1106851--6/30/2008--OMNIVISION_TECHNOLOGIES

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Risks Related to Our Business We face intense competition in our markets from CMOS and CCD image sensor manufacturers, and if we are unable to compete successfully we may not be able to maintain or grow our business. Reductions in our average selling prices may lower our revenues and, as a result, may reduce our gross margins. Sales of our image-sensor products for mobile phones account for a large portion of our revenues, and any decline in sales to the mobile phone market or failure of this market to continue to grow as expected could adversely affect our results of operations. Our future success depends on the timely development, introduction, marketing and selling of new CMOS image sensors, which we might not be able to achieve. Design wins are a key determinant of future revenues, and failure to obtain design wins adversely affects our revenues and impairs our ability to grow our business. We depend on a limited number of third party wafer foundries, which reduces our ability to control our manufacturing process. We rely on a joint venture company for color filter application and on third party service providers for packaging and other back-end services, which reduces our control over delivery schedules, product quality and cost, and could adversely affect our ability to deliver products to customers. Fluctuations in our quarterly operating results have caused volatility in the market price of our common stock and also make it difficult to predict our future operating results. Our business is subject to seasonal fluctuations which may in turn cause fluctuations in our results of operations from period to period. Problems with wafer manufacturing and/or back-end processing yields could result in higher product costs and could impair our ability to meet customer demand for our products. If we do not forecast customer demand correctly, our business could be impaired and our stock price may decline. We depend on the increased acceptance of mass-market image-sensor applications to grow our business and increase our revenues. Our lengthy manufacturing, packaging and assembly cycle, in addition to our customers' design cycle, may result in uncertainty and delays in generating revenues. Our ability to deliver products that meet customer demand is dependent upon our ability to meet new and changing requirements for color filter application and image-sensor packaging. The high level of complexity and integration of our products increases the risk of latent defects, which could damage customer relationships and increase our costs. We depend for the majority of our revenues on a few key customers and, the loss of one or more of our key customers could significantly reduce our revenues. Changes in accounting rules for stock-based compensation have adversely affected our reported operating results, and may adversely affect our stock price and our competitiveness in the employee marketplace. We may be required to record a significant charge to earnings if our goodwill, amortizable intangible assets or long-term investments become impaired. We maintain a backlog of customer orders that is subject to cancellation or delay in delivery schedules, and any cancellation or delay may result in lower than anticipated revenues. If we are unable to maintain processes and procedures to sustain effective internal control over our financial reporting, our ability to provide reliable and timely financial reports could be harmed and this could have a material adverse effect on our stock price. Corporate governance regulations have increased our compliance costs and could further increase our expenses if changes occur within our business. We hold a significant amount of marketable securities which are subject to general market risks over which we have no control. There are risks associated with our operations in China. We may experience integration or other problems with potential future acquisitions, which could have an adverse effect on our business or results of operations. New acquisitions could dilute the interests of existing stockholders, and the announcement of new acquisitions could result in a decline in the price of our common stock. We may not achieve continued benefits from our joint venture with TSMC. We may not achieve all of the anticipated benefits of our alliances with, and strategic investments in, third parties. Changes in our relationships with our joint ventures and/or companies in which we hold less than a majority interest could change the way we account for such interests in the future. We may be unable to adequately protect our intellectual property, and therefore we may lose some of our competitive advantage. Litigation regarding intellectual property could divert management attention, be costly to defend and prevent us from using or selling the challenged technology. If we do not effectively manage our growth, our ability to increase our revenues and improve our earnings could be adversely affected. Our future tax rates could be higher than we anticipate and may harm our results of operations Our sales through distributors increase the complexity of our business and may reduce our ability to forecast revenues. We face foreign business, political and economic risks, because a majority of our products and those of our customers are manufactured and sold outside of the United States. Our business could be harmed if we lose the services of one or more members of our senior management team, or if we are unable to attract and retain qualified personnel. We are currently implementing a new enterprise resource planning system, a process which presents a number of significant operational risks. Our operations may be impaired as a result of disasters, business interruptions or similar events. Acts of war and terrorist acts may seriously harm our business and revenue, costs and expenses and financial condition. Risks Related to the Securities Markets and Ownership of Our Common Stock Provisions in our charter documents and Delaware law, as well as our stockholders' rights plan, could prevent or delay a change in control of our company and may reduce the market price of our common stock. Our stock has been and will likely continue to be subject to substantial price and volume fluctuations due to a number of factors, many of which are beyond our control that may prevent our stockholders from selling our common stock at a profit.

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1106851--6/30/2008--OMNIVISION_TECHNOLOGIES_INC