Saifun Semiconductors Reports Fourth Quarter and Year-End 2005 Results

Netanya, Israel, February 15, 2006 - Saifun Semiconductors Ltd. (NASDAQ: SFUN), a provider of intellectual property solutions for the non-volatile memory (NVM) market, today announced financial results for the fourth quarter and twelve months ended December 31, 2005.

Financial Highlights: Fourth Quarter 2005 compared to Fourth Quarter 2004

• Revenues were $16.7 million (including $374,000 of non-cash license revenues recognized in connection with the exit in December 2004 from the company’s former joint venture with Infineon Technologies), compared to $9.4 million, an increase of  77%.
• Licensing revenues were $13.0 million (including $374,000 of non-cash license revenues), compared to $7.6 million, an increase of 70%.
• Service revenues were $3.7 million, compared to $1.8 million, an increase of 104%.
• Cost of service revenues was $3.8 million, of which $746,000 represented services performed for licensees pursuant to which no revenues were recognized in this quarter.
• Operating income was $7.3 million, compared to $3.5 million, an increase of 107%.
• Net income was $8.6 million (including income of $0.2 million from discontinued operations), or $0.16 per basic and $0.15 per diluted share, compared to a net loss of $24.4 million, or $(1.44) per basic and diluted share.
• Net income included $1.8 million of stock-based compensation expense compared to $177,000.

Financial Highlights: Fiscal Year 2005 compared to Fiscal Year 2004

• Revenues were $78.6 million (including $19.2 million of non-cash license revenues) compared to $30.6 million, an increase of 157%.
• Licensing revenues were $65.8 million (including $19.2 million of non-cash license revenues), compared to $22.6 million, an increase of 191%. 
• Service revenues were $12.8 million, compared to $7.9, an increase of 62%.
• Cost of service revenues was $12.0 million, of which $1.4 million represented services performed for licensees pursuant to which no revenues were recognized in this year.
• Operating income for the period was $48.0 million, compared to $11.7 million, an increase of 312%.
• Net income was $44.5 million (including a loss of $5.3 million from discontinued operations), or $0.17 per basic and $0.16 per diluted share, compared to net loss of $37.9 million (including a loss of $7.2 million from discontinued operations), or $(2.24) per basic and diluted share.
• Net income included $4.3 million of stock-based compensation expense compared to $0.6 million.

Commenting on the results, Kobi Rozengarten, President of Saifun Semiconductors said, “We are very pleased with our results for 2005, which reflect record revenues and net profits.  During the fourth quarter and throughout 2005, we saw continued growth in our core business. We strengthened relationships with our existing licensees and welcomed Semiconductor Manufacturing International Corporation (SMIC), one of the top foundries in the world, which adopted our NROM technology as part of its NVM strategy.

“In the latter part of 2005, we launched our next generation Quad NROM, which we believe is the only technology that enables the storage of four bits of information in a single cell.  Quad NROM is particularly suitable for data flash (NAND) applications and we are currently working on Quad NROM projects with four of our licensees.” 

About Saifun Semiconductors Ltd.
Saifun is a provider of intellectual property (IP) solutions for the non-volatile memory (NVM) market. The company’s innovative Saifun NROM® technology allows semiconductor manufacturers to deliver high performance, reliable products at a lower cost per megabit, with greater storage capacity, using a single process for all NVM applications. Saifun licenses its IP to semiconductor manufacturers who use this technology to develop and manufacture a variety of stand-alone and embedded NVM products. These include Flash memory for the telecommunications, consumer electronic, networking and automotive markets. Among the companies licensing Saifun NROM are Infineon Technologies, Macronix International, MEI (Panasonic), Sony Corporation, SMIC, Spansion, and Tower Semiconductors. For more information please check out our website: www.saifun.com