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Silicon Motion Announces Second Quarter Results for the Period Ended June 30, 2008

Second Quarter 2008, Jul 29, 2008 (PrimeNewswire via COMTEX News Network) --

Financial Highlights

 *   Net sales increased 2% year-over-year to US$48.6 million
 *   Gross margin excluding stock-based compensation declined from
     2Q07 to 47.3%, mainly because of a mobile communications product
     mix shift from tuners to SiPs and write-offs of obsolete
     inventory; mobile storage product gross margins are unchanged
     from 1Q08
 *   GAAP gross margin declined to 47.1%
 *   Operating margin excluding stock-based compensation, acquisition-
     related charges, and one-time items decreased from 32.0% in 2Q07
     to 17.5%
 *   Net income excluding stock-based compensation, acquisition-
     related charges, foreign exchange gain or loss, and one-time
     items decreased 44% year-over-year to US$8.8 million
 *   Diluted earnings per ADS excluding stock-based compensation,
     acquisition-related charges, foreign exchange gain or loss, and
     one-time items were US$0.26, a 43% decrease from US$0.46 in 2Q07
 *   GAAP diluted earnings per ADS were US$0.06, down 78% from US$0.27
     in 2Q07

 Business Highlights
 *  Total unit shipments increased 29% year-over-year and decreased
    10% sequentially to approximately 101 million units
 *  Storage controller unit shipments increased 31% year-over-year
    from a strong 2Q07 and decreased 11% quarter-over-quarter from a
    very strong 1Q08
 *  SSD controller shipments increased to over 1 million units as a
    result of continued demand for low-cost and ultra mobile notebook
    PCs, as well as accelerating demand from industrial and enterprise
    applications
 *  New eMMC and eUSB embedded flash controller design-wins received
    from Hynix, Numonyx, and Micron and developed for tier-1 handset
    and GPS OEMs, as well as for enterprise applications
 *  New controller business signed with Intel and Samsung for their
    OEM USB flash drive products
 *  Mobile TV IC revenue increased more than 31% sequentially and
    approximately 130% year-over-year as we continue to scale in Korea
    and ship in limited quantities to Chinese handset OEMs such as ZTE
    and Amoisonic

TAIPEI, Taiwan, July 29, 2008 (PRIME NEWSWIRE) -- Silicon Motion Technology Corporation (Nasdaq:SIMO) (the "Company") today announced its second quarter 2008 financial results. Second quarter net sales increased 2% year-over-year to US$48.6 million. GAAP net income decreased 78% year-over-year to US$2.0 million, or US$0.06 per diluted ADS, compared to US$0.27 per diluted ADS in the second quarter of 2007.

Non-GAAP net income, which excludes stock-based compensation, acquisition-related charges, foreign exchange gain or loss, and one-time items, decreased 44% year-over-year to US$8.8 million, or US$0.26 per diluted ADS, compared to US$0.46 per diluted ADS in the second quarter of 2007.

Commenting on the results, Silicon Motion's President and CEO, Wallace Kou, said:

"The second quarter turned out to be an extremely challenging period for the Company. Although our overall first half of 2008 revenues are in-line with our original expectations, our second quarter sales, particularly sales of storage products, were unfavorably affected by weak demand from many of our customers, both in our retail as well as bundled card controller segments. Strength in our first quarter revenue performance was largely offset by weakness in the second quarter. Our retail card customers were negatively affected by both higher NAND flash prices during part of the second quarter, together with softening end-consumer demand, primarily in Europe and the US. Our sales to China met expectations, but were nevertheless negatively affected by the devastating earthquake in Sichuan. In the second quarter, NAND flash vendors started reducing their capacity and therefore also reduced their sales of OEM cards and procurement of controllers from us. Our handset bundled business also underperformed, but mostly because of temporary product transition issues. Handset OEMs began taking advantage of improved affordability of NAND flash late this quarter to transition from bundling lower density cards to bundling higher density cards.

"Our business also had some important positive developments. Increasingly affordable NAND flash continued to create new opportunities for us in SSDs, embedded flash, and for non-consumer applications. This quarter we won embedded flash controller business from Hynix and Numonyx for eMMC solutions designed for tier-1 global handset and GPS OEMs. We also won embedded flash controller business at Micron for an eUSB solution targeting enterprise storage applications. Importantly, we have already started shipping some of these embedded flash controllers. Our embedded flash controller for handsets are on track to ship in the fourth quarter.

"This quarter, we shipped over one million SSD controllers for ultra low cost PCs and other applications, with a big part of our sales going to the ASUS eeePC and HP Mini-Note. We also shipped increasing numbers of SSD controllers for industrial and enterprise applications. Separately, we are on track to release additional engineering samples of our recently announced series of best-in-class MLC SSD controllers in the third quarter and expect to begin production in the fourth quarter.

"Our mobile TV IC revenue increased over 31% this quarter. Our overall communications products now account for 21% of our total revenue. We continue to have the leading position in Korea, our home market for this business, and have a developing presence in China with local handset OEM customers that include ZTE and Amoisonic. We remain excited about our mobile TV business and believe we have one of the most comprehensive and competitive portfolios of mobile TV solutions, including for T-DMB, S-DMB, DVB-H, C-MMB, T-MMB, and ISDB-T standards, in the global market."

Second Quarter 2008 Financial Review (1)

Sales

Net sales in the second quarter totaled US$48.6 million, representing an increase of 2% from the second quarter of 2007 and a decrease of 7% compared with the first quarter of 2008. In the second quarter of 2008, mobile storage products accounted for 73% of net sales, mobile communications 21% of net sales, and multimedia SoCs 7% of net sales.

Net sales of mobile storage products, which include flash memory card controllers, USB flash drive controllers, card reader controllers, SSD controllers, and embedded flash controllers, decreased 6% from the second quarter of 2007 to US$35.4 million for the second quarter of 2008 and decreased 14% from the first quarter of 2008 primarily because of reduced memory card controller sales. Storage controller shipments increased 31% year-over-year and decreased 11% quarter-over-quarter.

Net sales of mobile communication products, which include mobile TV tuners, CDMA RF ICs, and electronic toll collection (ETC) RF ICs, increased 126% from the second quarter of 2007 to US$10.0 million for the second quarter of 2008 and increased 31% from the first quarter of 2008, primarily because of higher mobile TV IC sales.

Net sales of multimedia SoC products, which include embedded graphics processors, MP3 SoCs, and PC camera SoCs, declined 43% from the second quarter of 2007 and increased 8% from the first quarter of 2008 to US$3.2 million for the second quarter of 2008 mainly because of a slight increase in graphics sales.

Gross and Operating Margins

Gross margin excluding stock-based compensation was 47.3%, which was lower than 51.2% in the first quarter of 2008. This decrease was due primarily to a rapid shift of communications products from higher margin tuners to lower margin SiPs, which combine Silicon Motion's tuners with procured demodulators, and a US$1.0 million write-off of mainly obsolete MP3 SoCs, image processor SoCs, and card reader controllers. Gross margins for mobile storage products in the second quarter of 2008 were unchanged from the first quarter of 2008.

Operating expense excluding stock-based compensation, acquisition-related charges, and one-time items was US$14.5 million in the second quarter of 2008, which was higher than US$11.9 million in the first quarter of 2008. R&D expenditures excluding stock-based compensation was US$8.9 million, which was higher than US$6.3 million in the first quarter of 2008, mainly because of new photomask and product development costs. Selling and marketing expenses excluding stock-based compensation was US$2.3 million in the second quarter of 2008, which was unchanged from the first quarter of 2008. General and administrative expenses excluding stock-based compensation was US$4.0 million in the second quarter of 2008, which was slightly higher than US$3.9 million in the first quarter of 2008. Stock-based compensation was US$2.2 million in the second quarter of 2008, unchanged from the first quarter of 2008. Acquisition-related charges in the second quarter of 2008 were US$1.6 million, which was unchanged from US$1.6 million in the first quarter of 2008. Litigation expenses increased slightly from US$0.6 million in the first quarter of 2008 to US$0.7 million in the second quarter of 2008.

Operating margin excluding stock-based compensation, acquisition-related charges, and one-time items was 17.5% for the second quarter of 2008, which was lower than 28.4% in the first quarter of 2008. GAAP operating margin was 8.2%, which was lower than 19.9% in the first quarter of 2008.

Other Income and Expenses

Net total other income excluding net foreign exchange gain or loss was US$0.6 million, which was unchanged from US$0.6 million in the first quarter of 2008. GAAP net total other income was US$0.4 million, compared to a loss of US$2.1 million in the first quarter of 2008.

Earnings

Net income excluding stock-based compensation, acquisition-related charges, net foreign exchange gain or loss, and one-time items decreased 44% year-over-year to US$8.8 million in the second quarter of 2008. Diluted earnings per ADS excluding stock-based compensation, acquisition-related charges, net foreign exchange gain or loss, and one-time items were US$0.26, down 44% from US$0.46 in the second quarter of 2007. One time items affecting earnings in the second quarter of 2008 also include a one-time US$2.1 million FIN48 tax charge, which relates to uncertainties about income tax liabilities that resulted from an arbitrary change in interpretation of tax codes by the Taiwan tax authorities following a routine review of the Company's tax filings.

GAAP net income decreased 78% year-over-year to US$2.0 million in the second quarter of 2008. Diluted GAAP earnings per ADS were US$0.06, a decrease of 78% from US$0.27 in the second quarter of 2007.

Balance Sheet

Cash, cash equivalents, and short-term investments decreased from US$110.7 million at the end of the fourth quarter of 2007 to US$95.0 million at the end of the second quarter of 2008. At the end of the fourth quarter of 2007, there were no short-term borrowings, which relate mainly to the current portion of other long term liabilities. There were US$3.3 million in short-term borrowings at the end of the second quarter of 2008. Other long term liabilities, which are comprised of loans from the Korean government for R&D financing, increased from US$1.6 million at the end of the fourth quarter of 2007 to US$2.1 million at the end of the second quarter of 2008.

Cash Flow

Our cash flows were as follows:



                     6 months ended June 30, 2008
                     ----------------------------
                                                 (In US$ millions)

 Net income                                                   10.2
 Depreciation & amortization                                   5.4
 Changes in operating assets and liabilities                  27.1
 Others                                                        3.4
                                                               ---
  Net cash provided by (used in) operating activities         46.1
                                                              ====
 Acquisition of properties                                    (9.8)
 Others                                                        0.4
                                                               ---
  Net cash provided by (used in) investing activities         (9.4)
                                                             =====
 Share repurchase-                                           (25.2)
 Others                                                        8.1
                                                               ---
 Net cash provided by (used in) financing activities         (17.1)
                                                             =====
 Effects of changes in foreign currency exchange rates
  on cash                                                     (2.0)
                                                             -----
 Net increase in cash and cash equivalents                   17.6%
                                                             =====

During the second quarter of 2008, Silicon Motion spent US$4.0 million to acquire office space in Shanghai to house the Company's expanding R&D team and US$25.2 million to repurchase American Depositary Receipts (ADSs).

Share Repurchase Program:

On March 12, 2008, the Company announced a US$40 million share repurchase program. During the three months ended June 8, 2008, the Company repurchased 1.5 million ADSs for a total cost of US$25.2. The weighted average price per ADS repurchased was US$17.16.

Business Outlook:

Silicon Motion's President and CEO, Wallace Kou, added:

"When we provided our 2008 full year guidance earlier this year, we did factor in the effect of a global economic slowdown. However, we believe we may have underestimated the severity of weak global consumer confidence for the second half of 2008, especially as it relates to our mobile storage products. We believe that since the economic slowdown and related weakness in consumer confidence weakness are already leading to closures of older NAND flash fabs and push-outs of investments in new flash capacity, it is prudent that we take an even more conservative view of the second half of 2008. Nevertheless, our sales of our mobile TV solutions are tracking well. We expect sales of these products to scale further during the second half of 2008 and become a larger part of our product mix by the end of the year. We are on-track in terms of our MLC SSD controller sampling and production timetable, and sales of multimedia SoCs are expected to grow moderately in the second half of 2008."

As a result, Management is revising its full year 2008 guidance:



    * Revenue of US$200 to US$205 million, which compares to
      previously announced guidance of US$225 to US$235 million.  The
      new guidance still implies year-over-year growth of 11% to 15%
    * Non-GAAP and GAAP gross margin of 48 to 51%, which compares to
      previously announced guidance of 52 to 53%
    * Non-GAAP earnings per ADS of approximately US$1.30 - 1.40, which
      compares to previously announced guidance of US$1.95 - 2.05.
      GAAP earnings per ADS of approximately US$0.50 - 0.60, which
      compares to previously announced guidance of US$1.55 - 1.65

For the third quarter of 2008, management expects:



    * Revenue of approximately US$44 - 46 million, which represents 0
      to 4% decrease from the third quarter of 2007 and a 5 - 9%
      decrease over the second quarter of 2008
    * Non-GAAP and GAAP gross margin to be in the 48- 50% range

Conference Call & Webcast:



 The Company's management team will conduct a conference call at
 8:00am Eastern Time on July 30.
    (Speakers)
    Wallace Kou, President & CEO
    Riyadh Lai, CFO

    PRE-REGISTRATION:
    https://www.theconferencingservice.com/prereg/key.process
     key=PNYR43WU8

    CONFERENCE CALL ACCESS NUMBERS:
    USA (Toll Free): 1 888 679 8018
    USA (Toll): 1 617 213 4845
    Taiwan (Toll Free): 0080 144 4360
    Participant Passcode: 9546 8335

    REPLAY NUMBERS (for 7 days):
    USA (Toll Free): 1 888 286 8010
    USA (Toll): 1 617 801 6888
    Participant Passcode: 3126 0473

A webcast of the call will be available on the Company's website at www.siliconmotion.com.

Discussion of Non-GAAP Financial Measures

To supplement the Company's unaudited selected financial results calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the Company discloses certain non-GAAP financial measures that exclude stock-based compensation, acquisition-related charges and one-time items, including, non-GAAP cost of sales, non-GAAP gross profit, non-GAAP selling, general, and administrative expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per diluted ADS. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all the amounts associated with the Company's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measure. We compensate for the limitations of our non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

Our non-GAAP financial measures are provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors as these non-GAAP results exclude certain expenses, gains and losses that we believe are not indicative of our core operating results and because it is consistent with the financial models and estimates published by many analysts who follow the company. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with our forecasts, and for benchmarking our performance externally against our competitors. Also, when evaluating potential acquisitions, we exclude the items described below from our consideration of the target's performance and valuation. Since we find these measures to be useful, we believe that our investors benefit from seeing the results from management's perspective in addition to seeing our GAAP results. We believe that these non-GAAP measures, when read in conjunction with the Company's GAAP financials, provide useful information to investors by offering:



     -- the ability to make more meaningful period-to-period
        comparisons of the Company's on-going operating results;
     -- the ability to better identify trends in the Company's
        underlying business and perform related trend analysis;
     -- a better understanding of how management plans and measures
        the Company's underlying business; and
     -- an easier way to compare the Company's operating results
        against analyst financial models and operating results of our
        competitors that supplement their GAAP results with non-GAAP
        financial measures.

The following are explanations of each of the adjustments that we incorporate into our non-GAAP measures, as well as the reasons for excluding each or these individual items in our reconciliation of these non-GAAP financial measures:

Stock-based compensation expense consists of non-cash charges incurred as a result of the Company's adoption of SFAS 123R relating to the fair value of stock options and restricted stock units awarded to employees. The Company believes that the exclusion of these non-cash charges provides for more accurate comparisons of our operating results to our peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, the Company believes it is useful to investors to understand the specific impact the application of SFAS 123R has on its operating results.

Intangible amortization consists of non-cash charges that can be impacted by the timing and magnitude of our acquisitions. The Company considers its operating results without these charges when evaluating its ongoing performance and forecasting its earnings trends, and therefore excludes such charges when presenting non-GAAP financial measures. The Company believes that the assessment of its operations excluding these costs is relevant to its assessment of internal operations and comparisons to the performance of its competitors.

In-process research and development consists of one-time charges incurred in connection with the acquisition of FCI in the second quarter of 2007 that otherwise would not have been incurred and therefore we have excluded the effects of these charges from our non-GAAP operating income and non-GAAP net income. In-process research and development consists of technology projects which, as of acquisition date, had not yet reached technological feasibility and there are no future alternative uses that exist. We believe it is useful for investors to understand the effect of this expense on our statement of operations. This non-GAAP adjustment is intended to reflect acquisition-related expense incurred that is not directly associated with our continuing operations.

Litigation expenses consist of the legal expenses relating to complaints SanDisk filed in the US International Trade Commission and the US District Court for the Western District of Wisconsin.

Foreign exchange gains and losses consists of translation gains and/or losses of non-NT$ denominated current assets and current liabilities, as well as certain other balance sheet items which result from the appreciation or depreciation of non-NT$ currencies against the NT$.

FIN48 tax charge relates to uncertainties about income tax liabilities that had resulted from an arbitrary change in interpretation of tax codes by the Taiwan tax authorities following a routine review of our tax filings.



                  Silicon Motion Technology Corporation
                    Consolidated Statements of Income
    (in thousands, except percentages and per share data, unaudited)


                            For the Three Months Ended
             -----------------------------------------------------
                        Mar. 31,                   Mar. 31,
              Jun. 30,   2008     Jun. 30, Jun. 30, 2008   Jun. 30,
                2007   ---------   2008     2007   -------   2008
               (NT$)     (NT$)     (NT$)    (US$)   (US$)   (US$)
             --------- --------- --------- ------- ------- -------
 Net Sales   1,446,207 1,586,074 1,475,747  47,635  52,242  48,608

 Cost of
  sales        685,693   776,945   780,523  22,585  25,591  25,709
             --------- --------- --------- ------- ------- -------
 Gross
  profit       760,514   809,129   695,224  25,050  26,651  22,899

 Operating
  expenses
   Research
    &
    devel-
    opment     200,818   226,207   305,203   6,615   7,451  10,053
   Sales &
    market-
    ing         78,846    81,581    83,093   2,597   2,687   2,737
   General &
    adminis-
    trative     95,588   136,509   136,720   3,148   4,496   4,503
    In-
     process
     research
     and de-
     velop-
     ment       69,189        --        --   2,279      --      --
   Amorti-
    zation
    of intan-
    gibles
    assets      54,472    48,806    48,467   1,794   1,608   1,596
             --------- --------- --------- ------- ------- -------
 Operating
  income       261,601   316,026   121,741   8,617  10,409   4,010

 Non-
  operating
  income
  (expense)
  Gain on
   sale of
   investments   4,886     9,249     5,816     161     305     191
  Interest
   income
   (net)        12,366    10,541    10,488     408     347     345
  Foreign
   exchange
   gain
   (loss)       (4,384)  (81,944)   (7,329)   (144) (2,699)   (241)
  Dividend
   income          772        --     2,239      25      --      74
  Others            18      (967)       24      --     (32)      1
             --------- --------- --------- ------- ------- -------
  Subtotal      13,658   (63,121)   11,238     450  (2,079)    370
             --------- --------- --------- ------- ------- -------
 Income
  before tax   275,259   252,905   132,979   9,067   8,330   4,380
 Income tax
  expense        2,915     1,939    73,161      97      64   2,410
             --------- --------- --------- ------- ------- -------
 Net income    272,344   250,966    59,818   8,970   8,266   1,970
             ========= ========= ========= ======= ======= =======
 Basic
  earnings
  per ADS      NT$8.43     $7.58     $1.83   $0.28    $0.25  $0.06
 Diluted
  earnings
  per ADS      NT$8.14     $7.48     $1.79   $0.27    $0.25  $0.06

 Margin
  Analysis:

 Gross
  margin         52.6%     51.0%     47.1%   52.6%    51.0%  47.1%
 Operating
  margin         18.1%     19.9%      8.2%   18.1%    19.9%   8.2%
 Net margin      18.8%     15.8%      4.1%   18.8%    15.8%   4.1%

 Additional
  Data:
 Weighted
  avg. ADS
  equiv-
  alents 2      32,312    33,093    32,775  32,312   33,093 32,775
 Diluted ADS
  equiv-
  alents        33,453    33,546    33,377  33,453   33,546 33,377
 -----------------------------------------------------------------

 -------------------------
 2 Assumes all outstanding ordinary shares are represented by ADSs.
   Each ADS represents  four ordinary shares.

                 Silicon Motion Technology Corporation

         Reconciliation of GAAP to Non-GAAP Operating Results
   (in thousands, except percentages and per share data, unaudited)


                            For the Three Months Ended
            ------------------------------------------------------
                               Jun. 30,          Mar. 31,
             Jun. 30, Mar. 31,  2008   Jun. 30,   2008    Jun. 30,
              2007     2008    -------   2007    -------    2008
              (NT$)    (NT$)    (NT$)    (US$)    (US$)    (US$)
             -------  -------  -------  -------  -------  -------
 GAAP cost
  of sales   685,693  776,945  780,523   22,585   25,591   25,709
 Adjustment
  for share-
  based
  compensa-
  tion        (3,972)  (3,086)  (3,045)    (131)    (102)    (100)
             =======  =======  =======  =======  =======  =======
 Non GAAP
  cost of
  sales      681,721  773,859  777,478   22,454   25,489   25,609
             =======  =======  =======  =======  =======  =======

 GAAP
  operating
  income     261,601  316,026  121,741    8,617   10,409    4,010
 Adjustment
  for share
  -based
  compensa-
  tion
  within:

 Cost of
  sales        3,972    3,086    3,045      131      102      100
  Research &
   develop-
   ment       39,915   35,113   35,410    1,315    1,157    1,166
  Sales &
   marketing  14,199   12,743   12,856      468      420      423
  General &
   adminis-
   trative    19,985   16,697   16,274      658      550      536
 In-process
  research
  and
  develop-
  ment        69,189       --       --    2,279       --       --
 Amortiza-
  tion of
  intan-
  gibles
  assets      54,472   48,806   48,467    1,794    1,608    1,596
 Litigation
  expenses        --   18,720   20,405       --      617      672
             -------  -------  -------  -------  -------  -------
 Non-GAAP
  operating
  income     463,333  451,191  258,198   15,261   14,861    8,505
             =======  =======  =======  =======  =======  =======

 GAAP Net
  income     272,344  250,966   59,818    8,970    8,266    1,970
 Adjustment
  for share
  -based
  compen-
  sation
  within:

 Cost of
  sales        3,972    3,086    3,045      131      102      100
  Research &
   develop-
   ment       39,915   35,113   35,410    1,315    1,157    1,166
  Sales &
   marketing  14,199   12,743   12,856      468      420      423
  General &
   adminis-
   trative    19,985   16,697   16,274      658      550      536
 In-process
  research
  and
  develop-
  ment        69,189       --       --    2,279       --       --

 Amortiza-
  tion of
  intangi-
  bles
  assets      54,472   48,806   48,467    1,794    1,608    1,596
 Litigation
  expenses        --   18,720   20,405       --      617      672
 Foreign
  exchange
  loss         4,384   81,944    7,329      144    2,699      241
 FIN 48 tax
  charge          --       --   64,328       --       --    2,119
             -------  -------  -------  -------  -------  -------
 Non-GAAP
  Net income 478,460  468,075  267,932   15,759   15,419    8,823
             =======  =======  =======  =======  =======  =======


                          For the Three Months Ended
              -----------------------------------------------------
                                 Jun. 30,          Mar. 31,
              Jun. 30,  Mar. 31,  2008    Jun. 30,   2008   Jun. 30,
                2007     2008    -------   2007    -------   2008
                (NT$)    (NT$)    (NT$)    (US$)    (US$)    (US$)
               -------  -------  -------  -------  -------  -------
 Diluted
  earnings
  per ADS:

 GAAP            $8.14    $7.48    $1.79    $0.27    $0.25    $0.06

 Non-GAAP       $13.85   $13.51    $7.79    $0.46    $0.44    $0.26

 Shares used
  in
  computing
  diluted net
  income per
 share:
 GAAP           33,453   33,546   33,377   33,453   33,546   33,377
 Non-GAAP       34,558   34,640   34,386   34,558   34,640   34,386

 Gross margin

 GAAP            52.6%    51.0%    47.1%    52.6%    51.0%    47.1%
 Non-GAAP        52.9%    51.2%    47.3%    52.9%    51.2%    47.3%

 Operating
  margin

 GAAP            18.1%    19.9%     8.2%    18.1%    19.9%     8.2%
 Non-GAAP        32.0%    28.4%    17.5%    32.0%    28.4%    17.5%

                   Silicon Motion Technology Corporation
                      Consolidated Statements of Income
           (in thousands, except percentages, and per share data)
                                (unaudited)

                               For the Six Months Ended
                  -------------------------------------------------
                   Jun. 30,  Jun. 30,  Jun. 30,  Jun. 30,
                  --------- --------- --------- ---------
                    2007      2008      2007      2008      Change
                  --------- --------- --------- ---------   -------
                    (NT$)     (NT$)     (US$)     (US$)       (%)
                  --------- --------- --------- ---------   -------

 Net Sales        2,617,720 3,061,821    86,223   100,850       17%
 Cost of sales    1,230,189 1,557,468    40,520    51,300       27%
 Gross profit     1,387,531 1,504,353    45,703    49,550        8%
 Operating
  expenses
  Research &
   development      374,762   531,410    12,344    17,503       42%
  Sales &
   marketing        139,994   164,674     4,611     5,424       18%
  General &
   administrative   162,138   273,229     5,341     9,000       69%
  In-process
   research and
   development       69,189        --     2,279        --     -100%
  Amortization of
   intangible
   assets            54,472    97,273     1,794     3,204       79%
                  --------- --------- --------- ---------
  Subtotal          800,555 1,066,586    26,369    35,131       33%
                  --------- --------- --------- ---------
 Operating income   586,976   437,767    19,334    14,419      -25%

 Non-operating
  expense
  (income)
  Gain on sale of
   investments       10,233    15,065       336       496       47%
  Interest income
   (net)             32,909    21,028     1,085       692      -36%
  Investments
   income               772     2,239        25        74      190%
  Foreign
   exchange gain
   (loss)            (6,344)  (89,274)     (209)   (2,940)   1,307%
  Others                 17      (941)        1       (31)  -5,635%
                  --------- --------- --------- ---------
  Subtotal           37,587   (51,883)    1,238    (1,709)    -238%
                  --------- --------- --------- ---------
 Income before
  tax               624,563   385,884    20,572    12,710      -38%
 Income tax
  expense            26,452    75,100       871     2,474      184%
                  --------- --------- --------- ---------
 Net income         598,111   310,784    19,701    10,236      -48%
                  ========= ========= ========= =========
 Basic earnings
  per ADS          NT$18.94   NT$9.41   US$0.62   US$0.31
 Diluted earnings
  per ADS          NT$18.33   NT$9.27   US$0.60   US$0.31

 Margin
  Analysis:
 Gross margin         53.0%     49.1%     53.0%     49.1%
 Operating margin     22.4%     14.3%     22.4%     14.3%
 Net margin           22.9%     10.2%     22.9%     10.2%

 Additional Data:
 Weighted average
  ADS equivalents    31,579    33,031    31,579    33,031
 Diluted ADS
  equivalents        32,630    33,514    32,630    33,514


 Note: The Company maintains its accounts and expresses its financial
 statements in New Taiwan dollars. For convenience only, U.S. dollar
 amounts presented in the income statement have been translated from
 New Taiwan dollars, using an average exchange rate of NT$30.36 to
 US$1 on Jun. 30, 2008.

                        Silicon Motion Technology Corporation
                              Consolidated Balance Sheet
                                    (In thousands)
                                     (unaudited)

                       Dec. 31,   Jun. 30,   Dec. 31,   Jun. 30,
                         2007       2008       2007       2008
                         (NT$)      (NT$)      (US$)      (US$)
                      ---------- ---------- ---------- ----------
 Cash and cash
  equivalents          1,608,272  2,142,344     52,973     70,565
 Short-term
  investments          1,751,113    742,160     57,678     24,445
 Accounts receivable,
  net                  1,007,384    948,415     33,181     31,239
 Inventories             547,400    706,442     18,030     23,269
 Refundable deposits
  - current              127,466    104,989      4,199      3,458
 Deferred income tax
  assets, net             83,526     84,844      2,751      2,795
 Prepaid expenses and
  other current
  assets                 227,044    156,234      7,479      5,146
                      ---------- ---------- ---------- ----------
 Total current assets  5,352,205  4,885,428    176,291    160,917

 Long-term
  investments            119,535    119,055      3,937      3,921
 Property and
  equipment (net)        519,189    734,111     17,101     24,180
 Goodwill and
  intangible assets
  (net)                2,849,437  2,744,952     93,855     90,414
 Other assets            279,865    194,481      9,219      6,406
                      ---------- ---------- ---------- ----------
 Total assets         $9,120,231 $8,678,027   $300,403   $285,838
                      ========== ========== ========== ==========

 Short-term borrowing         --     99,821         --      3,288
 Accounts payable        444,440    567,263     14,639     18,685
 Income tax payable      227,356    136,588      7,489      4,499
 Accrued expenses and
  other current
  liabilities            785,717    510,546     25,880     16,816
                      ---------- ---------- ---------- ----------
 Total current
  liabilities          1,457,513  1,314,218     48,008     43,288

 Accrued pension cost         --        534         --         18
 Long-term
  liabilities             47,919     44,867      1,578      1,477
 Other liabilities        30,692     65,141      1,011      2,146
                      ---------- ---------- ---------- ----------
 Total liabilities     1,536,124  1,424,760     50,597     46,929
 Shareholders' equity  7,584,107  7,253,267    249,806    238,909
                      ---------- ---------- ---------- ----------
 Total
  liabilities &
  shareholders'
  equity              $9,120,231 $8,678,027   $300,403   $285,838
                      ========== ========== ========== ==========

 ----------------------------------------------------------------

About Silicon Motion:

We are a fabless semiconductor company that designs, develops and markets high performance, low-power semiconductor solutions for the multimedia consumer electronics market. We have three major product lines: mobile storage, mobile communications, and multimedia SoCs. Our mobile storage business is composed of microcontrollers used in NAND flash memory storage products such as flash memory cards, USB flash drives, SSDs, embedded flash applications, and card readers. Our mobile communications business is composed of mobile TV tuners, CDMA RF ICs, and electronic toll collection RF ICs. Our multimedia SoCs business is composed of products that support MP3 players, PC cameras, and embedded graphics applications.

Forward-Looking Statements: This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, statements about Silicon Motion's expected fourth quarter 2007 revenue, gross margin and operating margin and full fiscal year 2007 diluted earnings per ADS, all of which reflect management's estimates based on information available at this time of this press release. While Silicon Motion believes these estimates to be meaningful, these amounts could differ materially from actual reported amounts for the fourth quarter and the full fiscal year. Forward-looking statements also include, without limitation, statements regarding trends in the multimedia consumer electronics market and our future results of operations, financial condition and business prospects. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue," or the negative of these terms or other comparable terminology. Although such statements are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on them. These statements involve risks and uncertainties, and actual market trends or our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, our belief in the outcome of any claim or lawsuit, including those uncertainties relating to litigation filed against the Company relating to whether its products are covered by patents not owned by the Company; unpredictable volume and timing of customer orders, which are not fixed by contract but vary on a purchase order basis; the loss of one or more key customers or the significant reduction, postponement, rescheduling or cancellation of orders from these customers; integration of our recently announced acquisitions general economic conditions or conditions in the semiconductor or multimedia consumer electronics markets; decreases in the overall average selling prices of our products; changes in the relative sales mix of our products; changes in our cost of finished goods; the availability, pricing, and timeliness of delivery of other components and raw materials used in our customers' products; our customers' sales outlook, purchasing patterns, and inventory adjustments based on consumer demands and general economic conditions; our ability to successfully develop, introduce, and sell new or enhanced products in a timely manner; and the timing of new product announcements or introductions by us or by our competitors. For additional discussion of these risks and uncertainties and other factors, please see the documents we file from time to time with the Securities and Exchange Commission, including our Annual Report on Form 20-F filed on July 2, 2007. We assume no obligation to update any forward-looking statements, which apply only as of the date of this press release.

(1) Unless otherwise stated, all financial information used in this press release is unaudited, consolidated, prepared in accordance with US GAAP and denominated in New Taiwan dollars. US dollar amounts are translated for convenience only. Such financial information is generated internally and has not been subjected to the same review and scrutiny, including internal auditing procedures and audit by independent auditors, to which we subject our audited consolidated financial statements, and may vary materially from the audited consolidated financial information for the same period. Any evaluation of the financial information presented in this press release should also take into account our published audited consolidated financial statements and the notes to those statements. In addition, the financial information presented is not necessarily indicative of our results for any future period.

This news release was distributed by PrimeNewswire, www.primenewswire.com

SOURCE: Silicon Motion Technology Corporation

Silicon Motion Technology Corporation 
          Investor Contact:
          Selina Hsieh, Investor Relations
            +886 3 552 6888 x2311 
            ir@siliconmotion.com
          Media Contact: 
          Sara Hsu, Project Manager 
            +886 2 2219 6688 x3509
            sara.hsu@siliconmotion.com.tw