of 2005 and an increase of 90.8% from $8.2 million in the third quarter of 2004.   Pre-tax income for the third quarter includes a stock compensation benefit of $1.4 million, as compared to a stock compensation expense of $1.3 million in the second quarter of 2005 and a stock compensation expense of $1.5 million in the third quarter of 2004.

During the quarter the Company determined that, based on favorable operating results in 2005, it may be appropriate to release a portion of the valuation allowance against certain deferred tax assets.  As a result the Company is performing an analysis to determine the extent to which the allowance should be released.  Because this analysis has not been completed, the Company has limited this release to a discussion of income before provision for income taxes. 

Cash, cash equivalents and short- term investments, at the end of the third quarter was $134.1 million, an increase of $40.6 million from December 31, 2004.  

“We continue to achieve record revenue, earnings, bookings, and growth in cash from operations as we enable digital content delivery systems in the home,” stated Steve Tirado, president and chief executive officer of Silicon Image.

“While our ongoing evaluation of the deferred tax allowance prevented us from reporting net income in this release, the fact that we are undertaking this task at this time is an affirmation of our continuing profitable performance and our confidence that we will be able to use this deferred tax asset to offset future income,” added Robert Freeman, interim chief financial officer.

The company will host a conference call at 2:00 p.m. Pacific time today to discuss its third quarter 2005 results and business outlook.  The call will be broadcast over the Internet and can be accessed on the investor relation site located at www.siliconimage.com.  To access the conference call, dial (719) 457-2625 and enter pass code 1471991.  A replay of the conference call will be available until midnight (PT), November 3, 2005.  To access the replay, dial (719) 457-0820 or (888) 203-1112, and enter pass code 1471991.

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About Silicon Image
Headquartered in Sunnyvale, Calif., Silicon Image, Inc. is a leader in the secure distribution, presentation and storage of high-definition content. Silicon Image creates and drives industry standards for digital content delivery such as DVI, HDMI and SATA, leveraging strategic partnerships with global leaders in consumer electronics and personal computing. Silicon Image offers robust, high-bandwidth semiconductors in the global PC/display, consumer electronics and storage arenas based on its innovative digital interconnect technology and has become one of the top ten IP licensing vendors in the world. For more information on Silicon Image, visit www.siliconimage.com.

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