Silicon Laboratories Inc.
Oct 23, 2006

Silicon Laboratories Announces Third Quarter Results

AUSTIN, Texas, Oct 23, 2006 (BUSINESS WIRE) -- Silicon Laboratories Inc. (Nasdaq:SLAB), a leader in high-performance, analog-intensive, mixed-signal ICs, today reported third quarter revenues of $115.5 million, an eleven percent increase over the same period in 2005.

Quarterly Business Highlights

Silicon Laboratories' diversifying product portfolio has multiple growth areas that performed well in the third quarter including microcontrollers, timing products and broadcast products. The broad-based mixed-signal business was up slightly in the third quarter despite weakness in the company's DAA business. New product introductions, including FM transmitters and automotive MCUs, further expanded the portfolio and are expected to be important growth areas in the future.

The mobile handset business declined as expected, however the company added significant design wins in both FM tuners and EDGE transceivers among large, top tier customers. The company's Aero® IIed transceiver announced during the third quarter is expected to increase Silicon Laboratories' total addressable market for EDGE in 2007. The company also plans to ship first revenue for its AeroFONE single-chip phone in the fourth quarter of 2006 as planned.

"We're at the beginning of several strong potential product cycles in both our mobile handset and broad-based mixed-signal businesses," said Necip Sayiner, president and CEO of Silicon Laboratories. "So while the near-term outlook remains relatively muted, we feel very good about the long-term growth potential and health of the business."

Financial Highlights

Gross margin for the third quarter was within the company's target range at 55 percent. GAAP operating income was $4.2 million. Non-GAAP operating income was $17.4 million or 15 percent of revenue. GAAP net income for the third quarter was $4.7 million, or eight cents per fully diluted share. Non-GAAP net income per fully diluted share, excluding certain charges, was 26 cents. The reconciling charges are set forth in the reconciliation of GAAP to non-GAAP financial measures table included below.

The company's balance sheet continued to be very healthy with cash and short-term investments totaling approximately $392 million at quarter end, including the impact of $35 million in stock repurchases during the quarter.

For the fourth quarter of 2006, the company anticipates revenue of $108 to $113 million.

Conference Call Today

A conference call discussing the third quarter results will follow the release today at 7:30 a.m. Central Time. An audio webcast will be available simultaneously on Silicon Laboratories' website under Investor Relations (www.silabs.com). A replay will be available after the call at the same website listed above or by calling 1 866-415-3312 or +1 203-369-0691 (international). These replays will be available through November 6th, 2006.

About Silicon Laboratories Inc.

Silicon Laboratories Inc. is a leading designer of high-performance, analog-intensive, mixed-signal integrated circuits (ICs) for a broad range of applications. Silicon Laboratories' diverse portfolio of highly integrated, patented solutions is developed by a world-class engineering team with decades of cumulative expertise in cutting-edge mixed-signal design. The company has design, engineering, marketing, sales and applications offices throughout North America, Europe and Asia. For more information about Silicon Laboratories please visit www.silabs.com.

Cautionary Language

This press release contains forward-looking statements based on Silicon Laboratories' current expectations. The words "believe," "estimate," "expect," "intend," "anticipate," "plan," "project," "will" and similar phrases as they relate to Silicon Laboratories are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Silicon Laboratories and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are the following: risks that Silicon Laboratories may not be able to maintain its historical growth; quarterly fluctuations in revenues and operating results; volatile stock price; average selling prices of products may decrease significantly and rapidly, especially for mobile handset products; dependence on a limited number of products and customers; risks associated with shifting market demand from GSM/GPRS to EDGE and WCDMA; difficulties developing new products that achieve market acceptance; risks that Silicon Laboratories may not be able to manage strains associated with its growth; dependence on key personnel; difficulties managing our manufacturers and subcontractors; difficulties managing international activities; credit risks associated with our accounts receivable; geographic concentration of manufacturers, assemblers, test service providers and customers in the Pacific Rim that subjects Silicon Laboratories' business and results of operations to risks of natural disasters, epidemics, war and political unrest; product development risks; inventory-related risks; intellectual property litigation risks; risks associated with acquisitions; the competitive and cyclical nature of the semiconductor industry and other factors that are detailed in Silicon Laboratories' filings with the SEC. Silicon Laboratories disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Note to editors: Silicon Laboratories, Silicon Labs, AeroFONE, Aero and the Silicon Labs logo are trademarks of Silicon Laboratories Inc. All other product names noted herein may be trademarks of their respective holders.

Silicon Laboratories Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share data)

                        Three Months Ended       Nine Months Ended
                     ------------------------ ------------------------
                     September 30, October 1, September 30, October 1,
                         2006         2005        2006         2005
                     ------------- ---------- ------------- ----------
Revenues                 $115,540   $103,913      $353,585   $315,833
Cost of revenues           52,142     47,269       156,439    144,405
                     ------------- ---------- ------------- ----------
Gross profit               63,398     56,644       197,146    171,428
Operating expenses:
   Research and
    development            31,264     36,604        89,288     77,531
   Selling, general
    and
    administrative         27,308     17,480        78,173     53,655
   In-process
    research and
    development               600         --         3,200         --
                     ------------- ---------- ------------- ----------
Operating expenses         59,172     54,084       170,661    131,186
                     ------------- ---------- ------------- ----------
Operating income            4,226      2,560        26,485     40,242
Other income
 (expense):
   Interest income          3,525      2,138        10,351      5,542
   Interest expense          (236)       (30)         (635)      (131)
   Other income
    (expense), net             53        (48)          344       (241)
                     ------------- ---------- ------------- ----------
Income before income
 taxes                      7,568      4,620        36,545     45,412
Provision for income
 taxes                      2,834      5,365        10,610     13,170
                     ------------- ---------- ------------- ----------
Net income (loss)          $4,734      $(745)      $25,935    $32,242
                     ============= ========== ============= ==========
Net income (loss)
 per share:
   Basic                    $0.08     $(0.01)        $0.47      $0.61
   Diluted                  $0.08     $(0.01)        $0.45      $0.58
Weighted-average
 common shares
 outstanding:
   Basic                   55,725     53,770        55,557     53,129
   Diluted                 57,151     53,770        57,566     55,244

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data)

                                                 Three Months Ended
                                              ------------------------
                                              September 30, October 1,
                                                  2006         2005
                                              ------------- ----------
GAAP operating income                               $4,226     $2,560
Stock compensation adjustments:
   Cost of revenues                                    243         20
   Research and development                          5,071        657
   Selling, general and administrative               4,270        618
Headquarters relocation costs                        2,956         --
In-process research and development                    600         --
Acquired research and development                       --     13,687
                                              ------------- ----------
Non-GAAP operating income                          $17,366    $17,542
                                              ------------- ----------

Non-GAAP operating income %                          15.0 %      16.9%
                                              ------------- ----------

                                                 Three Months Ended
                                              ------------------------
                                              September 30, October 1,
                                                  2006         2005
                                              ------------- ----------
GAAP net income (loss)                              $4,734      $(745)
Stock compensation adjustments:
   Cost of revenues                                    243         20
   Research and development                          5,071        657
   Selling, general and administrative               4,270        618
   Provision for income taxes                       (2,066)      (487)
Headquarters relocation costs                        2,956         --
In-process research and development                    600         --
Acquired research and development                       --     13,687
Taxes                                               (1,035)       588
                                              ------------- ----------
Non-GAAP net income                                $14,773    $14,338
                                              ------------- ----------

GAAP diluted shares outstanding                     57,151     53,770
Adjustments
   Weighted-average shares of common stock
    subject to repurchase                               --         72
  Stock options                                         --      1,500
                                              ------------- ----------
Non-GAAP diluted shares outstanding                 57,151     55,342
                                              ------------- ----------
Non-GAAP diluted net income per share                $0.26      $0.26
                                              ------------- ----------

Silicon Laboratories Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)

                                            September 30, December 31,
                                                2006          2005
                                            ------------- ------------
                  Assets                     (Unaudited)
Current assets:
   Cash and cash equivalents                     $84,744     $100,504
   Short-term investments                        307,195      263,206
   Accounts receivable, net of allowance
    for doubtful accounts of $423 at
    September 30, 2006 and $1,088 at
    December 31, 2005                             49,436       68,824
   Inventories                                    45,332       23,132
   Deferred income taxes                          15,214       11,505
   Prepaid expenses and other                     14,479        9,670
                                            ------------- ------------
Total current assets                             516,400      476,841
Property, equipment and software, net             41,902       32,584
Goodwill                                          77,324       62,877
Other intangible assets, net                      23,253       14,838
Other assets, net                                 37,602       25,863
                                            ------------- ------------
Total assets                                    $696,481     $613,003
                                            ============= ============

   Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                              $46,215      $43,846
   Accrued expenses                               16,381       11,307
   Deferred income on shipments to
    distributors                                  44,460       34,036
   Income taxes payable                           10,945       18,348
                                            ------------- ------------
Total current liabilities                        118,001      107,537
Long-term obligations and other liabilities       18,281        7,418
                                            ------------- ------------
Total liabilities                                136,282      114,955

Commitments and contingencies

Stockholders' equity:
   Preferred stock -- $0.0001 par value;
    10,000 shares authorized; no shares
    issued and outstanding                            --           --
   Common stock -- $0.0001 par value;
    250,000 shares authorized; 54,919 and
    54,530 shares issued and outstanding at
    September 30, 2006 and December 31,
    2005, respectively                                 5            5
   Additional paid-in capital                    370,395      335,284
   Deferred stock compensation                        --       (1,105)
   Retained earnings                             189,799      163,864
                                            ------------- ------------
Total stockholders' equity                       560,199      498,048
                                            ------------- ------------
Total liabilities and stockholders' equity      $696,481     $613,003
                                            ============= ============



Certain prior period amounts have been reclassified to conform to the
                     current period presentation.

SOURCE: Silicon Laboratories Inc.

Silicon Laboratories Inc., Austin
Shannon Pleasant, 512-464-9254
investor.relations@silabs.com