inSilicon Corporation Reports Third Quarter 2002 Financial Results

SAN JOSE, Calif., July 16, 2002 -inSilicon Corporation (Nasdaq: INSN) -- a leading provider of communications technology for complex systems-on-chip (SOC) -- today reported financial results for the third fiscal quarter ended June 30, 2002.

Net revenue for the third fiscal quarter of 2002 was $4.7 million compared to net revenue of $5.2 million in the second fiscal quarter of 2002 and net revenue of $6.0 million in the third fiscal quarter of 2001. Pro forma net loss for the third fiscal quarter of 2002 was $0.6 million, or ($0.04) per basic share, compared with a pro forma net loss of $0.1 million, or ($0.01) per basic share, in the second quarter of fiscal 2002 and a pro forma net loss of $0.7 million, or ($0.05) per basic share, in the third quarter of fiscal 2001.

For the nine month period ended June 30, 2002, the Company reported net revenue of $14.6 million compared to $17.3 million in the first nine months of fiscal 2001. The pro forma net loss for the nine month period ended June 30, 2002 was $1.3 million, or ($0.08) per basic share, compared with a pro forma net loss of $1.4 million, or ($0.09) per basic share, in the comparable period of fiscal 2001. Pro forma operating expenses totaled $15.2 million during the nine month period ended June 30, 2002, compared to $19.2 million in the comparable period of fiscal 2001.

Pro forma net loss excludes certain non-cash and other charges related to the amortization of purchased intangible assets and stock based compensation, and includes a pro-forma tax adjustment. These items totaled approximately $1.9 million in the third quarter of fiscal 2002. Including these items, the Company generated a net loss of $2.5 million, or ($0.16) per basic share in the third quarter of fiscal 2002, as compared to a net loss of $2.3 million or ($0.15) per basic share, in the third quarter of fiscal 2001. The net loss for the nine month period ended June 30, 2002, including non-cash and other charges, was $8.0 million, or ($0.52) per basic share, compared to a net loss of $4.9 million, or ($0.33) per basic share, in the comparable period of fiscal 2001. Results for the nine months ended June 30, 2002 include $2.4 million for restructuring charges and write-downs of purchased technology.

"Last quarter's revenue reflects our customers' return to cautious purchasing," said Barry Hoberman, President and Chief Executive Officer. "Market activity continues to look encouraging, but customer delays in orders and project starts are still affecting revenue. However, our cost control strategy has been implemented successfully and we believe we are well positioned to withstand the pressures of this uncertain market. Our cash position remains strong and we are poised to take advantage of increased customer demand for our products as the recovery begins."

The company will provide future revenue guidance on its quarterly conference call with the investment community today.

Highlights in the Quarter

• Announced Agilent Technologies had licensed our USB 2.0 Analog Transceiver for use in future system-on-chip designs.

• USB 2.0 Analog Transceiver revenue exceeded 10% of the total quarterly revenue for two out of the last three quarters.

• Released JPEG 2000 CODEC for embedded applications.

• Launched Triple-Speed Gigabit Ethernet MAC Subsystem for SOC designs.

About inSilicon
inSilicon Corporation is a leading provider of connectivity semiconductor intellectual property used by semiconductor and systems companies to design systems-on-chip that are critical components of innovative wired and wireless products. inSilicon's technology provides customers faster time-to-market, reduced risk, and lower development cost. The company's broad portfolio of analog and mixed-signal products and enabling connectivity technologies, including USB, PCI, Ethernet, IEEE-1394, JPEG, and Java™ Acceleration are used in a wide variety of markets encompassing communications, consumer, computing, multimedia, and office automation.

Conference Call Webcast
The Company will hold its quarterly conference call with the investment community today, July 16, 2002, at 1:30 p.m. Pacific time. This call will be webcast live and a replay of the call will be available for a 90-day period at http://www.insilicon.com .

inSilicon and JVX are trademarks of inSilicon Corporation. All other trademarks are the property of their respective owners.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on management's beliefs as well as on a number of assumptions concerning future events made by and information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside inSilicon's control, that could cause actual results to differ materially from such statements. For a more detailed description of the factors that could cause such a difference, please see inSilicon's filings with the Securities and Exchange Commission including its Annual Report on Form 10-K. inSilicon disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results of inSilicon.

 inSilicon Corporation
Pro Forma Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)

 inSilicon Corporation
Pro Forma Consolidated Statements of Operations - continued
(in thousands, except per share amounts)
(Unaudited)

The above pro forma statements have been adjusted to eliminate the following non-cash and other charges:

inSilicon Corporation
Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)

inSilicon Corporation
Condensed Consolidated Balance Sheets
(in thousands)