Silicon Image Achieves Revenue Growth and Profitability in the Second Quarter

SUNNYVALE, Calif., July 27, 2010 – Silicon Image, Inc. (NASDAQ: SIMG), a leader in semiconductors and intellectual property (IP) for the secure distribution, presentation and storage of high-definition (HD) content, today reported financial results for its second quarter ended June 30, 2010.

Revenue for the second quarter of 2010 was $44.6 million compared to $34.3 million for the first quarter of 2010 and $37.3 million for the second quarter of 2009. 

GAAP net income for the second quarter of 2010 was $1.8 million, or $0.02 per diluted share, compared to a net loss of $7.2 million, or $0.10 per diluted share, for the first quarter of 2010 and net loss of $13.3 million, or $0.18 per diluted share, for the second quarter of 2009. GAAP net loss for the second quarter of 2009 includes pre-tax restructuring expenses of $7.1 million.

Non-GAAP net income for the second quarter of 2010 was $2.0 million, or $0.03 per diluted share, compared to a non-GAAP net loss of $3.6 million, or $0.05 per diluted share, for the first quarter of 2010 and non-GAAP net loss of $4.3 million, or $0.06 per diluted share, for the second quarter of 2009. Non-GAAP net income for the second quarter of 2010 and non-GAAP net loss for the first quarter of 2010 and second quarter of 2009 exclude stock-based compensation expense, amortization of intangible assets, restructuring charges and net tax adjustments. A reconciliation of GAAP and non-GAAP items is provided in a table following the Condensed Consolidated Statements of Operations.

"Silicon Image grew revenue and returned to profitability in the second quarter," said Camillo Martino, chief executive officer of Silicon Image, Inc. "We continue to expand our market share in the growing DTV market by offering our customers differentiated technology solutions based on our standards-plus business model. In addition, with the recent publication of the MHL 1.0 specification in June, we plan to launch new products targeted for the mobile market and we expect them to contribute to our revenue growth in 2011."

The following are Silicon Image’s financial performance estimates for the third quarter of 2010:

• Revenue: $48 million - $50 million
• Gross margin: 54% - 55%
• GAAP operating expenses: $25 million - $26 million
• Non-GAAP operating expenses: $23 million - $24 million
• Interest income: approximately $0.6 million
• Diluted shares outstanding: approximately 78 million
• Non-GAAP tax rate: approximately 2% of revenue
• Cash and investment balance of more than $170 million

Use of Non-GAAP Financial Information

Silicon Image presents and discusses gross margin, operating expenses, net income (loss) and basic and diluted net income (loss) per share in accordance with Generally Accepted Accounting Principles (GAAP), and on a non-GAAP basis for informational purposes only. Silicon Image believes that non-GAAP reporting, giving effect to the adjustments shown in the attached reconciliation, provides meaningful information and therefore uses non-GAAP reporting to supplement its GAAP reporting and internally in evaluating operations, managing and monitoring performance, and determining bonus compensation. Further, Silicon Image uses non-GAAP information as certain non-cash charges such as amortization of intangibles, stock based compensation and goodwill impairment do not reflect the cash operating results of the business. Silicon Image has chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of its operating results and to illustrate the results of operations giving effect to such non-GAAP adjustments. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

Conference Call

Silicon Image will host an investor conference call today to discuss its second quarter 2010 results at 2:00 p.m. Pacific Daylight Time and will webcast the event. To access the conference call, dial 877-545-1414 or 719-325-4810 and enter pass code 3656744. The webcast will be accessible on Silicon Image's investor relations website at http://ir.SiliconImage.com. A replay of the conference call will be available within two hours of the conclusion of the conference call through August 1, 2010. To access the replay, please dial 888-203-1112 or 719-457-0820 and enter pass code 3656744.

About Silicon Image, Inc.

Silicon Image, Inc. is a leading provider of semiconductor and intellectual property products for the secure distribution, presentation and storage of high-definition content. With a rich history of technology innovation that includes creating industry standards such as DVI and HDMI, the company’s solutions facilitate the use of digital content amongst consumer electronics, personal computer (PC) and storage devices, with the goal to securely deliver digital content anytime, anywhere and on any device. Founded in 1995, the company is headquartered in Sunnyvale, California, with regional engineering and sales offices in China, Japan, Korea and Taiwan. For more information, please visit http://www.SiliconImage.com.