Silicon Image Reports Second Quarter 2005 Financial Results

SUNNYVALE, Calif., August 9, 2005- Silicon Image, Inc. (Nasdaq: SIMG), a leader in multi-gigabit semiconductor solutions for the secure transmission and storage of rich digital media, today reported financial results for its second quarter ended June 30, 2005. 

Selected Second Quarter Highlights:

• Record revenue of $50.7 million, an increase of 17.0 percent from the year ago quarter and a 14.4 percent sequential increase
• GAAP net income of $10.5 million, or $0.12 per diluted share compared to a net loss of $0.3 million, or $0.00 per share for the year ago quarter and net income of $16.6 million, or $0.19 per diluted share last quarter
• Non-GAAP* net income of $10.7 million or $0.12 per diluted share compared to non-GAAP net income of $8.3 million, or $0.10 per diluted share in the year ago second quarter and non-GAAP net income of $7.7 million, or $0.09 per diluted share last quarter
• Non-GAAP* net income as a percentage of revenue was 21.1 percent as compared to 19.2 percent in the year ago quarter and 17.5 percent last quarter
• 30 percent sequential quarterly growth in Consumer Electronics product revenue
• Signed 48 new HDMI adopters
• Announced SteelVine Storage Architecture design win with major OEM, LaCie, targeting CE applications
• Top-tier accounting firm Deloitte & Touche engaged as independent auditors in July 2005
• Awarded ISO 9001 certification
• Elected Peter Hanelt as chairman of the board of directors in July 2005

Silicon Image achieved record revenue of $50.7 million for the second quarter.  This was an increase of 17.0 percent from revenue of $43.4 million in the second quarter of 2004, and an increase of 14.4 percent sequentially from the $44.3 million in revenue in the first quarter of 2005. 

Net income under Generally Accepted Accounting Principles (GAAP), which includes stock compensation expense, amortization of intangible assets, patent assertion costs and realized gain on an investment security was $10.5 million, or $0.12 per diluted share, for the quarter ended June 30, 2005.  This compares to a net loss of $0.3 million, or $0.00 per share, for the year ago second quarter, and net income of $16.6 million, or $0.19 per diluted share for the first quarter of 2005. 

Second quarter non-GAAP* net income was $10.7 million or $0.12 per diluted share, and was calculated excluding non-cash expenses for stock compensation, a non-cash expense for the amortization of intangible assets, gains and losses on an investment security and patent assertion costs.  This compares to non-GAAP net income of $8.3 million, or $0.10 per diluted share, for the second quarter of 2004 and non-GAAP net income $7.7 million, or $0.09 per diluted share, for the first quarter of 2005. 

"We continue to execute well on both the top and bottom lines.  Our innovative product and business strategy has positioned us well for continued growth with high definition TV, PC and storage platforms, enabling secure digital content delivery in the home," said Steve Tirado, president and chief executive officer.

"Our noteworthy operational performance in the second quarter is helping to drive the continued growth of our cash and investment balances, ending the quarter with $116.8 million in cash and short term investments, up from $100.4 million at the end of March," added Darrel Slack, chief financial officer.  "In addition, we are pleased to have engaged the top-tier accounting firm Deloitte & Touche as our independent auditors." 

The company will host a conference call at 5:30 a.m. Pacific time today to discuss its second 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.  A replay of the conference call will be available on this site until 12:00 p.m. Pacific time on August 21, 2005.

Financial Tables

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About Silicon Image

Headquartered in Sunnyvale, Calif., Silicon Image, Inc. designs, develops and markets multi-gigabit semiconductor and system solutions for a variety of communications applications demanding high-bandwidth capability.  With its proprietary Multi-layer Serial Link (MSL™) architecture, Silicon Image is well positioned for leadership in multiple mass markets including PCs, consumer electronics, and storage.  Silicon Image is a leader in the global PC/display arena with its innovative digital interconnect technology and is now emerging as a leading player in the fields of storage and consumer electronics by offering robust, high-bandwidth semiconductors.  For more information on Silicon Image, visit www.siliconimage.com.

* Note Regarding Non-GAAP Financial Information

The non-GAAP financial information set forth in this press release is presented for informational purposes only.  Our presentation of non-GAAP financial information excludes stock compensation expense or benefit and amortization of intangible assets.  It also excludes patent assertion costs and gains or losses on certain investment securities, which are not directly attributable to our ongoing operations and are expected to be non-recurring or to be incurred over a limited period of time.  We believe that the exclusion of these items can help investors better understand our underlying operating performance.  Additionally, items such as these mentioned above have the potential to distort our ability to provide a meaningful comparison of financial results across reporting periods.  For these reasons, management does not evaluate these items when assessing the performance of our ongoing operations or when allocating resources.

Safe Harbor Statement

This news release contains forward-looking information within the meaning of federal securities regulations.  These forward-looking statements include statements related to future financial results, cash and investment balances, business outlook, business programs and initiatives, market growth, standards adoption and product introductions.  These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements.  In particular, future demand in the PC display, consumer electronics and storage markets may differ from current expectations, adversely affecting the company's expected future results and cash and investment balances, new product introductions may not be timely or successful, business programs and initiatives and markets may not grow at the rates anticipated and standards may not be adopted at the rates anticipated.  In addition, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors Affecting Future Results" in the most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K filed by Silicon Image with the SEC.  Silicon Image assumes no obligation to update this forward-looking information.

Silicon Image, PanelLink Cinema, SteelVine, MSL and www.siliconimage.com are trademarks, registered trademarks or service marks of Silicon Image, Inc. in the United States and other countries.