SUNNYVALE, Calif., Apr 17, 2003 (BUSINESS WIRE) — Monolithic
System Technology, Inc. (MoSys), (Nasdaq:MOSY) today reported
financial results for its first quarter ended March 31, 2003.

    First Quarter Highlights

    --  Total net revenue increased 23% over the first quarter of last

    --  Year-over-year licensing revenue increased 137%

    --  Achieved silicon verification on 90-Nanometer process of
        1T-SRAM(R) embedded memory

    --  Expanded license agreement with Applied Micro Circuits
        Corporation (AMCC) for incorporation of 1T-SRAM technology
        into high speed networking ICs for traffic management

    --  Licensed 1T-SRAM technology to Advanced Communications Devices
        Corporation (ACD) for Etherlan broadband switch

    --  Expanded global presence through the opening of a Tokyo office
        to support the growing customer demand in Japan

    Financial Results

Total net revenue in the quarter was $7.9 million, as compared to
$6.4 million in first quarter of 2002. Total net revenue consisted of
$4.5 million from licensing, $2.9 million in royalties and
approximately $544,000 in product revenue. Licensing revenue for the
current quarter increased by $2.6 million over the same period last
year, while royalty revenue decreased approximately $760,000 from the
first quarter 2002. Product revenue of $544,000 decreased as compared
to the $893,000 in 2001. The gross margin percentage in the first
quarter of 2003 was 87%.

Net income for the quarter was $2.7 million representing 34% of
total revenue, or $0.09 fully diluted earnings per share, compared to
$2.8 million, or $0.09 fully diluted earnings per share, in the same
period last year.

Commenting on the results of the first quarter, Dr. Fu-Chieh Hsu,
CEO of MoSys stated, “We are encouraged by the growth in licensing
revenue achieved during the first quarter. We are confident about the
commitment of the high-tech industry to invest in future product
development. As the memory portion of the SoC die area grows,
companies are turning to MoSys to supply them with high density, high
performance, low cost memory solutions that most effectively meet
their design needs.”

Dr. Hsu further stated, “Although we continue to see strong
interest in our technologies, we cannot predict the pace or speed at
which our customers will commit resources to new project designs.
Recently we have begun to see more than the normal seasonal dip in new
project initiatives and production deployment. We believe this to be a
result of the budgetary decisions made by our customers as they are
applying even greater caution to their research and development
projects in the midst of prolonged economic uncertainty. As a result,
we are becoming increasingly cautious as we formulate our quarterly
guidance. Visibility, even in the short-term, is very difficult and I
encourage interested investors to access our first quarter earnings
conference call on our Web site, at which time we will discuss our
outlook for the coming quarter in greater detail.”

Business Outlook

MoSys’ President and Chief Executive Officer Dr. Fu-Chieh Hsu and
Chief Financial Officer, Mark Voll will update their business outlook
and give guidance for the second quarter of 2003 during their earnings
conference call at 2:15 P.M. PT on April 17, 2003.

First Quarter Financial Results Web cast/Conference Call

The MoSys management team will host a live web cast and conference
call to discuss Q1 2003 financial results beginning at 2:15 P.M. (PT)
on Thursday, April 17, 2003. Investors and other interested parties
may listen to the live web cast by visiting the investor relations
section of the MoSys web site at A replay of the
conference call will be available for 24 hours beginning at 5 P.M. PT.
The replay number is 1-800-633-8284 with a pass code of 21139568. A
web cast replay will also be available on the company’s web site.

About MoSys

Founded in 1991, MoSys (Nasdaq: MOSY), develops, licenses and
markets innovative memory technologies for semiconductors. MoSys’
patented 1T-SRAM technologies offer a combination of high density, low
power consumption, high speed and low cost unmatched by other
available memory technologies. The single transistor bit cell used in
1T-SRAM memory results in the technology achieving much higher density
than traditional four or six transistor SRAMs while using the same
standard logic manufacturing processes. 1T-SRAM technologies also
offer the familiar, refresh-free interface and high performance for
random address access cycles associated with traditional SRAMs. In
addition, these technologies can reduce operating power consumption by
a factor of four compared with traditional SRAM technology,
contributing to making them ideal for embedding large memories in
System on Chip (SoC) designs. MoSys’ licensees have shipped more than
50 million chips incorporating 1T-SRAM embedded memory technologies,
demonstrating excellent manufacturability in a wide range of silicon
processes and applications. MoSys is headquartered at 1020 Stewart
Drive, Sunnyvale, California 94085. More information is available on
MoSys’ website at

Forward Looking Statements

This press release may contain forward-looking statements about
the Company including, without limitation, benefits and performance
expected from use of the Company’s 1T-SRAM technology.

Forward-looking statements are based on certain assumptions and
expectations of future events that are subject to risks and
uncertainties. Actual results and trends may differ materially from
historical results or those projected in any such forward-looking
statements depending on a variety of factors. These factors include
but are not limited to, customer acceptance of our 1T-SRAM technology,
proving our technology in high-volume production of licensees’
integrated circuits, the level of commercial success of licensees’
products such as the Nintendo GAMECUBE and cell phone hand sets, ease
of integration of our 1T-SRAM with other semiconductor functions, ease
of manufacturing and yields of devices incorporating our 1T-SRAM, our
ability to enhance the 1T-SRAM technology or develop new technologies,
the level of intellectual property protection provided by our patents,
the vigor and growth of markets served by our licensees and customers,
the impact of the Company’s recent acquisition of ATMOS Corporation on
future operating results and operations of the Company and other risks
identified in the Company’s most recent annual report on Form 10-K
filed with the Securities and Exchange Commission, as well as other
reports that MoSys files from time to time with the Securities and
Exchange Commission. MoSys undertakes no obligation to update publicly
any forward-looking statement for any reason, except as required by
law, even as new information becomes available or other events occur
in the future.

Note to Editors: 1T-SRAM(R) is a MoSys trademark registered in the
U.S. Patent and Trademark Office. All other trade, product, or service
names referenced in this release may be trademarks or registered
trademarks of their respective holders.

               (In thousands, except per share amounts)

                                                Three Months Ended
                                                     March 31,
                                                2003           2002
                                            -----------    -----------
                                            (unaudited)    (unaudited)
Net Revenue
 Product                                    $    544       $    893
 Licensing                                     4,513          1,884
 Royalty                                       2,856          3,618
                                            -----------    -----------
    Total                                      7,913          6,395
                                            -----------    -----------

Cost of Net Revenue
 Product                                         407            447
 Licensing                                       615            312
                                            -----------    -----------
    Total                                      1,022            759
                                            -----------    -----------
Gross Profit                                   6,891          5,636
                                            -----------    -----------

Operating Expenses:
 Research and  development                     2,245          1,331
 Selling, general and administrative           1,670            992
 Stock-based compensation expense                126            208
                                            -----------    -----------
    Total operating expenses                   4,041          2,531
                                            -----------    -----------

 Income from operations                        2,850          3,105
 Interest and other income                       490            367
                                            -----------    -----------

 Income before income taxes                    3,340          3,472
 Provision for income taxes                     (668)          (694)
                                            -----------    -----------

Net Income                                  $  2,672       $  2,778
                                            ===========    ===========
Net Income Per Share
    Basic                                   $   0.09       $   0.09
                                            ===========    ===========
    Diluted                                 $   0.09       $   0.09
                                            ===========    ===========

Shares Used in Computing Net Income
     Basic                                    30,302         29,570
     Diluted                                  30,539         31,742

                            (in thousands)

                                             March 31,    December 31,
                                               2003           2002
                                            -----------   ------------
Current Assets
 Cash, cash equivalents and short-term
  investments                               $ 64,915       $ 68,433
 Accounts receivable - net                     2,148            943
 Unbilled contract receivable                    937            693
 Inventories                                     892          1,037
 Prepaid expenses and other assets             3,768          4,475
                                            -----------    -----------
    Total Current Assets                      72,660         75,581

 Long-term investments                        17,020         11,400
 Property and equipment                        3,056          3,352
 Goodwill                                     12,326         12,326
 Other Assets                                    473            431
                                            -----------    -----------
    Total Assets                             105,535        103,090
                                            ===========    ===========

Liabilities and Shareholders' Equity:
Current Liabilities:
 Accounts payable                           $    280       $     82
 Accrued expenses and other liabilities        2,620          2,418
 Deferred revenue                                672          1,779
 Current portion of capital lease
  obligations                                     37             89
                                            -----------    -----------
 Total Current Liablilites                     3,609          4,368

 Long term portion of capital
  lease obligations                               20             25

 Common stock and additional paid in
  capital                                     97,687         97,150
 Retained earnings                             4,219          1,547
                                            -----------    -----------
Total Shareholders' Equity                   101,906         98,697
                                            -----------    -----------
 Total Liablility and
  Shareholders' Equity                      $105,535       $103,090
                                            ===========    ===========