1106851--7/14/2006--OMNIVISION_TECHNOLOGIES

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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. Failure to obtain design wins could cause our market share and revenues to decline and could impair 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 services, which reduces our control over delivery schedules, product quality and cost, and could adversely affect our ability to deliver products to customers. Declines in our average selling prices may result in declines in our revenues and gross margins. Changes in accounting rules for stock-based compensation will adversely affect our reported operating results, and may adversely affect our stock price and our competitiveness in the employee marketplace. 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. Declines in our average selling prices may result in declines in our revenues and gross margins. Changes in accounting rules for stock-based compensation will adversely affect our reported operating results, and may adversely affect our stock price and our competitiveness in the employee marketplace. 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 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. Historically, our revenues have been dependent upon a few key customers, the loss of one or more of which could significantly reduce our revenues. Our customers experience fluctuating product cycles and seasonality, which could cause our results of operations to fluctuate from period to period. Fluctuations in our quarterly operating results make it difficult to predict our future performance and may result in volatility in the market price of our common stock. We may be required to record a significant charge to earnings if our goodwill or amortizable intangible assets 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 recently increased our compliance costs and could further increase our expenses if changes occur within our business. 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 never achieve the anticipated benefits from our joint venture with TSMC. We may not achieve 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. We have been named as a defendant in certain litigation that could have a material adverse impact on our operating results and financial condition. 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 if the proportion of future operating income generated outside the U.S. by our foreign subsidiaries is less than we expect. Our sales through distributors increase the complexity of our business, which may increase our operating costs 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 need to continue to upgrade our enterprise resource planning and other management information systems. 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--7/14/2006--OMNIVISION_TECHNOLOGIES_INC