Integrated Silicon Solution (ISSI) DEFA14A Additional proxy soliciting materials

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

(RULE 14a-101)

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Integrated Silicon Solution, Inc.

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Uphill Investment Co. Merger Proposal

Special Meeting of Stockholders

June 19, 2015

Forward Looking Statements

This presentation and our related comments contain forward-looking statements within the meaning of the Private

Securities Litigation Reform Act of 1995.

Among other things, statements concerning the expected closing date of the

acquisition and the timing and outcome of the CFIUS process and the Taiwan restructuring process are forward-looking

statements that involve risks and uncertainties that could cause actual results to differ materially from those anticipated.

Such risks and uncertainties include obtaining stockholder approval of the transaction, the timing and ability to complete

the restructuring of our operations in Taiwan, the satisfaction of the other closing conditions in the definitive agreement

(including regulatory approvals), the outcome of any existing or future litigation involving the acquisition transaction or other

risks listed from time to time in our filings with the Securities and Exchange Commission (SEC), including our Form 10-K

for the fiscal year ended September

30, 2014 and Form 10-Q for the quarter ended March 31, 2015. We assume no

obligation to update or revise the forward-looking statements in this presentation because of new information, future

events, or otherwise.

Additional Information and Where to Find It

In connection with our pending acquisition by Uphill, we filed with the SEC a Schedule 14A containing a Proxy Statement

and other relevant materials. The Proxy Statement was mailed on or about April 30, 2015 to ISSI's stockholders of record

as

of

April

20,

2015.

An

amendment

to

the

proxy

materials

was

filed

with

the

SEC

on

June

5,

2015.

Stockholders

may

obtain, free of charge, copies of the definitive proxy statement, the amendment to the definitive proxy statement and any

other documents filed by ISSI with the SEC in connection with the Special Meeting of Stockholders at the SEC's website

(http://www.sec.gov),

at

ISSI's

website

(http://www.issi.com)

or

by

writing

to

Investor

Relations,

Integrated

Silicon

Solution,

Inc., 1623 Buckeye Drive, Milpitas, CA 95035.

2

Legal Notices

The ISSI board of directors unanimously recommends that

the stockholders approve the Uphill Investment Co. Merger

Agreement and related matters.

The ISSI board of directors determined that the most recent

Cypress offer was not a Superior Proposal since the per

share price was $0.75 lower than Uphill.

3

Board Recommendation

Company A offer

$18.19

Uphill initial deal

$19.25

Cypress initial offer

$19.75

Uphill revised deal

$20.00

Cypress revised offer

$20.25

Uphill revised deal

$21.00

Increase of $2.81 per share

4

Results of ISSI Board Process

Key Parties

Background of Acquisition Discussions

Comparison of Acquisition Terms

CFIUS Regulatory Approval

Taiwan Regulatory Approval

Summary

ISSI Board Recommendation

5

Contents

Key Parties

•

High quality specialty memory, flash and analog

mixed signal products

•

Founded in 1988, IPO in 1995

•

Headquarters: Milpitas, CA

•

Solid growth: 2009-2014 revenue CAGR 16.4%

•

Business model similar to a broad line fabless

analog company

Corporate Facts

•

2Q’15 revenue of $80.1M

•

Automotive revenue +6.7% over prior year

•

35.0% gross margin in FQ2’15

•

$135.6M cash and investments

•

$0.06 per share quarterly dividend

Financial Highlights at March 31

•

SRAM–

Synch, asynch, high performance, legacy,

QUAD and DDR

•

DRAM

-

Low to high density DRAM, SDRAM, DDR,

DDR2, DDR3 for specific applications

•

NOR Flash

–

industry standard NOR Flash products

and embedded non-volatile solutions

•

Analog

-

Audio power amplifiers, sensors and LED

drivers for backlighting and display

•

Automotive

•

Industrial

•

Communications

•

Specialty Consumer

Diverse Products

Growing End Markets

7

ISSI Overview

8

A Consortium of primarily Chinese investors, including:

Summitview

Capital (Pujiang)

is an investment fund managed by Summitview

Capital.

Summitview

Capital is a venture capital and private equity firm focusing on the

semiconductor industry in China.

eTown

MemTek

Ltd.

is a company engaged in the business of development and sale of

integrated circuit products and related components. The equity holders of eTown

are

Beijing E-Town International Investment

& Development Co., Ltd. and GigaDevice

Capital Ltd. Beijing E-Town is an investment firm with headquarters in Beijing.

GigaDevice

Capital Ltd. is a subsidiary of GigaDevice

Semiconductor (Beijing) Inc., a

semiconductor memory company in China.

Beijing Integrated Circuit Design and Test Fund

is a private equity fund managed by

Hua Capital Management Ltd. Hua Capital was established by Tsinghua Holding Sino

King Capital, China Fortune-Tech Capital Co., Ltd. and a team of investors in the

semiconductor industry.

Huaqing

Jiye

Investment Management Co., Ltd.

is a Beijing-based investment

company focusing on capital investment management and consulting. In the past 10

years,

the company

has invested in more than 50 high-tech start-ups and several private

equity funds.

Uphill Overview

Background of Acquisition Discussions

Dec 2014

–

Jan

2015

Oppenheimer contacted 22 potential acquirers. Three signed non-disclosure agreements, conducted due diligence

and met with ISSI.

Jan 2015

Conducted

due

diligence

with

Company

A

(a

strategic

buyer);

determined

unwilling

to

acquire

at

proposed

price

of

$18.19 per share

Feb –

Mar 2015

Entered non-disclosure agreement with Uphill and conducted due diligence and negotiations.

March 12, 2015

Merger

Agreement

with

Uphill

executed

at

$19.25

per

share

with

expected

closing

date

in

third

calendar

quarter

of

2015.

March 12, 2015

Cypress

announces

completed

Spansion

acquisition.

May 5, 2015

Cypress and GSI Technologies settle SRAM antitrust litigation under confidential terms.

May 13, 2015

ISSI received unsolicited non-binding proposal from Cypress to acquire ISSI for $19.75 per share in cash.

May 19, 2015

Confidentiality

Agreement

with

Cypress

signed.

Due

diligence

begins

with

eight

meetings

and

conference

calls

held

between

ISSI

and

Cypress

management

within

10

days.

May 28, 2015

Uphill proposed increase in purchase price from $19.25 per share to $20.00 per share and Merger Agreement

Amendment signed on May 29, 2015.

May 29, 2015

ISSI received revised unsolicited non-binding proposal from Cypress to acquire ISSI for $20.25 per share in cash.

Due diligence continued with 6 additional meetings and conference calls, for a total of 14 meetings and conference

calls held within 17 days of signing the confidentiality agreement on May 19, 2015, and a total of 83 Cypress

employees

and

advisors

with

access

to

the

data

room

containing

1,953

documents

and

45,790

pages

of

information.

June 8, 2015

ISSI announced that agreement could not be reached with Cypress on antitrust issues.

June 10, 2015

After

further

negotiating

antitrust

provisions,

ISSI

agrees

to

merger

terms

with

Cypress

at

$20.25

per

share

which

commences Uphill match period of 4 days.

June

11, 2015

Uphill proposed increase in purchase price from $20.00 per share to $21.00 per share and Merger Agreement

Amendment signed on June 11, 2015.

10

Background of Acquisition Discussions

Comparison of Acquisition Terms

Uphill Agreement

–

$21.00 per share of common stock (all cash)

–

Signed commitment letter from ICBC

–

Merger is not conditioned on availability of financing

–

If financing is unavailable, ISSI may terminate the Merger Agreement and collect a

$19 million reverse termination fee.

Cypress Proposal

–

$20.25 per share of common stock (all cash)

–

Signed commitment letter from Barclays Bank PLC

–

Merger is not conditioned on availability of financing

–

If debt financing is unavailable, there is no reverse termination fee; ISSI may obtain

specific performance to force Cypress to close, but this could be challenging to

enforce.

12

Proposed Acquisition Terms

Uphill Agreement

–

Expected to close in third calendar quarter 2015 (with specific timing subject to

CFIUS and Taiwan approvals)

Cypress Proposal

–

Expected to close 6-9 months following signing a merger agreement (e.g. March

2016 closing ) due to highly likely “second request” by the FTC/DOJ

–

Thus, expected real value of the Cypress proposal is less than its stated price.

13

Timing of Closing

Uphill Agreement

–

Closing conditions include CFIUS regulatory approval and Taiwan approval.  We

believe

there

is

low

risk

of

non-approvals

and

that

approvals

should

be

received

within a few months.

Cypress Proposal

–

Cypress has agreed to use its reasonable best efforts and take all reasonable

actions to obtain antitrust approvals, including fully divesting all of ISSI’s SRAM

business,

if

required.

As

such,

we

believe

there

would

be

low

risk

of

antitrust

issues preventing the closing after the second request.

Consistent with its fiduciary duties, ISSI’s Board of Directors

is seeking the highest price for its stockholders.

ISSI’s Board must also evaluate the closing risks of any

proposed transaction to assure that it can successfully close

in order to deliver value to stockholders.

14

Regulatory Summary 

Relevant to Uphill:

CFIUS Regulatory Approval

The Committee on Foreign Investment in the United States (“CFIUS”) is a U.S.

Government inter-agency committee with authority to review transactions involving

control over a U.S. business by a foreign person.

The scope of review is for potential national security implications arising from the

foreign control.

Submission of a Notice to CFIUS is voluntary, but CFIUS has the authority to initiate

an investigation if no Notice is filed.

CFIUS may determine that there are no national security concerns with the

transaction, may impose mitigation terms to resolve any national security concerns

with the covered transaction, or may send a report to the President recommending

that the transaction be suspended or prohibited.

16

CFIUS Regulatory Filings

There are up to four stages of CFIUS Review

–

1 to 2 week pre-filing consultation period,

–

followed by a 30 initial review period,

–

followed by a 45 day investigation period, and

–

then a potential 15 day review by the President

CFIUS clearance generally takes up to 75 days after formal acceptance for

transactions comparable to the ISSI –

Uphill Transaction

Key issues for CFIUS review include:

–

a U.S. Target’s amount of U.S. government business, both direct and indirect

–

the export control classification of the Target’s products and technologies

17

CFIUS Process

ISSI’s U.S. Government Business is minimal

–

ISSI has no contracts, classified or unclassified, with any U.S. government agency

–

ISSI does not have any direct military sales

–

ISSI does not customize its products for military or any other end-use

ISSI has customers that sell to the U.S. Government and defense contractors

–

These sales are a very small percentage of ISSI’s business and represent less than

0.5% ($1 million) of ISSI’s annual sales

Export control classification of  ISSI’s products and technologies

–

ISSI products are standard off-the-shelf commercial products

–

The products and underlying technologies can be exported to all countries (other than

those subject to U.S. sanctions) without any export licensing requirements or controls

Key markets are: automotive (safety features, digital audio and entertainment), mobile

communications,  industrial (power management, programmable logic devices, point of sale

terminals), and digital consumer markets

–

Approximately 88% of ISSI’s revenues are from foreign sales

–

All ISSI’s products are manufactured in Asia

18

Key Factors for CFIUS

On May 19, ISSI and Uphill voluntarily submitted a draft of the proposed Joint

Voluntary Notice to CFIUS

Consistent with CFIUS practice, counsel for parties had a call with CFIUS on May 26

to discuss the proposed Notice and CFIUS sent follow-up questions to parties

On June 11, the formal Joint Voluntary Notice was submitted to CFIUS

–

CFIUS will notify the parties of formal acceptance of the filing commencing the

initial 30 review

–

Delays after acceptance only likely if changes to deal and CFIUS requires parties

to withdraw and refile

19

CFIUS Status

The parties are confident that CFIUS will clear the acquisition of ISSI by Uphill in a

timely manner

The parties strongly believe that the Transaction does not raise national security

concerns

If CFIUS imposes mitigation measures to address any potential national security

concerns, it should not be a material issue:

–

The Merger Agreement obligates the buyer to consent to CFIUS mitigation,

including mitigation requiring the termination and/or cancellation of ISSI contracts,

products and/or assets, etc. that are responsible for revenue of up to $5 million

We believe there is a high level of certainty

of obtaining CFIUS approval and almost

no risk of CFIUS preventing closing of the

merger after any requested remediation.

20

CFIUS Conclusion

Relevant to Uphill:

Taiwan Regulatory Approval

ISSI has four legal entities in Taiwan that engage in a variety of business

activities, including R&D, sales, marketing, customer and supplier technical

support, operations/logistics, and administration.

Under Taiwan’s PRC Investment Rules, a PRC investor can only directly or

indirectly invest in or control a Taiwanese company doing business under specific

business codes (“Positive List”).

Business activities such as R&D and manufacturing are not on the Positive List

and, therefore, those business activities cannot be controlled by a PRC investor.

22

Background

ISSI and Uphill performed extensive legal and operational analysis prior to

executing the Merger Agreement to ensure that, after legal entity restructuring,

the transaction would comply with Taiwan’s PRC Investment Rules.

Under the Merger Agreement, ISSI and Uphill agreed to fully cooperate on the

legal entity restructuring, and the closing is subject to obtaining approval from the

Taiwan Investment Commission.

Once the Merger Agreement was executed, Uphill, ISSI, and their Taiwan legal

and financial advisors investigated various options to determine the most efficient

restructuring plan that would comply with Taiwan’s PRC Investment Rules.

A step-by-step restructuring plan was prepared and agreed to by ISSI and Uphill,

and an amendment to the Merger Agreement was executed and filed with the

SEC in a Form 8-K on April 28, 2015.

23

Uphill Merger Agreement

The plan includes restructuring the four legal entities such that the activities that

cannot be controlled by a PRC investor

would be combined into one legal entity.

That legal entity would then be sold to a non-PRC investor.  The remaining

activities would be on the Positive List, can be controlled by a PRC investor, and

would remain within ISSI.

ISSI has begun implementing the restructuring plan and expects to have it

completed in the third calendar quarter of 2015. 

A highly regarded non-PRC company has been identified to purchase the entity

that would be sold. ISSI expects to execute an agreement with that party in the

near future.

ISSI has reviewed and discussed its plan with certain representatives of the

Taiwan government and received positive feedback. ISSI expects to obtain the

necessary Taiwan government approvals in the third calendar quarter of 2015.

Based on our extensive research and consultation, we believe

there is low risk of Taiwan approvals impacting the merger closing.

24

ISSI/Uphill Taiwan Restructuring Plan

Price difference

Uphill $21.00; Cypress

$20.25, or 3.75% premium

Targeted Closing

Uphill:

Third Quarter 2015

Cypress: Estimated March 2016

Uphill:

CFIUS Assessment

Believed to be low risk; Merger Agreement provides for

mitigation in excess of revenue in question

Uphill:

Taiwan Assessment

Initial response from government is positive; buyer identified

for assets,

executing restructuring plan

25

Summary

The ISSI board of directors unanimously recommends that

the stockholders approve the Uphill Investment Co. Merger

Agreement and related matters.

26

Board Recommendation