Silicon Motion Technology Updates 4Q08 Guidance

Silicon Motion Technology Corporation, a fabless semiconductor company that designs, develops, and markets universally compatible, high-performance, low-power semiconductor solutions for the multimedia consumer electronics market, today announced an update to its fourth quarter 2008 financial guidance.

The Company now expects:

Q4 2008 revenue

• New guidance: down 25 to 30% sequentially
• Prior guidance: flat to down 10% sequentially

Q4 2008 gross margin

• New guidance: same as prior guidance
• Prior guidance: 48 to 50% range

Q4 2008 operating expense

• New guidance:  same as prior guidance
• Prior guidance:  $15 to 16 million (excluding stock-based compensation, acquisition-related charges, and one time items)

"Although our industry clearly has been affected by the global economic slowdown — and we are not immune and have been broadly impacted across all product lines and geographies — we continue to execute well under this current environment," said Wallace Kou, President and CEO of Silicon Motion. "Weak consumer demand and resulting inventory build at many of our customers have had an adverse effect on our sales momentum, and we do not expect this situation to change in the first quarter. That said, while our Q4 sales are anticipated to be weaker than expected, our storage controller shipment growth for full year 2008 should increase 25 to 35%, which is well within the growth rate range for the flash card industry forecasted by IDC and Gartner. Let me add that we have, in addition to aggressively defending our business franchise, actively pushed to roll out a broad number of new controllers to support sub-50 nm next generation NAND flash components that require more sophisticated wear-leveling and error correction algorithms. These next generation flash components are only beginning to come to market. For some of our other key products, for example, our hybrid SLC-MLC SSD controllers will be available in January 2009 for customer sampling, and we have also successfully started delivering our new T-DMB mobile TV SoC solution to customers immediately after it entered mass production this quarter."