Cypress Updates First-Quarter 2012 Guidance

Cypress Semiconductor Corp. (Nasdaq: CY) today provided an update to its guidance for the first quarter of 2012 that was previously issued on January 26, 2012.

“We have recently seen some order decreases, mostly in certain wire line and handset customers. In addition we are seeing weaker than expected revenues from our distribution channel, mainly due to lower turns business in Europe and Asia. These factors are resulting in a negative impact to our previously expected Q1 2012 revenue,” stated Brad Buss, Executive Vice President of Finance and CFO.

“Customer backlog and bookings stabilized in January and we have seen improvements for the last six weeks. We continue to believe that Q1 will be the bottom for revenue and bookings, and at this point expect Q2 revenue to grow sequentially. However the macro environment and order patterns remain very fluid and lead-times are near historical lows, impacting visibility,” continued Brad Buss.

Cypress’s revised Q1 2012 Non-GAAP1 guidance is as follows:

Revenue of $180 million to $190 million. We expect all divisions and most product lines to decrease sequentially, driven mostly by CCD and MPD.
Gross margin of 53% to 54%, which is down mainly due to lower factory utilization as we reduce wafer starts in order to proactively manage inventory levels for Q1 and Q2.
Operating expenses of $82 million to $83 million.
Fully diluted earnings per share of $0.08 to $0.11.

Any estimate in this environment has a high degree of risk and current estimates could differ materially from actual results.

“We continue to remain very optimistic about our competitive positioning, our design-win penetration and our new product offerings, in particular our Gen4 TrueTouch® touch-sensing solutions, PSoC® 3 and 5 programmable-systems-on-chip, USB 3.0 controllers and trackpad solutions,” concluded Brad Buss.

About Cypress

Cypress delivers high-performance, mixed-signal, programmable solutions that provide customers with rapid time-to-market and exceptional system value. Cypress offerings include the flagship PSoC® programmable system-on-chip families and derivatives such as PowerPSoC® solutions for high-voltage and LED lighting applications, CapSense® touch sensing and TrueTouch solutions for touchscreens. Cypress is the world leader in USB controllers, including the high-performance West Bridge® solution that enhances connectivity and performance in multimedia handsets. Cypress is also a leader in high-performance memories and programmable timing devices. Cypress serves numerous markets including consumer, mobile handsets, computation, data communications, automotive, industrial and military. Cypress trades on the NASDAQ Global Select Market under the ticker symbol CY. Visit Cypress online at www.cypress.com.

FORWARD-LOOKING STATEMENTS

Statements herein that are not historical facts and that refer to Cypress or its subsidiaries’ plans and expectations for the remainder of fiscal year 2012 and the future are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. We may use words such as “believe,” “expect,” “future,” “plan,” “intend” and similar expressions to identify such forward-looking statements that include, but are not limited to, statements related to our expected revenue and other financial results for Q1 2012, whether or not revenues will increase in future fiscal quarters, whether revenue among all of our divisions will decrease sequentially, our competitive positioning going forward, our design-win penetration and our new product offerings. Such statements reflect our current expectations, which are based on information and data available to our management as of the date of this release. Our actual results may differ materially due to a variety of uncertainties and risk factors, including but not limited to the state of and future of the global economy, business conditions and growth trends in the semiconductor market, possible continued drops in revenue from our distribution channel, whether orders stabilize, especially among our wire line and handset customers, our limited visibility in this economic environment, our ability to effectively manage our factory utilization and inventory levels, whether the demand for our proprietary and programmable products, including our TrueTouch, PSoC products, USB and trackpad solutions, is fully realized, whether our product and design wins result in increased sales, our ability to achieve lower operating expenses and maintain a solid balance sheet, the actions of our competitors, the strength or softness of the markets we serve and whether those markets achieve expected growth, our ability to maintain and improve our gross margins and realize our bookings, and other risks described in our filings with the Securities and Exchange Commission. We assume no responsibility to update any such forward-looking statements.

1 Cypress uses non-GAAP financial measures which are adjusted from the most directly comparable GAAP financial measures to exclude certain items such as stock-based compensation, restructuring expenses, changes in value of deferred compensation and tax effects. Management believes that these non-GAAP financial measures reflect an additional and useful way of viewing aspects of Cypress's operations that, when viewed in conjunction with Cypress's GAAP results, provide a more comprehensive understanding of the various factors and trends affecting Cypress's business and operations. Please refer to our recently filed Form 10-K for the fiscal year ended January 1, 2012 for a discussion of these financial measures.

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