10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ___________________________________

FORM 10-Q

___________________________________ 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 000-23084

 __________________________________________

Integrated Silicon Solution, Inc.

(Exact name of registrant as specified in its charter)

 ___________________________________________

Delaware	77-0199971
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1623 Buckeye Drive, Milpitas, California	95035
(Address of principal executive offices)	(Zip Code)

(408) 969-6600

(Registrant’s telephone number, including area code)

______________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	ý
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

The number of outstanding shares of the registrant’s Common Stock as of May 1, 2015 was 31,762,106.

TABLE OF CONTENTS

PART I	Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Statements of Income for the three and six months ended March 31, 2015 and 2014 (Unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2015 and 2014 (Unaudited)	2
	Condensed Consolidated Balance Sheets as of March 31, 2015 (Unaudited) and September 30, 2014	3
	Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2015 and 2014 (Unaudited)	4
	Notes to Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II	Other Information
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 6.	Exhibits	38
Signatures		39

References in this Quarterly Report on Form 10-Q to “we,” “us,” “our” and “ISSI” mean Integrated Silicon Solution, Inc. and all entities controlled by Integrated Silicon Solution, Inc.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Integrated Silicon Solution, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2015			2014			2015			2014
Net sales	$	80,104		$	80,868		$	161,014		$	159,991
Cost of sales	52,056			53,118			103,821			106,712
Gross profit	28,048			27,750			57,193			53,279
Operating expenses:
Research and development	12,423			10,827			24,671			21,385
Selling, general and administrative	14,177			11,469			27,074			22,903
Total operating expenses	26,600			22,296			51,745			44,288
Operating income	1,448			5,454			5,448			8,991
Interest and other income (expense), net	365			375			527			806
Gain on sale of investments	—			6,039			—			9,160
Income before income taxes	1,813			11,868			5,975			18,957
Provision for income taxes	682			2,910			1,608			4,553
Consolidated net income	1,131			8,958			4,367			14,404
Net income attributable to noncontrolling interests	(15		)	(146		)	(65		)	(157		)
Net income attributable to ISSI	$	1,116		$	8,812		$	4,302		$	14,247
Basic net income per share	$	0.04		$	0.30		$	0.14		$	0.48
Shares used in basic per share calculation	31,544			29,818			31,267			29,568
Diluted net income per share	$	0.03		$	0.28		$	0.13		$	0.46
Shares used in diluted per share calculation	33,270			31,244			32,936			30,986

See accompanying notes to condensed consolidated financial statements.

1

Integrated Silicon Solution, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2015			2014			2015			2014
Consolidated net income	$	1,131		$	8,958		$	4,367		$	14,404
Other comprehensive income (loss), net of tax:
Change in unrealized loss on investments:
Changes arising during current period, net of tax benefit of $0, $0, $0 and $251, respectively	—			—			—			(349		)
Reclassification for gain included in net income, net of tax expense of $0, $1,624, $0 and $2,997, respectively	—			(2,709		)	—			(5,005		)
	—			(2,709		)	—			(5,354		)
Change in cumulative translation adjustment:
Changes arising during current period	1,548			(2,787		)	(4,955		)	(4,009		)
Change in retirement plan actuarial losses:
Reclassification for gain included in net income, net of tax expense (benefit) of $0 for the three and six months ended March 31, 2015 and 2014	29			28			58			55
Change in retirement plan transition obligation:
Reclassification for gain included in net income, net of tax expense (benefit) of $0 for the three and six months ended March 31, 2015 and 2014	(14		)	(15		)	(29		)	(30		)
Other comprehensive income (loss)	1,563			(5,483		)	(4,926		)	(9,338		)
Comprehensive income (loss)	2,694			3,475			(559		)	5,066
Comprehensive income attributable to noncontrolling interest	(15		)	(146		)	(65		)	(157		)
Comprehensive income (loss) attributable to ISSI	$	2,679		$	3,329		$	(624	)	$	4,909

See accompanying notes to condensed consolidated financial statements.

2

Integrated Silicon Solution, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

	March 31, 2015			September 30, 2014
	(unaudited)			(1)
ASSETS
Current assets:
Cash and cash equivalents	$	115,003		$	137,534
Restricted cash	19,168			1,000
Short-term investments	1,431			1,477
Accounts receivable, net	49,096			50,458
Inventories	90,838			85,093
Deferred tax assets	1,903			1,868
Other current assets	17,226			17,033
Total current assets	294,665			294,463
Property, equipment and leasehold improvements, net	57,266			58,847
Purchased intangible assets, net	4,399			5,093
Goodwill	9,178			9,178
Deferred tax assets	8,617			8,392
Other assets	28,995			24,369
Total assets	$	403,120		$	400,342
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	50,705		$	54,554
Accrued compensation and benefits	10,519			9,875
Accrued expenses	12,795			11,365
Current portion of long-term debt	195			195
Total current liabilities	74,214			75,989
Long-term debt	4,241			4,339
Other long-term liabilities	5,362			5,456
Total liabilities	83,817			85,784
Commitments and contingencies
Stockholders’ equity:
Common stock	3			3
Additional paid-in capital	373,639			364,587
Accumulated deficit	(50,522		)	(51,076		)
Accumulated other comprehensive loss	(5,970		)	(1,044		)
Total ISSI stockholders’ equity	317,150			312,470
Noncontrolling interest	2,153			2,088
Total stockholders’ equity	319,303			314,558
Total liabilities and stockholders’ equity	$	403,120		$	400,342

(1) Derived from audited financial statements.

See accompanying notes to condensed consolidated financial statements.

3

Integrated Silicon Solution, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Six Months Ended   March 31,
	2015			2014
Cash flows from operating activities
Consolidated net income	$	4,367		$	14,404
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,336			3,724
Stock-based compensation	2,790			3,046
Excess tax benefits from share-based compensation	—			(658		)
Amortization of intangibles	694			818
Gain on sale of investments	—			(9,160		)
Equity in net loss of affiliate	54			139
Net foreign currency transaction gains	(83		)	(456		)
Deferred tax assets	(473		)	224
Other non-cash items	47			35
Net effect of changes in current and other assets and current liabilities	(6,941		)	(14,925		)
Net cash (used in) provided by operating activities	4,791			(2,809		)
Cash flows from investing activities
Acquisition of property and equipment	(3,722		)	(8,310		)
Acquisition of noncontrolling interest in consolidated subsidiary	—			(199		)
Payment of license fees	(5,779		)	(6,000		)
Increase in restricted cash	(18,168		)	(1,000		)
Purchases of available-for-sale securities	(1,176		)	(1,218		)
Sales of available-for-sale securities	1,216			18,190
Net cash provided by (used in) investing activities	(27,629		)	1,463
Cash flows from financing activities
Repurchases and retirement of common stock	(497		)	(350		)
Proceeds from issuance of stock through compensation plans	6,759			7,316
Dividends Paid	(3,748		)	—
Excess tax benefit from share-based compensation	—			658
Principal payments of long-term obligations	(98		)	(98		)
Net cash provided by financing activities	2,416			7,526
Effect of exchange rate changes on cash and cash equivalents	(2,109		)	(1,398		)
Net increase (decrease) in cash and cash equivalents	(22,531		)	4,782
Cash and cash equivalents at beginning of period	137,534			119,997
Cash and cash equivalents at end of period	$	115,003		$	124,779

See accompanying notes to condensed consolidated financial statements.

4

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Integrated Silicon Solution, Inc. (the Company or ISSI) and its majority owned subsidiaries, after elimination of all significant intercompany accounts and transactions. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (which are of a normal, recurring nature) considered necessary for fair presentation have been included.

On March 12, 2015, the Company entered into a definitive merger agreement (the Merger Agreement) to be acquired by a Chinese consortium of investors led by Summitview Capital (the Parent) under which the Parent will acquire all of our outstanding shares for $19.25 per share in cash (the Merger). The transaction is subject to approval by the stockholders of the Company, as well as regulatory approvals. As part of the transaction, the Merger Agreement contemplates that, in connection with the closing of the merger, the Company's operations in Taiwan will be restructured or some or all of the Company's Taiwan operations may be sold in order to comply with the requirements of Taiwan laws and regulations. The transaction is currently expected to close in the third calendar quarter of 2015.

On September 14, 2012, the Company acquired approximately 94.1% of the outstanding shares of Chingis Technology Corporation (Chingis) and the Company’s financial results reflect accounting for Chingis on a consolidated basis from the date of acquisition. In May 2013, the Company acquired an additional 4.8% of Chingis for approximately $1.6 million. In fiscal 2014, the Company acquired the remaining 1.1% of Chingis for approximately $0.4 million, and at March 31, 2015, the Company owned 100% of Chingis.

The Company’s operating results for the six months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2015 or for any other period. The financial statements included herein should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014.

2. Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Such estimates include the useful lives of fixed assets, allowances for doubtful accounts and customer returns, valuation allowances for deferred tax assets, inventory write-downs, potential reserves relating to litigation matters, accrued liabilities, and other reserves. The Company bases its estimates and judgments on its historical experience, knowledge of current conditions and its beliefs of what could occur in the future, given available information. Actual results may differ from those estimates, and such differences may be material to the financial statements.

3. Impact of Recently Issued Accounting Pronouncements and Standards

Impact of Recently Adopted Accounting Standards

On October 1, 2014, the Company adopted the following accounting standards, which did not have any impact on its consolidated results of operations during such period or its financial condition at the end of such period:

Liabilities

In February 2013, the Financial Accounting Standards Board (FASB) issued guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date. Examples of obligations include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The guidance requires an entity to measure such obligations as the sum of the amount that the reporting entity agreed to pay on the basis of its arrangement among its co-obligors in addition to amounts the reporting entity expects to pay on behalf of its co-obligors.

5

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Foreign Currency Matters

In March 2013, FASB issued guidance on when foreign currency translation adjustments should be released to net income. When a parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided.

Accounting Pronouncements

The following issued accounting pronouncements are not yet effective for the Company as of March 31, 2015.

Revenue from Contracts with Customers

In May 2014, FASB amended the existing accounting standards for revenue recognition. The new guidance establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The guidance becomes effective for the Company beginning in the first quarter of fiscal 2018. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company has not yet selected a transition method nor has the Company determined the impact of adopting the new revenue standard on its consolidated financial statements.

4. Fair Value Measurements

Under FASB guidance, fair value is defined as the price expected to be received from the sale of an asset or paid to transfer a liability in a transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The FASB guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that the market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company’s judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available at that time. The fair value hierarchy is broken down into the following three levels based on the reliability of inputs:

• Level 1 – Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices which are readily and regularly available in an active market, valuation of these products can be done without a significant degree of judgment.

• Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments and model-derived valuations in which all significant inputs and significant value drives are observable in active markets.

• Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

As of March 31, 2015 and September 30, 2014, all of the Company’s financial assets utilized Level 1 inputs.

As of March 31, 2015, the Company did not have any liabilities or non-financial assets that are measured at fair value on a recurring basis.

6

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Available-for-sale marketable securities consisted of the following:

March 31, 2015	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
				(In thousands)
Available-for-sale
Level 1:
Money market instruments	$	9,326		$	—	$	—	$	9,326
Certificates of deposit	20,075			—		—		20,075
Total	29,401			—		—		29,401
Less: Amounts included in cash and cash
equivalents	(27,970		)	—		—		(27,970		)
	$	1,431		$	—	$	—	$	1,431
September 30, 2014	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
				(In thousands)
Available-for-sale
Level 1:
Money market instruments	$	22,519		$	—	$	—	$	22,519
Certificates of deposit	20,679			—		—		20,679
Total	43,198			—		—		43,198
Less: Amounts included in cash, cash
equivalents and restricted cash	(41,721		)	—		—		(41,721		)
	$	1,477		$	—	$	—	$	1,477

There were no transfers in or out of Level 1 assets during the three months ended March 31, 2015.

As of March 31, 2015 and September 30, 2014, the Company had cash, cash equivalents, restricted cash and short-term investments in foreign financial institutions of $75.9 million ($1.0 million of which was in China and subject to exchange control regulations) and $71.9 million, respectively.

7

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

5. Stock-based Compensation

Stock-Based Benefit Plans

The Company grants stock-based compensation awards under its 2007 Incentive Compensation Plan (the 2007 Plan) which permits the grant of stock options, stock appreciation rights (SARs), restricted stock awards, restricted stock units (RSUs), performance shares and performance units. The Company has outstanding grants under its 2012 Inducement Option Plan (the Inducement Plan) and under prior plans, though no further grants can be made under these plans. At March 31, 2015, 1,523,000 shares were available for future grant under the 2007 Plan. Options generally vest ratably over a four-year period with a 6-month or 1-year cliff vest and then vesting ratably over the remaining period. Options granted prior to October 1, 2005 expire ten years after the date of grant; options granted after October 1, 2005 expire seven years after the date of the grant. RSUs generally vest annually over periods ranging from two years to four years based upon continued employment with the Company.

The Company began granting cash-settled SARs in the first quarter of fiscal 2014. The SARs vest ratably over a four-year period with a 6-month or 1-year cliff vest and then vest ratably each month over the remaining period based upon continued employment with the Company. The SARs expire seven years after the date of grant. These SARs allow the holder to receive in cash the difference between the SARs' exercise price (which is the closing market price of the Company's common stock on the grant date) and the closing market price of the Company's common stock on the date the holder exercises the SAR. The SARs are recorded as a liability in accrued compensation and benefits in the Company's balance sheet.

The Company has an Employee Stock Purchase Plan (ESPP) which permits eligible employees to purchase shares of the Company’s common stock through payroll deductions. As approved by the Board of Directors, effective August 1, 2010, shares under the ESPP are purchased at a price equal to 85% of the lesser of the fair market value of the Company’s common stock as of the first day or the last day of each six-month offering period. The offering periods under the ESPP commence on approximately February 1 and August 1 of each year. The ESPP terminated pursuant to its terms on February 2, 2015, therefore at March 31, 2015, no shares were available for future issuance under the ESPP.

Stock-Based Compensation

The following table outlines the effects of total stock-based compensation including expense related to SARs.

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2015			2014			2015			2014
	(In thousands)
Stock-based compensation
Cost of sales	$	47		$	54		$	98		$	104
Research and development	729			776			1,496			1,425
Selling, general and administrative	1,193			1,190			2,427			2,139
Total stock-based compensation	1,969			2,020			4,021			3,668
Tax effect on stock-based compensation	(412		)	(386		)	(832		)	(688		)
Net effect on net income	$	1,557		$	1,634		$	3,189		$	2,980
Compensation related to SARs included in total stock-based compensation	$	705		$	465		$	1,231		$	622

As of March 31, 2015, there was approximately $8.9 million of total unrecognized stock-based compensation expense related to awards under the Company’s stock-based benefit plans that will be recognized over a weighted-average period of approximately 2.37 years. Future awards will add to this total whereas quarterly amortization and the vesting of existing awards will reduce this total. As of March 31, 2015, there was approximately $7.4 million of total unrecognized stock-based compensation expense related to SARs that will be recognized over a weighted-average period of approximately 3.13 years. Future SAR grants will add to this total whereas quarterly amortization and the vesting of SARs will reduce this total. In addition, because SARs are settled with cash, the fair value of SARs must be revalued on a quarterly basis which will likely impact the amount of expense in future periods.

8

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The Company uses the Black-Scholes option pricing model to estimate the fair value of the options and SARs granted and rights to acquire stock granted under the ESPP. The weighted average estimated fair values of stock option grants and rights granted under the ESPP, as well as the weighted average assumptions used in calculating these values during the three and six month periods ended March 31, 2015 and 2014 were based on estimates at the date of grant as follows:

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2015			2014			2015			2014
Options
Weighted-average fair value of grants	$	4.41		$	5.12		$	4.11		$	4.69
Expected term in years	4.27			4.42			4.27			4.42
Estimated volatility	36		%	52		%	38		%	51		%
Risk-free interest rate	1.21		%	1.18		%	1.25		%	1.04		%
Dividend yield	1.56		%	—		%	1.66		%	—		%
ESPP
Weighted-average fair value of grants	$	—		$	2.66		$	—		$	2.66
Expected term in years	—			0.49			—			0.49
Estimated volatility	—		%	27		%	—		%	27		%
Risk-free interest rate	—		%	0.41		%	—		%	0.41		%
Dividend yield	—		%	—		%	—		%	—		%

The Company issues RSUs from time to time. The estimated fair value of RSU awards is calculated based on the market price of the Company’s common stock on the date of grant. The weighted average grant date fair value of RSUs granted in the three and six months ended March 31, 2015 was $16.18 per share and $13.55 per share, respectively. The weighted average grant date fair value of RSUs granted in the three and six months ended March 31, 2014 was $11.26 per share and $11.17 per share, respectively.

A summary of the Company’s stock option activity and related information for the six months ended March 31, 2015 follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Outstanding at September 30, 2014	4,240		$	8.10
Granted	85		$	14.83
Exercised	(733	)	$	7.53		$	6,456
Cancelled/Expired	(36	)	$	10.07
Outstanding at March 31, 2015	3,556		$	8.35	3.48	$	33,906
Exercisable at March 31, 2015	2,473		$	7.39	2.85	$	25,963
Vested and expected to vest after March 31, 2015	3,515		$	8.32	3.46	$	33,626

A summary of the Company’s RSU activity and related information for the six months ended March 31, 2015 under the 2007 Plan follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at September 30, 2014	262		$	9.91
Granted	229		$	13.55
Vested	(107	)	$	9.28	$	1,486
Forfeited	(3	)	$	13.12
Outstanding at March 31, 2015	381		$	12.25	$	6,815

9

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

A summary of the Company’s SAR activity and related information for the six months ended March 31, 2015 under the 2007 Plan follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Outstanding at September 30, 2014	747		$	10.96
Granted	682		$	13.55
Exercised	(34	)	$	10.96		$	177
Cancelled/Expired	(24	)	$	12.13
Outstanding at March 31, 2015	1,371		$	12.23	6.09	$	7,766
Exercisable at March 31, 2015	211		$	10.96	5.61	$	1,460

6. Concentrations

In the three and six months ended March 31, 2015, revenue from the Company's largest distributor accounted for approximately 17% and 15%, respectively, of the Company's total net sales. In both the three and six months ended March 31, 2015, revenue from the Company's second largest distributor accounted for approximately 14% of the Company's total net sales. In the three and six months ended March 31, 2014, revenue from the Company's largest distributor accounted for approximately 18% and 17%, respectively, of the Company's total net sales. In the three and six months ended March 31, 2014, revenue from the Company's second largest distributor accounted for approximately 15% and 14%, respectively, of the Company's total net sales.

7. Inventories

The following is a summary of inventories by major category:

	March 31, 2015		September 30, 2014
	(In thousands)
Purchased components	$	27,840	$	21,677
Work-in-process	23,630		27,058
Finished goods	39,368		36,358
	$	90,838	$	85,093

During the three and six months ended March 31, 2015, the Company recorded inventory write-downs of $1.7 million and $3.2 million, respectively. During the three and six months ended March 31, 2014, the Company recorded inventory write-downs of $1.4 million and $2.2 million, respectively. The inventory write-downs were predominantly for excess and obsolescence and lower of cost or market issues on certain of the Company's products.

10

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

8.     Other Assets

Other assets consisted of the following:

	March 31, 2015		September 30, 2014
	(In thousands)
Restricted assets	$	644	$	499
Other investment	1,382		1,436
Nanya private placement shares	10,318		10,645
Technology licenses, net	15,500		10,644
Other	1,151		1,145
	$	28,995	$	24,369

The Company has various deposits including deposits with suppliers for purchase guarantees and for customs clearance. These deposits are included in restricted assets.

The Company accounts for the private placement shares it acquired in Nanya on the cost-basis as these securities are restricted and the restrictions do not terminate within one year of the reporting date.

From time to time, the Company licenses patents or other intellectual property rights from third parties. The technology licenses are being amortized over their estimated useful lives ranging from three to fifteen years.

In March 2012, the Company made an equity investment of $2.0 million in a private technology company headquartered in Hong Kong. At March 31, 2015, the Company's ownership interest in such company was approximately 25%. This investment is accounted for under the equity method and the Company's results include its percentage share of such company's results of operations in interest and other income (expense), net.

9. Purchased Intangible Assets

The following tables present details of the Company’s total purchased intangible assets:

	Gross		Accumulated Amortization		Net
	(In thousands)
March 31, 2015
Developed technology	$	5,330	$	2,925	$	2,405
Customer relationships	3,340		1,415		1,925
Other	450		381		69
Total	$	9,120	$	4,721	$	4,399
September 30, 2014
Developed technology	$	5,330	$	2,584	$	2,746
Customer relationships	3,340		1,137		2,203
Other	450		306		144
Total	$	9,120	$	4,027	$	5,093

11

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The following table presents details of the amortization expense of purchased intangible assets as reported in the consolidated statements of income:

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2015		2014		2015		2014
	(In thousands)
Reported as:
Cost of sales	$	170	$	233	$	341	$	465
Operating expenses	177		176		353		353
Total	$	347	$	409	$	694	$	818

The following table presents the estimated future amortization expense of the Company’s purchased intangible assets at March 31, 2015 (in thousands). The weighted-average remaining amortization period for developed technology, customer relationships and other intangibles is 3.54 years, 3.46 years and 0.46 years, respectively. If the Company acquires additional purchased intangible assets in the future, its future amortization may be increased by those assets.

Fiscal year
Remainder of 2015	$	688
2016	1,238
2017	1,239
2018	1,195
2019	39
Thereafter	—
Total	$	4,399

10. Borrowings

In December 2012, the Company obtained a bank loan in the amount of $4.9 million (the Loan), to partially finance the $6.5 million purchase price of approximately 2.85 acres of land and a 55,612 square foot building located at 1623 Buckeye Drive, Milpitas, California for its corporate headquarters. The Loan has a maturity date of November 30, 2017 and is secured by the property and an assignment of all leases and rents relating to the property. The Loan is subject to customary events of default, including defaults in the payment of principal and interest. The Loan bears an interest rate of one percent above LIBOR adjusted on a monthly basis. The interest rate on the Loan was 1.25% at March 31, 2015. Principal payments due under the Loan are as follows (in thousands):

Fiscal year
Remainder of 2015	$	97
2016	195
2017	195
2018	3,949
2019	—
Thereafter	—
Total	$	4,436

12

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

11. Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, were as follows (in thousands):

	March 31, 2015			September 30, 2014
Accumulated foreign currency translation adjustments	$	(3,904	)	$	1,051
Accumulated net retirement plan transition asset (net of tax of $124 and $124, respectively)	(21		)	8
Accumulated net retirement plan actuarial losses (net of tax of $477 and $477, respectively)	(2,045		)	(2,103		)
Total accumulated other comprehensive loss	$	(5,970	)	$	(1,044	)

The significant amounts reclassified out of accumulated other comprehensive loss into the consolidated condensed statements of income, with presentation location, during the three and six months ended March 31, 2015 and March 31, 2014 were as follows:

	Three Months Ended   March 31,					Six Months Ended   March 31,
	2015		2014			2015		2014
	(In thousands)
Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Loss										Location
Unrealized holding gains on available-for -sale investments
	$	—	$	4,333		$	—	$	8,002		Gain on the sale of investments
	—		(1,624		)	—		(2,997		)	Provision for income taxes
	$	—	$	2,709		$	—	$	5,005

12. Income Taxes

The income tax provision includes U.S. federal, state and local, and foreign income taxes and is based on the application of a forecasted annual income tax rate applied to the current quarter's year-to-date pre-tax income for fiscal 2015. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company's annual earnings, taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the Company's ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives. Discrete items, including the effect of changes in tax laws, tax rates, and certain circumstances with respect to valuation allowances or other unusual or non-recurring tax adjustments are reflected in the period in which they occur as an addition to, or reduction from, the income tax provision, rather than being included in the estimated annual effective income tax rate.

For the three and six months ended March 31, 2015, the Company recorded income tax expense of $0.7 million and $1.6 million, respectively, that represents an effective tax rate of approximately 39% and 27%, respectively. The differences between the recorded provision for income taxes and the tax provision, based on the federal statutory rate of 35%, were primarily attributable to the differential in foreign tax rates, non-deductible stock-based compensation expense and certain foreign losses not benefited.

For the three and six months ended March 31, 2014, the Company recorded income tax expense of $2.9 million and $4.6 million, respectively, that represents an effective tax rate of approximately 25% and 24%, respectively. The difference between the recorded provision for income taxes and the tax provision, based on the federal statutory rate of 35%, was primarily attributable to the differential in foreign tax rates and non-deductible stock-based compensation expense.

As of March 31, 2015, the Company had unrecognized tax positions that would impact its effective tax rate, if realized.

13

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

13. Per Share Data

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2015		2014		2015		2014
Numerator for basic and diluted net income per share:
Net income attributable to ISSI	$	1,116	$	8,812	$	4,302	$	14,247
Denominator for basic net income per share:
Weighted average common shares outstanding	31,544		29,818		31,267		29,568
Dilutive stock options and awards	1,726		1,426		1,669		1,418
Denominator for diluted net income per share	33,270		31,244		32,936		30,986
Basic net income per share	$	0.04	$	0.30	$	0.14	$	0.48
Diluted net income per share	$	0.03	$	0.28	$	0.13	$	0.46

For the three months and six months ended March 31, 2015, stock options and awards for 118,000 shares and 161,000 shares, respectively, were excluded from diluted earnings per share by the application of the treasury stock method. For the three months and six months ended March 31, 2014, stock options and awards for 1,372,000 shares and 2,177,000 shares, respectively, were excluded from diluted earnings per share by the application of the treasury stock method.

14. Common Stock Repurchase Program

In the six month period ended March 31, 2015, the Company did not repurchase any shares of its common stock in the open market. As of March 31, 2015, the Company had repurchased and retired an aggregate of 14,179,711 shares of common stock at a cost of approximately $88.5 million since September 2007. As of March 31, 2015, $19.8 million remained available under the Company's existing share repurchase authorization.

The Company issues RSUs as part of its equity incentive plan. For a portion of the RSUs granted, the number of shares issued on the date the RSUs vest is net of the statutory withholding requirements that the Company pays on behalf of its employees. During the six months ended March 31, 2015, the Company withheld 36,025 shares to satisfy approximately $0.5 million of employee tax obligations. Although the shares withheld are not issued, they are treated as common stock repurchases for accounting purposes, as they reduce the number of shares that would have been issued upon vesting.

15. Commitments and Contingencies

Legal Matters

In the semiconductor industry, it is not unusual for companies to receive notices alleging infringement of patents or other intellectual property rights of others. The Company has been, and from time to time expects to be, notified of claims that it may be infringing patents, maskwork rights or copyrights owned by third parties. If it appears necessary or desirable, the Company may seek licenses under patents that it is alleged to be infringing. Although patent holders commonly offer such licenses, licenses may not be offered and the terms of any offered licenses may not be acceptable to the Company. The failure to obtain a license under a key patent or intellectual property right from a third party for technology used by the Company could cause it to incur substantial liabilities and to suspend the manufacture of the products utilizing the invention or to attempt to develop non-infringing products, any of which could materially and adversely affect the Company’s business and operating results. Furthermore, there can be no assurance that the Company will not become involved in protracted litigation regarding its alleged infringement of third party intellectual property rights or litigation to assert and protect its patents or other intellectual property rights. Any litigation relating to patent infringement or other intellectual property matters could result in substantial cost and diversion of the Company’s resources.

14

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

GSI Technology Inc. v. Integrated Silicon Solution, Inc., et al.

On October 2, 2013, GSI Technology Inc. (GSI) filed a Second Amended Complaint in a lawsuit filed earlier in 2013 solely against defendant United Memories, Inc. in the United States District Court for the Northern District of California.  GSI named the Company as a new, second defendant in the Second Amended Complaint.  On April 18, 2014, the Court granted the Company's motion to dismiss that complaint in part, leaving claims against the Company for Unfair Competition under California Business & Professions Code 17200, misappropriation of trade secrets, and intentional interference with prospective economic advantage.  In the remaining portion of the complaint, GSI alleged that the Company acted together with United Memories, Inc. to harm GSI in connection with a bid requested by Cisco Systems, Inc. and misappropriated alleged GSI trade secrets.  GSI seeks damages and injunctive relief.  The Company filed an answer on June 2, 2014 and asserted a declaratory relief counterclaim against GSI.  Before the Company was named as a defendant, the Court denied motions by GSI against United Memories, Inc. for temporary and preliminary injunctive relief.  The Court issued a revised case management order on January 7, 2015 with a scheduled trial date of October 26, 2015.   The Company believes it has meritorious defenses to the claims alleged by GSI and intends to defend this suit vigorously.  However, there can be no assurance as to the outcome of this matter or any future litigation.

Legal Proceedings Regarding our Pending Acquisition

Beginning on April 1, 2015, three stockholder class action complaints were filed in the Superior Court of the State of California in the County of Santa Clara on behalf of a putative class of ISSI stockholders and naming as defendants ISSI’s Board of Directors and Parent: Richard Wilson III, on Behalf of Himself and All Others Similarly Situated v. Jimmy S.M. Lee, et al., Case No. 1-15-CV-278815 (filed April 1, 2015); Matthew Sciabacucchi, on Behalf of Himself and All Others Similarly Situated v. Jimmy S.M. Lee, et al., Case No. 1-15-CV-278812 (filed April 1, 2015); and Kathy Guerra, Individually and on Behalf of All Others Similarly Situated v. Scott D. Howarth, et al., Case No. 1-15-CV-279142 (filed April 8, 2015).  The complaints generally allege that, in connection with the proposed acquisition of ISSI by Parent, the ISSI directors breached their fiduciary duties owed to ISSI’s stockholders by, among other things, purportedly failing to take steps to maximize the value of ISSI to ISSI’s stockholders and agreeing to allegedly preclusive deal protection devices in the Merger Agreement. The complaint filed by Kathy Guerra also alleges that the ISSI directors breached their fiduciary duties by allegedly failing to disclose material information to ISSI stockholders.  The complaints further generally allege that Parent aided and abetted the ISSI directors in the alleged breaches of their fiduciary duties. The complaints seek, among other things, an order enjoining the defendants from consummating the proposed transaction, or alternatively, in the event that the proposed transaction is consummated, an order rescinding it.

Other Legal Proceedings

In the ordinary course of its business, the Company has been involved in a limited number of other legal actions, both as plaintiff and defendant, and could incur uninsured liability in any one or more of them. Although the outcome of these actions is not presently determinable, the Company believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position, cash flows or results of operations. However, no assurances can be given with respect to the extent or outcome of any such litigation in the future.

Commitments to Wafer Fabrication Facilities and Contract Manufacturers

The Company issues purchase orders for wafers to various wafer foundries. These purchase orders are generally considered to be cancelable. However, to the degree that the wafers have entered into work-in-process at the foundry, as a matter of practice, it becomes increasingly difficult to cancel the purchase order. As of March 31, 2015, the Company had approximately $16.4 million of purchase orders for which the related wafers had been entered into wafer work-in-process (i.e., manufacturing had begun).

15

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

16. Geographic and Segment Information

The Company has one operating segment, which is to design, develop, and market high-performance SRAM, DRAM, and other semiconductor products. The following table summarizes the Company’s operations in different geographic areas:

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2015		2014		2015		2014
			(In thousands)
Net sales
United States	$	9,213	$	9,816	$	20,106	$	18,878
China	8,885		10,939		18,757		22,851
Hong Kong	14,555		14,022		28,395		29,043
Japan	6,961		4,580		12,618		10,653
Korea	3,904		3,167		7,823		6,544
Taiwan	10,373		11,752		21,770		22,755
Other Asia Pacific countries	5,557		5,691		11,526		11,955
Europe	20,434		20,554		39,530		36,620
Other	222		347		489		692
Total net sales	$	80,104	$	80,868	$	161,014	$	159,991

	March 31, 2015		September 30, 2014
	(In thousands)
Long-lived assets
United States	$	11,055	$	11,174
Hong Kong	11		14
China	13,010		12,908
Taiwan	33,190		34,751
	$	57,266	$	58,847

Revenues are attributed to countries based on the customers' ship-to location.

Long-lived assets by geographic area are those assets used in the Company’s operations in each area.

17. Related Party Transactions

The Company sells semiconductor products to Chrontel International Ltd. (Chrontel). Jimmy S.M. Lee, the Company’s Executive Chairman, has been a director of Chrontel since July 1995. Sales to Chrontel were $86,000 and $144,000 during the three months and six months ended March 31, 2015, respectively. Sales to Chrontel were $61,000 and $82,000 during the three months and six months ended March 31, 2014, respectively. Accounts receivable from Chrontel were approximately $64,000 and $59,000 at March 31, 2015 and September 30, 2014, respectively.

16

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

18. Subsequent Event

On April 20, 2015, the Company entered into Equipment Lease Agreements ( Lease Agreements) with Powerchip Technology Corporation (Powerchip). Under the Lease Agreements, the Company will purchase and then lease up to an aggregate of $73.5 million in semiconductor manufacturing equipment to Powerchip whereby Powerchip will acquire ownership of the equipment at the end of the lease period, and the Company will obtain access to certain manufacturing capacity and technology at Powerchip.

The Lease Agreements provide for a term of approximately six years, each ending December 31, 2021. Beginning in 2019 and continuing through 2021, Powerchip will make quarterly payments to the Company in an aggregate amount of approximately $82.1 million (the Quarterly Payments). Until such time as all Quarterly Payments have been made, the Company shall own, and continue to own, all equipment subject to the Lease Agreements.

In addition to making the Quarterly Payments, Powerchip shall provide the Company with manufacturing capacity to produce a specified number of wafers each month beginning in 2015 through 2021. The Company has an option to renew such manufacturing arrangement for an additional three years.

17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this report that are subject to risks and uncertainties. Forward-looking statements include information concerning possible or assumed future results of our operations. Also, when we use words such as “believes,” “expects,” “anticipates” or similar expressions, we are making forward-looking statements. You should note that an investment in our securities involves certain risks and uncertainties that could affect our future financial results. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in “Risk Factors” and elsewhere in this report.

We believe it is important to communicate our expectations to our investors. However, there may be events in the future that we are not able to predict accurately or over which we have no control. The risks described in “Risk Factors” included in this report, as well as any other cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you invest in our common stock, you should be aware that the occurrence of the events described in “Risk Factors” and elsewhere in this report could harm our business and adversely affect our results.

All forward-looking statements made by us or persons acting on our behalf are expressly qualified in their entirety by the "Risk Factors" and other cautionary statements set forth in this report. Except as required by federal securities laws, we are under no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

Overview

We are a fabless semiconductor company that designs and markets high performance integrated circuits for the following key markets: (i) automotive, (ii) communications, (iii) industrial, and (iv) digital consumer. Our primary products are DRAM in both package and Known Good Die (KGD) form and high speed and low power SRAM, serial and parallel NOR flash products and a variety of mixed signal and analog products. In the first six months of fiscal 2015 and in fiscal 2014, approximately 91% and 89%, respectively, of our revenue was derived from our DRAM and SRAM products. Sales of our DRAM products have represented a majority of our revenue in each year since fiscal 2003.

On March 12, 2015, we entered into a definitive merger agreement (the Merger Agreement) to be acquired by a Chinese consortium of investors led by Summitview Capital under which the consortium will acquire all of our outstanding shares for $19.25 per share in cash (the Merger).  The transaction is subject to approval by the stockholders of ISSI, as well as regulatory approvals. As part of the transaction, the Merger Agreement contemplates that, in connection with the closing of the Merger, ISSI’s operations in Taiwan will be restructured or some or all of ISSI’s Taiwan operations may be sold in order to comply with the requirements of Taiwan laws and regulations. The transaction is currently expected to close in the third calendar quarter of 2015.

In order to control our operating expenses, for the past several years we have limited our headcount in the U.S. and maintained much of our operations in Taiwan and China. We believe this strategy has enabled us to limit our operating expenses while simultaneously locating these operations closer to our manufacturing partners and our customers. As a result of these efforts, we currently have significantly more employees in Asia than we do in the U.S. We intend to continue these strategies going forward.

As a fabless semiconductor company, our business model is less capital intensive because we rely on third parties to manufacture, assemble and test our products. Because of our dependence on third-party wafer foundries, our ability to increase our unit sales volumes depends on our ability to increase our wafer capacity allocation from current foundries, add additional foundries and improve yields of good die per wafer. In recent years, it has become more difficult for us to secure long-term foundry capacity (particularly for our DRAM products) due to industry consolidation affecting foundries and adverse financial conditions at foundries.  In this regard, in April 2015, we entered into Equipment Lease Agreements ( the Lease Agreements) with Powerchip Technology Corporation (Powerchip). Under the Lease Agreements, we will purchase and then lease up to an aggregate of $73.5 million in semiconductor manufacturing equipment to Powerchip whereby Powerchip will acquire ownership of the equipment at the end of the lease period, and we will obtain access to certain manufacturing capacity and technology at Powerchip. In addition, in September 2012, we invested approximately $27.1 million in Nanya and entered into an agreement with Nanya to provide us with access to leading edge process technologies and certain wafer volume guarantees. Certain of our foundries have decided from time to time not to produce the type of wafers that we need (especially certain types of DRAM wafers) so we have been forced to rely on alternative sources of supply and to place large last time buy orders which exposes us to the risk of inventory obsolescence. Once a product is in production at a particular foundry, it is time consuming and costly to have such product manufactured at a different foundry.  There can be no assurance as to the future impact that such matters will have on our business, customer relationships or results of operations.

18

The average selling prices of our DRAM and SRAM products are sensitive to supply and demand conditions in our target markets and have generally declined over time. We experienced declines in the average selling prices for certain of our products in the first six months of fiscal 2015 and in fiscal 2014. We expect average selling prices for our products to decline in the future, principally due to market demand, market competition and the supply of competitive products in the market. Any future decreases in our average selling prices could have an adverse impact on our revenue, gross margins and operating margins. Our ability to maintain or increase revenues will be highly dependent upon our ability to increase unit sales volumes of existing products and to introduce and sell new products in quantities sufficient to compensate for the anticipated declines in average selling prices of existing products. Declining average selling prices will adversely affect our gross margins unless we are able to offset such declines with commensurate reductions in per unit costs or changes in product mix in favor of higher margin products.

Revenue from product sales to our direct customers is recognized upon shipment provided that persuasive evidence of a sales arrangement exists, the price is fixed or determinable, title has transferred, collection of resulting receivables is reasonably assured, there are no customer acceptance requirements and there are no remaining significant obligations. A portion of our sales is made to distributors under agreements that provide for the possibility of certain sales price rebates and limited product return privileges. Given the uncertainties associated with credits that will be issued to these distributors, we defer recognition of such sales until our products are sold by the distributors to their end customers. Revenue from sales to distributors who do not have sales price rebates or product return privileges is recognized at the time our products are sold by us to the distributors.

We market and sell our products in Asia, the U.S., Europe and other locations through our direct sales force, distributors and sales representatives. The percentage of our sales shipped outside the U.S. was approximately 88% in each of the first six months of fiscal 2015, the first six months of fiscal 2014, in fiscal 2014 and in fiscal 2013. We measure sales location by the shipping destination. We anticipate that sales to international customers will continue to represent a significant percentage of our net sales. The percentages of our net sales by region are set forth in the following table:

	Six Months Ended   March 31,				Fiscal Years Ended   September 30,
	2015		2014		2014		2013
Asia	63	%	65	%	65	%	67	%
Europe	25		23		23		20
U.S.	12		12		12		12
Other	—		—		—		1
Total	100	%	100	%	100	%	100	%

Our sales are generally made by purchase orders. Because industry practice allows customers to reschedule or cancel orders on relatively short notice, backlog may not be a good indicator of our future sales. Cancellations of customer orders or changes in product specifications could result in the loss of anticipated sales without allowing us sufficient time to reduce our inventory and operating expenses.

Due to the complex nature of the markets we serve and the broad fluctuations in economic conditions in the U.S. and other countries, it is difficult for us to assess the impact of seasonal factors on our business.

We are subject to the risks of conducting business internationally, including economic conditions in Asia, particularly Taiwan and China, changes in trade policy and regulatory requirements, duties, tariffs and other trade barriers and restrictions, the burdens of complying with foreign laws and, possibly, political instability. Most of our foundries and all of our assembly and test subcontractors are located in Asia. Although our international sales are largely denominated in U.S. dollars, we do have sales transactions in New Taiwan dollars, in Hong Kong dollars and in Chinese renminbi. In addition, we have foreign operations where expenses are generally denominated in the local currency. Such transactions expose us to the risk of exchange rate fluctuations. We monitor our exposure to foreign currency fluctuations, but have not adopted any hedging strategies to date. There can be no assurance that exchange rate fluctuations will not harm our business and operating results in the future.

19

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make difficult and subjective estimates, judgments and assumptions. These estimates, judgments and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. The estimates and judgments that we use in applying our accounting policies have a significant impact on the results we report in our financial statements. We base our estimates and judgments on our historical experience combined with knowledge of current conditions and our beliefs of what could occur in the future, considering the information available at the time. Actual results could differ from those estimates and such differences may be material to our financial statements. We reevaluate our estimates and judgments on an ongoing basis.

Our critical accounting policies which are impacted by our estimates are: (i) the valuation of our inventory, which impacts cost of goods sold and gross profit; (ii) the valuation of our allowance for sales returns and allowances, which impacts net sales; (iii) the valuation of our allowance for doubtful accounts, which impacts general and administrative expense; (iv) accounting for acquisitions and goodwill, which impacts cost of goods sold and operating expense when we record impairments; (v) accounting for stock-based compensation which impacts costs of goods sold, research and development expense and selling, general and administrative expense and (vi) accounting for income taxes. Each of these policies is described in more detail below. We also have other key accounting policies that may not require us to make estimates and judgments that are as subjective or difficult. For instance, our policies with regard to revenue recognition, including the deferral of revenues on sales to distributors with sales price rebates and product return privileges. These policies are described in the notes to our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2014.

Valuation of inventory. Our inventories are stated at the lower of cost or market value. Determining the market value of inventories on hand and at distributors as of the balance sheet date involves numerous judgments, including projecting average selling prices and sales volumes for future periods and costs to complete products in work in process inventories. When market values are below our costs, we record a charge to cost of goods sold to write down our inventories to their estimated market value in advance of when the inventories are actually sold. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required that may adversely affect our operating results. If actual market conditions are more favorable, we may have higher gross margins when the written down products are sold. In addition to lower of cost or market write-downs, we also analyze inventory to determine whether any of it is excess, obsolete or defective. We write down to zero dollars (which is a charge to cost of goods sold) the carrying value of inventory on hand that has aged over one year (two years for wafer and die bank) to cover estimated excess and obsolete exposures, unless adjustments are made based on management’s judgments for newer products, end of life products, planned inventory increases or strategic customer supply. In making such judgments to write down inventory, we take into account the product life cycles which can range from six to 30 months, the stage in the life cycle of the product, and the impact of competitors’ announcements and product introductions on our products. Once established, these write-downs are considered permanent.

Valuation of allowance for sales returns and allowances.    Net sales consist principally of total product sales less estimated sales returns and allowances. To estimate sales returns and allowances, we analyze potential customer specific product application issues, potential quality and reliability issues and historical returns. We evaluate quarterly the adequacy of the allowance for sales returns and allowances. This allowance is reflected as a reduction to accounts receivable in our consolidated balance sheets. Increases to the allowance are recorded as a reduction to net sales. Because the allowance for sales returns and allowances is based on our judgments and estimates, particularly as to product application, quality and reliability issues, our allowances may not be adequate to cover actual sales returns and other allowances. If our allowances are not adequate, our net sales could be adversely affected.

Valuation of allowance for doubtful accounts.    We maintain an allowance for doubtful accounts for losses that we estimate will arise from our customers’ inability to make required payments for goods and services purchased from us. We make our estimates of the uncollectibility of our accounts receivable by analyzing historical bad debts, specific customer creditworthiness and current economic trends. Once an account is deemed unlikely to be fully collected, we write down the carrying value of the receivable to the estimated recoverable value, which results in a charge to general and administrative expense, which decreases our profitability.

Accounting for acquisitions and goodwill.    We account for acquisitions using the purchase accounting method. Under this method, the total consideration paid is allocated over the fair value of the net assets acquired, including in-process research and development, with any excess allocated to goodwill. Goodwill is defined as the excess of the purchase price over the fair value allocated to the net assets. Our judgments as to the fair value of the assets will, therefore, affect the amount of goodwill that we record. Management is responsible for the valuation of tangible and intangible assets. For tangible assets acquired in any acquisition, such as plant and equipment, the useful lives are estimated by considering comparable lives of similar assets, past history, the intended use of the assets and their condition. In estimating the useful life of the acquired intangible assets with definite lives, we consider the industry environment and unique factors relating to each product relative to our business strategy and the likelihood

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of technological obsolescence. Acquired intangible assets primarily include developed and in-process technology (IPR&D), customer relationships, trade names and non-compete agreements. The amounts allocated to IPR&D projects are not expensed until technological feasibility is reached for each project. Upon completion of development for each project, the acquired IPR&D will be amortized over its useful life. We are currently amortizing our acquired intangible assets with definite lives over periods generally ranging from three to six years.

We perform goodwill impairment tests on an annual basis and between annual tests in certain circumstances where indicators of impairment may exist. For instance, in response to changes in industry and market conditions, we could be required to strategically realign our resources and consider restructuring, disposing of, or otherwise exiting businesses, which could result in an impairment of tangible and intangible assets, including goodwill.

Accounting for stock-based compensation.    Stock option fair value is calculated on the date of grant using the Black-Scholes valuation model. The compensation cost is then recognized on a straight-line basis over the requisite service period of the option, which is generally the option vesting term of four years. The Black-Scholes valuation model requires us to estimate key assumptions such as expected term, volatility, dividend yield and risk-free interest rates that determine the stock option fair value. In addition, we estimate forfeitures at the time of grant. In subsequent periods, if actual forfeitures differ from the estimate, the forfeiture rate may be revised. We estimate our expected forfeitures rate based on our historical activity and judgment regarding trends. We estimate the expected term for option grants based upon historical exercise data. If we determined that another method used to estimate expected life was more reasonable than our current method, or if another method for calculating these input assumptions was prescribed by authoritative guidance, the fair value calculated could change materially. We also use the Black-Scholes model to estimate the value of cash-settled stock appreciation rights (SARs). The fair value of the SARs must be revalued on a quarterly basis which will likely impact the amount of our expense in future periods. Upon the exercise of a SAR, the expense recognized is adjusted to reflect the difference between the exercise price of the SAR and the closing market price of our common stock on the date of exercise.

Accounting for income taxes.    We account for income taxes under the asset and liability approach. We record a valuation allowance to reduce our net deferred tax assets to the amount that we believe is more likely than not to be realized. In assessing the need for a valuation allowance, we consider historical levels of income, projections of future income, expectations and risks associated with estimates of future taxable income, and ongoing prudent and practical tax planning strategies. To the extent we believe it is more likely than not that some portion of our deferred tax assets will not be realized, we would increase the valuation allowance against the deferred tax assets. Realization of our deferred tax assets is dependent primarily upon future U.S. and foreign taxable income. Our judgments regarding future profitability may change due to future market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require possible material adjustments to these deferred tax assets, resulting in a reduction in net income or an increase in net loss in the period when such determinations are made.

We are subject to income taxes in the U.S. and foreign countries, and we are subject to routine corporate income tax audits in certain of these jurisdictions. We believe that our tax return positions are fully supported, but tax authorities may challenge certain positions, which may not be fully sustained. Our income tax expense includes amounts intended to satisfy income tax assessments that result from these challenges. Determining the income tax expense for these potential assessments and recording the related assets and liabilities requires management judgment and estimates. We evaluate our uncertain tax positions and believe that our provision for uncertain tax positions, including related interest and penalties, is adequate based on information currently available to us. However, the amount ultimately paid upon resolution of audits could be materially different from the amounts previously included in income tax expense and therefore could have a material impact on our tax provision, net income and cash flows. Our overall tax provision requirement could change due to the issuance of new regulations or new case law, management's judgments on undistributed foreign earnings including judgments about and intentions concerning our future operations, negotiations with tax authorities, resolution with respect to individual audit issues, or the entire audit, or the expiration of statutes of limitations.

Accounting Changes and Recent Accounting Pronouncements

For a description of accounting changes and recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated condensed financial statements, see “Note 3: Impact of Recently Issued Accounting Pronouncements and Standards” in the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.

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Results of Operations

Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014

Net Sales. Net sales consist principally of total product sales less estimated sales returns. Net sales decreased to $80.1 million in the three months ended March 31, 2015 from $80.9 million in the three months ended March 31, 2014. The decrease of $0.8 million was the result of a decrease in SRAM and flash revenue partially offset by an increase in DRAM and analog revenue in the three months ended March 31, 2015 compared to the three months ended March 31, 2014. Our SRAM revenue decreased by $2.6 million in the three months ended March 31, 2015 compared to the three months ended March 31, 2014 as a result of a decrease in unit shipments and an overall net decline in average selling prices. In addition, our flash revenue decreased by $1.6 million primarily as a result of a decrease in unit shipments. However, our DRAM revenue increased by $2.9 million as a result of an increase in unit shipments of our DRAM products which was partially offset by the impact of a decline in average selling prices for our DRAM products. In addition, our analog revenue increased by $0.5 million in the three months ended March 31, 2015 compared to the three months ended March 31, 2014. We anticipate that the average selling prices of our existing products will generally decline over time, although the rate of decline may fluctuate for certain products. There can be no assurance that any future price declines will be offset by higher volumes or by higher prices on newer products.

In the three months ended March 31, 2015, revenue from our largest and second largest distributor accounted for approximately 17% and 14%, respectively, of our total net sales. In the three months ended March 31, 2014, revenue from our largest and second largest distributor accounted for approximately 18% and 15%, respectively, of our total net sales.

Gross profit. Cost of sales includes die cost from wafers acquired from foundries, subcontracted package, assembly and test costs, costs associated with in-house product testing, quality assurance and import duties. Gross profit increased by $0.3 million to $28.1 million in the three months ended March 31, 2015 from $27.8 million in the three months ended March 31, 2014 primarily as a result of an increase in DRAM shipments. Our gross margin was 35.0% in the three months ended March 31, 2015 compared to 34.3% in the three months ended March 31, 2014. The increase in gross margin in the three months ended March 31, 2015 compared to the three months ended March 31, 2014 can be attributed to the favorable impact in the current period from decreased product costs for certain DRAM products which more than offset a decrease in average selling prices for certain of our DRAM products. In addition, in the three months ended March 31, 2015, our product cost benefited from a weaker New Taiwan dollar. We believe that the average selling prices of our products will decline over time and, unless we are able to reduce our cost per unit to the extent necessary to offset such declines, the decline in average selling prices could result in a material decline in our gross margin. In addition, our product costs could increase if our suppliers raise prices, which could result in a material decline in our gross margin. Although we have product cost reduction programs in place that involve efforts to reduce internal costs and supplier costs, there can be no assurance that product costs will be reduced or that such reductions will be sufficient to offset the expected declines in average selling prices. We do not believe that such cost reduction efforts are likely to have a material adverse impact on the quality of our products or the level of service provided by us.

Research and Development. Research and development expenses increased by 15% to $12.4 million in the three months ended March 31, 2015 compared to $10.8 million in the three months ended March 31, 2014. As a percentage of net sales, research and development expenses increased to 15.5% in the three months ended March 31, 2015 from 13.4% in the three months ended March 31, 2014. The increase in research and development expenses of $1.6 million was primarily the result of an increase in product development costs and headcount related expenses in the three months ended March 31, 2015 compared to the three months ended March 31, 2014. We expect the dollar amount of our research and development expenses to decrease in the June 2015 quarter and expect such expenses to fluctuate as a percentage of net sales depending on our overall level of sales.

Selling, General and Administrative. Selling, general and administrative expenses increased by 24% to $14.2 million in the three months ended March 31, 2015 from $11.5 million in the three months ended March 31, 2014. As a percentage of net sales, selling, general and administrative expenses increased to 17.7% in the three months ended March 31, 2015 from 14.2% in the three months ended March 31, 2014. The increase in selling, general and administrative expenses of $2.7 million was primarily the result of $1.6 million of expenses related to our pending acquisition, an increase of $1.0 million in legal expenses related to our GSI litigation and a $0.2 million increase in proxy related expenses in the three months ended March 31, 2015 compared to the three months ended March 31, 2014. We expect the dollar amount of our selling, general and administrative expenses to increase in the June 2015 quarter as a result of acquisition and litigation related expenses and expect such expenses to fluctuate as a percentage of net sales depending on our overall level of sales.

Interest and other income, net. Interest and other income, net was $0.4 million in both the three months ended March 31, 2015 and March 31, 2014. The $0.4 million of interest and other income in the three months ended March 31, 2015 is comprised primarily of $0.3 million in rental income from the lease of excess space in our Taiwan facility and an exchange gain of $0.1 million as a result of the appreciation of the U.S. dollar compared to the New Taiwan dollar. The $0.4 million of interest and other income in the three months ended March 31, 2014 is comprised primarily of $0.2 million in rental income from the lease of excess

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space in our Taiwan facility and an exchange gain of $0.2 million as a result of the appreciation of the U.S. dollar compared to the New Taiwan dollar.

Gain on the sale of investments. In the three months ended March 31, 2014, we sold approximately 4.4 million shares of Nanya common stock for approximately $6.7 million which resulted in a pre-tax gain of approximately $3.9 million. In addition, we sold our remaining shares of SMIC for approximately $3.2 million which resulted in a pre-tax gain of approximately $2.1 million.

Provision for income taxes. For the three months ended March 31, 2015, we recorded income tax expense of $0.7 million that represents an effective tax rate of approximately 39%. The difference between the recorded provision for income taxes and the tax provision, based on the federal statutory rate of 35%, was primarily attributable to the differential in foreign tax rates, non-deductible stock-based compensation expense and certain foreign losses not benefited. For the three months ended March 31, 2014, we recorded income tax expense of $2.9 million that represents an effective tax rate of approximately 25%. The difference between the recorded provision for income taxes and the tax provision, based on the federal statutory rate of 35%, was primarily attributable to the differential in foreign tax rates and non-deductible stock-based compensation expense.

Net income attributable to noncontrolling interests. The net income attributable to noncontrolling interests was net income of $15,000 in the three months ended March 31, 2015 compared to net income of $146,000 in the three months ended March 31, 2014.

Six Months Ended March 31, 2015 Compared to Six Months Ended March 31, 2014

Net Sales. Net sales increased to $161.0 million in the six months ended March 31, 2015 from $160.0 million in the six months ended March 31, 2014. The increase of $1.0 million was the result of an increase in DRAM and analog revenue partially offset by a decrease in SRAM and flash revenue in the six months ended March 31, 2015 compared to the six months ended March 31, 2014. Our DRAM revenue increased by $8.4 million as a result of an increase in units shipments of our DRAM products which was partially offset by the impact of a decline in average selling prices for our DRAM products in the six months ended March 31, 2015 compared to the six months ended March 31, 2014. In addition, our analog revenue increased by $0.3 million. However, our SRAM revenue decreased by $4.6 million in the six months ended March 31, 2015 compared to the six months ended March 31, 2014 as a result of a decrease in unit shipments and an overall net decline in average selling prices. In addition, our flash revenue decreased by $3.1 million primarily as a result of a decrease in unit shipments.

In the six months ended March 31, 2015, revenue from our largest and second largest distributor accounted for approximately 15% and 14%, respectively, of our total net sales. In the six months ended March 31, 2014, revenue from our largest and second largest distributor accounted for approximately 17% and 14%, respectively, of our total net sales.

Gross profit. Gross profit increased by $3.9 million to $57.2 million in the six months ended March 31, 2015 from $53.3 million in the six months ended March 31, 2014 primarily as a result of an increase in DRAM shipments. Our gross margin was 35.5% in the six months ended March 31, 2015 compared to 33.3% in the six months ended March 31, 2014. The increase in gross margin in the six months ended March 31, 2015 compared to the six months ended March 31, 2014 can be attributed to the favorable impact in the current period from decreased product costs for certain DRAM products which more than offset a decrease in average selling prices for certain of our DRAM products. In addition, in the six months ended March 31, 2015, our product cost benefited from a weaker New Taiwan dollar.

Research and development. Research and development expenses increased by 15% to $24.7 million in the six months ended March 31, 2015 compared to $21.4 million in the six months ended March 31, 2014. As a percentage of net sales, research and development expenses increased to 15.3% in the six months ended March 31, 2015 from 13.4% in the six months ended March 31, 2014. The increase in research and development expenses of $3.3 million was primarily the result of increases in product development costs and headcount related expenses in the six months ended March 31, 2015 compared to the six months ended March 31, 2014.

Selling, general and administrative. Selling, general and administrative expenses increased by 18% to $27.1 million in the six months ended March 31, 2015 from $22.9 million in the six months ended March 31, 2014. As a percentage of net sales, selling, general and administrative expenses increased to 16.8% in the six months ended March 31, 2015 from 14.3% in the six months ended March 31, 2014. The increase in selling, general and administrative expenses of $4.2 million was primarily the result of $1.6 million of expenses related to our pending acquisition, an increase of $1.4 million in legal expenses related to our GSI litigation and a $0.6 million increase in proxy related expenses in the six months ended March 31, 2015 compared to the six months ended March 31, 2014.

Interest and other income, net. Interest and other income, net was $0.5 million in the six months ended March 31, 2015 compared to $0.8 million in the six months ended March 31, 2014. The $0.5 million of interest and other income in the six months

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ended March 31, 2015 is comprised primarily of $0.5 million in rental income from the lease of excess space in our Taiwan facility and an exchange gain of $0.1 million as a result of the appreciation of the U.S. dollar compared to the New Taiwan dollar partially offset by other items. The $0.8 million of interest and other income in the six months ended March 31, 2014 is comprised primarily of $0.5 million in rental income from the lease of excess space in our Taiwan facility and an exchange gain of $0.5 million as a result of the appreciation of the U.S. dollar compared to the New Taiwan dollar partially offset by $0.2 million of other items.

Gain on the sale of investments. In the six months ended March 31, 2014, we sold approximately 8.6 million shares of Nanya common stock for approximately $12.6 million which resulted in a pre-tax gain of approximately $7.1 million. In addition, we sold our remaining shares of SMIC for approximately $3.2 million which resulted in a pre-tax gain of approximately $2.1 million.

Provision for income taxes. For the six months ended March 31, 2015, we recorded income tax expense of $1.6 million that represents an effective tax rate of approximately 27%. The difference between the recorded provision for income taxes and the tax provision, based on the federal statutory rate of 35%, were primarily attributable to the differential in foreign tax rates, non-deductible stock-based compensation expense and certain foreign losses not benefited. For the six months ended March 31, 2014, we recorded income tax expense of $4.6 million that represents an effective tax rate of approximately 24%. The difference between the recorded provision for income taxes and the tax provision, based on the federal statutory rate of 35%, was primarily attributable to the differential in foreign tax rates and non-deductible stock-based compensation expense.

Net income attributable to noncontrolling interests. The net income attributable to noncontrolling interests was $65,000 in the six months ended March 31, 2015 compared to net income of $157,000 in the six months ended March 31, 2014.

Liquidity and Capital Resources

As of March 31, 2015, our principal sources of liquidity included cash, cash equivalents, restricted cash and short-term investments of approximately $135.6 million. During the six months ended March 31, 2015, we generated $4.8 million from operating activities compared to $2.8 million used in the six months ended March 31, 2014. The cash generated by operations in the six months ended March 31, 2015 was primarily due to our net income of $4.4 million adjusted for non-cash items of $7.4 million, an increase in accrued liabilities of $2.5 million and a decrease in accounts receivable of $1.0 million. This was partially offset by an increase in inventories of $8.1 million and a decrease in accounts payable of $2.4 million. The cash used for operations in the six months ended March 31, 2014 was primarily due to increases in accounts receivable of $5.4 million, increases in inventory of $9.0 million, increases in other assets of $3.3 million and decreases in accounts payable of $0.3 million. This was partially offset by our net income of $14.4 million adjusted for non-cash items of $2.2 million and increases in accrued liabilities of $3.0 million.

In the six months ended March 31, 2015, we used $27.6 million for investing activities compared to $1.5 million generated in the six months ended March 31, 2014. The cash used in the six months ended March 31, 2015 included $3.7 million for the acquisition of property and equipment, a net increase in restricted cash of $18.2 million and $5.8 million for the payment of license fees. As contemplated by the terms of the Merger Agreement, we deposited $19.2 million into an escrow account which resulted in the increase in our restricted cash. In the six months ended March 31, 2015, we generated $0.1 million from net sales of other available-for-sale securities. The cash generated in the six months ended March 31, 2014 included $12.6 million from the sale of approximately 86.4 million shares of Nanya common stock, $3.2 million from the sale of our remaining shares of SMIC common stock and $1.2 million from net sales of other available-for-sale securities. In the six months ended March 31, 2014, we used $8.3 million for the acquisition of property and equipment, $6.0 million for the payment of license fees, $1.0 to collateralize accounts payable to a supplier and $0.2 million to acquire additional shares of our Chingis subsidiary.

In the six months ended March 31, 2015, we made capital expenditures of approximately $3.7 million for test equipment, engineering tools, building improvements and computer hardware. We expect to spend approximately $9.0 million to $12.0 million for capital expenditures during the next twelve months, principally for the purchase of additional test equipment, design and engineering tools, computer hardware and software and building improvements. In addition, we expect to purchase and then lease up to an aggregate of $73.5 million in manufacturing equipment to Powerchip whereby Powerchip will acquire ownership of the equipment at the end of the lease period. Beginning in 2019 and continuing through 2021, Powerchip will make quarterly lease payments to us in an aggregate amount of approximately $82.1 million. Until such time as all quarterly payments have been made, we will continue to own all equipment subject to the Lease Agreements. We expect to fund our capital expenditures from our existing cash and cash equivalent balances and new borrowings.

We generated $2.4 million from financing activities during the six months ended March 31, 2015 compared to $7.5 million generated during the six months ended March 31, 2014. Our sources of financing for the six months ended March 31, 2015 were proceeds from the issuance of common stock of $6.7 million from stock option exercises. In the six months ended March 31, 2015, we used $3.7 million for payments of dividends to stockholders, $0.5 million to settle shares withheld for statutory withholding requirements upon the vesting of RSUs and $0.1 million for the repayment of long-term borrowings. Our sources of financing for the six months ended March 31, 2014 were proceeds from the issuance of common stock of $7.3 million from stock option

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exercises and sales under our employee stock purchase plan and $0.7 million excess tax benefits from share-based compensation. In the six months ended March 31, 2014, we used $0.4 million to settle shares withheld for statutory withholding requirements upon the vesting of RSUs and $0.1 million for the repayment of long-term borrowings.

At March 31, 2015, we had $10.6 million in borrowings available through a number of short-term lines of credit with various financial institutions in Taiwan. These lines of credit expire at various times through December 2015. As of March 31, 2015, we had no outstanding borrowings under these short-term lines of credit.

On December 4, 2012, we purchased a building in Milpitas, California consisting of 55,612 square feet on approximately 2.85 acres for $6.5 million. We relocated our headquarters to this location in June 2013. We financed a portion of the purchase price for our new headquarters with a loan for approximately $4.9 million. In Taiwan, we own and occupy our building and the land upon which our building is situated is leased under an operating lease that expires in March 2016. We have operations in leased sites in the U.S., China and Hong Kong. In addition to these sites, we lease sales offices in the U.S., Europe and Asia. These leases expire at various dates through 2019. Our outstanding commitments under these leases were approximately $1.7 million at March 31, 2015.

We generally warrant our products against defects in materials and workmanship for a period of 12 months. Liability for a stated warranty period is usually limited to the replacement of defective items or return of amounts paid. Warranty expense has historically been immaterial to our financial statements.

Our contractual cash obligations at March 31, 2015 are outlined in the table below:

	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(In thousands)
Operating leases	$	1,652	$	569	$	948	$	135	$	—
Borrowings	4,436		97		390		3,949		—
Purchase obligations with wafer foundries	16,446		16,446		—		—		—
Total contractual cash obligations	$	22,534	$	17,112	$	1,338	$	4,084	$	—

At March 31, 2015, we had outstanding authorization from our Board to purchase up to $19.8 million of our common stock from time to time. However, we do not expect to repurchase any shares under this authorization due to our pending acquisition.

Our total cash, cash equivalents, restricted cash and short-term investments held by our foreign subsidiaries was $95.0 million at March 31, 2015 and $91.3 million at September 30, 2014. Under current tax laws and regulations, if accumulated earnings and profits held by our foreign subsidiaries that U.S. taxes had not previously been provided for were to be distributed to the U.S., in the form of dividends or otherwise, we would be subject to additional U.S. income taxes and foreign withholding taxes. Our balance of cash, cash equivalents, restricted cash and short-term investments available for our U.S. operations as of March 31, 2015 and September 30, 2014 was approximately $40.6 million and $48.7 million, respectively. We utilize a variety of tax planning and financing strategies with the objective of having our worldwide cash available in the locations in which it is needed. We consider our offshore earnings to be permanently reinvested offshore. However, we could determine to repatriate some of our offshore earnings in future periods to fund stockholder dividends, share repurchases, acquisitions or other corporate activities.  We expect that a significant portion of our future cash generation will be in our foreign subsidiaries.

We believe our existing funds will satisfy our anticipated working capital and other cash requirements through at least the next 12 months. We may from time to time take actions to further increase our cash position through equity or debt financings, sales of shares of investments, additional bank borrowings, or the disposition of certain assets. From time to time, we may also commit to acquisitions or equity investments, including strategic investments in, or prepayments to or equipment purchases for wafer fabrication foundries or assembly and test subcontractors. To the extent we enter into such transactions, any such transaction could require us to seek additional equity or debt financing to fund such activities. There can be no assurance that any such additional financing could be obtained on terms acceptable to us, if at all.

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Off-Balance Sheet Arrangements

We may be obligated to indemnify certain customers, distributors, suppliers, and subcontractors for attorney fees and damages and costs awarded against these parties in certain circumstances in which our products are alleged to infringe third party intellectual property rights, including patents, registered trademarks, or copyrights. In certain cases, there are limits on and exceptions to our potential liability for indemnification relating to intellectual property infringement claims. In addition, we have entered into indemnification agreements with our officers, certain key employees and directors, and the Company’s bylaws provide that indemnification may be provided to our agents. We have directors’ and officers’ insurance pursuant to which we may be reimbursed for certain indemnity expenses, subject to the terms of the insurance policy. We cannot estimate the amount of potential future indemnity expenses that we may be required to make. The amount of available directors’ and officers’ insurance may not be sufficient to cover our indemnity obligations, which may have a material adverse effect on our results of operations in future periods.

Other than as set forth above, we are not currently party to any off-balance sheet arrangements as defined in Item 303 (a)(4)(ii) of SEC Regulation S-K.

Item 3.Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Exchange Risk.    We anticipate that international sales will continue to account for a significant portion of our consolidated revenue. Our international sales are largely denominated in U.S. dollars and therefore are not subject to material foreign currency exchange risk. However, we have operations in China, Europe, Taiwan, Hong Kong, India, Japan, Korea and Singapore where our expenses are denominated in each country’s local currency and are subject to foreign currency exchange risk. In the six months ended March 31, 2015 and in fiscal 2014, we recorded exchange gains of approximately $0.1 million and $0.4 million, respectively. We do not currently engage in any hedging activities. In the future, if we feel our foreign currency exposure has significantly increased, we may consider entering into hedging transactions to help mitigate that risk.

Interest Rate Risk.    We had cash, cash equivalents, restricted cash and short-term investments of $135.6 million at March 31, 2015. These funds were primarily invested in money market funds and certificates of deposit. Due to the relatively short-term nature of our investment portfolio, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates. We believe a hypothetical 100 basis point increase in interest rates would not materially affect the fair value of our interest-sensitive financial instruments. Since we believe we have the ability to liquidate this portfolio, we do not expect our operating results or cash flows to be materially affected to any significant degree by a sudden change in market interest rates on our investment portfolio.

Investments in Publicly Traded Companies. We own approximately $10.3 million of private placement shares in Nanya which are accounted for on the cost-basis. We account for such shares on the cost-basis as these securities are restricted and the restrictions do not terminate within one year of the reporting date. In the event a decline in the market value of our Nanya shares below our cost basis is determined to be other-than-temporary, we would be required to recognize a loss on our investment through our operating results.

Item 4.Controls and Procedures

Our Chief Executive Officer and our Chief Financial Officer, based on the evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) required by paragraph (b) of Rule 13a-15 or Rule 15d-15, have concluded that, as of March 31, 2015, our disclosure controls and procedures were effective to ensure that the information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the three months ended March 31, 2015, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rules 13a-15 or 15d-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1.Legal Proceedings

GSI Technology Inc. v. Integrated Silicon Solution, Inc., et al.

On October 2, 2013, GSI Technology Inc. (GSI) filed a Second Amended Complaint in a lawsuit filed earlier in 2013 solely against defendant United Memories, Inc. in the United States District Court for the Northern District of California.  GSI named us as a new, second defendant in the Second Amended Complaint.  On April 18, 2014, the Court granted our motion to dismiss that complaint in part, leaving claims against us for Unfair Competition under California Business & Professions Code 17200, misappropriation of trade secrets, and intentional interference with prospective economic advantage.  In the remaining portion of the complaint, GSI alleged that we acted together with United Memories, Inc. to harm GSI in connection with a bid requested by Cisco Systems, Inc. and misappropriated alleged GSI trade secrets.  GSI seeks damages and injunctive relief.  We filed an answer on June 2, 2014 and asserted a declaratory relief counterclaim against GSI.  Before we were named as a defendant, the Court denied motions by GSI against United Memories, Inc. for temporary and preliminary injunctive relief.  The Court issued a revised case management order on January 7, 2015 with a scheduled trial date of October 26, 2015.   We believe we have meritorious defenses to the claims alleged by GSI and intend to defend this suit vigorously.  However, there can be no assurance as to the outcome of this matter or any future litigation.

Legal Proceedings Regarding our Pending Acquisition

Beginning on April 1, 2015, three stockholder class action complaints were filed in the Superior Court of the State of California in the County of Santa Clara on behalf of a putative class of ISSI stockholders and naming as defendants ISSI’s Board of Directors and Parent: Richard Wilson III, on Behalf of Himself and All Others Similarly Situated v. Jimmy S.M. Lee, et al., Case No. 1-15-CV-278815 (filed April 1, 2015); Matthew Sciabacucchi, on Behalf of Himself and All Others Similarly Situated v. Jimmy S.M. Lee, et al., Case No. 1-15-CV-278812 (filed April 1, 2015); and Kathy Guerra, Individually and on Behalf of All Others Similarly Situated v. Scott D. Howarth, et al., Case No. 1-15-CV-279142 (filed April 8, 2015).  The complaints generally allege that, in connection with the proposed acquisition of ISSI by Parent, the ISSI directors breached their fiduciary duties owed to ISSI’s stockholders by, among other things, purportedly failing to take steps to maximize the value of ISSI to ISSI’s stockholders and agreeing to allegedly preclusive deal protection devices in the Merger Agreement. The complaint filed by Kathy Guerra also alleges that the ISSI directors breached their fiduciary duties by allegedly failing to disclose material information to ISSI stockholders.  The complaints further generally allege that Parent aided and abetted the ISSI directors in the alleged breaches of their fiduciary duties. The complaints seek, among other things, an order enjoining the defendants from consummating the proposed transaction, or alternatively, in the event that the proposed transaction is consummated, an order rescinding it.

Other Legal Proceedings

In the ordinary course of our business, as is common in the semiconductor industry, we have been involved in a limited number of other legal actions, both as plaintiff and defendant, and could incur uninsured liability in any one or more of them. Although the outcome of these actions is not presently determinable, we believe that the ultimate resolution of these matters will not have a material adverse effect on our financial position, cash flows or results of operations. However, no assurances can be given with respect to the extent or outcome of any such litigation in the future.

Item 1A. Risk Factors

Risks Related to our Pending Acquisition

The parties may be unable to satisfy the conditions to the closing of our acquisition by Parent and the acquisition may not be consummated.

Consummation of our acquisition by Parent is subject to various closing conditions, including, among other things, (i) the adoption of the Merger Agreement by ISSI’s stockholders, (ii) the absence of any legal restraints or prohibitions on the consummation of the Merger, and (iii) receipt of the Committee on Foreign Investment in the United States (CFIUS) and other regulatory approvals. The obligation of each party to consummate the Merger is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions), the other party having performed in all material respects its obligations under the Merger Agreement and the other party not having suffered a Material Adverse Effect (as defined in the Merger Agreement). These and other conditions to the consummation of the Merger may fail to be satisfied. In addition, satisfying the conditions to the Merger may take longer, and could cost more, than ISSI and Parent currently expect. The satisfaction of all of the required conditions could delay the completion of the Merger for a significant period of time or

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prevent it from occurring. Thus, there can be no assurance that the conditions to the Merger will be satisfied or waived or that the Merger will be consummated.

In addition, the Merger Agreement may be terminated under specified circumstances, including by Parent upon a change in the recommendation of ISSI Board of Directors in connection with ISSI entering into an acquisition agreement with respect to a Superior Proposal (as defined in the Merger Agreement). Failure to complete the Merger could adversely affect our business and the market price of our common stock in a number of ways, including:

• the current ISSI stock price likely reflects a market assumption that the proposed acquisition will occur, meaning that a failure to complete the proposed transaction could result in a decline in the price of ISSI common stock;

• we may be required to pay a termination fee of $19.2 million if the Merger Agreement is terminated under certain circumstances, and any such payment would negatively affect our liquidity; and

• we expect to incur substantial transaction costs in connection with the proposed transaction, whether or not it is completed.

The announcement and pendency of our proposed acquisition by Parent could materially adversely affect our business, financial condition, and results of operations.

The announcement and pendency of our proposed acquisition by Parent could disrupt our business and create uncertainty about our future, which could have a material and negative impact on our business, financial condition, and results of operations, regardless of whether the acquisition is completed. These risks to our business, all of which could be exacerbated by any delay in the closing of the acquisition, include:

• restrictions in the Merger Agreement on the conduct of our business prior to the closing of the acquisition, which prevent us from taking specified actions without the prior consent of Parent, which actions we might otherwise take in the absence of the Merger Agreement;

• the attention of our management may be directed towards the closing of the acquisition and may be diverted from our day-to-day business operations, and matters related to the acquisition may require commitments of time and resources that could otherwise have been devoted to other opportunities that might have been beneficial to us;

• our customers, suppliers and other third parties may decide not to renew or seek to terminate, change or renegotiate their relationships with us, whether pursuant to the terms of their existing agreements with us or otherwise;

• our employees may experience uncertainty regarding their future roles, which might adversely affect our ability to retain, recruit and motivate key personnel;

• certain actions we take in connection with the restructuring of our operations in Taiwan as contemplated by the Merger Agreement may result in significant costs or disruptions to our business or relationships with our employees; and

• litigation relating to the merger and the related costs.

Any of these matters could adversely affect our stock price, business, financial condition, results of operations, or business prospects.

Risks Related to our Business

Uncertain economic conditions and any future downturn in the automotive market, industrial market or other markets we serve are expected to adversely affect our business and financial results.

Substantially all of our products are incorporated into products for the automotive, communications, industrial, and digital consumer markets. In particular, in the six months ended March 31, 2015 and in fiscal 2014, approximately 51% and 47%, respectively, of our sales were to the automotive market and any future downturn in this market would have a material adverse effect on our revenue and profitability. Historically, the automotive, communications, industrial, and digital consumer markets have experienced cyclical depressed business conditions, often in connection with, or in anticipation of, a decline in general economic conditions, or due to adverse supply and demand conditions in such markets. Industry downturns have resulted in reduced demand and declining average selling prices for our products which adversely affected our business. During uncertain economic conditions, our current or potential customers may delay or reduce purchases of our products which would adversely affect our revenues and harm our business and financial results. In addition, any uncertainty in the economy may negatively impact the spending patterns of businesses including our current and potential customers. We expect our business to be adversely impacted by any further downturn in the U.S. or global economies.

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Our sales depend on DRAM and SRAM products and reduced demand for these products or a decline in average selling prices could harm our business.

In the first six months of fiscal 2015 and in fiscal 2014, approximately 91% and 89%, respectively, of our net sales were derived from the sale of DRAM and SRAM products, which are subject to unit volume fluctuations and declines in average selling prices that could harm our business. We experienced a sequential decline in revenue from $84.2 million in the September 2014 quarter to $80.9 million in the December 2014 quarter as a result of a decrease in unit shipments of our DRAM and SRAM products. We experienced a sequential decline in revenue from $84.8 million in the June 2014 quarter to $84.2 million in the September 2014 quarter partially as a result of a decrease in unit shipments of our SRAM products. We may not be able to offset any future price declines for our products by higher volumes or by higher prices on newer products. While we experienced increases in the average selling prices for certain of our products in fiscal 2013, fiscal 2014 and the first six months of fiscal 2015, historically, average selling prices for semiconductor memory products have declined, and we expect that average selling prices for our products will decline in the future. Although we entered the NOR Flash market with our acquisition of Chingis in September 2012, our NOR Flash business is generally subject to the same types of unit volume fluctuations and declines in average selling prices as our DRAM and SRAM businesses. Our ability to maintain or increase revenues will depend upon our ability to increase unit sales volume of existing products and introduce and sell new products that compensate for the anticipated declines in the average selling prices of our existing products.

If we are unable to obtain an adequate supply of wafers due to industry consolidation involving foundries, financial difficulties at foundries or other reasons, our business will be harmed unless we are able to secure alternative capacity in a timely manner and on reasonable terms.

If we are unable to obtain an adequate supply of wafers from our current suppliers or any alternative sources in a timely manner and on reasonable terms, our business will be severely harmed. For example, our revenue in each of the December 2014 quarter, September 2014 quarter and the March 2013 quarter was adversely affected as we were unable to secure an adequate supply of NOR flash wafers. Our principal manufacturing relationships are with GlobalFoundries, Hynix, Nanya, Powerchip, SMIC, TSMC, UMC, Vanguard and XMC. Each of our wafer foundries also supplies wafers to other semiconductor companies, including certain of our competitors or for their own account. Although we are allocated wafer capacity from our key suppliers, we may not be able to obtain such capacity in periods of tight supply. If any of our suppliers experience manufacturing failures or yield shortfalls, severe financial or operational difficulties, choose to prioritize capacity for other uses, or reduce or eliminate deliveries to us for any other reason, we may not be able to obtain enough wafers to meet the market demand for our products which would adversely affect our revenues. In recent years, it has been more difficult for us to secure long-term foundry capacity (particularly for our DRAM products) due to industry consolidation affecting foundries and adverse financial conditions at foundries. From time to time, certain of our wafer foundries have announced that they will no longer produce a specific type of wafer we may need (especially certain types of DRAM wafers). In such event, we have had to and expect in the future to have to place large last time buy orders which expose us to the risk of inventory obsolescence. Once a product is in production at a particular foundry, it is time consuming and costly to have such product manufactured at a different foundry. In addition, we may not be able to qualify additional manufacturing sources for existing or new products in a timely manner and we cannot be certain that other manufacturing sources would be able to deliver an adequate supply of wafers to us or at the same cost.

Foundry capacity can be limited, resulting in higher wafer prices, and we have had to enter into special arrangements to secure foundry capacity.

If we are not able to obtain sufficient foundry capacity as required, our relationships with our customers would be harmed and our future sales would be adversely impacted. In order to secure foundry capacity, we have entered into in the past, and will likely enter into in the future, various arrangements with suppliers, which could include:

• option payments or other prepayments to foundries;

• increased prices for wafers;

• purchases of equity or debt securities in foundries;

• nonrefundable deposits with, loans to, or equipment purchases for foundries in exchange for capacity commitments;

• contracts that commit us to purchase specified quantities of wafers over extended periods:

• process development relationships with foundries; and

• joint ventures.

In this regard, in April 2015, we entered into the Lease Agreements with Powerchip under which we will purchase and then lease up to an aggregate of $73.5 million in semiconductor manufacturing equipment to Powerchip, whereby Powerchip will acquire ownership of the equipment at the end of the lease period, and we will obtain access to certain manufacturing capacity and technology at Powerchip. Also, in September 2012, we invested approximately $27.1 million in Nanya and entered into an agreement with Nanya to provide us with access to leading edge process technologies and certain wafer volume guarantees.

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In the future, we may not be able to make arrangements for needed foundry capacity in a timely fashion or at all, and such arrangements, if any, may not be on terms favorable to us. Once we make commitments to secure foundry capacity, we may incur significant financial penalties if we subsequently determine that we are not able to utilize all of that capacity. Such penalties may be substantial and could harm our financial results. In addition, we must be able to secure sufficient assembly and test capacity from third-party contractors. In order to secure such capacity, we are exposed to many of the same risks we face when securing foundry capacity. In the past, we have purchased testing equipment for use by our contractors to satisfy a portion of our capacity needs. If we are not able to secure required assembly and test capacity, our business and customer relationships would be harmed.

We rely on third-party contractors to fabricate, assemble and test our products. Our business is highly dependent on the continued operations of such contractors and our failure to successfully manage our relationships with these contractors could damage our relationships with our customers, decrease our sales and limit our growth.

We rely on third-party contractors located in Asia to fabricate, assemble and test our products. Any uncertain economic conditions or uncertainty in the U.S. and global equity or credit markets could materially impact the financial condition or operations of our third-party contractors such as our wafer foundries, test contractors and assembly contractors. Our business is highly dependent on the continued operations of such contractors. Any deterioration in the financial condition of our contractors or any disruption in the operations of our contractors could adversely impact the flow of our products to our end customers and materially adversely impact our business and results of operation. In recent years, several foundries (including foundries that we relied on for wafers) experienced financial difficulties and filed for bankruptcy protection, substantially reduced their operations or were acquired by competing companies. There are significant risks associated with our reliance on these third-party contractors, including:

• potential price increases;

• possible capacity shortages;

• foundries ceasing production of wafer types that we need;

• financial viability of our foundries or other contractors;

• reduced control over product quality;

• reduced control over delivery schedules;

• their inability to increase production and achieve acceptable yields on a timely basis;

• absence of long-term agreements;

• limited warranties on products supplied to us;

• impact of foreign exchange rates on our product costs; and

• general risks related to conducting business internationally.

If any of these risks are realized, our business and results of operations could be adversely affected until our subcontractor is able to remedy the problem or until we are able to secure an alternative subcontractor.

Potential intellectual property claims and litigation could subject us to significant liability for damages and could invalidate our proprietary rights.

In the semiconductor industry, it is not unusual for companies to receive notices alleging infringement of patents or other intellectual property rights. We have been, and from time-to-time expect to be, notified of claims that we may be infringing patents, maskwork rights or copyrights owned by third-parties. If it appears necessary or desirable, we may seek licenses under patents that we are alleged to be infringing. However, licenses may not be offered and the terms of any offered licenses may not be acceptable to us.

The failure to obtain a license under a key patent or intellectual property right from a third party for technology used by us could cause us to incur substantial liabilities and to suspend the manufacture of the products utilizing the invention or to attempt to develop non-infringing products, any of which could harm our business. Furthermore, we may become involved in protracted litigation regarding the alleged infringement by us of third-party intellectual property rights or litigation to assert and protect our patents or other intellectual property rights. Any litigation relating to patent infringement or other intellectual property matters could result in substantial costs and diversion of our resources, which could harm our business. In this regard, please refer to "Part II, Item 1. Legal Proceedings" for discussion of our pending litigation with GSI.

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Our foundries may experience lower than expected yields which could adversely affect our business.

The manufacture of integrated circuits is a highly complex and technically demanding process. Production yields and device reliability can be affected by a large number of factors. As is typical in the semiconductor industry, our foundries have from time to time experienced lower than anticipated manufacturing yields and device reliability problems, particularly in connection with the introduction of new products and changes in such foundry’s processing steps. There can be no assurance that our foundries will not experience lower than expected manufacturing yields or device reliability problems in the future, which could materially and adversely affect our business and operating results.

Our operating results are expected to continue to fluctuate and may not meet our financial guidance or published analyst forecasts. This may cause the price of our common stock to decline significantly.

Our future quarterly and annual operating results are subject to fluctuations due to a wide variety of factors, including:

• changes in the global economy;

• changes in business conditions in our key markets especially the automotive and industrial markets;

• cancellation of existing orders or the failure to secure new orders;

• shortages in foundry, assembly or test capacity;

• the cyclicality of the semiconductor industry;

• declines in average selling prices of our products;

• changes in our product mix which could reduce our gross margins;

• increased expenses related to our pending acquisition;

• fluctuations in foreign currencies relative to the U.S. dollar;

• our ability to control or reduce our operating expenses;

• the costs and outcome of any pending or future litigation including our litigation with GSI;

• a failure to introduce new products and to implement technologies on a timely basis;

• disruption in the supply of wafers, assembly or test services;

• changes in the pricing for wafers or assembly or test services;

• oversupply of memory or analog products in the market;

• inventory write-downs for lower of cost or market or excess and obsolete products;

• a failure to deliver products to customers on a timely basis;

• excess inventory levels at our customers;

• decreases in the demand for our memory or analog products;

• increased expenses associated with new product introductions, masks or process changes;

• the ability of customers to make payments to us;

• market acceptance of ours and our customers’ products;

• a failure to anticipate changing customer product requirements;

• fluctuations in manufacturing yields at our suppliers;

• fluctuations in product quality resulting in rework, replacement, or loss due to damages;

• the timing of significant orders; and

• the commencement of any future litigation or antidumping proceedings.

Shifts in industry-wide capacity may cause our results to fluctuate. These shifts may occur quickly with little or no advance notice. Such shifts have historically resulted in significant inventory write-downs.

The semiconductor industry is highly cyclical and is subject to significant downturns resulting from excess capacity, overproduction, reduced demand or technological obsolescence. Shifts in industry-wide capacity from shortages to oversupply or from oversupply to shortages may result in significant fluctuations in our quarterly or annual operating results. These shifts in industry conditions can occur quickly with little or no advance notice to us. Adverse changes in industry conditions are likely to result in a decline in average selling prices and the stated value of our inventory. In the first six months of fiscal 2015, in fiscal 2014, and in fiscal 2013, we recorded inventory write-downs of $3.2 million, $5.6 million, and $4.6 million, respectively. These inventory write-downs related to adjusting our inventory valuation for certain excess and obsolete products, and valuing our inventory at the lower-of-cost-or-market.

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Differences in forecasted average selling prices used in calculating lower of cost or market adjustments can result in significant changes in the estimated net realizable value of inventory and accordingly the amount of write-down recorded. If the estimated market value of products in inventory at quarter-end is below the manufacturing cost of these products, we will recognize charges to write down the carrying value of our inventories to market value. In addition, we write down to zero dollars the carrying value of inventory on hand that has aged over one year (two years for wafer and die bank) to cover estimated excess and obsolete exposures, unless adjustments are made based on management’s judgments for newer products, end of life products, planned inventory increases or strategic customer supply. In making such judgments to write down inventory, management takes into account the product life cycles which can range from six to 30 months, the stage in the life cycle of the product, the impact of competitors’ announcements and product introductions on our products. Future additional inventory write-downs may occur due to lower of cost or market accounting, excess inventory or inventory obsolescence.

Strong competition in the semiconductor market may harm our business.

The semiconductor market is intensely competitive and has been characterized by an oversupply of product, price erosion, rapid technological change, short product life cycles, cyclical market patterns, and heightened foreign and domestic competition. Many of our competitors offer broader product lines and have greater financial, technical, marketing, distribution and other resources than us. We may not be able to compete successfully against any of these competitors. Our ability to compete successfully in our markets depends on factors both within and outside of our control, including:

• the pricing of our products;

• the supply and cost of wafers;

• product design, functionality, performance and reliability;

• successful and timely product development;

• the performance of our competitors and their pricing policies;

• wafer manufacturing over or under capacity;

• real or perceived imbalances in supply and demand for our products;

• the rate at which OEM customers incorporate our products into their systems;

• the gain or loss of significant customers;

• the success of our customers’ products and end-user demand;

• access to advanced process technologies at competitive prices;

• achievement of acceptable yields of functional die;

• the capacity of our third-party contractors to assemble and test our products;

• the nature and success of our competitors;

• our financial strength and the financial strength of our competitors; and

• general economic conditions.

In addition, we are vulnerable to technology advances utilized by competitors to manufacture higher performance or lower cost products. We may not be able to compete successfully in the future as to any of these factors. Our failure to compete successfully in these or other areas could harm our business and financial results.

Our revenues and business would be harmed if we are not able to successfully develop, introduce and sell new products and develop and implement new manufacturing technologies in a timely manner. Our research and development expenses could increase and our business could be harmed if the implementation of these new manufacturing technologies is unsuccessful.

We operate in highly competitive, quickly changing markets which are characterized by rapid obsolescence of existing products. As a result, our future success depends on our ability to develop and introduce new products that our customers choose to buy in significant quantities. If we fail to introduce new products in a timely manner or if our customers’ products do not achieve commercial success, our business and results of operations could be seriously harmed. The design and introduction of new products is challenging as such products typically incorporate more functions and operate at faster speeds than prior products. Increasing complexity generally requires smaller features on a chip. This makes developing new generations of products substantially more difficult than prior generations. The cost to develop products utilizing these new technologies is expensive and requires significant research and development spending and, as a result, our research and development expenses could increase in the future. Further, new products may not work properly in our customers’ applications. If we are unable to design, introduce, manufacture, market and sell new products successfully, our business and financial results would be seriously harmed.

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The loss of a significant customer or a reduction in orders from one or more large customers could adversely affect our operating results.

As sales to our customers are executed pursuant to purchase orders and no purchasing contracts typically exist, our customers can cease doing business with us at any time. We may not be able to retain our key customers, such customers may cancel or reschedule orders, and in the event of canceled orders, such orders may not be replaced by other sales. In addition, sales to any particular customer may fluctuate significantly from quarter to quarter, and such fluctuating sales could harm our business and financial results.

We have significant international sales and operations and risks related to our international activities could harm our operating results.

In the six months ended March 31, 2015, approximately 12% of our net sales was attributable to customers located in the U.S., 25% was attributable to customers located in Europe and 63% was attributable to customers located in Asia. In fiscal 2014, approximately 12% of our net sales was attributable to customers located in the U.S., 23% was attributable to customers located in Europe and 65% was attributable to customers located in Asia. In fiscal 2013, approximately 12% of our net sales was attributable to customers located in the U.S., 20% was attributable to customers located in Europe and 67% was attributable to customers located in Asia. We anticipate that sales to international sites will continue to represent a significant percentage of our net sales. Although our international sales are largely denominated in U.S. dollars, we do have sales transactions in New Taiwan dollars, in Hong Kong dollars and in Chinese renminbi. In addition, our wafer foundries and assembly and test subcontractors are primarily located in Taiwan and China and, while our wafer purchases are denominated in U.S. dollars, most of our assembly and test costs are denominated in New Taiwan dollars. A substantial majority of our employees are located outside of the U.S and the expenses for our foreign operations are generally denominated in local currency. As a result, a devaluation of the U.S. dollar compared to the New Taiwan dollar or Chinese renminbi could substantially increase the cost of our products and our operations in Taiwan or China.

We are subject to the risks of conducting business internationally, including:

• global economic conditions, particularly in Taiwan and China;

• difficulties in hiring and retaining experienced engineers in countries such as China and Taiwan;

• foreign currency fluctuations;

• duties, tariffs and other trade barriers and restrictions;

• changes in trade policy and regulatory requirements;

• transportation delays;

• the burdens of complying with foreign laws;

• imposition of foreign currency controls;

• language barriers;

• difficulties in collecting foreign accounts receivable;

• difficulties in protecting our intellectual property rights;

• political instability, including any changes in relations between China and Taiwan;

• public health outbreaks such as SARS, ebola or avian flu; and

• earthquakes and other natural disasters.

We depend on our ability to attract and retain our key technical and management personnel.

Our success depends upon the continued service of our key technical and management personnel. Several of our important manufacturing and other subcontractor relationships are based on personal relationships between our senior executive officers and such parties. In particular, our Executive Chairman has long-term relationships with our key foundries. If we were to lose the services of any key executive, it may negatively impact the related business relationships since we typically have no long-term contractual agreements with such parties. Our success also depends on our ability to continue to attract, retain and motivate qualified technical personnel, particularly experienced circuit designers and process engineers. The competition for such employees has been intense in recent periods. We have no employment contracts or key person life insurance policies with or for any of our employees. The loss of the service of one or more of our key personnel could harm our business.

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Our products are complex and could contain defects, which could reduce sales of those products or result in claims against us.

We develop complex and evolving products. Despite testing by us and our customers, errors may be found in existing or new products. This could result in a delay in recognition or loss of revenues, loss of market share or failure to achieve market acceptance. The occurrence of defects could also cause us to incur significant warranty, support and repair costs, could divert the attention of our engineering personnel from our product development efforts, and could harm our relationships with our customers. The occurrence of these problems could also result in the delay or loss of market acceptance of our products and would likely harm our business. Defects, integration issues or other performance problems in our products could result in financial or other damages to our customers. Our customers could also seek and obtain damages from us for their losses. From time to time, we have been involved in disputes regarding product warranty issues. Although we seek to limit our liability, a product liability claim brought against us, even if unsuccessful, would likely be time consuming and could be costly to defend.

We may be unable to effectively protect our intellectual property, which would negatively impact our ability to compete.

We believe that the protection of our intellectual proprietary rights will continue to be important to the success of our business. We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. We also enter into confidentiality or license agreements with our employees, consultants and business partners, and take actions to control access to and distribution of our documentation and other proprietary information. Despite these efforts, unauthorized parties may attempt to copy or otherwise obtain and use our proprietary technology. Monitoring unauthorized use of our technology is difficult, and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as do the laws of the U.S. Many U.S. companies have encountered substantial infringement problems in foreign countries, including countries in which we design and sell our products. We cannot be certain that patents will be issued as a result of our pending applications nor can we be certain that any issued patents would protect or benefit us or give us adequate protection from competing products. For example, issued patents may be circumvented or challenged and declared invalid or unenforceable. We also cannot be certain that others will not develop similar technology or develop competing technologies on their own.

We may encounter difficulties in effectively integrating newly acquired businesses.

From time to time, we have acquired and expect in the future to acquire other companies or assets that we believe to be complementary to our business. In this regard, in September 2012, we acquired Chingis, a provider of NOR flash memory technologies used in standalone and embedded applications headquartered in Taiwan. In addition, in January 2011, we acquired Si En, a privately held fabless provider of high performance analog and mixed signal integrated circuits headquartered in Xiamen, China. Acquisitions may result in the use of our cash resources, potentially dilutive issuances of equity securities, incurrence of debt and contingent liabilities, amortization expenses related to intangible assets, and the possible impairment of goodwill, which could harm our profitability. For example, in fiscal 2012, we wrote-off $4.3 million of the goodwill we acquired with the acquisition of Si En. In addition, acquisitions involve numerous risks, including:

• lower than expected sales of any acquired products;

• the risk that the markets for acquired products do not develop as expected;

• difficulties in continuing to develop new technologies and deliver products to market on time;

• the potential loss of key employees and customers as a result of the acquisition;

• difficulties in successfully assimilating the operations, technologies and personnel of the acquired company;

• diversion of management’s attention from other business concerns;

• risks of entering markets in which we have no, or limited, direct prior experience; and

• higher than estimated acquisition expenses.

There is no assurance that any of our acquisitions will contribute positively to our business or operating results.

Our stock price is expected to continue to be volatile.

The trading price of our common stock has been and is expected to be subject to wide fluctuations in response to:

• the announcement of our pending acquisition and matters related to the completion of such acquisition;

• quarter-to-quarter variations in our operating results;

• general conditions or cyclicality in the semiconductor industry or the end markets that we serve;

• new or revised earnings estimates or guidance by us or industry analysts;

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• comments or recommendations issued by analysts who follow us, our competitors or the semiconductor industry;

• aggregate valuations and movement of stocks in the broader semiconductor industry;

• announcements of new products, strategic relationships or acquisitions by us or our competitors;

• increases or decreases in available wafer capacity;

• governmental regulations, trade laws and import duties;

• announcements related to future or existing litigation involving us or any of our competitors;

• announcements of technological innovations by us or our competitors;

• announcements regarding our cash dividend program, including the timing and amount of any future dividends;

• announcements regarding our share repurchase program and the timing and amount of shares we purchase under such program;

• additions or departures of senior management; and

• other events or factors, many of which are beyond our control.

In addition, stock markets have from time to time experienced extreme price and trading volume volatility. This volatility has had a substantial effect on the market prices of securities of many companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations have adversely affected the market price of our common stock in the past and are likely to continue to do so in the future.

We have incurred significant losses in certain recent periods, and there can be no assurance that we will be able to sustain profitability in the future.

Though we had been profitable for twelve consecutive quarters beginning with the September 2009 quarter through the June 2012 quarter, we incurred a loss of $13.2 million in the September 2012 quarter and a loss of $2.7 million for fiscal 2012, which included a $14.3 million write-down for certain tangible and intangible net assets related to our acquisition of Si En and a charge of $2.3 million to write-down our investment in SMIC due to the decline in fair market value of such shares being considered other than temporary. There can be no assurance that we will maintain profitability in future periods. Our ability to maintain profitability on a quarterly or fiscal year basis in the future will depend on a variety of factors, including the need for future inventory write-downs, impairment of goodwill, our ability to increase net sales, maintain or expand gross margins, introduce new products on a timely basis, secure sufficient wafer fabrication and assembly and test capacity and control operating expenses, including stock-based compensation. Adverse developments with respect to these or other factors could result in quarterly or annual operating losses in the future.

Adverse changes in our effective tax rate will harm our results of operations.

A number of factors may increase our future effective tax rate, including:

• the jurisdictions in which our profits are determined to be earned and taxed;

• changes in the valuation of our deferred tax assets and liabilities, and changes in deferred tax valuation allowances;

• exhaustion of our existing federal and foreign net operating loss carryforwards and credits;

• our decision to repatriate non-U.S. earnings for which we have not previously provided for U.S. taxes;

• increases in expenses not deductible for tax purposes, including impairments of goodwill in connection with acquisitions;

• limitations on the utilization of federal net operating loss carryforwards and credits;

• the resolution of issues arising from tax audits with various tax authorities;

• adjustments to income taxes upon finalization of various tax returns;

• changes in available tax credits;

• changes in tax laws or the interpretation of such tax laws; and

• changes in U.S. generally accepted accounting principles.

Any significant increase in our future effective tax rate will reduce our net income for future periods.

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We have used and may in the future use a significant amount of our cash resources to repurchase shares of our common stock and such repurchases present potential risks and disadvantages to us and our continuing stockholders.

While we have not repurchased any shares since fiscal 2011, from September 2007 through September 2011, we repurchased and retired an aggregate of 14,179,711 shares of our common stock in the open market under Rule 10b-18 and pursuant to our tender offers at a cost of approximately $88.5 million. At March 31, 2015, we had outstanding authorization from our Board to purchase up to an additional $19.8 million of our common stock from time to time. However, under the terms of the Merger Agreement, we are currently prohibited from repurchasing shares of our common stock. Although our Board of Directors has determined that our repurchase programs were in the best interests of our stockholders, these repurchases expose us to a number of risks including:

• the use of a substantial portion of our cash reserves, which may reduce our ability to engage in significant cash acquisitions or to pursue other business opportunities that could create significant value to our stockholders;

• the risk that we would not be able to replenish our cash reserves by raising debt or equity financing in the future on terms acceptable to us, or at all;

• the risk that these repurchases have reduced our “public float,” which is the number of our shares owned by non-affiliate stockholders and available for trading in the securities markets, and likely reduced the number of our stockholders, which may reduce the volume of trading in our shares and may result in lower stock prices and reduced liquidity in the trading of our shares; and

• the risk that our stock price could decline and that we would be able to repurchase shares of our common stock at a lower price per share than the prices we pay in our repurchase programs.

Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.

Our worldwide operations, including the operations of our foundries and other suppliers, could be subject to natural disasters and other business disruptions, which could seriously harm our revenue and financial condition and increase our costs and expenses. Our corporate headquarters, and a portion of our research and development activities, are located in Milpitas, California, and our other critical business operations and many of our suppliers are located in Asia, near major earthquake faults. The ultimate impact on us, our significant suppliers and our general infrastructure of being located near major earthquake faults is unknown, but our revenue, profitability and financial condition could suffer in the event of a major earthquake or other natural disaster. Losses and interruptions could also be caused by earthquakes, power shortages, telecommunications failures, water shortages, tsunamis, floods, typhoons, volcanic eruptions, fires, extreme weather conditions, medical epidemics such as a flu or ebola outbreak and other natural or manmade disasters.

Our results of operations could vary as a result of the methods, estimates, and judgments we use in applying our accounting policies.

The methods, estimates, and judgments we use in applying our accounting policies have a significant impact on our results of operations (see “Critical Accounting Policies” in Part I, Item 2 of this Form 10-Q). Such methods, estimates, and judgments are, by their nature, subject to substantial risks, uncertainties, and assumptions, and factors may arise over time that lead us to change our methods, estimates, and judgments and such changes could significantly affect our results of operations.

Our operations involve the use of hazardous and toxic materials, and we must comply with environmental laws and regulations, which can be expensive, and may adversely affect our business and operating results.

We are subject to federal, state and local regulations relating to the use, handling, storage, disposal and human exposure to hazardous and toxic materials. If we were to violate or become liable under environmental laws in the future as a result of our inability to obtain permits, human error, accident, equipment failure or other causes, we could be subject to fines, costs, or civil or criminal sanctions, face property damage or personal injury claims or be required to incur substantial investigation or remediation costs or experience disruptions in our operations, any of which could have a material adverse effect on our business. In addition, environmental laws could become more stringent over time, imposing greater compliance costs and increasing the risks and penalties associated with violations, which could harm our business.

We also face increasing complexity in our product design as we adjust to new and future requirements relating to the materials composition of our products, including the restrictions on lead and other hazardous substances applicable to specified electronic products placed on the market in the European Union (Restriction on the Use of Hazardous Substances Directive 2002/95/EC, also known as the RoHS Directive). We expect that our operations will be affected by other new environmental laws and regulations on an ongoing basis. Although we cannot predict the ultimate impact of any such new laws and regulations, they will likely result in additional costs, and could require that we change the design or manufacturing of our products, any of which could have a material adverse effect on our business.

36

We may experience difficulties in complying with Sarbanes-Oxley Section 404 in future periods.

We concluded that our internal control over financial reporting was effective at September 30, 2014. If, in the future, we are unable to conclude that our internal control over financial reporting is effective or we are unable to conclude that our disclosure controls and procedures are effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our stock price.

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Item 6. Exhibits

(a) The following exhibits are filed as a part of this report.

Exhibit 2.1(1)	Agreement and Plan of Merger, dated as of March 12, 2015, by and among Uphill Investment Co. and Integrated Silicon Solution, Inc.
Exhibit 2.2(2)	Amendment No. 1 to Agreement and Plan of Merger, dated as of April 28, 2015, by and among Uphill Investment Co., Indigo Acquisition Sub, and Integrated Silicon Solution, Inc.
Exhibit 2.3	Joinder Agreement, dated as of March 25, 2015, by and among Uphill Investment Co., Indigo Acquisition Sub, Inc. and Integrated Silicon Solution, Inc.
Exhibit 3.1	Amended and Restated Bylaws of Registrant.
Exhibit 10.1(1)	Escrow Agreement, dated as of March 12, 2015, with Deutsche Bank (China) Co., Ltd. Shanghai Branch.
Exhibit 10.2(1)	Escrow Agreement, dated as of March 12, 2015, with China Merchants Bank.
Exhibit 10.3(3)	Equipment Lease Agreement, dated April 20, 2015, by and between Integrated Silicon Solution, Inc. and Powerchip Technology Corporation.
Exhibit 10.4(3)	Equipment Lease Agreement, dated April 20, 2015, by and between Integrated Circuit Solution, Inc. and Powerchip Technology Corporation.
Exhibit 31.1	Certification Pursuant to SEC Release No. 33-8238, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification Pursuant to SEC Release No. 33-8238, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101.INS	XBRL Instance Document
Exhibit 101.SCH	XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
(1)	Incorporated by reference to the Company's Current Report on Form 8-K filed on March 12, 2015.
(2)	Incorporated by reference to the Company's Current Report on Form 8-K filed on April 29, 2015.
(3)	Portions of Exhibit A and Exhibit E of this document have been omitted pursuant to a confidential treatment request, and the full, unredacted document has been separately submitted to the Securities and Exchange Commission with a confidential treatment request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Integrated Silicon Solution, Inc.
		(Registrant)
Dated:	May 5, 2015	/s/ John M. Cobb
		John M. Cobb
		Vice President and Chief Financial Officer
		(Principal Financial and
		Accounting Officer)

39

EX-2.3

Exhibit 2.3

JOINDER AGREEMENT

This JOINDER AGREEMENT, dated as of March 25, 2015 (this “Agreement”), is made and entered into by and among Uphill Investment Co., a PRC limited liability company (“Parent”), Indigo Acquisition Sub, Inc., a Delaware corporation and wholly-owned (direct or indirect) subsidiary of Parent (“Acquisition Sub”) and Integrated Silicon Solution Inc., a Delaware corporation (the “Company”). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement and Plan of Merger, dated as of March 12, 2015 (the “Merger Agreement”).

WITNESSETH:

WHEREAS, Parent and the Company have entered into the Merger Agreement pursuant to which and subject to the terms and conditions thereof, at the Effective Time, Acquisition Sub shall merge with and into the Company (the “Merger”), with the Company surviving as a wholly-owned (direct or indirect) Subsidiary of Parent;

WHEREAS, Acquisition Sub was formed as a corporation organized under the laws of the State of Delaware and is a wholly-owned (direct or indirect) Subsidiary of Parent formed pursuant to the Merger Agreement for the purpose of serving as Acquisition Sub thereunder; and

WHEREAS, pursuant to the Merger Agreement, Parent has caused Acquisition Sub to execute this Joinder to become a party to the Merger Agreement and be bound by the terms, covenants and other provisions thereof applicable to it as Acquisition Sub on the terms hereof.

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in the Merger Agreement, the parties hereto agree as follows:

1.Joinder. By executing this Agreement, Acquisition Sub shall become a party to the Merger Agreement as of the date hereof and hereby agrees to be bound by the terms, covenants and other provisions of the Merger Agreement applicable to it as Acquisition Sub, with the same force and effect as if originally named therein.

2.Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws.

3.Counterparts. This Agreement may be executed in any number of counterparts (including by means of facsimile or e-mail in .pdf format), each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

[Signature Page Follows.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above.

PARENT:

UPHILL INVESTMENT CO.

By: /s/ Xu Wei    

Name: Xu Wei    

Title: Executive Director    

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above.

ACQUISITION SUB:

INDIGO ACQUISITION SUB, INC.

By: /s/ Xu Wei    

Name: Xu Wei    

Title: President    

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first written above,

COMPANY:

INTEGRATED SILICON SOLUTION, INC.

By: /s/ Jimmy S.M. Lee    

Name: Jimmy S.M. Lee    

Title: Executive Chairman of the Board    

EX-3.1

AMENDED AND RESTATED BYLAWS

OF

INTEGRATED SILICON SOLUTION, INC.

(a Delaware corporation)

TABLE OF CONTENTS

		Page
ARTICLE I CORPORATE OFFICES		1
1.1	REGISTERED OFFICE	1
1.2	OTHER OFFICES	1
ARTICLE II MEETINGS OF STOCKHOLDERS		1
2.1	PLACE OF MEETINGS	1
2.2	ANNUAL MEETING	1
2.3	SPECIAL MEETING	5
2.4	NOTICE OF STOCKHOLDERS’ MEETINGS	6
2.5	MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE	6
2.6	QUORUM	7
2.7	ADJOURNED MEETING; NOTICE	7
2.8	VOTING	7
2.9	VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT	8
2.10	STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING	8
2.11	RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS	9
2.12	PROXIES	9
2.13	INSPECTORS OF ELECTION	9
ARTICLE III DIRECTORS		10
3.1	POWERS	10
3.2	NUMBER AND TERM OF OFFICE	10
3.3	RESIGNATION AND VACANCIES	11
3.4	REMOVAL	12
3.5	PLACE OF MEETINGS; MEETINGS BY TELEPHONE	12
3.6	FIRST MEETINGS	12
3.7	REGULAR MEETINGS	12
3.8	SPECIAL MEETINGS; NOTICE	13
3.9	QUORUM	13
3.10	WAIVER OF NOTICE	13
3.11	ADJOURNMENT	13
3.12	NOTICE OF ADJOURNMENT	14
3.13	BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING	14
3.14	FEES AND COMPENSATION OF DIRECTORS	14
3.15	APPROVAL OF LOANS TO OFFICERS	14
ARTICLE IV COMMITTEES		14
4.1	COMMITTEES OF DIRECTORS	14
4.2	MEETINGS AND ACTION OF COMMITTEES	15

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		Page
ARTICLE V OFFICERS		15
5.1	OFFICERS	15
5.2	ELECTION OF OFFICERS	16
5.3	SUBORDINATE OFFICERS	16
5.4	REMOVAL AND RESIGNATION OF OFFICERS	16
5.5	VACANCIES IN OFFICES	16
5.6	CHAIRMAN OF THE BOARD	16
5.7	PRESIDENT	16
5.8	VICE PRESIDENTS	17
5.9	SECRETARY	17
5.10	CHIEF FINANCIAL OFFICER	17
ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS		18
6.1	INDEMNIFICATION OF DIRECTORS AND OFFICERS	18
6.2	INDEMNIFICATION OF OTHERS	18
6.3	INSURANCE	18
ARTICLE VII RECORDS AND REPORTS		19
7.1	MAINTENANCE AND INSPECTION OF RECORDS	19
7.2	INSPECTION BY DIRECTORS	19
7.3	ANNUAL STATEMENT TO STOCKHOLDERS	20
7.4	REPRESENTATION OF SHARES OF OTHER CORPORATIONS	20
ARTICLE VIII GENERAL MATTERS		20
8.1	RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING	20
8.2	CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS	20
8.3	CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED	21
8.4	STOCK CERTIFICATES; PARTLY PAID SHARES	21
8.5	SPECIAL DESIGNATION ON CERTIFICATES	21
8.6	LOST CERTIFICATES	22
8.7	CONSTRUCTION; DEFINITIONS	22
ARTICLE IX AMENDMENTS		22
ARTICLE X DISSOLUTION		22
ARTICLE XI CUSTODIAN		23
11.1	APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES	23
11.2	DUTIES OF CUSTODIAN	24

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AMENDED AND RESTATED BYLAWS

OF

INTEGRATED SILICON SOLUTION, INC.

(a Delaware corporation)

ARTICLE I

CORPORATE OFFICES

1.1REGISTERED OFFICE

The registered office of the corporation shall be fixed in the Certificate of Incorporation of the corporation.

1.2OTHER OFFICES

The board of directors may at any time establish branch or subordinate offices at any place or places where the corporation is qualified to do business.

ARTICLE II

MEETINGS OF STOCKHOLDERS

2.1PLACE OF MEETINGS

Meetings of stockholders shall be held at any place within or outside the State of Delaware designated by the board of directors. In the absence of any such designation, stockholders’ meetings shall be held at the registered office of the corporation.

2.2ANNUAL MEETING

(a)The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. At the meeting, directors shall be elected, and any other proper business may be transacted.

(b)At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be brought: (A) pursuant to the corporation’s proxy materials with respect to such meeting, (B) by or at the direction of the board of directors, or (C) by a stockholder of the corporation who (1) is a stockholder of record at the time of the giving of the notice required by this Section 2.2(b) and on the record date for the determination of stockholders entitled to vote at the

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annual meeting and (2) has timely complied in proper written form with the notice procedures set forth in this Section 2.2. In addition, for business to be properly brought before an annual meeting by a stockholder, such business must be a proper matter for stockholder action pursuant to these Bylaws and applicable law. For the avoidance of doubt, clause (C) above shall be the exclusive means for a stockholder to bring business before an annual meeting of stockholders.

(i)To comply with clause (C) of Section 2.2(b) above, a stockholder’s notice must set forth all information required under this Section 2.2 and must be timely received by the secretary of the corporation. To be timely, a stockholder’s notice must be received by the secretary at the principal executive offices of the corporation not later than the 45th day nor earlier than the 75th day before the one-year anniversary of the date on which the corporation first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or if the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after the one-year anniversary of the date of the previous year’s annual meeting, then, for notice by the stockholder to be timely, it must be so received by the secretary not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting, or (ii) the tenth day following the day on which Public Announcement (as defined below) of the date of such annual meeting is first made. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described in this Section 2.2(b)(i). “Public Announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended, or any successor thereto (the “1934 Act”).

(ii)To be in proper written form, a stockholder’s notice to the secretary must set forth as to each matter of business the stockholder intends to bring before the annual meeting: (1) a brief description of the business intended to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (2) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business and any Stockholder Associated Person (as defined below), (3) the class and number of shares of the corporation that are held of record or are beneficially owned by the stockholder or any Stockholder Associated Person and any derivative positions held or beneficially held by the stockholder or any Stockholder Associated Person, (4) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of such stockholder or any Stockholder Associated Person with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit from share price changes for, or to increase or decrease the voting power of, such stockholder or any Stockholder Associated Person with respect to any securities of the corporation, (5) any material interest of the stockholder or a Stockholder Associated Person in such business, and (6) a statement whether either such stockholder or any Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of at least the percentage of the corporation’s voting shares required under applicable law to carry the

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proposal (such information provided and statements made as required by clauses (1) through (6), a “Business Solicitation Statement”). In addition, to be in proper written form, a stockholder’s notice to the secretary must be supplemented not later than ten days following the record date to disclose the information contained in clauses (3) and (4) above as of the record date. For purposes of this Section 2.2, a “Stockholder Associated Person” of any stockholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any beneficial owner of shares of stock of the corporation owned of record or beneficially by such stockholder and on whose behalf the proposal or nomination, as the case may be, is being made, or (iii) any person controlling, controlled by or under common control with such person referred to in the preceding clauses (i) and (ii).

(iii)Without exception, no business shall be conducted at any annual meeting except in accordance with the provisions set forth in this Section 2.2(b) and, if applicable, Section 2.2(c). In addition, business proposed to be brought by a stockholder may not be brought before the annual meeting if such stockholder or a Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Business Solicitation Statement applicable to such business or if the Business Solicitation Statement applicable to such business contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading. The board of directors or the chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual meeting that business was not properly brought before the annual meeting and in accordance with the provisions of this Section 2.2(b), and, if the board of directors or the chairperson should so determine, the chairperson shall so declare at the annual meeting that any such business not properly brought before the annual meeting shall not be conducted.

(c)Notwithstanding anything in these Bylaws to the contrary, only persons who are nominated in accordance with the procedures set forth in this Section 2.2(c) shall be eligible for election or re-election as Directors at an annual meeting of stockholders. Nominations of persons for election to the board of directors shall be made at an annual meeting of stockholders only (A) by or at the direction of the board of directors or (B) by a stockholder of the corporation who (1) was a stockholder of record at the time of the giving of the notice required by this Section 2.2(c) and on the record date for the determination of stockholders entitled to vote at the annual meeting and (2) has complied with the notice procedures set forth in this Section 2.2(c). In addition to any other applicable requirements, for a nomination to be made by a stockholder, the stockholder must have given timely notice thereof in proper written form to the secretary of the corporation.

(i)To comply with clause (B) of Section 2.2(c) above, a nomination to be made by a stockholder must set forth all information required under this Section 2.2(c) and must be received by the secretary of the corporation at the principal executive offices of the corporation at the time set forth in, and in accordance with, the final three sentences of Section 2.2(b)(i) above.

(ii)To be in proper written form, such stockholder’s notice to the secretary must set forth:

(1)as to each person (a “nominee”) whom the stockholder proposes to nominate for election or re-election as a Director: (A) the name, age, business address and

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residence address of the nominee, (B) the principal occupation or employment of the nominee, (C) the class and number of shares of the corporation that are held of record or are beneficially owned by the nominee and any derivative positions held or beneficially held by the nominee, (D) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of the nominee with respect to any securities of the corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit of share price changes for, or to increase or decrease the voting power of the nominee, (E) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, (F) a written statement executed by the nominee acknowledging that as a Director of the corporation, the nominee will owe a fiduciary duty under Delaware law with respect to the corporation and its stockholders, and (G) any other information relating to the nominee that would be required to be disclosed about such nominee if proxies were being solicited for the election of the nominee as a Director, or that is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation the nominee’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a Director if elected); and

(2)as to such stockholder giving notice, (A) the information required to be provided pursuant to clauses (2) through (5) of Section 2.2(b)(ii) above, and the supplement referenced in the second sentence of Section 2.2(b)(ii) above (except that the references to “business” in such clauses shall instead refer to nominations of directors for purposes of this paragraph), and (B) a statement whether either such stockholder or Stockholder Associated Person will deliver a proxy statement and form of proxy to holders of a number of the corporation’s voting shares reasonably believed by such stockholder or Stockholder Associated Person to be necessary to elect such nominee(s) (such information provided and statements made as required by clauses (A) and (B) above, a “Nominee Solicitation Statement”).

(iii)At the request of the board of directors, any person nominated by a stockholder for election as a Director must furnish to the secretary of the corporation (1) that information required to be set forth in the stockholder’s notice of nomination of such person as a Director as of a date subsequent to the date on which the notice of such person’s nomination was given and (2) such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as an independent Director of the corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee; in the absence of the furnishing of such information if requested, such stockholder’s nomination shall not be considered in proper form pursuant to this Section 2.2(c).

(iv)Without exception, no person shall be eligible for election or re-election as a Director of the corporation at an annual meeting of stockholders unless nominated in accordance with the provisions set forth in this Section 2.2(c). In addition, a nominee shall not be eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Nominee Solicitation Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein

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not misleading. The board of directors or the chairperson of the annual meeting shall, if the facts warrant, determine and declare at the annual meeting that a nomination was not made in accordance with the provisions prescribed by these Bylaws, and if the board of directors or the chairperson should so determine, the chairperson shall so declare at the annual meeting, and the defective nomination shall be disregarded.

(d)In addition to the foregoing provisions of this Section 2.2, a stockholder must also comply with all applicable requirements of state law and of the 1934 Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.2, including, with respect to business such stockholder intends to bring before the annual meeting that involves a proposal that such stockholder requests to be included in the corporation’s proxy statement, the requirements of Rule 14a-8 (or any successor provision) under the 1934 Act. Nothing in this Section 2.2 shall be deemed to affect any right of the corporation to omit a proposal from the corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the 1934 Act.

2.3SPECIAL MEETING

A special meeting of the stockholders may be called at any time by the board of directors, or by the chairman of the board, by the president or by the chief executive officer, but a special meeting may not be called by any other person or persons.

If a special meeting is called by any person or persons other than the board of directors, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the chairman of the board, the president, chief executive officer, or the secretary of the corporation. No business may be transacted at any special meeting otherwise than as shall have been brought before the meeting by or at the direction of the board of directors, or by the chairman of the board, by the president or by the chief executive officer. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the board of directors may be held.

For a special meeting of stockholders at which Directors are to be elected, nominations of persons for election to the board of directors shall be made only (1) by or at the direction of the board of directors or (2) by any stockholder of the corporation who (A) is a stockholder of record at the time of the giving of the notice required by this Section 2.3 and on the record date for the determination of stockholders entitled to vote at the special meeting and (B) delivers a timely written notice of the nomination to the secretary of the corporation that includes the information set forth in Sections 2.2(c)(ii) and (c)(iii) above. To be timely, such notice must be received by the secretary at the principal executive offices of the corporation not later than the close of business on the later of the 90th day prior to such special meeting or the tenth day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected at such meeting. A person shall not be eligible for election or re-election as a Director at a special meeting unless the person is nominated (i) by or at the direction of the board of directors or (ii) by a stockholder in accordance with the notice procedures set forth in this Section 2.3. In addition, a nominee shall not be eligible for election or re-election if a stockholder or Stockholder Associated Person, as applicable, takes action contrary to the representations made in the Nominee Solicitation

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Statement applicable to such nominee or if the Nominee Solicitation Statement applicable to such nominee contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading.

The board of directors or the chairperson of the special meeting shall, if the facts warrant, determine and declare at the meeting that a nomination or business was not made in accordance with the procedures prescribed by these Bylaws, and if the board of directors or the chairperson should so determine, the chairperson shall so declare at the meeting, and the defective nomination or business shall be disregarded.

In addition to the foregoing provisions of this Section 2.3, a stockholder must also comply with all applicable requirements of state law and of the 1934 Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.3, including, with respect to business such stockholder intends to bring before the annual meeting that involves a proposal that such stockholder requests to be included in the corporation’s proxy statement, the requirements of Rule 14a-8 (or any successor provision) under the 1934 Act. Nothing in this Section 2.3 shall be deemed to affect any right of the corporation to omit a proposal from the corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the 1934 Act.

2.4NOTICE OF STOCKHOLDERS’ MEETINGS

Except as set forth in Section 2.3, all notices of meetings of stockholders shall be sent or otherwise given in accordance with Section 2.5 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting. The notice shall specify the place, date, and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted (no business other than that specified in the notice may be transacted) or (ii) in the case of the annual meeting, those matters which the board of directors, at the time of giving the notice, intends to present for action by the stockholders (but any proper matter may be presented at the meeting for such action). The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees who, at the time of the notice, the board intends to present for election.

2.5MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

Written notice of any meeting of stockholders shall be given either personally or by first-class mail or by facsimile, telegraphic or other written communication. Notices not personally delivered shall be sent charges prepaid and shall be addressed to the stockholder at the address of that stockholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice. If no such address appears on the corporation’s books or is given, notice shall be deemed to have been given if sent to that stockholder by mail or telegraphic or other written communication to the corporation’s principal executive office, or if published at least once in a newspaper of general circulation in the county where that office is located. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telegram or other means of written communication.

If any notice addressed to a stockholder at the address of that stockholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to

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indicate that the United States Postal Service is unable to deliver the notice to the stockholder at that address, then all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available to the stockholder on written demand of the stockholder at the principal executive office of the corporation for a period of one (1) year from the date of the giving of the notice.

An affidavit of the mailing or other means of giving any notice of any stockholders’ meeting, executed by the secretary, assistant secretary or any transfer agent of the corporation giving the notice, shall be prima facie evidence of the giving of such notice.

2.6QUORUM

The presence in person or by proxy of the holders of a majority of the shares entitled to vote thereat constitutes a quorum for the transaction of business at all meetings of stockholders. The stockholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum.

2.7ADJOURNED MEETING; NOTICE

In the absence of a quorum, no other business may be transacted at a stockholders’ meeting, annual or special, except as provided in Section 2.6 of these bylaws. If no quorum is present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented.

When any meeting of stockholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at the meeting at which the adjournment is taken. However, if a new record date for the adjourned meeting is fixed or if the adjournment is for more than thirty (30) days from the date set for the original meeting, then notice of the adjourned meeting shall be given. Notice of any such adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting in accordance with the provisions of Sections 2.4 and 2.5 of these bylaws. At any adjourned meeting the corporation may transact any business which might have been transacted at the original meeting.

2.8VOTING

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners, and to voting trusts and other voting agreements).

Except as may be otherwise provided in the Certificate of Incorporation, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote of the

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stockholders. Any stockholder entitled to vote on any matter may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or, except when the matter is the election of directors, may vote them against the proposal; but, if the stockholder fails to specify the number of shares which the stockholder is voting affirmatively, it will be conclusively presumed that the stockholder’s approving vote is with respect to all shares which the stockholder is entitled to vote.

If a quorum is present, the affirmative vote of the majority of the shares represented and voting at a duly held meeting (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the stockholders, unless the vote of a greater number or a vote by classes is required by law or by the Certificate of Incorporation.

2.9VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT

The transactions of any meeting of stockholders, either annual or special, however called and noticed, and wherever held, shall be as valid as though they had been taken at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each person entitled to vote, who was not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. The waiver of notice or consent or approval need not specify either the business to be transacted or the purpose of any annual or special meeting of stockholders. All such waivers, consents, and approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Attendance by a person at a meeting shall also constitute a waiver of notice of and presence at that meeting, except when the person objects at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Attendance at a meeting is not a waiver of any right to object to the consideration of matters required by law to be included in the notice of the meeting but not so included, if that objection is expressly made at the meeting.

2.10STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Unless otherwise provided in the Certificate of Incorporation, any action which may be taken at any annual or special meeting of stockholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all shares entitled to vote on that action were present and voted.

Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. If the action which is consented to is such as would have required the filing of a certificate under any section of the General Corporation Law of Delaware if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the General Corporation Law of Delaware.

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2.11RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

For purposes of determining the stockholders entitled to notice of any meeting or to vote thereat or entitled to give consent to corporate action without a meeting, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of any such meeting nor more than sixty (60) days before any such action without a meeting, and in such event only stockholders of record on the date so fixed are entitled to notice and to vote or to give consents, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date.

If the board of directors does not so fix a record date:

(a)the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held; and

(b)the record date for determining stockholders entitled to give consent to corporate action in writing without a meeting, (i) when no prior action by the board has been taken, shall be the day on which the first written consent is given, or (ii) when prior action by the board has been taken, shall be at the close of business on the day on which the board adopts the resolution relating to that action.

The record date for any other purpose shall be as provided in Article VIII of these bylaws.

2.12PROXIES

Every person entitled to vote for directors, or on any other matter, shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder’s attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(c) of the General Corporation Law of Delaware.

2.13INSPECTORS OF ELECTION

Before any meeting of stockholders, the board of directors may appoint an inspector or inspectors of election to act at the meeting or its adjournment. If no inspector of election is so appointed, then the chairman of the meeting may, and on the request of any stockholder or a stockholder’s proxy shall, appoint an inspector or inspectors of election to act at the meeting. The number of inspectors shall be either one (1) or three (3). If inspectors are appointed at a meeting pursuant to the request of one (1) or more stockholders or proxies, then the holders of a majority of shares or their proxies present at the meeting shall determine whether one (1) or three (3) inspectors

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are to be appointed. If any person appointed as inspector fails to appear or fails or refuses to act, then the chairman of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy.

Such inspectors shall:

(a)determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;

(b)receive votes, ballots or consents;

(c)hear and determine all challenges and questions in any way arising in connection with the right to vote;

(d)count and tabulate all votes or consents;

(e)determine when the polls shall close;

(f)determine the result; and

(g)do any other acts that may be proper to conduct the election or vote with fairness to all stockholders.

ARTICLE III

DIRECTORS

3.1POWERS

Subject to the provisions of the General Corporation Law of Delaware and to any limitations in the Certificate of Incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors.

3.2NUMBER AND TERM OF OFFICE

The authorized number of directors shall be not less than five (5) nor more than nine (9). The exact number of directors shall be nine (9) until changed, within the limits specified above, by (i) a bylaw amending this Section 3.2 duly adopted by the board of directors or by the stockholders or (ii) a resolution of a majority of the board of directors. The indefinite number of directors may be changed, or a definite number may be fixed without provision for an indefinite number, by a duly adopted amendment to the Certificate of Incorporation or by an amendment to this bylaw adopted by

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the vote or written consent of holders of a majority of the outstanding shares entitled to vote or by resolution of a majority of the board of directors.

No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires. If for any cause, the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in these Bylaws.

3.3RESIGNATION AND VACANCIES

Any director may resign effective on giving written notice to the chairman of the board, the president, the secretary or the board of directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a director is effective at a future time, the board of directors may elect a successor to take office when the resignation becomes effective.

Vacancies in the board of directors may be filled by a majority of the remaining directors, even if less than a quorum, or by a sole remaining director; however, a vacancy created by the removal of a director by the vote or written consent of the stockholders or by court order may be filled only by the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute a majority of the required quorum), or by the unanimous written consent of all shares entitled to vote thereon. Each director so elected shall hold office until the next annual meeting of the stockholders and until a successor has been elected and qualified.

Unless otherwise provided in the Certificate of Incorporation or these bylaws:

(i)Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

(ii)Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware.

If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such

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increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10) percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable.

3.4REMOVAL

Subject to any limitations imposed by law or the Certificate of Incorporation, the Board of Directors, or any individual Director, may be removed from office at any time with or without cause by the affirmative vote of the holders of at least a majority of the then outstanding shares of the capital stock of the corporation entitled to vote at an election of Directors.

3.5PLACE OF MEETINGS; MEETINGS BY TELEPHONE

Regular meetings of the board of directors may be held at any place within or outside the State of Delaware that has been designated from time to time by resolution of the board. In the absence of such a designation, regular meetings shall be held at the principal executive office of the corporation. Special meetings of the board may be held at any place within or outside the State of Delaware that has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, at the principal executive office of the corporation.

Any meeting, regular or special, may be held by conference telephone or similar communication equipment, so long as all directors participating in the meeting can hear one another; and all such directors shall be deemed to be present in person at the meeting.

3.6FIRST MEETINGS

The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors.

3.7REGULAR MEETINGS

Regular meetings of the board of directors may be held without notice if the times of such meetings are fixed by the board of directors.

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3.8SPECIAL MEETINGS; NOTICE

Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board, the president, any vice president, the secretary or any two directors.

Notice of the time and place of special meetings shall be delivered personally, by electronic mail, by facsimile or by telephone to each director or sent by first-class mail or telegram, charges prepaid, addressed to each director at that director’s address as it is shown on the records of the corporation. If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. If the notice is delivered personally or by telephone, by electronic mail or by facsimile, it shall be delivered personally or by telephone, by electronic mail or by facsimile machine at least forty-eight (48) hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the corporation.

3.9QUORUM

A majority of the authorized number of directors shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 3.11 of these bylaws. Every act or decision done or made by a majority of the directors present at a duly held meeting at which a quorum is present shall be regarded as the act of the board of directors, subject to the provisions of the Certificate of Incorporation and applicable law.

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

3.10WAIVER OF NOTICE

Notice of a meeting need not be given to any director (i) who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or (ii) who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such directors. All such waivers, consents, and approvals shall be filed with the corporate records or made part of the minutes of the meeting. A waiver of notice need not specify the purpose of any regular or special meeting of the board of directors.

3.11ADJOURNMENT

A majority of the directors present, whether or not constituting a quorum, may adjourn any meeting to another time and place.

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3.12NOTICE OF ADJOURNMENT

Notice of the time and place of holding an adjourned meeting need not be given unless the meeting is adjourned for more than twenty-four (24) hours. If the meeting is adjourned for more than twenty-four (24) hours, then notice of the time and place of the adjourned meeting shall be given before the adjourned meeting takes place, in the manner specified in Section 3.8 of these bylaws, to the directors who were not present at the time of the adjournment.

3.13BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Any action required or permitted to be taken by the board of directors may be taken without a meeting, provided that all members of the board individually or collectively consent in writing to that action. Such action by written consent shall have the same force and effect as a unanimous vote of the board of directors. Such written consent and any counterparts thereof shall be filed with the minutes of the proceedings of the board.

3.14FEES AND COMPENSATION OF DIRECTORS

Directors and members of committees may receive such compensation, if any, for their services and such reimbursement of expenses as may be fixed or determined by resolution of the board of directors. This Section 3.14 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee or otherwise and receiving compensation for those services.

3.15APPROVAL OF LOANS TO OFFICERS

The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing contained in this section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

ARTICLE IV

COMMITTEES

4.1COMMITTEES OF DIRECTORS

The board of directors may, by resolution adopted by a majority of the authorized number of directors, designate one (1) or more committees, each consisting of two or more directors, to serve at the pleasure of the board. The board may designate one (1) or more directors as alternate members of

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any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors. Any committee, to the extent provided in the resolution of the board, shall have all the authority of the board, but no such committee shall have the power or authority to (i) amend the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the bylaws or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware.

4.2MEETINGS AND ACTION OF COMMITTEES

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these bylaws, Section 3.5 (place of meetings), Section 3.7 (regular meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11 (adjournment), Section 3.12 (notice of adjournment), and Section 3.13 (action without meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the board of directors, and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

ARTICLE V

OFFICERS

5.1OFFICERS

The officers of the corporation shall be a president, a secretary and a chief financial officer. The corporation may also have, at the discretion of the board of directors, a chairman of the board, one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws. Any number of offices may be held by the same person.

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5.2ELECTION OF OFFICERS

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of these bylaws, shall be chosen by the board, subject to the rights, if any, of an officer under any contract of employment.

5.3SUBORDINATE OFFICERS

The board of directors may appoint, or may empower the president to appoint, such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine.

5.4REMOVAL AND RESIGNATION OF OFFICERS

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the board of directors at any regular or special meeting of the board or, except in case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.

Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

5.5VACANCIES IN OFFICES

A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointments to that office.

5.6CHAIRMAN OF THE BOARD

The chairman of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and exercise and perform such other powers and duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these bylaws. If there is no president, then the chairman of the board shall also be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 5.7 of these bylaws.

5.7PRESIDENT

Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction, and control of the business and the officers of the corporation. He or she shall preside at all

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meetings of the stockholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the board of directors. He or she shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed by the board of directors or these bylaws.

5.8VICE PRESIDENTS

In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors, these bylaws, the president or the chairman of the board.

5.9SECRETARY

The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these bylaws. He or she shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these bylaws.

5.10CHIEF FINANCIAL OFFICER

The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director.

The chief financial officer shall deposit all money and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the board of directors. He or she shall disburse the funds of the corporation as may be ordered by the board of directors, shall

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render to the president and directors, whenever they request it, an account of all of his or her transactions as chief financial officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws.

ARTICLE VI

INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS

6.1INDEMNIFICATION OF DIRECTORS AND OFFICERS

The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its directors and officers against expenses (including attorneys’ fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a “director” or “officer” of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

6.2INDEMNIFICATION OF OTHERS

The corporation shall have the power, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys’ fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.2, an “employee” or “agent” of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

6.3INSURANCE

The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of Delaware.

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ARTICLE VII

RECORDS AND REPORTS

7.1MAINTENANCE AND INSPECTION OF RECORDS

The corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books and other records.

Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business.

The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

7.2INSPECTION BY DIRECTORS

Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

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7.3ANNUAL STATEMENT TO STOCKHOLDERS

The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation.

7.4REPRESENTATION OF SHARES OF OTHER CORPORATIONS

The chairman of the board, the president, any vice president, the chief financial officer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority herein granted may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

ARTICLE VIII

GENERAL MATTERS

8.1RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING

For purposes of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any other lawful action (other than action by stockholders by written consent without a meeting), the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days before any such action. In that case, only stockholders of record at the close of business on the date so fixed are entitled to receive the dividend, distribution or allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date so fixed, except as otherwise provided by law.

If the board of directors does not so fix a record date, then the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board adopts the applicable resolution or the sixtieth (60th) day before the date of that action, whichever is later.

8.2CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS

From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.

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8.3CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED

The board of directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

8.4STOCK CERTIFICATES; PARTLY PAID SHARES

The shares of the corporation shall be represented by certificates, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or vice-president, and by the chief financial officer, the secretary or an assistant secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

8.5SPECIAL DESIGNATION ON CERTIFICATES

If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the

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powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

8.6LOST CERTIFICATES

Except as provided in this Section 8.6, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and canceled at the same time. The board of directors may, in case any share certificate or certificate for any other security is lost, stolen or destroyed, authorize the issuance of replacement certificates on such terms and conditions as the board may require; the board may require indemnification of the corporation secured by a bond or other adequate security sufficient to protect the corporation against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction of the certificate or the issuance of the replacement certificate.

8.7CONSTRUCTION; DEFINITIONS

Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the General Corporation Law of Delaware shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

ARTICLE IX

AMENDMENTS

The original or other bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its Certificate of Incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws.

ARTICLE X

DISSOLUTION

If it should be deemed advisable in the judgment of the board of directors of the corporation that the corporation should be dissolved, the board, after the adoption of a resolution to that effect by a majority of the whole board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of meeting of stockholders to take action upon the resolution.

At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the outstanding stock of the corporation entitled to vote thereon votes for the proposed dissolution,

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then a certificate stating that the dissolution has been authorized in accordance with the provisions of Section 275 of the General Corporation Law of Delaware and setting forth the names and residences of the directors and officers shall be executed, acknowledged, and filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such certificate’s becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved.

Whenever all the stockholders entitled to vote on a dissolution consent in writing, either in parson or by duly authorized attorney, to a dissolution, no meeting of directors or stockholders shall be necessary. The consent shall be filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such consent’s becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved. If the consent is signed by an attorney, then the original power of attorney or a photocopy thereof shall be attached to and filed with the consent. The consent filed with the Secretary of State shall have attached to it the affidavit of the secretary or some other officer of the corporation stating that the consent has been signed by or on behalf of all the stockholders entitled to vote on a dissolution; in addition, there shall be attached to the consent a certification by the secretary or some other officer of the corporation setting forth the names and residences of the directors and officers of the corporation.

ARTICLE XI

CUSTODIAN

11.1APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES

The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the corporation is insolvent, to be receivers, of and for the corporation when:

(i)at any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; or

(ii)the business of the corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the corporation that the required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or

(iii)the corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets.

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11.2DUTIES OF CUSTODIAN

The custodian shall have all the powers and title of a receiver appointed under Section 291 of the General Corporation Law of Delaware, but the authority of the custodian shall be to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.

* * * * * * *

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CERTIFICATE OF ADOPTION OF AMENDED AND RESTATED BYLAWS

OF

INTEGRATED SILICON SOLUTION, INC.

Certificate by Secretary of Adoption by Board of Directors

The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of Integrated Silicon Solution, Inc. and that the foregoing Amended and Restated Bylaws, comprising twenty-four (24) pages, were adopted as the Bylaws of the corporation on June 12, 2009, by the Board of Directors of the corporation.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand and affixed the corporate seal this 15th day of June 2009.

/s/ John M. Cobb    

John M. Cobb
Secretary

CERTIFICATE OF AMENDMENT

OF

THE AMENDED AND RESTATED BYLAWS OF

INTEGRATED SILICON SOLUTION, INC.,

a Delaware corporation

The undersigned, John M. Cobb, hereby certifies that:

1. He is the duly elected Secretary of Integrated Silicon Solution, Inc., a Delaware corporation (the “Company”).

2. Pursuant to a resolution duly adopted by the Board of Directors of Integrated Silicon Solution, Inc., a Delaware corporation, effective March 12, 2015, the Amended and Restated Bylaws are amended to add a new Section 8.8 which shall read as follows:

“Section 8.8 FORUM FOR ADJUDICATION OF DISPUTES

Unless the corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of the corporation to the corporation or the corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine (each, an “Action”) shall be the Courts of Santa Clara County in the State of California (a “Chosen Court”) (or, only if the Courts of Santa Clara County in the State of California decline to accept jurisdiction over a particular matter, any federal court within the State of California), in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this bylaw.”

3. The matters set forth in this certificate are true and correct to my own knowledge.

[Signature Page Follows]

IN WITNESS HEREOF, the undersigned has set her hand hereto this 12th day of March, 2015.

/s/ John M. Cobb

John M. Cobb, Secretary

CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED BYLAWS

SIGNATURE PAGE

EX-10.3

EQUIPMENT LEASE AGREEMENT

Lessor: Integrated Silicon Solution, Inc. Lessee: Powerchip Technology Corporation

===============================================================================

THIS LEASE AGREEMENT (hereinafter referred to as this "Lease" , is made as of April 20, 2015 (the “Effective Date” ) by and between Integrated Silicon Solution, Inc., a company duly organized and existing under the laws of the State of Delaware of the United States of America, having its registered business office at 1623 Buckeye Drive, Milpitas, California, 95035-7423 USA (hereinafter referred to as "Lessor") and Powerchip Technology Corporation, a company duly organized and existing under the laws of the Republic of China (R.O.C). , having its registered business office at No. 12, Li-Hsin 1^st Rd., Hsinchu Science Park, Hsinchu, Taiwan, R.O.C. (hereinafter referred to as "Lessee") .

Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, such equipment (the "Equipment") as listed in Exhibit A attached hereto.

Simultaneously with the signing of this Lease, Lessee signed another equipment lease agreement with Integrated Circuit Solution, Inc. (“ICSI”) , a company duly organized and existing under the laws of the R.O.C., having its registered office at No. 2, Technology 5^th Road, Science-Based Industrial Park, Hsinchu, Taiwan, R.O.C. (hereinafter referred to as the “ICSI Lease”).

Article 1.        Acceptance and Delivery

1.1    Lessee has selected (a) Equipment it desires to lease from Lessor and (b) the vendor of such Equipment, and Lessor has approved the purchase orders (copies of such purchase orders are attached hereto as Exhibit B) . Lessor shall cause ICSI to place such purchase orders with the vendors in order to lease said Equipment to Lessee. The “Delivery Date” of the Equipment shall be the date on which such Equipment is received by Lessee at Lessee’s Plant (No. 12, Li-Hsin 1st Rd. Hsinchu Science Park, Hsinchu, Taiwan, R.O.C.). Delivery terms of the Equipment shall be FCA defined in Incoterms 2010 (as amended ). Lessor is not responsible and shall not be held liable for the non-delivery, incomplete or delayed delivery, failure upon delivery, return for replacement, inland transportation, Customs clearance, erection, installation, assembly, commissioning, acceptance test, operation or maintenance of any Equipment, all of which shall be at the cost and risk of Lessee. For the avoidance of doubt, Lessor’s only obligation is to make payments of the purchase price/cost of Equipment pursuant to the relevant purchase order(s) with the total amount not to exceed thirty Million United States Dollars (US$30,000,000 ) placed by Lessee on behalf of Lessor, but will not otherwise assume any duty, obligation or liability whatsoever even if all Equipment cannot function as may be reasonably anticipated by Lessee.

1.2     Notwithstanding anything else contrary herein and except for the occurrence of a force majeure event (in which case, to extend the Acceptance Date for the period of such event) , the “Acceptance Date” shall be September 30, 2015 or the date on which Lessee executes and delivers to Lessor the Acceptance Certificate for all the Equipment in the form attached hereto as Exhibit D ("Acceptance Certificate" ) on the date when installation of such Equipment at Lessee’s Hsinchu Plant (No. 12, Li-Hsin 1st Rd. Hsinchu Science Park, Hsinchu. Taiwan, R.O.C.) has been completed, whichever comes earlier.

1.3    Unless Lessee owns the Equipment pursuant to Article 16 hereof, title to the Equipment shall not pass to Lessee by or upon acceptance of the Equipment by Lessee, but shall at all times remain vested in Lessor until Lessee pays up all the Quarterly Installments (as defined below) .

Article 2.        Duration

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2.1.     The term of this Lease shall commence on the Effective Date and shall continue through the earlier of (i) December 31, 2021 (the "Maturity Date") , or (ii) the date on which this Lease is otherwise terminated in accordance with the terms of this Lease.

Article 3.        Purchase Price

3.1.     In order for Lessee to purchase the Equipment from Lessor pursuant to Article 16, Lessee shall pay to Lessor installment payments for all of the Equipment in 12 consecutive quarterly payments commencing from March 30, 2019 and thereafter on June 30, 2019, September 30, 2019, December 30, 2019, March 30, 2020, June 30, 2020, September 30, 2020, December 30, 2020, March 30, 2021, June 30, 2021, September 30, 2021 and December 30, 2021, with the amount of each quarterly payment to be computed by Lessor based on the principles set forth in Exhibit C ("Quarterly Payments") . In the absence of manifest error, the Quarterly Payments computed by Lessor shall be conclusive. For the avoidance of doubt, the amount of each Quarterly Payment specified in Exhibit C at the time of signing of this Lease is for reference only and will be adjusted by Lessor in accordance with the first sentence of this Article 3.1. All payments hereunder shall be made in lawful money of the U.S.A. by way of electronic transfer of funds to the Lessor’s bank account (as notified to Lessee from time to time) or such other mode of payment as mutually agreed.

3.2.    Lessee shall pay, and shall indemnify and hold Lessor harmless from and against, any fees, charges, assessments, duties or taxes imposed by any taxing authorities or other authorities as a result of the execution of this Lease or any of the transactions described in this Lease or arising out of the same, provided, however, Lessor shall be solely liable for any and all income tax liability of Lessor in the U.S.A. resulting from the contemplated transaction.

3.4.     Without prejudice to the foregoing, all sums payable by Lessee to Lessor hereunder shall be made free and clear of all deductions or withholdings whatsoever. However, if any deductions and/or withholdings are required by law Lessee shall pay Lessor the amount due net of such deductions and/or withholding and provide Lessor with all documentation necessary to enable Lessor to obtain a tax credit from the relevant tax authorities. Lessee will provide Lessor with such documentation without delay and do all such other things and take such other steps as may be reasonably required by Lessor.

Article 4.        [INTENTIONALLY OMITTED]

Article 5.        Disclaimers, Covenants, Representations and Warranties

5.1    Lessee acknowledges that Lessor is not the manufacturer of the Equipment, nor manufacturer’s agent, and that LESSOR MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS, DESIGN OR CONDITION, THE MERCHANTABILITY OF THE EQUIPMENT OR THEIR FITNESS FOR ANY PARTICULAR PURPOSE, the quality or capacity of the materials in the Equipment or workmanship in the Equipment, or that the Equipment will satisfy the requirements of any law, rule, specification or contract which provides for specific machinery or special methods. No defect or unfitness of the Equipment shall relieve Lessee of the obligation to Lessor hereunder. Lessor shall have no obligation, and Lessee shall have the obligation, to import, install, erect, test, adjust, maintain, store, put into use or service the Equipment. No oral agreement, guaranty, promise, condition, representation or warranty nor any oral modification hereof shall be binding on Lessor.

5.2.     To the extent permitted by the manufacturer and provided no Event of Default has occurred, Lessor agrees to assign and hereby so assigns to Lessee for the term of this Lease any and all warranties which it may have received from the manufacturer(s ) of the Equipment or to which it may be legally entitled. Lessor agrees to assist Lessee in enforcing any such warranties and to permit Lessee to sue in Lessee's or Lessor's name, at the sole cost of Lessee,

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to enforce any such warranties against the manufacturer, provided that Lessor shall have no liability for any costs, damages, charges or expenses incurred thereby and that Lessee's sole remedy for the breach of any such warranty, indemnification or service agreement shall be against the manufacturer of such Equipment and not against Lessor, nor shall any such breach have any effect whatsoever on the rights of Lessor or obligation of Lessee hereunder.

5.3     Lessor covenants that if Lessee has paid the Quarterly Installments required hereunder as and when the same become due and payable and has performed and complied with all the other terms and conditions hereof, Lessor will not interfere with the peaceful and quiet use and enjoyment of the Equipment by Lessee, which use and enjoyment shall be without hindrance, ejection or molestation by Lessor. Nothing in this Article 5 shall restrict the right, subject to any applicable laws, regulations and rules, of Lessor or its duly authorized agent or representative from time to time, upon prior written notice to Lessee, during reasonable business hours, to enter upon Lessee's premises for the purpose of confirming the existence, condition, and proper maintenance of the Equipment; provided that such confirmation shall not reduce Lessee’s obligations under this Lease.

5.4     Lessee specifically waives the right to make claim against Lessor herein for breach of any warranty of any kind with respect to the Equipment.

5.5     During the term of this Lease, the Equipment shall be primarily for use in Lessee's business and shall not be held for sale or sublease or to be furnished to a third party under any contract of service unless otherwise agreed between Lessor and Lessee in writing.

Article 6.        Risk of Loss and Maintenance and Repair

6.1    Upon delivery of the Equipment to Lessee, Lessee shall bear the entire risk of loss, damage, theft, or destruction of the Equipment or any part thereof, from any and every cause whatsoever, which may occur prior to the return of the Equipment in accordance with Article 8.3, and no such loss, damage, theft or destruction shall relieve Lessee of its obligation to pay the Quarterly Installments or to comply with any other provision of this Lease. In the event of damage to any part of the Equipment, Lessee shall immediately repair such Equipment at Lessee's expense, and return such Equipment to its previous condition, unless irreparably damaged. If any part of the Equipment is lost, stolen, destroyed or irreparably damaged from any cause whatsoever, (each an “Event of Loss”) , Lessee shall promptly notify Lessor of the occurrence of such Event of Loss, and shall, at Lessee's option, and cost (a) replace the Equipment with like equipment in good condition and working order acceptable to Lessor (the “replacement equipment”), and Lessee shall transfer title to the replacement equipment to Lessor, free and clear of all liens, claims and encumbrances, which equipment shall thereupon become subject to the terms of this Lease; or (b) pay Lessor in one lump sum, within ten (10) business days following such Event of Loss, the entire Quarterly Installments applicable to that particular Equipment that have not fallen due for payment by Lessee hereunder (exclusive of interest at the rate of 2.2% per annum from the date of Lessee’s payment up to and until the Maturity Date), and upon such payment by Lessee Lessor's right, title and interest in such part of the Equipment shall immediately without further action pass to Lessee, on an as-is where-is basis, without recourse or warranty against Lessor.

6.2    Lessee shall, at its own cost and expense, at all times during the term of this Lease, (a ) pay all charges and expenses in connection with the operation of the Equipment; and (b) comply with all laws, ordinances, requirements, rules and the manufacturer’s specifications and manuals with respect to the use, maintenance and operation of the Equipment.

Article 7.        General Conditions and Covenants

7.1     Lessee shall indemnify, defend and hold Lessor wholly harmless against any liens, all losses, liabilities, damages, costs and expenses, including reasonable attorneys' fees, arising from accidents or occurrences causing injury or illness to or the death of any persons or the loss of or damage to property due to any use whatsoever, involving the Equipment. Lessee shall, at Lessee's own cost and expense, defend any and all suits which may be

3

brought against Lessor, either alone or in conjunction with others, upon any such liability or claim or claims. Lessee shall satisfy, pay and discharge any and all judgments and fines that may be assessed against Lessor in any such action or actions, provided, however, Lessor shall give Lessee written notice of any such claim or demand. In no event shall Lessor be liable for any damages of whatever nature except for damages caused by Lessor’s willful misconduct or breach of this Lease.

7.2     Lessee shall pay or reimburse Lessor for all taxes and charges including any penalties arising out of or incident to the use of the Equipment until returned to Lessor or purchased by Lessee on the Maturity Date pursuant to Article 16. Lessee shall indemnify, defend and hold Lessor harmless from and against any expenses (including attorneys' fees) , loss or damages which Lessor may incur due to Lessee's failure to pay such taxes, or arising out of, or resulting from any levy or attachment on any of the Equipment, or otherwise arising out of, or resulting from Lessee's use or possession of the Equipment. Any such expenses, losses or damages may be collected by Lessor upon notice to Lessee.

7.3     Time is the essence of this Lease and of every provision herein contained.

7.4     If any of the Equipment is damaged or destroyed or the use or possession of any such Equipment is otherwise lost, Lessee shall repair, reconstruct, restore or replace such damaged, destroyed or lost Equipment to substantially the same condition or utility value as existed prior to the event causing such damage, destruction or loss. Lessee shall apply the proceeds with respect to any insurance loss claim relating to such damage, destruction or loss to the payment or reimbursement of such repair, reconstruction, restoration or replacement. In the event any damaged, destroyed or lost Equipment is replaced, Lessee shall execute and deliver to Lessor such instruments and assurances as Lessor may reasonably and in good faith deem necessary or advisable to include such replacement equipment as an Equipment hereunder and to perfect the title on behalf of Lessor with respect to such replacement equipment.

7.5    During the term of this Lease, Lessee shall, in addition to payment of the Quarterly Installments provided herein, promptly pay all taxes, assessments and other governmental charges levied or assessed upon the interest of the Lessee in the Equipment or upon the use or operation thereof or on the earnings arising therefrom, and shall promptly pay or reimburse Lessor for all taxes, assessments and other governmental charges (including fees for titling and registration of the Equipment, if required ) levied or assessed against and paid by the Lessor on account of its ownership of the Equipment or any part thereof, or the use or operation thereof, or the leasing thereof to the Lessee, or the rent herein provided for or the earnings arising therefrom (other than taxes on the overall net income of Lessor) .

7.6    If Lessee shall fail duly and promptly to perform any of its obligations under the provisions of Articles 3.1, 3.2, 7.2, or 7.5, Lessor may, after prior written notice to Lessee, perform the same for the account of Lessee without thereby waiving the default, and any expense or liability incurred by Lessor in doing so, together with interest at the rate of ten percent (10.0%) per year or such other rate as Lessor may impose from time to time by giving five (5 business days’ written notice to the Lessee, and to the extent that such interest rate imposed by the Lessor is higher than any applicable maximum interest rate imposed under any applicable law (“Maximum Lawful Rate”) , the Maximum Lawful Rate shall apply, and until paid by Lessee to Lessor, the fees, charges, expenses and interest provided in this Article 7.6 shall be payable by Lessee upon demand.

7.7    With prior notice to Lessee, Lessor shall at any reasonable times during business hours have the right to enter into and upon the premises where the Equipment may be located for the purpose of inspecting the same or observing its use, provided that Lessor shall comply with Lessee’s security rule. Lessee shall give Lessor immediate notice of any attachment or other judicial process affecting any of the Equipment and shall, whenever requested by Lessor, advise Lessor of the exact location of the Equipment at Lessee’s Hsinchu Plant.

Article 8.        Interest of Lessor

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8.1    Unless Lessee owns the Equipment pursuant to Article 16 hereof, all Equipment is and shall at all times be the property of Lessor. Lessee shall have no right, title or interest therein except as set forth under this Lease. The lease contemplated hereunder shall constitute a lease of personal property, and Lessee agrees to take all action necessary or reasonably requested by Lessor to ensure that all Equipment shall be and remain personal property of the Lessor. Nothing in this Lease shall be construed as conveying to Lessee any interest in the Equipment other than its interest as a lessee.

8.2    Lessee shall, at its expense, keep all Equipment free and clear of all liens, charges, claims and other encumbrances. Lessee covenants that it will at all times protect and defend, at its own cost and expense, the rights of Lessor to the Equipment against all claims, liens and legal processes of creditors of Lessee and other persons, and keep the Equipment free and clear from all such claims, liens and processes (other than those in favor of Lessor). Lessee covenants that it will not pledge, encumber or permit any liens to attach to any of the Equipment.

8.3     Unless Lessee owns the Equipment pursuant to Article 16 hereof, upon the expiration or termination of this Lease for any reason, Lessee, at Lessee's sole expense, shall surrender and deliver possession of each of the Equipment unencumbered to Lessor at the time and place reasonably designated by Lessor and in the same condition as when received by Lessee, reasonable wear and tear excepted. Upon its return as provided in this Article, the Equipment shall be free and clear of all liens or encumbrances of any kind whatsoever. Lessee shall, at its sole expense, and upon the request of the Lessor, take any one or more of the following steps (collectively, the “Return Conditions”) with respect to such Equipment (which obligation shall be in addition to, and not in limitation of, Lessee's other obligations under this Lease) :

(a) thirty (30) days after receipt of written notice from Lessor, provide to Lessor the following documents: (i) one set per each Equipment (or group of related Equipment) of installation instructions/manuals, service manuals, and operating manuals relating to such Equipment (including replacements and/or additions thereto, such that all documentation is completely up to date) and (ii) one set per Equipment (or group of related Equipment) of documents, detailing equipment configuration, operating requirements and maintenance records of such Equipment (such that all documentation is completely up to date) ;

(b) one hundred twenty (120) days prior to the Maturity Date or earlier termination of this Lease, cause a qualified manufacturer's representative or qualified equipment maintenance provider, acceptable to Lessor, to perform a comprehensive physical inspection, including testing all of the Equipment and providing a report thereon, which report shall certify that the Equipment have been properly inspected, examined and tested and is operating within the manufacturer's specifications; and, if during such inspection, examination and test, such inspector finds the Equipment not operating within manufacturer's specifications, then Lessee shall repair or replace such Equipment and, after corrective measures are completed, Lessee will provide for a follow-up inspection of the Equipment and report thereon by such inspector as outlined above;

(c) ensure that all Equipment will be cleaned and in such condition so that such Equipment may be immediately installed and placed into use in an operating environment similar to that under which it was used during the term of this Lease;

(d) properly remove all installed markings which are removable without damage to the Equipment and not necessary for the operation, maintenance or repair of the Equipment;

(e) ensure that all Equipment conform to all applicable environmental laws and regulations and all other applicable laws at the time of deinstallation;

(f) provide for the deinstallation, packing, transporting and certifying of the Equipment to include, but not limited to, the following: (i) Lessee or Lessee's designated representative shall deinstall all Equipment in accordance with the specifications of the manufacturer thereof; (ii) each Equipment will be returned with a certificate supplied by Lessee certifying that such Equipment is in good condition and (where applicable) comply with

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the manufacturer's maintenance plan, which certificate of compliance shall be transferable by Lessor to another operator of the Equipment; (iii) the Equipment shall be packed properly and in accordance with the manufacturer's recommendations which should meet or exceed industry standards for similar equipment; and (iv) Lessee shall transport the Equipment in a manner consistent with the manufacturer's recommendations and practices which should meet or exceed industry standards for similar equipment; and

(g) Upon sale of the Equipment by Lessor to a third party, provide transportation to any location reasonably selected by Lessor.

8.4    If the return of the Equipment or any part thereof to Lessor, as required pursuant to this Article 8, shall be delayed beyond the end of the term hereof, all of Lessee's obligations under this Lease with respect to the Equipment or part thereof shall continue in full force and effect, except that the rental during such holdover period shall be the fair market rental value of the Equipment as reasonably determined by Lessor and the term thereof shall be on a day to day basis.

Article 9.        Assignment

This Lease and all rights of Lessor (including but limited the production capacity committed by lessee) hereunder shall be fully assignable by Lessor without Lessee's consent. Any such assignment shall be subject to and subordinate to the terms and provisions of this Lease. Lessee shall not assign this Lease, the Equipment or any interest it may have in this Lease, or in the Equipment or enter into any sub-lease with respect to the Equipment without the prior written consent of Lessor which consent shall not be unreasonably withheld.

Article 10.        Change of Ownership

So long as any of the Quarterly Installments shall remain unpaid, Lessee will not, without the prior written consent of the Lessor, cause, permit, or suffer any change, direct or indirect, in the capital ownership of Lessee.

Article 11.        Insurance

11.1. Lessee, at its own expense, shall keep the Equipment insured at all times against any and all risk of loss or damage from any cause whatsoever in such an amount, in such form and with such insurance companies as are satisfactory to Lessor. Such insurance shall include a loss payable clause in favor of Lessor.

11.2 Lessee, at its own expense, shall effect insurance on all the Equipment in amounts necessary to cover public liability, including, but not limited to, bodily injury.

11.3 Lessee shall request its insurance company or agent to nominate Lessor as additional insured and loss payee on the insurance and shall furnish to Lessor as soon as commercially promptly, but in no event later than ten (10) business days after delivery of the Equipment to Lessee, certificates acceptable to Lessor evidencing all such insurances.

Article 12.        Equipment to be Identified

During the term of this Lease, Lessee shall, at Lessee's expense, firmly affix to the back of the Equipment, in a conspicuous manner, such decal or metal plate showing Lessor, or Lessor's assignee (if this Lease is assigned), as the owner and lessor of such Equipment, or such other mode of identification as requested by Lessor from time to time.

Article 13.        Possession, Use and Location of Equipment

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So long as Lessee shall not be in default under this Lease, Lessee may possess and use the Equipment in accordance with this Lease. The Equipment shall be used in the lawful business of Lessee and shall remain located at Lessee’s Hsinchu Plant.

Article 14.        Representations by Lessee

In order to induce Lessor to enter into this Lease, Lessee hereby represents and warrants to Lessor:

(a) that Lessee will provide Lessor with the production capacity as set forth in Exhibit E;

(b) that Lessee is a company duly organized, validly existing and in good standing under the laws of the R.O.C., and has the power and authority to carry on its business as presently conducted and to perform its obligations under this Lease;

(c) that neither the execution and delivery of this Lease nor the consummation of the transactions contemplated hereby nor compliance by Lessee with any of the terms and conditions hereof will contravene any law, regulation, order, decree or injunction binding on Lessee or result in any breach of any agreement or arrangement with its creditors and banks, or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, bylaw or other agreement or instrument to which Lessee is a party or by which Lessee or its properties may be bound or affected;

(d) that the execution of this Lease has been duly authorized by all necessary corporate action of Lessee and said terms constitute the legally valid and binding obligations of Lessee, enforceable against Lessee in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally; and

(e) that Lessee has duly obtained all applicable governmental approvals and licenses required under applicable laws to enable it to execute and deliver this Lease and to perform its obligations hereunder all in accordance with the respective terms hereof.

Article 15.        Default

15.1     If any of the following conditions or events occurs after the date hereof, then each will constitute an Event of Default:

(a ) Lessee shall default in the payment of any Quarterly Installments or any other sums payable hereunder and such default shall continue for thirty (30) days after written notice of such default is served on Lessee;

(b) Lessee shall default in the performance of any other covenant herein and such default shall continue for forty-five (45) days after the sending of written notice thereof by Lessor to Lessee;

(c) Lessee shall cease to do business as a going concern, make an assignment for the benefit of creditors, admit in writing its inability to pay its debts as they become due, file a voluntary petition in bankruptcy or winding-up, be adjudicated bankrupt or insolvent, file a petition seeking for itself liquidation, dissolution, or similar arrangement under any present or future statute, law or regulation or file an answer admitting the material allegations of a petition filed against it in any such proceeding or consent to or acquiesce in the appointment of a trustee, receiver or liquidator of it or of all or any substantial part of its assets or properties, or if it shall take any action looking to its dissolution or liquidation;

(d) within sixty (60) days after the commencement of any proceedings against Lessee seeking liquidation, dissolution or similar relief under any present or future statute, law, or regulation, such proceedings shall not have been dismissed, or if within sixty (60) days after the appointment without Lessee’s consent or acquiescence of trustee, receiver or liquidator of it or of all or any substantial part of its assets or properties, such appointment shall not be vacated;

(e) Lessee attempts to sell, transfer, encumber, sublet or part with possession (except in the ordinary course of business in order to maintain the Equipment) of any of the Equipment;

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(f ) any representation or warranty made by Lessee herein or in any document or certificate furnished to Lessor in connection herewith or pursuant hereto shall prove to have been incorrect in any material respect on the date as of which made; or

(g ) the ICSI Lease is terminated.

15.2     Upon the occurrence of any Event of Default, Lessor may, with or without notice to Lessee, exercise any one or more of the following remedies, as Lessor in its sole discretion shall elect and such remedies shall be cumulative:

(i) Require Lessee, at Lessee's expense, to return any or all of the Equipment and satisfy the Return Conditions as the Lessor may require, or Lessor, at its option, may enter upon the premises where the Equipment is located and repossess and remove the Equipment, or render the Equipment unusable without removal;

(ii) Declare immediately due and payable all Quarterly Installments and other amounts payable under this Lease which have not fallen due for payment, and Lessee shall pay the same immediately;

(iii) Recover from Lessee, as liquidated damages for loss of the benefit of its bargain and not as a penalty, an amount (the “Default Payment”) equal to the sum of: (A) all accrued and unpaid Quarterly Installments and other amounts due under this Lease and the other operative agreements through the date Lessor declared an Event of Default, (B) interest at Maximum Lawful Rate on the sum of item (A ) accruing from the date Lessor declared an Event of Default through the date Lessor receives such payment, (C) the amount of any recapture of tax benefits to be incurred by Lessor as a result of the termination of this Lease, as reasonably estimated by Lessor and notified by Lessor to Lessee, (D) all reasonable attorneys' fees and other expenses and costs incurred by Lessor relating to the enforcement of its rights under this Lease; and (E) all other amounts due under this Lease;

(iv) Sell by public or private sale, re-lease, hold, retain, or otherwise dispose of the Equipment in any manner Lessor chooses, free and clear of any claims or rights of Lessee and recover from Lessee as liquidated damages for loss of the benefit of its bargain and not as a penalty the Default Payment; and/or

(v) Upon notice to Lessee, terminate this Lease, sue to enforce Lessee's performance thereof, and/or exercise any other right or remedy then available to Lessor at law or in equity.

The exercise of any of the foregoing remedies by Lessor shall not constitute a termination of this Lease unless Lessor so notifies Lessee in writing. No failure or delay on the part of Lessor to exercise any right or remedy hereunder shall operate as a waiver thereof. No express or implied waiver by Lessor of any default shall constitute a waiver of any other default by Lessee or a waiver of any of Lessor's rights. No remedy referred to in this Article 15.2 is intended to be exclusive, but each shall be cumulative and concurrent to the extent permitted by law, and shall be in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity.

15.3    Unless otherwise provided in Article 16, the parties agree that upon the expiry of this Lease or occurrence of any Event of Default Lessor may request Lessee to return the Equipment in writing (hereinafter refer to as the “Return Notice” ). Upon receipt of the Return Notice, Lessee shall be obligated to immediately deliver, at its expense, the Equipment in the Return Conditions to such place as may be designated by Lessor without any objection.

15.4    For the avoidance of doubt, Lessee shall continue to fulfill its obligations set forth in Exhibit E up to and until the Maturity Date in case this Lease is terminated for reasons attributable to Lessee or ownership of an Equipment is transferred to Lessee pursuant to Article 16.

Article 16. Purchase

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In case that Lessee has fully paid up the Quarterly Installments to Lessor for an Equipment pursuant to this Agreement, the title to or ownership of such Equipment shall be automatically and immediately transferred from Lessor to Lessee.

Article 17. Renewal Option

17.1 Lessee may, at its option, renew this Lease for all but not less than all the Equipment by giving Lessor written notice not less than ninety (90) days before the Maturity Date or any renewal term subsequent thereof for a term then agreed upon by the Lessee and the Lessor in writing, and paying to Lessor the “fair market rental value” of the Equipment for such renewal term, provided, that such renewal option shall not be exercisable if Lessee is in default under this Lease. Upon such notification and payment, such annual renewal rental as agreed between Lessor and Lessee in writing, but the other provisions and conditions of this Lease shall continue unchanged and in full force and effect. If “fair market rental value” cannot be agreed upon by Lessee and Lessor, it shall be determined by averaging the appraisals obtained from three independent appraisers, which shall include one appraiser selected by Lessee, one appraiser selected by Lessor, and a third appraiser selected by both Lessee and Lessor. The fees and expenses of all such appraisers shall be paid by Lessee.

17.2 If Lessee does not exercise its renewal option or purchase option as aforesaid and fails to return the Equipment at the end of the term of this Lease or any renewal term(s), then, unless and until the Equipment is returned to Lessor in accordance herewith (which Lessor may insist upon at any time) , this Lease shall automatically be renewed from month to month with rent payable monthly in advance equal to the “fair market rental value” as determined by Lessor.

Article 18.        Notices

All notices, requests, demands or other communication to or upon the respective parties hereto shall be deemed to have been duly given or made:

(a) if given by letter one hundred twenty (120) hours after being deposited in the mail (registered airmail, postage prepaid);

(b) if delivered by hand, at the time of delivery; or

(c) if given or made by telecopy, when sent, addressed as follows:

(i ) If to Lessee:	(ii ) If to Lessor:
No. 12, Li-Hsin 1st Rd. Hsinchu Science Park, Hsinchu. Taiwan, R.O.C.	1623 Buckeye Drive, Milpitas, California, 95035-7423 USA
Facsimile No.: +886-3-579-2057	Facsimile No.: +1-408-969-7800

or to such other address and/or telecopy number as any party hereto may specify in writing.

Article 19.        Irrevocability

Except as otherwise provided herein, this Lease is irrevocable by Lessee for the full term hereof as set forth in Article 2 hereof and for the aggregate Quarterly Installments, and the obligation to make such Quarterly Installments shall not be abated by reason of termination of Lessee's right of possession and/or the taking of possession by Lessor or for any other reason, and any delinquent Quarterly Installments or any other amount due and payable by Lessee hereunder shall bear interest at the rate of ten percent (10.0% )per annum, or such other rate as Lessor may impose from time to time by giving five (5) business days’ written notice to the Lessee, and to the extent that such interest rate imposed by the Lessor is higher than the Maximum Lawful Rate, the Maximum Lawful Rate shall apply.

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Article 20.        Severability

If any provision hereof or any remedy herein provided for is invalid under the applicable law, such provision shall be inapplicable and deemed omitted but the remaining provisions hereof, including the remaining default remedies, shall be given effect in accordance with the manifest intent hereof.

Article 21.        Waiver of Rights

No failure or delay by Lessor to exercise any power given it under this Lease or to insist upon strict compliance by the Lessee of any obligations hereunder shall constitute a waiver of Lessor's right to demand exact compliance with the terms hereof.

Article 22.        Governing Law

This Lease shall be governed in all respects by, and construed in accordance with, the laws of the R.O.C.

Article 23.        Jurisdiction

Any dispute, whether contractual or not, arising out of or in connection with this Lease (including any question regarding its existence, validity or termination) shall be referred to and finally resolved by arbitration in Taiwan by three arbitrators in accordance with the Arbitration Rules of the Arbitration Association of the Republic of China for the time being in force, which rules are deemed to be incorporated by reference in this Article. The language of the arbitration shall be Chinese. The physical venue of the arbitration shall be Taipei City. The decision of the arbitrators shall be final and binding on the parties.

Article 24.        Entire Agreement

The terms and conditions contained herein and in the ICSI Lease constitute the entire agreement between the parties hereto and ICSI and supersede all previous communications, whether written or oral, between the parties hereto and ICSI with respect to the subject matter hereof and thereof, and no agreement or understanding varying or extending the same shall be binding upon any party hereto or ICSI unless it is in writing which expressly refers to this Lease or the ICSI Lease, as the case may be, and is signed by a duly authorized officer or representative of the party or ICSI bound thereby. The attachments to this Lease, including Exhibit A (List of Equipment), Exhibit B (Copies of Purchase Orders), Exhibit C (“Quarterly Payments”), Exhibit D (Form of Acceptance Certificate) and Exhibit E (Production Capacity Committed by Lessee) shall be deemed as an integral part of this Lease and shall have the same legal effect as this Lease. In the event of any discrepancy between any attachment and the provisions of this Lease, the former shall prevail.

Article 25.        Counterparts

This Lease may be executed in two (2) counterparts, each of which shall be deemed to be an original, but both of which together shall constitute one and the same instrument. Either party may enter into this Lease by signing any such counterpart. Each counterpart may be executed by the parties and transmitted by facsimile transmission, and shall be valid and effectual as if executed as an original.

IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed in duplicate by their duly authorized officers or representatives as of the day and year first above written, and each such counterpart shall be deemed an original hereof.

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LESSOR:	LESSEE:
By: /s/ Scott D. Howarth	By: /s/ Steve R.L. Chen
Name: Scott D. Howarth	Name: Steve R.L. Chen
Title: President and CEO	Title: Chairman

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EXHIBIT A

List of Equipment

Model	Vendor	currency	quantity	Current Price	ISSI Payment	Total
QLC7500	Headway Holdings Limited.	USD	1	**	90% by T/T, 2 weeks before shipment, 10% by T/T, after acceptance.	**
DV-38	LAM	USD	1	**	100% by T/T, 60 days before shipment	**
Producer GT	AMAT	USD	1	**	100% by T/T, 14 days before shipment	**
UN2004A-PGD	UNISEN	USD	1	**	80% by T/T, 3 months after shipment 20% by T/T, 5 months after shipment	**
Producer GT	AMAT	USD	1	**	100% by T/T, 14 days before shipment	**
UN2004A-PGD	UNISEN	USD	1	**	80% by T/T, 3 months after shipment 20% by T/T, 5 months after shipment	**
Reflexion LK Reflexion LK (Used F-REX 300S2 (GIII New F-REX 300S2 (GII New F-REX 300S2 (GIII Used	待決 AMAT EBARA	USD	1	**	AMAT: 100% by T/T, 14 days before shipment EBARA: 100% T/T in advance (30 days after PO issued	**
Sparc 30KW	辛耘	USD	3	**	100% by T/T, 30 days after shipment	**
-	辛耘	USD	3	**	100% by T/T, 30 days after shipment	**
Centura AP	AMAT	USD	1	**	AMAT： 100% by T/T, 14 days before shipment	**
UN2002A-PG	UNISEN	USD	1	**	80% by T/T, 3 months after shipment 20% by T/T, 5 months after shipment	**
Kiyo	LAM	USD	1	**	100% by T/T, 60 days before shipment	**
LSA101	Ultratech	USD	1	**	50% by T/T, 15 days before shipment 50% by T/T, 30 days after shipment	**
iXH1220HTX	Edwards	USD	3	**	80% T/T, 30 days before shipment, 20% T/T net 60 days after delivery date.	**
UN2004A-PGD	UNISEN	USD	1	**	80% by T/T, 3 months after shipment 20% by T/T, 5 months after shipment	**

** The confidential portions of this Exhibit A have been omitted and filed separately with the Committee.

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Model	Vendor	currency	quantity	Current Price	ISSI Payment	Total
NX2000X Helios 660	FEI	USD	1	**	90% by T/T 30 days after delivery 10% by T/T 30 days after Powerchip final acceptance	**
-	翔曜	USD	1	**	100% T/T 60 days after acceptance	**
-	辛耘	USD	1	**	T/T 80% 30 days upon shipping T/T 20% 30 days after acceptance	**
G5	AMAT	USD	1	**	100% by T/T, 14 days before shipment	**

** The confidential portions of this Exhibit A have been omitted and filed separately with the Committee.

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EXHIBIT B

COPIES OF PURCHASE ORDERS

*Each Purchased Order will be attached hereto after the Purchase Order sent by ICSI is confirmed by Vendor.

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EXHIBIT C

Quarterly Payments (USD)

	Payment Date	Principal Amount(A)	Interest(B)
1	2019/3/30	2,500,000.00	2,475,452.05
2	2019/6/30	2,500,000.00	152,493.15
3	2019/9/30	2,500,000.00	138,630.14
4	2019/12/30	2,500,000.00	123,410.96
5	2020/3/30	2,500,000.00	109,698.63
6	2020/6/30	2,500,000.00	97,041.10
7	2020/9/30	2,500,000.00	83,178.08
8	2020/12/30	2,500,000.00	68,561.64
9	2021/3/30	2,500,000.00	54,246.58
10	2021/6/30	2,500,000.00	41,589.04
11	2021/9/30	2,500,000.00	27,726.03
12	2021/12/30	2,500,000.00	13,712.33
		30,000,000.00	3,385,739.73

Where

(A) = the aggregate amount of all disbursements for the Equipment divided by 12

(B) = the amount of interest payable along with each principal amount, which interest shall be accrued from the last day of the calendar month in which the relevant disbursement was made until the respective payment date of each Quarterly Payment set forth above at the rate of 2.2% per annum based on the aggregate amount of all outstanding disbursements.

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EXHIBIT D

FORM OF ACCEPTANCE CERTIFICATE

ACCEPTANCE CERTIFICATE

Reference is made to the LEASE AGREEMENT the “Lease” dated as of April 20, 2015 between Powerchip Technology Corporation, as Lessee and Integrated Silicon Solution, Inc., as Lessor. All capitalized terms herein shall have the meanings assigned to such terms in the Lease.

Lessee confirms that the Equipment set forth in Exhibit A was received and accepted by Lessee for leasing on the date set forth below, that such Equipment is in all respects satisfactory to Lessee, and that Lessor has fully and satisfactorily performed all of its obligations under the Lease up to and including the date hereof.

IN WITNESS WHEREOF, Lessee has duly executed this Acceptance Certificate on , 20 .

Powerchip Technology Corporation.

By: ________________________

Print Name: Steve R. L. Chen

Title: Chairman

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EXHIBIT E

PRODUCTION CAPACITY COMMITTED BY LESSEE

Subject to reasonable lead time, Lessee shall offer monthly production capacity to Lessor as follows:

Year	CY Year-2015 wafer start	CY Year-2016 wafer start	CY Year-2017 wafer start	CY Year-2018 wafer start	CY Year-2019 wafer start	CY Year-2020 wafer start	CY Year-2021 wafer start
Monthly Allocation	**	**	**	**	**	**	**

upon prior mutual agreement, Lessor has the option to extend this commitment for another three years with allocation of ** pcs wafer per month.

________________________

** The confidential portions of this Exhibit E have been omitted and filed separately with the Commission.

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EX-10.4

EQUIPMENT LEASE AGREEMENT

Lessor: Integrated Circuit Solution, Inc. Lessee: Powerchip Technology Corporation

===============================================================================

THIS LEASE AGREEMENT (hereinafter referred to as this "Lease"), is made as of April 20, 2015 (the “Effective Date”) by and between Integrated Circuit Solution, Inc. (“ICSI”) a company duly organized and existing under the laws of the R.O.C., having its registered office at No. 2, Technology 5^th Road, Science-Based Industrial Park, Hsinchu, Taiwan, R.O.C. (hereinafter referred to as "Lessor") and Powerchip Technology Corporation, a company duly organized and existing under the laws of the Republic of China (R.O.C.), having its registered business office at No. 12, Li-Hsin 1^st Rd., Hsinchu Science Park, Hsinchu, Taiwan, R.O.C. (hereinafter referred to as "Lessee").

Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, such equipment (the "Equipment") as listed in Exhibit A attached hereto.

Simultaneously with the signing of this Lease, Lessee signed another equipment lease agreement with Integrated Silicon Solution, Inc. (“ISSI”) , a company duly organized and existing under the laws of the State of Delaware of the United States of America, having its registered business office at1623 Buckeye Drive, Milpitas, California, 95035-7423 USA (hereinafter referred to as the “ISSI Lease”).

Article 1.        Acceptance and Delivery

1.1    Lessee has selected (a) Equipment it desires to lease from Lessor and (b) the vendor of such Equipment, and Lessor has approved the purchase orders (copies of such purchase orders are attached hereto as Exhibit B). Lessor shall place such purchase orders with the vendors in order to lease said Equipment to Lessee. The “Delivery Date” of the Equipment shall be the date on which such Equipment is received by Lessee at Lessee’s Plant (No. 12, Li-Hsin 1st Rd. Hsinchu Science Park, Hsinchu, Taiwan, R.O.C.). Delivery terms of the Equipment shall be FCA defined in Incoterms 2010 (as amended). Lessor is not responsible and shall not be held liable for the non-delivery, incomplete or delayed delivery, failure upon delivery, return for replacement, inland transportation, Customs clearance, erection, installation, assembly, commissioning, acceptance test, operation or maintenance of any Equipment, all of which shall be at the cost and risk of Lessee. For the avoidance of doubt, Lessor’s only obligation is to make payments of the purchase price/cost of Equipment pursuant to the relevant purchase order(s) with the total amount not to exceed One Billion and Three Hundred Fifty Million New Taiwan Dollars (NT$1,350,000,000) placed by Lessor, but will not otherwise assume any duty, obligation or liability whatsoever even if all Equipment cannot function as may be reasonably anticipated by Lessee.

1.2     Notwithstanding anything else contrary herein and except for the occurrence of a force majeure event (in which case, to extend the Acceptance Date for the period of such event), the “Acceptance Date” shall be September 30, 2015 or the date on which Lessee executes and delivers to Lessor the Acceptance Certificate for all the Equipment in the form attached hereto as Exhibit D ("Acceptance Certificate") on the date when installation of such Equipment at Lessee’s Hsinchu Plant (No. 12, Li-Hsin 1st Rd. Hsinchu Science Park, Hsinchu. Taiwan, R.O.C.) has been completed, whichever comes earlier.

1.3    Unless Lessee owns the Equipment pursuant to Article 16 hereof, title to the Equipment shall not pass to Lessee by or upon acceptance of the Equipment by Lessee, but shall at all times remain vested in Lessor until Lessee pays up all the Quarterly Installments (as defined below).

Article 2.        Duration

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2.1.     The term of this Lease shall commence on the Effective Date and shall continue through the earlier of (i) December 31, 2021 (the "Maturity Date"), or (ii) the date on which this Lease is otherwise terminated in accordance with the terms of this Lease.

Article 3.        Purchase Price

3.1.     In order for Lessee to purchase the Equipment from Lessor pursuant to Article 16, Lessee shall pay to Lessor installment payments for all of the Equipment in 12 consecutive quarterly payments commencing from March 30, 2019 and thereafter on June 30, 2019, September 30, 2019, December 30, 2019, March 30, 2020, June 30, 2020, September 30, 2020, December 30, 2020, March 30, 2021, June 30, 2021, September 30, 2021 and December 30, 2021, with the amount of each quarterly payment to be computed by Lessor based on the principles set forth in Exhibit C ("Quarterly Payments"). In the absence of manifest error, the Quarterly Payments computed by Lessor shall be conclusive. For the avoidance of doubt, the amount of each Quarterly Payment specified in Exhibit C at the time of signing of this Lease is for reference only and will be adjusted by Lessor in accordance with the first sentence of this Article 3.1. Each Quarterly Payment is exclusive of 5% VAT, which shall be borne by Lessee against a government uniform invoice to be issued by Lessor on or before each payment date set forth above. All payments hereunder shall be made in New Taiwan Dollars by way of electronic transfer of funds to the Lessor’s bank account (as notified to Lessee from time to time) or such other mode of payment as mutually agreed.

3.2.    Lessee shall pay, and shall indemnify and hold Lessor harmless from and against, any fees, charges, assessments, duties or taxes imposed by any taxing authorities or other authorities as a result of the execution of this Lease or any of the transactions described in this Lease or arising out of the same, provided, however, Lessor shall be solely liable for any and all income tax liability of Lessor in Taiwan resulting from the contemplated transaction.

3.4.     Without prejudice to the foregoing, all sums payable by Lessee to Lessor hereunder shall be made free and clear of all deductions or withholdings whatsoever. However, if any deductions and/or withholdings are required by law Lessee shall pay Lessor the amount due net of such deductions and/or withholding and provide Lessor with all documentation necessary to enable Lessor to obtain a tax credit from the relevant tax authorities. Lessee will provide Lessor with such documentation without delay and do all such other things and take such other steps as may be reasonably required by Lessor.

Article 4.        [INTENTIONALLY OMITTED]

Article 5.        Disclaimers, Covenants, Representations and Warranties

5.1    Lessee acknowledges that Lessor is not the manufacturer of the Equipment, nor manufacturer’s agent, and that LESSOR MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS, DESIGN OR CONDITION, THE MERCHANTABILITY OF THE EQUIPMENT OR THEIR FITNESS FOR ANY PARTICULAR PURPOSE, the quality or capacity of the materials in the Equipment or workmanship in the Equipment, or that the Equipment will satisfy the requirements of any law, rule, specification or contract which provides for specific machinery or special methods. No defect or unfitness of the Equipment shall relieve Lessee of the obligation to Lessor hereunder. Lessor shall have no obligation, and Lessee shall have the obligation, to import, install, erect, test, adjust, maintain, store, put into use or service the Equipment. No oral agreement, guaranty, promise, condition, representation or warranty nor any oral modification hereof shall be binding on Lessor.

5.2.     To the extent permitted by the manufacturer and provided no Event of Default has occurred, Lessor agrees to assign and hereby so assigns to Lessee for the term of this Lease any and all warranties which it may have received from the manufacturer(s) of the Equipment or to which it may be legally entitled. Lessor agrees to assist Lessee in enforcing any such warranties and to permit Lessee to sue in Lessee's or Lessor's name, at the sole cost of Lessee, to enforce any such warranties against the manufacturer, provided that Lessor shall have no liability for any costs,

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damages, charges or expenses incurred thereby and that Lessee's sole remedy for the breach of any such warranty, indemnification or service agreement shall be against the manufacturer of such Equipment and not against Lessor, nor shall any such breach have any effect whatsoever on the rights of Lessor or obligation of Lessee hereunder.

5.3     Lessor covenants that if Lessee has paid the Quarterly Installments required hereunder as and when the same become due and payable and has performed and complied with all the other terms and conditions hereof, Lessor will not interfere with the peaceful and quiet use and enjoyment of the Equipment by Lessee, which use and enjoyment shall be without hindrance, ejection or molestation by Lessor. Nothing in this Article 5 shall restrict the right, subject to any applicable laws, regulations and rules, of Lessor or its duly authorized agent or representative from time to time, upon prior written notice to Lessee, during reasonable business hours, to enter upon Lessee's premises for the purpose of confirming the existence, condition, and proper maintenance of the Equipment; provided that such confirmation shall not reduce Lessee’s obligations under this Lease.

5.4     Lessee specifically waives the right to make claim against Lessor herein for breach of any warranty of any kind with respect to the Equipment.

5.5     During the term of this Lease, the Equipment shall be primarily for use in Lessee's business and shall not be held for sale or sublease or to be furnished to a third party under any contract of service unless otherwise agreed between Lessor and Lessee in writing.

Article 6.        Risk of Loss and Maintenance and Repair

6.1    Upon delivery of the Equipment to Lessee, Lessee shall bear the entire risk of loss, damage, theft, or destruction of the Equipment or any part thereof, from any and every cause whatsoever, which may occur prior to the return of the Equipment in accordance with Article 8.3, and no such loss, damage, theft or destruction shall relieve Lessee of its obligation to pay the Quarterly Installments or to comply with any other provision of this Lease. In the event of damage to any part of the Equipment, Lessee shall immediately repair such Equipment at Lessee's expense, and return such Equipment to its previous condition, unless irreparably damaged. If any part of the Equipment is lost, stolen, destroyed or irreparably damaged from any cause whatsoever, (each an “Event of Loss”), Lessee shall promptly notify Lessor of the occurrence of such Event of Loss, and shall, at Lessee's option, and cost (a) replace the Equipment with like equipment in good condition and working order acceptable to Lessor (the “replacement equipment”), and Lessee shall transfer title to the replacement equipment to Lessor, free and clear of all liens, claims and encumbrances, which equipment shall thereupon become subject to the terms of this Lease; or (b) pay Lessor in one lump sum, within ten (10) business days following such Event of Loss, the entire Quarterly Installments applicable to that particular Equipment that have not fallen due for payment by Lessee hereunder (exclusive of interest at the rate of 2.2% per annum from the date of Lessee’s payment up to and until the Maturity Date), and upon such payment by Lessee Lessor's right, title and interest in such part of the Equipment shall immediately without further action pass to Lessee, on an as-is where-is basis, without recourse or warranty against Lessor.

6.2    Lessee shall, at its own cost and expense, at all times during the term of this Lease, (a) pay all charges and expenses in connection with the operation of the Equipment; and (b) comply with all laws, ordinances, requirements, rules and the manufacturer’s specifications and manuals with respect to the use, maintenance and operation of the Equipment.

Article 7.        General Conditions and Covenants

7.1     Lessee shall indemnify, defend and hold Lessor wholly harmless against any liens, all losses, liabilities, damages, costs and expenses, including reasonable attorneys' fees, arising from accidents or occurrences causing injury or illness to or the death of any persons or the loss of or damage to property due to any use whatsoever, involving the Equipment. Lessee shall, at Lessee's own cost and expense, defend any and all suits which may be brought against Lessor, either alone or in conjunction with others, upon any such liability or claim or claims. Lessee shall satisfy, pay and discharge any and all judgments and fines that may be assessed against Lessor in any such

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action or actions, provided, however, Lessor shall give Lessee written notice of any such claim or demand. In no event shall Lessor be liable for any damages of whatever nature except for damages caused by Lessor’s willful misconduct or breach of this Lease.

7.2     Lessee shall pay or reimburse Lessor for all taxes and charges including any penalties arising out of or incident to the use of the Equipment until returned to Lessor or purchased by Lessee on the Maturity Date pursuant to Article 16. Lessee shall indemnify, defend and hold Lessor harmless from and against any expenses (including attorneys' fees), loss or damages which Lessor may incur due to Lessee's failure to pay such taxes, or arising out of, or resulting from any levy or attachment on any of the Equipment, or otherwise arising out of, or resulting from Lessee's use or possession of the Equipment. Any such expenses, losses or damages may be collected by Lessor upon notice to Lessee.

7.3     Time is the essence of this Lease and of every provision herein contained.

7.4     If any of the Equipment is damaged or destroyed or the use or possession of any such Equipment is otherwise lost, Lessee shall repair, reconstruct, restore or replace such damaged, destroyed or lost Equipment to substantially the same condition or utility value as existed prior to the event causing such damage, destruction or loss. Lessee shall apply the proceeds with respect to any insurance loss claim relating to such damage, destruction or loss to the payment or reimbursement of such repair, reconstruction, restoration or replacement. In the event any damaged, destroyed or lost Equipment is replaced, Lessee shall execute and deliver to Lessor such instruments and assurances as Lessor may reasonably and in good faith deem necessary or advisable to include such replacement equipment as an Equipment hereunder and to perfect the title on behalf of Lessor with respect to such replacement equipment.

7.5    During the term of this Lease, Lessee shall, in addition to payment of the Quarterly Installments provided herein, promptly pay all taxes, assessments and other governmental charges levied or assessed upon the interest of the Lessee in the Equipment or upon the use or operation thereof or on the earnings arising therefrom, and shall promptly pay or reimburse Lessor for all taxes, assessments and other governmental charges (including fees for titling and registration of the Equipment, if required) levied or assessed against and paid by the Lessor on account of its ownership of the Equipment or any part thereof, or the use or operation thereof, or the leasing thereof to the Lessee, or the rent herein provided for or the earnings arising therefrom (other than taxes on the overall net income of Lessor).

7.6    If Lessee shall fail duly and promptly to perform any of its obligations under the provisions of Articles 3.1, 3.2, 7.2, or 7.5, Lessor may, after prior written notice to Lessee, perform the same for the account of Lessee without thereby waiving the default, and any expense or liability incurred by Lessor in doing so, together with interest at the rate of ten percent (10.0%) per year or such other rate as Lessor may impose from time to time by giving five (5) business days’ written notice to the Lessee, and to the extent that such interest rate imposed by the Lessor is higher than any applicable maximum interest rate imposed under any applicable law (“Maximum Lawful Rate”), the Maximum Lawful Rate shall apply, and until paid by Lessee to Lessor, the fees, charges, expenses and interest provided in this Article 7.6 shall be payable by Lessee upon demand.

7.7    With prior notice to Lessee, Lessor shall at any reasonable times during business hours have the right to enter into and upon the premises where the Equipment may be located for the purpose of inspecting the same or observing its use, provided that Lessor shall comply with Lessee’s security rule. Lessee shall give Lessor immediate notice of any attachment or other judicial process affecting any of the Equipment and shall, whenever requested by Lessor, advise Lessor of the exact location of the Equipment at Lessee’s Hsinchu Plant.

Article 8.        Interest of Lessor

8.1    Unless Lessee owns the Equipment pursuant to Article 16 hereof, all Equipment is and shall at all times be the property of Lessor. Lessee shall have no right, title or interest therein except as set forth under this Lease. The lease contemplated hereunder shall constitute a lease of personal property, and Lessee agrees to take all action necessary or reasonably requested by Lessor to ensure that all Equipment shall be and remain personal property of

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the Lessor. Nothing in this Lease shall be construed as conveying to Lessee any interest in the Equipment other than its interest as a lessee.

8.2    Lessee shall, at its expense, keep all Equipment free and clear of all liens, charges, claims and other encumbrances. Lessee covenants that it will at all times protect and defend, at its own cost and expense, the rights of Lessor to the Equipment against all claims, liens and legal processes of creditors of Lessee and other persons, and keep the Equipment free and clear from all such claims, liens and processes (other than those in favor of Lessor). Lessee covenants that it will not pledge, encumber or permit any liens to attach to any of the Equipment.

8.3     Unless Lessee owns the Equipment pursuant to Article 16 hereof, upon the expiration or termination of this Lease for any reason, Lessee, at Lessee's sole expense, shall surrender and deliver possession of each of the Equipment unencumbered to Lessor at the time and place reasonably designated by Lessor and in the same condition as when received by Lessee, reasonable wear and tear excepted. Upon its return as provided in this Article, the Equipment shall be free and clear of all liens or encumbrances of any kind whatsoever. Lessee shall, at its sole expense, and upon the request of the Lessor, take any one or more of the following steps (collectively, the “Return Conditions”) with respect to such Equipment (which obligation shall be in addition to, and not in limitation of, Lessee's other obligations under this Lease):

(a) thirty (30) days after receipt of written notice from Lessor, provide to Lessor the following documents: (i) one set per each Equipment (or group of related Equipment) of installation instructions/manuals, service manuals, and operating manuals relating to such Equipment (including replacements and/or additions thereto, such that all documentation is completely up to date) and (ii) one set per Equipment (or group of related Equipment) of documents, detailing equipment configuration, operating requirements and maintenance records of such Equipment (such that all documentation is completely up to date);

(b) one hundred twenty (120) days prior to the Maturity Date or earlier termination of this Lease, cause a qualified manufacturer's representative or qualified equipment maintenance provider, acceptable to Lessor, to perform a comprehensive physical inspection, including testing all of the Equipment and providing a report thereon, which report shall certify that the Equipment have been properly inspected, examined and tested and is operating within the manufacturer's specifications; and, if during such inspection, examination and test, such inspector finds the Equipment not operating within manufacturer's specifications, then Lessee shall repair or replace such Equipment and, after corrective measures are completed, Lessee will provide for a follow-up inspection of the Equipment and report thereon by such inspector as outlined above;

(c) ensure that all Equipment will be cleaned and in such condition so that such Equipment may be immediately installed and placed into use in an operating environment similar to that under which it was used during the term of this Lease;

(d) properly remove all installed markings which are removable without damage to the Equipment and not necessary for the operation, maintenance or repair of the Equipment;

(e) ensure that all Equipment conform to all applicable environmental laws and regulations and all other applicable laws at the time of deinstallation;

(f) provide for the deinstallation, packing, transporting and certifying of the Equipment to include, but not limited to, the following: (i) Lessee or Lessee's designated representative shall deinstall all Equipment in accordance with the specifications of the manufacturer thereof; (ii) each Equipment will be returned with a certificate supplied by Lessee certifying that such Equipment is in good condition and (where applicable) comply with the manufacturer's maintenance plan, which certificate of compliance shall be transferable by Lessor to another operator of the Equipment; (iii) the Equipment shall be packed properly and in accordance with the manufacturer's recommendations which should meet or exceed industry standards for similar equipment; and (iv) Lessee shall transport the Equipment in a manner consistent with the manufacturer's recommendations and practices which should meet or exceed industry standards for similar equipment; and

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(g) Upon sale of the Equipment by Lessor to a third party, provide transportation to any location reasonably selected by Lessor.

8.4    If the return of the Equipment or any part thereof to Lessor, as required pursuant to this Article 8, shall be delayed beyond the end of the term hereof, all of Lessee's obligations under this Lease with respect to the Equipment or part thereof shall continue in full force and effect, except that the rental during such holdover period shall be the fair market rental value of the Equipment as reasonably determined by Lessor and the term thereof shall be on a day to day basis.

Article 9.        Assignment

This Lease and all rights of Lessor (including but limited the production capacity committed by lessee) hereunder shall be fully assignable by Lessor without Lessee's consent. Any such assignment shall be subject to and subordinate to the terms and provisions of this Lease. Lessee shall not assign this Lease, the Equipment or any interest it may have in this Lease, or in the Equipment or enter into any sub-lease with respect to the Equipment without the prior written consent of Lessor which consent shall not be unreasonably withheld.

Article 10.        Change of Ownership

So long as any of the Quarterly Installments shall remain unpaid, Lessee will not, without the prior written consent of the Lessor, cause, permit, or suffer any change, direct or indirect, in the capital ownership of Lessee.

Article 11.        Insurance

11.1. Lessee, at its own expense, shall keep the Equipment insured at all times against any and all risk of loss or damage from any cause whatsoever in such an amount, in such form and with such insurance companies as are satisfactory to Lessor. Such insurance shall include a loss payable clause in favor of Lessor.

11.2 Lessee, at its own expense, shall effect insurance on all the Equipment in amounts necessary to cover public liability, including, but not limited to, bodily injury.

11.3 Lessee shall request its insurance company or agent to nominate Lessor as additional insured and loss payee on the insurance and shall furnish to Lessor as soon as commercially promptly, but in no event later than ten (10) business days after delivery of the Equipment to Lessee, certificates acceptable to Lessor evidencing all such insurances.

Article 12.        Equipment to be Identified

During the term of this Lease, Lessee shall, at Lessee's expense, firmly affix to the back of the Equipment, in a conspicuous manner, such decal or metal plate showing Lessor, or Lessor's assignee (if this Lease is assigned), as the owner and lessor of such Equipment, or such other mode of identification as requested by Lessor from time to time.

Article 13.        Possession, Use and Location of Equipment

So long as Lessee shall not be in default under this Lease, Lessee may possess and use the Equipment in accordance with this Lease. The Equipment shall be used in the lawful business of Lessee and shall remain located at Lessee’s Hsinchu Plant.

Article 14.        Representations by Lessee

In order to induce Lessor to enter into this Lease, Lessee hereby represents and warrants to Lessor:

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(a) that Lessee will provide Lessor with the production capacity as set forth in Exhibit E;

(b) that Lessee is a company duly organized, validly existing and in good standing under the laws of the R.O.C., and has the power and authority to carry on its business as presently conducted and to perform its obligations under this Lease;

(c) that neither the execution and delivery of this Lease nor the consummation of the transactions contemplated hereby nor compliance by Lessee with any of the terms and conditions hereof will contravene any law, regulation, order, decree or injunction binding on Lessee or result in any breach of any agreement or arrangement with its creditors and banks, or constitute any default under any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, bylaw or other agreement or instrument to which Lessee is a party or by which Lessee or its properties may be bound or affected;

(d) that the execution of this Lease has been duly authorized by all necessary corporate action of Lessee and said terms constitute the legally valid and binding obligations of Lessee, enforceable against Lessee in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally; and

(e) that Lessee has duly obtained all applicable governmental approvals and licenses required under applicable laws to enable it to execute and deliver this Lease and to perform its obligations hereunder all in accordance with the respective terms hereof.

Article 15.        Default

15.1     If any of the following conditions or events occurs after the date hereof, then each will constitute an Event of Default:

(a) Lessee shall default in the payment of any Quarterly Installments or any other sums payable hereunder and such default shall continue for thirty (30) days after written notice of such default is served on Lessee;

(b) Lessee shall default in the performance of any other covenant herein and such default shall continue for forty-five (45) days after the sending of written notice thereof by Lessor to Lessee;

(c) Lessee shall cease to do business as a going concern, make an assignment for the benefit of creditors, admit in writing its inability to pay its debts as they become due, file a voluntary petition in bankruptcy or winding-up, be adjudicated bankrupt or insolvent, file a petition seeking for itself liquidation, dissolution, or similar arrangement under any present or future statute, law or regulation or file an answer admitting the material allegations of a petition filed against it in any such proceeding or consent to or acquiesce in the appointment of a trustee, receiver or liquidator of it or of all or any substantial part of its assets or properties, or if it shall take any action looking to its dissolution or liquidation;

(d) within sixty (60) days after the commencement of any proceedings against Lessee seeking liquidation, dissolution or similar relief under any present or future statute, law, or regulation, such proceedings shall not have been dismissed, or if within sixty (60) days after the appointment without Lessee’s consent or acquiescence of trustee, receiver or liquidator of it or of all or any substantial part of its assets or properties, such appointment shall not be vacated;

(e) Lessee attempts to sell, transfer, encumber, sublet or part with possession (except in the ordinary course of business in order to maintain the Equipment) of any of the Equipment;

(f) any representation or warranty made by Lessee herein or in any document or certificate furnished to Lessor in connection herewith or pursuant hereto shall prove to have been incorrect in any material respect on the date as of which made; or

(g) the ISSI Lease is terminated.

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15.2     Upon the occurrence of any Event of Default, Lessor may, with or without notice to Lessee, exercise any one or more of the following remedies, as Lessor in its sole discretion shall elect and such remedies shall be cumulative:

(i) Require Lessee, at Lessee's expense, to return any or all of the Equipment and satisfy the Return Conditions as the Lessor may require, or Lessor, at its option, may enter upon the premises where the Equipment is located and repossess and remove the Equipment, or render the Equipment unusable without removal;

(ii) Declare immediately due and payable all Quarterly Installments and other amounts payable under this Lease which have not fallen due for payment, and Lessee shall pay the same immediately;

(iii) Recover from Lessee, as liquidated damages for loss of the benefit of its bargain and not as a penalty, an amount (the “Default Payment”) equal to the sum of: (A) all accrued and unpaid Quarterly Installments and other amounts due under this Lease and the other operative agreements through the date Lessor declared an Event of Default, (B) interest at Maximum Lawful Rate on the sum of item (A) accruing from the date Lessor declared an Event of Default through the date Lessor receives such payment, (C) the amount of any recapture of tax benefits to be incurred by Lessor as a result of the termination of this Lease, as reasonably estimated by Lessor and notified by Lessor to Lessee, (D) all reasonable attorneys' fees and other expenses and costs incurred by Lessor relating to the enforcement of its rights under this Lease; and (E) all other amounts due under this Lease;

(iv) Sell by public or private sale, re-lease, hold, retain, or otherwise dispose of the Equipment in any manner Lessor chooses, free and clear of any claims or rights of Lessee and recover from Lessee as liquidated damages for loss of the benefit of its bargain and not as a penalty the Default Payment; and/or

(v) Upon notice to Lessee, terminate this Lease, sue to enforce Lessee's performance thereof, and/or exercise any other right or remedy then available to Lessor at law or in equity.

The exercise of any of the foregoing remedies by Lessor shall not constitute a termination of this Lease unless Lessor so notifies Lessee in writing. No failure or delay on the part of Lessor to exercise any right or remedy hereunder shall operate as a waiver thereof. No express or implied waiver by Lessor of any default shall constitute a waiver of any other default by Lessee or a waiver of any of Lessor's rights. No remedy referred to in this Article 15.2 is intended to be exclusive, but each shall be cumulative and concurrent to the extent permitted by law, and shall be in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity.

15.3    Unless otherwise provided in Article 16, the parties agree that upon the expiry of this Lease or occurrence of any Event of Default Lessor may request Lessee to return the Equipment in writing (hereinafter refer to as the “Return Notice”). Upon receipt of the Return Notice, Lessee shall be obligated to immediately deliver, at its expense, the Equipment in the Return Conditions to such place as may be designated by Lessor without any objection.

15.4    For the avoidance of doubt, Lessee shall continue to fulfill its obligations set forth in Exhibit E up to and until the Maturity Date in case this Lease is terminated for reasons attributable to Lessee or ownership of an Equipment is transferred to Lessee pursuant to Article 16.

Article 16. Purchase

In case that Lessee has fully paid up the Quarterly Installments to Lessor for an Equipment pursuant to this Agreement, the title to or ownership of such Equipment shall be automatically and immediately transferred from Lessor to Lessee.

Article 17. Renewal Option

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17.1 Lessee may, at its option, renew this Lease for all but not less than all the Equipment by giving Lessor written notice not less than ninety (90) days before the Maturity Date or any renewal term subsequent thereof for a term then agreed upon by the Lessee and the Lessor in writing, and paying to Lessor the “fair market rental value” of the Equipment for such renewal term, provided, that such renewal option shall not be exercisable if Lessee is in default under this Lease. Upon such notification and payment, such annual renewal rental as agreed between Lessor and Lessee in writing, but the other provisions and conditions of this Lease shall continue unchanged and in full force and effect. If “fair market rental value” cannot be agreed upon by Lessee and Lessor, it shall be determined by averaging the appraisals obtained from three independent appraisers, which shall include one appraiser selected by Lessee, one appraiser selected by Lessor, and a third appraiser selected by both Lessee and Lessor. The fees and expenses of all such appraisers shall be paid by Lessee.

17.2 If Lessee does not exercise its renewal option or purchase option as aforesaid and fails to return the Equipment at the end of the term of this Lease or any renewal term(s), then, unless and until the Equipment is returned to Lessor in accordance herewith (which Lessor may insist upon at any time), this Lease shall automatically be renewed from month to month with rent payable monthly in advance equal to the “fair market rental value” as determined by Lessor.

Article 18.        Notices

All notices, requests, demands or other communication to or upon the respective parties hereto shall be deemed to have been duly given or made:

(a) if given by letter one hundred twenty (120) hours after being deposited in the mail (registered airmail, postage prepaid);

(b) if delivered by hand, at the time of delivery; or

(c) if given or made by telecopy, when sent, addressed as follows:

(i) If to Lessee:	(ii) If to Lessor:
No. 12, Li-Hsin 1st Rd. Hsinchu Science Park, Hsinchu. Taiwan, R.O.C.	No. 2, Technology 5th Road, Science-Based Industrial Park, Hsinchu, Taiwan, R.O.C.
Facsimile No.: +886-3-579-2057	Facsimile No.: +886-3-5783000

or to such other address and/or telecopy number as any party hereto may specify in writing.

Article 19.        Irrevocability

Except as otherwise provided herein, this Lease is irrevocable by Lessee for the full term hereof as set forth in Article 2 hereof and for the aggregate Quarterly Installments, and the obligation to make such Quarterly Installments shall not be abated by reason of termination of Lessee's right of possession and/or the taking of possession by Lessor or for any other reason, and any delinquent Quarterly Installments or any other amount due and payable by Lessee hereunder shall bear interest at the rate of ten percent (10.0%) per annum, or such other rate as Lessor may impose from time to time by giving five (5) business days’ written notice to the Lessee, and to the extent that such interest rate imposed by the Lessor is higher than the Maximum Lawful Rate, the Maximum Lawful Rate shall apply.

Article 20.        Severability

If any provision hereof or any remedy herein provided for is invalid under the applicable law, such provision shall be inapplicable and deemed omitted but the remaining provisions hereof, including the remaining default remedies, shall be given effect in accordance with the manifest intent hereof.

Article 21.        Waiver of Rights

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No failure or delay by Lessor to exercise any power given it under this Lease or to insist upon strict compliance by the Lessee of any obligations hereunder shall constitute a waiver of Lessor's right to demand exact compliance with the terms hereof.

Article 22.        Governing Law

This Lease shall be governed in all respects by, and construed in accordance with, the laws of the R.O.C.

Article 23.        Jurisdiction

Any dispute, whether contractual or not, arising out of or in connection with this Lease (including any question regarding its existence, validity or termination) shall be referred to and finally resolved by arbitration in Taiwan by three arbitrators in accordance with the Arbitration Rules of the Arbitration Association of the Republic of China for the time being in force, which rules are deemed to be incorporated by reference in this Article. The language of the arbitration shall be Chinese. The physical venue of the arbitration shall be Taipei City. The decision of the arbitrators shall be final and binding on the parties.

Article 24.        Entire Agreement

The terms and conditions contained herein and in the ISSI Lease constitute the entire agreement between the parties hereto and ISSI and supersede all previous communications, whether written or oral, between the parties hereto and ISSI with respect to the subject matter hereof and thereof, and no agreement or understanding varying or extending the same shall be binding upon any party hereto or ISSI unless it is in writing which expressly refers to this Lease or the ISSI Lease, as the case may be, and is signed by a duly authorized officer or representative of the party or ISSI bound thereby. The attachments to this Lease, including Exhibit A (List of Equipment), Exhibit B (Copies of Purchase Orders), Exhibit C (“Quarterly Payments”), Exhibit D (Form of Acceptance Certificate) and Exhibit E (Production Capacity Committed by Lessee) shall be deemed as an integral part of this Lease and shall have the same legal effect as this Lease. In the event of any discrepancy between any attachment and the provisions of this Lease, the former shall prevail.

Article 25.        Counterparts

This Lease may be executed in two (2) counterparts, each of which shall be deemed to be an original, but both of which together shall constitute one and the same instrument. Either party may enter into this Lease by signing any such counterpart. Each counterpart may be executed by the parties and transmitted by facsimile transmission, and shall be valid and effectual as if executed as an original.

IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed in duplicate by their duly authorized officers or representatives as of the day and year first above written, and each such counterpart shall be deemed an original hereof.

LESSOR:	LESSEE:
By: /s/ Chang-Chaio Han	By: /s/ Steve R.L. Chen
Name: Chang-Chaio Han	Name: Steve R.L. Chen
Title: General Manager	Title: Chairman

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EXHIBIT A

List of Equipment

Model	Vendor	currency	Quantity	Current Price	ISSI Payment	Total
Extreme	LAM	USD	1	**	100% by T/T, 60 days before shipment	**
TSP-3055SSS	TEL	JPY	1	**	100% by T/T, 7 days before shipment	**
ESR80WN	EBARA	JPY	6	**	100% T/T in advance(30 days after PO issued)	**
CLEAN-S-PFCZ	昭和	NTD	1	**	100% by T/T, 30 days after shipment	**
Star-T	LAM	USD	1	**	100% by T/T, 60 days before shipment	**
ESR80WN	EBARA	JPY	1	**	100% T/T in advance(30 days after PO issued)	**
YR-8020SC	Risshi	JPY	1	**	100% by T/T, 30 days after shipment	**
Clean-S-ZN-13	昭和	NTD	1	**	100% by T/T, 30 days after shipment	**
EST200WN-XHT	EBARA	JPY	3	**	100% T/T in advance(30 days after PO issued)	**
ESR200WN	EBARA	JPY	2	**	100% T/T in advance(30 days after PO issued)	**
10管	和淞	NTD	1	**	100% by T/T, 120 days after Powerchip final acceptance	**
CG100	三福	NTD	1	**	100% by T/T, 30 days after shipment	**
-	穎傳	NTD	3	**	100% by T/T, 60 days after shipment.	**
-	穎傳	NTD	3	**	100% by T/T, 60 days after shipment	**
5管	和淞	NTD	1	**	100% by T/T, 120 days after Powerchip final acceptance	**
-	穎傳	NTD	2	**	100% by T/T, 60 days after shipment.	**
EST200WN-XHT	EBARA	JPY	1	**	100% T/T in advance(30 days after PO issued)	**
ESR200WN	EBARA	JPY	1	**	100% T/T in advance(30 days after PO issued)	**
Producer SE	AMAT	USD	1	**	100% by T/T, 14 days before shipment	**
Ih1800	Edwards	USD	1	**	100% by T/T, 30 days before shipment	**
CAT-O3-G (88 SLPM)	佳霖	NTD	3	**	90% by T/T, 30 days after shipment 10% by T/T, after Powerchip final acceptance	**

** The confidential portions of this Exhibit A have been omitted and filed separately with the Committee.

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Model	Vendor	currency	Quantity	Current Price	ISSI Payment	Total
IN-2000-3	佳霖	NTD	1	**	90% by T/T, 30 days after shipment 10% by T/T, after Powerchip final acceptance	**
Scan3090 Next Plus 300	NOVA	USD	1	**	100% by T/T, 21 days before Shipment	**
FPA-5550iz #1	Canon	JPY	1	**	100% by T/T, 30 days before shipment	**
Lithius Pro #1	TEL	JPY	1	**	100% by T/T, 7 days before shipment	**
-	久福	NTD	1	**	100% by T/T, 120 days after Powerchip final acceptance	**
-	協崑	NTD	1	**	100% by T/T, 120 days after Powerchip final acceptance	**
-	TEL	JPY	1	**	100% by T/T, 7 days before shipment	**
SEN SHX III/S	SEN	JPY	1	**	100% by T/T, 7 days before shipment	**
EV-S20N	EBARA	JPY	2	**	100% T/T in advance(30 days after PO issued)	**
ESR101W	EBARA	JPY	3	**	100% T/T in advance(30 days after PO issued)	**
D400LA	愛迪亞	NTD	1	**	100% by T/T, 60 days after Shipment	**
PR300Z (Used)	TEL (Used)	JPY	1	**	100% by T/T, 7 days before shipment	**
-	正德	NTD	1	**	100% by T/T, 驗收後月結60天(TC60)	**
Endura 2	AMAT	USD	1	**	100% by T/T, 14 days before shipment	**
ESR80WN	EBARA	JPY	4	**	100% T/T in advance(30 days after PO issued)	**
Extron W300T (Used)	優貝克 (Used)	NTD	1	**	100% by T/T, 6 months after shipment	**
ESR80WN SDE603X	EBARA	JPY	3	**	100% T/T in advance(30 days after PO issued)	**
Archer 500	KLA	USD	1	**	100% by T/T, 14 days before shipment	**
-	久福	NTD	1	**	100% by T/T, 120 days after Powerchip final acceptance	**
S-9380II (Used) (2 Loadport)	MMJ	USD	1	**	100% by T/T, 14 days before shipment	**
S-9380II (Used) (2 Loadport)裝機費用	日立先端	NTD	1	**	100% T/T 30 days from shipment	**
ESR20N	EBARA	JPY	2	**	100% T/T in advance(30 days after PO issued)	**

** The confidential portions of this Exhibit A have been omitted and filed separately with the Committee.

12

Model	Vendor	currency	Quantity	Current Price	ISSI Payment	Total
-	久福	NTD	1	**	100% by T/T, 120 days after Powerchip final acceptance	**
PW-2830 (Used)	思百吉 (Used)	NTD	1	**	90% by T/T, 7 days before shipment 10% by T/T, 30 days after Powerchip final acceptance or 180 days from shipment which comes first	**
2 line	和淞	NTD	1	**	100% by T/T, 120 days after Powerchip final acceptance	**
ESR80WN	EBARA	JPY	1	**	100% T/T in advance(30 days after PO issued)	**
ESR200WN	EBARA	JPY	3	**	100% T/T in advance(30 days after PO issued)	**
SIH4,H2,NF3	和淞	NTD	1	**	100% by T/T, 120 days after Powerchip final acceptance	**
ESR80WN	EBARA	JPY	4	**	100% T/T in advance(30 days after PO issued)	**
YR-8020SC	Risshi	JPY	3	**	100% by T/T, 30 days after shipment	**
Clean-S-ZN-13	昭和	NTD	2	**	100% by T/T, 30 days after shipment	**
CLEAN-S-PFCZ	昭和	NTD	1	**	100% by T/T, 30 days after shipment	**
Star-T	LAM	USD	1	**	100% by T/T, 60 days before shipment	**
Agilent 4082F	Keysight (Agilent)	USD	1	**	100% T/T Cash-In-Advance, 交貨前10天付款	**
Agilent 4082F	Keysight (Agilent)	USD	1	**	100% T/T Cash-In-Advance, 交貨前10天付款	**
Agilent 4082F	Keysight (Agilent)	USD	1	**	100% T/T Cash-In-Advance, 交貨前10天付款	**
Producer GT	AMAT	USD	1	**	100% by T/T, 14 days before shipment	**
ESR200WN	EBARA	JPY	1	**	100% T/T in advance(30 days after PO issued)	**
CG100(TEOS)	三福	NTD	1	**	100% by T/T, 30 days after Shipment	**
NF3+N2	和淞	NTD	2	**	100% by T/T, 120 days after Powerchip final acceptance	**
CAT-O3-G (20 SLPM)	佳霖	NTD	2	**	90% by T/T, 30 days after shipment 10% by T/T, after Powerchip final acceptance	**

** The confidential portions of this Exhibit A have been omitted and filed separately with the Committee.

13

Model	Vendor	currency	Quantity	Current Price	ISSI Payment	Total
IN-2000-3	佳霖	NTD	1	**	90% by T/T, 30 days after shipment 10% by T/T, after Powerchip final acceptance	**
-	穎傳	NTD	1	**	100% by T/T, 60 days after shipment.	**
iPhemos-TD	宇創	USD	1	**	90% by T/T 30 days before delivery 10% by T/T 30 days after Powerchip final acceptance	**
SU8220 (主機) +XMAX50(EDX)	益弘	USD	1	**	70% by T/T, 30 days after PO, 30% by T/T, 30 days before shipment.	**
Atlas-CAA502 (移動式)	聯宙	NTD	1	**	80% by T/T, 30 Days Before shipment 20% by T/T, 30 Days after Powerchip acceptance	**
Atlas-CAA502 (固定式) (P3)	聯宙	NTD	1	**	80% by T/T, 30 Days Before shipment 20% by T/T, 30 Days after Powerchip acceptance	**
Sdair1100	聯宙	NTD	3	**	80% by T/T, 30 Days Before shipment 20% by T/T, 30 Days after Powerchip acceptance	**
-	協崑	NTD	1	**	100% by T/T, 120 days after Powerchip final acceptance	**
4082F	Agilent	USD	1	**	100% T/T Cash-In-Advance, 交貨前10天付款	**
	TEL	JPY	1	**	100% by T/T, 7 days before shipment	**
PW-2830ZT (P3)	思百吉	EUR	1	**	90% by T/T, 7 days after shipment 10% by T/T, 30 days after Powerchip final acceptance or 180 days from shipment which comes first	**
ESR80WN	EBARA	JPY	1	**	100% T/T in advance(30 days after PO issued)	**
RS100C (Used)	虹鳴 (Used)	NTD	1	**	50% by T/T, 14 days before shipmentupon shipment 50% by T/T, 30 days from shipment	**
Kiyo EX	LAM	USD	1	**	100% by T/T, 60 days before shipment	**

** The confidential portions of this Exhibit A have been omitted and filed separately with the Committee.

14

Model	Vendor	currency	Quantity	Current Price	ISSI Payment	Total
ESR100WN	Ebara	JPY	2	**	100% T/T in advance(30 days after PO issued)	**
YR-8030SC	Risshi	JPY	1	**	100% by T/T, 30 days after shipment	**
UN2004A-PGS	Unisem	USD	1	**	80% by T/T, 3 months after shipment 20% by T/T, 5 months after shipment	**

** The confidential portions of this Exhibit A have been omitted and filed separately with the Committee.

15

EXHIBIT B

COPIES OF PURCHASE ORDERS

*Each Purchased Order will be attached after the Purchase Order sent by ICSI is confirmed by Vendor.

16

EXHIBIT C

Quarterly Payments (NTD)

	Payment Date	Principal Amount(A)	Interest(B)
1	2019/3/30	112,500,000	111,395,342
2	2019/6/30	112,500,000	6,862,192
3	2019/9/30	112,500,000	6,238,356
4	2019/12/30	112,500,000	5,553,493
5	2020/3/30	112,500,000	4,936,438
6	2020/6/30	112,500,000	4,366,849
7	2020/9/30	112,500,000	3,743,014
8	2020/12/30	112,500,000	3,085,274
9	2021/3/30	112,500,000	2,441,096
10	2021/6/30	112,500,000	1,871,507
11	2021/9/30	112,500,000	1,247,671
12	2021/12/30	112,500,000	617,055
Total		1,350,000,000	152,358,287

Where

(A) = the aggregate amount of all disbursements for the Equipment divided by 12

(B) = the amount of interest payable along with each principal amount, which interest shall be accrued from the last day of the calendar month in which the relevant disbursement was made until the respective payment date of each Quarterly Payment set forth above at the rate of 2.2% per annum based on the aggregate amount of all outstanding disbursements.

It is understood that Lessor will make payment of the purchase price of the Equipment to vendor(s) by converting NT$ into foreign currency based on the then prevailing exchange rate as at the relevant date of disbursement, and use the NT$ for the purposes of Lessor’s computation of the Quarterly Payment hereunder.

17

EXHIBIT D

FORM OF ACCEPTANCE CERTIFICATE

ACCEPTANCE CERTIFICATE

Reference is made to the LEASE AGREEMENT(the “Lease”) dated as of April 20, 2015 between Powerchip Technology Corporation, as Lessee and Integrated Circuit Solution, Inc., as Lessor. All capitalized terms herein shall have the meanings assigned to such terms in the Lease.

Lessee confirms that the Equipment set forth in Exhibit A was received and accepted by Lessee for leasing on the date set forth below, that such Equipment is in all respects satisfactory to Lessee, and that Lessor has fully and satisfactorily performed all of its obligations under the Lease up to and including the date hereof.

IN WITNESS WHEREOF, Lessee has duly executed this Acceptance Certificate on , 20 .

Powerchip Technology Corporation.

By: ________________________

Print Name: Steve R. L. Chen

Title: Chairman

18

EXHIBIT E

PRODUCTION CAPACITY COMMITTED BY LESSEE

Subject to reasonable lead time, Lessee shall offer monthly production capacity to Lessor as follows:

Year	CY Year-2015 wafer start	CY Year-2016 wafer start	CY Year-2017 wafer start	CY Year-2018 wafer start	CY Year-2019 wafer start	CY Year-2020 wafer start	CY Year-2021 wafer start
Monthly Allocation	**	**	**	**	**	**	**

upon prior mutual agreement, Lessor has the option to extend this commitment for another three years with allocation of ** pcs wafer per month.

___________________________

** The confidential portions of the Exhibit E have been omitted and filed separately with the Commission.

19

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Scott D. Howarth, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Integrated Silicon Solution, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2015

/s/ Scott D. Howarth

Scott D. Howarth

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, John M. Cobb, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Integrated Silicon Solution, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2015

/s/ John M. Cobb

John M. Cobb

Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott D. Howarth, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Integrated Silicon Solution, Inc. on Form 10-Q for the quarterly period ended March 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Integrated Silicon Solution, Inc.

By:	/s/ Scott D. Howarth
	Scott D. Howarth
	President and Chief Executive Officer
	May 5, 2015

I, John M. Cobb, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Integrated Silicon Solution, Inc. on Form 10-Q for the quarterly period ended March 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of Integrated Silicon Solution, Inc.

By:	/s/ John M. Cobb
	John M. Cobb
	Vice President and Chief Financial Officer
	May 5, 2015

XML

Stock-based Compensation (Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	$ 1,969	$ 2,020	$ 4,021	$ 3,668
Tax effect on stock-based compensation	(412)	(386)	(832)	(688)
Net effect on net income	1,557	1,634	3,189	2,980
SARS
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Net effect on net income	705	465	1,231	622
Cost of sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	47	54	98	104
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	729	776	1,496	1,425
Selling, general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	$ 1,193	$ 1,190	$ 2,427	$ 2,139

XML

Borrowings (Schedule of Maturities of Debt) (Details) (Secured Debt, USD $) In Thousands, unless otherwise specified	Mar. 31, 2015
Secured Debt
Debt Instrument [Line Items]
Remainder of 2015	$ 97
2016	195
2017	195
2018	3,949
2019	0
Thereafter	0
Total	$ 4,436

XML

Other Assets (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	1 Months Ended	6 Months Ended
	Sep. 30, 2012	Mar. 31, 2015	Sep. 30, 2014	Mar. 31, 2012
Entity Information [Line Items]
Termination period	1 year
Other investment		1,382	$ 1,436	$ 2,000
Hong Kong
Entity Information [Line Items]
Equity method investment ownership percentage		25.00%
Technology licenses, net | Minimum
Entity Information [Line Items]
Estimated useful lives		3 years
Technology licenses, net | Maximum
Entity Information [Line Items]
Estimated useful lives		15 years

XML

Accumulated Other Comprehensive Loss (Schedule of Accumulated Other Comprehensive Income (Loss)) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Stockholders' Equity Note [Abstract]
Accumulated foreign currency translation adjustments	$ (3,904)	$ 1,051
Accumulated net retirement plan transition asset (net of tax of $124 and $124, respectively)	(21)	8
Accumulated net retirement plan actuarial losses (net of tax of $477 and $477, respectively)	(2,045)	(2,103)
Total accumulated other comprehensive loss	(5,970)	(1,044)	[1]
Accumulated net retirement plan transition asset, tax	124	124
Accumulated net retirement plan actuarial losses, tax	$ 477	$ 477

[1] Derived from audited financial statements.

XML

Inventories (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Inventory Disclosure [Abstract]
Inventory write-downs	$ 1.7	$ 1.4	$ 3.2	$ 2.2

XML

Per Share Data (Tables)

6 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Computation of basic and diluted net income per share

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2015		2014		2015		2014
Numerator for basic and diluted net income per share:
Net income attributable to ISSI	$	1,116	$	8,812	$	4,302	$	14,247
Denominator for basic net income per share:
Weighted average common shares outstanding	31,544		29,818		31,267		29,568
Dilutive stock options and awards	1,726		1,426		1,669		1,418
Denominator for diluted net income per share	33,270		31,244		32,936		30,986
Basic net income per share	$	0.04	$	0.30	$	0.14	$	0.48
Diluted net income per share	$	0.03	$	0.28	$	0.13	$	0.46

XML

Income Taxes (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Income Tax Disclosure [Abstract]
Income tax expense	$ 682	$ 2,910	$ 1,608	$ 4,553
Effective tax rate	39.00%	25.00%	27.00%	24.00%
Federal statutory rate	35.00%	35.00%	35.00%	35.00%

XML

Basis of Presentation (Policies)

6 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Integrated Silicon Solution, Inc. (the Company or ISSI) and its majority owned subsidiaries, after elimination of all significant intercompany accounts and transactions. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (which are of a normal, recurring nature) considered necessary for fair presentation have been included.

Impact of Recently Adopted Accounting Standards and Accounting Pronouncements

Impact of Recently Adopted Accounting Standards

On October 1, 2014, the Company adopted the following accounting standards, which did not have any impact on its consolidated results of operations during such period or its financial condition at the end of such period:

Liabilities

In February 2013, the Financial Accounting Standards Board (FASB) issued guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date. Examples of obligations include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The guidance requires an entity to measure such obligations as the sum of the amount that the reporting entity agreed to pay on the basis of its arrangement among its co-obligors in addition to amounts the reporting entity expects to pay on behalf of its co-obligors.

Foreign Currency Matters

In March 2013, FASB issued guidance on when foreign currency translation adjustments should be released to net income. When a parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided.

Accounting Pronouncements

The following issued accounting pronouncements are not yet effective for the Company as of March 31, 2015.

Revenue from Contracts with Customers

In May 2014, FASB amended the existing accounting standards for revenue recognition. The new guidance establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The guidance becomes effective for the Company beginning in the first quarter of fiscal 2018. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company has not yet selected a transition method nor has the Company determined the impact of adopting the new revenue standard on its consolidated financial statements.

XML

Purchased Intangible Assets (Schedule of Current Finite-Lived Intangible Asset Amortization Expense by Income Statement Line Item) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Schedule of Current Intangible Asset Amortization Expense By Income Statement Line Item [Line Items]
Amortization of intangibles	$ 347	$ 409	$ 694	$ 818
Cost of sales
Schedule of Current Intangible Asset Amortization Expense By Income Statement Line Item [Line Items]
Amortization of intangibles	170	233	341	465
Operating expenses
Schedule of Current Intangible Asset Amortization Expense By Income Statement Line Item [Line Items]
Amortization of intangibles	$ 177	$ 176	$ 353	$ 353

XML

Stock-based Compensation (Restricted Stock and Restricted Stock Units Activity) (Details) (Restricted Stock Units (RSUs), USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at September 30, 2014			262
Granted			229
Vested			(107)
Forfeited			(3)
Outstanding at March 31, 2015	381		381
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Outstanding at September 30, 2014, Weighted-Average Grant Date Fair Value			$ 9.91
Weighted-average fair value of grants	$ 16.18	$ 11.26	$ 13.55	$ 11.17
Weighted average grant date fair value, vested			$ 9.28
Weighted average grant date fair value, forfeited			$ 13.12
Outstanding at March 31, 2015, Weighted-Average Grant Date Fair Value	$ 12.25		$ 12.25
Aggregate Intrinsic Value, Vested			$ 1,486
Aggregate Intrinsic Value, Outstanding at March 31, 2015	$ 6,815		$ 6,815

XML

Fair Value Measurements (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Foreign
Segment Reporting Information [Line Items]
Cash and cash equivalents, and short-term investments	$ 75.9	$ 71.9
China
Segment Reporting Information [Line Items]
Cash and cash equivalents, and short-term investments	$ 1.0

XML

Purchased Intangible Assets (Schedule Finite-Lived Intangible Assets, Future Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2015	$ 688
2016	1,238
2017	1,239
2018	1,195
2019	39
Thereafter	0
Net	$ 4,399

XML

Commitments and Contingencies (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2015	Apr. 01, 2015 complaint
Loss Contingencies [Line Items]
Amount of purchase orders that had been entered into wafer work-in-process	$ 16.4
Stockholder Class Action Complaints | Pending Litigation | Subsequent Event
Loss Contingencies [Line Items]
Number of stockholder class action complaints		3

XML

Other Assets (Schedule of Other Assets) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014		Mar. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Restricted assets	$ 644	$ 499
Other investment	1,382	1,436		2,000
Nanya private placement shares	10,318	10,645
Other	1,151	1,145
Other assets	28,995	24,369	[1]
Technology licenses, net
Finite-Lived Intangible Assets [Line Items]
Technology licenses, net	$ 15,500	$ 10,644

[1] Derived from audited financial statements.

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Impact of Recently Issued Accounting Pronouncements and Standards

6 Months Ended

Mar. 31, 2015

Accounting Changes and Error Corrections [Abstract]

Impact of Recently Issued Accounting Pronouncements and Standards

Impact of Recently Issued Accounting Pronouncements and Standards

Impact of Recently Adopted Accounting Standards

On October 1, 2014, the Company adopted the following accounting standards, which did not have any impact on its consolidated results of operations during such period or its financial condition at the end of such period:

Liabilities

In February 2013, the Financial Accounting Standards Board (FASB) issued guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date. Examples of obligations include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The guidance requires an entity to measure such obligations as the sum of the amount that the reporting entity agreed to pay on the basis of its arrangement among its co-obligors in addition to amounts the reporting entity expects to pay on behalf of its co-obligors.

Foreign Currency Matters

In March 2013, FASB issued guidance on when foreign currency translation adjustments should be released to net income. When a parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided.

Accounting Pronouncements

The following issued accounting pronouncements are not yet effective for the Company as of March 31, 2015.

Revenue from Contracts with Customers

In May 2014, FASB amended the existing accounting standards for revenue recognition. The new guidance establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. The guidance becomes effective for the Company beginning in the first quarter of fiscal 2018. Early adoption is not permitted. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company has not yet selected a transition method nor has the Company determined the impact of adopting the new revenue standard on its consolidated financial statements.

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Geographic and Segment Information (Narrative) (Details)	6 Months Ended
	Mar. 31, 2015 Business_Segment
Segment Reporting [Abstract]
Number of operating segments	1

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Stock-based Compensation (Schedule of SAR Activity) (Details) (SARS, USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Mar. 31, 2015
SARS
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at September 30, 2014	747
Granted	682
Exercised	(34)
Cancelled/Expired	(24)
Outstanding at March 31, 2015	1,371
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at September 30, 2014	$ 10.96
Granted	$ 13.55
Exercised	$ 10.96
Cancelled/Expired	$ 12.13
Outstanding at March 31, 2015	$ 12.23
Aggregate Intrinsic Value, exercised	$ 177
Weighted-Average Remaining Contractual Term in Years, Outstanding at March 31, 2015 (years)	6 years 1 month 2 days
Aggregate Intrinsic Value, Outstanding at March 31, 2015	7,766
Number of Shares, Exercisable at March 31, 2015 (shares)	211
Weighted-Average Exercise Price, Exercisable at March 31, 2015	$ 10.96
Weighted-Average Remaining Contractual Term in Years, Exercisable at March 31, 2015 (years)	5 years 7 months 10 days
Aggregate Intrinsic Value, Exercisable at March 31, 2015	$ 1,460

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Other Assets (Tables)

6 Months Ended

Mar. 31, 2015

Other Assets [Abstract]

Schedule of other assets

Other assets consisted of the following:

	March 31, 2015		September 30, 2014
	(In thousands)
Restricted assets	$	644	$	499
Other investment	1,382		1,436
Nanya private placement shares	10,318		10,645
Technology licenses, net	15,500		10,644
Other	1,151		1,145
	$	28,995	$	24,369

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Inventories (Tables)

6 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Schedule of inventories by major category

The following is a summary of inventories by major category:

	March 31, 2015		September 30, 2014
	(In thousands)
Purchased components	$	27,840	$	21,677
Work-in-process	23,630		27,058
Finished goods	39,368		36,358
	$	90,838	$	85,093

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Accumulated Other Comprehensive Loss (Schedule of Reclassification out of Accumulated Other Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
Gain on sale of investments	$ 0	$ 6,039	$ 0	$ 9,160
Provision for income taxes	(682)	(2,910)	(1,608)	(4,553)
Consolidated net income	1,131	8,958	4,367	14,404
Amount Reclassified from Accumulated Other Comprehensive Loss | Unrealized holding gains on available-for-sale investments
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
Gain on sale of investments	0	4,333	0	8,002
Provision for income taxes	0	(1,624)	0	(2,997)
Consolidated net income	$ 0	$ 2,709	$ 0	$ 5,005

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Concentrations (Narrative) (Details) (Sales Revenue, Goods, Net)	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Largest Distributor
Concentration Risk [Line Items]
Concentration risk, largest customers	17.00%	18.00%	15.00%	17.00%
Second Largest Distributor
Concentration Risk [Line Items]
Concentration risk, largest customers	14.00%	15.00%	14.00%	14.00%

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Purchased Intangible Assets (Tables)

6 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of total purchased intangible assets

The following tables present details of the Company’s total purchased intangible assets:

	Gross		Accumulated Amortization		Net
	(In thousands)
March 31, 2015
Developed technology	$	5,330	$	2,925	$	2,405
Customer relationships	3,340		1,415		1,925
Other	450		381		69
Total	$	9,120	$	4,721	$	4,399
September 30, 2014
Developed technology	$	5,330	$	2,584	$	2,746
Customer relationships	3,340		1,137		2,203
Other	450		306		144
Total	$	9,120	$	4,027	$	5,093

Schedule of amortization expense of purchased intangible assets as reported in the consolidated statements of income

The following table presents details of the amortization expense of purchased intangible assets as reported in the consolidated statements of income:

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2015		2014		2015		2014
	(In thousands)
Reported as:
Cost of sales	$	170	$	233	$	341	$	465
Operating expenses	177		176		353		353
Total	$	347	$	409	$	694	$	818

Schedule of estimated future amortization expense of purchased intangible assets

The following table presents the estimated future amortization expense of the Company’s purchased intangible assets at March 31, 2015 (in thousands). The weighted-average remaining amortization period for developed technology, customer relationships and other intangibles is 3.54 years, 3.46 years and 0.46 years, respectively. If the Company acquires additional purchased intangible assets in the future, its future amortization may be increased by those assets.

Fiscal year
Remainder of 2015	$	688
2016	1,238
2017	1,239
2018	1,195
2019	39
Thereafter	—
Total	$	4,399

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Borrowings (Tables)

6 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Schedule of principal payments due

Principal payments due under the Loan are as follows (in thousands):

Fiscal year
Remainder of 2015	$	97
2016	195
2017	195
2018	3,949
2019	—
Thereafter	—
Total	$	4,436

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Use of Estimates

6 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Such estimates include the useful lives of fixed assets, allowances for doubtful accounts and customer returns, valuation allowances for deferred tax assets, inventory write-downs, potential reserves relating to litigation matters, accrued liabilities, and other reserves. The Company bases its estimates and judgments on its historical experience, knowledge of current conditions and its beliefs of what could occur in the future, given available information. Actual results may differ from those estimates, and such differences may be material to the financial statements.

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Mar. 31, 2015

Stockholders' Equity Note [Abstract]

Components of accumulated other comprehensive loss, net of tax

The components of accumulated other comprehensive loss, net of tax, were as follows (in thousands):

	March 31, 2015			September 30, 2014
Accumulated foreign currency translation adjustments	$	(3,904	)	$	1,051
Accumulated net retirement plan transition asset (net of tax of $124 and $124, respectively)	(21		)	8
Accumulated net retirement plan actuarial losses (net of tax of $477 and $477, respectively)	(2,045		)	(2,103		)
Total accumulated other comprehensive loss	$	(5,970	)	$	(1,044	)

Significant amounts reclassified out of accumulated other comprehensive loss

The significant amounts reclassified out of accumulated other comprehensive loss into the consolidated condensed statements of income, with presentation location, during the three and six months ended March 31, 2015 and March 31, 2014 were as follows:

	Three Months Ended   March 31,					Six Months Ended   March 31,
	2015		2014			2015		2014
	(In thousands)
Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Loss										Location
Unrealized holding gains on available-for -sale investments
	$	—	$	4,333		$	—	$	8,002		Gain on the sale of investments
	—		(1,624		)	—		(2,997		)	Provision for income taxes
	$	—	$	2,709		$	—	$	5,005

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Stock-based Compensation (Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value) (Details) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average fair value of grants	$ 4.41	$ 5.12	$ 4.11	$ 4.69
Expected term in years	4 years 3 months 7 days	4 years 5 months 1 day	4 years 3 months 7 days	4 years 5 months 1 day
Estimated volatility	36.00%	52.00%	38.00%	51.00%
Risk-free interest rate	1.21%	1.18%	1.25%	1.04%
Dividend yield	1.56%	0.00%	1.66%	0.00%
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average fair value of grants	$ 0.00	$ 2.66	$ 0.00	$ 2.66
Expected term in years	0 years	5 months 27 days	0 years	5 months 27 days
Estimated volatility	0.00%	27.00%	0.00%	27.00%
Risk-free interest rate	0.00%	0.41%	0.00%	0.41%
Dividend yield	0.00%	0.00%	0.00%	0.00%

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Borrowings (Narrative) (Details) (Secured Debt, USD $) In Millions, unless otherwise specified	1 Months Ended
	Dec. 31, 2012	Mar. 31, 2015
Debt Instrument [Line Items]
Amount of bank loan	4.9
Purchase price of headquarters	6.5
Acres of land	2.85
Square footage of building	55,612
LIBOR
Debt Instrument [Line Items]
Interest rate spread above LIBOR	1.00%
LIBOR	LIBOR
Interest rate on loan at period end		1.25%

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Condensed Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Net sales	$ 80,104	$ 80,868	$ 161,014	$ 159,991
Cost of sales	52,056	53,118	103,821	106,712
Gross profit	28,048	27,750	57,193	53,279
Operating expenses:
Research and development	12,423	10,827	24,671	21,385
Selling, general and administrative	14,177	11,469	27,074	22,903
Total operating expenses	26,600	22,296	51,745	44,288
Operating income	1,448	5,454	5,448	8,991
Interest and other income (expense), net	365	375	527	806
Gain on sale of investments	0	6,039	0	9,160
Income before income taxes	1,813	11,868	5,975	18,957
Provision for income taxes	682	2,910	1,608	4,553
Consolidated net income	1,131	8,958	4,367	14,404
Net income attributable to noncontrolling interests	(15)	(146)	(65)	(157)
Net income attributable to ISSI	$ 1,116	$ 8,812	$ 4,302	$ 14,247
Basic net income per share (in dollars per share)	$ 0.04	$ 0.30	$ 0.14	$ 0.48
Shares used in basic per share calculation	31,544	29,818	31,267	29,568
Diluted net income per share (in dollars per share)	$ 0.03	$ 0.28	$ 0.13	$ 0.46
Shares used in diluted per share calculation	33,270	31,244	32,936	30,986

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Inventories (Schedule of Inventory, Current by major category) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Inventory Disclosure [Abstract]
Purchased components	$ 27,840	$ 21,677
Work-in-process	23,630	27,058
Finished goods	39,368	36,358
Inventories	$ 90,838	$ 85,093	[1]

[1] Derived from audited financial statements.

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Cash flows from operating activities
Consolidated net income	$ 4,367		$ 14,404
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,336		3,724
Stock-based compensation	2,790		3,046
Excess tax benefits from share-based compensation	0		(658)
Amortization of intangibles	694		818
Gain on sale of investments	0		(9,160)
Equity in net loss of affiliate	54		139
Net foreign currency transaction gains	(83)		(456)
Deferred tax assets	(473)		224
Other non-cash items	47		35
Net effect of changes in current and other assets and current liabilities	(6,941)		(14,925)
Net cash (used in) provided by operating activities	4,791		(2,809)
Cash flows from investing activities
Acquisition of property and equipment	(3,722)		(8,310)
Acquisition of noncontrolling interest in consolidated subsidiary	0		(199)
Payment of license fees	(5,779)		(6,000)
Increase in restricted cash	(18,168)		(1,000)
Purchases of available-for-sale securities	(1,176)		(1,218)
Sales of available-for-sale securities	1,216		18,190
Net cash provided by (used in) investing activities	(27,629)		1,463
Cash flows from financing activities
Repurchases and retirement of common stock	(497)		(350)
Proceeds from issuance of stock through compensation plans	6,759		7,316
Dividends Paid	(3,748)		0
Excess tax benefit from share-based compensation	0		658
Principal payments of long-term obligations	(98)		(98)
Net cash provided by financing activities	2,416		7,526
Effect of exchange rate changes on cash and cash equivalents	(2,109)		(1,398)
Net increase (decrease) in cash and cash equivalents	(22,531)		4,782
Cash and cash equivalents at beginning of period	137,534	[1]	119,997
Cash and cash equivalents at end of period	$ 115,003		$ 124,779

[1] Derived from audited financial statements.

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Per Share Data (Narrative) (Details) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Stock options and awards excluded from diluted earnings per share (shares)	118	1,372	161	2,177

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Basis of Presentation Basis of Presentation (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended		1 Months Ended	12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	May 31, 2013	Sep. 30, 2014	Sep. 14, 2012	Mar. 12, 2015
Business Acquisition [Line Items]
Additional interest acquired	$ 0	$ 199
Chingis Technology Corporation
Business Acquisition [Line Items]
Percentage of interests acquired					94.10%
Percentage of additional voting interests acquired			4.80%	1.10%
Additional interest acquired			$ 1,600	$ 400
Percentage ownership of Chingis	100.00%
ISSI | Summitview Capital
Business Acquisition [Line Items]
Acquisition price per share of outstanding shares						$ 19.25

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Related Party Transactions (Narrative) (Details) (Jimmy S.M. Lee, Executive Chairman, USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014	Sep. 30, 2014
Jimmy S.M. Lee, Executive Chairman
Related Party Transaction [Line Items]
Revenue from related parties	$ 86	$ 61	$ 144	$ 82
Accounts receivable, related parties	$ 64		$ 64		$ 59

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Geographic and Segment Information

6 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Geographic and Segment Information

Geographic and Segment Information

The Company has one operating segment, which is to design, develop, and market high-performance SRAM, DRAM, and other semiconductor products. The following table summarizes the Company’s operations in different geographic areas:

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2015		2014		2015		2014
			(In thousands)
Net sales
United States	$	9,213	$	9,816	$	20,106	$	18,878
China	8,885		10,939		18,757		22,851
Hong Kong	14,555		14,022		28,395		29,043
Japan	6,961		4,580		12,618		10,653
Korea	3,904		3,167		7,823		6,544
Taiwan	10,373		11,752		21,770		22,755
Other Asia Pacific countries	5,557		5,691		11,526		11,955
Europe	20,434		20,554		39,530		36,620
Other	222		347		489		692
Total net sales	$	80,104	$	80,868	$	161,014	$	159,991

	March 31, 2015		September 30, 2014
	(In thousands)
Long-lived assets
United States	$	11,055	$	11,174
Hong Kong	11		14
China	13,010		12,908
Taiwan	33,190		34,751
	$	57,266	$	58,847

Revenues are attributed to countries based on the customers' ship-to location.

Long-lived assets by geographic area are those assets used in the Company’s operations in each area.

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Fair Value Measurements (Marketable Equity and Cash Equivalents (Classified as Available-for-sale) and Cost Method Investments) (Details) (Fair Value, Inputs, Level 1, USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 29,401	$ 43,198
Gross Unrealized Holding Gains	0	0
Gross Unrealized Holding Losses	0	0
Fair Value	29,401	43,198
Money market instruments
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	9,326	22,519
Gross Unrealized Holding Gains	0	0
Gross Unrealized Holding Losses	0	0
Fair Value	9,326	22,519
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	20,075	20,679
Gross Unrealized Holding Gains	0	0
Gross Unrealized Holding Losses	0	0
Fair Value	20,075	20,679
Cash and Cash Equivalents
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	27,970
Gross Unrealized Holding Gains	0
Gross Unrealized Holding Losses	0
Fair Value	27,970
Cash and Cash Equivalents and Restricted Cash
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		41,721
Gross Unrealized Holding Gains		0
Gross Unrealized Holding Losses		0
Fair Value		41,721
Short-term Investments
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,431	1,477
Gross Unrealized Holding Gains	0	0
Gross Unrealized Holding Losses	0	0
Fair Value	$ 1,431	$ 1,477

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Subsequent Event

6 Months Ended

Mar. 31, 2015

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On April 20, 2015, the Company entered into Equipment Lease Agreements ( Lease Agreements) with Powerchip Technology Corporation (Powerchip). Under the Lease Agreements, the Company will purchase and then lease up to an aggregate of $73.5 million in semiconductor manufacturing equipment to Powerchip whereby Powerchip will acquire ownership of the equipment at the end of the lease period, and the Company will obtain access to certain manufacturing capacity and technology at Powerchip.

The Lease Agreements provide for a term of approximately six years, each ending December 31, 2021. Beginning in 2019 and continuing through 2021, Powerchip will make quarterly payments to the Company in an aggregate amount of approximately $82.1 million (the Quarterly Payments). Until such time as all Quarterly Payments have been made, the Company shall own, and continue to own, all equipment subject to the Lease Agreements.

In addition to making the Quarterly Payments, Powerchip shall provide the Company with manufacturing capacity to produce a specified number of wafers each month beginning in 2015 through 2021. The Company has an option to renew such manufacturing arrangement for an additional three years.

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Basis of Presentation

6 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Integrated Silicon Solution, Inc. (the Company or ISSI) and its majority owned subsidiaries, after elimination of all significant intercompany accounts and transactions. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (which are of a normal, recurring nature) considered necessary for fair presentation have been included.

On March 12, 2015, the Company entered into a definitive merger agreement (the Merger Agreement) to be acquired by a Chinese consortium of investors led by Summitview Capital (the Parent) under which the Parent will acquire all of our outstanding shares for $19.25 per share in cash (the Merger). The transaction is subject to approval by the stockholders of the Company, as well as regulatory approvals. As part of the transaction, the Merger Agreement contemplates that, in connection with the closing of the merger, the Company's operations in Taiwan will be restructured or some or all of the Company's Taiwan operations may be sold in order to comply with the requirements of Taiwan laws and regulations. The transaction is currently expected to close in the third calendar quarter of 2015.

On September 14, 2012, the Company acquired approximately 94.1% of the outstanding shares of Chingis Technology Corporation (Chingis) and the Company’s financial results reflect accounting for Chingis on a consolidated basis from the date of acquisition. In May 2013, the Company acquired an additional 4.8% of Chingis for approximately $1.6 million. In fiscal 2014, the Company acquired the remaining 1.1% of Chingis for approximately $0.4 million, and at March 31, 2015, the Company owned 100% of Chingis.

The Company’s operating results for the six months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2015 or for any other period. The financial statements included herein should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014.

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Condensed Statement of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
Consolidated net income	$ 1,131	$ 8,958	$ 4,367	$ 14,404
Change in unrealized loss on investments:
Changes arising during current period, net of tax benefit of $0, $0, $0 and $251, respectively	0	0	0	(349)
Reclassification for gain included in net income, net of tax expense of $0, $1,624, $0 and $2,997, respectively	0	(2,709)	0	(5,005)
Change in unrealized loss on investments:	0	(2,709)	0	(5,354)
Change in cumulative translation adjustment:
Changes arising during current period	1,548	(2,787)	(4,955)	(4,009)
Change in retirement plan actuarial losses:
Reclassification for gain included in net income, net of tax expense (benefit) of $0 for the three and six months ended March 31, 2015 and 2014	29	28	58	55
Change in retirement plan transition obligation:
Reclassification for gain included in net income, net of tax expense (benefit) of $0 for the three and six months ended March 31, 2015 and 2014	(14)	(15)	(29)	(30)
Other comprehensive income (loss)	1,563	(5,483)	(4,926)	(9,338)
Comprehensive income (loss)	2,694	3,475	(559)	5,066
Comprehensive income attributable to noncontrolling interest	(15)	(146)	(65)	(157)
Comprehensive income (loss) attributable to ISSI	$ 2,679	$ 3,329	$ (624)	$ 4,909

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Accumulated Other Comprehensive Loss

6 Months Ended

Mar. 31, 2015

Stockholders' Equity Note [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss, net of tax, were as follows (in thousands):

	March 31, 2015			September 30, 2014
Accumulated foreign currency translation adjustments	$	(3,904	)	$	1,051
Accumulated net retirement plan transition asset (net of tax of $124 and $124, respectively)	(21		)	8
Accumulated net retirement plan actuarial losses (net of tax of $477 and $477, respectively)	(2,045		)	(2,103		)
Total accumulated other comprehensive loss	$	(5,970	)	$	(1,044	)

The significant amounts reclassified out of accumulated other comprehensive loss into the consolidated condensed statements of income, with presentation location, during the three and six months ended March 31, 2015 and March 31, 2014 were as follows:

	Three Months Ended   March 31,					Six Months Ended   March 31,
	2015		2014			2015		2014
	(In thousands)
Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Loss										Location
Unrealized holding gains on available-for -sale investments
	$	—	$	4,333		$	—	$	8,002		Gain on the sale of investments
	—		(1,624		)	—		(2,997		)	Provision for income taxes
	$	—	$	2,709		$	—	$	5,005

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Document and Entity Information	6 Months Ended
	Mar. 31, 2015	May 01, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	INTEGRATED SILICON SOLUTION INC
Entity Central Index Key	0000854701
Current Fiscal Year End Date	--09-30
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		31,762,106

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Income Taxes

6 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax provision includes U.S. federal, state and local, and foreign income taxes and is based on the application of a forecasted annual income tax rate applied to the current quarter's year-to-date pre-tax income for fiscal 2015. In determining the estimated annual effective income tax rate, the Company analyzes various factors, including projections of the Company's annual earnings, taxing jurisdictions in which the earnings will be generated, the impact of state and local income taxes, the Company's ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives. Discrete items, including the effect of changes in tax laws, tax rates, and certain circumstances with respect to valuation allowances or other unusual or non-recurring tax adjustments are reflected in the period in which they occur as an addition to, or reduction from, the income tax provision, rather than being included in the estimated annual effective income tax rate.

For the three and six months ended March 31, 2015, the Company recorded income tax expense of $0.7 million and $1.6 million, respectively, that represents an effective tax rate of approximately 39% and 27%, respectively. The differences between the recorded provision for income taxes and the tax provision, based on the federal statutory rate of 35%, were primarily attributable to the differential in foreign tax rates, non-deductible stock-based compensation expense and certain foreign losses not benefited.

For the three and six months ended March 31, 2014, the Company recorded income tax expense of $2.9 million and $4.6 million, respectively, that represents an effective tax rate of approximately 25% and 24%, respectively. The difference between the recorded provision for income taxes and the tax provision, based on the federal statutory rate of 35%, was primarily attributable to the differential in foreign tax rates and non-deductible stock-based compensation expense.

As of March 31, 2015, the Company had unrecognized tax positions that would impact its effective tax rate, if realized.

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Condensed Statement of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
Unrealized gain (loss) on investments, Changes arising during current period, tax	$ 0	$ 0	$ 0	$ 251
Unrealized gain (loss) on investments, Reclassification for gain included in net income, tax	0	1,624	0	2,997
Retirement plan actuarial losses, Reclassification for gain included in net income, tax	0	0	0	0
Retirement plan transition obligation, Reclassification for gain included in net income, tax	$ 0	$ 0	$ 0	$ 0

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Concentrations

6 Months Ended

Mar. 31, 2015

Risks and Uncertainties [Abstract]

Concentrations

Concentrations

In the three and six months ended March 31, 2015, revenue from the Company's largest distributor accounted for approximately 17% and 15%, respectively, of the Company's total net sales. In both the three and six months ended March 31, 2015, revenue from the Company's second largest distributor accounted for approximately 14% of the Company's total net sales. In the three and six months ended March 31, 2014, revenue from the Company's largest distributor accounted for approximately 18% and 17%, respectively, of the Company's total net sales. In the three and six months ended March 31, 2014, revenue from the Company's second largest distributor accounted for approximately 15% and 14%, respectively, of the Company's total net sales.

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Stock-based Compensation

6 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation

Stock-based Compensation

Stock-Based Benefit Plans

The Company grants stock-based compensation awards under its 2007 Incentive Compensation Plan (the 2007 Plan) which permits the grant of stock options, stock appreciation rights (SARs), restricted stock awards, restricted stock units (RSUs), performance shares and performance units. The Company has outstanding grants under its 2012 Inducement Option Plan (the Inducement Plan) and under prior plans, though no further grants can be made under these plans. At March 31, 2015, 1,523,000 shares were available for future grant under the 2007 Plan. Options generally vest ratably over a four-year period with a 6-month or 1-year cliff vest and then vesting ratably over the remaining period. Options granted prior to October 1, 2005 expire ten years after the date of grant; options granted after October 1, 2005 expire seven years after the date of the grant. RSUs generally vest annually over periods ranging from two years to four years based upon continued employment with the Company.

The Company began granting cash-settled SARs in the first quarter of fiscal 2014. The SARs vest ratably over a four-year period with a 6-month or 1-year cliff vest and then vest ratably each month over the remaining period based upon continued employment with the Company. The SARs expire seven years after the date of grant. These SARs allow the holder to receive in cash the difference between the SARs' exercise price (which is the closing market price of the Company's common stock on the grant date) and the closing market price of the Company's common stock on the date the holder exercises the SAR. The SARs are recorded as a liability in accrued compensation and benefits in the Company's balance sheet.

The Company has an Employee Stock Purchase Plan (ESPP) which permits eligible employees to purchase shares of the Company’s common stock through payroll deductions. As approved by the Board of Directors, effective August 1, 2010, shares under the ESPP are purchased at a price equal to 85% of the lesser of the fair market value of the Company’s common stock as of the first day or the last day of each six-month offering period. The offering periods under the ESPP commence on approximately February 1 and August 1 of each year. The ESPP terminated pursuant to its terms on February 2, 2015, therefore at March 31, 2015, no shares were available for future issuance under the ESPP.

Stock-Based Compensation

The following table outlines the effects of total stock-based compensation including expense related to SARs.

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2015			2014			2015			2014
	(In thousands)
Stock-based compensation
Cost of sales	$	47		$	54		$	98		$	104
Research and development	729			776			1,496			1,425
Selling, general and administrative	1,193			1,190			2,427			2,139
Total stock-based compensation	1,969			2,020			4,021			3,668
Tax effect on stock-based compensation	(412		)	(386		)	(832		)	(688		)
Net effect on net income	$	1,557		$	1,634		$	3,189		$	2,980
Compensation related to SARs included in total stock-based compensation	$	705		$	465		$	1,231		$	622

As of March 31, 2015, there was approximately $8.9 million of total unrecognized stock-based compensation expense related to awards under the Company’s stock-based benefit plans that will be recognized over a weighted-average period of approximately 2.37 years. Future awards will add to this total whereas quarterly amortization and the vesting of existing awards will reduce this total. As of March 31, 2015, there was approximately $7.4 million of total unrecognized stock-based compensation expense related to SARs that will be recognized over a weighted-average period of approximately 3.13 years. Future SAR grants will add to this total whereas quarterly amortization and the vesting of SARs will reduce this total. In addition, because SARs are settled with cash, the fair value of SARs must be revalued on a quarterly basis which will likely impact the amount of expense in future periods.

The Company uses the Black-Scholes option pricing model to estimate the fair value of the options and SARs granted and rights to acquire stock granted under the ESPP. The weighted average estimated fair values of stock option grants and rights granted under the ESPP, as well as the weighted average assumptions used in calculating these values during the three and six month periods ended March 31, 2015 and 2014 were based on estimates at the date of grant as follows:

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2015			2014			2015			2014
Options
Weighted-average fair value of grants	$	4.41		$	5.12		$	4.11		$	4.69
Expected term in years	4.27			4.42			4.27			4.42
Estimated volatility	36		%	52		%	38		%	51		%
Risk-free interest rate	1.21		%	1.18		%	1.25		%	1.04		%
Dividend yield	1.56		%	—		%	1.66		%	—		%
ESPP
Weighted-average fair value of grants	$	—		$	2.66		$	—		$	2.66
Expected term in years	—			0.49			—			0.49
Estimated volatility	—		%	27		%	—		%	27		%
Risk-free interest rate	—		%	0.41		%	—		%	0.41		%
Dividend yield	—		%	—		%	—		%	—		%

The Company issues RSUs from time to time. The estimated fair value of RSU awards is calculated based on the market price of the Company’s common stock on the date of grant. The weighted average grant date fair value of RSUs granted in the three and six months ended March 31, 2015 was $16.18 per share and $13.55 per share, respectively. The weighted average grant date fair value of RSUs granted in the three and six months ended March 31, 2014 was $11.26 per share and $11.17 per share, respectively.

A summary of the Company’s stock option activity and related information for the six months ended March 31, 2015 follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Outstanding at September 30, 2014	4,240		$	8.10
Granted	85		$	14.83
Exercised	(733	)	$	7.53		$	6,456
Cancelled/Expired	(36	)	$	10.07
Outstanding at March 31, 2015	3,556		$	8.35	3.48	$	33,906
Exercisable at March 31, 2015	2,473		$	7.39	2.85	$	25,963
Vested and expected to vest after March 31, 2015	3,515		$	8.32	3.46	$	33,626

A summary of the Company’s RSU activity and related information for the six months ended March 31, 2015 under the 2007 Plan follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at September 30, 2014	262		$	9.91
Granted	229		$	13.55
Vested	(107	)	$	9.28	$	1,486
Forfeited	(3	)	$	13.12
Outstanding at March 31, 2015	381		$	12.25	$	6,815

A summary of the Company’s SAR activity and related information for the six months ended March 31, 2015 under the 2007 Plan follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Outstanding at September 30, 2014	747		$	10.96
Granted	682		$	13.55
Exercised	(34	)	$	10.96		$	177
Cancelled/Expired	(24	)	$	12.13
Outstanding at March 31, 2015	1,371		$	12.23	6.09	$	7,766
Exercisable at March 31, 2015	211		$	10.96	5.61	$	1,460

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Related Party Transactions

6 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company sells semiconductor products to Chrontel International Ltd. (Chrontel). Jimmy S.M. Lee, the Company’s Executive Chairman, has been a director of Chrontel since July 1995. Sales to Chrontel were $86,000 and $144,000 during the three months and six months ended March 31, 2015, respectively. Sales to Chrontel were $61,000 and $82,000 during the three months and six months ended March 31, 2014, respectively. Accounts receivable from Chrontel were approximately $64,000 and $59,000 at March 31, 2015 and September 30, 2014, respectively.

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Per Share Data

6 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Per Share Data

Per Share Data

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2015		2014		2015		2014
Numerator for basic and diluted net income per share:
Net income attributable to ISSI	$	1,116	$	8,812	$	4,302	$	14,247
Denominator for basic net income per share:
Weighted average common shares outstanding	31,544		29,818		31,267		29,568
Dilutive stock options and awards	1,726		1,426		1,669		1,418
Denominator for diluted net income per share	33,270		31,244		32,936		30,986
Basic net income per share	$	0.04	$	0.30	$	0.14	$	0.48
Diluted net income per share	$	0.03	$	0.28	$	0.13	$	0.46

For the three months and six months ended March 31, 2015, stock options and awards for 118,000 shares and 161,000 shares, respectively, were excluded from diluted earnings per share by the application of the treasury stock method. For the three months and six months ended March 31, 2014, stock options and awards for 1,372,000 shares and 2,177,000 shares, respectively, were excluded from diluted earnings per share by the application of the treasury stock method.

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Purchased Intangible Assets

6 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Purchased Intangible Assets

Purchased Intangible Assets

The following tables present details of the Company’s total purchased intangible assets:

	Gross		Accumulated Amortization		Net
	(In thousands)
March 31, 2015
Developed technology	$	5,330	$	2,925	$	2,405
Customer relationships	3,340		1,415		1,925
Other	450		381		69
Total	$	9,120	$	4,721	$	4,399
September 30, 2014
Developed technology	$	5,330	$	2,584	$	2,746
Customer relationships	3,340		1,137		2,203
Other	450		306		144
Total	$	9,120	$	4,027	$	5,093

The following table presents details of the amortization expense of purchased intangible assets as reported in the consolidated statements of income:

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2015		2014		2015		2014
	(In thousands)
Reported as:
Cost of sales	$	170	$	233	$	341	$	465
Operating expenses	177		176		353		353
Total	$	347	$	409	$	694	$	818

The following table presents the estimated future amortization expense of the Company’s purchased intangible assets at March 31, 2015 (in thousands). The weighted-average remaining amortization period for developed technology, customer relationships and other intangibles is 3.54 years, 3.46 years and 0.46 years, respectively. If the Company acquires additional purchased intangible assets in the future, its future amortization may be increased by those assets.

Fiscal year
Remainder of 2015	$	688
2016	1,238
2017	1,239
2018	1,195
2019	39
Thereafter	—
Total	$	4,399

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Common Stock Repurchase Program (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended	91 Months Ended
	Mar. 31, 2015	Mar. 31, 2015
Common Stock Repurchase Program [Abstract]
Stock repurchased and retired during period (shares)		14,179,711
Stock repurchased and retired during period, value		$ 88.5
Stock repurchase program, remaining authorized repurchase amount	19.8	19.8
Shares paid for tax withholding for share based compensation (shares)	36,025
Payments related to tax withholding for share-based compensation	$ 0.5

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Inventories

6 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Inventories

Inventories

The following is a summary of inventories by major category:

	March 31, 2015		September 30, 2014
	(In thousands)
Purchased components	$	27,840	$	21,677
Work-in-process	23,630		27,058
Finished goods	39,368		36,358
	$	90,838	$	85,093

During the three and six months ended March 31, 2015, the Company recorded inventory write-downs of $1.7 million and $3.2 million, respectively. During the three and six months ended March 31, 2014, the Company recorded inventory write-downs of $1.4 million and $2.2 million, respectively. The inventory write-downs were predominantly for excess and obsolescence and lower of cost or market issues on certain of the Company's products.

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Other Assets

6 Months Ended

Mar. 31, 2015

Other Assets [Abstract]

Other Assets

Other Assets

Other assets consisted of the following:

	March 31, 2015		September 30, 2014
	(In thousands)
Restricted assets	$	644	$	499
Other investment	1,382		1,436
Nanya private placement shares	10,318		10,645
Technology licenses, net	15,500		10,644
Other	1,151		1,145
	$	28,995	$	24,369

The Company has various deposits including deposits with suppliers for purchase guarantees and for customs clearance. These deposits are included in restricted assets.

The Company accounts for the private placement shares it acquired in Nanya on the cost-basis as these securities are restricted and the restrictions do not terminate within one year of the reporting date.

From time to time, the Company licenses patents or other intellectual property rights from third parties. The technology licenses are being amortized over their estimated useful lives ranging from three to fifteen years.

In March 2012, the Company made an equity investment of $2.0 million in a private technology company headquartered in Hong Kong. At March 31, 2015, the Company's ownership interest in such company was approximately 25%. This investment is accounted for under the equity method and the Company's results include its percentage share of such company's results of operations in interest and other income (expense), net.

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Borrowings

6 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Borrowings

Borrowings

In December 2012, the Company obtained a bank loan in the amount of $4.9 million (the Loan), to partially finance the $6.5 million purchase price of approximately 2.85 acres of land and a 55,612 square foot building located at 1623 Buckeye Drive, Milpitas, California for its corporate headquarters. The Loan has a maturity date of November 30, 2017 and is secured by the property and an assignment of all leases and rents relating to the property. The Loan is subject to customary events of default, including defaults in the payment of principal and interest. The Loan bears an interest rate of one percent above LIBOR adjusted on a monthly basis. The interest rate on the Loan was 1.25% at March 31, 2015. Principal payments due under the Loan are as follows (in thousands):

Fiscal year
Remainder of 2015	$	97
2016	195
2017	195
2018	3,949
2019	—
Thereafter	—
Total	$	4,436

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Geographic and Segment Information (Schedule of Long-Lived Assets, by Geographical Areas) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 57,266	$ 58,847
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	11,055	11,174
Hong Kong
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	11	14
China
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	13,010	12,908
Taiwan
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 33,190	$ 34,751

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Subsequent Event (Details) (Subsequent Event, Equipment Leased to Other Party, Powerchip Technology Corporation, USD $) In Millions, unless otherwise specified	0 Months Ended
	Apr. 20, 2015	Apr. 20, 2015
Subsequent Event | Equipment Leased to Other Party | Powerchip Technology Corporation
Subsequent Event [Line Items]
Amount the company will purchase and then lease (up to aggregate of $73.5 million)	$ 73.5
Term of lease agreements	6 years
Amount of quarterly payments	$ 82.1	$ 82.1
Additional renewal period	3 years

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Geographic and Segment Information (Schedule of Revenues, by Geographical Areas) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 80,104	$ 80,868	$ 161,014	$ 159,991
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	9,213	9,816	20,106	18,878
China
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	8,885	10,939	18,757	22,851
Hong Kong
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	14,555	14,022	28,395	29,043
Japan
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	6,961	4,580	12,618	10,653
Korea
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	3,904	3,167	7,823	6,544
Taiwan
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	10,373	11,752	21,770	22,755
Other Asia Pacific countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	5,557	5,691	11,526	11,955
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	20,434	20,554	39,530	36,620
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 222	$ 347	$ 489	$ 692

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Geographic and Segment Information (Tables)

6 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Summary of operations in different geographic areas

The following table summarizes the Company’s operations in different geographic areas:

	Three Months Ended   March 31,				Six Months Ended   March 31,
	2015		2014		2015		2014
			(In thousands)
Net sales
United States	$	9,213	$	9,816	$	20,106	$	18,878
China	8,885		10,939		18,757		22,851
Hong Kong	14,555		14,022		28,395		29,043
Japan	6,961		4,580		12,618		10,653
Korea	3,904		3,167		7,823		6,544
Taiwan	10,373		11,752		21,770		22,755
Other Asia Pacific countries	5,557		5,691		11,526		11,955
Europe	20,434		20,554		39,530		36,620
Other	222		347		489		692
Total net sales	$	80,104	$	80,868	$	161,014	$	159,991

Schedule of long lived assets in different geographic areas

	March 31, 2015		September 30, 2014
	(In thousands)
Long-lived assets
United States	$	11,055	$	11,174
Hong Kong	11		14
China	13,010		12,908
Taiwan	33,190		34,751
	$	57,266	$	58,847

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Purchased Intangible Assets (Narrative) (Details)	6 Months Ended
	Mar. 31, 2015
Developed technology
Acquired Indefinite-lived Intangible Assets [Line Items]
Weighted average useful life for intangibles (years)	3 years 6 months 15 days
Customer relationships
Acquired Indefinite-lived Intangible Assets [Line Items]
Weighted average useful life for intangibles (years)	3 years 5 months 16 days
Other
Acquired Indefinite-lived Intangible Assets [Line Items]
Weighted average useful life for intangibles (years)	5 months 16 days

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Commitments and Contingencies

6 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Matters

In the semiconductor industry, it is not unusual for companies to receive notices alleging infringement of patents or other intellectual property rights of others. The Company has been, and from time to time expects to be, notified of claims that it may be infringing patents, maskwork rights or copyrights owned by third parties. If it appears necessary or desirable, the Company may seek licenses under patents that it is alleged to be infringing. Although patent holders commonly offer such licenses, licenses may not be offered and the terms of any offered licenses may not be acceptable to the Company. The failure to obtain a license under a key patent or intellectual property right from a third party for technology used by the Company could cause it to incur substantial liabilities and to suspend the manufacture of the products utilizing the invention or to attempt to develop non-infringing products, any of which could materially and adversely affect the Company’s business and operating results. Furthermore, there can be no assurance that the Company will not become involved in protracted litigation regarding its alleged infringement of third party intellectual property rights or litigation to assert and protect its patents or other intellectual property rights. Any litigation relating to patent infringement or other intellectual property matters could result in substantial cost and diversion of the Company’s resources.

GSI Technology Inc. v. Integrated Silicon Solution, Inc., et al.

On October 2, 2013, GSI Technology Inc. (GSI) filed a Second Amended Complaint in a lawsuit filed earlier in 2013 solely against defendant United Memories, Inc. in the United States District Court for the Northern District of California.  GSI named the Company as a new, second defendant in the Second Amended Complaint.  On April 18, 2014, the Court granted the Company's motion to dismiss that complaint in part, leaving claims against the Company for Unfair Competition under California Business & Professions Code 17200, misappropriation of trade secrets, and intentional interference with prospective economic advantage.  In the remaining portion of the complaint, GSI alleged that the Company acted together with United Memories, Inc. to harm GSI in connection with a bid requested by Cisco Systems, Inc. and misappropriated alleged GSI trade secrets.  GSI seeks damages and injunctive relief.  The Company filed an answer on June 2, 2014 and asserted a declaratory relief counterclaim against GSI.  Before the Company was named as a defendant, the Court denied motions by GSI against United Memories, Inc. for temporary and preliminary injunctive relief.  The Court issued a revised case management order on January 7, 2015 with a scheduled trial date of October 26, 2015.   The Company believes it has meritorious defenses to the claims alleged by GSI and intends to defend this suit vigorously.  However, there can be no assurance as to the outcome of this matter or any future litigation.

Legal Proceedings Regarding our Pending Acquisition

Beginning on April 1, 2015, three stockholder class action complaints were filed in the Superior Court of the State of California in the County of Santa Clara on behalf of a putative class of ISSI stockholders and naming as defendants ISSI’s Board of Directors and Parent: Richard Wilson III, on Behalf of Himself and All Others Similarly Situated v. Jimmy S.M. Lee, et al., Case No. 1-15-CV-278815 (filed April 1, 2015); Matthew Sciabacucchi, on Behalf of Himself and All Others Similarly Situated v. Jimmy S.M. Lee, et al., Case No. 1-15-CV-278812 (filed April 1, 2015); and Kathy Guerra, Individually and on Behalf of All Others Similarly Situated v. Scott D. Howarth, et al., Case No. 1-15-CV-279142 (filed April 8, 2015).  The complaints generally allege that, in connection with the proposed acquisition of ISSI by Parent, the ISSI directors breached their fiduciary duties owed to ISSI’s stockholders by, among other things, purportedly failing to take steps to maximize the value of ISSI to ISSI’s stockholders and agreeing to allegedly preclusive deal protection devices in the Merger Agreement. The complaint filed by Kathy Guerra also alleges that the ISSI directors breached their fiduciary duties by allegedly failing to disclose material information to ISSI stockholders.  The complaints further generally allege that Parent aided and abetted the ISSI directors in the alleged breaches of their fiduciary duties. The complaints seek, among other things, an order enjoining the defendants from consummating the proposed transaction, or alternatively, in the event that the proposed transaction is consummated, an order rescinding it.

Other Legal Proceedings

In the ordinary course of its business, the Company has been involved in a limited number of other legal actions, both as plaintiff and defendant, and could incur uninsured liability in any one or more of them. Although the outcome of these actions is not presently determinable, the Company believes that the ultimate resolution of these matters will not have a material adverse effect on its financial position, cash flows or results of operations. However, no assurances can be given with respect to the extent or outcome of any such litigation in the future.

Commitments to Wafer Fabrication Facilities and Contract Manufacturers

The Company issues purchase orders for wafers to various wafer foundries. These purchase orders are generally considered to be cancelable. However, to the degree that the wafers have entered into work-in-process at the foundry, as a matter of practice, it becomes increasingly difficult to cancel the purchase order. As of March 31, 2015, the Company had approximately $16.4 million of purchase orders for which the related wafers had been entered into wafer work-in-process (i.e., manufacturing had begun).

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Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Available-for-sale securities

Available-for-sale marketable securities consisted of the following:

March 31, 2015	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
				(In thousands)
Available-for-sale
Level 1:
Money market instruments	$	9,326		$	—	$	—	$	9,326
Certificates of deposit	20,075			—		—		20,075
Total	29,401			—		—		29,401
Less: Amounts included in cash and cash
equivalents	(27,970		)	—		—		(27,970		)
	$	1,431		$	—	$	—	$	1,431
September 30, 2014	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
				(In thousands)
Available-for-sale
Level 1:
Money market instruments	$	22,519		$	—	$	—	$	22,519
Certificates of deposit	20,679			—		—		20,679
Total	43,198			—		—		43,198
Less: Amounts included in cash, cash
equivalents and restricted cash	(41,721		)	—		—		(41,721		)
	$	1,477		$	—	$	—	$	1,477

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Purchased Intangible Assets (Schedule of Finite-Lived Intangible Assets by Major Class) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Gross	$ 9,120	$ 9,120
Accumulated Amortization	4,721	4,027
Net	4,399
Total, Net	4,399	5,093	[1]
Developed technology
Finite-Lived Intangible Assets [Line Items]
Gross	5,330	5,330
Accumulated Amortization	2,925	2,584
Net	2,405	2,746
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross	3,340	3,340
Accumulated Amortization	1,415	1,137
Net	1,925	2,203
Other
Finite-Lived Intangible Assets [Line Items]
Gross	450	450
Accumulated Amortization	381	306
Net	$ 69	$ 144

[1] Derived from audited financial statements.

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Stock-based Compensation (Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable) (Details) (Options, USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Mar. 31, 2015
Options
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at September 30, 2014	4,240
Granted	85
Exercised	(733)
Cancelled/Expired	(36)
Outstanding at March 31, 2015	3,556
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at September 30, 2014	$ 8.10
Granted	$ 14.83
Exercised	$ 7.53
Cancelled/Expired	$ 10.07
Outstanding at March 31, 2015	$ 8.35
Aggregate Intrinsic Value, options exercised	$ 6,456
Weighted-Average Remaining Contractual Term in Years, Outstanding at March 31, 2015 (years)	3 years 5 months 23 days
Aggregate Intrinsic Value, Outstanding at March 31, 2015	33,906
Number of Shares, Exercisable at March 31, 2015 (shares)	2,473
Weighted-Average Exercise Price, Exercisable at March 31, 2015	$ 7.39
Weighted-Average Remaining Contractual Term in Years, Exercisable at March 31, 2015 (years)	2 years 10 months 6 days
Aggregate Intrinsic Value, Exercisable at March 31, 2015	25,963
Number of Shares, Vested and expected to vest after March 31, 2015 (shares)	3,515
Weighted-Average Exercise Price, Vested and expected to vest after March 31, 2015	$ 8.32
Weighted-Average Remaining Contractual Term in Years, Vested and expected to vest after March 31, 2015 (years)	3 years 5 months 16 days
Aggregate Intrinsic Value, Vested and expected to vest after March 31, 2015	$ 33,626

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Sep. 30, 2014
Current assets:
Cash and cash equivalents	$ 115,003	$ 137,534	[1]
Restricted cash	19,168	1,000	[1]
Short-term investments	1,431	1,477	[1]
Accounts receivable, net	49,096	50,458	[1]
Inventories	90,838	85,093	[1]
Deferred tax assets	1,903	1,868	[1]
Other current assets	17,226	17,033	[1]
Total current assets	294,665	294,463	[1]
Property, equipment and leasehold improvements, net	57,266	58,847	[1]
Purchased intangible assets, net	4,399	5,093	[1]
Goodwill	9,178	9,178	[1]
Deferred tax assets	8,617	8,392	[1]
Other assets	28,995	24,369	[1]
Total assets	403,120	400,342	[1]
Current liabilities:
Accounts payable	50,705	54,554	[1]
Accrued compensation and benefits	10,519	9,875	[1]
Accrued expenses	12,795	11,365	[1]
Current portion of long-term debt	195	195	[1]
Total current liabilities	74,214	75,989	[1]
Long-term debt	4,241	4,339	[1]
Other long-term liabilities	5,362	5,456	[1]
Total liabilities	83,817	85,784	[1]
Commitments and contingencies			[1]
Stockholders’ equity:
Common stock	3	3	[1]
Additional paid-in capital	373,639	364,587	[1]
Accumulated deficit	(50,522)	(51,076)	[1]
Accumulated other comprehensive loss	(5,970)	(1,044)	[1]
Total ISSI stockholders’ equity	317,150	312,470	[1]
Noncontrolling interest	2,153	2,088	[1]
Total stockholders’ equity	319,303	314,558	[1]
Total liabilities and stockholders’ equity	$ 403,120	$ 400,342	[1]

[1] Derived from audited financial statements.

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Fair Value Measurements

6 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Under FASB guidance, fair value is defined as the price expected to be received from the sale of an asset or paid to transfer a liability in a transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The FASB guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that the market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company’s judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available at that time. The fair value hierarchy is broken down into the following three levels based on the reliability of inputs:

• Level 1 – Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices which are readily and regularly available in an active market, valuation of these products can be done without a significant degree of judgment.

• Level 2 – Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments and model-derived valuations in which all significant inputs and significant value drives are observable in active markets.

• Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

As of March 31, 2015 and September 30, 2014, all of the Company’s financial assets utilized Level 1 inputs.

As of March 31, 2015, the Company did not have any liabilities or non-financial assets that are measured at fair value on a recurring basis.

Available-for-sale marketable securities consisted of the following:

March 31, 2015	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
				(In thousands)
Available-for-sale
Level 1:
Money market instruments	$	9,326		$	—	$	—	$	9,326
Certificates of deposit	20,075			—		—		20,075
Total	29,401			—		—		29,401
Less: Amounts included in cash and cash
equivalents	(27,970		)	—		—		(27,970		)
	$	1,431		$	—	$	—	$	1,431
September 30, 2014	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
				(In thousands)
Available-for-sale
Level 1:
Money market instruments	$	22,519		$	—	$	—	$	22,519
Certificates of deposit	20,679			—		—		20,679
Total	43,198			—		—		43,198
Less: Amounts included in cash, cash
equivalents and restricted cash	(41,721		)	—		—		(41,721		)
	$	1,477		$	—	$	—	$	1,477

There were no transfers in or out of Level 1 assets during the three months ended March 31, 2015.

As of March 31, 2015 and September 30, 2014, the Company had cash, cash equivalents, restricted cash and short-term investments in foreign financial institutions of $75.9 million ($1.0 million of which was in China and subject to exchange control regulations) and $71.9 million, respectively.

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Per Share Data (Calculation of Basic and Diluted EPS) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Earnings Per Share [Abstract]
Net income attributable to ISSI	$ 1,116	$ 8,812	$ 4,302	$ 14,247
Denominator for basic net income per share:
Weighted average common shares outstanding	31,544	29,818	31,267	29,568
Dilutive stock options and awards	1,726	1,426	1,669	1,418
Denominator for diluted net income per share	33,270	31,244	32,936	30,986
Basic net income per share (in dollars per share)	$ 0.04	$ 0.30	$ 0.14	$ 0.48
Diluted net income per share (in dollars per share)	$ 0.03	$ 0.28	$ 0.13	$ 0.46

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Stock-based Compensation (Tables)

6 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of total stock-based compensation

The following table outlines the effects of total stock-based compensation including expense related to SARs.

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2015			2014			2015			2014
	(In thousands)
Stock-based compensation
Cost of sales	$	47		$	54		$	98		$	104
Research and development	729			776			1,496			1,425
Selling, general and administrative	1,193			1,190			2,427			2,139
Total stock-based compensation	1,969			2,020			4,021			3,668
Tax effect on stock-based compensation	(412		)	(386		)	(832		)	(688		)
Net effect on net income	$	1,557		$	1,634		$	3,189		$	2,980
Compensation related to SARs included in total stock-based compensation	$	705		$	465		$	1,231		$	622

Weighted average estimated fair values of option grants and rights and weighted average assumptions used in calculating values

The weighted average estimated fair values of stock option grants and rights granted under the ESPP, as well as the weighted average assumptions used in calculating these values during the three and six month periods ended March 31, 2015 and 2014 were based on estimates at the date of grant as follows:

	Three Months Ended   March 31,						Six Months Ended   March 31,
	2015			2014			2015			2014
Options
Weighted-average fair value of grants	$	4.41		$	5.12		$	4.11		$	4.69
Expected term in years	4.27			4.42			4.27			4.42
Estimated volatility	36		%	52		%	38		%	51		%
Risk-free interest rate	1.21		%	1.18		%	1.25		%	1.04		%
Dividend yield	1.56		%	—		%	1.66		%	—		%
ESPP
Weighted-average fair value of grants	$	—		$	2.66		$	—		$	2.66
Expected term in years	—			0.49			—			0.49
Estimated volatility	—		%	27		%	—		%	27		%
Risk-free interest rate	—		%	0.41		%	—		%	0.41		%
Dividend yield	—		%	—		%	—		%	—		%

Summary of stock option activity and related information

A summary of the Company’s stock option activity and related information for the six months ended March 31, 2015 follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Outstanding at September 30, 2014	4,240		$	8.10
Granted	85		$	14.83
Exercised	(733	)	$	7.53		$	6,456
Cancelled/Expired	(36	)	$	10.07
Outstanding at March 31, 2015	3,556		$	8.35	3.48	$	33,906
Exercisable at March 31, 2015	2,473		$	7.39	2.85	$	25,963
Vested and expected to vest after March 31, 2015	3,515		$	8.32	3.46	$	33,626

Schedule of RSU activity and related information

A summary of the Company’s RSU activity and related information for the six months ended March 31, 2015 under the 2007 Plan follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at September 30, 2014	262		$	9.91
Granted	229		$	13.55
Vested	(107	)	$	9.28	$	1,486
Forfeited	(3	)	$	13.12
Outstanding at March 31, 2015	381		$	12.25	$	6,815

Summary of SAR activity and related information

A summary of the Company’s SAR activity and related information for the six months ended March 31, 2015 under the 2007 Plan follows (number of shares and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value
Outstanding at September 30, 2014	747		$	10.96
Granted	682		$	13.55
Exercised	(34	)	$	10.96		$	177
Cancelled/Expired	(24	)	$	12.13
Outstanding at March 31, 2015	1,371		$	12.23	6.09	$	7,766
Exercisable at March 31, 2015	211		$	10.96	5.61	$	1,460

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Stock-based Compensation (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Mar. 31, 2015	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for future grant under the 2007 Plan (shares)	1,523,000		1,523,000
Vesting period			4 years
1995 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage discount from fair market value for shares purchased under the Employee Stock Purchase Plan			85.00%
Offering period (years)			6 months
Shares available for future issuance under the Employee Stock Purchase Plan (shares)	0		0
Prior to October 1 2005
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option expiration period (years)			10 years
After October 1 2005
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option expiration period (years)			7 years
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option Cliff vesting period			6 months
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option Cliff vesting period			1 year
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average fair value of grants	$ 16.18	$ 11.26	$ 13.55	$ 11.17
Restricted Stock Units (RSUs) | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			2 years
Restricted Stock Units (RSUs) | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years
SARS
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			4 years
Option expiration period (years)			7 years
Total unrecognized stock-based compensation expense	$ 7.4		$ 7.4
Nonvested awards, total compensation cost not yet recognized, period for recognition (years)			3 years 1 month 17 days
SARS | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option Cliff vesting period			6 months
SARS | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option Cliff vesting period			1 year
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total unrecognized stock-based compensation expense	$ 8.9		$ 8.9
Nonvested awards, total compensation cost not yet recognized, period for recognition (years)			2 years 4 months 13 days

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Common Stock Repurchase Program

6 Months Ended

Mar. 31, 2015

Common Stock Repurchase Program [Abstract]

Common Stock Repurchase Program

Common Stock Repurchase Program

In the six month period ended March 31, 2015, the Company did not repurchase any shares of its common stock in the open market. As of March 31, 2015, the Company had repurchased and retired an aggregate of 14,179,711 shares of common stock at a cost of approximately $88.5 million since September 2007. As of March 31, 2015, $19.8 million remained available under the Company's existing share repurchase authorization.

The Company issues RSUs as part of its equity incentive plan. For a portion of the RSUs granted, the number of shares issued on the date the RSUs vest is net of the statutory withholding requirements that the Company pays on behalf of its employees. During the six months ended March 31, 2015, the Company withheld 36,025 shares to satisfy approximately $0.5 million of employee tax obligations. Although the shares withheld are not issued, they are treated as common stock repurchases for accounting purposes, as they reduce the number of shares that would have been issued upon vesting.