Integrated Silicon Solution DEFA14A Additional proxy soliciting materials

Integrated Silicon Solution (ISSI) Inactive DEFA14AAdditional proxy soliciting materials

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

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Notes:

Integrated Silicon Solution Inc. may use the following slides in discussions with stockholders.

Proposal to Increase Authorized Equity Awards

At February 8, 2013 Annual Meeting

Stockholders are urged to carefully review ISSI’s proxy statement dated January 8, 2013 for

further information about this proposal and other matters related to ISSI and its annual meeting

of stockholders.

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

Overview

Proposal

ISSI requests stockholder approval to increase its authorized equity

awards by 2 million shares

–

Increase expected to cover the next two years

–

As of record date, only 391,000 shares remain under the current authorization

Situation

Certain proxy advisor firms (“proxy advisors”) may recommend a NO

vote to subscribers

ISSI Position

Proxy advisor calculations do not appropriately reflect the significant

stockholder return ISSI has generated through incentivized

performance and share repurchases. We ask stockholders to vote

YES on our proposal.

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

Key Considerations

Equity awards are an important incentive to recruit, retain,

and motivate our employees.

70% of our equity awards are granted to non-executive

employees

ISSI base salaries are below peer company averages

Our equity award burn rate is within published proxy

advisor guidelines

Our stock compensation expense is below our peer

companies as a percentage of revenue and market cap.

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

Key Considerations

ISSI Book Value Per Share has grown at a 13.2% CAGR

over the last four years on a fully-diluted basis

ISSI stock price has outperformed the SOX, Russell 2000,

and NASDAQ over the last five years

ISSI has repurchased 14 million shares in the last 5

years, returning significant value to stockholders

In the last five years, ISSI has transitioned to a more

sustainable and profitable business model.

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

Option & RSU Burn Rate

ISSI is within published proxy advisor guidelines for

“burn rate”

even before adjusting for special items.

2010

2011

2012

Average

Common Shares Outstanding at Fiscal Year End

26,217

26,448

27,594

26,753

Granted Options and RSUs

1,073

1,556

1,714

1,448

ISSI Unadjusted Burn Rate

5.41%

Adjustments:

RSUs given to Officers in Lieu of Earned Cash Bonus

(189)

New Hire Option Grants to Si En and Chingis employees

(293)

(440)

ISSI Adjusted Option & RSU grants

1,073

1,074

1,274

1,140

ISSI Adjusted Burn Rate

4.26%

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

If ISSI did not grant stock

options or RSUs, and instead

paid equivalent value in

cash, it would have needed

to raise $114 million in order

to have the same cash

balance as it does today.

Above data is from ISSI Form 10-Ks filed with the SEC

Stock

Cash from

Fiscal

Compensation

Option

Cash from

Year

Expense

Exercises

ESPP

Issued

2012

$5,031

$4,439

$1,413

1,203

2011

$4,042

$2,146

$1,239

740

2010

$2,497

$5,279

$687

1,347

2009

$3,096

$81

$657

441

2008

$3,646

$415

$734

275

2007

$3,940

$1,461

224

2006

$4,639

$769

$1,067

412

2005

$2,023

$2,797

$999

1,022

2004

$3,305

$7,650

$1,116

1,847

2003

$4,381

$2,363

$867

802

2002

$5,505

$1,659

$992

549

2001

$6,409

$2,532

$1,125

751

2000

$6,685

$5,461

$859

1,241

1999

$3,214

$2,064

$699

791

1998

$959

$1,674

$1,379

706

$59,372

$40,790

$13,833

12,351

$113,995

$9.23

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

Equity

Awards

–

Good

Value

Proposition

Overhang and FAS 123R

ISSI overhang is only slightly higher than its peers.

However, ISSI has much lower stock compensation

expense compared to peers, and ISSI has repurchased

34% of its shares over the past 5 years.

Above metrics are calculated from Form 10-Ks filed with the SEC and from Market Capitalization amounts listed on Yahoo Finance

Total

Overhang

Market Cap.

Revenue

Peer Companies

19.1%

2.1%

4.0%

ISSI

22.2%

1.5%

FAS123R

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

Comparable Option/RSU Overhang

Adjusted overhang uses 2X multiple on RSUs

The list of peer companies is from ISSI’s proxy filing dated January 8, 2013. Data is from each company’s

most recently filed Form 10-K.

Stock

Options

Outstanding

Option

RSUs

Total

Adjusted

Symbol

Outstanding

Overhang

Outstanding

Total

Overhang

VLTR

5,401

24,804

21.8%

262

5,663

22.8%

23.9%

ANAD

4,275

69,394

6.2%

1,970

6,245

9.0%

11.8%

AMCC

4,164

61,879

6.7%

9,244

13,408

21.7%

36.6%

DSPG

7,428

22,502

33.0%

7,428

33.0%

ENTR

11,071

87,160

12.7%

626

11,697

13.4%

14.1%

IXYS

5,472

37,352

14.6%

601

6,073

16.3%

17.9%

IPHI

4,259

27,882

15.3%

4,259

15.3%

EXAR

6,345

45,245

14.0%

604

6,949

15.4%

16.7%

GSIT

5,626

27,618

20.4%

5,626

20.4%

IKAN

12,498

69,332

18.0%

527

13,025

18.8%

19.5%

LSCC

9,287

117,675

7.9%

1,077

10,364

8.8%

9.7%

MSPD

2,588

34,515

7.5%

2,055

4,643

13.5%

19.4%

PSEM

2,453

23,565

10.4%

504

2,957

12.5%

14.7%

POWI

3,577

28,066

12.7%

458

4,035

14.4%

16.0%

SIGM

5,846

32,878

17.8%

231

6,077

18.5%

19.2%

SIMG

5,937

64,455

9.2%

2,983

8,920

13.8%

18.5%

MCRL

7,960

61,038

13.0%

667

8,627

14.1%

15.2%

MPWR

4,863

33,826

14.4%

1,300

6,163

18.2%

22.1%

16.7%

19.1%

ISSI

5,477

27,600

19.8%

323

5,800

21.0%

22.2%

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

Stock Repurchases

In past five years, ISSI has repurchased 14.2 million

shares for $88.5 million; average price of $6.24 per

ISSI current shares outstanding is about 28 million

shares; therefore outstanding shares reduced by 34%

ISSI

has

additional

$19.8

million

remaining

its

board

authorized repurchase plan

ISSI believes overhang and dilution calculations should consider

the benefit of share repurchase activity. Instead, some proxy

advisor calculations penalize companies such as ISSI for returning

capital to stockholders through a share buyback program.

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

Fully Diluted Book Value Per Share

Fully Diluted

2008

2009

2010

2011

2012

CAGR

Shares Outstanding

32.6

30.0

30.5

31.6

33.4

Stockholders' Equity

$168.9

$148.5

$198.2

$262.2

$283.6

Book Value Per Share

$5.18

$4.95

$6.50

$8.30

$8.49

13.2%

Tangible Fully Diluted

2008

2009

2010

2011

2012

CAGR

Shares Outstanding

32.6

30.0

30.5

31.6

33.4

Stockholders' Equity

$168.9

$148.5

$198.2

$262.2

$283.6

Intangibles

($2.0)

($3.6)

($2.6)

($20.5)

($17.4)

Tangible book value

$166.9

$144.9

$195.6

$241.7

$266.2

Tangible Book Value Per Share

$5.12

$4.83

$6.41

$7.65

$7.97

11.7%

Above data is from ISSI Form 10-Ks filed with the SEC.

ISSI has significantly grown its Book

Value Per Share over the last five years.

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

ISSI Peer Companies

Anadigics, Inc. (ANAD)

Applied Micro Circuits Corp. (AMCC)

DSP Group, Inc. (DSPG)

Entropic Communications, Inc.(ENTR)

Exar Corp. (EXAR)

GSI Technology, Inc. (GSIT)

Ikanos Communications, Inc. (IKAN)

IXYS Corporation(IXYS)

Inphi Corporation (IPHI)

Lattice Semiconductor Corp. (LSCC)

Micrel, Inc. (MCRL)

Mindspeed Technologies, Inc. (MSPD)

Monolithic Power Systems, Inc. (MPWR)

Pericom Semiconductor Corp. (PSEM)

Power Integrations, Inc. (POWI)

Sigma Designs, Inc. (SIGM)

Silicon Image. Inc. (SIMG)

Volterra Semiconductor Corp.(VLTR)

These are the peer companies used by our Compensation

Committee in evaluating our executive compensation programs

The list of peer companies is from ISSI’s proxy filing dated January 8, 2013.

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

Summary

Equity awards have been a successful and cost effective incentive to

recruit, retain, and motivate ISSI employees.

The quantitative methodologies of certain proxy advisors penalize

ISSI for stockholder friendly repurchases and do not appropriately

account for stockholder value creation.

ISSI has demonstrated that its equity incentives preserve cash for

growth without added dilution to stockholders compared to alternative

compensation costs.

ISSI’s incentive plans have helped it outperform the SOX, Russell

and Nasdaq over the last five years.

We ask our stockholders to vote YES on our proposal to

increase the authorized equity awards based on ISSI’s prudent

use of incentive compensation and proven stockholder returns.

2007

ISSI,

INC.

ALL

RIGHTS

RESERVED

Preliminary Proxy Statement

Confidential, for Use of the Commission Only
(as Permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12