Silicon Storage Technology 8-K SST Reports Third Quarter 2009 Financial Results

Exhibit 99.1

	Silicon Storage Technology, Inc.
		News Release
		For More Information Contact:
		Leslie Green
		Green Communications Consulting, LLC
		(650) 312-9060

SST Reports Third Quarter 2009 Financial Results

SUNNYVALE, Calif., Oct. 27, 2009 — SST (Silicon Storage Technology, Inc.) (NASDAQ: SSTI), a leader in flash memory technology, today announced results for the third quarter, ended September 30, 2009.

Net revenues for the third quarter were $71.3 million compared with $58.1 million in the second quarter of 2009 and with $92.4 million in the third quarter of 2008. Product revenues for the third quarter of 2009 were $61.8 million, compared with $51.8 million in the second quarter of 2009 and with $79.8 million in the third quarter of 2008. Revenues from technology licensing for the third quarter of 2009 were $9.5 million, compared with $6.3 million in the second quarter of 2009 and with $12.6 million in the third quarter of 2008.

Income from operations for the third quarter of 2009 was $1.5 million compared with a loss from operations of $7.5 million in the second quarter of 2009 and with income from operations of $4.1 million in the third quarter of 2008.

Net income for the third quarter of 2009 was $3.1 million, or $0.03 per share, based on approximately 95.9 million diluted shares. By comparison, the company recorded a net loss of $6.4 million, or $0.07 per share, based on approximately 95.7 million diluted shares in the second quarter of 2009. For the third quarter of 2008, SST reported net income of $4.9 million, or $0.05 per share based on approximately 99.7 million diluted shares.

SST finished the third quarter of 2009 with $143.8 million in cash, cash equivalents, short-term investments, and long-term marketable debt securities, up approximately $8.5 million from $135.3 million at June 30, 2009.

SST Reports Third Quarter 2009 Financial Results

October 27, 2009

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Management Qualitative Comments

“This was a productive quarter for SST as we executed well on our strategy and returned the company to profitability ahead of our expectations,” said Bing Yeh, chief executive officer. “Seasonally strong demand in NOR flash memory, as well as a stabilizing pricing environment, resulted in healthy sequential growth in unit shipments and improved product revenues across all four of our application segments. Over the past few quarters, we have signed several new licensing agreements for our embedded SuperFlash program, which will begin to contribute upfront fee revenue in the fourth quarter as we make progress on deliverables. These new licensing agreements will help drive royalty growth in our licensing business in future years. We continue to manage our expenses closely and operate our business conservatively, but we are optimistic about the opportunities in our markets and we believe that we are laying a solid foundation for growth in 2010.”

Fourth Quarter 2009 Outlook

Taking into account normal seasonality, SST expects its fourth quarter revenues to be between $67 million and $72 million. Gross margin is expected to be between 30 and 32 percent, subject to the risk of changing market conditions. Total operating expenses are expected to be between $21 million and $23 million. Our net income per share is expected to be between $0.00 and $0.03.

Conference Call Dial-in Information

SST will hold a conference call to discuss its financial results today at 1:30 p.m. PT. Those wishing to participate in the conference call should dial (800) 288-8960, international participants please dial (612) 288-0337, using the password “SST” at approximately 1:20 p.m. PT. A replay of the call will be available for one week by dialing (800) 475-6701, international participants dial (320) 365-3844, using the access code 119429. A webcast replay of the conference call will be available for three months on the company’s Web site athttp://www.sst.com/about_sst/events/current_upcoming/.

About Silicon Storage Technology, Inc.

Headquartered in Sunnyvale, California, SST designs, manufactures and markets a diversified range of memory and non-memory products for high volume applications in the digital consumer, networking,

SST Reports Third Quarter 2009 Financial Results

October 27, 2009

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wireless communications and Internet computing markets. Leveraging its proprietary, patented SuperFlash technology, SST is a leading provider of nonvolatile memory solutions with product families that include various densities of high functionality flash memory components and flash mass storage products. The company also offers its SuperFlash technology for embedded applications through its broad network of world-class manufacturing partners and technology licensees, including TSMC, which offers it under its trademark Emb-FLASH. SST’s non-memory products include NAND controller-based products, smart card ICs and modules, flash microcontrollers and radio frequency ICs and modules. Further information on SST can be found on the company’s Web site at http://www.sst.com.

Forward-Looking Statements

Except for the historical information contained herein, this news release contains forward-looking statements regarding memory and non-memory market conditions, SST’s future financial performance, the ability to control expenses, manage inventory and generate cash, the launch, design cycle and performance of new products, SST’s licensing business, SST’s ability to diversify its business, the transition of SST’s products to smaller geometrics, and SST’s ability to bring new products to market, all of which involve risks and uncertainties. These risks may include timely development, acceptance and pricing of new products, the terms, conditions and revenue recognition issues associated with licensees’ royalty payments, the impact of competitive products and pricing, and general economic conditions as they affect SST’s customers, as well as other risks detailed from time to time in the company’s periodic reports, including the Annual Report on Form 10-K for the year ended December 31, 2008, Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 and other reports filed from time to time with the Securities and Exchange Commission. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, SST disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

For more information about SST and the company’s comprehensive list of product offerings, please call 1-888/SST-CHIP. Information can also be requested via email to literature@sst.com or through SST’s Web site at http://www.sst.com. SST’s head office is located at 1171 Sonora Court, Sunnyvale, Calif.; telephone: 408/735-9110; fax: 408/735-9036.

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October 27, 2009

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The SST logo and SuperFlash are registered trademarks of Silicon Storage Technology, Inc. All other trademarks or registered trademarks are the property of their respective holders.

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— FINANCIAL TABLES TO FOLLOW —

SST Reports Third Quarter 2009 Financial Results

October 27, 2009

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Silicon Storage Technology, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except per share data)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2008			2009		2008			2009
Net revenues:
Product revenues	$	79,801		$	61,766	$	220,572		$	152,319
Technology licensing		12,597			9,487		36,611			27,146
Total net revenues		92,398			71,253		257,183			179,465
Cost of revenues		61,421			48,790		176,548			127,899
Gross profit		30,977			22,463		80,635			51,566
Operating expenses:
Research and development		14,260			10,583		45,095			33,247
Sales and marketing		6,713			5,147		21,114			15,273
General and administrative		5,931			5,252		20,835			15,048
Other		—			—		—			329
Total operating expenses		26,904			20,982		87,044			63,897
Income (loss) from operations		4,073			1,481		(6,409	)		(12,331	)
Other income, net		2,313			3,376		4,163			4,076
Income (loss) before provision for (benefit from) income taxes and pro rata share of loss from equity investments		6,386			4,857		(2,246	)		(8,255	)
Provision for (benefit from) income taxes		(438	)		1,643		(5,098	)		3,371
Income (loss) before pro rata share of loss from equity investments		6,824			3,214		2,852			(11,626	)
Pro rata share of loss from equity investments		1,903			122		6,040			971
Net income (loss)	$	4,921		$	3,092	$	(3,188	)	$	(12,597	)
Net income (loss) per share - basic	$	0.05		$	0.03	$	(0.03	)	$	(0.13	)
Shares used in per share calculation - basic		99,186			95,852		101,527			95,768
Net income (loss) per share - diluted	$	0.05		$	0.03	$	(0.03	)	$	(0.13	)
Shares used in per share calculation - diluted		99,676			95,866		101,527			95,768

SST Reports Third Quarter 2009 Financial Results

October 27, 2009

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Silicon Storage Technology, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)

	December 31, 2008			September 30, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	50,880		$	75,251
Short-term investments		48,997			40,607
Trade accounts receivable, net		20,117			35,943
Inventories		54,159			30,643
Other current assets		4,153			4,016
Total current assets		178,306			186,460
Long-term marketable debt securities		31,848			27,915
Long-term marketable equity investments		18,196			34,941
Equity investments, others		24,619			32,888
Property and equipment, net		18,913			13,365
Goodwill and intangible assets, net		14,794			12,993
Other assets		1,807			4,215
Total assets	$	288,483		$	312,777
LIABILITIES
Current liabilities:
Trade accounts payable	$	19,146		$	25,973
Accrued expenses and other liabilities		14,200			23,284
Deferred revenue		3,841			2,025
Total current liabilities		37,187			51,282
Other liabilities		8,082			9,742
Total liabilities		45,269			61,024
SHAREHOLDERS’ EQUITY
Common stock		412,312			414,774
Accumulated other comprehensive income		14,308			32,982
Accumulated deficit		(183,406	)		(196,003	)
Total shareholders’ equity		243,214			251,753
Total liabilities and shareholders’ equity	$	288,483		$	312,777

SST Reports Third Quarter 2009 Financial Results

October 27, 2009

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Silicon Storage Technology, Inc. and Subsidiaries

Supplemental Data

	Percentage of Gross Product Revenue						Change in Revenue
	3Q08		2Q09		3Q09		3Q08 to 3Q09		2Q09 to 3Q09
Product Revenue By Ship-To Location
North America	4	%	4	%	4	%	(22	%)	30	%
Total International	96	%	96	%	96	%	(23	%)	21	%
Europe	7	%	4	%	4	%	(60	%)	22	%
Japan	8	%	11	%	12	%	14	%	30	%
Korea	5	%	7	%	7	%	25	%	26	%
China and Taiwan	66	%	66	%	64	%	(26	%)	16	%
Other Far East	10	%	8	%	9	%	(31	%)	41	%
Product Revenue by Application
Digital Consumer	30	%	23	%	24	%	(42	%)	22	%
Internet Computing	20	%	21	%	24	%	(9	%)	38	%
Networking	10	%	15	%	16	%	28	%	35	%
Wireless Communications	40	%	41	%	36	%	(33	%)	4	%
Total	100	%	100	%	100	%	(23	%)	21	%
Licensing Revenue as a % of Total Revenue	13	%	11	%	13	%	(25	%)	50	%