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Press Release
 
February 01, 2010
 

Silicon Motion Announces Results for the Period Ended December 31, 2009

Feb 1, 2010 (GlobeNewswire via COMTEX) -- Fourth Quarter 2009

Financial Highlights

  --  Net sales decreased 1% quarter-over-quarter to US$22.8 million from
      US$23.1 million in 3Q09
  --  Gross margin excluding stock-based compensation and reserves for
      obsolete and end-of-life products was 52.1%. Gross margin excluding only
      stock-based compensation decreased to 42.2% from 48.5% in 3Q09
  --  Operating expenses excluding stock-based compensation,
      acquisition-related charges, and other items increased from 3Q09 of
      US$12.0 million to US$14.0 million in the fourth quarter
  --  Net loss excluding stock-based compensation, acquisition-related
      charges, foreign exchange gain, and other items of US$7.8 million
      compares with a net gain US$0.8 million in 3Q09. GAAP net loss increased
      to US$17.3 million from a loss of US$4.7 million in 3Q09
  --  Diluted loss per ADS excluding stock-based compensation,
      acquisition-related charges, foreign exchange gain (loss), and other
      items was US$0.28, a decrease from our 3Q09 earnings per ADS of US$0.02.
      GAAP diluted loss per ADS was US$0.62
Business Highlights 
  --  Increased total unit shipments 5% sequentially but decreased 23%
      year-over-year to approximately 70 million units
  --  Increased storage controller unit shipments 8% sequentially but
      decreased 26% year-over-year
  --  Increased our SSD controller shipments over 35% sequentially and over
      50% year-over-year and now account for almost 10% of our total corporate
      revenue
  --  Secured design wins for our SSD controllers for four ultra-mobile MID
      and thin-client devices
  --  Shipments of our 3-bits per cell MLC controllers ramped in the fourth
      quarter and accounted for nearly 10% of our total card controller sales
  --  Secured a second design win for the Brazilian ISDB-T mobile TV market as
      well another design-win for the Japan domestic ISDB-T mobile TV market
  --  Began shipping our CMMB mobile TV solution for the China market with LG
      and Lenovo handsets
  --  Began shipping our previously announced design win for our CDMA
      transceiver in China with Nokia

TAIPEI, Taiwan, Feb. 2, 2010 (GLOBE NEWSWIRE) -- Silicon Motion Technology Corporation (Nasdaq:SIMO) (the "Company") today announced its fourth quarter and full year 2009 financial results. For the fourth quarter of 2009, net sales decreased 1% quarter-over-quarter to US$22.8 million. Net loss (GAAP) for the fourth quarter increased quarter-over-quarter to US$17.3 million or US$0.62 per diluted ADS from a GAAP net loss of US$4.7 million or US$0.17 per diluted ADS in the third quarter of 2009.

Net income excluding stock-based compensation, acquisition-related charges, foreign exchange gain, and other items decreased in the fourth quarter to a loss of US$7.8 million or US$0.28 per diluted ADS as compared to a gain of US$0.8 million or US$0.02 per diluted ADS in the third quarter of 2009.

In addition, and as discussed below under "Potential Impairment Charge", the Company is in the process of assessing potential impairments to goodwill and acquisition-related intangible assets relating to our FCI acquisition in 2007 and anticipates that it will record non-cash impairment charges to GAAP earnings in its 2009 audited financial statements.

Fourth Quarter 2009 Financial Review (1)

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

"Our mobile storage product line continued to rebound in the fourth quarter. Our mobile communications product line however declined sequentially because of continued product transitions in the Korea market. We are encouraged by the overall momentum of our business as new growth drivers and our pipeline of design wins continue to improve and position us for a strong 2010.

Although NAND flash industry component supply remains tight, we are encouraged by the improving outlook for supply and demand. This quarter, our mobile storage controller shipments increased 8% as compared to the third quarter. Our mobile storage business benefited from both increasing unit shipments of our controllers to cards and USB flash drives as well as increasing adoption of SSDs in industrial, networking, and consumer applications. Our shipment of controllers for SSD applications increased over 35% sequentially after growing over 100% the previous quarter. We believe that the continuing migration of NAND flash to finer process geometry, ramp of 3-bits per cell MLC flash, and accelerating NAND flash fab wafer capacity investments will improve NAND supply in 2010 and the following years.

The vast majority of controllers that we are shipping are for 40nm and 30nm NAND flash and we are on track to deliver controllers for 20nm NAND flash that is expected to be available in the second half 2010. In the fourth quarter, we also began shipping 3-bits per cell MLC controllers and these products accounted for nearly 10% of our card controller sales. We continue to lead the industry in developing next generation NAND flash controllers, whether for cutting edge process geometries, 3-bits per cell MLC, or differentiated quality NAND flash, and believe that the performance of our controllers is significantly better than those of our competitors.

During the fourth quarter, our mobile communications business decreased due to the impact of continued product transitions in the Korea domestic market. We will be rolling out a more advanced T-DMB mobile TV SoC in mid-2010. We are excited by our increasing pipeline of mobile TV design wins in new mobile TV markets and are delighted to announce that new LG and Lenovo TD-SCDMA handsets in China are using our CMMB mobile TV solutions. For the Brazil market, in addition to our first ISDB-T mobile TV solution that we started shipping in the third quarter with a Samsung handset, we have received another important ISBD-T design win. We have also received another ISDB-T design win for the Japan market."

(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.

Sales

Net sales in the fourth quarter were US$22.8 million, a decrease of 1% compared with the previous quarter. This quarter, mobile storage products accounted for 66% of net sales, mobile communications 16% of net sales, multimedia SoCs 14% of net sales, and others 4% of net sales.

Net sales of mobile storage products, which include primarily flash memory card controllers, USB flash drive controllers, SSD controllers, and embedded flash controllers, increased 7% from the third quarter of 2009 to US$15 million this quarter.

Net sales of mobile communication products, which include primarily mobile TV IC solutions and CDMA RF ICs, decreased 41% from the third quarter of 2009 to US$3.6 million in the fourth quarter.

Net sales of multimedia SoC products, which include primarily embedded graphics processors and PC camera SoCs, increased 13.2% from the third quarter of 2009 to US$3.3 million this quarter.

Gross and Operating Margins

Gross margin excluding stock-based compensation and reserves for obsolete and end-of-life products was 52.1%. Gross margin excluding only stock-based compensation decreased to 42.2% compared with the third quarter. GAAP gross margin decreased to 40.1% from 48.1% in the third quarter.

Operating expenses excluding stock-based compensation, acquisition-related charges, and other items were US$14.0 million, which was higher than the US$12.0 million reported for the third quarter. Research and development expenditures, excluding stock-based compensation, were US$7.5 million, which were higher than the US$7.3 million in the previous quarter. Selling and marketing expenses excluding stock-based compensation were US$2.9 million, which was higher than the US$2.4 million from the previous quarter. General and administrative expenses excluding stock-based compensation and litigation expenses were US$3.7 million, an increase from the US$2.2 million reported in the previous quarter. The increase in our G&A expenses was primarily due to a US$1.1 million bad debt reserve, largely attributed to accounts receivable relating to our ETC business. Stock-based compensation was US$7.6 million in the fourth quarter, which is higher than the US$2.2 million in the third quarter. Acquisition-related charges were US$1.5 million, unchanged compared with the previous quarter. Litigation expenses were less than US$0.1 million in the fourth quarter, similar to the previous quarter.

In the fourth quarter, we accelerated the vesting of certain soon-to-vest restricted stock units (RSUs) granted to our employees and cancelled a small portion of outstanding RSUs previously granted to our employees. Together, these two actions resulted in a one-time stock-based compensation charge of US$5.1 million. We are currently planning a new and more effective long-term employee incentive program and will implement this shortly.

Operating margin excluding stock-based compensation, acquisition-related charges, and other items was a negative 19.1%, a decrease from 3.2% in the previous quarter. GAAP operating margin was also lower at negative 59.1% compared with the negative 19.3% reported for the third quarter.

Other Income and Expenses

Net total other income excluding net foreign exchange gain or loss, and other items was US$0.1 million, which was unchanged from the previous quarter. GAAP net total other expense was US$0.3 million, which was significantly lower than US$1.6 million in the previous quarter due primarily to lower foreign exchange loss in the fourth quarter.

Earnings

Net loss excluding stock-based compensation, acquisition-related charges, net foreign exchange loss, and other items was US$7.8 million in this quarter, a decrease from the income of US$0.8 million in the third quarter. Diluted loss per ADS excluding stock-based compensation, acquisition-related charges, net foreign exchange gain (loss), and other items was US$0.28, a decrease from earnings per ADS of US$0.02 in the previous quarter.

GAAP net loss was US$17.3 million, an increase from the net loss of US$4.7 million in the third quarter. Diluted GAAP loss per ADS was US$0.62, an increase from loss per ADS of US$0.17 in the previous quarter.

Balance Sheet

Cash, cash equivalents, and short-term investments increased slightly from US$60.6 million at the end of the third quarter of 2009 to US$61.2 million at the end of this quarter.

Potential Impairment Charge

Because of weaker than expected performance of our mobile communications product line and push outs of market opportunities, we are currently assessing potential impairments to goodwill and acquisition-related intangible assets relating to our FCI acquisition and anticipate impairment charges to our 2009 financial statements. We acquired FCI in April 2007 for US$102 million. The net carrying cost of FCI at the end of 2009 and before potential impairment charges was US$71.7 million. We will be appointing an appraiser to assist the Company in determining the extent of the non-cash impairment charge to GAAP earnings and will disclose this as soon as practicable either in the Company's 20-F filing for the 2009 fiscal year or through an earlier, supplemental press release.

Cash Flow

Our cash flows were as follows:

               3 months ended December 31, 2009
                                                  (In US$
                                                  millions)
  Net income (loss)                                  (17.3)
  Depreciation & amortization                           2.8
  Changes in operating assets and liabilities           3.3
  Stock-based compensation                              7.6

  Others                                                4.8
                                                  ---------
   Net cash provided by (used in) operating
    activities                                          1.2
                                                  =========
  Acquisition of property and equipment               (1.0)

  Others                                                0.4
                                                  ---------
   Net cash provided by (used in) investing
    activities                                        (0.6)
                                                  =========

  Others                                             ( 0.1)
                                                  ---------
   Net cash provided by (used in) financing
    activities                                        (0.1)
                                                  =========
  Effects of changes in foreign currency
   exchange rates on cash                               0.2
                                                  ---------

   Net increase in cash and cash equivalents            0.7
                                                  =========
  Pro-forma adjustment for foreign exchange
   translation                                          0.2
                                                  =========
   Pro-forma net increase in cash and cash
    equivalents                                         0.9
                                                  =========

During the fourth quarter of 2009, we spent US$1.0 million in capital expenditures primarily relating to the purchase of software and equipment. There were no shares repurchased in the fourth quarter.

Business Outlook:

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

"Although we are entering the seasonally slow part of the year especially relating to our mobile storage business, we are seeing continued signs of improvement in our business and design pipeline and are confident that our business will improve as the year progresses."

For the first quarter of 2010, management expects:

  --  Revenue to be down 5% to up 5% sequentially
  --  Gross margin excluding stock-based compensation to be in the 46% to 48%
      range
  --  Operating expenses excluding stock-based compensation,
      acquisition-related charges, and other items of approximately US$13 to
      US$14 million

Conference Call & Webcast:

The Company's management team will conduct a conference call at 8:00am Eastern Time on February 2, 2010.

(Speakers)

Wallace Kou, President & CEO

Riyadh Lai, CFO

Jason Tsai, Director of Investor Relations and Strategy

PRE-REGISTRATION:

https://www.theconferencingservice.com/prereg/key.process?key=PWVRHUM6X

CONFERENCE CALL ACCESS NUMBERS:

USA (Toll Free): 1 888 680 0890

USA (Toll): 1 617 213 4857

Taiwan (Toll Free): 0080 144 4360

Participant Passcode: 5086 0045

REPLAY NUMBERS (for 7 days):

USA (Toll Free):1 888 286 8010

USA (Toll): 1 617 801 6888

Participant Passcode: 8454 4786

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 other 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 of 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 (acquisition-related charges) 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.

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.

Impairment losses on long-term investment relates to the other-than-temporary, non-operating write down of the Company's minority stake investments in Vastview Technology Corp. The investment was written down after the Company determined that these shares have been other-than-temporarily impaired.

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$.

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


                                                For the Three Months Ended
                              --------------------------------------------------------------

                                                                   Dec.     Sep.
                               Dec. 31,   Sep. 30,   Dec. 31,       31,      30,    Dec. 31,
                                 2008       2009       2009        2008     2009      2009
                                (NT$)      (NT$)      (NT$)        (US$)    (US$)    (US$)
                              ---------  ---------  ---------     -------  -------  --------
  Net Sales                   1,063,687    759,427    737,751      32,272   23,132    22,826

  Cost of sales                 655,820    394,448    442,285      19,897   12,015    13,684
                              ---------  ---------  ---------     -------  -------  --------
  Gross profit                  407,867    364,979    295,466      12,375   11,117     9,142
  Operating expenses
   Research & development       272,067    279,293    359,490       8,254    8,507    11,123
   Sales & marketing             97,842     94,200    134,060       2,969    2,869     4,148
   General & administrative     260,811     89,926    189,490       7,913    2,739     5,863
   Amortization of
    intangibles assets           47,901     48,151     48,282       1,453    1,467     1,494
                              ---------  ---------  ---------     -------  -------  --------
  Operating income (loss)     (270,754)  (146,591)  (435,856)     (8,214)  (4,465)  (13,486)

  Non-operating income
   (expense)
   Gain on sale of
    investments                     738         22         10          22        1        --
   Unrealized holding gain
    (loss) on marketable
    securities                    (673)         --         --        (20)       --        --
   Interest income (net)          8,698      4,328      3,536         264      132       109
   Impairment on long-term
    investment                 (69,253)    (6,472)    (2,158)     (2,101)    (197)      (67)
   Foreign exchange gain
    (loss)                       65,464   (49,402)   (11,070)       1,986  (1,506)     (342)

   Others                           279          6        142           8       --         5
                              ---------  ---------  ---------     -------  -------  --------

   Subtotal                       5,253   (51,518)    (9,540)         159  (1,570)     (295)
                              ---------  ---------  ---------     -------  -------  --------
  Income (loss) before tax    (265,501)  (198,109)  (445,396)     (8,055)  (6,035)  (13,781)
  Income tax expense
   (benefit)                      5,251   (44,971)    113,803         159  (1,370)     3,521
                              ---------  ---------  ---------     -------  -------  --------

  Net income (loss)           (270,752)  (153,138)  (559,199)     (8,214)  (4,665)  (17,302)
                              =========  =========  =========     =======  =======  ========

  Basic earnings (loss) per
   ADS                          ($9.83)    ($5.51)   ($20.09)     ($0.30)  ($0.17)   ($0.62)
  Diluted earnings (loss)
   per ADS                      ($9.83)    ($5.51)   ($20.09)     ($0.30)  ($0.17)   ($0.62)

  Margin Analysis:
  Gross margin                    38.3%      48.1%      40.1%       38.3%    48.1%     40.1%
  Operating margin              (25.5%)    (19.3%)    (59.1%)     (25.5%)  (19.3%)   (59.1%)
  Net margin                    (25.5%)    (20.2%)    (75.8%)     (25.5%)  (20.2%)   (75.8%)

  Weighted avg. ADS(2):
  Basic                          27,531     27,775     27,836      27,531   27,775    27,836
  Diluted                        27,531     27,775     27,836      27,531   27,775    27,836

(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 ADS data, unaudited)


                                                    For the Three Months Ended
                                  --------------------------------------------------------------

                                                                       Dec.     Sep.
                                   Dec. 31,   Sep. 30,   Dec. 31,       31,      30,    Dec. 31,
                                     2008       2009       2009        2008     2009      2009
                                    (NT$)      (NT$)      (NT$)        (US$)    (US$)    (US$)
                                  ---------  ---------  ---------     -------  -------  --------
  GAAP net income (loss)          (270,752)  (153,138)  (559,199)     (8,214)  (4,665)  (17,302)
  Stock-based compensation:
   Cost of sales                      1,552      3,223     15,699          47       98       486
   Research and development          31,321     39,265    117,949         950    1,196     3,649
   Sales and marketing               14,536     15,066     41,257         441      459     1,277

   General and administrative        20,544     15,700     70,358         624      478     2,177
                                  ---------  ---------  ---------     -------  -------  --------
     Total stock-based
      compensation                   67,953     73,254    245,263       2,062    2,231     7,589
                                  ---------  ---------  ---------     -------  -------  --------

  Acquisition related charges:
   Amortization of intangible
    assets                           47,901     48,151     48,282       1,453    1,467     1,494
  Litigation expenses                16,882      1,073      1,210         512       32        37
  Foreign exchange loss (gain)     (65,464)     49,402     11,070     (1,986)    1,506       343
  Impairment on long-term
   investment                        69,253      6,472      2,158       2,101      197        67
                                  ---------  ---------  ---------     -------  -------  --------


  Non-GAAP net income             (134,227)     25,214  (251,216)     (4,072)      768   (7,772)
                                  =========  =========  =========     =======  =======  ========

  Weighted avg. ADS (non-GAAP):

   Basic                             27,531     27,775     27,836      27,531   27,775    27,836
                                  =========  =========  =========     =======  =======  ========

   Diluted                           27,531     31,641     27,836      27,531   31,641    27,836
                                  =========  =========  =========     =======  =======  ========

  Non-GAAP basic earnings (loss)
   per ADS                          ($4.88)      $0.91    ($9.02)     ($0.15)    $0.03   ($0.28)
                                  =========  =========  =========     =======  =======  ========
  Non-GAAP diluted earnings
   (loss) per ADS                   ($4.88)      $0.80    ($9.02)     ($0.15)    $0.02   ($0.28)
                                  =========  =========  =========     =======  =======  ========

  Non-GAAP gross margin               38.5%      48.5%      42.2%       38.5%    48.5%     42.2%
  Non-GAAP operating margin         (13.0%)     (3.2%)    (19.1%)     (13.0%)   (3.2%)   (19.1%)

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

                                            For the Year Ended
                              ----------------------------------------------

                                 Dec. 31,     Dec. 31,   Dec. 31,   Dec. 31,
                                   2008         2009       2008       2009
                                  (NT$)        (NT$)       (US$)     (US$)
                              -------------  ---------  ----------  --------
  Net Sales                       5,528,051  2,902,828     175,382    87,772

  Cost of sales                   2,914,587  1,598,054      92,468    48,320
                              -------------  ---------  ----------  --------
  Gross profit                    2,613,464  1,304,774      82,914    39,452
  Operating expenses
   Research & development         1,080,918  1,122,459      34,293    33,939
   Sales & marketing                368,863    395,985      11,702    11,973
   General & administrative         675,285    464,892      21,424    14,057
   Amortization of
    intangible assets               193,800    192,391       6,148     5,817
                              -------------  ---------  ----------  --------

  Operating income (loss)           294,598  (870,953)       9,347  (26,334)
                              -------------  ---------  ----------  --------

  Non-operating income
   (expense)
   Gain on sale of
    investments                      17,577        233         558         7
   Unrealized holding gain
    (loss) on marketable
    securities                      (1,122)         --        (36)        --
   Interest income (net)             39,147     18,602       1,242       563
   Dividend income                    2,480         --          79        --
   Impairment losses on
    long-term investment           (69,253)    (8,630)     (2,197)     (261)
   Foreign exchange gain
    (loss)                           96,380   (89,435)       3,058   (2,704)

   Others                               222    (1,988)           6      (61)
                              -------------  ---------  ----------  --------

   Subtotal                          85,431   (81,218)       2,710   (2,456)
                              -------------  ---------  ----------  --------
  Income (loss) before tax          380,029  (952,171)      12,057  (28,790)
  Income tax expense
   (benefit)                         86,608     12,544       2,748       380
                              -------------  ---------  ----------  --------

  Net income (loss)                 293,421  (964,715)       9,309  (29,170)
                              =============  =========  ==========  ========

  Basic earnings (loss) per
   ADS                                $9.46   ($34.86)       $0.30   ($1.05)
                              =============  =========  ==========  ========
  Diluted earnings (loss)
   per ADS                            $9.37   ($34.86)       $0.30   ($1.05)
                              =============  =========  ==========  ========

  Margin Analysis:
  Gross margin                        47.3%      45.0%       47.3%     45.0%
  Operating margin                     5.3%    (30.0%)        5.3%   (30.0%)

  Weighted average ADS:
  Basic                              31,020     27,673      31,020    27,673
  Diluted                            31,326     27,673      31,326    27,673

                  Silicon Motion Technology Corporation


          Reconciliation of GAAP to Non-GAAP Operating Results


     (in thousands, except percentages and per ADS data, unaudited)


                                            For the Year Ended
                                  --------------------------------------

                                                        Dec.
                                  Dec. 31,   Dec. 31,    31,    Dec. 31,
                                    2008       2009     2008      2009
                                   (NT$)      (NT$)     (US$)    (US$)
                                  --------  ---------  -------  --------
  GAAP net income (loss)           293,421  (964,715)    9,309  (29,170)
  Stock-based compensation:
   Cost of sales                    11,481     24,445      364       739
   Research and development        138,907    224,220    4,407     6,780
   Sales and marketing              55,334     77,500    1,756     2,344

   General and administrative       70,333    120,298    2,231     3,638
                                  --------  ---------  -------  --------
     Total stock-based
      compensation                 276,055    446,463    8,758    13,501
                                  --------  ---------  -------  --------

  Acquisition related charges:
  Amortization of intangible
   assets                          193,800    192,391    6,148     5,817
  Litigation expenses               72,982      5,112    2,315       155
  Foreign exchange loss (gain)    (96,380)     89,435  (3,058)     2,704
  Impairment on long-term
   investment                       69,253      8,630    2,197       261

  FIN48 tax charges                 64,328         --    2,041        --
                                  --------  ---------  -------  --------

  Non-GAAP net income              873,459  (222,684)   27,710   (6,732)
                                  ========  =========  =======  ========

  Weighted avg. ADS (non-GAAP):

   Basic                            31,020     27,673   31,020    27,673
                                  ========  =========  =======  ========

   Diluted                          32,354     27,673   32,354    27,673
                                  ========  =========  =======  ========

  Non-GAAP basic earnings per
   ADS                              $28.16    ($8.05)    $0.90   ($0.24)
                                  ========  =========  =======  ========
  Non-GAAP diluted earnings per
   ADS                              $27.00    ($8.05)    $0.86   ($0.24)
                                  ========  =========  =======  ========

  Non-GAAP gross margin              47.5%      45.8%    47.5%     45.8%
  Non-GAAP operating margin          15.2%     (7.8%)    15.2%    (7.8%)

                  Silicon Motion Technology Corporation


                       Consolidated Balance Sheet


                             (In thousands)


                               (unaudited)


                                Dec. 31,    Sep. 30,    Dec. 31,   Dec. 31,  Sep. 30,  Dec. 31,
                                  2008        2009        2009       2008      2009      2009
                                  (NT$)       (NT$)       (NT$)     (US$)     (US$)     (US$)
                               ----------  ----------  ----------  --------  --------  --------
  Cash and cash equivalents     1,586,941   1,932,867   1,951,584    48,441    59,601    60,533
  Short-term investments          112,505      33,143      21,153     3,434     1,022       656
  Accounts receivable (net)       923,717     610,342     476,548    28,196    18,820    14,781
  Inventories                     638,566     517,689     560,311    19,492    15,963    17,379
  Refundable deposits -
   current                         85,368      66,167      50,689     2,606     2,040     1,572
  Deferred income tax assets
   (net)                           55,276      80,298      49,765     1,688     2,476     1,544
  Prepaid expenses and other
   current assets                 155,527     102,925     140,324     4,748     3,175     4,353
                               ----------  ----------  ----------  --------  --------  --------
  Total current assets          3,557,900   3,343,431   3,250,374   108,605   103,097   100,818

  Long-term investments            50,369      17,908      15,709     1,538       552       487
  Property and equipment
   (net)                          911,885     858,085     800,958    27,835    26,460    24,844
  Goodwill and intangible
   assets(net)                  2,641,504   2,499,051   2,451,548    80,632    77,061    76,041

  Other assets                    282,994     312,997     245,396     8,638     9,650     7,611
                               ----------  ----------  ----------  --------  --------  --------

  Total assets                 $7,444,652  $7,031,472  $6,763,985  $227,248  $216,820  $209,801
                               ==========  ==========  ==========  ========  ========  ========

  Accounts payable                378,624     299,688     325,519    11,558     9,241    10,097
  Income tax payable              212,513      38,713      38,655     6,487     1,194     1,199
  Accrued expenses and other
   current liabilities            456,710     426,336     420,846    13,940    13,146    13,053
                               ----------  ----------  ----------  --------  --------  --------
  Total current liabilities     1,047,847     764,737     785,020    31,985    23,581    24,349
  Long-term liabilities            60,702      61,287      76,894     1,853     1,890     2,385

  Other liabilities                46,511      45,572      43,881     1,420     1,405     1,361
                               ----------  ----------  ----------  --------  --------  --------
  Total liabilities             1,155,060     871,596     905,795    35,258    26,876    28,095

  Shareholders' equity          6,289,592   6,159,876   5,858,190   191,990   189,944   181,706
                               ----------  ----------  ----------  --------  --------  --------
  Total liabilities &
   shareholders' equity        $7,444,652  $7,031,472  $6,763,985  $227,248  $216,820  $209,801
                               ==========  ==========  ==========  ========  ========  ========

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$32.96 to US$1 for 4Q08, NT$32.83 to US$1 for 3Q09, and NT$32.32 to US$1 for 4Q09 based on the average of the historical exchange rate of the Oanda Corporation. Amounts from the balance sheet have been translated using the ending exchange rate for the period. The exchange rate was NT$32.76 to US$1 at the end of 4Q08, NT$32.43 to US$1 at the end of 3Q09, and NT$32.24 to US$1 at the end of 4Q09.

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, and embedded flash applications. Our mobile communications business is composed primarily of mobile TV IC solutions and CDMA RF ICs. Our multimedia SoCs business is composed primarily of embedded graphics processors and PC cameras image SoCs.

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 first quarter 2010 revenue, gross margin and operating expenses, 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. 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; the determination of the Company of the need to record a charge to earnings relating to certain impairments of assets in 2009, and the amounts of such impairments; 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 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, including the general global economic slowdown as it effects the Company, its customers and consumers; 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 14, 2009. We assume no obligation to update any forward-looking statements, which apply only as of the date of this press release.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Silicon Motion Technology Corporation

CONTACT:  Silicon Motion Technology Corporation
Investor Contact:
Jason Tsai, Director of IR and Strategy
+1 408 519 7259
Fax: +1 408 519 7101
jtsai@siliconmotion.com
Investor Relations
Selina Hsieh
+886 3 552 6888 x2311
Fax: +886 3 560 0336
ir@siliconmotion.com
Media Contact:
Sara Hsu, Project Manager
+886 2 2219 6688 x3509
Fax: +886 2 2219 6868
sara.hsu@siliconmotion.com

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