Revenues for the fourth quarter of 2008 were $6.5 million, a 6% increase compared sequentially with revenues of $6.1 million recorded in the third quarter of 2008, and a 13% decrease compared year-over-year with revenues of $7.5 million recorded in the fourth quarter of 2007. Net income for the fourth quarter of 2008 was $1.6 million, or $0.24 per diluted share ($0.25 per basic share), a 74% increase compared sequentially with $0.9 million, or $0.14 per share (basic and diluted) for the third quarter of 2008, and a 10% decrease compared year-over-year with net income of $1.8 million, or $0.27 per diluted share ($0.28 per basic share), for the fourth quarter of 2007.

Revenues for the full year ended December 31, 2008 were $25.6 million, a 5% decrease compared with $26.8 million for 2007. Net income for the year was $4.6 million, or $0.69 per share (basic and diluted), compared with $6.3 million, or $1.00 per diluted share ($1.03 per basic share), for 2007.

As of December 31, 2008, the Company’s cash, cash equivalents and marketable securities totaled $39.2 million, an increase of $1.8 million compared with its balance at the end of the third quarter of 2008, and an increase of $6.3 million compared with its balance at the end of 2007.

Commenting on the results, Shaike Orbach, President and CEO, said, “We are pleased to report another quarter of sequential growth. In line with our work plan, during the quarter we added several new customers and expanded the range of products sold to several existing customers, both significant achievements in today’s uncertain market environment. We continue to see signs that the industry differentiates Silicom in terms of our technology, customization and service capabilities. In fact, we have recently reported a milestone order from one of the world’s three largest server manufacturers, an achievement which represents a third-party confirmation of our products, business platform and financial stability. We are proud of this vote of confidence and believe it will prove strategic to our long-term sales efforts.”

Mr. Orbach concluded, “As we move into 2009, our visibility continues to be low due to the macro environment slowdown, and our results - together with those of the overall IT industry - may be impacted. In the face of this reality, our strategy is to continue executing a sound plan that has proven itself in the past, including the systematic and aggressive pursuit of sales; the provision of top-tier service; and continuous product innovation to meet the needs of a changing industry.”

Conference Call Details

The Company will host a conference call to discuss these results today, Monday, January 26th, at:

9:00 a.m. Eastern Standard Time

6:00 a.m. Pacific Standard 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 0609

INTERNATIONAL: +972 3 918 0609

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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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

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.