Leadis Technology Reports Second Quarter 2008 Results

Leadis Technology, Inc. (NASDAQ: LDIS), an analog and mixed-signal semiconductor developer of color display drivers, LED drivers, power management, audio and touch ICs for mobile consumer electronics devices, today announced results for the second quarter of 2008, ended June 30, 2008.

Q2 2008 Highlights

--  Leadis achieved ten new product design wins in the quarter, including
    two Tier 1 LED driver wins and its second design win utilizing the Epic(TM)
    technology for AM-OLED displays.  In total, Leadis was awarded four new
    display driver program design wins, two new Audio design wins and four new
    LED/Power design wins.

--  Leadis announced sample availability of the first four products in its
    family of PureTouch(TM) products, including the world's first capacitive
    touch controllers with an integrated haptics driver for use with mobile
    phone touch-input controls.

--  Leadis announced production availability and commencement of volume
    shipments of two display drivers, the LDS343, a QVGA LTPS LCD display
    controller, and the LDS342, a QVGA LTPS LCD display driver.  Shipments now
    exceed one million units on each of these devices.
    

Financial Results

Second quarter revenue was $5.9 million, falling short of the company's guidance of $7.0 million plus or minus 10%. Second quarter gross margin was 0%, with 2% gross margin on direct product sales offset by negative gross margin on NRE activity during the quarter. While the NRE activity generated a negative gross margin, these projects generate cash that offsets overall costs. Under generally accepted accounting principles (GAAP), second quarter net loss was $19.5 million, or $0.67 per basic share, as compared with the $10.1 million, or $0.35 per basic share, net loss reported in the previous quarter and the $6.1 million, or $0.21 per basic share, net loss reported in the second quarter of 2007. The loss in the second quarter of 2008 included a $9.4 million non-cash impairment charge for goodwill and other intangible assets originally recorded in connection with previous business acquisitions. The loss in the first quarter of 2008 included a $0.5 million charge for excess and obsolete inventory.

In addition to reporting GAAP results, the company reports non-GAAP results, which exclude share-based compensation expense per FAS 123(R), acquisition-related expenses, and goodwill and intangible impairment charges. Non-GAAP net loss for the second quarter of 2008 was $8.2 million, or $0.28 per basic share, as compared to a net loss of $8.3 million, or $0.28 per basic share, in the first quarter of 2008 and a net loss of $4.1 million, or $0.14 per basic share, in the second quarter of 2007. A reconciliation of GAAP measures to non-GAAP measures is included in the financial statements portion of this press release.

The company reported cash, restricted cash and investments of $54 million as of June 30, 2008, which was $5.6 million lower than its balance as of March 31, 2008, due primarily to the second quarter net loss. Cash flow was favorably impacted by a tax refund of $2.5 million received during the second quarter.

Business Summary

"Second quarter revenue fell short of our guidance, also impacting gross margins," said Mr. Tony Alvarez, President and CEO. "The shortfalls were primarily due to a slower than expected ramp rate in our display driver business."

The company continues to focus on achieving design wins across its business areas, as well as expanding its line of analog and mixed-signal products. Design win progress and product introductions for the quarter included:

--  Leadis gained four new display driver design wins, including a second
    design utilizing its Epic(TM) technology designed to dramatically improve
    AM-OLED manufacturing yields and picture quality.  The other design wins
    included one AM-OLED design, one TFT design and a timing controller product
    that will be utilized with Epic(TM) products.

--  The four LED/Power design wins included two designs with a Tier 1
    mobile phone manufacturer utilizing the LDS8866, a high-efficiency multi-
    mode fractional charge pump with ultra low dropout voltage.  These designs
    are expected to ramp into production in the third and fourth quarters.  The
    other two design wins utilize Power management products added through the
    Acutechnology Semiconductor acquisition in December 2007.

--  Leadis added two Audio design wins, both for its industry-leading low
    power CODEC device, which are expected to begin shipping in the third
    quarter.

--  Leadis announced sampling of the LDS8620 and the LDS8621, a new family
    of inductorless 200mA, dual-output LED flash/lamp drivers.  These products
    address portable LED lighting applications including LED flashlights,
    flash/lamp LEDs in video and camera cellphones, PDAs, smartphones and
    digital cameras.

--  Leadis announced sampling of a new Low Drop Out linear regulator (LDO)
    controller, the first new power management product announced resulting from
    the acquisition of Acutechnology.  The LDS128P is part of a new family of
    LDO controllers designed to drive NMOS or NPN pass transistors.

--  Leadis signed two additional NRE contracts during the second quarter
    and has several additional NRE contracts committed and under contract
    negotiation.  NRE contracts signed to date will generate over $1 million of
    cash during development of the projects.
    

Q3 2008 Outlook

"Our revenue outlook for the third quarter is mixed," said Mr. Paul Novell, Executive Vice President of Marketing. "We expect revenue to remain approximately flat in the third quarter of 2008 as compared with the second quarter. Our newer display driver programs are not ramping as quickly as expected, resulting in a lower revenue outlook for the remainder of this year. We currently believe the slower ramps are the result of a softening consumer market, in particular for higher-end phones. On the positive side, we are gaining traction in our analog businesses with the Tier 1 LED driver design wins leading to expected shipment of hundreds of thousands of analog units in the third quarter. This is an important milestone even though these parts still only provide modest revenue."

Based on information currently available to the company, expectations for the third quarter of 2008 are as follows:

--  Revenue is expected to be approximately flat at $5.9 million dollars
    in the third quarter of 2008.

--  Gross margin on product sales, which varies with product mix, selling
    price and unit costs, is expected to be approximately 8% in the third
    quarter.

--  Non-GAAP operating expenses are expected to be approximately flat with
    the second quarter at $8.9 million.
    

"Our revenue outlook for the second half of the year has dropped to reflect slower growth in display driver programs," said Mr. Alvarez. "It follows that we will hold operating expenses roughly flat for the remainder of the year. We are pleased to win our first Tier 1 analog customer and will see stronger growth in analog sales as a result. Year to date we have earned a total of 20 design wins and have introduced over ten new products. While our near term revenue outlook is weak and we fully understand the challenges that we face, we remain confident that the acceleration of design wins and new product introductions will lead to a successful turnaround of the company's financial results."

Conference Call Today

Leadis will broadcast its conference call today, Thursday, July 24, 2008 at 2 p.m. Pacific Time (5 p.m. Eastern Time) to discuss its second quarter 2008 earnings and provide additional guidance.

To listen to the call, dial 1-877-545-1488 approximately ten minutes before the start of the call. A taped replay will be made available approximately two hours after the conclusion of the call and will remain available for one week. To access the replay, dial 1-888-203-1112. The confirmation code for the replay is 3453123.

A live webcast of the call will be available on the investor relations section of the company's web site, http://ir.leadis.com. An archived webcast of the call will remain available until the company's next earnings call.

About Leadis Technology, Inc.

Leadis Technology, Inc., headquartered in Sunnyvale, California, designs, develops and markets analog and mixed-signal semiconductors that enable and enhance the features and capabilities of portable and consumer electronics devices. Leadis' product offerings include color display drivers, which are critical components of displays used in portable consumer electronic devices; LED drivers, which provide controlled levels of current required to drive light emitting diodes in diverse applications including backlight units; power management ICs including LDOs, LDO controllers, shunt references, thermal switches, current regulators, and battery charger controllers; audio CODEC and FM transmitter ICs, which are integral components in portable media players and their associated aftermarket accessories; and touch controller ICs, which enable highly reliable touch-based input controls and attractive industrial design options for both mobile and non-mobile applications.

Non-GAAP Financial Measures

Leadis reports financial information in accordance with generally accepted accounting principles (GAAP), but believes that non-GAAP financial measures are helpful in evaluating its ongoing operating results and comparing its performance to comparable companies. Leadis management uses financial statements that exclude share-based compensation expense and the impact of purchase accounting expenses, including in-process research and development expenses, amortization of purchased intangible assets, impairment charges for goodwill and other intangible assets, and retention expenses connected with acquisitions, to plan and evaluate its financial performance. Consequently, Leadis has excluded these expenses and charges in deriving calculations of net income (loss), net income (loss) per share, gross profit or margin and certain operating expenses (including cost of sales, research and development, selling, general and administrative, and provision for income taxes). Leadis believes the inclusion of these non-GAAP measures enhances the comparability of current results against the results of prior periods. These non-GAAP measures will enable investors to evaluate the company's operating results and business outlook in a manner similar to how the company internally analyzes its operating results and makes strategic decisions. Investors should note, however, that the non-GAAP financial measures used by the company may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies. The company does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures alone or as a substitute for financial information prepared in accordance with GAAP. A reconciliation of GAAP financial measures to non-GAAP financial measures is included in the financial statements portion of this press release. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measure. For additional information on the non-GAAP financial measures, please see the Form 8-K regarding this press release furnished today with the Securities and Exchange Commission.

Cautionary Language

This press release contains forward-looking statements regarding the company's business and financial outlook for the third quarter and remainder of the 2008 fiscal year based on the company's current expectations. The words "expect," "will," "should," "would," "anticipate," "project," "outlook," "believe," "intend," "confident," "optimistic," "targeted," and similar phrases as they relate to future events are intended to identify such forward-looking statements. These forward-looking statements reflect the company's current views and assumptions but are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are the following: risks that the company may not be able to maintain its current level of revenue or its gross margin levels; risks that one or more of the company's concentrated group of customers may reduce demand or price for the company's products or a particular product; risks that design wins will not result in meaningful revenue; the company's dependence on a limited number of products; risks that the company's new products may not be completed in a timely fashion or gain market acceptance; risks associated with the company's efforts to expand its business beyond display drivers, including efforts to develop and market LED drivers, power management ICs, audio CODECs and FM transmitters, and touch sensor technology products; risks related to the semiconductor and portable electronic industries; the company's ability to keep up with technological change; risks associated with any strategic transaction undertaken by the company; risks with managing international activities; and other factors. For a discussion of these and other factors that could impact the company's financial results and cause actual results to differ materially from those in the forward-looking statements, please refer to the company's Annual Report on Form 10-K for the year ended December 31, 2007 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, in the sections titled Risk Factors and Forward-Looking Statements, which are available at www.leadis.com. The projections in this press release are based on information currently available to the company. Although such projections, as well as the factors influencing them, may change in the future, the company undertakes no responsibility to update the information contained in this press release.

                          LEADIS TECHNOLOGY, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                (Unaudited)
                              (In thousands)


                                           June 30,   March 31,  June 30,
                                             2008       2008       2007
                                           ---------  ---------  ---------
ASSETS
Current assets:
  Cash and cash equivalents                $  37,710  $  39,450  $  44,020
  Restricted cash                              2,461      2,418      2,530
  Short-term investments                      11,851     15,442     40,287
  Accounts receivable, net                     3,772      5,340      8,127
  Inventory                                    4,659      1,706      5,635
  Prepaid expenses and other current
   assets                                      2,483      5,070      3,874
                                           ---------  ---------  ---------
    Total current assets                      62,936     69,426    104,473
Property and equipment, net                    3,513      4,021      4,725
Goodwill and purchased intangible assets,
 net                                             107     10,466      7,335
Long term investments, net                     2,307      2,607          -
Other assets                                   1,630      1,513        833
                                           ---------  ---------  ---------
    Total assets                           $  70,493  $  88,033  $ 117,366
                                           =========  =========  =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                         $   7,479  $   5,331  $   5,807
  Taxes payable                                   80      1,109        254
  Deferred margin                                386        303        281
  Other accrued liabilities                    4,463      3,811      4,328
                                           ---------  ---------  ---------
    Total current liabilities                 12,408     10,554     10,670
Long-term tax liabilities                      2,684      2,957      2,689
Other noncurrent liabilities                     901        937      1,159
                                           ---------  ---------  ---------
    Total liabilities                         15,993     14,448     14,518
Stockholders' equity:
  Common stock and additional paid-in
   capital                                   109,815    109,354    109,134
  Accumulated deficit                        (55,315)   (35,769)    (6,286)
                                           ---------  ---------  ---------
    Total stockholders' equity                54,500     73,585    102,848
                                           ---------  ---------  ---------
    Total liabilities and stockholders'
     equity                                $  70,493  $  88,033  $ 117,366
                                           =========  =========  =========



                          LEADIS TECHNOLOGY, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)
                 (In thousands, except per share amounts)

                           Three Months Ended           Six Months Ended
                     -------------------------------  --------------------
                     June 30,   March 31,  June 30,   June 30,   June 30,
                       2008       2008       2007       2008       2007
                     ---------  ---------  ---------  ---------  ---------
Product revenue      $   5,606  $   5,551  $   9,735  $  11,157  $  23,405
NRE  revenue               307         56          -        363          -
                     ---------  ---------  ---------  ---------  ---------
Total revenue            5,913      5,607      9,735     11,520     23,405

Product cost of
 sales                   5,483      5,577      8,678     11,060     20,976
NRE cost of sales          453         32          -        485          -
                     ---------  ---------  ---------  ---------  ---------
Total cost of sales      5,936      5,609      8,678     11,545     20,976
  Gross profit             (23)        (2)     1,057        (25)     2,429
Research and
 development
 expenses                5,485      5,333      4,479     10,818      7,840
Selling, general and
 administrative
 expenses                4,306      4,699      3,608      9,005      6,832
Amortization of
 purchased
 intangible assets         848        848        627      1,696        836
Impairment of
 goodwill and other
 intangible assets       9,445          -          -      9,445          -
In process research
 and development             -          -          -          -      1,320
                     ---------  ---------  ---------  ---------  ---------
  Total operating
   expenses             20,084     10,880      8,714     30,964     16,828
                     ---------  ---------  ---------  ---------  ---------
Operating loss         (20,107)   (10,882)    (7,657)   (30,989)   (14,399)
Interest and other
 income, net               340        797      1,085      1,137      2,323
                     ---------  ---------  ---------  ---------  ---------
Loss before benefit
 from income taxes     (19,767)   (10,085)    (6,572)   (29,852)   (12,076)
Benefit from income
 taxes                    (221)       (10)      (506)      (231)      (552)
                     ---------  ---------  ---------  ---------  ---------
  Net loss           $ (19,546) $ (10,075) $  (6,066) $ (29,621) $ (11,524)
                     =========  =========  =========  =========  =========

Basic and diluted
 net loss per share  $   (0.67) $   (0.35) $   (0.21) $   (1.02) $   (0.39)
                     =========  =========  =========  =========  =========

Shares used in
 computing basic and
 diluted per share
 amounts                29,221     29,015     29,376     29,118     29,354
                     =========  =========  =========  =========  =========



                          LEADIS TECHNOLOGY, INC.
         SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
                                (Unaudited)
                 (In thousands, except per share amounts)


                           Three Months Ended           Six Months Ended
                     -------------------------------  --------------------
                     June 30,   March 31,  June 30,   June 30,   June 30,
                       2008       2008       2007       2008       2007
                     ---------  ---------  ---------  ---------  ---------

A. GAAP net loss     $ (19,546) $ (10,075) $  (6,066) $ (29,621) $ (11,524)
    Adjustment for
     stock-based
     compensation
     within:
      Cost of sales         53         19         44         72         62
      Research and
       development
       expenses            329        133        255        462        451
      Selling,
       general and
       administrative
        expenses           229        572        480        801        917
      Provision for
       income taxes          -       (218)       (83)      (218)      (226)
    Adjustment for
     acquisition of
     business
     within:
      Research and
       development
       expenses            164        198        394        362        530
      Selling,
       general and
       administrative
        expenses           242        254        231        496        303
      Amortization
       of purchased
       intangible
       assets              848        848        627      1,696        836
      In-process
       research and
       development           -          -          -          -      1,320
      Provision for
       income taxes          -          -        (20)         -        (36)
    Adjustment for
     impairment of
     goodwill and
     other intangible
     assets              9,445          -          -      9,445          -
                     ---------  ---------  ---------  ---------  ---------
  Non-GAAP net loss  $  (8,236) $  (8,269) $  (4,138) $ (16,505) $  (7,367)

B. GAAP basic and
 diluted net loss
 per share           $   (0.67) $   (0.35) $   (0.21) $   (1.02) $   (0.39)
    Adjustment for
     stock-based
     compensation         0.02       0.02       0.02       0.04       0.04
    Adjustment for
     acquisition of
     business             0.04       0.05       0.05       0.09       0.10
    Adjustment for
     impairment of
     goodwill and
     other intangible
     assets               0.33          -          -       0.32          -
                     ---------  ---------  ---------  ---------  ---------
  Non-GAAP basic and
   diluted net loss
   per share         $   (0.28) $   (0.28) $   (0.14) $   (0.57) $   (0.25)

C. GAAP gross margin      -0.4%       0.0%      10.9%      -0.2%      10.4%
    Adjustment for
     stock-based
     compensation          0.9%       0.3%       0.4%       0.6%       0.2%
                     ---------  ---------  ---------  ---------  ---------
  Non-GAAP gross
   margin                  0.5%       0.3%      11.3%       0.4%      10.6%

D. GAAP operating
    expenses         $  20,084  $  10,880  $   8,714  $  30,964  $  16,828
    Adjustment for
     stock-based
     compensation
     within:
      Research and
       development
       expenses           (329)      (133)      (255)      (462)      (451)
      Selling,
       general and
       administrative
        expenses          (229)      (572)      (480)      (801)      (917)
    Adjustment for
     acquisition of
     business
     within:
      Research and
       development
       expenses           (164)      (198)      (394)      (362)      (530)
      Selling,
       general and
       administrative
        expenses          (242)      (254)      (231)      (496)      (303)
      Amortization
       of purchased
       intangible
       assets             (848)      (848)      (627)    (1,696)      (836)
      In-process
       research and
       development           -          -          -          -     (1,320)
    Adjustment for
     impairment of
     goodwill and
     other
     intangible
     assets             (9,445)         -          -     (9,445)         -
                     ---------  ---------  ---------  ---------  ---------
  Non-GAAP operating
   expenses          $   8,827  $   8,875  $   6,727  $  17,702  $  12,471