Monolithic System Technology, Inc. Announces Third Quarter Results

IP Revenues up 105% over third quarter last year

Sunnyvale, CA-October 17, 2002 – Monolithic System Technology, Inc. (MoSys), (NASDAQ: MOSY) today reported financial results for its third quarter ended September 30, 2002. Total net revenue in the quarter was $7.0 million, representing a 21% increase from the $5.8 million of net revenue for the same period a year ago and a 7% increase from revenues of $6.5 million in the second quarter of this year. Total net revenue consisted of $2.8 million from licensing, $3.5 million in royalties and approximately $784,000 in product revenue. Licensing revenue increased sequentially 5% from the $2.6 million in the second quarter and by 44% from the third quarter 2001 results. Royalty revenue in the third quarter increased by 6% over the $3.3 million in the previous quarter and by 211% in the third quarter of 2001. Product revenue was approximately one-third of the product revenue earned in the same quarter last year, but represented an increase of 21% from the $648,000 reported in the second quarter.

The gross margin percentage in the third quarter of 2002 was 87%, up from 74% in the same quarter a year ago.

Net income for the quarter was $2.8 million representing 40% of total revenue, or $0.09 per share, compared to $2.7 million, or $0.09 per share, in the second quarter of this year and $2.1 million, or $0.07 per share in the same period last year.

On August 30, 2002 MoSys announced the completion of the acquisition of ATMOS Corporation. The total purchase price was $14 million and was paid with a combination of cash, 61,729 shares of common stock to ATMOS employee shareholders, and the assumption of liabilities. The purchase price has been allocated principally to goodwill of $12 million and tangible assets, cash and other assets of $2.0 million.

ATMOS, a Canada based company located in Kanata, Ontario, is a semiconductor memory company that focuses on creating high-density, compiler-generated embedded memory solutions for SoC applications. The acquisition will enable MoSys to leverage the ATMOS team's experience in compiler technology to enhance the proliferation of MoSys' 1T-SRAM technology and to facilitate the development of additional 1T-SRAM® product offerings.

Consolidated operating results for the quarter include ATMOS' operating expenses of approximately $243,000 for the one month since the acquisition.

Commenting on the results of the third quarter, Dr. Fu-Chieh Hsu, CEO of MoSys stated, "The continued strengthening of revenues from licensing activities is reflective of the growing acceptance of 1T-SRAM technology and its value proposition. 1T-SRAM continues to offer advantages to our growing customers base by providing unparalleled solutions with high density, low power consumption, high speed and low cost."

Dr. Hsu further stated, "We are particularly pleased with the new licensing agreement with National Semiconductor announced in September for the use of our 1T-SRAM-R TM technology that incorporates Transparent Error Correction TM into future cellular baseband SoCs. Our customer base continues to expand as the advantages of 1T-SRAM and the quality of our design services and support become the industry benchmarks."

Third Quarter Business Highlights
Most recently, MoSys announced a new licensing agreement with National Semiconductor. National has entered into an agreement by which they will use MoSys' 1T-SRAM embedded memory technology in National's future cellular baseband SoCs to enable the incorporation of high performance, high density embedded memory blocks.

MoSys also announced that NEC Corporation within the quarter has now shipped more than 25 million units of 96-Mbit, high-density 1T-SRAM memory chips licensed from MoSys. These chips provide the 192 Mbits of very high performance, low-latency memory to the main system memory of the Nintendo GameCube TM . The companies also announced they have extended NEC's licensing agreement for MoSys 1T-SRAM memory technologies for additional projects in embedded DRAM and logic processes with geometries down to 90 nanometers.

Dr. Paul Russo, Chairman, President and CEO of Silicon Optix, Inc., has been elected to the MoSys Board of Directors. Additionally, Dr. Denny Ko is leaving the Board to devote more time to his duties as Managing General Partner of DynaFund Ventures, a venture capital firm located in Torrance, CA after eight years as a leading investor and Board member. Dr. Russo has also been appointed to replace Dr. Ko as a member of the Board's Compensation and Audit Committees.

Dr. Russo is the principal founder of Silicon Optix Inc., the leading supplier of advanced digital imaging processing integrated circuits focused on the capture, transmission, and display of digital visual information. Prior to Dr. Russo's involvement with Silicon Optix Inc., he was the principal founder of Genesis Microchip Inc. (NASDAQ:GNSS) and served as CEO and Director from its inception in 1987 through 2000, and as Chairman through April, 2001. Under his leadership, Genesis grew from a startup to become a leading public fabless semiconductor supplier of ICs for the projection and LCD monitor markets. Dr. Russo is also a member of the Board of Director of ATI Technologies Inc. (NASDAQ:ATYT) and was a former member of the Board of Directors of ATMOS Corporation.

Business Outlook
MoSys' President and Chief Executive Officer Dr. Fu-Chieh Hsu and Chief Financial Officer, Mark Voll will update their business outlook and give guidance for the fourth quarter during their earnings conference call at 2:00 pm PT on October 17, 2002. Third Quarter 2002 Financial Results Webcast/Conference Call The MoSys management team will host a live webcast and conference call to discuss Q3 2002 financial results beginning at 2:00 P.M. (PT) on Thursday, October 17, 2002. Investors and other interested parties may listen to the live webcast by visiting the investor relations section of the MoSys website at www.mosys.com. A replay of the conference call will be available for 48 hours beginning at 4pm PT. The replay number is 1-800-633-8284 with a pass code of 20962358. A webcast replay will also be available on the company's website.

ABOUT MOSYS
Founded in 1991, MoSys develops, licenses and markets innovative memory technology for semiconductors. The single transistor bit cell used in 1T-SRAM technology results in the technology achieving much higher density than traditional four or six transistor SRAMs while using the same standard logic manufacturing processes. 1T-SRAM technology also offers the familiar, refresh-free interface and high performance for random address access cycles associated with traditional SRAMs. In addition, this technology can reduce operating power consumption by a factor of four compared with traditional SRAM technology, contributing to making it an ideal technology for embedding large memories in System on Chip (SoC) designs. 1T-SRAM technology is in volume production both in SoC products at MoSys' licensees as well as in MoSys' standalone memories. MoSys is headquartered at 1020 Stewart Drive, Sunnyvale, California 94085.

More information is available on MoSys' website at http://www.mosys.com .

FORWARD LOOKING STATEMENTS

This press release may contain forward-looking statements about the Company including, without limitation, benefits and performance expected from use of the Company's 1T-SRAM technology.

Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors. These factors include but are not limited to, customer acceptance of our 1T-SRAM technology, proving our technology in high-volume production of licensees' integrated circuits, the level of commercial success of licensees' products such as the Nintendo GAMECUBE and cell phone hand sets, ease of integration of our 1T-SRAM with other semiconductor functions, ease of manufacturing and yields of devices incorporating our 1T- SRAM, our ability to enhance the 1T-SRAM technology or develop new technologies, the level of intellectual property protection provided by our patents, the vigor and growth of markets served by our licensees and customers, the impact of the Company's recent acquisition of ATMOS Corporation on future operating results and operations of the Company and other risks identified in the Company's most recent annual report on Form 10-K filed with the Securities and Exchange Commission, as well as other reports that MoSys files from time to time with the Securities and Exchange Commission. MoSys undertakes no obligation to update publicly any forward-looking statement for any reason, except as required by law, even as new information becomes available or other events occur in the future.

1T-SRAM ® is a MoSys trademark registered in the U.S. Patent and Trademark Office. All other trade, product, or service names referenced in this release may be trademarks or registered trademarks of their respective holders.

- # # # -

Financial Tables