Silicom Reports Fourth Quarter and Full Year 2002 Results.

Business Editors

KFAR SAVA, Israel--(BUSINESS WIRE)--Jan. 21, 2003

Silicom Ltd. (NASDAQ:SILCF) today reported financial results for the fourth quarter and year ended December 31, 2002.

Revenues for the fourth quarter of 2002 were $795,000 compared to $853,000 for the

For the full year ended December 31, 2002, revenues were $2,726,000, compared to $4,530,000 for 2001. Net loss for the period was ($2,485,000), or ($0.60) per share fully diluted, compared to ($1,486,000), or ($0.36) per share fully diluted, for 2001.

Commenting on the results, Shaike Orbach, President and CEO, said, "We are encouraged by the high level of interest which has surfaced for our new line of high-performance Storage Networking connectivity products. With deep Ethernet knowledge and advanced software and hardware development capabilities, we continue to intensify our R&D efforts and currently develop complex high-end server networking solutions. We believe these products address a significant market need, representing a sustained opportunity despite long sales cycles."

Silicom Ltd. is an industry leading provider of communications connectivity solutions and advanced enabling technologies, making it the preferred time-to-market and performance partner to many of the industry's significant players. With core expertise in high performance, innovative technologies for networking and operating systems, the Company develops innovative networking solutions for manufacturers of storage systems, Internet traffic management systems, security systems and for other hardware manufacturers providing a variety of server-based systems in multi port high performance environment. It also offers an extensive range of PC Cards, PCI cards and USB products. For more information about Silicom, please visit: www.silicom.co.il.

Statements in this press release which are not historical data are forward-looking statements which involve known and unknown risks, uncertainties, or other factors not under the Company's control, which may cause actual results, performance, or achievements of the Company to be materially different from the results, performance, or other expectations implied by these forward-looking statements. These factors include, but are not limited to, those detailed in the Company's periodic filings with the Securities and Exchange Commission. The Company disclaims any duty to update such statements.

             Silicom Ltd. Consolidated Summary of Results

       U.S. dollars, in thousands, except for per share amounts

                                Three-month period       Year ended
                                 ended December 31,      December 31,
                                    (Unaudited)           (Audited)

                                   2002      2001      2002      2001
                               ========= ========= ========= =========
Sales                              $795      $853    $2,726    $4,530
Cost of sales                       578       587     2,091     3,635
                               --------- --------- --------- ---------
Gross profit                        217       266       635       895
                               --------- --------- --------- ---------

Research and development
 costs, gross                       446       278     1,523     1,333
(Less) - royalty bearing
 participations                      49      (107)       15      (469)
                               --------- --------- --------- ---------
Research and development
 costs, net                         495       171     1,538       864

Selling and marketing               250       286     1,022     1,113
General and administrative          175       148       712       625
                               --------- --------- --------- ---------
                                    920       605     3,272     2,602
                               --------- --------- --------- ---------

Operating Loss                     (703)     (339)   (2,637)   (1,707)

Financial income, net                29        51       152       254
                               --------- --------- --------- ---------

Loss before taxes on income        (674)     (288)   (2,485)   (1,453)
Taxes on income                     ---       ---       ---        33
                               --------- --------- --------- ---------
Net Loss                          $(674)    $(288)  $(2,485)  $(1,486)
                               ========= ========= ========= =========


Basic and diluted Loss
 per share                      $ (0.16)  $ (0.07)  $ (0.60)  $ (0.36)
                               ========= ========= ========= =========

Weighted average number of
 shares outstanding
 - Basic EPS (in thousands)       4,110     4,110     4,110     4,110
                               ========= ========= ========= =========

Weighted average number of
 shares outstanding
 - Diluted EPS (in thousands)     4,113     4,110     4,111     4,110
                               ========= ========= ========= =========


               Silicom Ltd. Consolidated Balance Sheets
                              (Audited)

(U.S. dollars, in thousands)

                                 December 31,
                                2002     2001
                               ======= =======
Assets

Current assets
Cash and cash equivalents        $861  $1,916
Short term investments          3,799   1,115
Trade receivables                 504   1,232
Other receivables                 277     355
Inventories                     1,221   1,725
                               ------- -------
                                6,662   6,343

Long-term investments               -   2,648
Severance pay fund                408     361
Property and equipment, net       257     306
Other assets                       77     ---
                               ------- -------

Total assets                   $7,404  $9,658
                               ======= =======

Liabilities and
 shareholders' equity

Current liabilities
Trade payables                    561     310
Other payables and
 accrued liabilities              415     450
                               ------- -------
Total current liabilities         976     760

Liability for severance pay       743     728
                               ------- -------

Total liabilities               1,719   1,488
                               ------- -------

Shareholders' Equity
Share capital and additional
 paid in capital                5,550   5,550
Treasury stock                    (38)    (38)
Retained earnings                 173   2,658
                               ------- -------
                                5,685   8,170
                               ------- -------
Total liabilities and
 shareholders' equity          $7,404  $9,658
                               ======= =======