ISSI Offers Response to Boosted Offer from Cypress Semi: Sees Bid Leading to Superior Proposal, Remains Concerned with Cypress Ability to Finance

Integrated Silicon Solution, Inc.

today acknowledged the receipt of a revised unsolicited non-binding offer from Cypress Semiconductor Corporation

to acquire all of the outstanding common stock of ISSI for $20.25 per share in cash. As previously announced, on May 29, 2015, ISSI entered into an Amendment to the Agreement and Plan of Merger dated as of March 12, 2015 ("Uphill Agreement") with Uphill Investment Co., pursuant to which Uphill agreed to acquire all of the outstanding common stock of ISSI for $20.00 per share in cash. The ISSI Board of Directors has determined in good faith, after consultation with ISSI's financial advisor and outside legal counsel, that the increased Cypress offer either constitutes or is reasonably expected to lead to a Superior Proposal (as defined in the Uphill Agreement), and that the failure to participate or engage in discussions or negotiations with Cypress and/or furnish information to Cypress would reasonably be expected to be inconsistent with its fiduciary duties to the company stockholders under Delaware Law. Therefore, ISSI currently expects to engage in further discussions or negotiations with Cypress regarding the offer and furnish additional due diligence information to Cypress in compliance with the applicable terms of the Uphill Agreement. After reviewing the revised Cypress offer (including the Cypress comments to the merger agreement draft provided by ISSI on May 21, 2015) with its financial and legal advisors, ISSI remains concerned about the ability of Cypress to finance the approximately $680 million purchase price with only approximately $157 million in cash and cash equivalents and approximately $494 million in debt on its balance sheet at March 31, 2015. ISSI has previously asked Cypress to provide it with a financing commitment letter to support the proposed purchase price. However, Cypress has not provided such letter. This letter is necessary for due diligence purposes so that ISSI can have customary assurances that the purchase price can be paid by Cypress. ISSI is also concerned with the ability of a transaction with Cypress to obtain antitrust clearance in the U.S. and Germany and the timing of such clearance. If Cypress were to acquire ISSI, the combined company would represent a very high percentage of the SRAM market in the U.S., and would be the largest supplier of SRAM to the global automotive market. As such, ISSI believes that there is significant risk that the antitrust review by the U.S. Federal Trade Commission ("FTC") or Department of Justice ("DOJ") could take up to nine months, which would delay the closing of a transaction between Cypress and ISSI into 2016, and that there is a high possibility that the acquisition of ISSI by Cypress would not be approved by the FTC or DOJ without a divestiture of some or all of ISSI's SRAM business which represents up to approximately 25% of ISSI's revenue. In recognition of this significant issue, the revised Cypress offer proposed a "side letter" as a solution to address this risk. However, after consultation with its legal counsel, ISSI believes that such "side letter" in its current form would not be accepted as an adequate solution by the FTC or DOJ. Despite this significant risk, the draft merger agreement delivered to ISSI by Cypress provides that the obligation of Cypress to close the transaction would be contingent on receiving all necessary antitrust approvals. Thus, as proposed by Cypress, if the antitrust approvals are not received, Cypress could walk away from the deal. In concluding that the revised non-binding offer from Cypress is reasonably expected to lead to a Superior Proposal, the ISSI Board expects that Cypress will agree to take all actions necessary to receive government approvals. ISSI believes that these significant antitrust issues with the Cypress non-binding offer present a much larger risk to a successful closing than any of the regulatory matters in the Uphill Agreement. As originally announced on March 12, 2015, ISSI continues to expect to close the transaction with Uphill in the third calendar quarter of 2015. In an effort to maximize stockholder value, ISSI has cooperated fully with Cypress and permitted Cypress to conduct extensive due diligence in accordance with the terms of the binding Uphill Agreement. A confidentiality agreement with Cypress was signed on May 19, 2015, just three business days after Cypress submitted their first non-binding offer, and Cypress was provided access to an electronic data room the next morning. A total of 76 people, either Cypress employees or representatives of Cypress, were provided access to the data room, which contains nearly 1,900 ISSI documents totaling over 45,000 pages. ISSI management also held eight meetings with Cypress management as part of the due diligence process. Given that Cypress has already been permitted to conduct extensive due diligence, ISSI expects Cypress to comply with the statement in its May 29 letter and complete its due diligence within five days. The ISSI Board believes that Cypress should be able to resolve the financing and antitrust issues in this timeframe. There can be no assurance as to the outcome of any discussions with Cypress, including whether such discussions will result in any transaction or what the terms of such transaction will be. The ISSI special meeting of stockholders to consider approval of the transaction with Uphill and related matters is scheduled for June 12, 2015 at 2:00 p.m. local time. The ISSI Board of Directors is not withholding, withdrawing, qualifying, amending or modifying its recommendation with respect to the Uphill Agreement and the merger with Uphill, is not proposing to do so, and is not making any recommendation with respect to the Cypress proposal.