SST and Grace Semiconductor Expand Availability of Embedded SuperFlash Technology With New Licensing Agreement

Grace to Offer SST's SuperFlash(R) Technology in Various Logic Processes

SUNNYVALE, Calif., June 6, 2006 -- SST (Silicon Storage Technology, Inc., Nasdaq: SSTI), a leader in flash memory technology, and Grace Semiconductor Manufacturing Corporation announced today an extension of their technology licensing agreement. Grace can now offer its customers SST's self-aligned SuperFlash cell for embedded applications in 0.15 um, 0.18 um, and 0.25 um logic processes, allowing Grace to expand its customer base and applications it can serve. Grace is one of SST's major wafer foundry partners and has been in volume production with SST's SuperFlash memory products since the fourth quarter of 2003.

SST attributes the success of SuperFlash to its reliability, low power and compatibility with CMOS logic process. In addition, SST has been able to form strong relationships with semiconductor manufacturers and global foundry partners, enabling SuperFlash technology to be widely accessible to the industry.

"Because of our licensing agreement with SST, we have already been able to provide our customers qualified embedded SuperFlash cells. Some customers have already taped-out and are expected to be in production soon," said Yeshun Dong, President and CEO of Grace. "This latest agreement assures our customers that they have access to the leading edge embedded memory technology."

"This agreement with Grace is further proof that SuperFlash is the technology-of-choice for embedded applications," said Bing Yeh, President and CEO of SST. "Grace is an up and coming major foundry player in China, and we consider our continued partnership a significant endorsement of SST's embedded SuperFlash technology in these logic nodes."

About Grace Semiconductor Manufacturing Corp.

Grace Semiconductor Manufacturing Corporation (Grace) is a pure IC foundry company that specializes in integrated circuit (IC) fabrication. Grace's mission is to become a leading foundry in China by supplying high quality and advanced process technology to domestic and global customers.

Grace is located in Zhangjiang Hi-Tech Park in Pudong, Shanghai, with a total land area of 240,000 square meters. Two fabs, based on 12-inch wafer specifications, have been constructed. Currently, Fab 1 is in full production with a monthly capacity of 27,000 8-inch wafers. More information about Grace is available at http://www.gsmcthw.com/.

About Silicon Storage Technology, Inc.

Headquartered in Sunnyvale, California, SST designs, manufactures and markets a diversified range of memory and non-memory products for high volume applications in the digital consumer, networking, wireless communications and Internet computing markets. Leveraging its proprietary, patented SuperFlash technology, SST is a leading provider of nonvolatile memory solutions with product families that include various densities of high functionality flash memory components and flash mass storage products. The Company also offers its SuperFlash technology for embedded applications through its broad network of world-class manufacturing partners and technology licensees, including TSMC, which offers it under its trademark Emb-FLASH. SST's non-memory products include NAND controllers, smart card ICs, flash microcontrollers and radio frequency ICs and modules. Further information on SST can be found on the company's Web site at http://www.sst.com.