Saifun Semiconductors Announces Reduction in NROM Activity by Qimonda AG

NETANYA, Israel -- October 13, 2006 -- Saifun Semiconductors Ltd. (NASDAQ: SFUN), a provider of intellectual property solutions for the non-volatile memory (NVM) market, announced today that Qimonda AG, a majority-owned subsidiary of Infineon Technologies AG, has informed Saifun of its decision to ramp down current NROM-related activity. Qimonda, which has been a significant customer of Saifun's IP and design services, will continue to license NROM technology on a limited basis, under an amended license agreement. As a result of this change, Saifun does not expect to receive from Qimonda any license fees or services fees, and only limited royalties, after the fourth quarter of 2006. While this development will not impact Saifun's results for the third quarter of 2006, the Company does expect it to impact its results beginning in the fourth quarter of 2006.

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(R) 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 currently licensing Saifun NROM technology are Qimonda AG, Macronix International, NEC Electronics Corporation, Semiconductor Manufacturing International Corporation, Sony Corporation, Spansion, and Tower Semiconductor.