854701--12/18/2007--INTEGRATED_SILICON_SOLUTION

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{stock, price, operating}

{financial, litigation, operation}

{property, intellectual, protect}

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{operation, natural, condition}

{acquisition, growth, future}

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{operation, international, foreign}

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We have incurred significant losses in certain recent periods, and there can be no assurance that we will be able to maintain profitability in the future. Our operating results are expected to continue to fluctuate and may not meet our financial guidance or published analyst forecasts. This may cause the price of our common stock to decline significantly. Our sales depend on DRAM and SRAM products and reduced demand for these products or a decline in average selling prices could harm our business. We are subject to pending legal proceedings related to the SRAM market. We have been named as a party to several lawsuits related to our historical stock option practices and related accounting and we may be named in additional litigation in the future, all of which could result in an unfavorable outcome and have a material adverse effect on our business, financial condition, results of operations, cash flows and the trading price for our securities. We have used and plan to use a significant amount of our cash resources to repurchase shares of our common stock and such repurchases present potential risks and disadvantages to ISSI and its continuing stockholders. Any future downturn in the markets we serve would harm our business and financial results. Shifts in industry-wide capacity may cause our results to fluctuate. These shifts may occur quickly with little or no advance notice. Such shifts have historically resulted in significant inventory write-downs. Our transition to lead-free parts may result in excess inventory of products packaged using traditional methods. If we are unable to obtain an adequate supply of wafers, our business will be harmed. Our gross margins may decline even in periods of increasing revenue. We may encounter difficulties in effectively integrating newly acquired businesses. We rely on third-party contractors to assemble and test our products and our failure to successfully manage our relationships with these contractors could damage our relationships with our customers, decrease our sales and limit our growth. The loss of a significant customer or a reduction in orders from one or more large customers could adversely affect our operating results. We have significant international sales and operations and risks related to our international activities could harm our operating results. Strong competition in the semiconductor memory market may harm our business. Our revenues and business would be harmed if we are not able to successfully develop, introduce and sell new products and develop and implement new manufacturing technologies in a timely manner. Our research and development expenses could increase and our business could be harmed if the implementation of these new manufacturing technologies is unsuccessful. Our products are complex and could contain defects, which could reduce sales of those products or result in claims against us. Potential intellectual property claims and litigation could subject us to significant liability for damages and could invalidate our proprietary rights. We may be unable to effectively protect our intellectual property, which would negatively impact our ability to compete. We have acquired equity positions for strategic reasons in other companies which may significantly decrease in value. Changes in securities laws and regulations are increasing our costs. We may experience difficulties in complying with Sarbanes-Oxley Section 404 in future periods. Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States. Our results of operations could vary as a result of the methods, estimates, and judgments we use in applying our accounting policies. We depend on our ability to attract and retain our key technical and management personnel. Our stock price is expected to continue to be volatile. Foundry capacity can be limited, and we may be required to enter into costly arrangements to secure foundry capacity. Our foundries may experience lower than expected yields which could adversely affect our business. Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses. Terrorist attacks, threats of further attacks, acts of war and threats of war may negatively impact all aspects of our operations, revenues, costs and stock price.

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854701--12/18/2007--INTEGRATED_SILICON_SOLUTION_INC