1038074--2/7/2008--SILICON_LABORATORIES

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{product, market, service}

{customer, product, revenue}

{acquisition, growth, future}

{property, intellectual, protect}

{stock, price, operating}

{competitive, industry, competition}

{operation, international, foreign}

{personnel, key, retain}

{condition, economic, financial}

{operation, natural, condition}

{provision, law, control}

{product, liability, claim}

{capital, credit, financial}

Risks Related to our Business We may not be able to maintain our historical growth and may experience significant period-to-period fluctuations in our revenues and operating results, which may result in volatility in our stock price If we are unable to develop or acquire new and enhanced products that achieve market acceptance in a timely manner, our operating results and competitive position could be harmed Our research and development efforts are focused on a limited number of new technologies and products, and any delay in the development, or abandonment, of these technologies or products by industry participants, or their failure to achieve market acceptance, could compromise our competitive position We depend on a limited number of customers for a substantial portion of our revenues, and the loss of, or a significant reduction in orders from, any key customer could significantly reduce our revenues We have increased our international activities significantly and plan to continue such efforts, which subjects us to additional business risks including increased logistical and financial complexity, political instability and currency fluctuations Failure to manage our distribution channel relationships could impede our future growth We are subject to increased inventory risks and costs because we build our products based on forecasts provided by customers before receiving purchase orders for the products We are subject to credit risks related to our accounts receivable Our products are complex and may contain errors which could lead to product liability, an increase in our costs and/or a reduction in our revenues Significant litigation over intellectual property in our industry may cause us to become involved in costly and lengthy litigation which could seriously harm our business Our customers require our products to undergo a lengthy and expensive qualification process without any assurance of product sales We rely on third parties to manufacture, assemble and test our products and the failure to successfully manage our relationships with our manufacturers and subcontractors would negatively impact our ability to sell our products Our products incorporate technology licensed from third parties Our inability to manage growth could materially and adversely affect our business We are subject to risks relating to product concentration and lack of revenue diversification We depend on our key personnel to manage our business effectively in a rapidly changing market, and if we are unable to retain our current personnel and hire additional personnel, our ability to develop and successfully market our products could be harmed Any acquisitions we make could disrupt our business and harm our financial condition Any dispositions we make could harm our financial condition Our stock price may be volatile Most of our current manufacturers, assemblers, test service providers, distributors and customers are concentrated in the same geographic region, which increases the risk that a natural disaster, epidemic, labor strike, war or political unrest could disrupt our operations or sales We may be unable to protect our intellectual property, which would negatively affect our ability to compete The semiconductor manufacturing process is highly complex and, from time to time, manufacturing yields may fall below our expectations, which could result in our inability to satisfy demand for our products in a timely manner and may decrease our gross margins due to higher unit costs We depend on our customers to support our products, and some of our customers offer competing products We could seek to raise additional capital in the future through the issuance of equity or debt securities, but additional capital may not be available on terms acceptable to us, or at all We are a relatively small company with limited resources compared to some of our current and potential competitors and we may not be able to compete effectively and increase market share Provisions in our charter documents and Delaware law could prevent, delay or impede a change in control of us and may reduce the market price of our common stock Risks related to our industry We are subject to the cyclical nature of the semiconductor industry, which has been subject to significant fluctuations The average selling prices of our products could decrease rapidly which may negatively impact our revenues and gross profits Competition within the numerous markets we target may reduce sales of our products and reduce our market share Our products must conform to industry standards and technology in order to be accepted by end users in our markets

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1038074--2/7/2008--SILICON_LABORATORIES_INC