Silicon Laboratories Inc.
Jul 24, 2006

Silicon Laboratories Reports Strong Second Quarter Performance; Company Announces Share Repurchase Program

AUSTIN, Texas--(BUSINESS WIRE)--July 24, 2006--Silicon Laboratories Inc. (Nasdaq: SLAB), a leader in high-performance, analog-intensive, mixed-signal ICs, today reported second quarter revenues of $123.5 million, an eight percent sequential increase and a fifteen percent increase over the same period in 2005. The company also announced that based on confidence in the future potential of the business, Silicon Laboratories' Board of Directors authorized a share repurchase program having an aggregate value of up to $100 million over a period of twelve months.

The repurchase program allows for repurchases to be made in open market or privately negotiated transactions subject to market conditions, applicable legal requirements and other factors.

Quarterly Business Highlights

The diversity of Silicon Laboratories' product portfolio is driving growth opportunities across a wide variety of markets and customers. Both the broad-based mixed-signal and mobile handset businesses grew sequentially in the second quarter driven by strong market demand and market share gains. The broad-based mixed-signal business experienced growth across all major product lines including modems, ProSLIC® voice over IP solutions, mixed-signal microcontrollers (MCUs) and timing solutions.

Strength in the handset market resulted in nine percent sequential growth in mobile handset revenues for the second quarter. Penetration of the company's FM tuner continued throughout the quarter across a broad set of handset customers. Silicon Laboratories also reported additional design wins with the Aero® IIe EDGE transceiver.

"Product execution is our main priority, and we're starting to see the results of this in customer engagements on new products and strong demand for existing products," said Necip Sayiner, president and CEO of Silicon Laboratories. "The expansion of our portfolio, the access to new markets and large customers and the potential of our R&D pipeline give me a great deal of confidence in the future growth and profitability potential of our business."

Financial Highlights

GAAP operating income for the second quarter was $11.3 million. Non-GAAP operating income for the second quarter was $23.8 million or 19.3 percent of revenue. GAAP net income for the second quarter was $10.1 million or 18 cents per fully diluted share. Non-GAAP net income per fully diluted share, excluding pro-forma charges, was 37 cents. The reconciling charges are set forth in the reconciliation of GAAP to non-GAAP financial measures table included below. The company's cash and short-term investments totaled approximately $407 million at quarter end.

For the third quarter of 2006, the company anticipates revenue of $122 to $127 million.

Conference Call Today

A conference call discussing the second quarter results will follow the release 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 (888) 673-3571 or 402-220-6434 (international). These replays will be available through August 14th, 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, ProSLIC, Aero and the Silicon Laboratories 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 Income
(in thousands, except per share data)

                               Three Months Ended   Six Months Ended
                               ------------------- -------------------
                                July 1,   July 2,   July 1,   July 2,
                                 2006      2005      2006      2005
                               --------- --------- --------- ---------
Revenues                       $123,504  $107,156  $238,044  $211,920
Cost of revenues                 52,996    48,576   104,296    97,136
                               --------- --------- --------- ---------
Gross profit                     70,508    58,580   133,748   114,784
Operating expenses:
  Research and development       30,467    21,374    58,024    40,927
  Selling, general and
   administrative                26,163    19,297    50,865    36,175
  In-process research and
   development                    2,600        --     2,600        --
                               --------- --------- --------- ---------
Operating expenses               59,230    40,671   111,489    77,102
                               --------- --------- --------- ---------
Operating income                 11,278    17,909    22,259    37,682
Other income (expense):
  Interest income                 3,623     1,992     6,826     3,404
  Interest expense                 (225)      (45)     (400)     (101)
  Other income (expense), net        45      (178)      291      (193)
                               --------- --------- --------- ---------
Income before income taxes       14,721    19,678    28,976    40,792
Provision for income taxes        4,584     4,064     7,775     7,805
                               --------- --------- --------- ---------
Net income                     $ 10,137  $ 15,614  $ 21,201  $ 32,987
                               ========= ========= ========= =========
Net income per share:
  Basic                        $   0.18  $   0.29  $   0.38  $   0.62
  Diluted                      $   0.18  $   0.28  $   0.37  $   0.60
Weighted-average common shares
 outstanding:
  Basic                          55,842    53,149    55,460    52,807
  Diluted                        57,858    55,027    57,761    55,196




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

                                                   Three Months Ended
                                                   -------------------
                                                    July 1,   July 2,
                                                     2006      2005
                                                   --------- ---------
GAAP operating income                              $ 11,278  $ 17,909
Stock compensation adjustments:
  Cost of revenues                                      219        10
  Research and development                            4,756       479
  Selling, general and administrative                 4,942     2,078
In-process research and development                   2,600        --
                                                   --------- ---------
Non-GAAP operating income                          $ 23,795  $ 20,476
                                                   --------- ---------

Non-GAAP operating income %                            19.3%     19.1%
                                                   --------- ---------


                                                   Three Months Ended
                                                   -------------------
                                                    July 1,   July 2,
                                                     2006      2005
                                                   --------- ---------
GAAP net income                                    $ 10,137  $ 15,614
Stock compensation adjustments:
  Cost of revenues                                      219        10
  Research and development                            4,756       479
  Selling, general and administrative                 4,942     2,078
  Provision for income taxes                         (1,403)     (965)
In-process research and development                   2,600        --
                                                   --------- ---------
Non-GAAP net income                                $ 21,251  $ 17,216
                                                   --------- ---------

Diluted shares outstanding                           57,858    55,027
Non-GAAP diluted net income per share              $   0.37  $   0.31
                                                   --------- ---------




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

                                                July 1,   December 31,
                                                 2006         2005
                                             ------------ ------------
                   ASSETS                    (Unaudited)
Current assets:
  Cash and cash equivalents                  $   179,205  $   100,504
  Short-term investments                         227,764      263,206
  Accounts receivable, net of allowance for
   doubtful accounts of $1,088 at July 1,
   2006 and December 31, 2005                     75,686       68,824
  Inventories                                     38,187       23,132
  Deferred income taxes                           14,118       11,505
  Prepaid expenses and other                      15,173        9,670
                                             ------------ ------------
Total current assets                             550,133      476,841
Property, equipment and software, net             30,854       32,584
Goodwill                                          69,856       62,877
Other intangible assets, net                      22,545       14,838
Other assets, net                                 39,302       25,863
                                             ------------ ------------
Total assets                                 $   712,690  $   613,003
                                             ============ ============

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                           $    47,626  $    43,846
  Accrued expenses                                15,637       11,307
  Deferred income on shipments to
   distributors                                   39,046       34,036
  Income taxes payable                            12,935       18,348
                                             ------------ ------------
Total current liabilities                        115,244      107,537
Long-term obligations and other liabilities       15,377        7,418
                                             ------------ ------------
Total liabilities                                130,621      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; 55,987 and 54,530
   shares issued and outstanding at July 1,
   2006 and December 31, 2005, respectively            6            5
  Additional paid-in capital                     396,998      335,284
  Deferred stock compensation                          -       (1,105)
  Retained earnings                              185,065      163,864
                                             ------------ ------------
Total stockholders' equity                       582,069      498,048
                                             ------------ ------------
Total liabilities and stockholders' equity   $   712,690  $   613,003
                                             ============ ============

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

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

SOURCE: Silicon Laboratories Inc.