M-Systems Expands Its Product Portfolio with the Availability of Memory Cards for Mobile Handsets and Consumer Electronics Devices

Business Wire, Nov 14, 2005

SUNNYVALE, Calif. -- Company leverages its flash expertise, existing infrastructure, OEM customer base and newly acquired secured manufacturing capabilities to enter the growing memory card market

M-Systems (Nasdaq: FLSH), an industry leader and innovator of flash-based data storage devices, today announced it is expanding its product portfolio to include a range of memory cards. The addition of memory cards to M-Systems' product portfolio broadens the Company's offering for the mobile and consumer electronics markets to address storage needs from multiple angles. Gartner estimates the market for flash cards will reach $9.02 billion and more than 2,063 billion megabytes by 2010(i).

"The memory card market is demonstrating growing momentum as it diversifies beyond digital still cameras and into new consumer electronics devices, such as multimedia handsets, MP3 players, GPS and portable gaming devices. Given M-Systems' unique position as a flash data storage expert and as a trusted partner to leading OEMs worldwide, we have taken a strategic decision to expand the Company's product portfolio and take advantage of these growth opportunities," said Noam Kedem, vice president of marketing for M-Systems. "In doing so, we leverage existing core competencies that have enabled us to solidify our leadership in the USB and Embedded Flash Drive business, such as our infrastructure, flash expertise, and our global OEM network, strengthened by today's announced acquisition of Microelectronica Espanola. This acquisition will additionally position M-Systems as a memory card solution provider with smart card-grade secured manufacturing capabilities."

The new memory cards, together with the Company's DiskOnChip Embedded Flash Drives and its MegaSIM products will enable M-Systems to offer a unique product portfolio for a wide range of mobile and consumer applications.

About M-Systems

M-Systems develops, manufactures and markets innovative flash-based data storage solutions for consumer electronics and embedded markets. The Company targets the fast growing multimedia mobile handset market with its DiskOnChip(R) and MegaSIM(TM) products and the popular USB flash drive market with its DiskOnKey(R) product. More information about M-Systems is available online at www.m-systems.com.

Note to Editors: High-resolution photo images of M-Systems' products can be found on the Internet at www.m-systems.com/site/en-US/Corporate/PressRoom/ImageLibrary.> All company and product names mentioned may be trademarks or registered trademarks of their respective holders and are used for identification purposes only.

This press release includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties which may cause actual results to vary significantly. These risks include, but are not limited to: the effect of global economic conditions in general and conditions in M-Systems' industry and target markets in particular, shifts in supply and demand, market acceptance, the impact of competitive products and pricing, product development, commercialization and technological difficulties, and capacity and supply constraints including dependence on flash component suppliers; changes in M-Systems' and its customers' inventory levels and inventory valuations; timely product and technology development/upgrades and the ability to manage changes in market conditions as needed; market acceptance of new products and continuing product demand; the impact of competitive products and pricing on M-Systems' and its customers' products and markets; the development, release and sale of new products by strategic suppliers and customers; the development and growth of anticipated markets for M-Systems' and its customers' products; and other risk factors detailed from time to time in M-Systems' filings with the Securities and Exchange Commission. M-Systems assumes no obligation to update the information in this press release and disclaims any obligation to publicly update or revise any such forward-looking statements to reflect any change in its expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements. Reference to M-Systems' website above does not constitute incorporation of any of the information thereon into this press release.

(i)Gartner Dataquest: "Market Trends: USB Flash Drives, Worldwide, 2001-2010" by J. Unsworth. August 30, 2005.

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