Sunnyvale, CA, October 18, 2001 – Monolithic System Technology, Inc., (“MoSys,”) (NASDAQ: MOSY) today reported financial results for its third quarter ended September 30, 2001. Net revenue for the quarter was $5.8 million, an increase of 27% over the third quarter of 2000. Product revenue in the quarter declined to $2.8 million compared to $4.2 million for the third quarter of 2000. For the first time, revenue from the intellectual property business exceeded revenue from the sale of stand-alone memory products. Licensing revenue for the quarter was $1.9 million, or 33% of total revenue, compared to $342,000 in the third quarter of 2000. In addition, royalty revenue in the quarter was $1.1 million or 19% of total revenue.

Net income in the third quarter of 2001 was $2.1 million, up 125% compared to $941,000 in the third quarter of 2000. Net income was 37% of total revenue. Fully diluted earnings per share in the quarter were $0.07 compared to $0.04 in the prior year third quarter. Fully diluted shares of 30,554,000 were used in computing third quarter 2001 earnings per share. Net cash provided by operating activities was $3.9 million in the nine-month period ended September 30, 2001 and IPO net proceeds were $51.6 million. Cash, cash equivalents and investments totaled $79.1 million at the end of the third quarter 2001.

Dr. Fu-Chieh Hsu, CEO of MoSys stated, “We are pleased that our overall third quarter results were on target in spite of the continuing difficult economic environment for electronics manufacturers. Our royalty revenues from licensees of our 1T-SRAMÒ technology have increased to 19% of total revenue in less than a year. Our 1T-SRAM technology is proving to be very successful for our licensees who are producing high volume, high profile products that require high density embedded memories. We recently announced the availability and shipping of a new high-speed, low-power 36-Mbit stand-alone memory, which is another example of our technology leadership in high density memories.”

Dr. Hsu further stated, “During the third quarter we made good progress in the proliferation of 1T-SRAM embedded memories. We licensed embedded memory macros for a number of new projects at both new and existing customers. We have announced that Sony has started volume production of devices incorporating 1T-SRAM for use in low power consumer products. We launched our standard memory macro program with 36 initial configurations, which can shorten design cycles and lower entry costs for our customers. MoSys also announced a Design Services Alliance with 16 leading partners having expertise to further accelerate design cycles and volume production ramps of products incorporating our 1T-SRAM technology, delivering significant cost saving advantages to our customers.”

Q3 Financial Results Webcast

MoSys will host a live webcast to discuss Q3 financial results beginning at 2:15 P.M. (PT) on Thursday, October 18, 2001. Access to the webcast is provided in the MoSys website at http://www.mosys.com.

About MoSys

Founded in 1991, MoSys develops, licenses and markets innovative memory technology for semiconductors. MoSys’ patented 1T-SRAMÒ technology offers 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-SRAMÒ technology results in the technology achieving much higher density than traditional four or six transistor SRAMs while using the same standard logic manufacturing processes. 1T-SRAMÒ technology also offers the familiar, refresh-free interface and high performance for random address access cycles associated with traditional SRAMs. In addition, this technology can reduce operating power consumption by a factor of four compared with traditional SRAM technology, contributing to making it an ideal technology for embedding large memories in System on Chip (SoC) designs. 1T-SRAMÒ technology is in volume production both in SoC products at MoSys’ licensees as well as in MoSys’ standalone memories. MoSys is headquartered at 1020 Stewart Drive, Sunnyvale, California 94085. More information is available on MoSys’ website at http://www.mosys.com.

Forward Looking Statements

This press release may contain forward-looking statements about the Company including, without limitation, benefits and performance expected from use of our 1T-SRAM technology and future licensing and royalty revenue.

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 success of licensees’ products such as the Nintendo GAMECUBE, 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, and other risks identified in MoSys’ final Prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b)(1) on June 28, 2001, as well as other reports that MoSys will file 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.

1T-SRAM is a MoSys trademark registered in the U.S. Patent and Trademark Office.

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