28-July-2008

SILICOM ANNOUNCES FINANCIAL RESULTS
FOR Q2 & H1 2008

- Q2 Revenues Decrease to $5.2M Yielding $0.05 EPS; H1 Revenues Up 2% to $12.9M With $0.30 EPS -

KFAR SAVA, Israel-July 28, 2008--Silicom Ltd. (NASDAQ and TASE: SILC) today reported its financial results for the second quarter and six months ended June 30, 2008.

Revenues for the second quarter of 2008 were $5.2 million, a decrease of 22% compared with $6.6 million in the second quarter of 2007, reflecting the difficult market environment and a significant reduction in the purchases of the Company's largest customer. Net income for the period was $0.3 million, or $0.05 per share (basic and diluted), compared with $1.6 million, or $0.25 per diluted share ($0.26 per basic share), for the second quarter of 2007.

Revenues for the first half of 2008 were $12.9 million, compared with $12.7 million for the first half of 2007. Net income for the six-month period was $2.1 million, or $0.30 per basic share ($0.31 per diluted share), compared with $2.8 million, or $0.47 per diluted share ($0.49 per basic share), for the first six months of 2007.

The Company's profitability for both the quarter and the first half were impacted by the period's sharp decline in the shekel/dollar exchange rate, which has significantly increased the Company's shekel-based expenses as expressed in dollar terms.

As of the end of the second quarter, the Company's cash, cash equivalents and marketable securities totaled $37.5 million, an increase of $2.4 million compared with the end of the first quarter of 2008, and an increase of $4.6 million compared with the end of 2007.

Commenting on the results, Shaike Orbach, President and CEO, said, "Although we have reported our first 'down' quarter after 17 quarters of growth, we are encouraged by demonstrated indications that point towards continuous growth for our Company over the long term.

 Mr. Orbach continued, "On the other hand, during the quarter we were encouraged by news of an opposite nature: the fact that our Fortune 100 WAN Optimization customer - intends to make our BYPASS cards a standard rather than an optional feature in one of its new WAN Optimization appliances.

"The fact that this customer's appliance product line has such a significant future sales potential makes this an exciting long-term opportunity for us. This, together with the fact that we have nearly concluded discussions with several new accounts that will be deploying our cards in their appliances, gives us confidence regarding our ability to deliver continuous growth over the long term."

 Conference Call Details

The Company will host a conference call to discuss these results today, Monday, July 28^th, at:

                9:00 a.m. Eastern Daylight Time

                6:00 a.m. Pacific Daylight Time

              16:00 Israel Time

To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, try the international dial-in number.

US: 1 866 345 5855

UK: 0 800 404 8418

ISRAEL: 03 918 0650

INTERNATIONAL:  +972 3 918 0650

For those unable to listen to the live call, a replay of the call will be available for three months from the day after the call under the investor relations section of Silicom's website, at: www.silicom.co.il

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About Silicom

Silicom Ltd. is an industry-leading provider of high-performance server/appliances networking solutions. The Company's flagship products include a variety of multi-port Gigabit Ethernet, copper and fiber-optic, server adapters and innovative BYPASS adapters designed to increase throughput and availability of server-based systems, WAN Optimization and security appliances and other mission-critical gateway applications. For more information, please visit: www.silicom.co.il.