Silicon Image Updates Fourth Quarter Revenue Outlook

Records Inventory Charge

SUNNYVALE, Calif.-- January 4, 2013-- Silicon Image (NASDAQ: SIMG), a leading provider of HD connectivity solutions, today updated its revenue outlook for the quarter ending December 31, 2012.

Revenue for the fourth quarter is currently expected to be in the range of $59 million to $60 million. The Company's previous guidance for fourth quarter revenue was in the range of $64 million to $67 million. The reduction is the result of the rescheduling of certain orders by a large customer.

The Company also announced it has taken a charge to reflect the write down of certain unsalable inventory due to defects in the material used by one of our assembly vendors in the packaging process. All parts known to be defective have been identified and are within the Company's control. The Company is working with its vendor to resolve this matter as well as to recover the value of the inventory being written off. The amount of this charge as of December 31, 2012 is approximately $6.3 million which will be included in cost of goods sold and represents a GAAP pre-tax per share charge of approximately $0.08 per diluted share for the quarter. This charge will be excluded from our non-GAAP results as we believe this is an unusual and one time charge for which the Company is seeking recovery.

"Our lowered revenue guidance for the fourth quarter is the result of changes in the timing of production schedules and the level of inventory management by one of our large customers. Our operating expenses will be lower than planned for the quarter due to continued cost controls as well as lower incentive pay as a result of the reduced financial performance. With respect to our inventory charge, we are working with our vendor to either replace the inventory or compensate the Company for its incurred costs," said Camillo Martino, chief executive officer of Silicon Image. "As we enter the new year, we continue to expect our product revenues in the first quarter to be higher sequentially based on ordering patterns driven by the continued growth of MHL and an improved consumer electronics environment. We remain focused on enhancing shareholder value in 2013 through achieving our strategic and financial objectives for the year including significantly improving our profitability."

About Silicon Image, Inc.

Silicon Image is a leading provider of connectivity solutions that enable the reliable distribution and presentation of high-definition content for consumer electronics, mobile, and PC markets. The company delivers its technology via semiconductor and intellectual property products that are compliant with global industry standards and feature market leading Silicon Image innovations such as InstaPort™ and InstaPrevue™. Silicon Image's products are deployed by the world's leading electronics manufacturers in devices such as desktop and notebook PCs, DTVs, Blu-ray Disc™ players, audio-video receivers, as well as mobile phones, tablets and digital cameras. Silicon Image has driven the creation of the highly successful HDMI® and DVI™ industry standards, the latest standard for mobile devices — MHL®, and the leading 60GHz wireless HD video standard — WirelessHD®. Via its wholly-owned subsidiary, Simplay Labs, Silicon Image offers manufacturers comprehensive standards interoperability and compliance testing services. For more information, visit us at http://www.siliconimage.com/.