10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 _____________________________________________________

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2013

OR

¨ 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 0-23084

 _____________________________________________________

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)

Registrant’s telephone number, including area code (408) 969-6600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	Nasdaq Global Market

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

 _____________________________________________________ 

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ¨    No  ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ¨    No  ý

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 Website, 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

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 aggregate market value of the common stock held by non-affiliates of the registrant, based upon the price at which the registrant’s Common Stock was last sold as of March 31, 2013 (the last business day of the registrant’s second quarter of fiscal 2013), was approximately $159.4 million. Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of outstanding shares of the registrant’s Common Stock on December 6, 2013 was 29,466,567.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Registrant’s 2014 Annual Meeting of Stockholders are incorporated by reference in Part III of this Form 10-K.

TABLE OF CONTENTS

Special Note Regarding Forward-Looking Statements		1
	PART I
Item 1.	Business	2
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	18
Item 2.	Properties	18
Item 3.	Legal Proceedings	18
Item 4.	Mine Safety Disclosures	19
	PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
Item 6.	Selected Financial Data	22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	31
Item 8.	Financial Statements and Supplementary Data	32
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	71
Item 9A.	Controls and Procedures	71
Item 9B.	Other Information	72
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	73
Item 11.	Executive Compensation	73
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	73
Item 13.	Certain Relationships and Related Transactions, and Director Independence	73
Item 14.	Principal Accountant Fees and Services	73
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	74
SIGNATURES		76

 _____________________________________________________

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

 _____________________________________________________

All brand names, trademarks and trade names referred to in this report are the property of their respective holders.

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 results. Our actual results could differ materially from those anticipated in our forward-looking statements as a result of certain factors, including those set forth in “Risk Factors” beginning on page 10 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 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 undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

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PART I

Item 1. Business

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, medical and military (IMM), and (iv) digital consumer. Our primary products are low and medium density DRAM in both package and Known Good Die (KGD) form, high speed and low power SRAM, serial and parallel NOR flash products and a variety of mixed signal and analog products including high brightness LED (HBLED) drivers and audio amplifiers. In fiscal 2013, approximately 88% of our revenue was derived from our DRAM and SRAM products. We target large markets with our cost-effective, high quality semiconductor products and seek to build long-term relationships with our customers. A key part of our strategy is to offer a long-term commitment supplying many of the legacy DRAM and SRAM memories that are of less interest to many of our competitors. Our customers frequently cite our commitment to long-term supply of these memories as one reason they buy products from ISSI.

Our outsourced manufacturing model is based upon relationships with key foundries such as GlobalFoundries Inc., Hynix, Nanya Technology Corporation (Nanya), Powerchip, Semiconductor Manufacturing International Corporation (SMIC), Taiwan Semiconductor Manufacturing Corporation (TSMC), and United Microelectronics Corporation (UMC). We have an established presence in the important Asian market that includes our design groups in Shanghai, China, Xiamen, China, Hsinchu, Taiwan and Songham, Korea. These locations also have product engineering, sales and marketing, quality assurance, production control, and other operating functions. Our worldwide headquarters are in Milpitas, California.

Our customers include leaders in each of our four target markets, including Continental, Delphi, Panasonic and Sirius XM in automotive electronics; Cisco, Ericsson and Huawei Technologies in communications; Honeywell, Schneider and Siemens in IMM applications; and Samsung, Sharp and Toshiba in digital consumer. Due to their significant size and market influence, we believe these types of customers generally drive memory volumes in their market segments and help define the direction of future memory needs.

On September 14, 2012, we acquired Chingis Technology Corporation (Chingis), a public company in Taiwan, which provides a variety of NOR flash memory technologies used in standalone and embedded applications. Chingis targets the personal computer peripheral markets including the hard disk drive market. Chingis's current products include low density serial flash products.

On January 31, 2011, we acquired Si En Integration Holdings Limited (Si En), a privately held fabless provider of high performance analog and mixed signal integrated circuits headquartered in Xiamen, China. Si En targets the communications, digital consumer and automotive markets.

Company Background

We were incorporated in California in October 1988 and changed our state of incorporation to Delaware in August 1993. We have one operating segment which is to design, develop and market high performance DRAM and SRAM and other memory and non-memory semiconductor products. Our principal executive offices are located at 1623 Buckeye Drive, Milpitas, California 95035, and our telephone number is (408) 969-6600. On our Investor Relations web site, located at www.issi.com, we post the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission: our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. All such documents on our Investor Relations web site are available free of charge.

Market Background

In recent years, the need for sophisticated semiconductor memory architecture has expanded beyond the PC market and into electronic systems in a wide variety of markets, including automotive electronics, communications, IMM applications and digital consumer. Advances in technology have allowed for increasingly complex digital consumer products such as set-top boxes, digital cameras and HDTVs. Significant memory content is often required in these products to manage large amounts of data that create images and sounds in a digital format. As a result, virtually all electronic systems incorporate semiconductor memory devices to enable and enhance system performance.

The complexity of automobile electronics is also increasing rapidly. The significant increase in automotive electronic applications has resulted in an increase in microcontrollers and memory responsible for delivering control and command functionality. Automobile designers are increasing semiconductor content in automobiles to allow for improved telematics, digital audio and video entertainment systems, advanced safety features such as backup cameras and lane departure warning systems and

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powertrain functions such as engine control and fuel efficiency management systems. These systems require memory devices that meet the automotive industry’s high quality and reliability standards.

Mobile communication products have gained broad acceptance among consumers. Applications for cellular communications, wireless local area networks (WLAN) and global positioning systems (GPS) are increasingly able to access a wide range of data services, from internet connectivity to location detection, and are delivering information to consumers through sophisticated mobile products. Mobile products connect without wires to a base station that receives and sends data or voice to the mobile device. As more data and user content is accessed and stored on the mobile devices, advanced memory is required to store and access this information. As 3G and 4G mobile broadband services proliferate, the volume of data is expected to increase significantly, and memory is expected to play a crucial role in ensuring quality of service in the mobile infrastructure market.

The needs of the industrial memory market match our strategy of providing long-term customer support. Memory products are used in various industrial applications such as power management, imaging, point of sale terminals, bar code scanners, smart meters, instrumentation and data acquisition systems. We have a wide range of DRAM, SRAM, flash and analog products that meet the needs of the industrial market segment.

As more consumers and businesses utilize the internet and broadband communications networks, the demand for networking products has accelerated. Consumers and businesses require high speed access to internet content and other services to transmit and receive large amounts of data, such as highly graphical web sites, MP3 audio files, HD video and streaming multimedia applications. The numerous and complex applications that facilitate connections within networking and broadband products, such as cable and DSL modems, switches and routers, require optimized high speed memory architectures to maximize bus bandwidth and reduce latency.

Integrated circuits that address the semiconductor memory market can be segmented into volatile memory, such as DRAM and SRAM, and non-volatile memory, such as Flash and EEPROM. Volatile memory loses its data if the power is turned off, while non-volatile memory retains its data when the power is turned off. SRAM is used for applications that require very high speed access to stored data and it typically requires four to six transistors to store each bit of data. DRAM uses only a single transistor to store each bit of data. As a result, the storage capacity of DRAM tends to be much greater than that of SRAM. SRAM is faster than DRAM, but more expensive on a cost per bit basis. The same equipment manufacturers that use high performance SRAM may also use low and medium density DRAM and such products can be sold through the same channels.

System designers use SRAM in the most performance sensitive portions of their memory architecture. High performance SRAM operates at either very high speed or very low power or both. High speed SRAM is used in applications such as base stations, aggregators, routers, switches, modems and peripherals. Low power SRAM is used in applications such as industrial applications, wireless handheld devices and mobile phones.

The DRAM market can be segmented into high density devices (currently 4 Gb and above) and low and medium density devices (currently 2 Gb and below). High density DRAM is used in applications that require high capacity storage, such as PCs, servers and other high-end computing devices. Currently, DRAM in PCs is migrating from 4 Gb to 8 Gb and above. Low and medium density DRAM is used in applications such as digital consumer electronics, networking, mobile communications, and automotive electronics, which require less memory capacity than PCs and high end computing applications. Large captive memory manufacturers tend to focus production on higher density DRAM devices, where the volumes are greater and manufacturing economies of scale can be optimized. As a result, to the extent the large, captive memory manufacturers limit or cease production of low and medium density DRAM, customers will seek long-term, steady supply of these products. We do not participate in the PC and high end computing applications market, rather we focus on providing long-term support for low and medium density DRAM products.

The flash market can be segmented into serial NOR, parallel NOR and NAND flash products. We are currently focusing on serial NOR and parallel NOR products for personnel computer peripherals, communications, automotive and industrial applications.

Memory suppliers compete on the basis of speed, power consumption, density, reliability, and cost, all of which are a function of process technology and design expertise. Success in the memory market is determined not only by the quality of the device design, but also by the process through which the device is fabricated. Process technology improvements allow design line widths to be reduced, which in turn allow the integrated circuit design to operate at faster speeds and increased memory density. To meet the demands for high performance memories, a memory supplier must also have a wafer fabrication strategy allowing it to migrate to the newest generations of process technology on a timely basis. Process technology shifts occur frequently and are developed in high end wafer fabrication facilities that typically cost over $1.0 billion. Although most of the large multinational memory companies fabricate their own semiconductor wafers, fabless suppliers rely on third-party wafer foundries. The fabless model is much less capital intensive, but requires strong relationships with foundries to secure wafer supply and access to advanced process technology.

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We believe the demand for high performance memory products across a variety of end markets provides a substantial opportunity for a focused supplier of high performance memory integrated circuits to penetrate these markets and support customers’ long-term needs.

Strategy

Since our inception in 1988, we have developed a broad range of SRAM products that enable designers to meet the demanding density, speed, cost, reliability and power consumption requirements of semiconductors used in high technology products. In the late 1990’s, we began to establish ourselves as a supplier of low and medium density DRAM products. For both product lines, we emphasize our commitment to be a long-term provider of legacy, small to medium density memories that are of less interest to some of our larger competitors. Flash, our newest addition to our memory portfolio is complementary to our SRAM and DRAM products. Our customers are among the largest manufacturers in the automotive electronic, communications, IMM and digital consumer markets. Unlike many other fabless semiconductor companies, we employ our own process development team to work collaboratively with our key foundry suppliers, which are primarily located in Asia. Our management has extensive experience working with Asian foundries. We believe these factors allow us to build strong relationships with our foundry suppliers and facilitate access to leading edge process technology and wafer capacity. The key elements of our strategy are:

Target Specific Memory Market Segments. The memory markets are large and diverse, but also prone to the economics of demand and supply imbalances which can cause fluctuations in product prices. We work to market and sell our DRAM and SRAM products into certain specific markets that provide sufficient volume for sales, but which also may provide better stability in prices over time. Examples of the market segments that we target are automotive, communications, industrial applications, medical equipment, die sales and specialty consumer.

Commit to Being a Long-Term Supplier of our Products. We are a long-term supplier of products to many of our customers. Our fabless model provides us the flexibility to accommodate small volume production runs for products such as low and medium density memories. In contrast, many large captive suppliers may reduce or cease production of lower density products in periods of tight capacity, as manufacturing such products is less attractive to them than making higher density memories, which typically have higher volumes and greater economies of scale. As an example, we still supply low density 4 Mb EDO 3.3 volt DRAM and 64K SRAM, while most large captive memory companies ceased production of such devices many years ago.

Continue to Develop and Offer High Performance Products. We provide cost effective, high performance products, including a complete family of SRAM products and a broad range of low and medium density DRAM products. We work with our customers to identify the memory requirements of their next generation products and then focus our development efforts on achieving high performance standards through advanced process technology, circuit density, high speed, reliability and optimized power consumption. Examples of our high performance product offerings include a 72 Mb synchronous high speed SRAM product and RLDRAM^® 2 and RLDRAM^®3 products targeting high-end networking applications and a 2 Gb DDR2 DRAM and various densities of DDR3 DRAM products targeting the automotive and communication markets.

Expand our Cost Effective Asian-Based Development Teams. We intend to continue to capitalize on our extensive experience in Asia. We have established cost effective engineering development teams close to our customers through our subsidiaries in Taiwan, China and Korea and have a full complement of research and development and sales and marketing capability in these Asian locations.

Further Penetrate Industry Leading Customers. We leverage our expertise in producing high quality memory products to penetrate our target markets through industry leading accounts, such as Continental, Delphi and Panasonic in automotive electronics; Cisco, Ericsson and Huawei Technologies in communications; Honeywell, Schneider, and Siemens in IMM applications; and Samsung, Sharp, and Toshiba in digital consumer. We target these customers because we believe they drive high volumes in their markets, have long life cycle products and define the direction of future memory requirements. We believe our success with these market leaders enables us to attract other customers and broaden our customer base.

NOR Flash Product Line Addition. With our acquisition of Chingis, we offer a NOR flash product line which we believe is synergistic with our SRAM and DRAM customer base. Our goal is to expand our presence with our current customers and to promote our flash portfolio with our customer base specifically focused on the automotive and industrial markets.

Analog Market Expansion. We develop analog products for use in our key markets. Our goal is to expand our key customer relationships by developing additional analog products in core end markets, increasing our market share in China, and expanding into high volume emerging markets. Currently, our analog products include audio amplifiers, LED drivers, power management and temperature sensors.

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Customers and Marketing

Over the years, we have established a strong customer base, including industry leading accounts. Our key customers in each of our target markets are presented in the following table:

Automotive Electronics	Communications	Industrial/Military/Medical	Digital Consumer
Bosch	Alcatel-Lucent	General Electric	Garmin
Continental	Cisco	Honeywell	Inventec
Delphi	Ericsson	Hypercom	Lenovo
Harman Becker	Huawei Technologies	Philips	LG Electronics
Hyundai Mobis	Motorola Solutions	Raytheon	Motorola
Johnson Controls	Nokia Siemens Networks	Schneider Electric	NEC
Panasonic	Tellabs	Siemens	Oppo
Philips	ZTE	Tyco	Panasonic
SiriusXM			Samsung
TRW			Sharp
Valeo			Sony
			TCL
			Toshiba
			Western Digital

We have sales and marketing teams in the U.S. and Asia and a sales team in Europe. We market and sell our products in Asia, the U.S. and Europe through our direct sales force, independent sales representatives and distributors. We have distributors in North America and in many countries in Europe, including a Pan-European distributor. In Asia, we sell primarily through distributors who work closely with our Asian resident direct sales force. We have sales offices in the U.S., U.K., Germany, Taiwan, China, Hong Kong, Japan, India, Korea, and Singapore. Our marketing group focuses on product strategy, product development road maps, new product introduction, demand assessment and competitive analysis. The group also helps ensure that product launches, channel marketing programs, and ongoing demand and supply planning occur on a well-managed, timely basis.

In fiscal 2013, revenue from our largest and second largest distributor accounted for approximately 17% and 11%, respectively, of our total net sales. In fiscal 2012, revenue from our largest and second largest distributor accounted for approximately 14% and 13%, respectively, of our total net sales. In fiscal 2011, revenue from our largest and second largest distributor accounted for approximately 15% and 12%, respectively, of our total net sales. The percentage of our sales from customers located outside the U.S. was approximately 88%, 84%, and 85% in fiscal 2013, 2012 and 2011, respectively. We measure sales location by the shipping destination, even if the customer is headquartered in the U.S. We anticipate that sales to international customers will continue to represent a significant percentage of our net sales. The percentages of our sales by region are set forth in the following table:

	Fiscal Year Ended
	September 30,
	2013		2012		2011
Asia	67	%	62	%	64	%
Europe	20		21		20
U.S.	12		16		15
Other	1		1		1
Total	100	%	100	%	100	%

Information regarding our long-lived assets is contained in Note 15 to our Consolidated Financial Statements.

Our sales are generally made pursuant to standard purchase orders, which can be revised by our customers to reflect changes in the customer’s requirements. Generally, our purchase orders and OEM agreements allow customers to reschedule delivery dates and cancel purchase orders without significant penalties. For these reasons, we believe that our backlog, while useful for

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scheduling production, is not necessarily a reliable indicator of future revenues. To meet customer requirements, we often must deliver products on relatively short notice. Accordingly, we must maintain a significant inventory of certain items to be able to meet these requirements.

See page 24 of this Report on Form 10-K for a discussion of the impact of seasonality on our business. See “Risk Factors” for information regarding risks related to our international operations.

Markets and Products

Our memory products are used in a variety of specific applications within the automotive, communications, IMM, and digital consumer markets. Many of the same customers that purchase our SRAM products also purchase our DRAM products.

DRAM.    Our DRAM strategy is to be a long-term supplier of low and medium density DRAM products. Our DRAM products are not targeted at the largest DRAM markets requiring the highest density DRAM products used in PCs and workstations. Instead, we provide 4, 16, 64, 128, 256 and 512 Mb and 1 Gb, 2 Gb and 4 Gb DRAM products, including a 1.8 volt low power version of our 16, 64, 128, 256 and 512 Mb synchronous DRAM (SDRAM) products. We also provide EDO, SDRAM, DDR DDR2 and DDR3 memory solutions in both x 32 and x 16 configurations to meet our customers’ memory requirements. We provide 288 Mb and 576 Mb densities of the RLDRAM^® family. RLDRAM^® memory is a reduced latency DRAM product targeting high speed communication applications. We are now ramping production of various densities of DDR3 DRAM products.We also offer both high performance and lower memory solutions. Applications for our low and medium density DRAM products include products such as WLANs, base stations, networking switches and routers, fiber to the home (FTTH), DSL and cable modems, set top boxes, digital cameras, MP3, flat panel TVs, LCD TVs, HDTVs, video phones, voice over internet protocol (VOIP), printers, disk drives, tape drives, audio/video equipment, instrumentation, GPS, telematics, infotainment, backup cameras, lane departure warning systems and other applications. Most of these applications do not require high density products, and our customers’ memory component strategy typically follows one or more generations behind the high density DRAM market. Additional DRAM products are under development. For most SDRAM products, we offer both packaged and known good die (KGD) only solutions. We also offer FBGA packages, which are very small and thin, for all of our synchronous and low power DRAM products.

SRAM.    Our SRAM strategy is to offer a broad range of devices and to be a complete supplier of our customers’ SRAM requirements. We offer advanced, leading-edge products, such as our 72 Mb synchronous SRAM, and we also make long-term supply commitments on established SRAM products, such as a 32K x 8, 5 volt asynchronous SRAM. Our high performance SRAM products generally focus on either high speed or low power applications.

We offer both asynchronous and synchronous high speed SRAM products. Our high speed asynchronous SRAM products are used in applications such as LANs, telecommunication equipment such as base stations, routers, modems, automotive electronics, multimedia products, peripherals, and industrial instrumentation. We have also developed a low power family of SRAM products for wireless applications. Our high speed synchronous SRAM products are used in a variety of networking and telecommunications applications, such as high performance switches and routers, as well as in automotive applications. Additional SRAM products under development are expected to include performance-leading features in speed, configuration, power levels, density and packaging. We are also developing certain Psuedo SRAM products as a cost effective replacement for ultra low power SRAMs.

NOR Flash.    Through our acquisition of Chingis in September 2012, we are now offering serial NOR flash products targeting the personal computer peripheral, automotive, IMM and communication markets. Current products in production include 256Kb, 512Kb, 1Mb, 2Mb, 4Mb and 32Mb devices. We have a number of products that are in the engineering validation stage including 16Mb and 8Mb devices. Our goal is to provide a complete portfolio of serial NOR flash products ranging from 256Kb to 256Mb. We are also ramping production of 32Mb and 64Mb parallel NOR flash products.

Analog and Other Products.    Through our acquisition of Si En in January 2011, we added high performance analog and mixed signal integrated circuits and are targeting the communications, digital consumer, industrial and automotive markets. Our primary products are audio amplifiers, LED drivers, power management and sensors. Applications for our audio power amplifiers include smart phones, GPS devices, MP3 players and set top boxes. Applications for our LED drivers for backlighting and panel display include smart phones, digital cameras, notebook computers and other computing and consumer devices as well as voltage converters used in industrial applications. In addition, we continue to expand our product offerings in HBLED drivers for general lighting and automotive applications.

Product Warranty.    Consistent with semiconductor memory industry practice, we generally provide a limited warranty that our semiconductor memory devices are in compliance with specifications existing at the time of delivery. Liability for a stated warranty period is usually limited to replacement of defective items or return of amounts paid.

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Manufacturing

We outsource our manufacturing operations, including wafer fabrication, assembly and testing. Since memory products are particularly well suited for the development of advanced process technology, we seek to participate in developing and refining the process technology used to manufacture many of our products. We believe that this strategy enables us to achieve earlier introduction of smaller geometries for our memory products, which results in increased performance and lower manufacturing costs, as well as facilitates access to needed capacity. Our principal manufacturing relationships are with GlobalFoundries, Hynix, Nanya, Powerchip, SMIC, TSMC and UMC.

The manufacturing of our products begins at independent wafer foundries. Once the foundry has completed wafer processing, the wafers are shipped to subcontractors for wafer testing. They are then cut into individual memory chips, assembled into final packages and tested at our third-party subcontractors in Taiwan and China. Our operations groups in the U.S., China and Taiwan perform subcontractor management. We are certified to ISO 9001/2000 standards and ISO 14001, the environmental standard, and our quality system is periodically reviewed and approved by both ISO registrars and our customers. We are compliant to ISO/TS 16949:2002, the automotive standard.

Each of our wafer suppliers also fabricates for other integrated circuit companies, including certain of our competitors. In addition, some of our wafer suppliers manufacture memories for their own account. Although we are allocated specific wafer capacity from our suppliers, we may not be able to obtain such capacity in periods of tight supply. There can be no assurance that the foundries we use will not encounter construction or production difficulties or that they will allocate sufficient wafer capacity to satisfy our wafer requirements, especially in times of wafer capacity shortages. Moreover, there can be no assurance that we would be able to qualify additional manufacturing sources for existing or new products in a timely manner or that such additional manufacturing sources would be able to produce an adequate supply of wafers. If we were unable to obtain an adequate supply of wafers from our current or any alternative sources in a timely manner, our business and operating results would be harmed.

Our suppliers for wafer testing, assembly, and final test also provide services to other companies. There can be no assurance that these suppliers will not encounter production difficulties or that they will allocate sufficient capacity to satisfy our requirements. If we were unable to obtain an adequate supply of wafer testing, assembly, or final test services, our business and operating results would be harmed.

Competition

The semiconductor market is intensely competitive and has been characterized by cyclical market conditions, an oversupply of product, price erosion, rapid technological change and short product life cycles. Key factors impacting our competitive capabilities include:

• the pricing of our products;

• the supply and cost of wafers;

• product design, functionality, performance and reliability;

• successful and timely product development;

• wafer manufacturing over or under capacity;

• access to advanced process technologies at competitive prices;

• access to assembly and test capacity; and

• time to market.

Adverse developments with respect to any of these factors could impact our ability to compete successfully in the future and our failure to do so could harm our business. We currently believe that we compete favorably with respect to each of the foregoing factors.

In the low to medium density DRAM area, we generally compete with Hynix, Micron, Nanya, Oki, Samsung and Winbond. In addition, there are several fabless Taiwanese companies that are competitors, including ESMT and Etron. Other large DRAM manufacturers could address the low and medium density DRAM market in the future.

In the market for SRAM products we compete with several domestic and international semiconductor companies including Cypress, Etron, GSI Technology (GSI), Integrated Device Technology, Renesas Electronics and Samsung. We also may face significant competition from other domestic and foreign integrated circuit manufacturers which have advanced technological capabilities but are not currently participating in the SRAM market sector.

In the NOR Flash area, our main competitors are Macronix, Micron, Spansion and Winbond.

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In the analog market, our primary competitors are AMS, Dialog, Linear Technology, Maxim Integrated Products, NXP Semiconductors, On Semi, Richtek and Texas Instruments. We also compete with many small to medium-sized companies in one or more segments of the market.

Certain of our competitors offer broader product lines and have greater financial, technical, marketing, distribution and other resources than us. In industry down cycles, they may be willing to sell below fully absorbed costs at prices we cannot match. We may not be able to compete successfully against any of these competitors.

The process technology used by our manufacturing sources, including process technology that we have developed jointly with our foundries, can be used by such foundries to produce products for other companies, including our competitors. Although we believe that our participation in the development of the processes provides us the advantage of early access to such processes, the knowledge of the wafer manufacturer may be used to benefit our competitors.

Research and Development

Rapid technological change and continuing price competition require research and development efforts on both new products and advanced processes employing smaller geometries. Our research and development activities are focused primarily on the development of new memory circuit designs at very small die sizes and utilization of advanced process technologies. We currently have design teams in California, Taiwan, China and Korea. Our research and development expenditures in fiscal 2013, 2012, and 2011 were $40.8 million, $30.9 million, and $27.6 million, respectively.

New SRAM products in development include a 9Mb Synchronous SRAM, a 16Mb ultra low power Asynchronous SRAM, a 36Mb Synchronous SRAM, and a 72Mb Synchronous SRAM. New DRAM products in development include 1.8 volt, low power 256Mb, 512Mb and 1Gb SDRAMs and various densities of DDR/DDR2/DDR3 DRAMs. We are also enhancing our portfolio of RLDRAM^®2 and RLDRAM^®3 products. We are developing new products on advanced 38, 45, 63 and 65 nanometer process technology as well as 72nm and 0.13 micron process technology. We are planning to introduce a number of flash products to expand our portfolio including high density serial NOR and parallel NOR flash products. We are also planning to introduce low density single level cell based NAND flash products. In the analog area, we are developing various audio amplifiers and HBLED drivers.

Patents and Intellectual Property

As of September 30, 2013, we held 121 U.S. patents which expire between 2013 and 2030 and have ten U.S. patent applications pending. We do not believe that the expiration of any particular patent in the short-term will have a material impact on our business. We expect to continue to file patent applications where appropriate to protect our proprietary technologies. In addition, we hold 55 patents in foreign jurisdictions which expire between 2015 and 2033 and have 24 patent applications in foreign jurisdictions which are pending. Although patents are an important element of our intellectual property, we believe that our continued success depends primarily on factors such as the technological skills and innovation of our personnel rather than on our patents. The process of seeking patent protection can be expensive and time consuming. There can be no assurance that patents will be issued from pending or future applications or that, if patents are issued, they will not be challenged, invalidated or circumvented, or that any rights granted thereunder will provide meaningful protection or other commercial advantage to us. Moreover, there can be no assurance that any patent rights will be upheld in the future or that we will be able to preserve any of our other intellectual property rights.

In the semiconductor industry, it is not unusual for companies to receive notices alleging infringement of patents or other intellectual property rights of others. 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. Although patent holders commonly offer such licenses, 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 harm our business.

Part of our outsourcing strategy includes licensing product designs. To help control our research and development expenses, we license some of our DRAM and SRAM designs from other companies or our foundries. We also license our own designs to other companies.

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Employees

As of September 30, 2013, we had 590 employees worldwide, including 81 employees in the U.S., 158 in China, 306 in Taiwan, 8 in Hong Kong, 3 in Europe, 4 in India, 9 in Japan, 19 in Korea, and 2 in Singapore. Our future success will be dependent on our ability to attract, retain and motivate highly qualified technical and management personnel. The employment market for such personnel can be very competitive and there can be no assurance that we will successfully staff all necessary positions. Our employees are not represented by any collective bargaining agreements, we have never experienced a work stoppage and we believe our employee relations are good.

Executive Officers of the Registrant

Our executive officers and their ages as of December 1, 2013 are as follows:

Name	Age	Position
Jimmy S.M. Lee	58	Executive Chairman of the Board of Directors
Scott D. Howarth	53	President and Chief Executive Officer
John M. Cobb	57	Vice President and Chief Financial Officer
Kong Yeu Han	58	Vice Chairman
Chang-Chaio (James) Han	59	Executive Vice President, GM ISSI-Taiwan and SRAM/DRAM Business Division

Set forth below is certain information relating to our executive officers.

Jimmy S.M. Lee has served as our Executive Chairman since April 2008 and as Chairman, Chief Executive Officer and a director from October 1988, when he co-founded ISSI, until March 2008. He also served as President from November 2005 until December 2007. From 1985 to 1988, Mr. Lee was engineering manager at International CMOS Technology, a semiconductor company, and from 1983 to 1985, he was a design manager at Signetics Corporation, a semiconductor company. He has served as a director of Chrontel, a video optics company, since July 1995 and as a director of Alpha & Omega Semiconductor, Inc., a developer of advanced power semiconductor solutions, from March 2006 through January 2010. Mr. Lee holds an M.S. degree in electrical engineering from Texas Tech University and a B.S. degree in electrical engineering from National Taiwan University.

Scott D. Howarth has served as our Chief Executive Officer since April 2008, as a director since October 2008 and as our President since December 2007. He also served as our Chief Financial Officer from February 2006 until May 2008. From September 2001 to February 2006, Mr. Howarth was the Vice President of Finance and Administration and Chief Financial Officer of Chrontel, Inc., a fabless video optics company. Prior to joining Chrontel, Mr. Howarth was acting Chief Financial Officer at Securecom Networks, a start-up that was acquired. From 1984 to 2000, he was employed with Intel Corporation in both finance and operation positions, and held several group controller positions in the company. Mr. Howarth holds an MBA degree in finance and a B.S. degree in mining engineering from the University of Idaho.

John M. Cobb has served as our Vice President of Finance and Administration and Chief Financial Officer since May 2008. He served as Vice President Finance and Administration and Chief Financial Officer of Power Integrations, Inc., a power conversion semiconductor company, from 2001 through 2006. From 1990 to 2000, Mr. Cobb held various senior level financial positions at Quantum Corporation, a computer storage company, most recently as Vice President Finance and Chief Financial Officer of the company’s hard disk drive group. Mr. Cobb holds a B.S. degree in accounting from Villanova University.

Kong Yeu Han has served as our Vice Chairman since May 2005 and as a director since August 2005. He served as Chief Executive Officer of Integrated Circuit Solution, Inc. (ICSI) from January 1999 to May 2005. Mr. Han was a co-founder of ISSI and served as the Company’s Executive Vice President from April 1995 to December 1998, as Vice President from December 1988 to March 1995, and as General Manager, ISSI-Taiwan from September 1990 to December 1998. Mr. Han holds an M.S. degree in electrical engineering from the University of California, Santa Barbara and a B.S. degree in electrical engineering from National Taiwan University.

Chang-Chaio (James) Han has served as the Company’s Executive Vice President and as General Manager, ISSI-Taiwan and SRAM/DRAM Business Division since May 2005. He served as President of ICSI from October 2003 to April 2005, and as Vice President of Design of ICSI from July 1998 to October 2003. He has served as a director of Win Win Precision Technology Co., a solar energy and semiconductor equipment company, since August 2010. Mr. Han holds a PhD degree in electrical engineering from Case Western Reserve University and M.S. and B.S. degrees in electrical engineering from National Taiwan University.

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Officers serve at the discretion of the Board and are appointed annually. There are no family relationships among the directors or officers of ISSI.

Item 1A. Risk Factors

Uncertain economic conditions and any future downturn in the automotive 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, IMM, and digital consumer markets. In particular, in fiscal 2013 and fiscal 2012, approximately 46% and 41%, 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, IMM, 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.

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 fiscal 2013, fiscal 2012 and fiscal 2011, approximately 88%, 96% and 92%, 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. While our total revenue increased in the December 2012 quarter, our DRAM and SRAM revenue declined 4.9% in the December 2012 quarter from the September 2012 quarter due to weakness in the communications market. We also experienced a sequential decline in revenue from $66.2 million in the December 2011 quarter to $62.5 million in the March 2012 quarter primarily as a result of a decrease in unit shipments of our DRAM products. We experienced a sequential decline in revenue from $71.3 million in our September 2011 quarter to $66.2 million in our December 2011 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 2011, fiscal 2012, and fiscal 2013, 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 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 and UMC. 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. In this regard, in the September 2012 quarter, we took delivery of a large quantity of DRAM wafers as the result of a last time buy with one of our foundries. 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

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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, or loans to, foundries in exchange for capacity commitments;

• joint ventures;

• process development relationships with foundries; and

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

In this regard, 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.

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 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.

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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 "Item 3. Legal Proceedings" for discussion of our pending litigation with GSI.

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 market;

• 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;

• 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;

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

• excess inventory levels at our customers;

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

• our ability to control or reduce our operating expenses;

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

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

• 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;

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

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• 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 fiscal 2013, fiscal 2012, and fiscal 2011, we recorded inventory write-downs of $4.6 million, $5.7 million, and $3.5 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.

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.

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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. 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 recent or future acquisitions will contribute positively to our business or operating results.

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 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. In fiscal 2012, approximately 16% of our net sales was attributable to customers located in the U.S., 21% was attributable to customers located in Europe and 62% was attributable to customers located in Asia. In fiscal 2011, approximately 15% of our net sales was attributable to customers located in the U.S., 20% was attributable to customers located in Europe and 64% 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;

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• 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 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 executives, 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 depends on general economic and industry conditions but such competition 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.

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.

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

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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 our unpatented proprietary technology or develop competing technologies on their own.

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 II, Item 7 of this Form 10-K). 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. In particular, the calculation of share-based compensation expense requires us to use valuation methodologies (which were not developed for use in valuing employee stock options) and a number of assumptions, estimates, and conclusions regarding matters such as expected forfeitures, expected volatility of our share price, the expected dividend rate with respect to our common stock, and the option exercise behavior of our employees. Furthermore, there are no means, under applicable accounting principles, to compare and adjust our expense if and when we learn about additional information that may affect the estimates that we previously made, with the exception of changes in expected forfeitures of share-based awards. In the future, factors may arise that lead us to change our estimates and assumptions with respect to future share-based compensation arrangements, resulting in variability in our share-based compensation expense over time. Changes in forecasted share-based compensation expense could impact our gross margin percentage, research and development expenses, and selling, general and administrative expenses.

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:

• 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;

• 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 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, our ability to increase net sales, maintain or expand gross margins, introduce new products on a timely

16

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 rates, including:

• 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;

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

• 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 rates will reduce our net income for future periods.

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 September 30, 2013, we had outstanding authorization from our Board to purchase up to an additional $19.8 million of our common stock from time to time. Although our Board of Directors has determined that these repurchase programs are 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 outbreak and other natural or manmade disasters.

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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.

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, 2013. 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.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

In December 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. 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. In China, we own and occupy an office. We have operations in leased sites in 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 2016. We believe our existing facilities are adequate to meet our current needs and that we can renew our existing leases or obtain alternative space on terms that would not have a material adverse impact on our financial results.

Item 3. 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, and alleges claims against us for violation of the Sherman Act, violation of the Racketeering Influenced and Corrupt Organizations Act, Unfair Competition under California Business & Professions Code 17200, misappropriation of trade secrets, intentional interference with contract, and intentional interference with prospective economic advantage. GSI alleges that we conspired with United Memories, Inc. to harm GSI in connection with a bid from Cisco Systems, Inc., to misappropriate alleged GSI trade secrets, and to interfere with a contract between United Memories, Inc. and GSI. GSI seeks damages and injunctive relief. Before we were named as a defendant, the Court denied motions by GSI for temporary and preliminary injunctive relief. On December 6, 2013, we filed a motion to dismiss each of the causes of action alleged against us by GSI. The motion is currently pending. We believe we have meritorious defenses to the claims alleged by GSI and intend to defend this suit vigorously.

VAREP GmBH v. Integrated Silicon Solution, Inc.

On August 21, 2012, a lawsuit was filed against us in the Superior Court of California, County of Santa Clara by a former independent sales representative based in Germany named Varep GmbH (Varep), for the alleged underpayment of commissions(Case No. 112CV230846).  The original complaint alleged 11 causes of action, including, among others, breach of contract, Labor Code violations, and violations of the Independent Wholesale Sales Representatives Contractual Relations Act.  A demurrer by us challenging the legal sufficiency of the Complaint was sustained with leave to amend and a motion to strike portions of the

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initial complaint by us was granted in part and denied in part.  On December 28, 2012, Varep filed a First Amended Complaint (FAC) asserting seven causes of action, including, among others, breach of contract and Labor Code violations.  On January 7, 2013, we filed a demurrer challenging the legal sufficiency of the FAC and a motion to strike portions of the FAC.  On February 19, 2013, the demurrer was sustained without leave to amend as to the causes of action for breach of the implied covenant of good faith and fair dealing and Labor Code violations and overruled with respect to other causes of action, and the motion to strike was granted in part to strike a claim for punitive damages on the cause of action for negligent misrepresentation and denied in other part.  On March 4, 2013, we filed an answer to the remaining allegations of the FAC.  We and the plaintiff entered into a settlement and mutual general release agreement and on August 22, 2013 the case was dismissed with prejudice.

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 4. Mine Safety Disclosures

None.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market for Common Stock

Our common stock has been quoted on the Nasdaq Global Market under the symbol ISSI since our initial public offering in February 1995. Prior to such date, there was no public market for our common stock. The following table sets forth, for the fiscal quarters indicated, the high and low sale prices per share for our common stock as reported on the Nasdaq Global Market. These prices are over-the-counter market quotations which reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

	High		Low
Fiscal Year 2012
First Quarter	$	9.79	$	6.81
Second Quarter	$	11.40	$	9.03
Third Quarter	$	11.50	$	8.83
Fourth Quarter	$	10.49	$	8.75
Fiscal Year 2013
First Quarter	$	9.73	$	8.18
Second Quarter	$	9.92	$	8.33
Third Quarter	$	11.31	$	8.31
Fourth Quarter	$	11.99	$	9.99

Holders of Record

As of December 6, 2013, there were approximately 102 stockholders of record of our common stock.

Dividends

We have never declared or paid cash dividends. We currently intend to retain any earnings for use in our business and do not anticipate paying any cash dividends on our capital stock in the foreseeable future.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.

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Stock Performance Graph

The following graph sets forth our total cumulative stockholder return compared to the Standard & Poor’s 500 Index and the Philadelphia Semiconductor Index (“SOX”), for the period September 30, 2008 through September 30, 2013. Total stockholder return assumes $100 invested at the beginning of the period in our common stock, the stocks represented in the Standard & Poor’s 500 Index and the stocks represented in the Philadelphia Semiconductor Index, respectively. Total return also assumes reinvestment of dividends; we have paid no dividends on our common stock.

Comparison of Five-Year Cumulative Return

September 30, 2008 to September 30, 2013

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Item 6. Selected Financial Data

The selected consolidated financial data set forth below should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and the Notes thereto included elsewhere in this report. The consolidated statement of operations data set forth below for the three year period ended September 30, 2013 and the consolidated balance sheet data set forth below at September 30, 2013 and 2012 have been derived from our audited financial statements included elsewhere in this report. The consolidated statement of operations data set forth below for the fiscal years ended September 30, 2010 and September 30, 2009 and the consolidated balance sheet data set forth below at September 30, 2011, September 30, 2010 and September 30, 2009 have been derived from our audited financial statements not included in this report. Our historical results are not necessarily indicative of the results to be expected for any future period.

	Fiscal Years Ended September 30,
	2013			2012			2011			2010			2009
	(In thousands, except per share data)
Consolidated Statement of Operations Data:
Net sales	$	307,570		$	265,950		$	270,508		$	252,458		$	154,251
Cost of sales	206,109			182,966			180,100			155,927			113,373
Gross profit	101,461			82,984			90,408			96,531			40,878
Operating expenses
Research and development	40,839			30,918			27,622			24,066			20,020
Selling, general and administrative	43,964			42,174			36,617			32,509			26,221
Acquired in-process technology	—			—			—			—			710
Impairment of goodwill	—			4,261			—			—			—
Total operating expenses	84,803			77,353			64,239			56,575			46,951
Operating income (loss)	16,658			5,631			26,169			39,956			(6,073		)
Other income (expense), net	13,363			(1,724		)	2,616			3,953			961
Income (loss) before income taxes	30,021			3,907			28,785			43,909			(5,112		)
Provision (benefit) for income taxes	12,277			6,512			(27,338		)	1,154			(18		)
Consolidated net income (loss)	17,744			(2,605		)	56,123			42,755			(5,094		)
Less net (income) loss attributable to noncontrolling interest	(196		)	(113		)	(166		)	(559		)	44
Net income (loss)	$	17,548		$	(2,718	)	$	55,957		$	42,196		$	(5,050	)
Basic net income (loss) per share (1)	$	0.62		$	(0.10	)	$	2.11		$	1.65		$	(0.20	)
Diluted net income (loss) per share (1)	$	0.59		$	(0.10	)	$	1.98		$	1.56		$	(0.20	)
Consolidated Balance Sheet Data:
Cash, cash equivalents, restricted cash and short-term investments	$	141,555		$	82,038		$	95,410		$	91,609		$	83,486
Total assets	361,869			317,071			291,987			234,031			161,930
Long-term obligations	13,246			5,478			9,272			2,288			797
Total ISSI stockholders’ equity	280,573			242,829			232,554			172,205			122,826
Noncontrolling interests in subsidiaries	2,197			3,506			2,692			5,616			1,750
Total stockholders’ equity	282,770			246,335			235,246			177,821			124,576

________________________

(1) See Note 1 of Notes to Consolidated Financial Statements for an explanation of the basis used to calculate net income (loss) per share.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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, medical and military, and (iv) digital consumer. Our primary products are low and medium density 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 fiscal 2013, approximately 88% 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 September 14, 2012, we acquired approximately 94.1% of Chingis Technology Corporation (Chingis) for approximately $32 million, or $13 million net of the approximately $19 million in cash and cash equivalents on Chingis' balance sheet at closing. In May 2013, we acquired an additional 4.8% of Chingis for approximately $1.6 million. At September 30, 2013, we owned approximately 98.9% of Chingis. Founded in 1995, Chingis provides a variety of NOR flash memory technologies used in standalone and embedded applications. Chingis is headquartered in HsinChu, Taiwan and has offices in Taiwan, Korea, China and the U.S. Our financial results reflect accounting for Chingis on a consolidated basis beginning September 14, 2012.

On January 31, 2011, we acquired Si En Integration Holdings Limited (Si En), a privately held fabless provider of high performance analog and mixed signal integrated circuits headquartered in Xiamen, China. Si En targets the mobile communications, digital consumer, networking, and automotive markets. Si En’s current products include audio power amplifiers, LED drivers, power management and temperature sensors.

In January 2010, we formed a separate business unit, Giantec Semiconductor, Inc. (Giantec) which designs and markets application specific standard products (ASSP) primarily EEPROMs and SmartCards. As part of this formation, Giantec raised approximately $3.8 million from an outside investor. On December 30, 2010, Giantec received an additional investment of $4.0 million from outside investors, and as a result our ownership interest was reduced to approximately 44% and we were required to deconsolidate Giantec. In August 2011, we sold approximately 37% of our shares in Giantec and on August 31, 2011, Giantec merged with Maxllent Corp. thereby reducing our ownership interest in Giantec to approximately 19.85%. In fiscal 2013, we sold our remaining investment in Giantec for $4.3 million which resulted in a pre-tax gain of approximately $0.2 million. Our consolidated financial statements reflect accounting for Giantec on a consolidated basis from January 1, 2010 through December 30, 2010. For the period from December 31, 2010 through August 31, 2011, we accounted for Giantec on the equity method and our results included our percentage share of Giantec’s results of operations. From September 1, 2011 until the sale of our investment in June 2013, we accounted for Giantec on the cost basis.

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 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. In addition, 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 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.  Although such matters have not had a material adverse impact on our business or financial results in recent periods, there can be no assurance as to the future impact that such matters will have on our business, customer relationships or results of operations.

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 fiscal 2013 and in fiscal 2012. 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

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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%, 84% and 85% in fiscal 2013, 2012 and 2011, respectively. 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:

	Fiscal Years Ended September 30,
	2013		2012		2011
Asia	67	%	62	%	64	%
Europe	20		21		20
U.S.	12		16		15
Other	1		1		1
Total	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.

Fiscal Year Ended September 30, 2013 Compared to Fiscal Year Ended September 30, 2012

Net Sales. Net sales consist principally of total product sales less estimated sales returns. Net sales increased to $307.6 million in fiscal 2013 from $266.0 million in fiscal 2012. The increase in net sales of $41.6 million was primarily the result of $29.8 million of NOR Flash revenue from our acquisition of Chingis which closed on September 14, 2012. Our DRAM and SRAM revenue increased by $13.5 million in fiscal 2013 compared to fiscal 2012. Our DRAM revenue increased by 8% in fiscal 2013 compared to fiscal 2012 principally as a result of a favorable shift in product mix to higher density products. Our SRAM revenue remained relatively flat in fiscal 2013 compared to fiscal 2012 as the impact of an increase in average selling prices from a shift in product mix was offset by the impact of a decrease in unit shipments. Our analog revenue decreased by $1.7 million in fiscal 2013 compared to fiscal 2012. 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 fiscal 2013, revenue from our largest distributor accounted for 17% of net sales and revenue from our second largest distributor accounted for 11% of our net sales. In fiscal 2012, revenue from our largest distributor accounted for 14% of net sales and revenue from our second largest distributor accounted for 13% of our net sales.

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Gross profit. Cost of sales includes die cost from the wafers acquired from foundries, subcontracted package, assembly and test costs, costs associated with in-house product testing, quality assurance, amortization of intangibles and import duties. Gross profit increased by $18.5 million to $101.5 million in fiscal 2013 from $83.0 million in fiscal 2012. Our gross margin was 33.0% in fiscal 2013 compared to 31.2% in fiscal 2012. Fiscal 2013 included a $4.6 million charge for inventory write-downs which unfavorably impacted our gross margin by 1.5% compared to a $5.7 million charge for inventory write-downs which unfavorably impacted our gross margin by 2.2% in fiscal 2012. In addition, our gross profit for fiscal 2012 included $5.4 million for the write-off of certain intangible assets acquired with our acquisition of Si En which unfavorably impacted our gross margin by 2.0%. Excluding the impact of the inventory write-downs and impairment charge, our gross margin decreased in fiscal 2013 compared to fiscal 2012 which can be attributed to the unfavorable impact in the current period of sales of lower margin NOR flash products. 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 or improve our product mix to higher gross margin products to the extent necessary to offset such declines, the decline in average selling prices will 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. When demand for end products has increased, foundries have tended to raise wafer prices. 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 32% to $40.8 million in fiscal 2013 from $30.9 million in fiscal 2012. As a percentage of net sales, research and development expenses increased to 13.3% in fiscal 2013 from 11.6% in fiscal 2012. The increase in research and development expenses of $9.9 million was primarily the result of a $7.7 million increase in research and development expenses for our NOR flash products as a result of our acquisition of Chingis. In addition, our research and development expenses in fiscal 2013 increased by $4.0 million primarily related to headcount and other product development expenses compared to fiscal 2012. Fiscal 2012 included a $1.8 million impairment charge for certain intangible and tangible assets acquired with our acquisition of Si En. We expect the dollar amount of our research and development expenses to increase in fiscal 2014 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 4% to $44.0 million in fiscal 2013 from $42.2 million in fiscal 2012. As a percentage of net sales, selling, general and administrative expenses decreased to 14.3% in fiscal 2013 from 15.9% in fiscal 2012. The increase in selling, general and administrative expenses can be attributed to a $2.8 million increase in expenses as a result of our acquisition of Chingis. In addition, our selling, general and administrative expenses in fiscal 2013 increased by $2.7 million primarily related to headcount related expenses, professional service fees and sales commissions compared to fiscal 2012. Fiscal 2012 included a $2.9 million impairment charge and $0.8 million in amortization of certain intangible assets from our acquisition of Si En which were written-off in the September 2012 quarter. We expect the dollar amount of our selling, general and administrative expenses to remain relatively flat in fiscal 2014 and expect such expenses to fluctuate as a percentage of net sales depending on our overall level of sales.

Impairment of goodwill. There was no impairment of goodwill in fiscal 2013. During the fourth quarter of fiscal 2012, we completed the first step of our annual goodwill impairment test, which included examining the impact of current general economic conditions on our future prospects and the current level of our market capitalization. Based on this analysis, we concluded that goodwill related to our analog reporting unit was impaired. Our analog reporting unit's goodwill was originally recorded in connection with our acquisition of Si En. Therefore, we performed the second step of the impairment test to determine the implied fair value of goodwill. Specifically, we hypothetically allocated the estimated fair value of our equity as determined in the first step to recognized and unrecognized net assets, including allocations to intangible assets. The analysis indicated that there would be approximately $3.9 million remaining implied value attributable to goodwill and accordingly, we wrote off $4.3 million of our goodwill.

Interest and other income (expense), net. Interest and other income (expense), net was income of $1.2 million in fiscal 2013 compared to expense of $1.7 million in fiscal 2012. The $1.2 million of interest and other income in fiscal 2013 was comprised of $1.2 million in rental income from the lease of excess space in our Taiwan facility, interest income of $0.3 million and foreign exchange gains of approximately $0.2 million offset in part by $0.5 million of other items. The $1.7 million of interest of other income (expense) in fiscal 2012 was comprised of a $2.3 million charge to write-down our investment in Semiconductor Manufacturing International Corporation (SMIC) due to the decline in fair market value being considered other than temporary, foreign exchange losses of approximately $0.6 million, other expenses of approximately $0.3 million offset in part by $1.3 million in rental income from the lease of excess space in our Taiwan facility and $0.2 million of interest income.

Gain on the sale of investments. In fiscal 2013, we sold approximately 143.5 million shares of Nanya common stock for approximately $21.2 million which resulted in a pre-tax gain of approximately $12.0 million. In addition, we sold our investment in Giantec for approximately $4.3 million which resulted in a pre-tax gain of approximately $0.2 million.

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Provision for income taxes. We recorded income tax expense of $12.3 million in fiscal 2013 that represents an effective tax rate of approximately 41%. In fiscal 2013, we recorded an increase in the valuation allowance of approximately $0.7 million for California net operating loss carryforwards and a decrease in the valuation allowance of approximately $1.3 million for foreign tax credit carryforwards based on our estimated ability to use these carryforwards in the future as a result of a change in our legal structure. 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 impact of such items, the differential in foreign tax rates, significant foreign inclusions and non-deductible stock-based compensation expense. We recorded income tax expense of $6.5 million for fiscal 2012 that is principally comprised of U.S. federal, state and foreign income taxes. The difference between the $6.5 million tax expense and the tax on income based on the federal statutory rate of 35% is principally due to the impact of non-deductible foreign impairment charges, foreign losses for which no tax benefit has been recorded, non-deductible stock based compensation charges and other valuation allowance adjustments. For fiscal 2012, we continued to record a valuation allowance on certain U.S. and foreign deferred tax assets where the estimated realization is not certain.

Net income attributable to noncontrolling interests. The net income attributable to noncontrolling interests was $0.2 million in fiscal 2013 compared to $0.1 million in fiscal 2012.

Fiscal Year Ended September 30, 2012 Compared to Fiscal Year Ended September 30, 2011

Net Sales. Net sales decreased by 2% to $266.0 million in fiscal 2012 from $270.5 million in fiscal 2011. The decrease in net sales of $4.5 million was principally due to a decrease in ASSP, analog and SRAM revenue partially offset by an increase in DRAM revenue in fiscal 2012 compared to fiscal 2011. Our DRAM revenue increased by 8% in fiscal 2012 compared to fiscal 2011 principally as a result of a favorable shift in product mix whereas our SRAM revenue decreased by 8% in fiscal 2012 compared to fiscal 2011 as a result of a decrease in unit shipments and average selling prices. Fiscal 2012 included $8.9 million of analog revenue compared to $13.6 million in fiscal 2011. The decrease in analog revenue was the result of a decrease in unit shipments as the China feature phone market weakened due to the shift toward smart phones. As a result of our deconsolidation of Giantec, our ASSP revenue decreased $7.0 million in fiscal 2012 compared to fiscal 2011. Fiscal 2012 includes $1.2 million of flash revenue from our acquisition of Chingis which closed on September 14, 2012.

In fiscal 2012, revenue from our largest distributor accounted for 14% of net sales and revenue from our second largest distributor accounted for 13% of our net sales. In fiscal 2011, revenue from our largest distributor accounted for 15% of net sales and revenue from our second largest distributor accounted for 12% of our net sales.

Gross profit. Gross profit decreased by $7.4 million to $83.0 million in fiscal 2012 from $90.4 million in fiscal 2011. Our gross margin was 31.2% in fiscal 2012 compared to 33.4% in fiscal 2011. Our gross profit for fiscal 2012 included $5.4 million for the write-off of certain intangible assets acquired with our acquisition of Si En which unfavorably impacted our gross margin by 2.0%. Fiscal 2012 included a $5.7 million charge for inventory write-downs which unfavorably impacted our gross margin by 2.2% compared to a $3.5 million charge for inventory write-downs which unfavorably impacted our gross margin by 1.3% in fiscal 2011. Excluding the impact of the impairment charge and inventory write-downs, our gross margin increased in fiscal 2012 compared to fiscal 2011 due to the favorable impact in the current period of a change in product mix as well as a decrease in product costs for certain products.

Research and development. Research and development expenses increased by 12% to $30.9 million in fiscal 2012 from $27.6 million in fiscal 2011. As a percentage of net sales, research and development expenses increased to 11.6% in fiscal 2012 from 10.2% in fiscal 2011. The increase in research and development expenses of $3.3 million can be partially attributed to a $1.8 million impairment charge in fiscal 2012 for certain intangible and tangible assets acquired with our acquisition of Si En. In addition, $1.1 million of the increase in our research and development expenses is the result of consolidating Si En for all of fiscal 2012 and additional analog product development expenses. Our acquisition of Chingis in September 2012 resulted in an increase of $0.5 million in research and development expenses. Also, headcount related expenses increased in fiscal 2012 compared to fiscal 2011. The foregoing increases were partially offset by a $0.9 million decrease in research and development expenses as a result of our deconsolidation of Giantec.

Selling, general and administrative. Selling, general and administrative expenses increased by 15% to $42.2 million in fiscal 2012 from $36.6 million in fiscal 2011. As a percentage of net sales, selling, general and administrative expenses increased to 15.9% in fiscal 2012 from 13.5% in fiscal 2011. The increase in selling, general and administrative expenses of $5.6 million can be partially attributed to a $2.9 million impairment charge in fiscal 2012 for certain intangible assets acquired with our acquisition of Si En. In addition, $0.9 million of the increase in our selling, general and administrative expenses is the result of consolidating Si En for all of fiscal 2012. Our acquisition of Chingis in September 2012 resulted in an increase of $1.0 million in selling, general and administrative expenses. Also, headcount related expenses and accounting and legal fees increased in fiscal 2012 compared to fiscal 2011. The foregoing increases were partially offset by a $0.7 million decrease in selling, general and administrative expenses as a result of our deconsolidation of Giantec.

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Impairment of goodwill. During the fourth quarter of fiscal 2012, we completed the first step of our annual goodwill impairment test, which included examining the impact of current general economic conditions on our future prospects and the current level of our market capitalization. Based on this analysis, we concluded that goodwill related to our analog reporting unit was impaired. Our analog reporting unit's goodwill was originally recorded in connection with our acquisition of Si En. Therefore, we performed the second step of the impairment test to determine the implied fair value of goodwill. Specifically, we hypothetically allocated the estimated fair value of our equity as determined in the first step to recognized and unrecognized net assets, including allocations to intangible assets. The analysis indicated that there would be approximately $3.9 million remaining implied value attributable to goodwill and accordingly, we wrote off $4.3 million of our goodwill. In fiscal 2011, there was no impairment of goodwill.

Interest and other income (expense), net. Interest and other income (expense), net was expense of $1.7 million in fiscal 2012 compared to income of $2.1 million in fiscal 2011. The $1.7 million of interest of other income (expense) in fiscal 2012 was comprised of a $2.3 million charge to write-down our investment in SMIC due to the decline in fair market value being considered other than temporary, foreign exchange losses of approximately $0.6 million, other expenses of approximately $0.3 million offset in part by $1.3 million in rental income from the lease of excess space in our Taiwan facility and $0.2 million of interest income. The $2.1 million of interest and other income in fiscal 2011 was comprised of $1.4 million in rental income from the lease of excess space in our Taiwan facility, foreign exchange gains of approximately $0.4 million, $0.2 million from our equity interest in Giantec and interest income of $0.2 million offset in part by other items.

Gain on sale of investments. The gain on the sale of investments was $0.6 million in fiscal 2011 as we sold an investment and recorded a corresponding pre-tax gain.

Provision (benefit) for income taxes. We recorded income tax expense of $6.5 million for fiscal 2012 that is principally comprised of U.S. federal, state and foreign income taxes. The difference between the $6.5 million tax expense and the tax on income based on the federal statutory rate of 35% is principally due to the impact of non-deductible foreign impairment charges, foreign losses for which no tax benefit has been recorded, non-deductible stock based compensation charges and other valuation allowance adjustments. For fiscal 2012, we continued to record a valuation allowance on certain U.S. and foreign deferred tax assets where the estimated realization is not certain.

We recorded an income tax benefit of $27.3 million for fiscal 2011. The income tax benefit was due to the release of valuation allowances for federal, state and foreign deferred tax assets of approximately $28.3 million offset by the income tax provision of $1.0 million of foreign taxes on certain income earned by our foreign entities and some miscellaneous state income taxes. The release of the valuation allowance in fiscal 2011 was based on our evaluation of historical evidence, trends in profitability and expectations of future taxable income. As such, we determined that a valuation allowance was no longer necessary for the majority of our U.S. and for certain foreign deferred tax assets because, based on the available evidence, realization of these net deferred tax assets was more likely than not. A valuation allowance remained on certain U.S and foreign deferred tax assets to reduce our deferred tax assets to an amount that is more likely than not to be realized.

Net income attributable to noncontrolling interests. The net income attributable to noncontrolling interests was $0.1 million in fiscal 2012 compared to $0.2 million in fiscal 2011.

Liquidity and Capital Resources

As of September 30, 2013, our principal sources of liquidity included cash, cash equivalents and short-term investments of approximately $141.6 million. During fiscal 2013, we generated cash of approximately $33.6 million compared to $32.3 million of cash provided in fiscal 2012. The cash generated by operations in fiscal 2013 was primarily due to our net income of $17.7 million adjusted for non-cash items of $10.5 million and decreases in accounts receivable of $1.5 million, increases in accounts payable of $5.5 million and decreases in other assets of $0.7 million. This was partially offset by increases in inventory of $1.5 million and decreases in accrued liabilities of $0.8 million. The cash provided by operations in fiscal 2012 was primarily due to our net loss of $2.6 million adjusted for non-cash items of $34.9 million and increases in accounts payable of $2.4 million and increases in accrued and other liabilities of $2.0 million. This was partially offset by increases in inventories of $2.7 million, increases in accounts receivable of $1.3 million and increases in other assets of $0.3 million.

In fiscal 2013, we used $1.2 million for investing activities compared to $46.0 million used in fiscal 2012. The cash used in fiscal 2013 included $23.2 million for the acquisition of property and equipment including $8.7 million for our new corporate headquarters in Milpitas, California and $2.4 million for an office space in Suzhou, China, $4.2 million for the payment of a holdback related to our acquisition of Si En and $1.6 million to acquire an additional 4.8% of the noncontrolling interest in our Chingis subsidiary. In fiscal 2013, we generated $21.2 million from the sale of approximately143.5 million shares of Nanya common stock, $4.3 million from the sale of our investment in Giantec and $2.3 million from net sales of available-for-sale securities. The cash used in fiscal 2012 included $27.1 million for our investment in shares of Nanya, $13.2 million net of the cash acquired for our acquisition of Chingis, $6.0 million for the acquisition of property, equipment and leasehold improvements,

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$2.4 million for our acquisition of the noncontrolling interest in our Wintram subsidiary, $2.0 million for a minority investment in a joint venture and $2.1 million for net purchases of available-for-sale securities. In fiscal 2012, we generated $6.8 million from a decrease in restricted cash.

In fiscal 2013, we made capital expenditures of approximately $23.2 million which includes $8.7 million for our new corporate headquarters, $2.4 million for office space in Suzhou and the remaining balance for test equipment, engineering tools, and computer hardware and software compared to $6.0 million in fiscal 2012. We expect to spend approximately $12.0 million to $17.0 million to purchase capital equipment during the next twelve months, principally for the purchase of additional test equipment, design and engineering tools, and computer hardware and software. We expect to fund our capital expenditures from our existing cash and cash equivalent balances.

We generated $12.4 million from financing activities in fiscal 2013 compared to $5.3 million generated from financing activities in fiscal 2012. Our sources of financing for fiscal 2013 were borrowings of $4.9 million to purchase our new corporate headquarters, borrowing $4.1 million under short-term lines of credit and proceeds from the issuance of common stock of $8.2 million from stock option exercises and sales under our employee stock purchase plan. In fiscal 2013, we used $4.2 million for the repayment of short-term and long-term borrowings and $0.6 million to settle shares withheld for statutory withholding requirements upon the vesting of RSUs. Our sources of financing for fiscal 2012 were proceeds from the issuance of common stock of $5.8 million from stock option exercises and sales under our employee stock purchase plan and borrowings of $20.8 million under short-term lines of credit. In fiscal 2012, we used $20.8 million for the repayment of short-term borrowings and $0.5 million to settle shares withheld for statutory requirements upon the vesting of RSUs.

We have $22.5 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 August 2014. As of September 30, 2013, 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 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 2016. Our outstanding commitments under these leases were approximately $1.8 million at September 30, 2013.

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 September 30, 2013 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	$	1,760	$	802	$	958	$	—	$	—
Purchase obligations with wafer foundries	31,629		31,629		—		—		—
Total contractual cash obligations	$	33,389	$	32,431	$	958	$	—	$	—

At September 30, 2013, we had outstanding authorization from our Board to purchase up to $19.8 million of our common stock from time to time.

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 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 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.

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 elsewhere in this Report on Form 10-K.

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.

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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 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. In this regard, in fiscal 2012, we recorded impairment charges of $13.1 million for intangible assets and goodwill from our acquisition of Si En and $1.2 million for the impairment of certain tangible assets.

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.

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.

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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 1: Organization and Significant Accounting Policies" in the Notes to Consolidated Financial Statements of this Form 10-K.

Item 7A. 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 fiscal 2013, we recorded exchange gains of approximately $0.2 million, whereas in fiscal 2012, we recorded exchange losses of approximately $0.6 million. 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 and short-term investments of $141.6 million at September 30, 2013. 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 ordinary shares in SMIC which is classified as an available-for-sale investment and is recorded at fair value with the unrealized gain or loss reported as a component in “Accumulated other comprehensive loss” in our Consolidated Balance Sheets. The original cost basis of our shares in SMIC was approximately $3.4 million and the market value at September 30, 2013 was approximately $1.8 million and is included in short-term investments. The market value of SMIC shares is subject to fluctuations and our carrying value will be subject to adjustments to reflect changes in SMIC’s market value in future periods. The fair value of our SMIC stock would be approximately $2.0 million or $1.6 million, respectively, based on a hypothetical 10 percent increase or 10 percent decrease in SMIC’s stock price. In the event the decline in the market value of our SMIC 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. In this regard, in September 2012, we recorded a $2.3 million charge in our statement of operations as we determined that the decline in the value of our shares in SMIC was other-than temporary.

In September 2012, we invested approximately $27.1 million in Nayna which was comprised of private placement shares which are accounted for on the cost basis and common shares which are classified as an available-for-sale investment and are recorded at fair value with the unrealized gain or loss reported as a component in “Accumulated other comprehensive income” in our Consolidated Balance Sheets. In fiscal 2013, we sold shares with a cost basis of approximately $9.2 million and recognized a gain of $12.0 million. The total cost basis of our common shares in Nanya is approximately $7.1 million and the market value at September 30, 2013 was approximately $16.6 million and is included in short-term investments. The market value of Nanya shares is subject to fluctuations and our carrying value will be subject to adjustments to reflect changes in Nanya’s market value in future periods. The fair value of our Nanya stock would be approximately $18.3 million or $15.0 million, respectively, based on a hypothetical 10 percent increase or 10 percent decrease in Nanya's stock price. In the event the 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.

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Item 8. Financial Statements and Supplementary Data

INTEGRATED SILICON SOLUTION, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm	33
Financial Statements:
Consolidated Statements of Operations For Fiscal Years Ended September 30, 2013,  2012, and 2011	35
Consolidated Statements of Comprehensive Income For Fiscal Years Ended September 30, 2013,  2012, and 2011	36
Consolidated Balance Sheets As of September 30, 2013 and 2012	37
Consolidated Statements of Stockholders’ Equity For Fiscal Years Ended September  30, 2013, 2012, and 2011	38
Consolidated Statements of Cash Flows For Fiscal Years Ended September 30, 2013,  2012, and 2011	39
Notes to Consolidated Financial Statements	41

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Integrated Silicon Solution, Inc.

We have audited the accompanying consolidated balance sheets of Integrated Silicon Solution, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of September 30, 2013 and 2012, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended September 30, 2013.These financial statements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Integrated Silicon Solution, Inc. and subsidiaries as of September 30, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2013, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of September 30, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 1992and our report dated December 13, 2013 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ GRANT THORNTON LLP

San Francisco, California

December 13, 2013

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Integrated Silicon Solution, Inc.

We have audited the internal control over financial reporting of Integrated Silicon Solution, Inc. (a Delaware Corporation) and subsidiaries (the "Company") as of September 30, 2013, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 1992. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2013, based on criteria established in Internal Control-Integrated Framework issued by COSO in 1992.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended September 30, 2013 and our report dated December 13, 2013 expressed an unqualified opinion on those financial statements.

/s/ GRANT THORNTON LLP

San Francisco, California

December 13, 2013

34

INTEGRATED SILICON SOLUTION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended September 30,
	2013			2012			2011
	(in thousands, except per share data)
Net sales	$	307,570		$	265,950		$	270,508
Cost of sales	206,109			182,966			180,100
Gross profit	101,461			82,984			90,408
Operating expenses
Research and development	40,839			30,918			27,622
Selling, general and administrative	43,964			42,174			36,617
Impairment of goodwill	—			4,261			—
Total operating expenses	84,803			77,353			64,239
Operating income	16,658			5,631			26,169
Interest and other income (expense), net	1,247			(1,656		)	2,144
Interest expense	(101		)	(68		)	(88		)
Gain on sales of investments, net	12,217			—			560
Income before income taxes	30,021			3,907			28,785
Provision (benefit) for income taxes	12,277			6,512			(27,338		)
Consolidated net income (loss)	17,744			(2,605		)	56,123
Less net income attributable to noncontrolling interests	(196		)	(113		)	(166		)
Net income (loss) attributable to ISSI	$	17,548		$	(2,718	)	$	55,957
Basic net income (loss) per share	$	0.62		$	(0.10	)	$	2.11
Shares used in basic per share calculation	28,223			27,120			26,568
Diluted net income (loss) per share	$	0.59		$	(0.10	)	$	1.98
Shares used in diluted per share calculation	29,694			27,120			28,308

See the accompanying notes to consolidated financial statements

35

INTEGRATED SILICON SOLUTION, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Years Ended September 30,
	2013			2012			2011
	(in thousands)
Consolidated net income (loss)	$	17,744		$	(2,605	)	$	56,123
Other comprehensive income (loss), net of tax:
Change in unrealized gain (loss) on investments:
Changes arising during current year, net of tax benefit (expense) of $(7,975), $312 and $716 for fiscal 2013, 2012 and 2011, respectively	13,755			(1,523		)	57
Reclassification for (gain) loss included in net income (loss), net of tax expense (benefit) of $3,823, $(716) and $0 for fiscal 2013, 2012 and 2011, respectively	(5,854		)	1,213			—
	7,901			(310		)	57
Change in cumulative translation adjustment:
Changes arising during current year	(1,261		)	3,932			1,850
Reclassification for gain included in net income (loss)	—			—			—
	(1,261		)	3,932			1,850
Change in retirement plan transition obligation:
Changes arising during current year, net of tax benefit (expense) of $(44), $(119) and $0 for fiscal 2013, 2012 and 2011, respectively	(23		)	(134		)	10
Reclassification for gain included in net income (loss), net of tax expense (benefit) of $15 for fiscal 2013 and $0 for both fiscal 2012 and 2011	(45		)	(62		)	(60		)
	(68		)	(196		)	(50		)
Change in retirement plan actuarial losses:
Changes arising during current year, net of tax benefit (expense) of $160, $323 and $0 for fiscal 2013, 2012 and 2011, respectively	63			127			(885		)
Reclassification for gain included in net income (loss), net of tax expense (benefit) of $(13) for fiscal 2013 and $0 for both fiscal 2012 and 2011	87			98			62
	150			225			(823		)
Other comprehensive income	6,722			3,651			1,034
Comprehensive income	24,466			1,046			57,157
Comprehensive income attributable to noncontrolling interests	(196		)	(113		)	(166		)
Comprehensive income attributable to ISSI	$	24,270		$	933		$	56,991

See the accompanying notes to consolidated financial statements

36

INTEGRATED SILICON SOLUTION, INC.

CONSOLIDATED BALANCE SHEETS

	As of September 30,
	2013			2012
	(in thousands, except Par value)
ASSETS
Current assets:
Cash and cash equivalents	$	119,997		$	75,497
Short-term investments	21,558			6,541
Accounts receivable, net of allowance for doubtful accounts of $372 in 2013 and $508 in 2012	46,088			47,710
Inventories	68,469			66,964
Deferred tax assets	2,326			8,940
Other current assets	14,602			12,264
Total current assets	273,040			217,916
Property and equipment, net	46,504			29,286
Goodwill	9,178			9,178
Purchased intangible assets, net	6,626			8,226
Deferred tax assets	9,942			13,588
Other assets	16,579			38,877
Total assets	$	361,869		$	317,071
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	50,229		$	44,705
Accrued compensation and benefits	8,072			9,420
Accrued expenses	7,357			11,133
Current portion of long-term debt	195			—
Total current liabilities	65,853			65,258
Long-term debt	4,534			—
Other long-term liabilities	8,712			5,478
Total liabilities	79,099			70,736
Commitments and contingencies (See Note 16)
Stockholders’ equity:
Preferred stock, $0.0001 par value: Authorized shares—5,000 in 2013 and 2012. No shares outstanding	—			—
Common stock, $0.0001 par value: Authorized shares—70,000 in 2013 and 2012. Issued and outstanding shares—29,060 in 2013 and 27,594 in 2012	3			3
Additional paid-in capital	343,947			330,473
Accumulated deficit	(72,498		)	(90,046		)
Accumulated other comprehensive income	9,121			2,399
Total ISSI stockholders’ equity	280,573			242,829
Noncontrolling interest	2,197			3,506
Total stockholders’ equity	282,770			246,335
Total liabilities and stockholders’ equity	$	361,869		$	317,071

See the accompanying notes to consolidated financial statements

37

INTEGRATED SILICON SOLUTION, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Common Stock				Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total ISSI Stockholders’ Equity			Non-controlling Interest			Total Stockholders’ Equity
	Shares		Amount
	(in thousands)
Balance at September 30, 2010	26,217		$	3	$	317,773		$	(143,285	)	$	(2,286	)	$	172,205		$	5,616		$	177,821
Net income	—		—		—			55,957			—			55,957			166			56,123
Other comprehensive income	—		—		—			—			1,034			1,034			—			1,034
Stock options exercised and shares issued upon vesting of restricted stock units (RSUs)	573		—		2,146			—			—			2,146			—			2,146
Shares issued under stock purchase plan	167		—		1,239			—			—			1,239			—			1,239
Stock-based compensation	—		—		4,042			—			—			4,042			—			4,042
Shares repurchased and retired	(509	)	—		(4,097		)	—			—			(4,097		)	—			(4,097		)
Noncontrolling interest in Giantec	—		—		—			—			—			—			(3,364		)	(3,364		)
Change in noncontrolling interest in Wintram	—		—		28			—			—			28			274			302
Balance at September 30, 2011	26,448		3		321,131			(87,328		)	(1,252		)	232,554			2,692			235,246
Net loss	—		—		—			(2,718		)	—			(2,718		)	113			(2,605		)
Other comprehensive income	—		—		—			—			3,651			3,651			—			3,651
Stock options exercised and shares issued upon vesting of restricted stock units (RSUs)	1,022		—		4,439			—			—			4,439			—			4,439
Shares issued under stock purchase plan	181		—		1,413			—			—			1,413			—			1,413
Stock-based compensation	—		—		5,031			—			—			5,031			—			5,031
Shares repurchased and retired	(57	)	—		(537		)	—			—			(537		)	—			(537		)
Change in noncontrolling interest in Wintram	—		—		8			—			—			8			63			71
Acquisition of noncontrolling interest in Wintram	—		—		(1,012		)	—			—			(1,012		)	(1,358		)	(2,370		)
Noncontrolling interest in Chingis	—		—		—			—			—			—			1,996			1,996
Balance at September 30, 2012	27,594		3		330,473			(90,046		)	2,399			242,829			3,506			246,335
Net income	—		—		—			17,548			—			17,548			196			17,744
Other comprehensive income	—		—		—			—			6,722			6,722			—			6,722
Stock options exercised and shares issued upon vesting of restricted stock units (RSUs)	1,288		—		6,264			—			—			6,264			—			6,264
Shares issued under stock purchase plan	237		—		1,915			—			—			1,915			—			1,915
Stock-based compensation	—		—		5,941			—			—			5,941			—			5,941
Tax effects from employee stock incentive plans	—		—		18			—			—			18			—			18
Shares repurchased and retired	(59	)	—		(555		)	—			—			(555		)	—			(555		)
Noncontrolling interest in Chingis	—		—		(109		)	—			—			(109		)	(1,505		)	(1,614		)
Balance at September 30, 2013	29,060		$	3	$	343,947		$	(72,498	)	$	9,121		$	280,573		$	2,197		$	282,770

See the accompanying notes to consolidated financial statements

38

INTEGRATED SILICON SOLUTION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended September 30,
	2013			2012			2011
	(in thousands)
Cash flows from operating activities:
Consolidated net income (loss)	$	17,744		$	(2,605	)	$	56,123
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation	5,941			5,031			4,042
Depreciation and amortization	5,726			5,569			4,831
Excess tax benefits from share-based compensation	(18		)	—			—
Amortization of intangibles	1,600			1,848			1,698
Impairment of and write-off of intangibles	—			8,887			145
Impairment of goodwill	—			4,261			—
Impairment of assets	—			1,182			—
Impairment of investment	—			2,327			—
Gain on sale of investments	(12,217		)	—			(560		)
Equity in net loss (income) of affiliate	316			—			(233		)
Net foreign currency transaction (gains) losses	(214		)	640			(436		)
Deferred tax assets	9,287			5,016			(28,362		)
Other non-cash items	69			108			677
Changes in operating assets and liabilities:
Accounts receivable	1,478			(1,290		)	721
Inventories	(1,454		)	(2,735		)	(2,026		)
Other assets	698			(256		)	(1,100		)
Accounts payable	5,443			2,444			(2,899		)
Accrued expenses and other liabilities	(771		)	1,928			(2,057		)
Net cash provided by operating activities	33,628			32,355			30,564
Cash flows from investing activities:
Acquisition of property and equipment	(23,191		)	(6,036		)	(6,329		)
Acquisition of noncontrolling interest in consolidated subsidiary	(1,614		)	(2,370		)	—
Payment of holdback related to Si En acquisition	(4,200		)	—			—
Investment in Nanya Technology Corporation (Nanya)	—			(27,109		)	—
Investment in joint venture	—			(2,000		)	—
Purchases of available-for-sale securities	(5,473		)	(4,800		)	(3,944		)
Sales of available-for-sale securities	28,969			2,697			3,305
Investment in consolidated subsidiaries, net of cash and cash equivalents acquired	—			(13,210		)	(15,960		)
Reduction in cash balances upon deconsolidation of Giantec	—			—			(6,455		)
Proceeds from sale of investments	4,256			—			2,768
Decrease (increase) in restricted cash	—			6,786			(1,679		)
Net cash used in investing activities	(1,253		)	(46,042		)	(28,294		)

39

	Years Ended September 30,
	2013			2012			2011
	(in thousands)
Cash flows from financing activities:
Repurchases and retirements of common stock	(555		)	(537		)	(4,097		)
Proceeds from issuance of stock through compensation plans	8,179			5,852			3,385
Excess tax benefit from share-based compensation	18			—			—
Proceeds from borrowings	4,875			—			—
Principal payments of long-term obligations	(146		)	—			—
Proceeds from borrowings under short-term lines of credit	4,069			20,809			11,750
Principal payments of short-term lines of credit	(4,069		)	(20,809		)	(11,750		)
Net cash provided by (used in) financing activities	12,371			5,315			(712		)
Effect of exchange rate changes on cash and cash equivalents	(246		)	6			640
Net increase (decrease) in cash and cash equivalents	44,500			(8,366		)	2,198
Cash and cash equivalents at beginning of year	75,497			83,863			81,665
Cash and cash equivalents at end of year	$	119,997		$	75,497		$	83,863
Supplemental disclosures of cash flow information:
Cash paid (refunded) for income taxes	$	1,826		$	875		$	1,601
Cash paid for interest expense	$	48		$	25		$	23

See the accompanying notes to consolidated financial statements

40

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Organization and Significant Accounting Policies

Organization

Integrated Silicon Solution, Inc. (the “Company”) was incorporated in California on October 27, 1988 and reincorporated in Delaware on August 9, 1993. The Company is a fabless semiconductor company that designs and markets high performance integrated circuits for the following key markets: (i) automotive, (ii) communications, (iii) industrial, medical and military, and (iv) digital consumer. The Company’s primary products are low and medium density DRAM and high speed and low power SRAM.

In January 2010, the Company formed a separate business unit, Giantec Semiconductor, Inc. (Giantec), which designs and markets application specific standard products (ASSP) primarily EEPROMs and SmartCards. As part of this formation, a third party invested approximately $3.8 million in Giantec. On December 30, 2010, Giantec received an additional direct investment of $4.0 million from outside investors, and as a result the Company’s ownership interest was reduced to approximately 44% and the Company was required to deconsolidate Giantec. In August 2011, the Company sold approximately 37% of its shares in Giantec and, on August 31, 2011, Giantec merged with Maxllent Corp. thereby reducing the Company's ownership interest in Giantec to approximately 19.85%. In fiscal 2013, the Company sold its remaining investment in Giantec for approximately $4.3 million which resulted in a pre-tax gain of approximately $0.2 million. The Company's consolidated financial statements reflect accounting for Giantec on a consolidated basis from January 1, 2010 through December 30, 2010. For the period from December 31, 2010 through August 31, 2011, the Company accounted for Giantec on the equity method and the Company's results included its percentage share of Giantec’s results of operations in interest and other income, net. From September 1, 2011 until the sale of its investment in June 2013, the Company accounted for Giantec on the cost basis and its investment in Giantec was included in other assets on the Company's balance sheets.

On January 31, 2011, the Company acquired Si En Integration Holdings Limited (Si En) and the Company’s financial results reflect accounting for Si En on a consolidated basis from the date of acquisition (See Note 18).

On September 14, 2012, the Company acquired Chingis Technology Corporation (Chingis) and the Company’s financial results reflect accounting for Chingis on a consolidated basis from the date of acquisition (See Note 19).

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Integrated Silicon Solution, Inc. and its wholly and majority owned subsidiaries, after elimination of all significant intercompany accounts and transactions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained at various financial institutions.

Investments

Debt securities and marketable equity securities are classified as “available-for-sale”. Available-for-sale securities are recorded at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss). Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in interest and other income, net. The cost of fixed income securities sold is based on the specific identification method and the weighted-average method is used to determine the cost basis of publicly traded equity securities disposed of. Interest and dividends on securities classified as available-for-sale are included in interest and other income, net.

The Company accounts for non-marketable equity and other equity investments for which it does not have control over the investee as equity method investments when the Company has the ability to exercise significant influence, but not control, over the investee. The Company accounts for non-marketable equity and and other equity investments as non-marketable cost method investments when the equity method does not apply. The Company's non-marketable equity and other equity investments are included in other assets in its consolidated balance sheet.

The Company regularly reviews its investments to determine whether a decline in fair value below the cost basis is other than temporary. If the decline in fair value is determined to be other than temporary, the cost basis of the investment is written down to fair value, and the amount of the write-down is included in the consolidated statements of operations.

41

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market. The Company’s inventory valuation process is done on a part-by-part basis. Lower of cost or market adjustments, specifically identified on a part-by-part basis, reduce the carrying value of the related inventory and take into consideration reductions in sales prices. 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 the Company’s costs, the Company records a charge to cost of goods sold to write down inventories to 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 the Company’s operating results. If actual market conditions are more favorable, the Company may have higher gross margins when such products are sold. The Company writes 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. Once established, these write-downs are considered permanent.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method, based upon the shorter of the estimated useful lives ranging from two to ten years for property and equipment and from 25 to 50 years for buildings or the lease term for improvements to leased properties.

Goodwill and Purchased Intangible Assets

The Company tests goodwill and other indefinite-lived intangible assets for impairment on an annual basis and between annual tests if events or circumstances require an interim impairment assessment. For goodwill, the Company either makes a qualitative assessment prior to proceeding to step 1 of the annual goodwill impairment test or performs a two-step impairment test. If the Company makes a qualitative assessment and it determines that the fair value of the reporting unit is less than its carrying amount, the Company would perform step 1 of the annual goodwill impairment test and, if necessary, proceed to step 2. Otherwise, no further evaluation is necessary. For the two-step impairment test, in the first step, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. The Company determines the fair value of the reporting unit based on a weighting of income and market approaches. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company performs the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference.

Purchased intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. Purchased intangible assets with definite lives are carried at cost less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, generally six months to eight years.

The Company has acquired in-process research and development (IPR&D) projects as the result of its business combinations (see Note 6). The fair values of the acquired IPR&D projects were determined through estimates and valuation techniques based on the terms and details of the related acquisitions. Upon completion of development for each project, the acquired IPR&D will be amortized over its useful life. The Company assesses the status of each IPR&D project quarterly to evaluate whether the carrying value has been impaired.

Valuation of Long-Lived Assets and Certain Identifiable Intangibles

The Company evaluates the recoverability of property, plant and equipment and identifiable intangible assets through the performance of periodic reviews to determine whether facts and circumstances exist that would indicate that the carrying amounts of property, plant and equipment and identifiable intangible assets exceed their fair values. If facts and circumstances indicate that the carrying amount of property, plant and equipment and identifiable intangible assets might not be fully recoverable, projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful life is compared to their respective carrying amounts. In the event that the projected undiscounted cash flows are not sufficient to recover the carrying value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets.

42

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Revenue Recognition and Accounts Receivable Allowances

Revenue from product sales (net of any applicable value added tax) to the Company’s 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. The Company makes estimates of potential future product returns and sales allowances related to current period product revenue. Management analyzes historical returns, changes in customer demand, and acceptance of products when evaluating the adequacy of sales returns and allowances. Estimates made by the Company may differ from actual product returns and sales allowances. These differences may materially impact reported revenue and amounts ultimately collected on accounts receivable.

A portion of the Company’s sales is made to distributors under agreements that provide the possibility of certain price adjustment credits, as discussed below, and to return qualifying products for credit, as determined by the Company, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. These agreements limit such returns to a certain percentage of the value of the Company's shipments to that distributor during the prior quarter. In addition, distributors are allowed to return unsold products if the Company terminates the relationship with the distributor.

Certain distributors are granted price adjustment credits related to many of their sales to their customers. Price adjustment credits are granted when a distributor’s standard cost (i.e., the Company’s sales price to the distributor) does not provide the distributor with an appropriate margin on its sales to its customers. As a result, the distributor may request and receive a price adjustment credit from the Company to allow the distributor to earn an appropriate margin on the transaction. Certain distributors are also granted price adjustment credits in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor. Generally, the Company will provide a credit equal to the difference between the price paid by the distributor (less any prior credits on such products) and the new price for the product multiplied by the quantity of such product in the distributor’s inventory at the time of the price decrease. Certain of the Company’s distributor arrangements may allow or require the granting of price concessions below the Company’s cost for a product.

Given the uncertainties associated with the levels of returns and other price adjustment credits that will be issued to these distributors, the sales price to distributors is not fixed or determinable until the distributors resell the products to their customers. Therefore, the Company defers revenue recognition from sales to these distributors until the distributors have sold the products to their end customers.

Title to the inventory transfers to a distributor at the time of shipment or delivery to the distributor, and payment from the distributor is due in accordance with the Company's standard payment terms. These payment terms are not contingent upon the distributors’ sale of the products to their customers. Upon title transfer to distributors, inventory is reduced for the cost of goods shipped, the deferred distributor margin (sales less cost of sales) is recorded as a liability and an account receivable is recorded.

The deferred costs of sales to distributors may be subject to impairment. The Company monitors the level and nature of product returns from distributors as well as the levels of inventory held at distributors. On a quarterly basis, the Company reviews the inventory held at distributors in terms of the Company’s inventory valuation policy and records a charge to cost of goods sold for all known lower of cost or market and excess and obsolescence issues.

In addition, the Company monitors collectibility of accounts receivable primarily through review of its accounts receivable aging. When facts and circumstances indicate the collection of specific amounts or from specific customers is at risk, the Company assesses the impact on amounts recorded for bad debts and, if necessary, will record a charge in the period such determination is made.

43

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following describes activity in the accounts receivable allowance for doubtful accounts for the years ended September 30, 2013, 2012 and 2011.

Description	Balance at Beginning of Year		Adjustments to Costs and Expenses(1)			Deductions(2)			Balance at End of Year
	(in thousands)
Accounts receivable—Allowance for doubtful accounts:
2011	$	154	$	362		$	(20	)	$	496
2012	$	496	$	(2	)	$	14		$	508
2013	$	508	$	19		$	(155	)	$	372

________________________

(1) Includes increases/(decreases) charged or credited to costs and expenses.

(2) Uncollectible accounts written off, net of recoveries.

Research and Development

Research and development expenditures are charged to operations as incurred.

Foreign Currency Translation

The Company uses the local currency as its functional currency for all foreign subsidiaries. Translation adjustments, which result from the process of translating foreign currency financial statements into U.S. dollars, are included in the accumulated other comprehensive income component of stockholders’ equity.

Advertising Costs

The Company expenses advertising costs as incurred and includes these costs in selling, general and administrative expenses in the consolidated statement of operations. Advertising costs totaled $79,000, $59,000 and $57,000 for the fiscal years ended September 30, 2013, 2012 and 2011, respectively.

Income Taxes

The Company accounts for income taxes under an asset and liability approach. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax reporting purposes. Valuation allowances are provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized. Uncertain tax positions are recognized or derecognized based on the threshold and measurement of a tax position taken or expected to be taken in a tax return. U.S. income tax has not been provided on earnings of foreign subsidiaries to the extent that such earnings are considered to be indefinitely reinvested.

Stock-Based Compensation

Stock-based compensation is measured at the grant date, based on the estimated fair value of the award. The Company amortizes the compensation costs on a straight-line basis over the requisite service period of the option, which is generally the option vesting term of four years. The Company estimates the fair value of stock options using the Black-Scholes valuation model. The Black-Scholes valuation model requires the Company to estimate key assumptions such as expected term, volatility and risk free interest rates to determine the fair value of a stock option. The estimates of these key assumptions are based on historical information and judgment regarding market factors and trends.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 relate to the useful lives and residual value of fixed assets, the fair value of investments, 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

44

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 difference, may be material to the financial statements.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, marketable securities, accounts receivable and accounts payable. The Company believes that the carrying amounts of the financial instruments approximate their respective fair values. When there is no readily available market data, the Company may make fair value estimates, which may not necessarily represent the amounts that will be realized in a current or future sale of these assets.

Concentration of Credit Risk

The Company operates in one business segment, which is to design, develop, and market high performance SRAM, DRAM, and other semiconductor products. The Company markets and distributes its products on a worldwide basis, primarily to original equipment manufacturers, contract manufacturers, and distributors. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral. In fiscal 2013, revenue from the Company’s largest and second largest distributor accounted for approximately 17% and 11%, respectively, of the Company's total net sales. In fiscal 2012, revenue from the Company’s largest and second largest distributor accounted for approximately 14% and 13%, respectively, of the Company's total net sales. In fiscal 2011, revenue from the Company’s largest and second largest distributor, accounted for approximately 15% and 12% of the Company's total net sales.

The Company maintains cash, cash equivalents, and short-term investments with various high credit quality financial institutions. The Company’s investment policy is designed to limit exposure to any one institution. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in its investment strategy. The Company is exposed to credit risk in the event of default by the financial institutions or issuers of investments to the extent of the amount recorded on the balance sheet. To date, the Company has not incurred losses related to these investments.

Product Warranty and Indemnifications

The Company generally warrants its products against defects in materials and workmanship for a period of 12 months. Liability for a stated warranty period is usually limited to replacement of defective items or return of amounts paid. If there is a material increase in the rate of customer claims or the Company’s estimates of probable losses relating to specifically identified warranty exposures are inaccurate, the Company may record a charge against future cost of sales. Warranty expense has historically been immaterial to the Company’s financial statements.

The Company 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 its products are alleged to infringe third party intellectual property rights, including patents, registered trademarks, or copyrights. The terms of the Company’s indemnification obligations are generally perpetual from the effective date of the agreement. In certain cases, there are limits on and exceptions to the Company’s potential liability for indemnification relating to intellectual property infringement claims. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws provide that indemnification may be provided to the Company’s agents. The Company has directors’ and officers’ insurance pursuant to which the Company may be reimbursed for certain indemnity expenses, subject to the insurers’ reservation of rights. The Company cannot estimate the amount of potential future indemnity expenses that it may be required to make. The amount of available directors’ and officers’ insurance may not be sufficient to cover the Company’s indemnity obligations, which may have a material adverse effect on the Company’s results of operations in future periods.

Net Income (Loss) Per Share

Basic and diluted net loss per share and basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding, if applicable, during the period. Common equivalent shares consist of the shares issuable upon the assumed exercise of stock options and awards under the treasury stock method.

45

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accounting Pronouncements

The following issued accounting pronouncements are not yet effective for the Company as of September 30, 2013.

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. The guidance becomes effective for the Company beginning in the first quarter of fiscal 2015 and is not expected to have a material impact on the Company's consolidated financial statements.

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. The guidance becomes effective for the Company beginning in the first quarter of fiscal 2015 and is not expected to have a material impact on the Company's consolidated financial statements.

Accounting Standards

On October 1, 2012, the Company adopted the following accounting standard, which did not have a material effect on its consolidated results of operations during such period or financial condition at the end of such period:

Comprehensive Income

In June 2011, FASB amended its guidance on the presentation of comprehensive income. This amendment eliminates the currently available option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. Under this amendment, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company elected to present the items of net income and other comprehensive income in two separate, but consecutive statements. Effective January 1, 2013, the Company adopted the FASB's standard regarding the reporting of reclassifications out of accumulated other comprehensive income. The new standard requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts.

Reclassifications

Certain reclassifications have been made to prior year balances in order to conform to the current year’s presentation.

46

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 2.    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 September 30, 2013, the Company’s financial assets utilizing Level 1 inputs include short-term investment securities traded on an active securities exchange. The Company did not have any financial assets utilizing Level 2 or Level 3 inputs at September 30, 2013 and September 30, 2012.

The following tables represent the Company’s fair value hierarchy for financial assets measured at fair value on a recurring basis:

	September 30, 2013		September 30, 2012
	(Level 1)		(Level 1)
	(In thousands)
Money market instruments (1)	$	19,318	$	34,317
Semiconductor Manufacturing International Corp.
(SMIC) common stock (2)	1,793		1,099
Nanya Technology Corporation (Nanya) common stock (3)	16,624		14,752
	$	37,735	$	50,168

(1) Included in cash and cash equivalents

(2) Included in short-term investments

(3) Included in short-term investments at September 30, 2013 and in other assets at September 30, 2012

There were no transfers in or out of the Company's Level 1 assets during the twelve months ending September 30, 2013 and September 30, 2012.

As of September 30, 2013, the Company did not have any liabilities or non-financial assets that are measured on a fair value basis on a recurring basis.

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INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
	(in thousands)
September 30, 2013
Money market instruments	$	19,318		$	—	$	—	$	19,318
Certificates of deposit	15,595			—		—		15,595
SMIC common stock	1,099			694		—		1,793
Nanya common stock	7,100			9,524		—		16,624
Total	43,112			10,218		—		53,330
Less: Amounts included in cash and cash
equivalents	(31,772		)	—		—		(31,772		)
	$	11,340		$	10,218	$	—	$	21,558

	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
	(in thousands)
September 30, 2012
Money market instruments	$	34,317		$	—	$	—		$	34,317
Certificates of deposit	18,302			—		—			18,302
SMIC common stock	1,099			—		—			1,099
Nanya common stock	16,587			—		(1,835		)	14,752
Total	70,305			—		(1,835		)	68,470
Less: Amounts included in cash and cash
equivalents	(47,177		)	—		—			(47,177		)
	$	23,128		$	—	$	(1,835	)	$	21,293

During the fourth quarter of fiscal 2012, the Company recorded a $2.3 million charge to write-down its investment in SMIC due to the decline in fair market value being considered other than temporary. The Company uses the weighted-average cost method to determine the cost basis of its shares of SMIC.

In September 2012, the Company invested approximately $27.1 million in Nanya, which was comprised of common shares which are classified as available-for-sale securities and private placement shares which are accounted for on the cost-basis (See Note 4). The Company uses the weighted-average cost method to determine the cost basis of its shares of Nanya.

During fiscal 2013, the Company sold approximately 143.5 million shares of Nanya common stock for approximately $21.2 million which resulted in a pre-tax gain of approximately $12.0 million.

The Company held no debt securities at September 30, 2013 and September 30, 2012. As of September 30, 2013 and September 30, 2012, the Company had cash, cash equivalents and short-term investments of $71.2 million ($4.7 million of which is in China and subject to exchange control regulations) and $39.3 million, respectively, in foreign institutions.

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INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 3.    Inventories

Inventories consisted of the following at September 30:

	2013		2012
	(in thousands)
Purchased components	$	14,039	$	17,059
Work-in-process	20,960		28,921
Finished goods	33,470		20,984
	$	68,469	$	66,964

In fiscal 2013, 2012 and 2011, the Company recorded inventory write-downs of $4.6 million, $5.7 million and $3.5 million, respectively. The inventory write-downs were predominately for excess and obsolescence and lower of cost or market issues on certain of its products.

Note 4.    Other Assets

Other assets consisted of the following at September 30:

	2013		2012
	(in thousands)
Restricted assets	$	811	$	239
Deposits to foundry for capacity	—		3,500
Investment in Giantec	—		4,025
Other investment	1,684		2,000
Nanya common stock	—		14,752
Nanya private placement shares	10,920		11,042
Other	3,164		3,319
	$	16,579	$	38,877

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

In September 2012, the Company invested approximately $27.1 million in Nanya, which was comprised of common shares which are classified as available-for-sale securities and private placement shares which are accounted for on the cost-basis. 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. In addition, as of September 30, 2013, the Company had pledged $5.4 million of its Nanya private placement shares with Nanya as collateral for the Company's accounts payable. During fiscal 2013, the Company reclassified its common shares in Nanya to short-term investments as the Company's intent is to sell these shares within one year.

In March 2012, the Company made an equity investment of $2.0 million in a private technology company headquartered in Hong Kong. At September 30, 2013, the Company's ownership interest was approximately 31%. 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.

On December 30, 2010, Giantec received an additional direct investment of $4.0 million from outside investors, and as a result the Company’s ownership interest was reduced to approximately 44% and the Company was required to deconsolidate Giantec and to record its retained interest in Giantec at fair value at the date of deconsolidation. As the additional investment received by Giantec was from new investors, the Company used the price paid by the new investors as a basis for determining the fair value of its investment in Giantec. As a result, the Company recorded a loss of approximately $30,000 in “Interest and other income, net,” which was the difference between the fair value of the Company’s retained interest in Giantec, and the carrying value of Giantec’s net assets and noncontrolling interest before the deconsolidation. In August 2011, the Company sold approximately 37% of its shares in Giantec for $2.2 million resulting in no gain and on August 31, 2011, Giantec merged with Maxllent Corp. thereby reducing the Company's ownership interest in Giantec to approximately 19.85%. In fiscal 2013, the Company sold its remaining investment in Giantec for approximately $4.3 million which resulted in a pre-tax gain of approximately $0.2 million. The Company's consolidated financial statements reflect accounting for Giantec on a consolidated basis from January 1, 2010 through December 30, 2010. For the period from December 31, 2010 through August 31, 2011, the Company

49

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

accounted for Giantec on the equity method and the Company's results included its percentage share of Giantec’s results of operations in interest and other income, net. From September 1, 2011 until the sale of its investment in June 2013, the Company accounted for Giantec on the cost basis and its investment in Giantec was included in other assets on the Company's balance sheets.

Note 5.    Property and Equipment, net

Property and equipment, net consisted of the following at September 30:

	2013			2012
	(in thousands)
Machinery and equipment	$	56,144		$	47,377
Furniture and fixtures	3,717			2,869
Land, buildings and improvements	40,665			29,553
	100,526			79,799
Less accumulated depreciation and amortization	(54,022		)	(50,513		)
	$	46,504		$	29,286

During the fourth quarter of fiscal 2012, the Company recorded a $1.2 million impairment charge, which was included in operating expenses, to write-down certain assets to their estimated fair value.

The Company rents out certain floors in its office building in Hsinchu, Taiwan. These leases are cancelable with two months to four months notice. The value of the assets leased to others is included in property and equipment, net in the Company’s balance sheet. Rental income and the depreciation of the assets are included in other income (expense), net. Rental income was approximately $1.2 million, $1.3 million and $1.4 million, in fiscal 2013, fiscal 2012 and fiscal 2011, respectively. Depreciation of the assets was approximately $0.1 million in each of fiscal 2013, fiscal 2012 and fiscal 2011.

The assets leased consisted of the following at September 30:

	2013			2012
	(in thousands)
Buildings and improvements	$	9,441		$	10,533
Less accumulated depreciation	(5,650		)	(6,116		)
	$	3,791		$	4,417

Note 6.    Purchased Intangible Assets and Goodwill

No additions to purchased intangible assets were recorded during fiscal 2013. During fiscal 2012, in connection with its acquisition of Chingis, the Company recorded $7.9 million of intangible assets (See Note 19). During fiscal 2011, in connection with its acquisition of Si En, the Company recorded $11.6 million of intangible assets (See Note 18).

During the fourth quarter of fiscal 2012, in connection with the Company's annual goodwill impairment test, the Company determined that the intangible assets acquired in the acquisition of Si En were impaired. The analysis indicated that there was no value attributable to the intangible assets and accordingly, the Company recorded an impairment charge of $8.9 million of which $5.4 million was included in cost of sales and $3.5 million was included in operating expenses.

50

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

	Gross		Accumulated Amortization		Net
	(in thousands)
September 30, 2013
Developed technology	$	5,330	$	1,758	$	3,572
Customer relationships	3,340		580		2,760
Other	450		156		294
Total	$	9,120	$	2,494	$	6,626
September 30, 2012
Developed technology	$	4,930	$	879	$	4,051
In-process technology (IPR&D)	400		—		400
Customer relationships	3,340		9		3,331
Other	450		6		444
Total	$	9,120	$	894	$	8,226

The following table presents details of the amortization expense of purchased intangible assets as reported in the Consolidated Statements of Operations:

	Years Ended September 30,
	2013		2012		2011
	(in thousands)
Reported as:
Cost of sales	$	879	$	984	$	1,082
Operating expenses	721		864		616
Total	$	1,600	$	1,848	$	1,698

The following table presents the estimated future amortization expense of the Company’s purchased intangible assets at September 30, 2013 (in thousands). The weighted-average remaining amortization period for developed technology, customer relationships and other intangibles is 4.86 years, 4.96 years and 1.96 years, respectively. If the Company acquires additional purchased intangible assets in the future, its future amortization may be increased by those assets. In fiscal 2013, the IPR&D projects were completed and $0.4 million was transferred from IPR&D to developed technology.

Fiscal year
2014	$	1,533
2015	1,382
2016	1,238
2017	1,239
2018	1,195
Thereafter	39
Total	$	6,626

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INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill

The following table provides details regarding the changes in the Company's goodwill:

	(in thousands)
Balance at September 30, 2010	$	1,301
Addition arising from acquisition of Si En	8,162
Balance at September 30, 2011	9,463
Addition arising from acquisition of Chingis	3,976
Impairment	(4,261		)
Balance at September 30, 2012	9,178
Impairment	—
Balance at September 30, 2013	$	9,178

During the fourth quarter of fiscal 2012, the Company completed the first step of its annual goodwill impairment test, which included examining the impact of current general economic conditions on its future prospects and the current level of its market capitalization. Based on this analysis, the Company concluded that goodwill related to its analog reporting unit was impaired. The Company's analog reporting unit's goodwill was originally recorded in connection with its acquisition of Si En. Therefore, the Company performed the second step of the impairment test to determine the implied fair value of goodwill. Specifically, the Company hypothetically allocated the estimated fair value of the analog reporting unit's equity as determined in the first step to recognized and unrecognized net assets, including allocations to intangible assets. The analysis indicated that there would be approximately $3.9 million remaining implied value attributable to goodwill and accordingly, the Company wrote off $4.3 million of its goodwill.

Note 7.    Borrowings

At September 30, 2013, the Company had short-term lines of credit with various financial institutions in Taiwan whereby it could borrow in aggregate up to approximately $22.5 million denominated in a combination of U.S. and New Taiwan dollars. As of September 30, 2013 and September 30, 2012, the Company had no borrowings outstanding under these lines of credit. These lines of credit expire at various times through August 2014. There were no assets pledged as collateral for short-term debt or notes. Commitment fees relating to these lines are not material.

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

Fiscal year
2014	$	195
2015	195
2016	195
2017	195
2018	3,949
Thereafter	—
Total	$	4,729

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INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 8.    Accrued Expenses

Accrued expenses consisted of the following at September 30:

	2013		2012
	(in thousands)
Deferred distributor margin	$	2,301	$	2,122
Acquisition related liability	—		4,200
Other	5,056		4,811
	$	7,357	$	11,133

The Company's acquisition of Si En included a $4.2 million holdback provision for a period of two years from the date of closing to secure certain Si En indemnification obligations. The holdback was paid during fiscal 2013.

Note 9.    Other Long-term Liabilities

Other long-term liabilities consisted of the following at September 30:

	2013		2012
	(in thousands)
Pension liability	$	3,790	$	3,537
Non-current deferred tax liabilities	4,479		1,415
Other	443		526
	$	8,712	$	5,478

Note 10.    Stockholders' Equity

The Company’s Restated Certificate of Incorporation provides for 70,000,000 authorized shares of common stock and 5,000,000 authorized shares of preferred stock. The terms of the preferred stock may be fixed by the board of directors, who have the right to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The rights of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future.

As of September 30, 2013, shares of common stock were reserved for future issuance as follows:

Common shares reserved under Employee Stock Purchase Plan	581,000
Common shares reserved under stock option plans	7,876,000

Common Stock Repurchases

In both fiscal 2013 and fiscal 2012, the Company did not repurchase any shares of its common stock in the open market. As of September 30, 2013, 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 September 30, 2013, $19.8 million remained available under the existing share repurchase authorization.

The Company issues RSUs as part of its equity incentive plans. For a portion of 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 fiscal 2013, the Company withheld 59,501 shares to satisfy approximately $555,000 of employees’ tax obligations. During fiscal 2012, the Company withheld 56,849 shares to satisfy approximately $537,000 of employees’ 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.

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INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax, were as follows at September 30:

	2013			2012
	(In thousands)
Accumulated foreign currency translation adjustments	$	4,787		$	6,048
Accumulated net unrealized gain on SMIC (net of tax of $275 in 2013 and $0 in 2012)	419			—
Accumulated net unrealized gain (loss) on Nanya (net of tax of $3,565 in 2013 and $312 in 2012)	5,959			(1,523		)
Accumulated net retirement plan transition asset (net of tax of $148 in 2013 and $119 in 2012)	47			115
Accumulated net retirement plan actuarial losses (net of tax of $470 in 2013 and $323 in 2012)	(2,091		)	(2,241		)
Total accumulated other comprehensive income	$	9,121		$	2,399

The estimated net prior service cost, actuarial loss, and transition obligation for the Company's defined benefit plan that will be amortized from accumulated other comprehensive income (loss) to net periodic benefit cost during fiscal year 2014 is $0, $110,000, and $(60,000), respectively.

Note 11.    Stock-Based Compensation

Stock-Based Benefit Plans

The Company grants stock-based compensation awards under its 2007 Incentive Compensation Plan (the “2007 Plan”). The Company has outstanding grants under prior option plans, though no further grants can be made under these prior plans. At September 30, 2013, the total number of shares subject to options and awards outstanding under all plans was 5,621,000. At September 30, 2013, 2,255,000 shares were available for future grant under the 2007 Plan of which 35,000 shares were available for the grant of RSUs. 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.

2007 Incentive Compensation Plan

On July 30, 2007, the Company’s stockholders approved, upon recommendation of the Company’s board of directors, the adoption of the 2007 Plan. The 2007 Plan is the successor to each of the 1998 Stock Plan, 1996 Nonstatutory Stock Plan and 1995 Director Stock Option Plan (the “Predecessor Plans”), and no further grants can be made under the Predecessor Plans.

The 2007 Plan permits the grant of stock options, stock appreciation rights, restricted stock awards, RSUs, performance shares and performance units. The Compensation Committee of the Company’s board of directors has the authority to determine the type of incentive award, as well as the terms and conditions of the award, under the 2007 Plan.

3,000,000 shares of the Company’s common stock were initially reserved for issuance under the 2007 Plan. To the extent any options outstanding under the Predecessor Plans subsequently terminate unexercised or any unvested shares outstanding under the Predecessor Plans are subsequently forfeited or repurchased by ISSI, the number of shares of common stock subject to those terminated options, together with the forfeited shares, are added to the share reserve available for issuance under the 2007 Plan, up to an additional 4,000,000 shares. On July 20, 2011, the Company's stockholders approved, upon a recommendation of the Company's board of directors, an amendment and restatement of the Company's 2007 Incentive Compensation Plan to increase the number of shares available for issuance thereunder by 2,000,000 shares, limit the number of awards other than options or stock appreciation rights that may be granted thereunder on or after the date of the special meeting to an aggregate of 263,100 and make certain other changes as set forth therein. On February 8, 2013, the Company's stockholders approved, upon a recommendation of the Company's board of directors, an amendment of the Company's 2007 Incentive Compensation Plan to increase the shares available for issuance thereunder by 2,000,000 shares.

54

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2012 Inducement Option Plan

On July 26, 2012, the Company's board of directors authorized and approved the 2012 Inducement Option Plan (the "Inducement Plan") which was adopted and approved by the compensation committee of the board of directors on September 17, 2012. The purpose of the Inducement Plan was to provide awards of stock options to persons employed by Chingis as a material inducement to such individuals entering into employment with the Company or its subsidiaries upon the acquisition of Chingis by the Company. In this regard, on September 17, 2012, the Company made stock option grants under the Inducement Plan for an aggregate of 439,500 shares of the Company's common stock. The grants under the Inducement Plan were non-qualified stock options to purchase shares of the Company’s common stock and have the following terms: (i) an exercise price equal to $10.42 per share which was the fair market value of the Company’s common stock on the grant date of September 17, 2012, (ii) a term of seven years from the date of grant, and (iii) vesting as to 12.5% of the shares on the six (6) month anniversary of the employment start date, and as to 1/48th of the total shares each month thereafter until the option is fully vested subject to continued employment with the Company.

Other Stock Plans

The Company has outstanding grants under its 1998 Stock Plan, 1996 Nonstatutory Stock Plan and 1995 Director Stock Option 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, except for options granted under the 1995 Director Stock Option Plan, which generally vest over 12 months. Options granted prior to October 1, 2005 expire ten years after the date of grant and options granted after October 1, 2005 expire seven years after the date of the grant.

The Company has shares of common stock reserved for future issuance under its 1995 Employee Stock Purchase Plan (ESPP). Offering periods prior to August 1, 2010 under the ESPP had a duration of six months and the purchase price was equal to 85% of the fair value of the common stock on the purchase date. As approved by the Board of Directors, effective August 1, 2010, shares under the ESPP will be 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 purchase period. The offering periods under the 1995 Employee Stock Purchase Plan commence on approximately February 1 and August 1 of each year. During the fiscal years ended September 30, 2013, 2012 and 2011, 237,000 shares, 181,000 shares, and 167,000 shares were issued under the plan, respectively. As of September 30, 2013, 581,000 shares were available under the plan for future issuance.

Accounting for Stock-Based Compensation

Stock-based compensation cost is calculated by the Company on the date of grant using the fair value of the option as determined using the Black-Scholes option pricing model. The compensation cost is then amortized ratably over the vesting period of the individual option grants. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on its historical forfeiture rates as it believes these rates to be the most indicative of the Company’s expected forfeiture rate.

As of September 30, 2013, there was approximately $10.4 million of total unrecognized stock-based compensation expense under the Company’s stock option plans that will be recognized over a weighted-average period of approximately 2.47 years. Future stock option grants will add to this total whereas quarterly amortization and the vesting of the existing stock option grants will reduce this total. In addition, as of September 30, 2013, there was approximately $0.2 million of total unrecognized stock-based compensation expense under the Company’s ESPP that will be recognized over a weighted-average period of approximately 4 months.

Cash flows from tax benefits resulting from the exercise of stock options are classified as financing cash flows in the statement of cash flows. As the Company has a valuation allowance for certain of its deferred tax assets, a tax benefit associated with stock option exercises has not been realized or recognized.

The Company issues new shares of common stock upon exercise of stock options and upon vesting of RSUs. The total intrinsic value (market value on date of exercise less exercise price) of options exercised and RSUs vested during the fiscal years ended September 30, 2013, 2012 and 2011, was $7.0 million, $5.7 million and $3.5 million, respectively.

55

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table below outlines the effects of total stock-based compensation.

	Years Ended September 30,
	2013			2012		2011
	(in thousands)
Stock-based compensation
Cost of sales	$	179		$	135	$	157
Research and development	2,310			1,461		1,078
Selling, general and administrative	3,452			3,435		2,807
Total stock-based compensation	5,941			5,031		4,042
Tax effect on stock-based compensation	(1,089		)	—		—
Net effect on net income (loss)	$	4,852		$	5,031	$	4,042

Valuation Assumptions

The Company uses the Black-Scholes option pricing model to estimate the fair value of the options granted. The Company estimates the expected term of options granted based upon historical exercise data. Estimated volatilities are based on historical stock price volatilities of the period immediately preceding the option grant that is equal in length to the option’s expected term. The Company believes that historical volatility is the best estimate of future volatility. The Company bases the risk- free interest rate on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The Company has never paid dividends and does not anticipate doing so over the expected life of the options and therefore used 0% for dividend yield. For offering periods prior to August 1, 2010 under the ESPP, the Company recorded compensation expense for the difference between the purchase price and the fair market value on the day of purchase. For offering periods subsequent to August 1, 2010, the Company uses the Black-Scholes option pricing model to estimate the fair value of stock purchase rights under its ESPP.

The estimated values of stock option grants and stock purchase rights, as well as the weighted average assumptions used in calculating these values during the fiscal years ended September 30, 2013, 2012 and 2011, were based on estimates at the date of grant as follows:

	Stock Options									ESPP
	2013			2012			2011			2013			2012			2011
Expected life (years)	4.45			4.40			4.37			0.50			0.50			0.50
Expected volatility	58.00		%	60.00		%	58.00		%	31.00		%	42.00		%	46.00		%
Risk-free interest rate	0.57		%	0.61		%	1.21		%	0.09		%	0.11		%	0.12		%
Dividend yield	—		%	—		%	—		%	—		%	—		%	—		%
Weighted-average fair value of grants	$	4.37		$	4.70		$	3.88		$	2.44		$	2.66		$	2.66

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 during the fiscal years ended September 30, 2013 , 2012 and 2011 was $9.14 per share, $9.42 per share and $7.82 per share, respectively.

56

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table is a summary of the Company’s stock option activity and related information for the last three fiscal years under the 1989 Stock Plan, 1996 Nonstatutory Stock Plan, 1998 Stock Plan, 1995 Director Stock Option Plan and the 2007 Plan (stock option amounts and aggregate intrinsic value are presented in thousands):

	Outstanding Options
	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Balance at September 30, 2010	4,275		$	4.77
Options Granted	1,194		$	8.29
Options Exercised	(524	)	$	4.09
Options Cancelled/Expired	(94	)	$	12.01
Balance at September 30, 2011	4,851		$	5.57
Options Granted	1,608		$	9.91
Options Exercised	(857	)	$	5.18
Options Cancelled/Expired	(125	)	$	9.68
Balance at September 30, 2012	5,477		$	6.81
Options Granted	1,106		$	9.31
Options Exercised	(1,116	)	$	5.61
Options Cancelled/Expired	(116	)	$	9.83
Balance at September 30, 2013	5,351		$	7.51	4.17	$	18,127
Exercisable at September 30, 2013	3,173		$	6.25	3.23	$	14,738
Vested and expected to vest after September 30, 2013	5,245		$	7.47	4.14	$	17,985
Options exercisable at:
September 30, 2011	2,868		$	5.31	3.51
September 30, 2012	3,072		$	5.42	3.28
September 30, 2013	3,173		$	6.25	3.23

The following table summarizes information about options outstanding and exercisable at September 30, 2013:

					Options Outstanding				Options Exercisable
Range of  Exercise Prices					Number of Options Outstanding (in thousands)	Wtd. Average Remaining Contractual Life (in years)	Wtd. Average Exercise Price		Number of Options Exercisable (in thousands)	Wtd. Average Exercise Price
$	1.50	-	$	4.34	1,246	2.68	$	3.28	1,208	$	3.25
$	4.35	-	7.34		1,155	2.40	$	6.81	989	$	6.73
$	7.35	-	9.14		1,172	5.70	$	8.83	311	$	8.32
$	9.15	-	10.42		1,300	5.43	$	9.77	449	$	9.67
$	10.43	-	16.08		478	5.14	$	10.85	216	$	10.76
$	1.50	-	$	16.08	5,351	4.17	$	7.51	3,173	$	6.25

57

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table is a summary of the Company’s RSU activity and related information under the 2007 Plan (RSU amounts and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted- Average Grant-Date Fair Value		Aggregate Intrinsic Value
Outstanding awards at September 30, 2010	69		$	7.21
Granted	362		$	7.82
Vested	(49	)	$	6.75	$	492
Forfeited	—		$	8.80
Outstanding awards at September 30, 2011	382		$	7.84
Granted	106		$	9.42
Vested	(165	)	$	7.73	$	1,563
Forfeited	—		$	10.64
Outstanding awards at September 30, 2012	323		$	8.41
Granted	121		$	9.14
Vested	(172	)	$	7.94	$	1,612
Forfeited	(3	)	$	10.64
Outstanding awards at September 30, 2013	269		$	9.02	$	2,934

Note 12.    Income Taxes

Income before provision for income taxes consisted of the following:

	2013		2012			2011
	(in thousands)
United States	$	4,542	$	9,723		$	12,931
International	25,479		(5,816		)	15,854
Total pre-tax income	$	30,021	$	3,907		$	28,785

The provision (benefit) for income taxes consisted of the following for the years ended September 30:

	2013		2012			2011
	(in thousands)
Current:
Federal	$	2	$	235		$	—
State	86		141			4
Foreign	2,902		1,120			1,020
Total current	$	2,990	$	1,496		$	1,024
Deferred:
Federal	7,596		5,470			(19,340		)
State	12		95			(4,561		)
Foreign	1,679		(549		)	(4,461		)
Total deferred	9,287		5,016			(28,362		)
Total provision (benefit)	$	12,277	$	6,512		$	(27,338	)

58

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s provision (benefit) for income taxes differs from the amount computed by applying the U.S. federal statutory rate (35%) to income before taxes and minority interest as follows for the years ended September 30:

	2013			2012			2011
	(in thousands)
Income taxes computed at the U.S. federal statutory rate	$	10,507		$	1,367		$	10,075
State income taxes	98			69			3
Research credits	(89		)	757			—
Foreign losses not benefited (benefited)	—			1,377			(5,549		)
Foreign Income Inclusion, net of credit	6,469			—			—
Non-deductible stock compensation	991			672			527
Non-deductible impairment charges	—			3,321			—
U.S. operating loss not benefited (benefited)	—			—			(5,123		)
Valuation allowance changes	(1,334		)	1,384			(28,136		)
Foreign taxes	(4,334		)	(2,523		)	1,020
Other	(31		)	88			(155		)
Total provision (benefit)	$	12,277		$	6,512		$	(27,338	)

As of September 30, 2013, the Company had net operating loss carryforwards for federal, state and foreign income tax purposes of approximately $36.5 million, $78.4 million and $17.9 million, respectively. The federal, state and foreign net operating loss carryforwards will expire at various dates beginning in 2015, if not utilized. The Company has federal research and development tax credits and foreign tax and minimum tax credit carryforwards of approximately $1.6 million, $0.9 million and $0.6 million, respectively. The Company also has California state research and development tax credit carryforwards of approximately $2.6 million. The Company has foreign research and development tax credit carryforwards of approximately $2.0 million. The federal tax credits will expire in 2019 through 2031, if not utilized. The California state research and development tax credit can be carried forward indefinitely. The foreign research and development tax credit carryforwards will expire by 2014, if not utilized.

Utilization of the federal net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation, should the Company undergo an ownership change, may result in the expiration of federal or state net operating losses and credits before utilization.

The Company’s China operation was under a tax holiday program which began on January 1, 2007 and expired on December 31, 2011. The tax benefit resulting from the holiday was $57,000 for fiscal 2011.

59

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred taxes consisted of the following at September 30:

	2013			2012
	(in thousands)
Deferred tax assets:
Depreciation	$	217		$	215
Inventory and other valuation reserves	532			1,136
Accrued expenses	5,312			6,255
Federal, state and foreign credit carryforwards	4,310			7,695
Federal, state and foreign net operating loss carryforwards	20,388			27,041
Non-deductible stock options	3,064			2,714
Other, net	38			2,444
Subtotal	33,861			47,500
Valuation allowance	(24,928		)	(24,887		)
Total deferred tax assets	$	8,933		$	22,613
Deferred tax liabilities:
Purchased intangibles	(1,144		)	(1,500		)
Net deferred tax assets	$	7,789		$	21,113
Reported as:
Current deferred tax assets	$	2,326		$	8,940
Non-current deferred tax assets	9,942			13,588
Non-current deferred tax liabilities	(4,479		)	(1,415		)
Net deferred tax assets	$	7,789		$	21,113

Non-current deferred tax liabilities are included within other long-term liabilities in the consolidated balance sheets.

Management has established a valuation allowance for a portion of the gross deferred tax assets based on management’s expectations of future taxable income and the actual taxable income during the three years ended September 30, 2013. The valuation allowance for deferred tax assets increased by $41,000 in fiscal 2013, increased by $2.7 million in fiscal 2012 and decreased by $40.5 million in fiscal 2011. Approximately $13.6 million of the valuation allowance is attributable to tax benefits of stock option deductions which will be credited to paid-in capital when recognized.

A reconciliation of the beginning and ending amount of the consolidated liability for unrecognized income tax benefits during the tax year ended September 30 is as follows:

	2013		2012			2011
	(in thousands)
Balance at the beginning of the year	$	2,906	$	4,533		$	3,460
Increases (decreases) related to current year positions	108		68			112
Increases (decreases) related to prior year positions	38		(1,695		)	961
Balance at the end of the year	$	3,052	$	2,906		$	4,533

The remaining amount of the unrecognized tax benefit as of September 30, 2013 is offset by a full valuation allowance. The Company does not anticipate a significant change in unrecognized tax benefits within the next twelve months except for any adjustments related to the expiration of the statute of limitations.

60

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company anticipates the unrecognized tax benefits may increase during the year for items that arise in the ordinary course of business. These increases will be considered in the determination of the Company’s annual effective tax rate. The amount of the unrecognized tax benefit classified as a long term tax payable, if recognized, would reduce the annual income tax provision.

The Company’s policy to include interest and penalties related to unrecognized tax benefits within the Company’s provision for (benefit from) income taxes did not change. As of September 30, 2013, the Company has not accrued any potential penalties and interest related to these unrecognized tax benefits.

The Company files U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitations during which such tax returns may be audited and adjusted by the relevant tax authorities. The 2006 through 2013 tax years generally remain subject to examination by federal and most state tax authorities, and tax years 2006 through 2013 generally remain subject to examination by foreign tax authorities. In addition, U.S. tax returns are open from the 2000 tax year through the 2003 tax year to the extent that net operating losses generated during these periods are being utilized in open tax periods. Also, U.S. tax returns are open for the tax years from 1996 through 2003 and from 2007 through 2011 to the extent research and development credits were generated during these periods and are being utilized in open years.

Note 13.    Retirement Plan

Pension Plan

The Company has pension plans covering substantially all of its Taiwan-based employees. The pension plans are based on the Labor Standards Law, a defined benefit plan (Benefit Plan), and the Labor Pension Act, a defined contribution plan (Contribution Plan). Under the Labor Standards Law, the Benefit Plan provides for a lump sum payment upon retirement based on years of service and the employee’s compensation during the last six months of employment. In accordance with the Labor Standards Law of Taiwan, the Company makes monthly contributions equal to 2% of its wages and salaries. The fund is administered by the Employees’ Retirement Fund Committee and is registered in this committee’s name. Accordingly, the pension fund assets are not included in the financial statements of the Company.

Under the Labor Pension Act effective July 1, 2005, employees may choose the requirements under the Labor Standards Law or the new statute. For employees subject to the new statute, the Company shall contribute no less than 6% of the employees’ wages and salaries to the Contribution Plan.

Benefit Obligation and Plan Assets

As of September 30, 2013 and 2012, the Company’s Benefit Plan had projected benefit obligations in excess of plan assets. The changes in the benefit obligation and plan assets for the Benefit Plan described above were as follows:

	2013			2012
	(in thousands)
Change in projected benefit obligation:
Beginning benefit obligation	$	6,047		$	5,178
Service cost	200			195
Interest cost	119			108
Actuarial loss	90			75
Currency exchange rate changes	(66		)	205
Assumed liability in business combination	—			286
Ending projected benefit obligation	$	6,390		$	6,047

61

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	2013			2012
	(in thousands)
Change in fair value plan assets:
Beginning fair value of plan assets	$	2,510		$	2,079
Actual return on plan assets	32			19
Employer contributions	86			70
Currency exchange rate changes	(29		)	83
Assets acquired in business combination	—			259
Ending fair value of plan assets	$	2,599		$	2,510

The following table summarizes the amounts recognized on the consolidated balance sheet as of September 30:

	2013		2012
	(in thousands)
Other long-term liabilities	$	3,790	$	3,537
Accumulated other comprehensive income (net of tax of $322 in 2013 and $204 in 2012)	2,044		2,126
Amount recognized	$	5,834	$	5,663

The following table summarizes the amounts recorded in accumulated other comprehensive income (loss) before taxes, as of September 30:

	2013			2012
	(in thousands)
Net transition asset	$	195		$	234
Net actuarial loss	(2,561		)	(2,564		)
Defined benefit plans, net	$	(2,366	)	$	(2,330	)

The following table summarizes the accumulated benefit obligation as of September 30:

	2013		2012
	(in thousands)
Accumulated benefit obligation	$	3,940	$	3,745

Weighted-average actuarial assumptions used to determine benefit obligations and plan assets for the Benefit Plan at September 30 were as follows:

	2013	2012
Discount rate	1.90-2.00%	1.90-2.00%
Expected return on plan assets	1.90-2.00%	1.90-2.00%
Rate of compensation increase	3.00-4.00%	3.00-4.00%

The assumptions used in the expected long-term rate of return on plan assets are determined by the Bureau of Labor Insurance in Taiwan.

62

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The net periodic benefit cost for the Benefit Plan included the following components at September 30:

	2013			2012			2011
	(in thousands)
Service cost	$	200		$	195		$	165
Interest cost	119			108			83
Expected return on plan assets	(50		)	(44		)	(40		)
Amortization of deferred amount	40			36			2
Net periodic benefit cost	$	309		$	295		$	210

The balance of vested benefits was $352,000 and $45,000 as of September 30, 2013 and September 30, 2012, respectively.

Non-U.S. Plan Assets

For the Benefit Plan, the Company deposits funds into government-managed accounts, and accrues for the unfunded portion of its obligation.

Estimated Future Benefit Payments

The following table reflects the benefit payments, which include the amount that will be funded from retiree contributions that the Company expects to pay in the periods noted (in thousands):

Fiscal year ending:
2014	$	760
2015	$	49
2016	$	152
2017	$	69
2018	$	514
2019-2023	$	3,377

Estimated Future Contributions

The Company’s expected contributions to be paid to the Benefit Plan during fiscal 2014 is $43,000.

ISSI 401(k) Plan

The Company sponsors the ISSI 401(k) Plan (401(k) Plan) to provide retirement benefits to its eligible U.S. employees. As allowed under Section 401(k) of the Internal Revenue Code, the 401(k) Plan provides for tax-deferred salary contributions and after-tax contributions for eligible employees. The 401(k) Plan allows employees to contribute up to 75% of their eligible compensation to the 401(k) Plan on a pre-tax and after-tax basis, and effective November 1, 2011, the 401(k) Plan also allows employees to make Roth contributions. Employee contributions are limited to a maximum annual amount as set periodically by the Internal Revenue Code. The 401(k) Plan also allows employees who meet the age requirements and reach the 401(k) Plan contribution limits to make a catch-up contribution not to exceed the lesser of 75% of their eligible compensation or the limit set forth in the Internal Revenue Code. The catch-up contributions are not eligible for matching contributions. The 401(k) Plan allows for employer contributions and the Company has elected to make a contribution for the plan year beginning January 1, 2013 and ending December 31, 2013. The Company will match employee contributions in an amount equal to 50% of every dollar contributed by the employee up to 10% of the employees' eligible earnings. The matching contribution in a year will not exceed $6,000 for any participant. The Company contributions are subject to vesting of 25% for each year of service with the Company. The Company elected to make no matching contributions during the fiscal years ended September 30, 2012 and 2011. Administrative expenses relating to the plan are insignificant.

63

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred Compensation Plan

The Compensation Committee of the Board of Directors of the Company adopted the Non-qualified Deferred Compensation Plan (the Deferred Compensation Plan or NDCP), effective as of March 22, 2013. As required by applicable law, participation in the Deferred Compensation Plan is limited to a select group of management and highly-compensated employees of the Company and its participating subsidiaries and affiliates, which group includes the Company’s executive officers. Under the Deferred Compensation Plan, which is an unfunded and unsecured deferred compensation arrangement, a participant may elect to defer part of his or her base salary and/or commissions (if any), but not more than 50% of his or her base salary or commissions, and all or part of his or her eligible bonus (if any) or performance-based compensation (if any), in each case on a pre-tax basis. Such deferrals made by participants in the NDCP are at all times 100% vested. In addition, the Company and its participating subsidiaries and affiliates may, but are not required to, make matching or discretionary contributions to the accounts of participants in the NDCP. The matching or discretionary contributions (if any) made by the Company and/or its participating subsidiaries and affiliates may be subject to any vesting schedule determined by the Company when any such matching or discretionary contribution is made, but will vest in full upon a participant’s disability, death, separation from service due do retirement, or upon a “change in control” of the Company (as defined in the NDCP). The Company elected to make no matching or discretionary contributions during the fiscal year ended September 30, 2013.

The Company has a prior non-qualified deferred compensation plan; however, no employee contributions have been made to the prior plan since fiscal 1998.

Note 14.    Per Share Data

The calculations of basic and diluted net income (loss) per share for each of the three years ended September 30, 2013, 2012 and 2011 are as follows:

	Years Ended September 30,
	2013		2012			2011
	(in thousands, except per share data)
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$	17,548	$	(2,718	)	$	55,957
Denominator for basic net income (loss) per share:
Weighted average common shares outstanding	28,223		27,120			26,568
Dilutive effect of stock options and awards	1,471		—			1,740
Denominator for diluted net income (loss) per share	29,694		27,120			28,308
Basic net income (loss) per share	$	0.62	$	(0.10	)	$	2.11
Diluted net income (loss) per share	$	0.59	$	(0.10	)	$	1.98

The diluted earnings per share calculation for the year ended September 30, 2012 does not include approximately 1,781,000 potential common shares from outstanding stock options and awards because their inclusion would be anti-dilutive. For the years ended September 30, 2013, 2012, and 2011, an additional 2,733,000, 1,499,000 and 1,115,000 stock options and awards were excluded from diluted earnings per share by the application of the treasury stock method.

64

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 15.    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:

	Years Ended September 30,
	2013		2012		2011
	(in thousands)
Net Sales
United States	$	37,954	$	42,527	$	40,864
China	32,170		17,913		10,181
Hong Kong	64,193		57,971		74,604
Taiwan	41,204		26,107		28,990
Japan	30,102		29,664		23,143
Other Asia Pacific countries	37,897		32,987		37,356
Europe	62,065		57,295		53,585
Other	1,985		1,486		1,785
Total net sales	$	307,570	$	265,950	$	270,508
Long-lived assets
United States	$	9,696	$	440	$	1,216
Hong Kong	7		7		5
China	3,424		558		706
Taiwan	33,377		28,281		27,032
Total long-lived assets	$	46,504	$	29,286	$	28,959

Revenues are attributed to countries based on the shipping location of customers.

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

Net foreign currency transaction gains (losses) of approximately $214,000, $(640,000), and $436,000 for the years ended September 30, 2013, 2012, and 2011, respectively, are included in the determination of net income (loss).

Note 16.    Commitments and Contingencies

Patents and Licenses

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.

Litigation

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. GSI named the Company as a new, second defendant in the Second Amended Complaint, and alleges claims against the Company for violation of the Sherman Act, violation of the Racketeering Influenced and Corrupt Organizations Act, Unfair Competition under California Business & Professions Code 17200, misappropriation of trade secrets,

65

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

intentional interference with contract, and intentional interference with prospective economic advantage. GSI alleges that the Company conspired with United Memories, Inc. to harm GSI in connection with a bid from Cisco Systems, Inc., to misappropriate alleged GSI trade secrets, and to interfere with a contract between United Memories, Inc. and GSI. GSI seeks damages and injunctive relief. Before the Company was named as a defendant, the Court denied motions by GSI for temporary and preliminary injunctive relief. On December 6, 2013, the Company filed a motion to dismiss each of the causes of action alleged against the Company by GSI. The motion is currently pending. The Company believes it has meritorious defenses to the claims alleged by GSI and intend to defend this suit vigorously.

VAREP GmBH v. Integrated Silicon Solution, Inc.

On August 21, 2012, a lawsuit was filed against the Company in the Superior Court of California, County of Santa Clara by a former independent sales representative based in Germany named Varep GmbH (Varep), for the alleged underpayment of commissions (Case No. 112CV230846).  The original complaint alleged 11 causes of action, including, among others, breach of contract, Labor Code violations, and violations of the Independent Wholesale Sales Representatives Contractual Relations Act.  A demurrer by the Company challenging the legal sufficiency of the Complaint was sustained with leave to amend and a motion to strike portions of the initial complaint by the Company was granted in part and denied in part.  On December 28, 2012, Varep filed a First Amended Complaint (FAC) asserting seven causes of action, including, among others, breach of contract and Labor Code violations.  On January 7, 2013, the Company filed a demurrer challenging the legal sufficiency of the FAC and a motion to strike portions of the FAC.  On February 19, 2013, the demurrer was sustained without leave to amend as to the causes of action for breach of the implied covenant of good faith and fair dealing and Labor Code violations and overruled with respect to other causes of action, and the motion to strike was granted in part to strike a claim for punitive damages on the cause of action for negligent misrepresentation and denied in other part.  On March 4, 2013, the Company filed an answer to the remaining allegations of the FAC.  The Company and the plaintiff entered into a settlement and mutual general release agreement and on August 22, 2013 the case was dismissed with prejudice.

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.

Operating Leases

The Company leases various facilities and the land upon which its building in Taiwan is situated under operating lease agreements that expire at various dates through 2016. Minimum rental commitments under these leases are as follows (in thousands):

Fiscal year ending:
2014	$	802
2015	603
2016	355
2017	—
2018	—
Total minimum rental commitments	$	1,760

Total rental expense, recorded on a straight-line basis, for the fiscal years ended September 30, 2013, 2012 and 2011 was approximately $1.4 million, $1.4 million and $1.1 million, respectively.

Commitments to Wafer Fabrication Facilities

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, as a matter of practice it becomes increasingly difficult to cancel the purchase order. As of September 30, 2013, the Company had approximately $31.6 million of purchase orders for which the related wafers had been entered into wafer work-in-process (i.e., manufacturing had begun).

66

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 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 $429,000, $458,000 and $938,000 during the fiscal years ended September 30, 2013, 2012 and 2011, respectively. Accounts receivable from Chrontel was approximately $65,000 and $30,000 at September 30, 2013 and September 30, 2012, respectively.

Note 18.    Acquisition of Si En

On January 31, 2011, the Company acquired 100% of the outstanding shares of Si En Integration Holdings Limited (Si En), a privately held fabless provider of high performance analog and mixed signal integrated circuits headquartered in Xiamen, China. The acquisition of Si En is part of a Company strategy to target additional revenue opportunities and attractive margins in non-memory markets. The purchase price was approximately $27.4 million in cash which included a $4.2 million holdback provision for a period of two years from the date of closing to secure certain Si En indemnification obligations.

The allocation of the purchase price of Si En includes both tangible assets and acquired intangible assets. The excess of the purchase price over the fair value allocated to the net assets is goodwill. The goodwill recognized was attributable primarily to expected synergies and the assembled workforce of Si En. The Company currently does not expect to receive a tax benefit for such goodwill.

The purchase price allocation is as follows (in thousands):

Cash and cash equivalents	$	7,240
Accounts receivable	2,148
Inventories	2,117
Property, equipment and leasehold improvements	124
Other current and other assets	260
Intangible assets:
In-process technology	2,610
Developed technology	4,650
Customer relationships	3,800
Other intangibles	570
Total identifiable assets acquired	23,519
Current liabilities	(2,533		)
Deferred tax liability	(1,748		)
Total liabilities assumed	(4,281		)
Net identifiable assets acquired	19,238
Goodwill	8,162
Net assets acquired	$	27,400

The developed technology was being amortized over eight years, the customer relationships were being amortized over five years and the other intangible assets were being amortized over lives ranging from three to four years with a weighted-average useful life of three years and six months.

In September 2012, the Company recorded an impairment charge of $13.1 million related to the goodwill and intangibles acquired in connection with its acquisition of Si En (See Note 6).

In fiscal 2011, the Company incurred legal fees of $0.3 million related to its acquisition of Si En. These costs were recorded in selling, general and administrative expenses in the Company’s consolidated statements of operations.

67

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 19.    Acquisition of Chingis

On September 14, 2012, the Company acquired approximately 94.1% of Chingis Technology Corporation (Chingis) a company headquartered in Taiwan. Chingis provides a variety of NOR flash memory technologies used in standalone and embedded applications. The Company’s goal with this acquisition is to strengthen its specialty memory product portfolio by adding another specialty memory technology to expand the Company's future growth opportunities. In addition, the Company expects to leverage existing customer and vendor relationships to promote Chingis’s products.

The purchase price was approximately $31.8 million, or $13.2 million net of the approximately $18.6 million in cash on Chingis' balance sheet at closing.

The allocation of the purchase price of Chingis includes both tangible assets and acquired intangible assets. The excess of the purchase price over the fair value allocated to the net assets is goodwill. The goodwill recognized was attributable primarily to expected synergies and the assembled workforce of Chingis. The Company currently does not expect to receive a tax benefit for such goodwill.

The purchase price allocation is as follows (in thousands):

Cash and cash equivalents	$	18,622
Accounts receivable	6,546
Inventories	5,229
Property, equipment and leasehold improvements	117
Other current and other assets	844
Intangible assets:
In-process technology	400
Developed technology	3,690
Customer relationships	3,340
Other intangibles	450
Total identifiable assets acquired	39,238
Current liabilities and other liabilities	(7,946		)
Deferred tax liability	(1,440		)
Total liabilities assumed	(9,386		)
Net identifiable assets acquired	29,852
Noncontrolling interest	(1,996		)
Goodwill	3,976
Net assets acquired	$	31,832

The noncontrolling interest was determined based on the acquisition date fair value and the minority shareholders' ownership percentage.

The developed technology is being amortized over six years, the customer relationships are being amortized over six years and the other intangible assets are being amortized over three years.

In fiscal 2012, the Company incurred costs of $0.4 million related to its acquisition of Chingis. These costs are recorded in selling, general and administrative expenses in the Company’s consolidated statements of operations. The Company's financial results for fiscal 2012, include revenue of $1.2 million and a net loss of $1.2 million attributable to Chingis for the period from September 14, 2012 through September 30, 2012.

In May 2013, the Company acquired an additional 4.8% of Chingis for approximately $1.6 million. At September 30, 2013, the Company owned approximately 98.9% of Chingis.

68

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Unaudited Pro forma Financial Information

The pro forma financial information presented below is presented as if the acquisition of Chingis had occurred at the beginning of fiscal 2011. The pro forma statements of operations for the twelve months ended September 30, 2013, 2012 and 2011, include the historical results of the Company and Chingis plus the effect of recurring amortization of the related intangible assets. Such pro forma results do not purport to be indicative of what would have occurred had the acquisition been made as of those dates or the results which may occur in the future. The pro forma financial results are as follows:

	Years Ended September 30,
	2013		2012			2011
	(in thousands, except per share data)
Net sales	$	307,570	$	303,299		$	320,516
Net income	$	17,852	$	(2,259	)	$	57,608

69

INTEGRATED SILICON SOLUTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 20.    Quarterly Financial Information (unaudited)

The following tables show the Company's quarterly results of operations for each of the years ended September 30, 2013 and 2012.

Fiscal 2013	Fourth Quarter				Third Quarter			Second Quarter			First Quarter
	(in thousands, except per share data)
Net sales	$	78,392			$	77,788		$	74,991		$	76,399
Gross profit	$	25,934			$	26,047		$	24,989		$	24,491
Operating income	$	4,693			$	4,635		$	3,951		$	3,379
Consolidated net income	$	4,730		(1)	$	7,246	(2)	$	3,280	(3)	$	2,488
Net income attributable to ISSI	$	4,698		(1)	$	7,064	(2)	$	3,287	(3)	$	2,499
Basic net income per share	$	0.16			$	0.25		$	0.12		$	0.09
Diluted net income per share	$	0.15			$	0.24		$	0.11		$	0.09
Market price range common stock:
High	$	11.99			$	11.31		$	9.92		$	9.73
Low	$	9.99			$	8.31		$	8.33		$	8.18
Fiscal 2012
Net sales	$	72,500			$	64,781		$	62,505		$	66,164
Gross profit	$	18,328		(4)	$	21,337		$	21,121		$	22,198
Operating income (loss)	$	(9,862	)	(5)	$	5,196		$	5,197		$	5,100
Consolidated net income (loss)	$	(13,118	)	(6)	$	3,147		$	3,597		$	3,769
Net income (loss) attributable to ISSI	$	(13,246	)	(6)	$	3,137		$	3,601		$	3,790
Basic net income (loss) per share	$	(0.48	)		$	0.11		$	0.13		$	0.14
Diluted net income (loss) per share	$	(0.48	)		$	0.11		$	0.12		$	0.13
Market price range common stock:
High	$	10.49			$	11.50		$	11.40		$	9.79
Low	$	8.75			$	8.83		$	9.03		$	6.81

________________________

(1) In the September 2013 quarter, the Company realized a gain of $2.9 million from the sale of a portion of its Nanya shares.

(2) In the June 2013 quarter, the Company realized a gain from the sale of investments of $7.3 million including $7.0 million from the sale of a portion of its Nanya shares.

(3) In the March 2013 quarter, the Company realized a gain of $2.1 million from the sale of a portion of its Nanya shares.

(4) In the September 2012 quarter, the Company recorded a charge of approximately $5.4 million for the impairment of certain intangible assets related to the acquisition of Si En.

(5) In the September 2012 quarter, the Company recorded a charge of approximately $14.3 million for the impairment of certain tangible and intangible assets related to the acquisition of Si En.

(6) In the September 2012 quarter, the Company recorded a charge of approximately $14.3 million for the impairment of certain tangible and intangible assets related to the acquisition of Si En and a charge of approximately $2.3 million to write-down its investment in SMIC due to the decline in fair market value being considered other than temporary.

70

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Securities Exchange Act of 1934, as amended, we evaluated under the supervision of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective at September 30, 2013 to ensure that 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. Our disclosure controls and procedures are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our disclosure controls and procedures include components of our internal control over financial reporting. Management’s assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance because a control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of the unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management assessed our internal control over financial reporting as of September 30, 2013, the end of our fiscal year. Management based its assessment on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 1992. Management’s assessment included an evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment. This assessment is supported by testing and monitoring performed by our finance organization.

Based on its assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. We reviewed the results of management’s assessment with the Audit Committee of our Board of Directors.

Our independent registered public accounting firm, Grant Thornton LLP, who also audited our consolidated financial statements, audited the effectiveness of our internal control over financial reporting. Grant Thornton LLP has issued its attestation report on our internal control over financial reporting, which is included in Part II, Item 8 of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

Chingis operated under its own set of systems and internal controls. Following our acquisition of Chingis on September 14, 2012, we began to transition certain of Chingis' processes to our internal control processes. We were separately maintaining many of Chingis' internal controls until we were able to complete the integration of Chingis' operations into our systems and control environment. We completed this transition by the end of fiscal 2013.

Other than with the respect to our transition of Chingis to our systems and control environment as described above, during the three months ended September 30, 2013, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of 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.

71

Item 9B. Other Information

None.

72

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Executive Officers—See the section entitled “Executive Officers” in Part I, Item 1 hereof.

Directors—The information required by this Item is incorporated by reference from the section entitled “Election of Directors” in our 2014 Proxy Statement for our annual meeting of stockholders to be held on February 11, 2014 which proxy statement will be filed no later than 120 days following the end of our 2013 fiscal year (the “2014 Proxy Statement”).

The disclosure required by Item 405 of Regulation S-K is incorporated by reference from the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” in our 2013 Proxy Statement.

We have adopted a Code of Business Conduct and Ethics that applies to all directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our Code of Business Conduct and Ethics is posted on our website at http://www.issi.com/. We intend to disclose future amendments to certain provisions of the Code of Business Conduct and Ethics, or waivers of such provisions granted to executive officers and directors, on our website within four business days following the date of such amendment or waiver.

The disclosure required by Items 407 (c)(3), (d)(4), and (d)(5) of Regulation S-K is incorporated by reference from the section entitled “Election of Directors” in our 2014 Proxy Statement.

Item 11. Executive Compensation

The information required by Items 402 and 407 (e)(4) and (e)(5) of Regulation S-K is incorporated by reference from the sections entitled “Compensation of Executive Officers,” “Compensation of Directors,” “Compensation Committee Interlocks and Insider Participation,” and “Report of the Compensation Committee of the Board of Directors,” in our 2014 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The disclosure required by Item 403 of Regulation S-K is incorporated by reference from the sections entitled “Security Ownership of Principal Stockholders, Directors and Executive Officers—Beneficial Owners” and “Security Ownership of Principal Stockholders, Directors and Executive Officers—Security Ownership of Management” in our 2014 Proxy Statement.

The information required by Item 201(d) of Regulation S-K regarding securities authorized for issuance under equity compensation plans is incorporated by reference from the section entitled “Equity Compensation Plan Information” in our 2014 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated by reference from the sections entitled “Certain Transactions” and “Election of Directors” in our 2014 Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by this Item appears under “Fees Paid to Accountants” and “Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors” in our 2014 Proxy Statement. Those portions of the Proxy Statement are incorporated by reference into this report.

73

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) List of documents filed as part of this Report.

1. Financial Statements: See “Index to Consolidated Financial Statements” under Item 8 on page 32 of this Form 10-K.

The following consolidated financial statements of Integrated Silicon Solution, Inc. are contained in Part II, Item 8 of this Report on Form 10-K:

Reports of Independent Registered Public Accounting Firm

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

2. Financial Statement Schedules

All other schedules for which provision is made in the Applicable Accounting Regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted, as the information is contained in Part II, Item 8 of this Report on Form 10-K.

3. Exhibits

Exhibit Number	Description of Document
3.1(2)	Restated Certificate of Incorporation of Registrant.
3.2(5)	Amendment to Restated Certificate of Incorporation of Registrant.
3.3(9)	Amended and Restated Bylaws of Registrant.
4.2(1)	Form of Common Stock Certificate.
10.1(1)	Form of Indemnification Agreement.
10.2(6)*	1993 Employee Stock Purchase Plan, as amended, and form of Subscription Agreement.
10.3(7)*	1995 Director Stock Option Plan, as amended.
10.4(4)*	Nonstatutory Stock Plan, as amended.
10.5(3)*	1998 Stock Plan, as amended.
10.6*	2007 Incentive Compensation Plan (as amended through October 16, 2013).
10.7(13)*	Form of Stock Appreciation Right Agreement for Officers.
10.8(13)*	Form of Stock Appreciation Right Agreement for Non-Officer Employees.
10.9(8)*	Executive Bonus Plan.
10.10(6)*	Form of Change in Control Agreement.
10.11(11)*	2012 Inducement Option Plan.
10.12(12)*	Nonqualified Deferred Compensation Plan.
10.13(11)+	Share Subscription Agreement with Nanya Technology Corporation, dated August 31, 2012.
10.14(11)	Side Letter by and between Nanya Plastic Corporation and Integrated Circuit Solution Inc., dated August 31, 2012.
10.15(10)	Purchase and Sale Agreement, dated July 30, 2012, between Scott M. Cooley and Integrated Silicon Solution, Inc. with addendum.
21.1	Subsidiaries of the Registrant.
23.1	Consent of Independent Registered Public Accounting Firm (Grant Thornton LLP).
24.1	Power of Attorney (see page 76).

74

Exhibit Number		Description of Document
31.1		Certification Pursuant to SEC Release No. 33-8238, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification Pursuant to SEC Release No. 33-8238, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	**	XBRL Instance Document
101.SCH	**	XBRL Taxonomy Extension Schema Document
101.CAL	**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	**	XBRL Taxonomy Extension Presentation Linkbase Document

____________________

* Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Report on Form 10-K pursuant to item 15(b) of this report.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

+ Confidential treatment was requested for certain confidential portions of this exhibit pursuant to Rule 24b-2 under the Exchange Act. In accordance with Rule 24b-2, these confidential portions were omitted from this exhibit and filed separately with the Securities and Exchange Commission.

(1) Incorporated by reference to the Company’s Registration Statement on Form S-1, as amended (file no. 33-72960).

(2) Incorporated by reference to the Company’s Registration Statement on Form S-1, as amended (file no. 33-91520).

(3) Incorporated by reference to the Company’s Registration Statement on Form S-8 filed March 9, 2001.

(4) Incorporated by reference to the Company’s Registration Statement on Form S-8 filed November 21, 2002.

(5) Incorporated by reference to the Company’s Annual Report on Form 10-K for the period ended September 30, 2003.

(6) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2009.

(7) Incorporated by reference to the Company’s Report on Form 8-K filed September 12, 2006.

(8) Incorporated by reference to the Company’s Report on Form 8-K filed November 12, 2008.

(9) Incorporated by reference to the Company’s Report on Form 8-K filed June 16, 2009.

(10) Incorporated by reference to the Company's Report on Form 8-K filed December 6, 2012.

(11) Incorporated by reference to the Company's Report on Form 10-K filed December 14, 2012.

(12) Incorporated by reference to the Company's Report on Form 8-K filed March 25, 2013.

(13) Incorporated by reference to the Company's Report on Form 8-K filed November 12, 2013.

(b) Exhibits

See (3) above

(c) Financial statement schedules

See (2) above

75

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.
By	/S/    SCOTT D. HOWARTH
	Scott D. Howarth President and Chief Executive Officer
Date:	December 13, 2013

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Scott D. Howarth and John M. Cobb, and each of them acting individually, as his attorney-in-fact, each with full power of substitution, for him in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorney to any and all amendments to said Report.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated and on the dates indicated.

Signature	Title	Date
/S/    JIMMY S.M. LEE	Executive Chairman of the Board	December 13, 2013
(Jimmy S.M. Lee)
/S/    SCOTT D. HOWARTH	Director, President and Chief Executive Officer (Principal Executive Officer)	December 13, 2013
(Scott D. Howarth)
/S/    JOHN M. COBB	Vice President and Chief Financial Officer (Principal Financial and Principal Accounting Officer)	December 13, 2013
(John M. Cobb)
/S/    KONG-YEU HAN	Director and Vice Chairman	December 13, 2013
(Kong-Yeu Han)
/S/    PAUL CHIEN	Director	December 13, 2013
(Paul Chien)
/S/    JONATHAN KHAZAM	Director	December 13, 2013
(Jonathan Khazam)
/S/    KEITH MCDONALD	Director	December 13, 2013
(Keith McDonald)
/S/    STEPHEN PLETCHER	Director	December 13, 2013
(Stephen Pletcher)
/S/    BRUCE A. WOOLEY	Director	December 13, 2013
(Bruce A. Wooley)
/S/    JOHN ZIMMERMAN	Director	December 13, 2013
(John Zimmerman)

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EXHIBIT INDEX

Exhibit Number		Description of Document
3.1(2)		Restated Certificate of Incorporation of Registrant.
3.2(5)		Amendment to Restated Certificate of Incorporation of Registrant.
3.3(9)		Amended and Restated Bylaws of Registrant.
4.2(1)		Form of Common Stock Certificate.
10.1(1)		Form of Indemnification Agreement.
10.2(6)*		1993 Employee Stock Purchase Plan, as amended, and form of Subscription Agreement.
10.3(7)*		1995 Director Stock Option Plan, as amended.
10.4(4)*		Nonstatutory Stock Plan, as amended.
10.5(3)*		1998 Stock Plan, as amended.
10.6*		2007 Incentive Compensation Plan (as amended through October 16, 2013).
10.7(13)*		Form of Stock Appreciation Right Agreement for Officers.
10.8(13)*		Form of Stock Appreciation Right Agreement for Non-Officer Employees.
10.9(8)*		Executive Bonus Plan.
10.10(6)*		Form of Change in Control Agreement.
10.11(11)*		2012 Inducement Option Plan.
10.12(12)*		Nonqualified Deferred Compensation Plan.
10.13(11)+		Share Subscription Agreement with Nanya Technology Corporation, dated August 31, 2012.
10.14(11)		Side Letter by and between Nanya Plastic Corporation and Integrated Circuit Solution Inc., dated August 31, 2012.
10.15(10)		Purchase and Sale Agreement, dated July 30, 2012, between Scott M. Cooley and Integrated Silicon Solution, Inc. with addendum.
21.1		Subsidiaries of the Registrant.
23.1		Consent of Independent Registered Public Accounting Firm (Grant Thornton LLP).
24.1		Power of Attorney (see page 76).
31.1		Certification Pursuant to SEC Release No. 33-8238, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification Pursuant to SEC Release No. 33-8238, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	**	XBRL Instance Document
101.SCH	**	XBRL Taxonomy Extension Schema Document
101.CAL	**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	**	XBRL Taxonomy Extension Presentation Linkbase Document

________________________

* Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Report on Form 10-K pursuant to item 15(b) of this report.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

+ Confidential treatment was requested for certain confidential portions of this exhibit pursuant to Rule 24b-2 under the Exchange Act. In accordance with Rule 24b-2, these confidential portions were omitted from this exhibit and filed separately with the Securities and Exchange Commission.

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(1) Incorporated by reference to the Company’s Registration Statement on Form S-1, as amended (file no. 33-72960).

(2) Incorporated by reference to the Company’s Registration Statement on Form S-1, as amended (file no. 33-91520).

(3) Incorporated by reference to the Company’s Registration Statement on Form S-8 filed March 9, 2001.

(4) Incorporated by reference to the Company’s Registration Statement on Form S-8 filed November 21, 2002.

(5) Incorporated by reference to the Company’s Annual Report on Form 10-K for the period ended September 30, 2003.

(6) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2009.

(7) Incorporated by reference to the Company’s Report on Form 8-K filed September 12, 2006.

(8) Incorporated by reference to the Company’s Report on Form 8-K filed November 12, 2008.

(9) Incorporated by reference to the Company’s Report on Form 8-K filed June 16, 2009.

(10) Incorporated by reference to the Company's Report on Form 8-K filed December 6, 2012.

(11) Incorporated by reference to the Company's Report on Form 10-K filed December 14, 2012.

(12) Incorporated by reference to the Company's Report on Form 8-K filed March 25, 2013.

(13) Incorporated by reference to the Company's Report on Form 8-K filed November 12, 2013.

78

EX-10.6

Exhibit 10.6

INTEGRATED SILICON SOLUTION, INC.

2007 INCENTIVE COMPENSATION PLAN

(As amended through October 16, 2013)

ARTICLE ONE

GENERAL PROVISIONS

I. PURPOSE OF THE PLAN

This 2007 Incentive Compensation Plan is intended to promote the interests of Integrated Silicon Solution, Inc., a Delaware corporation, by providing eligible persons in the Corporation’s service with the opportunity to participate in one or more cash or equity incentive compensation programs designed to encourage them to continue their service relationship with the Corporation.

Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.

II. STRUCTURE OF THE PLAN

A. The Plan shall be divided into a series of separate incentive compensation programs:

• the Discretionary Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock or stock appreciation rights tied to the value of such Common Stock,

• the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock pursuant to restricted stock awards, restricted stock units, performance shares or other stock-based awards which vest upon the completion of a designated service period or the attainment of pre-established performance milestones, or such shares of Common Stock may be issued through direct purchase or as a bonus for services rendered the Corporation (or any Parent or Subsidiary),

• the Incentive Bonus Program under which eligible persons may, at the discretion of the Plan Administrator, be provided with incentive bonus opportunities through performance unit awards and special cash incentive programs tied to the attainment of pre-established performance milestones, and

• the Automatic Grant Program under which eligible non-employee Board members will automatically receive equity awards at designated intervals over their period of continued Board service.

B. The provisions of Articles One and Six shall apply to all incentive compensation programs under the Plan and shall govern the interests of all persons under the Plan.

III. ADMINISTRATION OF THE PLAN

A. The Compensation Committee (either acting directly or through a subcommittee of two or more members of the Compensation Committee) shall have sole and exclusive authority to administer the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to Section 16 Insiders. Administration of the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to all other persons eligible to participate in those programs may, at the Board’s discretion, be vested in the Compensation Committee or a Secondary Committee, or the Board may retain the power to administer those programs with respect to such persons; provided, however, that to the extent that Awards are intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a committee of two (2) or more “outside directors” within the meaning of Section 162(m) of the Code. However, any Awards for members of the Compensation Committee (other than pursuant to the Automatic Grant Program) must be authorized by a disinterested majority of the Board.

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B. Members of the Compensation Committee or any Secondary Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time. The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority previously delegated to such committee.

C. Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Grant, Stock Issuance and Incentive Bonus Programs and to make such determinations under, and issue such interpretations of, the provisions of those programs and any outstanding Awards thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Grant, Stock Issuance and Incentive Bonus Programs under its jurisdiction or any Award thereunder.

D. Service as a Plan Administrator by Board members on the Compensation Committee or the Secondary Committee shall constitute service as Board members, and Board members of each such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Compensation Committee or the Secondary Committee shall be liable for any act or omission made in good faith with respect to the Plan or any Award thereunder.

E. Administration of the Automatic Grant Program shall be self-executing in accordance with the terms of that program, and no Plan Administrator shall exercise any discretionary functions with respect to any Awards made under that program, except that Board or the Compensation Committee in its discretion may change and otherwise revise the terms and/or types of Awards granted thereunder, including, without limitation, the number of shares and exercise prices thereof, for Awards granted on or after the date the Plan Administrator determines to make any such change or revision; provided however, that the exercise price per share for each option granted under the Automatic Grant Program shall be equal to one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date and each option granted under the Automatic Grant Program shall have a term of seven (7) years measured from the grant date, subject to earlier termination following the Optionee’s cessation of Service.

IV. ELIGIBILITY

A. The persons eligible to participate in the Plan are as follows:

(i) Employees,

(ii) non-employee members of the Board or the board of directors of any Parent or Subsidiary, and

(iii) consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

B. The Plan Administrator shall have full authority to determine, (i) with respect to Awards made under the Discretionary Grant Program, which eligible persons are to receive such Awards, the time or times when those Awards are to be made, the number of shares to be covered by each such Award, the time or times when the Award is to become exercisable, the maximum term for which such Award is to remain outstanding and the status of a granted option as either an Incentive Option or a Non-Statutory Option; (ii) with respect to Awards under the Stock Issuance Program, which eligible persons are to receive such Awards, the time or times when the Awards are to be made, the number of shares subject to each such Award, the vesting and issuance schedules applicable to the shares which are the subject of such Award, the cash consideration (if any) payable for those shares and the form (cash or shares of Common Stock) in which the Award is to be settled; and (iii) with respect to Awards under the Incentive Bonus Program, which eligible persons are to receive such Awards, the time or times when the Awards are to be made, the performance objectives for each such Award, the amounts payable at designated levels of attained performance, any applicable service vesting requirements, the payout schedule for each such Award and the form (cash or shares of Common Stock) in which the Award is to be settled.

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C. The Plan Administrator shall have the absolute discretion to grant options or stock appreciation rights in accordance with the Discretionary Grant Program, to effect stock issuances and other stock-based awards in accordance with the Stock Issuance Program and to grant incentive bonus awards in accordance with the Incentive Bonus Program.

D. The individuals who shall be eligible to participate in the Automatic Grant Program (the “Eligible Directors”) shall be limited to (i) those individuals who first become non-employee Board members on or after the Plan Effective Date, whether through appointment by the Board or election by the Corporation’s stockholders, and (ii) those individuals who continue to serve as non-employee Board members on or after the Plan Effective Date. A non-employee Board member who has been in the employ of the Corporation (or any Parent or Subsidiary) at any time during the twelve (12)-month period preceding the date he or she first becomes a non-employee Board member shall not be considered Eligible Director for purposes of receiving a grant under the Automatic Grant Program at the time he or she first becomes a non-employee Board member, but may subsequently qualify as an Eligible Director for purposes of the annual grants made to continuing Eligible Directors under the Automatic Grant Program.

V. STOCK SUBJECT TO THE PLAN

A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open market. The number of shares of Common Stock reserved for issuance over the term of the Plan shall be (a) 3,000,000 shares, which is approximately the number of shares which remain unallocated and available for issuance under the Predecessor Plans on the Plan Effective Date, plus (b) an additional 2,000,000 shares effective June 9, 2011 plus (c) an additional 2,000,000 shares effective December 5, 2012. Beginning on July 20, 2011, no more than 263,100 shares of Common Stock available under the Plan may be issued as Awards other than options or stock appreciation rights.

B. The Plan shall serve as the successor to the Predecessor Plans, and no further stock option grants or unvested share awards shall be made under the Predecessor Plans after the Plan Effective Date. However, all option grants and unvested share awards outstanding under the Predecessor Plans on the Plan Effective Date shall continue in full force and effect in accordance with their terms, and no provision of this Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of those awards with respect to their acquisition of shares of Common Stock thereunder. To the extent any options outstanding under the Predecessor Plans on the Plan Effective Date expire or terminate unexercised or any unvested shares outstanding under the Predecessor Plans on the Plan Effective Date are forfeited or repurchased by the Corporation, the number of shares of Common Stock subject to those expired or terminated options at the time of expiration or termination and the number of such forfeited or repurchased shares shall be added to the share reserve under this Plan and shall accordingly be available for issuance hereunder, up to a maximum of an additional 4,000,000 shares.

C. Shares of Common Stock subject to outstanding Awards made under the Plan shall be available for subsequent issuance under the Plan to the extent those Awards expire or terminate for any reason prior to the issuance of the shares of Common Stock subject to those Awards. Unvested shares issued under the Plan and subsequently forfeited or repurchased by the Corporation pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for subsequent reissuance. Should the exercise price of an option under the Plan be paid with shares of Common Stock, then the authorized reserve of Common Stock under the Plan shall be reduced by the gross number of shares for which that option is exercised, and not by the net number of shares issued under the exercised stock option. Upon the exercise of any stock appreciation right under the Plan, the share reserve shall be reduced by the gross number of shares as to which such right is exercised, and not by the net number of shares actually issued by the Corporation upon such exercise. If shares of Common Stock otherwise issuable under the Plan are withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the issuance, vesting or exercise of an Award or the issuance of Common Stock thereunder, then the number of shares of Common Stock available for issuance under the Plan shall be reduced on the basis of the gross number of shares issued, vested or exercised under such Award, calculated in each instance prior to any such share withholding. Shares of Common Stock granted on or after July 20, 2011 pursuant to Awards

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other than options or stock appreciation rights that become available for subsequent issuance under the Plan pursuant to this Section V.C will be available for issuance without regard to the 263,100 share grant limitation in Section V.A.

D. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Company Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable adjustments shall be made by the Board or Compensation Committee to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities by which the share reserve under the Plan may increase by reason of the expiration or termination of unexercised options or the forfeiture or repurchase of unvested shares under the Predecessor Plans, (iii) the maximum number and/or class of securities for which any one person may be granted Common Stock-denominated Awards under the Plan per calendar year, (iv) the number and/or class of securities and the exercise or base price per share in effect under each outstanding Award under the Discretionary Grant Program, (v) the number and/or class of securities subject to each outstanding Award under the Stock Issuance Program and the cash consideration (if any) payable per share, (vi) the number and/or class of securities subject to each outstanding Award under the Automatic Grant Program and the exercise price per share in effect for each outstanding option grant under such program, (vii) the maximum number and/or class of securities for which stock option grants and restricted stock unit awards may subsequently be made under the Automatic Grant Program to new and continuing non-employee Board members, (viii) the number and/or class of securities subject to each outstanding Award under the Incentive Bonus Program denominated in shares of Common Stock, (ix) the maximum number of shares that may be granted pursuant to Awards other than options or stock appreciation rights beginning July 20, 2011 and (x) the number and/or class of securities subject to the Corporation’s outstanding repurchase rights under the Plan and the repurchase price payable per share. The adjustments shall be made in such manner in order to prevent the dilution or enlargement of benefits under the Plan and the outstanding Awards thereunder, and such adjustments shall be final, binding and conclusive. In the event of a Change in Control, however, the adjustments (if any) shall be made solely in accordance with the applicable provisions of the Plan governing Change in Control transactions.

E. Outstanding Awards granted pursuant to the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

ARTICLE TWO

DISCRETIONARY GRANT PROGRAM

I. OPTION TERMS

Each option shall be evidenced by an Award Agreement in the form approved by the Plan Administrator; provided, however, that each Award Agreement shall comply with the terms specified below. Each Award Agreement evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options. The Plan Administrator will have complete discretion to determine the number of shares of Common Stock subject to Options granted to any Optionee, provided that during any calendar year, no Optionee will be granted options covering more than 1,000,000 shares of Common Stock.

A. Exercise Price.

1. The exercise price per share shall be fixed by the Plan Administrator; provided, however, that such exercise price shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the grant date.

2. The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of the documents evidencing the option, be payable in one or more of the forms specified by the Plan Administrator, including without limitation, by one of the following forms of consideration:

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(i) cash or check made payable to the Corporation,

(ii) shares of Common Stock (whether delivered in the form of actual stock certificates or through attestation of ownership) held for the requisite period (if any) necessary to avoid any resulting charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or

(iii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide instructions to (a) a brokerage firm (reasonably satisfactory to the Corporation for purposes of administering such procedure in compliance with the Corporation’s pre-clearance/pre-notification policies) to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm on such settlement date in order to complete the sale.

Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

B. Exercise and Term of Options.

1. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option. However, no option granted prior to July 20, 2011 shall have a term in excess of ten (10) years measured from the option grant date and no option granted on or after July 20, 2011 shall have a term in excess of seven (7) years measured from the option grant date.

2. The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more Awards under the Discretionary Grant Program so that those Awards shall vest and become exercisable only after the achievement of pre-established corporate performance objectives based on one or more Performance Goals and measured over the performance period specified by the Plan Administrator at the time of the Award.

C. Effect of Termination of Service.

1. The following provisions shall govern the exercise of any options granted pursuant to the Discretionary Grant Program that are outstanding at the time of the Optionee’s cessation of Service or death:

(i) Any option outstanding at the time of the Optionee’s cessation of Service for any reason shall remain exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the Award Agreement, but no such option shall be exercisable after the expiration of the option term.

(ii) Any option held by the Optionee at the time of the Optionee’s death and exercisable in whole or in part at that time may be subsequently exercised by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or by the Optionee’s designated beneficiary or beneficiaries of that option.

(iii) Should the Optionee’s Service be terminated for Misconduct or should the Optionee otherwise engage in Misconduct while holding one or more outstanding options granted under this Article Two, then all of those options shall terminate immediately and cease to be outstanding.

(iv) During the applicable post-Service exercise period, the option may not be exercised for more than the number of vested shares for which the option is at the time exercisable; provided, however, that one or more options under the Discretionary Grant Program may be structured so that those options continue to vest in whole or part during the applicable post-Service exercise period. Upon the expiration of the

5

applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any shares for which the option has not been exercised.

2. The Plan Administrator shall have complete discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:

(i) extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service from the limited exercise period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration date of the option term,

(ii) include an automatic extension provision whereby the specified post-Service exercise period in effect for any option granted under this Article Two shall automatically be extended by an additional period of time equal in duration to any interval within the specified post-Service exercise period during which the exercise of that option or the immediate sale of the shares acquired under such option could not be effected in compliance with applicable federal and state securities laws, but in no event shall such an extension result in the continuation of such option beyond the expiration date of the term of that option, and/or

(iii) permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested had the Optionee continued in Service.

D. Stockholder Rights. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares.

E. Repurchase Rights. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while such shares are unvested, the Corporation shall have the right to repurchase any or all of those unvested shares on such terms as the Plan Administrator determines at the time of grant, including, without limitation, when such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares).

F. Transferability of Options. The transferability of options granted under the Plan shall be governed by the following provisions:

(i) Incentive Options: During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or the laws of inheritance following the Optionee’s death.

(ii) Non-Statutory Options. Non-Statutory Options shall be subject to the same limitation on transfer as Incentive Options, except that the Plan Administrator may structure one or more Non- Statutory Options so that the option may be assigned in whole or in part during the Optionee’s lifetime to one or more Family Members of the Optionee or to a trust established exclusively for the Optionee and/or such Family Members, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The

terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.

(iii) Beneficiary Designations. Notwithstanding the foregoing, the Optionee may designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Two (whether Incentive Options or Non-Statutory Options), and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to

6

all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee’s death.

II. INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Six shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall not be subject to the terms of this Section II.

A. Eligibility. Incentive Options may only be granted to Employees.

B. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000).

To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, then for purposes of the foregoing limitations on the exercisability of those options as Incentive Options, such options shall be deemed to become first exercisable in that calendar year on the basis of the chronological order in which they were granted, except to the extent otherwise provided under applicable law or regulation.

C. 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option term shall not exceed five (5) years measured from the option grant date.

III. STOCK APPRECIATION RIGHTS

A. Authority. The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant stock appreciation rights in accordance with this Section III to selected Optionees or other individuals eligible to receive option grants under the Discretionary Grant Program. The Plan Administrator will have complete discretion to determine the number of stock appreciation rights granted to any Optionee, provided that during any calendar year, no Optionee will be granted stock appreciation rights covering more than 1,000,000 Shares.

B. Types. Two types of stock appreciation rights shall be authorized for issuance under this Section III: (i) tandem stock appreciation rights (“Tandem Rights”) and (ii) stand-alone stock appreciation rights (“Stand-alone Rights”).

C. Exercise Price. The exercise price per share of Tandem Rights and Stand-alone Rights shall be fixed by the Plan Administrator; provided, however, that such exercise price shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the grant date.

D. Tandem Rights. The following terms and conditions shall govern the grant and exercise of Tandem Rights.

1. One or more Optionees may be granted a Tandem Right, exercisable upon such terms and conditions as the Plan Administrator may establish, to elect between the exercise of the underlying option for shares of Common Stock or the surrender of that option in exchange for a distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on the option surrender date) of the number of shares in which the Optionee is at the time vested under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise price payable for such vested shares. No Tandem Right granted on or after July 20, 2011 shall have a maximum term in excess of seven (7) years measured from the grant date.

2. Any distribution to which the Optionee becomes entitled upon the exercise of a Tandem Right may be made in (i) shares of Common Stock valued at Fair Market Value on the option surrender date, (ii) cash or (iii) a combination of cash and shares of Common Stock, as specified in the applicable Award Agreement.

7

E. Stand-Alone Rights. The following terms and conditions shall govern the grant and exercise of Stand-alone Rights:

1. One or more individuals eligible to participate in the Discretionary Grant Program may be granted a Stand-alone Right not tied to any underlying option under this Discretionary Grant Program. The Stand-alone Right shall relate to a specified number of shares of Common Stock and shall be exercisable upon such terms and conditions as the Plan Administrator may establish. However, no Stand-alone Right granted prior to July 20, 2011 shall have a maximum term in excess of ten (10) years measured from the grant date and no Stand-alone Right granted on or after July 20, 2011 shall have a term in excess of seven (7) years measured from the grant date. The provisions and limitations of Paragraph B.2 of Section I of this Article Two shall also be applicable to any Stand-Alone Right awarded under the Plan.

2. Upon exercise of the Stand-alone Right, the holder shall be entitled to receive a distribution from the Corporation in an amount equal to the excess of (i) the aggregate Fair Market Value (on the exercise date) of the shares of Common Stock as to which such right is exercised over (ii) the aggregate base price in effect for those shares.

3. The number of shares of Common Stock underlying each Stand-alone Right and the base price in effect for those shares shall be determined by the Plan Administrator in its sole discretion at the time the Stand-alone Right is granted. In no event, however, may the base price per share be less than the Fair Market Value per underlying share of Common Stock on the grant date.

4. Stand-alone Rights shall be subject to the same transferability restrictions applicable to Non-Statutory Options and may not be transferred during the holder’s lifetime, except if such assignment is in connection with the holder’s estate plan and is to one or more Family Members of the holder or to a trust established for the holder and/or one or more such Family Members or pursuant to a domestic relations order covering the Stand-alone Right as marital property. In addition, one or more beneficiaries may be designated for an outstanding Stand-alone Right in accordance with substantially the same terms and provisions as set forth in Section I.F of this Article Two.

5. The distribution with respect to an exercised Stand-alone Right may be made in (i) shares of Common Stock valued at Fair Market Value on the exercise date, (ii) cash or (iii) a combination of cash and shares of Common Stock, as specified in the applicable Award Agreement.

6. The holder of a Stand-alone Right shall have no stockholder rights with respect to the shares subject to the Stand-alone Right unless and until such person shall have exercised the Stand-alone Right and become a holder of record of the shares of Common Stock issued upon the exercise of such Stand-alone Right.

F. Post-Service Exercise. The provisions governing the exercise of Tandem and Stand-alone Rights following the cessation of the recipient’s Service shall be substantially the same as those set forth in Section I.C of this Article Two for the options granted under the Discretionary Grant Program, and the Plan Administrator’s discretionary authority under Section I.C.2 of this Article Two shall also extend to any outstanding Tandem or Stand-alone Appreciation Rights.

IV. CHANGE IN CONTROL

A. In the event of an actual Change in Control transaction, each outstanding Award under the Discretionary Grant Program shall automatically accelerate so that each such Award shall, immediately prior to the effective date of that Change in Control, become exercisable as to all the shares of Common Stock at the time subject to such Award and may be exercised as to any or all of those shares as fully vested shares of Common Stock. However, an outstanding Award under the Discretionary Grant Program shall not become exercisable on such an accelerated basis if and to the extent: (i) such Award is to be assumed by the successor corporation (or parent thereof) or is otherwise to continue in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such Award is to be replaced with a cash retention program of the successor corporation which preserves the spread existing at the time of the Change in Control on any shares as to which the Award is not otherwise at that time exercisable and provides for subsequent payout of that spread in accordance with the same (or more favorable) exercise/vesting schedule in effect for that Award or (iii) the acceleration of such Award is subject to other limitations imposed by the Plan Administrator.

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B. All outstanding repurchase rights under the Discretionary Grant Program shall automatically terminate, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, immediately prior to the effective date of an actual Change in Control transaction, except to the extent: (i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) or are otherwise to continue in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator.

C. Immediately following the consummation of the Change in Control, all outstanding Awards under the Discretionary Grant Program shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or are otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction.

D. Each Award which is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities into which the shares of Common Stock subject to that Award would have been converted in consummation of such Change in Control had those shares actually been outstanding at that time. Appropriate adjustments to reflect such Change in Control shall also be made to (i) the exercise or base price per share in effect under each outstanding Award, provided the aggregate exercise or base price in effect for such securities shall remain the same, (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan, (iii) the maximum number and/or class of securities by which the share reserve under the Plan may increase by reason of the expiration or termination of unexercised options or the forfeiture or repurchase of unvested shares under the Predecessor Plans, (iv) the maximum number and/or class of securities for which any one person may be granted Common Stock-denominated Awards under the Plan per calendar year, (v) the number and/or class of securities and the exercise or base price per share in effect under each outstanding Award under the Discretionary Grant Program, (vi) the number and/or class of securities subject to each outstanding Award under the Stock Issuance Program and the cash consideration (if any) payable per share, (vii) the number and/or class of securities subject to each outstanding Award under the Incentive Bonus Program denominated in shares of Common Stock, (viii) the number and/or class of securities subject to each outstanding Award under the Automatic Grant Program and the exercise price per share in effect for each outstanding option grant under such program, (ix) the maximum number and/or class of securities for which stock option grants and restricted stock unit awards may subsequently be made under the Automatic Grant Program to new and continuing non-employee Board members, and (x) the number and/or class of securities subject to the Corporation’s outstanding repurchase rights under the Plan and the repurchase price payable per share. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption or continuation of the outstanding Awards under the Discretionary Grant Program, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction, provided such common stock is readily traded on an established U.S. securities exchange.

E. The Plan Administrator shall have the discretionary authority to structure one or more outstanding Awards under the Discretionary Grant Program so that those Awards shall, immediately prior to the effective date of an actual Change in Control transaction, become exercisable as to all the shares of Common Stock at the time subject to those Awards and may be exercised as to any or all of those shares as fully vested shares of Common Stock, whether or not those Awards are to be assumed in the Change in Control transaction or otherwise continued in effect. In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Discretionary Grant Program so that those rights shall terminate immediately prior to the effective date of an actual Change in Control transaction, and the shares subject to those terminated rights shall thereupon vest in full.

F. The Plan Administrator shall have full power and authority to structure one or more outstanding Awards under the Discretionary Grant Program so that those Awards shall become exercisable as to all the shares of Common Stock at the time subject to those Awards in the event the Optionee’s Service is subsequently terminated by reason of an Involuntary Termination within a designated period following the effective date of any Change in Control transaction in which those Awards do not otherwise fully accelerate. In addition, the Plan Administrator may structure one or more

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of the Corporation’s repurchase rights so that those rights shall immediately terminate with respect to any shares held by the Optionee at the time of such Involuntary Termination, and the shares subject to those terminated repurchase rights shall accordingly vest in full at that time.

G. The portion of any Incentive Option accelerated in connection with a Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-statutory Option under the Federal tax laws.

V. PROHIBITION ON REPRICING PROGRAMS

Except in connection with a corporation transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares of Common Stock), the terms of outstanding Awards may not be amended to (i) reduce the exercise price of outstanding options or stock appreciation rights, or (ii) cancel outstanding options or stock appreciation rights in exchange for cash, other Awards or options or stock appreciation rights with an exercise price that is less than the exercise price of the original options or stock appreciation rights, without obtaining stockholder approval.

ARTICLE THREE

STOCK ISSUANCE PROGRAM

I. STOCK ISSUANCE TERMS

Shares of Common Stock may be issued directly under the Stock Issuance Program as either vested or unvested shares. Each such stock issuance shall be evidenced by an Award Agreement in the form approved by the Plan Administrator; provided, however, that each Award Agreement shall comply with the terms specified below. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to performance shares or restricted stock units which entitle the recipients to receive the shares underlying those Awards upon the attainment of designated performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those Awards. The Plan Administrator will have complete discretion to determine the number of shares of Common Stock that will be granted pursuant to Awards under the Stock Issuance Program, provided that during any calendar year, no Participant will be granted an Award under the Stock Issuance Program covering more than 500,000 shares of Common Stock.

A. Issue Price.

1. The issue price per share, if any, shall be fixed by the Plan Administrator and set forth in the Award Agreement.

2. Shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:

(i) cash or check made payable to the Corporation,

(ii) past services rendered to the Corporation (or any Parent or Subsidiary); or

(iii) any other valid consideration under the State in which the Corporation is at the time incorporated.

B. Vesting Provisions.

1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance as a bonus for Service rendered or may vest in one or more installments over the Participant’s period of Service or upon the attainment of specified performance objectives. The elements of the vesting schedule applicable to any unvested shares of Common Stock issued under the Stock Issuance Program shall be determined by the Plan Administrator and incorporated into the Award Agreement. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to performance shares or restricted stock units which entitle the recipients to receive the shares underlying those Awards upon the attainment of designated

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performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those Awards, including (without limitation) a deferred distribution date following the termination of the Participant’s Service. Notwithstanding the foregoing, the following limitations shall apply with respect to the vesting schedules established for the Awards made under the Stock Issuance Program, subject to the acceleration provisions in Paragraphs B.6 and B.7 below and Section II of this Article Three:

(i) for any such Award which is to vest on the basis of Service, the minimum vesting period shall be three (3) years, with the rate of vesting over that period to be determined by the Plan Administrator; and

(ii) for any such Award which is to vest on the basis of performance objectives, the performance period shall have duration of at least one year.

2. The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more Awards under the Stock Issuance Program so that the shares of Common Stock subject to those Awards shall vest (or vest and become issuable) upon the achievement of pre-established corporate performance objectives based on one or more Performance Goals and measured over the performance period specified by the Plan Administrator at the time of the Award.

3. Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate. Equitable adjustments to reflect each such transaction shall also be made by the Plan Administrator to the repurchase price payable per share by the Corporation for any unvested securities subject to its existing repurchase rights under the Plan; provided the aggregate repurchase price shall in each instance remain the same.

4. The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any dividends paid on such shares, subject to any applicable vesting requirements. The Participant shall not have any stockholder rights with respect to the shares of Common Stock subject to a performance share or restricted stock unit award until that Award vests and the shares of Common Stock are actually issued thereunder. However, dividend-equivalent units may be paid or credited, either in cash or in actual or phantom shares of Common Stock, on outstanding performance share or restricted stock unit awards, subject to such terms and conditions as the Plan Administrator may deem appropriate.

5. Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent, the Corporation shall repay to the Participant the lower of (i) the cash consideration paid for the surrendered shares or (ii) the Fair Market Value of those shares at the time of cancellation.

6. The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock which would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those shares. Any such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives. However, no vesting requirements tied to the attainment of performance objectives may be waived with respect to shares which were intended at the time of issuance to qualify as performance-

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based compensation under Code Section 162(m), except in the event of the Participant’s Involuntary Termination or as otherwise provided in Section II of this Article Three.

7. Outstanding performance shares or restricted stock units under the Stock Issuance Program shall automatically terminate, and no shares of Common Stock shall actually be issued in satisfaction of those Awards, if the performance goals or Service requirements established for those Awards are not attained or satisfied. The Plan Administrator, however, shall have the discretionary authority to issue vested shares of Common Stock under one or more outstanding Awards of performance shares or restricted stock units as to which the designated performance goals or Service requirements have not been attained or satisfied. However, no vesting requirements tied to the attainment of Performance Goals may be waived with respect to Awards which were intended, at the time those Awards were made, to qualify as performance-based compensation under Code Section 162(m), except in the event of the Participant’s Involuntary Termination or as otherwise provided in Section II of this Article Three.

8. The following additional requirements shall be in effect for any performance shares awarded under this Article Three:

(i) At the end of the performance period, the Plan Administrator shall determine the actual level of attainment for each performance objective and the extent to which the performance shares awarded for that period are to vest and become payable based on the attained performance levels.

(ii) The performance shares which so vest shall be paid as soon as practicable following the end of the performance period, unless such payment is to be deferred for the period specified by the Plan Administrator at the time the performance shares are awarded or the period selected by the Participant in accordance with the applicable requirements of Code Section 409A.

(iii) Performance shares may be paid in (i) cash, (ii) shares of Common Stock or (iii) any combination of cash and shares of Common Stock, as determined by the Plan Administrator in its sole discretion.

(iv) Performance shares may also be structured so that the shares are convertible into shares of Common Stock, but the rate at which each performance share is to so convert shall be based on the attained level of performance for each applicable performance objective.

II. CHANGE IN CONTROL

A. All of the Corporation’s outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights and the Awards issued under the Stock Issuance Program shall vest in full, immediately prior to the effective date of an actual Change in Control transaction, except to the extent (i) the Awards as to which those repurchase rights or other vesting criteria pertain are to be assumed by the successor corporation (or parent thereof) or are otherwise to continue in full force and effect pursuant to the terms of the Change in Control transaction, (ii) those Awards are to be replaced with a cash retention program of the successor corporation which preserves, for each such Award, the Fair Market Value of the underlying shares of Common Stock at the time of the Change in Control and provides for the subsequent payout of that value in accordance with the same (or more favorable) vesting schedule in effect for those Awards at the time of such Change in Control or (iii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.

B. Each outstanding Award under the Stock Issuance Program which is assumed in connection with a Change in Control or otherwise continued in effect shall be adjusted immediately after the consummation of that Change in Control so as to apply to the number and class of securities into which the shares of Common Stock subject to that Award immediately prior to the Change in Control would have been converted in consummation of such Change in Control had those shares actually been outstanding at that time, and appropriate adjustments shall also be made to the cash consideration (if any) payable per share thereunder, provided the aggregate amount of such consideration shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption or continuation of the outstanding Awards, substitute one or more shares of its own

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common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction, provided such common stock is readily traded on an established U.S. securities exchange.

C. If an Award under the Stock Issuance Program is not assumed or otherwise continued in effect or replaced with a cash retention program of the successor corporation which preserves the Fair Market Value of the underlying shares of Common Stock at the time of the Change in Control and provides for the subsequent payout of that value in accordance with the same (or more favorable) vesting schedule in effect for those shares at the time of such Change in Control, then such Award shall vest, and the shares of Common Stock subject to that Award shall be issued as fully-vested shares, immediately prior to the effective date of the Change in Control.

D. The Plan Administrator shall have the discretionary authority to structure one or more unvested Awards under the Stock Issuance Program so that the shares of Common Stock subject to those Awards shall automatically vest (or vest and become issuable) in whole or in part immediately prior to the effective date of an actual Change in Control transaction or upon the subsequent termination of the Participant’s Service by reason of an Involuntary Termination within a designated period following the effective date of that Change in Control transaction.

E. The Plan Administrator’s authority under Paragraphs D and E of this Section II shall also extend to any Awards intended to qualify as performance-based compensation under Code Section 162(m), even though the automatic vesting of those Awards pursuant to Paragraph D or E of this Section II may result in their loss of performance-based status under Code Section 162(m).

ARTICLE FOUR

INCENTIVE BONUS PROGRAM

I. INCENTIVE BONUS TERMS

The Plan Administrator shall have full power and authority to implement one or more of the following incentive bonus programs under the Plan:

(i) cash bonus awards (“Cash Awards”),

(ii) performance unit awards (“Performance Unit Awards”), and

(iii) dividend equivalent rights (“DER Awards”)

A. Cash Awards. The Plan Administrator shall have the discretionary authority under the Plan to make Cash Awards which are to vest in one or more installments over the Participant’s continued Service with the Corporation or upon the attainment of specified performance goals. Each such Cash Award shall be evidenced by an Award Agreement in the form approved by the Plan Administrator; provided however, that each such Award Agreement shall comply with the terms specified below.

1. The elements of the vesting schedule applicable to each Cash Award shall be determined by the Plan Administrator and incorporated into the Incentive Bonus Award Agreement.

2. The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more Cash Awards so that those Awards shall vest upon the achievement of pre-established corporate performance objectives based upon one or more Performance Goals.

3. Outstanding Cash Awards shall automatically terminate, and no cash payment or other consideration shall be due the holders of those Awards, if the performance goals or Service requirements established for the Awards are not attained or satisfied. The Plan Administrator may in its discretion waive the cancellation and termination of one or more unvested Cash Awards which would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those Awards. Any such waiver shall result in the immediate vesting of the Participant’s interest in the Cash Award as to which the waiver applies. Such wavier may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives. However, no vesting requirements tied to the attainment of Performance Goals may

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be waived with respect to Awards which were intended, at the time those Awards were granted, to qualify as performance-based compensation under Code Section 162(m), except in the event of the Participant’s Involuntary Termination or as otherwise provided in Section II of this Article Four.

4. Cash Awards which become due and payable following the attainment of the applicable performance goals or satisfaction of the applicable Service requirement (or the waiver of such goals or Service requirement) may be paid in (i) cash, (ii) shares of Common Stock valued at Fair Market Value on the payment date or (iii) a combination of cash and shares of Common Stock, as the Plan Administrator shall determine.

5. The maximum dollar amount for which such Awards may be made to such person in any calendar year shall not exceed $1,000,000, with such limitation to be measured at the time the Award is made and not at the time the Award becomes payable.

B. Performance Unit Awards. The Plan Administrator shall have the discretionary authority to make Performance Unit Awards in accordance with the terms of this Article Four. Each such Performance Unit Award shall be evidenced by an Award Agreement in the form approved by the Plan Administrator; provided however, that each such Award Agreement shall comply with the terms specified below.

1. A Performance Unit shall represent a participating interest in a special bonus pool tied to the attainment of pre-established corporate performance objectives based on one or more Performance Goals. The amount of the bonus pool may vary with the level at which the applicable performance objectives are attained, and the value of each Performance Unit which becomes due and payable upon the attained level of performance shall be determined by dividing the amount of the resulting bonus pool (if any) by the total number of Performance Units issued and outstanding at the completion of the applicable performance period.

2. Performance Units may also be structured to include a Service requirement which the Participant must satisfy following the completion of the performance period in order to vest in the Performance Units awarded with respect to that performance period.

3. Performance Units which become due and payable following the attainment of the applicable Performance Objectives and the satisfaction of any applicable Service requirement may be paid in (i) cash, (ii) shares of Common Stock valued at Fair Market Value on the payment date or (iii) a combination of cash and shares of Common Stock, as the Plan Administrator shall determine.

4. The maximum dollar amount for which such Performance Unit Awards may be made to such person in any calendar year shall not exceed $1,000,000, or 600,000 shares of Common Stock with such limitation to be measured at the time the Award is made and not at the time the Award becomes payable.

C. DER Awards. The Plan Administrator shall have the discretionary authority to make DER Awards in accordance with the terms of this Article Four. Each such DER Award shall be evidenced by an Award Agreement in the form approved by the Plan Administrator; provided however, that each such Award Agreement shall comply with the terms specified below.

1. The DER Awards may be made as stand-alone awards or in tandem with other Awards made under the Plan. The term of each such DER Award shall be established by the Plan Administrator at the time of grant, but no DER Award shall have a term in excess of ten (10) years.

2. Each DER shall represent the right to receive the economic equivalent of each dividend or distribution, whether in cash, securities or other property (other than shares of Common Stock), which is made or paid per issued and outstanding share of Common Stock during the term the DER remains outstanding. A special account on the books of the Corporation shall be maintained for each Participant to whom a DER Award is made, and that account shall be credited per DER with each such dividend or distribution made or paid per issued and outstanding share of Common Stock during the term of that DER remains outstanding.

3. Payment of the amounts credited to such book account may be made to the Participant either concurrently with the actual dividend or distribution made per issued and outstanding share of Common Stock or may be deferred

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for a period specified by the Plan Administrator at the time the DER Award is made or selected by the Participant in accordance with the requirements of Code Section 409A.

4. Payment may be paid in (i) cash, (ii) shares of Common Stock or (iii) a combination of cash and shares of Common Stock, as the Plan Administrator shall determine If payment is to be made in the form of Common Stock, the number of shares of Common Stock into which the cash dividend or distribution amounts are to be converted for purposes of the Participant’s book account may be based on the Fair Market Value per share of Common Stock on the date of conversion, a prior date or an average of the Fair Market Value per share of Common Stock over a designated period, as the Plan Administrator shall determine in its sole discretion.

5. The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more DER Awards so that those Awards shall vest only after the achievement of pre-established corporate performance objectives based upon one or more Performance Goals. The maximum dollar amount for which such DER Awards may be made to such person in any calendar year shall not exceed $1,000,000, or 600,000 shares of Common Stock with such limitation to be measured at the time the Award is made and not at the time the Award becomes payable.

II. CHANGE IN CONTROL

A. The Plan Administrator shall have the discretionary authority to structure one or more incentive bonus awards under this Article Four so that those Awards shall automatically vest in whole or in part immediately prior to the effective date of an actual Change in Control transaction or upon the subsequent termination of the Participant’s Service by reason of an Involuntary Termination within a designated period following the effective date of such Change in Control.

B. The Plan Administrator’s authority under Paragraph A of this Section II shall also extend to any performance bonus awards intended to qualify as performance-based compensation under Code Section 162(m), even though the automatic vesting of those awards pursuant to such Paragraph A may result in their loss of performance-based status under Code Section 162(m).

ARTICLE FIVE

AUTOMATIC GRANT PROGRAM

I. TERMS

A. Automatic Grants. The Automatic Grant Program shall, as of the Plan Effective Date, supersede and replace the Corporation’s 1995 Director Stock Option Plan. The Awards for the Eligible Directors at the 2007 Annual Meeting shall be made pursuant to the Automatic Grant Program in effect under this Article Five, and no further option grants or stock issuances shall be made to the Eligible Directors or any other non-employee Board members under the 1995 Director Stock Option Plan on or after the 2007 Annual Meeting, if this Plan is approved by the stockholders at such meeting. Grants under the Automatic Grant Program shall be made as follows:

1. Each individual who is first elected or appointed as an Eligible Director at any time on or after the date of the 2007 Annual Meeting shall automatically be granted, on the date of such initial election or appointment, a Non-Statutory Option to purchase fifteen thousand (15,000) shares of Common Stock provided that individual has not been in the employ of the Corporation or any Parent or Subsidiary at any time during the twelve (12)-month period preceding his or her initial election or appointment as a non-employee Board member.

2. On the date of each annual stockholders meeting, beginning with the 2014 Annual Meeting, each Eligible Director who is to continue to serve as a non-employee Board member, whether or not that individual is standing for re-election to the Board at that particular annual meeting, shall automatically be granted a Non-Statutory Option to purchase seven thousand five hundred (7,500) shares of common stock provided that such Eligible Director has served as a non-employee Board member for a period of at least six (6) months. There shall be no limit on the number of such option grants any one continuing non-employee Board member may receive over his or her period of Board service, and non-employee Board members who have previously been in the employ of the Corporation (or any Parent or

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Subsidiary) shall be eligible to receive one or more such annual option grants over their period of continued Board service.

B. Exercise Price.

1. The exercise price per share for each option granted under this Article Five shall be equal to one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

2. The exercise price shall be payable in one or more of the alternative forms authorized under the Discretionary Grant Program as the Plan Administrator determines. Except to the extent the sale and remittance procedure specified thereunder is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

C. Option Term. Each option granted under this Article Five shall have a term of seven (7) years measured from the grant date, subject to earlier termination following the Optionee’s cessation of Service.

D. Vesting of Options. Each option granted under Paragraph A.1 of Section I of this Article Five shall vest as to 1/4th of the shares subject to the options on each anniversary following its date of grant, subject to the Eligible Director’s continued service of a non-employee board member through each such date. Each option granted under Paragraph A.2 of Section I of this Article Five shall vest as to 1/12th of the shares subject to the options each month following its date of grant, subject to the Eligible Director’s continued service of a non-employee board member through each such date.

E. Limited Transferability of Options. Each option under this Article Five may be assigned in whole or in part during the Eligible Director’s lifetime to one or more of his or her Family Members or to a trust established exclusively for the Eligible Director and/or one or more such Family Members, to the extent such assignment is in connection with the Eligible Director’s estate plan or pursuant to a domestic relations order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. The Eligible Director may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Five, and the options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Eligible Director’s death while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Eligible Director’s death.

F. Termination of Service. The following provisions shall govern the exercise of any options held by the Eligible Director at the time he or she ceases Board service:

(i) The Eligible Director (or, in the event of his or her death while holding the option, the personal representative of the Eligible Director’s estate or the person or persons to whom the option is transferred pursuant to the Eligible Director’s will or the laws of inheritance or the designated beneficiary or beneficiaries of such option) shall have a thirty (30)-day period following the date of such cessation of Board service in which to exercise such option, unless such cessation of Board service is due to Optionee’s death or Permanent Disability, in which case such party shall have a twelve (12)-month period following the date of such cessation of Board service in which to exercise such option.

(ii) During the thirty (30)-day or twelve (12)-month exercise period, as the case may be, the option may not be exercised in the aggregate for more than the number of vested shares of Common Stock for which the option is exercisable at the time of the Eligible Director’s cessation of Board service. However, should the Eligible Director cease to serve as a Board member by reason of death or Permanent Disability, then all shares at the time subject to the option shall immediately vest so that such option may, during the twelve (12)-month exercise period following such cessation of Board service, be exercised for any or all of those shares as fully vested shares of Common Stock.

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(iii) In no event shall the option remain exercisable after the expiration of the option term. Upon the expiration of the thirty (30)-day or twelve (12)-month exercise period, as the case may be, or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall, immediately upon the Eligible Director’s cessation of Board service for any reason other than death or Permanent Disability), terminate and cease to be outstanding to the extent the option is not otherwise at that time exercisable for vested shares.

II. CHANGE IN CONTROL

A. Should the Eligible Director continue in Board service until the effective date of an actual Change in Control transaction, then the following provisions shall apply with respect to the outstanding Awards held by such individual under the Automatic Grant Program:

(i) The shares of Common Stock at the time subject to each outstanding option held by such Eligible Director under the Automatic Grant Program but not otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Change in Control, become exercisable for all the option shares as fully vested shares of Common Stock and may be exercised for any or all of those vested shares. Immediately following the consummation of the Change in Control, each automatic option grant shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction.

(ii) The shares of Common Stock which are at the time of such Change in Control subject to any outstanding restricted stock units awarded to such Eligible Director under the Automatic Grant Program shall, immediately prior to the effective date of the Change in Control, vest in full and be issued to such Eligible Director as soon as administratively practicable thereafter, but in no event later than fifteen (15) business days after such effective date, or shall otherwise be converted into the right to receive the same consideration per share of Common Stock payable to the other stockholders in the Change in Control and distributed at the same time as such stockholder payments.

B. All outstanding repurchase rights under this Automatic Grant Program shall automatically terminate, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control.

C. Each option which is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to the Eligible Director in consummation of such Change in Control had the option been exercised immediately prior to such Change in Control. Appropriate adjustments shall also be made to the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption or continuation of the outstanding options under the Automatic Grant Program, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction.

III. REMAINING TERMS

The remaining terms of each option grant under the Automatic Grant Program shall be the same as the terms in effect for option grants made under the Discretionary Grant Program, including the prohibition on repricing contained in Section V of Article Two.

IV. ALTERNATIVE AWARDS

The Compensation Committee shall have full power and authority to award, in lieu of one or more initial or annual automatic option grants under this Article Five, unvested shares of Common Stock or restricted stock units which in each instance have an aggregate Fair Market Value substantially equal to the fair value (as determined for financial reporting purposes in accordance with Financial Accounting Standard 123R or any successor standard) of the

17

automatic option grant which such award replaces. Any such alternative award shall be made at the same time the automatic option grant which it replaces would have been made, and the vesting provisions (including vesting acceleration) applicable to such award shall be substantially the same as in effect for the automatic option grant so replaced.

ARTICLE SIX

MISCELLANEOUS

I. DEFERRED COMPENSATION

A. The Plan Administrator may, in its sole discretion, structure one or more Awards under the Stock Issuance or Incentive Bonus Programs so that the Participants may be provided with an election to defer the compensation associated with those Awards for federal income tax purposes. Any such deferral opportunity shall comply with all applicable requirements of Code Section 409A.

B. To the extent the Corporation maintains one or more separate non-qualified deferred compensation arrangements which allow the participants the opportunity to make notional investments of their deferred account balances in shares of Common Stock, the Plan Administrator may authorize the share reserve under the Plan to serve as the source of any shares of Common Stock that become payable under those deferred compensation arrangements. In such event, the share reserve under the Plan shall be reduced on a share-for-share basis for each share of Common Stock issued under the Plan in settlement of the deferred compensation owed under those separate arrangements.

II. TAX WITHHOLDING

A. The Corporation’s obligation to deliver shares of Common Stock upon the exercise, issuance, vesting or settlement of an Award under the Plan shall be subject to the satisfaction of all applicable income, employment and other tax withholding requirements.

B. The Plan Administrator may, in its discretion, provide Optionees and Participants to whom Awards are made under the Plan with the right to use shares of Common Stock in satisfaction of all or part of the Withholding Taxes to which such holders may become subject in connection with the exercise, issuance or vesting of those Awards or the issuance of shares of Common Stock thereunder. Such right may be provided to any such holder in either or both of the following formats:

1. Stock Withholding: The election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the issuance, exercise or vesting of such Award or the issuance of shares of Common Stock thereunder, a portion of those shares with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%) of the minimum amount required to be withheld) designated by such individual. The shares of Common Stock so withheld shall reduce the number of shares of Common Stock authorized for issuance under the Plan.

2. Stock Delivery: The election to deliver to the Corporation, at the time of the issuance, exercise or vesting of such Award or the issuance of shares of Common Stock thereunder, one or more shares of Common Stock previously acquired by such individual with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%) of the minimum amount required to be withheld)

designated by the individual. The shares of Common Stock so delivered shall neither reduce the number of shares of Common Stock authorized for issuance under the Plan nor be added to the number of shares of Common Stock authorized for issuance under the Plan.

III. SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

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IV. EFFECTIVE DATE AND TERM OF THE PLAN

A. The Plan shall become effective on the Plan Effective Date.

B. The Plan shall serve as the successor to each of the Predecessor Plans, and no further option grants or unvested share issuances shall be made under the Predecessor Plans if this Plan is approved by the stockholders at the 2007 Annual Meeting. Such stockholder approval shall not affect the option grants and unvested share awards outstanding under the Predecessor Plans at the time of the 2007 Annual Meeting, and those option grants and unvested share awards shall continue in full force and effect in accordance with their terms. However, should any of those options expire or terminate unexercised or those unvested shares be forfeited or repurchased by the Corporation, the shares of Common Stock subject to those options at the time of expiration or termination and those forfeited or repurchased shares shall be added to the share reserve of this Plan, up to the maximum number of additional shares permissible hereunder.

C. The Plan shall terminate upon the earliest to occur of (i) July 30, 2017, (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully vested shares or (iii) the termination of all outstanding Awards in connection with a Change in Control. Should the Plan terminate on July 30, 2017, then all Awards outstanding at that time shall continue to have force and effect in accordance with the provisions of the documents evidencing those Awards.

V. AMENDMENT OF THE PLAN

A. The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects; provided, however, that stockholder approval shall be required for any amendment to the Plan which increases the number of shares of Common Stock authorized for issuance under the Plan (other than pursuant to Section V.E of Article One), materially increases the benefits accruing to Optionees or Participants, materially expands the class of individuals eligible to participate in the Plan, expands the types of Awards which may be made under the Plan or extends the term of the Plan or to the extent such stockholder approval may otherwise required under applicable law or regulation or pursuant to the listing standards of the Stock Exchange on which the Common Stock is at the time primarily traded. However, no such amendment or modification shall adversely affect the rights and obligations with respect to Awards at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification.

B. The Compensation Committee shall have the discretionary authority to adopt and implement from time to time such addenda or subplans to the Plan as it may deem necessary in order to bring the Plan into compliance with applicable laws and regulations of any foreign jurisdictions in which Awards are to be made under the Plan and/or to obtain favorable tax treatment in those foreign jurisdictions for the individuals to whom the Awards are made.

C. Awards may be made under the Plan that involve shares of Common Stock in excess of the number of shares then available for issuance under the Plan, provided no shares shall actually be issued pursuant to those Awards until the number of shares of Common Stock available for issuance under the Plan is sufficientlyincreased by stockholder approval of an amendment of the Plan authorizing such increase. If such stockholder approval is not obtained within twelve (12) months after the date the first excess Award is made, then all Awards granted on the basis of such excess shares shall terminate and cease to be outstanding.

VI. USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.

VII. REGULATORY APPROVALS

A. The implementation of the Plan, the granting of any Award under the Plan and the issuance of any shares of Common Stock in connection with the issuance, exercise, vesting or settlement of any Award under the Plan shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the shares of Common Stock issuable pursuant to those Awards.

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B. No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of applicable securities laws and all applicable listing requirements of any Stock Exchange on which Common Stock is then listed for trading.

VIII. NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.

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APPENDIX

The following definitions shall be in effect under the Plan:

A. Annual Meeting shall mean the 2007 annual meeting of the Corporation’s stockholders.

B. Automatic Grant Program shall mean the automatic grant program in effect for non-employee Board members under Article Five of the Plan.

C. Award shall mean any of the following awards authorized for issuance or grant under the Plan: stock options, stock appreciation rights, direct stock issuances, restricted stock or restricted stock unit awards, performance shares, performance units, dividend-equivalent rights and cash incentive awards.

D. Award Agreement shall mean the agreement(s) between the Corporation and the Optionee or Participant evidencing a particular Award made to that individual under the Plan, as such agreement(s) may be in effect from time to time.

E. Board shall mean the Corporation’s Board of Directors.

F. Cause shall, with respect to each Award made under the Plan, be defined in accordance with the following provisions:

• Cause shall have the meaning assigned to such term in the Award Agreement for the particular Award or in any other agreement incorporated by reference into the Award Agreement for purposes of defining such term.

• In the absence of any other Cause definition in the Award Agreement for a particular Award (or in any other agreement incorporated by reference into the Award Agreement), an individual’s termination of Service shall be deemed to be for Cause if such termination occurs by reason his or her commission of any act of fraud, embezzlement or dishonesty, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary).

G. Change in Control shall, with respect to each Award made under the Plan, be defined in accordance with the following provisions:

• Change in Control shall have the meaning assigned to such term in the Award Agreement for the particular Award or in any other agreement incorporated by reference into the Award Agreement for purposes of defining such term.

• In the absence of any other Change in Control definition in the Award Agreement (or in any other agreement incorporated by reference into the Award Agreement), Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

(i) the closing of a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction,

(ii) a sale, transfer or other disposition of all or substantially all of the Corporation’s assets,

(iii) the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) becomes directly or indirectly (whether as a result of a single acquisition or by reason of one or more acquisitions within the twelve (12)-month

21

period ending with the most recent acquisition) the beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders, or

(iv) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

H. Code shall mean the Internal Revenue Code of 1986, as amended.

I. Common Stock shall mean the Corporation’s common stock.

J. Compensation Committee shall mean the Compensation Committee of the Board comprised of two (2) or more non-employee Board members.

K. Corporation shall mean Integrated Silicon Solution, Inc., a Delaware corporation, and any corporate successor to all or substantially all o f the assets or voting stock of Integrated Silicon Solution, Inc. which has by appropriate action assumed the Plan.

L. Discretionary Grant Program shall mean the discretionary grant program in effect under Article Two of the Plan pursuant to which stock options and stock appreciation rights may be granted to one or more eligible individuals.

M. Eligible Director shall mean a non-employee Board member who satisfies the criteria set forth in Section IV.D of Article One for participation in the Automatic Grant Program and who is accordingly eligible to receive one or more Awards under that program.

N. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary, whether now existing or subsequently established), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

O. Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise.

P. Fair Market Value per share of Common Stock on any relevant date shall be the closing selling price per share of Common Stock at the close of regular hours trading (i.e., before after-hours trading begins) on date on question on the Stock Exchange serving as the primary market for the Common Stock, as such price is reported by the National Association of Securities Dealers (if primarily traded on the Nasdaq Global or Global Select Market) or as officially quoted in the composite tape of transactions on any other Stock Exchange on which the Common Stock is then primarily traded. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Plan Administrator.

Q. Family Member means, with respect to a particular Optionee or Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law.

R. Good Reason shall, with respect to each Award made under the Plan, be defined in accordance with the following provisions:

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• Good Reason shall have the meaning assigned to such term in the Award Agreement for the particular Award or in any other agreement incorporated by reference into the Award Agreement for purposes of defining such term.

• In the absence of any other Good Reason definition in the Award Agreement (or in any other agreement incorporated by reference into the Award Agreement), Good Reason shall mean an individual’s voluntary resignation following (A) a change in his or her position with the Corporation (or any Parent or Subsidiary) which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation (or any Parent or Subsidiary) without the individual’s consent.

S. Incentive Bonus Program shall mean the incentive bonus program in effect under Article Four of the Plan.

T. Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

U. Involuntary Termination shall mean the termination of the Service of any individual which occurs by reason of one or more of the following as the Plan Administrator shall determine and in the absence of a determination in the Award Agreement (or in any other agreement incorporated by reference into the Award Agreement), an Involuntary Termination shall include both of the following:

(i) such individual’s involuntary dismissal or discharge by the Corporation (or any Parent or Subsidiary) for reasons other than for Cause, or

(ii) such individual’s voluntary resignation for Good Reason.

V. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.

W. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

X. Optionee shall mean any person to whom an option is granted under the Discretionary Grant or Automatic Grant Program.

Y. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

Z. Participant shall mean any person who is issued (i) shares of Common Stock, restricted stock units, performance shares, performance units or other stock-based awards under the Stock Issuance Program or (ii) an incentive bonus award under the Incentive Bonus Program.

AA. Permanent Disability or Permanently Disabled shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more. However, solely for purposes of the Automatic Grant Program, Permanent Disability or Permanently Disabled shall mean the inability of the non-employee Board member to perform his or her usual duties as a Board member by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.

BB. Performance Goals shall mean any of the following performance criteria upon which the vesting of one or more Awards under the Plan may be based: (i) cash flow; (ii) earnings (including earnings before interest and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and charges for stock-based compensation, earnings before interest, taxes, depreciation and amortization, and net earnings); (iii) earnings per share; (iv) growth in earnings or earnings per share; (v) stock price; (vi) return on equity or average stockholder equity;

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(vii) total stockholder return or growth in total stockholder return; (viii) return on capital; (ix) return on assets or net assets; (x) invested capital, return on capital or return on invested capital; (xi) revenue, growth in revenue, return on sales, or market share gains; (xii) income or net income; (xiii) operating income, net operating income or net operating income after tax; (xiv) operating profit or net operating profit; (xv) operating margin or gross margin; (xvi) return on operating revenue or return on operating profit; (xvii) expense control or cost reduction goals, (xviii) budget comparisons; (xix) development and implementation of strategic plans and/or organizational restructuring goals; (xx) measures of customer satisfaction; (xxi) development or marketing collaborations, formations of joint ventures or partnerships or the completion of other similar transactions intended to enhance the Corporation’s revenue or profitability or enhance its customer base; (xxii) product development, product quality, or product delivery goals; (xxiii) specific project delivery goals; and (xxiv) other similar criteria consistent with the foregoing. In addition, such performance criteria may be based upon the attainment of specified levels of the Corporation’s performance under one or more of the measures described above relative to the performance of other entities and may also be based on the performance of any of the Corporation’s business units or divisions or any Parent or Subsidiary. Each applicable Performance Goal may include a minimum threshold level of performance below which no Award will be earned, levels of performance at which specified portions of an Award will be earned and a maximum level of performance at which an Award will be fully earned. Each applicable performance goal may be structured at the time of the Award to provide for appropriate adjustment for one or more of the following items: (A) asset impairments or write-downs; (B) litigation judgments or claim settlements; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; (E) any extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Corporation’s annual report to stockholders for the applicable year; and (F) the operations of any business acquired by the Corporation.

CC. Plan shall mean the Corporation’s 2007 Incentive Compensation Plan, as set forth in this document.

DD. Plan Administrator shall mean the particular entity, whether the Compensation Committee (or subcommittee thereof), the Board or the Secondary Committee, which is authorized to administer the Discretionary Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under the Plan with respect to the persons under its jurisdiction.

EE. Plan Effective Date shall mean the July 30, 2007 date on which the Plan is approved by the stockholders at the 2007 Annual Meeting.

FF. Predecessor Plans shall mean (i) the Corporation’s 1998 Stock Plan, (ii) the Corporation’s 1995 Director Stock Option Plan and (iii) the Nonstatutory Stock Plan, as each such plan is in effect immediately prior to the 2007 Annual Meeting.

GG. Secondary Committee shall mean a committee of one or more Board members or such other individual(s) appointed by the Board to administer the Plan with respect to eligible persons other than Section 16 Insiders.

HH. Section 16 Insider shall mean an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the 1934 Act.

II. Service shall mean the performance of services for the Corporation (or any Parent or Subsidiary, whether now existing or subsequently established) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance. For purposes of the Plan, an Optionee or Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) the Optionee or Participant no longer performs services in any of the foregoing capacities for the Corporation or any Parent or Subsidiary or (ii) the entity for which the Optionee or Participant is performing such services ceases to remain a Parent or Subsidiary of the Corporation, even though the Optionee or Participant may subsequently continue to perform services for that entity. Service shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that should such leave of absence exceed three (3) months, then for purposes

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of determining the period within which an Incentive Option may be exercised as such under the federal tax laws, the Optionee’s Service shall be deemed to cease on the first day immediately following the expiration of such three (3)-month period, unless Optionee is provided with the right to return to Service following such leave either by statute or by written contract. Except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period the Optionee or Participant is on a leave of absence.

JJ. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

KK. Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.

LL. Stock Issuance Program shall mean the stock issuance program in effect under Article Three of the Plan.

MM. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

NN. 10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary).

OO. Withholding Taxes shall mean the applicable federal, state, local and foreign income, employment and other withholding taxes to which the holder of an Award under the Plan may become subject in connection with the issuance, exercise or vesting of that Award or the issuance of shares of Common Stock thereunder.

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EX-21.1

EXHIBIT 21.1

SUBSIDIARIES

OF

INTEGRATED SILICON SOLUTION, INC.

Name	Place of Incorporation
Integrated Silicon Solution Inc. (Hong Kong) Limited	Hong Kong
ISSI Hong Kong Holding Limited	Hong Kong
Integrated Silicon Solution (Cayman), Inc.	Cayman Islands
Integrated Silicon Solution (Shanghai) Inc.	China
Integrated Silicon Solution (Taiwan) Inc.	Taiwan
Integrated Circuit Solution Inc.	Taiwan
ISSI Japan, Inc.	Japan
Integrated Silicon Solution, Inc. (Singapore) Pte. Limited	Singapore
Enable Korea Co., Ltd.	Korea
Enable Semiconductor Corporation	Taiwan
Si En Integration Holdings Limited	Cayman Islands
Si En Technology (Xiamen) Limited	China
Enchida International Limited	Hong Kong
Chingis Technology Corporation	Taiwan
Chingis Technology Corporation	United States
Eminent International Limited	Samoa
Sofwin, Inc.	California
Winston, Inc.	California

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our reports dated December 13, 2013, with respect to the consolidated financial statements and internal control over financial reporting, included in the Annual Report of Integrated Silicon Solution, Inc. on Form 10-K for the year ended September 30, 2013. We hereby consent to the incorporation by reference of said reports in the Registration Statements of Integrated Silicon Solution, Inc. on Forms S-3 (File Nos. 333-84402, 333-42245 and 333-95837) and on Forms S-8 (File Nos. 333-95282, 333-3438, 333-26135, 333-44281, 333-50679, 333-76991, 333-33944, 333-56800, 333-84404, 333-101378, 333-115494, 333-144006, 333-148184, 333-163934, 333-178491, and 333-185488).

/s/ GRANT THORNTON, LLP

San Francisco, California

December 13, 2013

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Scott D. Howarth, certify that:

1. I have reviewed this annual report on Form 10-K 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(s) 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(s) 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: December 13, 2013

/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 annual report on Form 10-K 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(s) 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(s) 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: December 13, 2013

/s/    John M. Cobb

John M. Cobb

Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

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 Annual Report of Integrated Silicon Solution, Inc. on Form 10-K for the annual period ended September 30, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Annual Report on Form 10-K 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
	December 13, 2013

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 Annual Report of Integrated Silicon Solution, Inc. on Form 10-K for the annual period ended September 30, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Annual Report on Form 10-K 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
	December 13, 2013

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Retirement Plan (Schedule of Changes in Projected Benefit Obligation) (Details) (Pension Plans, Defined Benefit, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Pension Plans, Defined Benefit
Change in projected benefit obligation:
Beginning benefit obligation	$ 6,047	$ 5,178
Service cost	200	195	165
Interest cost	119	108	83
Actuarial loss	90	75
Currency exchange rate changes	(66)	205
Assumed liability in business combination	0	286
Ending projected benefit obligation	$ 6,390	$ 6,047	$ 5,178

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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) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at end of period (shares)	5,621,000
Common shares reserved under stock option plans
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning of period (shares)	5,477,000	4,851,000	4,275,000
Granted (shares)	1,106,000	1,608,000	1,194,000
Exercised (shares)	(1,116,000)	(857,000)	(524,000)
Cancelled/Expired (shares)	(116,000)	(125,000)	(94,000)
Outstanding at end of period (shares)	5,351,000	5,477,000	4,851,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Weighted-Average Exercise Price, Outstanding at beginning of period	$ 6.81	$ 5.57	$ 4.77
Weighted-Average Exercise Price, Granted	$ 9.31	$ 9.91	$ 8.29
Weighted-Average Exercise Price, Exercised	$ 5.61	$ 5.18	$ 4.09
Weighted-Average Exercise Price, Cancelled/Expired	$ 9.83	$ 9.68	$ 12.01
Weighted-Average Exercise Price, Outstanding at end of period	$ 7.51	$ 6.81	$ 5.57
Weighted-Average Remaining Contractual Term in Years, Outstanding at September 30, 2012 (years)	4 years 2 months 1 day
Aggregate Intrinsic Value, Outstanding at September 30, 2013	$ 18,127
Number of Shares, Exercisable (shares)	3,173,000	3,072,000	2,868,000
Weighted-Average Exercise Price, Exercisable	$ 6.25	$ 5.42	$ 5.31
Weighted-Average Remaining Contractual Term in Years, Exercisable (years)	3 years 2 months 23 days	3 years 3 months 11 days	3 years 6 months 4 days
Aggregate Intrinsic Value, Exercisable at September 30, 2013	14,738
Number of Shares, Vested and expected to vest after September 30, 2013 (shares)	5,245,000
Weighted-Average Exercise Price, Vested and expected to vest after September 30, 2013	$ 7.47
Weighted-Average Remaining Contractual Term in Years, Vested and expected to vest after September 30, 2013 (years)	4 years 1 month 21 days
Aggregate Intrinsic Value, Vested and expected to vest after September 30, 2013	$ 17,985

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Stock Based Compensation (Restricted Stock and Restricted Stock Units Activity) (Details) (USD $)	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at end of period (shares)	5,621,000
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 beginning of period (shares)	323,000	382,000	69,000
Granted (shares)	121,000	106,000	362,000
Vested (shares)	(172,000)	(165,000)	(49,000)
Forfeited (shares)	(3,000)	0	0
Outstanding at end of period (shares)	269,000	323,000	382,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Weighted-Average Grant Date Fair Value, Outstanding at beginning of period	$ 8.41	$ 7.84	$ 7.21
Weighted-average fair value of grants	$ 9.14	$ 9.42	$ 7.82
Weighted Average Grant Date Fair Value, Vested	$ 7.94	$ 7.73	$ 6.75
Weighted-Average Grant Date Fair Value, Forfeited	$ 10.64	$ 10.64	$ 8.80
Weighted-Average Grant Date Fair Value, Outstanding at end of period	$ 9.02	$ 8.41	$ 7.84
Aggregate Intrinsic Value, Vested	$ 1,612,000	$ 1,563,000	$ 492,000
Aggregate Intrinsic Value, Outstanding at September 30, 2013	$ 2,934,000

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Retirement Plan (Schedule of Net Periodic Benefit Cost) (Details) (Pension Plans, Defined Benefit, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 200	$ 195	$ 165
Interest cost	119	108	83
Expected return on plan assets	(50)	(44)	(40)
Amortization of deferred amount	40	36	2
Net periodic benefit cost	$ 309	$ 295	$ 210

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Commitments and Contingencies (Schedule of Future Minimum Rental Commitments) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]
2014	$ 802
2015	603
2016	355
2017	0
2018	0
Total minimum rental commitments	$ 1,760

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Other Long-term Liabilities

12 Months Ended

Sep. 30, 2013

Other Liabilities Disclosure [Abstract]

Other Long-term Liabilities

Other Long-term Liabilities

Other long-term liabilities consisted of the following at September 30:

	2013		2012
	(in thousands)
Pension liability	$	3,790	$	3,537
Non-current deferred tax liabilities	4,479		1,415
Other	443		526
	$	8,712	$	5,478

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Fair Value Measurements (Marketable Equity and Cash Equivalents (Classified as Available-for-sale) and Cost Method Investments) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 43,112	$ 70,305
Gross Unrealized Holding Gains	10,218	0
Gross Unrealized Holding Losses	0	(1,835)
Fair Value	53,330	68,470
Money market instruments
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	19,318	34,317
Gross Unrealized Holding Gains	0	0
Gross Unrealized Holding Losses	0	0
Fair Value	19,318	34,317
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	15,595	18,302
Gross Unrealized Holding Gains	0	0
Gross Unrealized Holding Losses	0	0
Fair Value	15,595	18,302
Available-for-sale securities | SMIC
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,099	1,099
Gross Unrealized Holding Gains	694	0
Gross Unrealized Holding Losses	0	0
Fair Value	1,793	1,099
Available-for-sale securities | Nanya
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	7,100	16,587
Gross Unrealized Holding Gains	9,524	0
Gross Unrealized Holding Losses	0	(1,835)
Fair Value	16,624	14,752
Amounts included in cash and cash equivalents
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	31,772	47,177
Gross Unrealized Holding Gains	0	0
Gross Unrealized Holding Losses	0	0
Fair Value	31,772	47,177
Short-term Investments
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	11,340	23,128
Gross Unrealized Holding Gains	10,218	0
Gross Unrealized Holding Losses	0	(1,835)
Fair Value	$ 21,558	$ 21,293

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Consolidated Statements of Comprehensive Income Parenthetical (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Statement of Comprehensive Income [Abstract]
Unrealized holding gain (loss) on securities arising during period, tax	$ (7,975)	$ 312	$ 716
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Tax	3,823	(716)	0
Pension and Other Postretirement Benefit Plans, for Net Transition (Asset) Obligation, Before Reclassification Adjustment, Tax	(44)	(119)	0
Pension and Other Postretirement Benefit Plans, Net Unamortized Gain (Loss) Arising During Period, Tax	160	323	0
Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Transition (Asset) Obligation, Tax	15	0	0
Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net (Gain) Loss, Tax	$ (13)	$ 0	$ 0

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Fair Value Measurements

12 Months Ended

Sep. 30, 2013

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 September 30, 2013, the Company’s financial assets utilizing Level 1 inputs include short-term investment securities traded on an active securities exchange. The Company did not have any financial assets utilizing Level 2 or Level 3 inputs at September 30, 2013 and September 30, 2012.

The following tables represent the Company’s fair value hierarchy for financial assets measured at fair value on a recurring basis:

	September 30, 2013		September 30, 2012
	(Level 1)		(Level 1)
	(In thousands)
Money market instruments (1)	$	19,318	$	34,317
Semiconductor Manufacturing International Corp.
(SMIC) common stock (2)	1,793		1,099
Nanya Technology Corporation (Nanya) common stock (3)	16,624		14,752
	$	37,735	$	50,168

(1) Included in cash and cash equivalents

(2) Included in short-term investments

(3) Included in short-term investments at September 30, 2013 and in other assets at September 30, 2012

There were no transfers in or out of the Company's Level 1 assets during the twelve months ending September 30, 2013 and September 30, 2012.

As of September 30, 2013, the Company did not have any liabilities or non-financial assets that are measured on a fair value basis on a recurring basis.

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

	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
	(in thousands)
September 30, 2013
Money market instruments	$	19,318		$	—	$	—	$	19,318
Certificates of deposit	15,595			—		—		15,595
SMIC common stock	1,099			694		—		1,793
Nanya common stock	7,100			9,524		—		16,624
Total	43,112			10,218		—		53,330
Less: Amounts included in cash and cash
equivalents	(31,772		)	—		—		(31,772		)
	$	11,340		$	10,218	$	—	$	21,558

	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
	(in thousands)
September 30, 2012
Money market instruments	$	34,317		$	—	$	—		$	34,317
Certificates of deposit	18,302			—		—			18,302
SMIC common stock	1,099			—		—			1,099
Nanya common stock	16,587			—		(1,835		)	14,752
Total	70,305			—		(1,835		)	68,470
Less: Amounts included in cash and cash
equivalents	(47,177		)	—		—			(47,177		)
	$	23,128		$	—	$	(1,835	)	$	21,293

During the fourth quarter of fiscal 2012, the Company recorded a $2.3 million charge to write-down its investment in SMIC due to the decline in fair market value being considered other than temporary. The Company uses the weighted-average cost method to determine the cost basis of its shares of SMIC.

In September 2012, the Company invested approximately $27.1 million in Nanya, which was comprised of common shares which are classified as available-for-sale securities and private placement shares which are accounted for on the cost-basis (See Note 4). The Company uses the weighted-average cost method to determine the cost basis of its shares of Nanya.

During fiscal 2013, the Company sold approximately 143.5 million shares of Nanya common stock for approximately $21.2 million which resulted in a pre-tax gain of approximately $12.0 million.

The Company held no debt securities at September 30, 2013 and September 30, 2012. As of September 30, 2013 and September 30, 2012, the Company had cash, cash equivalents and short-term investments of $71.2 million ($4.7 million of which is in China and subject to exchange control regulations) and $39.3 million, respectively, in foreign institutions.

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Commitments and Contingencies

12 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Patents and Licenses

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.

Litigation

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. GSI named the Company as a new, second defendant in the Second Amended Complaint, and alleges claims against the Company for violation of the Sherman Act, violation of the Racketeering Influenced and Corrupt Organizations Act, Unfair Competition under California Business & Professions Code 17200, misappropriation of trade secrets, intentional interference with contract, and intentional interference with prospective economic advantage. GSI alleges that the Company conspired with United Memories, Inc. to harm GSI in connection with a bid from Cisco Systems, Inc., to misappropriate alleged GSI trade secrets, and to interfere with a contract between United Memories, Inc. and GSI. GSI seeks damages and injunctive relief. Before the Company was named as a defendant, the Court denied motions by GSI for temporary and preliminary injunctive relief. On December 6, 2013, the Company filed a motion to dismiss each of the causes of action alleged against the Company by GSI. The motion is currently pending. The Company believes it has meritorious defenses to the claims alleged by GSI and intend to defend this suit vigorously.

VAREP GmBH v. Integrated Silicon Solution, Inc.

On August 21, 2012, a lawsuit was filed against the Company in the Superior Court of California, County of Santa Clara by a former independent sales representative based in Germany named Varep GmbH (Varep), for the alleged underpayment of commissions (Case No. 112CV230846).  The original complaint alleged 11 causes of action, including, among others, breach of contract, Labor Code violations, and violations of the Independent Wholesale Sales Representatives Contractual Relations Act.  A demurrer by the Company challenging the legal sufficiency of the Complaint was sustained with leave to amend and a motion to strike portions of the initial complaint by the Company was granted in part and denied in part.  On December 28, 2012, Varep filed a First Amended Complaint (FAC) asserting seven causes of action, including, among others, breach of contract and Labor Code violations.  On January 7, 2013, the Company filed a demurrer challenging the legal sufficiency of the FAC and a motion to strike portions of the FAC.  On February 19, 2013, the demurrer was sustained without leave to amend as to the causes of action for breach of the implied covenant of good faith and fair dealing and Labor Code violations and overruled with respect to other causes of action, and the motion to strike was granted in part to strike a claim for punitive damages on the cause of action for negligent misrepresentation and denied in other part.  On March 4, 2013, the Company filed an answer to the remaining allegations of the FAC.  The Company and the plaintiff entered into a settlement and mutual general release agreement and on August 22, 2013 the case was dismissed with prejudice.

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.

Operating Leases

The Company leases various facilities and the land upon which its building in Taiwan is situated under operating lease agreements that expire at various dates through 2016. Minimum rental commitments under these leases are as follows (in thousands):

Fiscal year ending:
2014	$	802
2015	603
2016	355
2017	—
2018	—
Total minimum rental commitments	$	1,760

Total rental expense, recorded on a straight-line basis, for the fiscal years ended September 30, 2013, 2012 and 2011 was approximately $1.4 million, $1.4 million and $1.1 million, respectively.

Commitments to Wafer Fabrication Facilities

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, as a matter of practice it becomes increasingly difficult to cancel the purchase order. As of September 30, 2013, the Company had approximately $31.6 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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Borrowings Principal Repayments (Details) (Secured Debt, USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Secured Debt
Debt Instrument [Line Items]
2014	$ 195
2015	195
2016	195
2017	195
2018	3,949
Thereafter	0
Total	$ 4,729

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Other Assets (Narrative) (Details) (USD $)	1 Months Ended	12 Months Ended				1 Months Ended		3 Months Ended		0 Months Ended
	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2013 Pledged Nanya private placement shares	Aug. 31, 2011 Giantec Semiconductor, Inc	Aug. 31, 2011 Giantec Semiconductor, Inc	Dec. 31, 2010 Giantec Semiconductor, Inc	Dec. 30, 2010 Giantec Semiconductor, Inc	Dec. 30, 2010 Giantec Semiconductor, Inc	Sep. 30, 2013 Hong Kong
Entity Information [Line Items]
Purchases of available-for-sale securities	$ 27,109,000	$ 0	$ 27,109,000	$ 0
Termination period	1 year
Deposited private placement shares as collateral for accounts payable	11,042,000	10,920,000	11,042,000		5,400,000
Equity Method Investments	2,000,000	1,684,000	2,000,000
Ownership interest									44.00%		31.00%
Investment received from outside investors										4,000,000
Loss in equity method investment, Giantec								30,000
Ownership percentage sold in Giantec							37.00%
Proceeds from sale of equity method investments							2,200,000
Sale of Giantec, percentage of ownership after transaction						19.85%
Proceeds from Sale of Other Investments		4,300,000
Cost-method Investments, Realized Gain (Loss)		$ 200,000

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Stock Based Compensation

12 Months Ended

Sep. 30, 2013

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”). The Company has outstanding grants under prior option plans, though no further grants can be made under these prior plans. At September 30, 2013, the total number of shares subject to options and awards outstanding under all plans was 5,621,000. At September 30, 2013, 2,255,000 shares were available for future grant under the 2007 Plan of which 35,000 shares were available for the grant of RSUs. 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.

2007 Incentive Compensation Plan

On July 30, 2007, the Company’s stockholders approved, upon recommendation of the Company’s board of directors, the adoption of the 2007 Plan. The 2007 Plan is the successor to each of the 1998 Stock Plan, 1996 Nonstatutory Stock Plan and 1995 Director Stock Option Plan (the “Predecessor Plans”), and no further grants can be made under the Predecessor Plans.

The 2007 Plan permits the grant of stock options, stock appreciation rights, restricted stock awards, RSUs, performance shares and performance units. The Compensation Committee of the Company’s board of directors has the authority to determine the type of incentive award, as well as the terms and conditions of the award, under the 2007 Plan.

3,000,000 shares of the Company’s common stock were initially reserved for issuance under the 2007 Plan. To the extent any options outstanding under the Predecessor Plans subsequently terminate unexercised or any unvested shares outstanding under the Predecessor Plans are subsequently forfeited or repurchased by ISSI, the number of shares of common stock subject to those terminated options, together with the forfeited shares, are added to the share reserve available for issuance under the 2007 Plan, up to an additional 4,000,000 shares. On July 20, 2011, the Company's stockholders approved, upon a recommendation of the Company's board of directors, an amendment and restatement of the Company's 2007 Incentive Compensation Plan to increase the number of shares available for issuance thereunder by 2,000,000 shares, limit the number of awards other than options or stock appreciation rights that may be granted thereunder on or after the date of the special meeting to an aggregate of 263,100 and make certain other changes as set forth therein. On February 8, 2013, the Company's stockholders approved, upon a recommendation of the Company's board of directors, an amendment of the Company's 2007 Incentive Compensation Plan to increase the shares available for issuance thereunder by 2,000,000 shares.

2012 Inducement Option Plan

On July 26, 2012, the Company's board of directors authorized and approved the 2012 Inducement Option Plan (the "Inducement Plan") which was adopted and approved by the compensation committee of the board of directors on September 17, 2012. The purpose of the Inducement Plan was to provide awards of stock options to persons employed by Chingis as a material inducement to such individuals entering into employment with the Company or its subsidiaries upon the acquisition of Chingis by the Company. In this regard, on September 17, 2012, the Company made stock option grants under the Inducement Plan for an aggregate of 439,500 shares of the Company's common stock. The grants under the Inducement Plan were non-qualified stock options to purchase shares of the Company’s common stock and have the following terms: (i) an exercise price equal to $10.42 per share which was the fair market value of the Company’s common stock on the grant date of September 17, 2012, (ii) a term of seven years from the date of grant, and (iii) vesting as to 12.5% of the shares on the six (6) month anniversary of the employment start date, and as to 1/48th of the total shares each month thereafter until the option is fully vested subject to continued employment with the Company.

Other Stock Plans

The Company has outstanding grants under its 1998 Stock Plan, 1996 Nonstatutory Stock Plan and 1995 Director Stock Option 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, except for options granted under the 1995 Director Stock Option Plan, which generally vest over 12 months. Options granted prior to October 1, 2005 expire ten years after the date of grant and options granted after October 1, 2005 expire seven years after the date of the grant.

The Company has shares of common stock reserved for future issuance under its 1995 Employee Stock Purchase Plan (ESPP). Offering periods prior to August 1, 2010 under the ESPP had a duration of six months and the purchase price was equal to 85% of the fair value of the common stock on the purchase date. As approved by the Board of Directors, effective August 1, 2010, shares under the ESPP will be 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 purchase period. The offering periods under the 1995 Employee Stock Purchase Plan commence on approximately February 1 and August 1 of each year. During the fiscal years ended September 30, 2013, 2012 and 2011, 237,000 shares, 181,000 shares, and 167,000 shares were issued under the plan, respectively. As of September 30, 2013, 581,000 shares were available under the plan for future issuance.

Accounting for Stock-Based Compensation

Stock-based compensation cost is calculated by the Company on the date of grant using the fair value of the option as determined using the Black-Scholes option pricing model. The compensation cost is then amortized ratably over the vesting period of the individual option grants. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on its historical forfeiture rates as it believes these rates to be the most indicative of the Company’s expected forfeiture rate.

As of September 30, 2013, there was approximately $10.4 million of total unrecognized stock-based compensation expense under the Company’s stock option plans that will be recognized over a weighted-average period of approximately 2.47 years. Future stock option grants will add to this total whereas quarterly amortization and the vesting of the existing stock option grants will reduce this total. In addition, as of September 30, 2013, there was approximately $0.2 million of total unrecognized stock-based compensation expense under the Company’s ESPP that will be recognized over a weighted-average period of approximately 4 months.

Cash flows from tax benefits resulting from the exercise of stock options are classified as financing cash flows in the statement of cash flows. As the Company has a valuation allowance for certain of its deferred tax assets, a tax benefit associated with stock option exercises has not been realized or recognized.

The Company issues new shares of common stock upon exercise of stock options and upon vesting of RSUs. The total intrinsic value (market value on date of exercise less exercise price) of options exercised and RSUs vested during the fiscal years ended September 30, 2013, 2012 and 2011, was $7.0 million, $5.7 million and $3.5 million, respectively.

The table below outlines the effects of total stock-based compensation.

	Years Ended September 30,
	2013			2012		2011
	(in thousands)
Stock-based compensation
Cost of sales	$	179		$	135	$	157
Research and development	2,310			1,461		1,078
Selling, general and administrative	3,452			3,435		2,807
Total stock-based compensation	5,941			5,031		4,042
Tax effect on stock-based compensation	(1,089		)	—		—
Net effect on net income (loss)	$	4,852		$	5,031	$	4,042

Valuation Assumptions

The Company uses the Black-Scholes option pricing model to estimate the fair value of the options granted. The Company estimates the expected term of options granted based upon historical exercise data. Estimated volatilities are based on historical stock price volatilities of the period immediately preceding the option grant that is equal in length to the option’s expected term. The Company believes that historical volatility is the best estimate of future volatility. The Company bases the risk- free interest rate on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The Company has never paid dividends and does not anticipate doing so over the expected life of the options and therefore used 0% for dividend yield. For offering periods prior to August 1, 2010 under the ESPP, the Company recorded compensation expense for the difference between the purchase price and the fair market value on the day of purchase. For offering periods subsequent to August 1, 2010, the Company uses the Black-Scholes option pricing model to estimate the fair value of stock purchase rights under its ESPP.

The estimated values of stock option grants and stock purchase rights, as well as the weighted average assumptions used in calculating these values during the fiscal years ended September 30, 2013, 2012 and 2011, were based on estimates at the date of grant as follows:

	Stock Options									ESPP
	2013			2012			2011			2013			2012			2011
Expected life (years)	4.45			4.40			4.37			0.50			0.50			0.50
Expected volatility	58.00		%	60.00		%	58.00		%	31.00		%	42.00		%	46.00		%
Risk-free interest rate	0.57		%	0.61		%	1.21		%	0.09		%	0.11		%	0.12		%
Dividend yield	—		%	—		%	—		%	—		%	—		%	—		%
Weighted-average fair value of grants	$	4.37		$	4.70		$	3.88		$	2.44		$	2.66		$	2.66

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 during the fiscal years ended September 30, 2013 , 2012 and 2011 was $9.14 per share, $9.42 per share and $7.82 per share, respectively.

The following table is a summary of the Company’s stock option activity and related information for the last three fiscal years under the 1989 Stock Plan, 1996 Nonstatutory Stock Plan, 1998 Stock Plan, 1995 Director Stock Option Plan and the 2007 Plan (stock option amounts and aggregate intrinsic value are presented in thousands):

	Outstanding Options
	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Balance at September 30, 2010	4,275		$	4.77
Options Granted	1,194		$	8.29
Options Exercised	(524	)	$	4.09
Options Cancelled/Expired	(94	)	$	12.01
Balance at September 30, 2011	4,851		$	5.57
Options Granted	1,608		$	9.91
Options Exercised	(857	)	$	5.18
Options Cancelled/Expired	(125	)	$	9.68
Balance at September 30, 2012	5,477		$	6.81
Options Granted	1,106		$	9.31
Options Exercised	(1,116	)	$	5.61
Options Cancelled/Expired	(116	)	$	9.83
Balance at September 30, 2013	5,351		$	7.51	4.17	$	18,127
Exercisable at September 30, 2013	3,173		$	6.25	3.23	$	14,738
Vested and expected to vest after September 30, 2013	5,245		$	7.47	4.14	$	17,985
Options exercisable at:
September 30, 2011	2,868		$	5.31	3.51
September 30, 2012	3,072		$	5.42	3.28
September 30, 2013	3,173		$	6.25	3.23

The following table summarizes information about options outstanding and exercisable at September 30, 2013:

					Options Outstanding				Options Exercisable
Range of  Exercise Prices					Number of Options Outstanding (in thousands)	Wtd. Average Remaining Contractual Life (in years)	Wtd. Average Exercise Price		Number of Options Exercisable (in thousands)	Wtd. Average Exercise Price
$	1.50	-	$	4.34	1,246	2.68	$	3.28	1,208	$	3.25
$	4.35	-	7.34		1,155	2.40	$	6.81	989	$	6.73
$	7.35	-	9.14		1,172	5.70	$	8.83	311	$	8.32
$	9.15	-	10.42		1,300	5.43	$	9.77	449	$	9.67
$	10.43	-	16.08		478	5.14	$	10.85	216	$	10.76
$	1.50	-	$	16.08	5,351	4.17	$	7.51	3,173	$	6.25

The following table is a summary of the Company’s RSU activity and related information under the 2007 Plan (RSU amounts and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted- Average Grant-Date Fair Value		Aggregate Intrinsic Value
Outstanding awards at September 30, 2010	69		$	7.21
Granted	362		$	7.82
Vested	(49	)	$	6.75	$	492
Forfeited	—		$	8.80
Outstanding awards at September 30, 2011	382		$	7.84
Granted	106		$	9.42
Vested	(165	)	$	7.73	$	1,563
Forfeited	—		$	10.64
Outstanding awards at September 30, 2012	323		$	8.41
Granted	121		$	9.14
Vested	(172	)	$	7.94	$	1,612
Forfeited	(3	)	$	10.64
Outstanding awards at September 30, 2013	269		$	9.02	$	2,934

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Retirement Plan (Schedule of Changes in Plan Assets) (Details) (Pension Plans, Defined Benefit, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Pension Plans, Defined Benefit
Change in fair value plan assets
Beginning fair value of plan assets	$ 2,510	$ 2,079
Actual return on plan assets	32	19
Employer contributions	86	70
Currency exchange rate changes	(29)	83
Assets acquired in business combination	0	259
Ending fair value of plan assets	$ 2,599	$ 2,510

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Quarterly Financial Information (Tables)

12 Months Ended

Sep. 30, 2013

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

The following tables show the Company's quarterly results of operations for each of the years ended September 30, 2013 and 2012.

Fiscal 2013	Fourth Quarter				Third Quarter			Second Quarter			First Quarter
	(in thousands, except per share data)
Net sales	$	78,392			$	77,788		$	74,991		$	76,399
Gross profit	$	25,934			$	26,047		$	24,989		$	24,491
Operating income	$	4,693			$	4,635		$	3,951		$	3,379
Consolidated net income	$	4,730		(1)	$	7,246	(2)	$	3,280	(3)	$	2,488
Net income attributable to ISSI	$	4,698		(1)	$	7,064	(2)	$	3,287	(3)	$	2,499
Basic net income per share	$	0.16			$	0.25		$	0.12		$	0.09
Diluted net income per share	$	0.15			$	0.24		$	0.11		$	0.09
Market price range common stock:
High	$	11.99			$	11.31		$	9.92		$	9.73
Low	$	9.99			$	8.31		$	8.33		$	8.18
Fiscal 2012
Net sales	$	72,500			$	64,781		$	62,505		$	66,164
Gross profit	$	18,328		(4)	$	21,337		$	21,121		$	22,198
Operating income (loss)	$	(9,862	)	(5)	$	5,196		$	5,197		$	5,100
Consolidated net income (loss)	$	(13,118	)	(6)	$	3,147		$	3,597		$	3,769
Net income (loss) attributable to ISSI	$	(13,246	)	(6)	$	3,137		$	3,601		$	3,790
Basic net income (loss) per share	$	(0.48	)		$	0.11		$	0.13		$	0.14
Diluted net income (loss) per share	$	(0.48	)		$	0.11		$	0.12		$	0.13
Market price range common stock:
High	$	10.49			$	11.50		$	11.40		$	9.79
Low	$	8.75			$	8.83		$	9.03		$	6.81

________________________

(1) In the September 2013 quarter, the Company realized a gain of $2.9 million from the sale of a portion of its Nanya shares.

(2) In the June 2013 quarter, the Company realized a gain from the sale of investments of $7.3 million including $7.0 million from the sale of a portion of its Nanya shares.

(3) In the March 2013 quarter, the Company realized a gain of $2.1 million from the sale of a portion of its Nanya shares.

(4) In the September 2012 quarter, the Company recorded a charge of approximately $5.4 million for the impairment of certain intangible assets related to the acquisition of Si En.

(5) In the September 2012 quarter, the Company recorded a charge of approximately $14.3 million for the impairment of certain tangible and intangible assets related to the acquisition of Si En.

(6) In the September 2012 quarter, the Company recorded a charge of approximately $14.3 million for the impairment of certain tangible and intangible assets related to the acquisition of Si En and a charge of approximately $2.3 million to write-down its investment in SMIC due to the decline in fair market value being considered other than temporary.

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Income Taxes (Schedule of Income (loss) before Provision for Income Taxes) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Income Tax Disclosure [Abstract]
United States	$ 4,542	$ 9,723	$ 12,931
International	25,479	(5,816)	15,854
Total pre-tax income	$ 30,021	$ 3,907	$ 28,785

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Other Assets (Schedule of Other Assets) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Other Assets [Abstract]
Restricted assets	$ 811	$ 239
Deposits to foundry for capacity	0	3,500
Investment in Giantec	0	4,025
Other investment	1,684	2,000
Nanya common stock	0	14,752
Nanya private placement shares	10,920	11,042
Other	3,164	3,319
Other assets	$ 16,579	$ 38,877

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Other Long-term Liabilities (Tables)

12 Months Ended

Sep. 30, 2013

Other Liabilities Disclosure [Abstract]

Schedule of Accrued Liabilities

Accrued expenses consisted of the following at September 30:

	2013		2012
	(in thousands)
Deferred distributor margin	$	2,301	$	2,122
Acquisition related liability	—		4,200
Other	5,056		4,811
	$	7,357	$	11,133

Other long-term liabilities consisted of the following at September 30:

	2013		2012
	(in thousands)
Pension liability	$	3,790	$	3,537
Non-current deferred tax liabilities	4,479		1,415
Other	443		526
	$	8,712	$	5,478

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Acquisition of Chingis (Chingis)

12 Months Ended

Sep. 30, 2013

Chingis

Business Acquisition [Line Items]

Acquisition of Chingis

Acquisition of Chingis

On September 14, 2012, the Company acquired approximately 94.1% of Chingis Technology Corporation (Chingis) a company headquartered in Taiwan. Chingis provides a variety of NOR flash memory technologies used in standalone and embedded applications. The Company’s goal with this acquisition is to strengthen its specialty memory product portfolio by adding another specialty memory technology to expand the Company's future growth opportunities. In addition, the Company expects to leverage existing customer and vendor relationships to promote Chingis’s products.

The purchase price was approximately $31.8 million, or $13.2 million net of the approximately $18.6 million in cash on Chingis' balance sheet at closing.

The allocation of the purchase price of Chingis includes both tangible assets and acquired intangible assets. The excess of the purchase price over the fair value allocated to the net assets is goodwill. The goodwill recognized was attributable primarily to expected synergies and the assembled workforce of Chingis. The Company currently does not expect to receive a tax benefit for such goodwill.

The purchase price allocation is as follows (in thousands):

Cash and cash equivalents	$	18,622
Accounts receivable	6,546
Inventories	5,229
Property, equipment and leasehold improvements	117
Other current and other assets	844
Intangible assets:
In-process technology	400
Developed technology	3,690
Customer relationships	3,340
Other intangibles	450
Total identifiable assets acquired	39,238
Current liabilities and other liabilities	(7,946		)
Deferred tax liability	(1,440		)
Total liabilities assumed	(9,386		)
Net identifiable assets acquired	29,852
Noncontrolling interest	(1,996		)
Goodwill	3,976
Net assets acquired	$	31,832

The noncontrolling interest was determined based on the acquisition date fair value and the minority shareholders' ownership percentage.

The developed technology is being amortized over six years, the customer relationships are being amortized over six years and the other intangible assets are being amortized over three years.

In fiscal 2012, the Company incurred costs of $0.4 million related to its acquisition of Chingis. These costs are recorded in selling, general and administrative expenses in the Company’s consolidated statements of operations. The Company's financial results for fiscal 2012, include revenue of $1.2 million and a net loss of $1.2 million attributable to Chingis for the period from September 14, 2012 through September 30, 2012.

In May 2013, the Company acquired an additional 4.8% of Chingis for approximately $1.6 million. At September 30, 2013, the Company owned approximately 98.9% of Chingis.

Unaudited Pro forma Financial Information

The pro forma financial information presented below is presented as if the acquisition of Chingis had occurred at the beginning of fiscal 2011. The pro forma statements of operations for the twelve months ended September 30, 2013, 2012 and 2011, include the historical results of the Company and Chingis plus the effect of recurring amortization of the related intangible assets. Such pro forma results do not purport to be indicative of what would have occurred had the acquisition been made as of those dates or the results which may occur in the future. The pro forma financial results are as follows:

	Years Ended September 30,
	2013		2012			2011
	(in thousands, except per share data)
Net sales	$	307,570	$	303,299		$	320,516
Net income	$	17,852	$	(2,259	)	$	57,608

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Acquisition of Si En (Si En)

12 Months Ended

Sep. 30, 2013

Si En

Business Acquisition [Line Items]

Acquisition of Si En

Acquisition of Si En

On January 31, 2011, the Company acquired 100% of the outstanding shares of Si En Integration Holdings Limited (Si En), a privately held fabless provider of high performance analog and mixed signal integrated circuits headquartered in Xiamen, China. The acquisition of Si En is part of a Company strategy to target additional revenue opportunities and attractive margins in non-memory markets. The purchase price was approximately $27.4 million in cash which included a $4.2 million holdback provision for a period of two years from the date of closing to secure certain Si En indemnification obligations.

The allocation of the purchase price of Si En includes both tangible assets and acquired intangible assets. The excess of the purchase price over the fair value allocated to the net assets is goodwill. The goodwill recognized was attributable primarily to expected synergies and the assembled workforce of Si En. The Company currently does not expect to receive a tax benefit for such goodwill.

The purchase price allocation is as follows (in thousands):

Cash and cash equivalents	$	7,240
Accounts receivable	2,148
Inventories	2,117
Property, equipment and leasehold improvements	124
Other current and other assets	260
Intangible assets:
In-process technology	2,610
Developed technology	4,650
Customer relationships	3,800
Other intangibles	570
Total identifiable assets acquired	23,519
Current liabilities	(2,533		)
Deferred tax liability	(1,748		)
Total liabilities assumed	(4,281		)
Net identifiable assets acquired	19,238
Goodwill	8,162
Net assets acquired	$	27,400

The developed technology was being amortized over eight years, the customer relationships were being amortized over five years and the other intangible assets were being amortized over lives ranging from three to four years with a weighted-average useful life of three years and six months.

In September 2012, the Company recorded an impairment charge of $13.1 million related to the goodwill and intangibles acquired in connection with its acquisition of Si En (See Note 6).

In fiscal 2011, the Company incurred legal fees of $0.3 million related to its acquisition of Si En. These costs were recorded in selling, general and administrative expenses in the Company’s consolidated statements of operations.

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Commitments and Contingencies (Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended			0 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011	Dec. 28, 2012 Varep GmBh Case cause_of_action	Aug. 21, 2012 Varep GmBh Case cause_of_action
Loss Contingencies [Line Items]
Total rental expense	$ 1.4	$ 1.4	$ 1.1
Amount of purchase orders that had been entered into wafer work-in-process	$ 31.6
New claims filed, number				7	11

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Acquisition of Si En (Tables) (Si En)

12 Months Ended

Sep. 30, 2013

Si En

Business Acquisition [Line Items]

Schedule of Purchase Price Allocation

The purchase price allocation is as follows (in thousands):

Cash and cash equivalents	$	7,240
Accounts receivable	2,148
Inventories	2,117
Property, equipment and leasehold improvements	124
Other current and other assets	260
Intangible assets:
In-process technology	2,610
Developed technology	4,650
Customer relationships	3,800
Other intangibles	570
Total identifiable assets acquired	23,519
Current liabilities	(2,533		)
Deferred tax liability	(1,748		)
Total liabilities assumed	(4,281		)
Net identifiable assets acquired	19,238
Goodwill	8,162
Net assets acquired	$	27,400

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Property, Equipment, and Leasehold Improvements, net (Tables)

12 Months Ended

Sep. 30, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property and equipment, net consisted of the following at September 30:

	2013			2012
	(in thousands)
Machinery and equipment	$	56,144		$	47,377
Furniture and fixtures	3,717			2,869
Land, buildings and improvements	40,665			29,553
	100,526			79,799
Less accumulated depreciation and amortization	(54,022		)	(50,513		)
	$	46,504		$	29,286

Schedule of Leased Assets

The assets leased consisted of the following at September 30:

	2013			2012
	(in thousands)
Buildings and improvements	$	9,441		$	10,533
Less accumulated depreciation	(5,650		)	(6,116		)
	$	3,791		$	4,417

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Stockholders' Equity (Tables)

12 Months Ended

Sep. 30, 2013

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax, were as follows at September 30:

	2013			2012
	(In thousands)
Accumulated foreign currency translation adjustments	$	4,787		$	6,048
Accumulated net unrealized gain on SMIC (net of tax of $275 in 2013 and $0 in 2012)	419			—
Accumulated net unrealized gain (loss) on Nanya (net of tax of $3,565 in 2013 and $312 in 2012)	5,959			(1,523		)
Accumulated net retirement plan transition asset (net of tax of $148 in 2013 and $119 in 2012)	47			115
Accumulated net retirement plan actuarial losses (net of tax of $470 in 2013 and $323 in 2012)	(2,091		)	(2,241		)
Total accumulated other comprehensive income	$	9,121		$	2,399

The following table summarizes the amounts recorded in accumulated other comprehensive income (loss) before taxes, as of September 30:

	2013			2012
	(in thousands)
Net transition asset	$	195		$	234
Net actuarial loss	(2,561		)	(2,564		)
Defined benefit plans, net	$	(2,366	)	$	(2,330	)

Schedule of Common Stock reserved for future issuance

As of September 30, 2013, shares of common stock were reserved for future issuance as follows:

Common shares reserved under Employee Stock Purchase Plan	581,000
Common shares reserved under stock option plans	7,876,000

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Organization and Significant Accounting Policies (Narrative) (Details) (USD $)	12 Months Ended																	1 Months Ended			0 Months Ended	1 Months Ended
	Sep. 30, 2013 Business_Segment	Sep. 30, 2013 Largest Distributor Sales Revenue, Goods, Net Customer Concentration Risk	Sep. 30, 2012 Largest Distributor Sales Revenue, Goods, Net Customer Concentration Risk	Sep. 30, 2011 Largest Distributor Sales Revenue, Goods, Net Customer Concentration Risk	Sep. 30, 2013 Second Largest Distributor Sales Revenue, Goods, Net Customer Concentration Risk	Sep. 30, 2012 Second Largest Distributor Sales Revenue, Goods, Net Customer Concentration Risk	Sep. 30, 2011 Second Largest Distributor Sales Revenue, Goods, Net Customer Concentration Risk	Sep. 30, 2013 Selling, general and administrative	Sep. 30, 2012 Selling, general and administrative	Sep. 30, 2011 Selling, general and administrative	Sep. 30, 2013 Minimum	Sep. 30, 2013 Maximum	Sep. 30, 2013 Property and equipment Minimum	Sep. 30, 2013 Property and equipment Maximum	Sep. 30, 2013 Buildings and leasehold improvements Minimum	Sep. 30, 2013 Buildings and leasehold improvements Maximum	Sep. 30, 2013 Wafer and Die Bank	Aug. 31, 2011 Giantec Semiconductor, Inc	Aug. 31, 2011 Giantec Semiconductor, Inc	Dec. 30, 2010 Giantec Semiconductor, Inc	Dec. 30, 2010 Giantec Semiconductor, Inc	Jan. 31, 2010 Co-venturer Giantec Semiconductor, Inc
Entity Information [Line Items]
Cost-method Investments, Realized Gain (Loss)	$ 200,000
Proceeds from formation of Giantec																						3,800,000
Investment received from outside investors																					4,000,000
Ownership interest																				44.00%
Ownership percentage sold in Giantec																			37.00%
Ownership percentage in Giantec after sale																		19.85%
Proceeds from Sale of Other Investments	4,300,000
Cash and cash equivalents maturity period	90 days
Inventory aging period	1 year																2 years
Property, equipment and leasehold improvements useful life (years)													2 years	10 years	25 years	50 years
Estimated useful lives of purchased definite lived intangible assets											6 months	8 years
Advertising costs								$ 79,000	$ 59,000	$ 57,000
Option vesting term (years)	4 years
Business segment	1
Concentration Risk, largest customers (percentage)		17.00%	14.00%	15.00%	11.00%	13.00%	12.00%
Period of product warranty (months)	12 months

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Fair Value Measurements (Tables)

12 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Assets Measured on Recurring Basis

The following tables represent the Company’s fair value hierarchy for financial assets measured at fair value on a recurring basis:

	September 30, 2013		September 30, 2012
	(Level 1)		(Level 1)
	(In thousands)
Money market instruments (1)	$	19,318	$	34,317
Semiconductor Manufacturing International Corp.
(SMIC) common stock (2)	1,793		1,099
Nanya Technology Corporation (Nanya) common stock (3)	16,624		14,752
	$	37,735	$	50,168

(1) Included in cash and cash equivalents

(2) Included in short-term investments

(3) Included in short-term investments at September 30, 2013 and in other assets at September 30, 2012

Available-for-sale Securities

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

	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
	(in thousands)
September 30, 2013
Money market instruments	$	19,318		$	—	$	—	$	19,318
Certificates of deposit	15,595			—		—		15,595
SMIC common stock	1,099			694		—		1,793
Nanya common stock	7,100			9,524		—		16,624
Total	43,112			10,218		—		53,330
Less: Amounts included in cash and cash
equivalents	(31,772		)	—		—		(31,772		)
	$	11,340		$	10,218	$	—	$	21,558

	Amortized Cost			Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
	(in thousands)
September 30, 2012
Money market instruments	$	34,317		$	—	$	—		$	34,317
Certificates of deposit	18,302			—		—			18,302
SMIC common stock	1,099			—		—			1,099
Nanya common stock	16,587			—		(1,835		)	14,752
Total	70,305			—		(1,835		)	68,470
Less: Amounts included in cash and cash
equivalents	(47,177		)	—		—			(47,177		)
	$	23,128		$	—	$	(1,835	)	$	21,293

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Purchased Intangible Assets (Schedule Finite-Lived Intangible Assets, Future Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
2014	$ 1,533
2015	1,382
2016	1,238
2017	1,239
2018	1,195
Thereafter	39
Total	$ 6,626

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Stock Based Compensation (Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	$ 5,941	$ 5,031	$ 4,042
Tax effect on stock-based compensation	(1,089)	0	0
Net effect on net income (loss)	4,852	5,031	4,042
Cost of sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	179	135	157
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	2,310	1,461	1,078
Selling, general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated share-based compensation expense	$ 3,452	$ 3,435	$ 2,807

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Purchased Intangible Assets (Schedule of Current Finite-Lived Intangible Asset Amortization Expense by Income Statement Line Item) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Schedule of Current Intangible Asset Amortization Expense By Income Statement Line Item [Line Items]
Amortization expense of intangible assets	$ 1,600	$ 1,848	$ 1,698
Cost of sales
Schedule of Current Intangible Asset Amortization Expense By Income Statement Line Item [Line Items]
Amortization expense of intangible assets	879	984	1,082
Operating expenses
Schedule of Current Intangible Asset Amortization Expense By Income Statement Line Item [Line Items]
Amortization expense of intangible assets	$ 721	$ 864	$ 616

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Per Share Data (Tables)

12 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The calculations of basic and diluted net income (loss) per share for each of the three years ended September 30, 2013, 2012 and 2011 are as follows:

	Years Ended September 30,
	2013		2012			2011
	(in thousands, except per share data)
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$	17,548	$	(2,718	)	$	55,957
Denominator for basic net income (loss) per share:
Weighted average common shares outstanding	28,223		27,120			26,568
Dilutive effect of stock options and awards	1,471		—			1,740
Denominator for diluted net income (loss) per share	29,694		27,120			28,308
Basic net income (loss) per share	$	0.62	$	(0.10	)	$	2.11
Diluted net income (loss) per share	$	0.59	$	(0.10	)	$	1.98

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Other Long-term Liabilities (Schedule of Other Long-Term Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Other Liabilities Disclosure [Abstract]
Pension liability	$ 3,790	$ 3,537
Non-current deferred tax liabilities	4,479	1,415
Other	443	526
Other long-term liabilities	$ 8,712	$ 5,478

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Retirement Plan (Schedule of Expected Benefit Payments) (Details) (Pension Plans, Defined Benefit, USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
2014	$ 760
2015	49
2016	152
2017	69
2018	514
2019-2023	$ 3,377

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Per Share Data (Narrative) (Details) (Outstanding stock options and awards)	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Outstanding stock options and awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options and awards excluded from diluted earnings per share (shares)		1,781,000
Additional stock options and awards excluded from diluted earnings per share by the application of the treasury stock method (shares)	2,733,000	1,499,000	1,115,000

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Geographic and Segment Information (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Segment Reporting [Abstract]
Net foreign currency transaction gains (losses)	$ 214	$ (640)	$ 436

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Related Party Transactions

12 Months Ended

Sep. 30, 2013

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 $429,000, $458,000 and $938,000 during the fiscal years ended September 30, 2013, 2012 and 2011, respectively. Accounts receivable from Chrontel was approximately $65,000 and $30,000 at September 30, 2013 and September 30, 2012, respectively.

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Consolidated Balance Sheets Parenthetical (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 372	$ 508
Preferred stock, par or stated value per share (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par or stated value per share (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	70,000,000	70,000,000
Common Stock, shares, issued (shares)	29,060,000	27,594,000
Common stock, shares, outstanding (in shares)	29,060,000	27,594,000

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Quarterly Financial Information (Details) (USD $)	3 Months Ended												12 Months Ended
	Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012	Sep. 30, 2012		Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Schedule of Quarterly Financial Information [Line Items]
Gain (Loss) on Sale of Equity Investments			$ 7,300,000
Net sales	78,392,000		77,788,000		74,991,000		76,399,000	72,500,000		64,781,000	62,505,000	66,164,000	307,570,000	265,950,000	270,508,000
Gross profit	25,934,000		26,047,000		24,989,000		24,491,000	18,328,000	[1]	21,337,000	21,121,000	22,198,000	101,461,000	82,984,000	90,408,000
Operating income	4,693,000		4,635,000		3,951,000		3,379,000	(9,862,000)	[2]	5,196,000	5,197,000	5,100,000	16,658,000	5,631,000	26,169,000
Consolidated net income (loss)	4,730,000	[3]	7,246,000	[4]	3,280,000	[5]	2,488,000	(13,118,000)	[6]	3,147,000	3,597,000	3,769,000	17,744,000	(2,605,000)	56,123,000
Net income attributable to ISSI	4,698,000	[3]	7,064,000	[4]	3,287,000	[5]	2,499,000	(13,246,000)	[6]	3,137,000	3,601,000	3,790,000	17,548,000	(2,718,000)	55,957,000
Basic net income per share (in dollars per share)	$ 0.16		$ 0.25		$ 0.12		$ 0.09	$ (0.48)		$ 0.11	$ 0.13	$ 0.14	$ 0.62	$ (0.10)	$ 2.11
Diluted net income (loss) per share (in dollars per share)	$ 0.15		$ 0.24		$ 0.11		$ 0.09	$ (0.48)		$ 0.11	$ 0.12	$ 0.13	$ 0.59	$ (0.10)	$ 1.98
Market price range common stock:
Impairment of intangible assets													0	8,887,000	145,000
Write-down of investment								2,300,000
Maximum
Market price range common stock:
Share Price	$ 11.99		$ 11.31		$ 9.92		$ 9.73	$ 10.49		$ 11.50	$ 11.40	$ 9.79	$ 11.99	$ 10.49
Minimum
Market price range common stock:
Share Price	$ 9.99		$ 8.31		$ 8.33		$ 8.18	$ 8.75		$ 8.83	$ 9.03	$ 6.81	$ 9.99	$ 8.75
SMIC
Market price range common stock:
Write-down of investment								2,300,000
Si En
Market price range common stock:
Impairment of intangible assets								5,400,000
Impairment of tangible and intangible assets								14,300,000
Nanya
Schedule of Quarterly Financial Information [Line Items]
Gain (Loss) on Sale of Equity Investments	$ 2,900,000		$ 7,000,000		$ 2,100,000

[1] In the September 2012 quarter, the Company recorded a charge of approximately $5.4 million for the impairment of certain intangible assets related to the acquisition of Si En.

[2] In the September 2012 quarter, the Company recorded a charge of approximately $14.3 million for the impairment of certain tangible and intangible assets related to the acquisition of Si En.

[3] In the September 2013 quarter, the Company realized a gain of $2.9 million from the sale of a portion of its Nanya shares.

[4] In the June 2013 quarter, the Company realized a gain from the sale of investments of $7.3 million including $7.0 million from the sale of a portion of its Nanya shares.

[5] In the March 2013 quarter, the Company realized a gain of $2.1 million from the sale of a portion of its Nanya shares.

[6] In the September 2012 quarter, the Company recorded a charge of approximately $14.3 million for the impairment of certain tangible and intangible assets related to the acquisition of Si En and a charge of approximately $2.3 million to write-down its investment in SMIC due to the decline in fair market value being considered other than temporary.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Consolidated net income (loss)	$ 17,744	$ (2,605)	$ 56,123
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock-based compensation	5,941	5,031	4,042
Depreciation and amortization	5,726	5,569	4,831
Excess tax benefits from share-based compensation	(18)	0	0
Amortization of intangibles	1,600	1,848	1,698
Impairment of and write-off of intangibles	0	8,887	145
Impairment of goodwill	0	4,261	0
Impairment of assets	0	1,182	0
Impairment of investment	0	2,327	0
Gain on sale of investments	(12,217)	0	(560)
Equity in net loss (income) of affiliate	316	0	(233)
Net foreign currency transaction (gains) losses	(214)	640	(436)
Deferred tax assets	9,287	5,016	(28,362)
Other non-cash items	69	108	677
Changes in operating assets and liabilities:
Accounts receivable	1,478	(1,290)	721
Inventories	(1,454)	(2,735)	(2,026)
Other assets	698	(256)	(1,100)
Accounts payable	5,443	2,444	(2,899)
Accrued expenses and other liabilities	(771)	1,928	(2,057)
Net cash provided by operating activities	33,628	32,355	30,564
Cash flows from investing activities:
Acquisition of property and equipment	(23,191)	(6,036)	(6,329)
Acquisition of noncontrolling interest in consolidated subsidiary	(1,614)	(2,370)	0
Payment of holdback related to Si En acquisition	(4,200)	0	0
Investment in Nanya Technology Corporation (Nanya)	0	(27,109)	0
Investment in joint venture	0	(2,000)	0
Purchases of available-for-sale securities	(5,473)	(4,800)	(3,944)
Sales of available-for-sale securities	28,969	2,697	3,305
Investment in consolidated subsidiaries, net of cash and cash equivalents acquired	0	(13,210)	(15,960)
Reduction in cash balances upon deconsolidation of Giantec	0	0	(6,455)
Proceeds from sale of investments	4,256	0	2,768
Decrease (increase) in restricted cash	0	6,786	(1,679)
Net cash used in investing activities	(1,253)	(46,042)	(28,294)
Cash flows from financing activities:
Repurchases and retirements of common stock	(555)	(537)	(4,097)
Proceeds from issuance of stock through compensation plans	8,179	5,852	3,385
Excess tax benefit from share-based compensation	18	0	0
Proceeds from borrowings	4,875	0	0
Principal payments of long-term obligations	(146)	0	0
Proceeds from borrowings under short-term lines of credit	4,069	20,809	11,750
Principal payments of short-term lines of credit	(4,069)	(20,809)	(11,750)
Net cash provided by (used in) financing activities	12,371	5,315	(712)
Effect of exchange rate changes on cash and cash equivalents	(246)	6	640
Net increase (decrease) in cash and cash equivalents	44,500	(8,366)	2,198
Cash and cash equivalents at beginning of year	75,497	83,863	81,665
Cash and cash equivalents at end of year	119,997	75,497	83,863
Supplemental disclosures of cash flow information:
Cash paid (refunded) for income taxes	1,826	875	1,601
Cash paid for interest expense	$ 48	$ 25	$ 23

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Inventories

12 Months Ended

Sep. 30, 2013

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consisted of the following at September 30:

	2013		2012
	(in thousands)
Purchased components	$	14,039	$	17,059
Work-in-process	20,960		28,921
Finished goods	33,470		20,984
	$	68,469	$	66,964

In fiscal 2013, 2012 and 2011, the Company recorded inventory write-downs of $4.6 million, $5.7 million and $3.5 million, respectively. The inventory write-downs were predominately for excess and obsolescence and lower of cost or market issues on certain of its products.

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Stockholders' Equity (Schedule of Common Shares Reserved for Future Issuance) (Details) In Thousands, unless otherwise specified	Sep. 30, 2013
Common shares reserved under Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares reserved for future issuance	581
Common shares reserved under stock option plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares reserved for future issuance	7,876

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Organization and Significant Accounting Policies

12 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Significant Accounting Policies

Organization and Significant Accounting Policies

Organization

Integrated Silicon Solution, Inc. (the “Company”) was incorporated in California on October 27, 1988 and reincorporated in Delaware on August 9, 1993. The Company is a fabless semiconductor company that designs and markets high performance integrated circuits for the following key markets: (i) automotive, (ii) communications, (iii) industrial, medical and military, and (iv) digital consumer. The Company’s primary products are low and medium density DRAM and high speed and low power SRAM.

In January 2010, the Company formed a separate business unit, Giantec Semiconductor, Inc. (Giantec), which designs and markets application specific standard products (ASSP) primarily EEPROMs and SmartCards. As part of this formation, a third party invested approximately $3.8 million in Giantec. On December 30, 2010, Giantec received an additional direct investment of $4.0 million from outside investors, and as a result the Company’s ownership interest was reduced to approximately 44% and the Company was required to deconsolidate Giantec. In August 2011, the Company sold approximately 37% of its shares in Giantec and, on August 31, 2011, Giantec merged with Maxllent Corp. thereby reducing the Company's ownership interest in Giantec to approximately 19.85%. In fiscal 2013, the Company sold its remaining investment in Giantec for approximately $4.3 million which resulted in a pre-tax gain of approximately $0.2 million. The Company's consolidated financial statements reflect accounting for Giantec on a consolidated basis from January 1, 2010 through December 30, 2010. For the period from December 31, 2010 through August 31, 2011, the Company accounted for Giantec on the equity method and the Company's results included its percentage share of Giantec’s results of operations in interest and other income, net. From September 1, 2011 until the sale of its investment in June 2013, the Company accounted for Giantec on the cost basis and its investment in Giantec was included in other assets on the Company's balance sheets.

On January 31, 2011, the Company acquired Si En Integration Holdings Limited (Si En) and the Company’s financial results reflect accounting for Si En on a consolidated basis from the date of acquisition (See Note 18).

On September 14, 2012, the Company acquired Chingis Technology Corporation (Chingis) and the Company’s financial results reflect accounting for Chingis on a consolidated basis from the date of acquisition (See Note 19).

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Integrated Silicon Solution, Inc. and its wholly and majority owned subsidiaries, after elimination of all significant intercompany accounts and transactions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained at various financial institutions.

Investments

Debt securities and marketable equity securities are classified as “available-for-sale”. Available-for-sale securities are recorded at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss). Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in interest and other income, net. The cost of fixed income securities sold is based on the specific identification method and the weighted-average method is used to determine the cost basis of publicly traded equity securities disposed of. Interest and dividends on securities classified as available-for-sale are included in interest and other income, net.

The Company accounts for non-marketable equity and other equity investments for which it does not have control over the investee as equity method investments when the Company has the ability to exercise significant influence, but not control, over the investee. The Company accounts for non-marketable equity and and other equity investments as non-marketable cost method investments when the equity method does not apply. The Company's non-marketable equity and other equity investments are included in other assets in its consolidated balance sheet.

The Company regularly reviews its investments to determine whether a decline in fair value below the cost basis is other than temporary. If the decline in fair value is determined to be other than temporary, the cost basis of the investment is written down to fair value, and the amount of the write-down is included in the consolidated statements of operations.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market. The Company’s inventory valuation process is done on a part-by-part basis. Lower of cost or market adjustments, specifically identified on a part-by-part basis, reduce the carrying value of the related inventory and take into consideration reductions in sales prices. 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 the Company’s costs, the Company records a charge to cost of goods sold to write down inventories to 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 the Company’s operating results. If actual market conditions are more favorable, the Company may have higher gross margins when such products are sold. The Company writes 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. Once established, these write-downs are considered permanent.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method, based upon the shorter of the estimated useful lives ranging from two to ten years for property and equipment and from 25 to 50 years for buildings or the lease term for improvements to leased properties.

Goodwill and Purchased Intangible Assets

The Company tests goodwill and other indefinite-lived intangible assets for impairment on an annual basis and between annual tests if events or circumstances require an interim impairment assessment. For goodwill, the Company either makes a qualitative assessment prior to proceeding to step 1 of the annual goodwill impairment test or performs a two-step impairment test. If the Company makes a qualitative assessment and it determines that the fair value of the reporting unit is less than its carrying amount, the Company would perform step 1 of the annual goodwill impairment test and, if necessary, proceed to step 2. Otherwise, no further evaluation is necessary. For the two-step impairment test, in the first step, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. The Company determines the fair value of the reporting unit based on a weighting of income and market approaches. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company performs the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference.

Purchased intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. Purchased intangible assets with definite lives are carried at cost less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, generally six months to eight years.

The Company has acquired in-process research and development (IPR&D) projects as the result of its business combinations (see Note 6). The fair values of the acquired IPR&D projects were determined through estimates and valuation techniques based on the terms and details of the related acquisitions. Upon completion of development for each project, the acquired IPR&D will be amortized over its useful life. The Company assesses the status of each IPR&D project quarterly to evaluate whether the carrying value has been impaired.

Valuation of Long-Lived Assets and Certain Identifiable Intangibles

The Company evaluates the recoverability of property, plant and equipment and identifiable intangible assets through the performance of periodic reviews to determine whether facts and circumstances exist that would indicate that the carrying amounts of property, plant and equipment and identifiable intangible assets exceed their fair values. If facts and circumstances indicate that the carrying amount of property, plant and equipment and identifiable intangible assets might not be fully recoverable, projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful life is compared to their respective carrying amounts. In the event that the projected undiscounted cash flows are not sufficient to recover the carrying value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets.

Revenue Recognition and Accounts Receivable Allowances

Revenue from product sales (net of any applicable value added tax) to the Company’s 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. The Company makes estimates of potential future product returns and sales allowances related to current period product revenue. Management analyzes historical returns, changes in customer demand, and acceptance of products when evaluating the adequacy of sales returns and allowances. Estimates made by the Company may differ from actual product returns and sales allowances. These differences may materially impact reported revenue and amounts ultimately collected on accounts receivable.

A portion of the Company’s sales is made to distributors under agreements that provide the possibility of certain price adjustment credits, as discussed below, and to return qualifying products for credit, as determined by the Company, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. These agreements limit such returns to a certain percentage of the value of the Company's shipments to that distributor during the prior quarter. In addition, distributors are allowed to return unsold products if the Company terminates the relationship with the distributor.

Certain distributors are granted price adjustment credits related to many of their sales to their customers. Price adjustment credits are granted when a distributor’s standard cost (i.e., the Company’s sales price to the distributor) does not provide the distributor with an appropriate margin on its sales to its customers. As a result, the distributor may request and receive a price adjustment credit from the Company to allow the distributor to earn an appropriate margin on the transaction. Certain distributors are also granted price adjustment credits in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor. Generally, the Company will provide a credit equal to the difference between the price paid by the distributor (less any prior credits on such products) and the new price for the product multiplied by the quantity of such product in the distributor’s inventory at the time of the price decrease. Certain of the Company’s distributor arrangements may allow or require the granting of price concessions below the Company’s cost for a product.

Given the uncertainties associated with the levels of returns and other price adjustment credits that will be issued to these distributors, the sales price to distributors is not fixed or determinable until the distributors resell the products to their customers. Therefore, the Company defers revenue recognition from sales to these distributors until the distributors have sold the products to their end customers.

Title to the inventory transfers to a distributor at the time of shipment or delivery to the distributor, and payment from the distributor is due in accordance with the Company's standard payment terms. These payment terms are not contingent upon the distributors’ sale of the products to their customers. Upon title transfer to distributors, inventory is reduced for the cost of goods shipped, the deferred distributor margin (sales less cost of sales) is recorded as a liability and an account receivable is recorded.

The deferred costs of sales to distributors may be subject to impairment. The Company monitors the level and nature of product returns from distributors as well as the levels of inventory held at distributors. On a quarterly basis, the Company reviews the inventory held at distributors in terms of the Company’s inventory valuation policy and records a charge to cost of goods sold for all known lower of cost or market and excess and obsolescence issues.

In addition, the Company monitors collectibility of accounts receivable primarily through review of its accounts receivable aging. When facts and circumstances indicate the collection of specific amounts or from specific customers is at risk, the Company assesses the impact on amounts recorded for bad debts and, if necessary, will record a charge in the period such determination is made.

The following describes activity in the accounts receivable allowance for doubtful accounts for the years ended September 30, 2013, 2012 and 2011.

Description	Balance at Beginning of Year		Adjustments to Costs and Expenses(1)			Deductions(2)			Balance at End of Year
	(in thousands)
Accounts receivable—Allowance for doubtful accounts:
2011	$	154	$	362		$	(20	)	$	496
2012	$	496	$	(2	)	$	14		$	508
2013	$	508	$	19		$	(155	)	$	372

________________________

(1) Includes increases/(decreases) charged or credited to costs and expenses.

(2) Uncollectible accounts written off, net of recoveries.

Research and Development

Research and development expenditures are charged to operations as incurred.

Foreign Currency Translation

The Company uses the local currency as its functional currency for all foreign subsidiaries. Translation adjustments, which result from the process of translating foreign currency financial statements into U.S. dollars, are included in the accumulated other comprehensive income component of stockholders’ equity.

Advertising Costs

The Company expenses advertising costs as incurred and includes these costs in selling, general and administrative expenses in the consolidated statement of operations. Advertising costs totaled $79,000, $59,000 and $57,000 for the fiscal years ended September 30, 2013, 2012 and 2011, respectively.

Income Taxes

The Company accounts for income taxes under an asset and liability approach. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax reporting purposes. Valuation allowances are provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized. Uncertain tax positions are recognized or derecognized based on the threshold and measurement of a tax position taken or expected to be taken in a tax return. U.S. income tax has not been provided on earnings of foreign subsidiaries to the extent that such earnings are considered to be indefinitely reinvested.

Stock-Based Compensation

Stock-based compensation is measured at the grant date, based on the estimated fair value of the award. The Company amortizes the compensation costs on a straight-line basis over the requisite service period of the option, which is generally the option vesting term of four years. The Company estimates the fair value of stock options using the Black-Scholes valuation model. The Black-Scholes valuation model requires the Company to estimate key assumptions such as expected term, volatility and risk free interest rates to determine the fair value of a stock option. The estimates of these key assumptions are based on historical information and judgment regarding market factors and trends.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 relate to the useful lives and residual value of fixed assets, the fair value of investments, 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 difference, may be material to the financial statements.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, marketable securities, accounts receivable and accounts payable. The Company believes that the carrying amounts of the financial instruments approximate their respective fair values. When there is no readily available market data, the Company may make fair value estimates, which may not necessarily represent the amounts that will be realized in a current or future sale of these assets.

Concentration of Credit Risk

The Company operates in one business segment, which is to design, develop, and market high performance SRAM, DRAM, and other semiconductor products. The Company markets and distributes its products on a worldwide basis, primarily to original equipment manufacturers, contract manufacturers, and distributors. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral. In fiscal 2013, revenue from the Company’s largest and second largest distributor accounted for approximately 17% and 11%, respectively, of the Company's total net sales. In fiscal 2012, revenue from the Company’s largest and second largest distributor accounted for approximately 14% and 13%, respectively, of the Company's total net sales. In fiscal 2011, revenue from the Company’s largest and second largest distributor, accounted for approximately 15% and 12% of the Company's total net sales.

The Company maintains cash, cash equivalents, and short-term investments with various high credit quality financial institutions. The Company’s investment policy is designed to limit exposure to any one institution. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in its investment strategy. The Company is exposed to credit risk in the event of default by the financial institutions or issuers of investments to the extent of the amount recorded on the balance sheet. To date, the Company has not incurred losses related to these investments.

Product Warranty and Indemnifications

The Company generally warrants its products against defects in materials and workmanship for a period of 12 months. Liability for a stated warranty period is usually limited to replacement of defective items or return of amounts paid. If there is a material increase in the rate of customer claims or the Company’s estimates of probable losses relating to specifically identified warranty exposures are inaccurate, the Company may record a charge against future cost of sales. Warranty expense has historically been immaterial to the Company’s financial statements.

The Company 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 its products are alleged to infringe third party intellectual property rights, including patents, registered trademarks, or copyrights. The terms of the Company’s indemnification obligations are generally perpetual from the effective date of the agreement. In certain cases, there are limits on and exceptions to the Company’s potential liability for indemnification relating to intellectual property infringement claims. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws provide that indemnification may be provided to the Company’s agents. The Company has directors’ and officers’ insurance pursuant to which the Company may be reimbursed for certain indemnity expenses, subject to the insurers’ reservation of rights. The Company cannot estimate the amount of potential future indemnity expenses that it may be required to make. The amount of available directors’ and officers’ insurance may not be sufficient to cover the Company’s indemnity obligations, which may have a material adverse effect on the Company’s results of operations in future periods.

Net Income (Loss) Per Share

Basic and diluted net loss per share and basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding, if applicable, during the period. Common equivalent shares consist of the shares issuable upon the assumed exercise of stock options and awards under the treasury stock method.

Accounting Pronouncements

The following issued accounting pronouncements are not yet effective for the Company as of September 30, 2013.

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. The guidance becomes effective for the Company beginning in the first quarter of fiscal 2015 and is not expected to have a material impact on the Company's consolidated financial statements.

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. The guidance becomes effective for the Company beginning in the first quarter of fiscal 2015 and is not expected to have a material impact on the Company's consolidated financial statements.

Accounting Standards

On October 1, 2012, the Company adopted the following accounting standard, which did not have a material effect on its consolidated results of operations during such period or financial condition at the end of such period:

Comprehensive Income

In June 2011, FASB amended its guidance on the presentation of comprehensive income. This amendment eliminates the currently available option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. Under this amendment, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company elected to present the items of net income and other comprehensive income in two separate, but consecutive statements. Effective January 1, 2013, the Company adopted the FASB's standard regarding the reporting of reclassifications out of accumulated other comprehensive income. The new standard requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts.

Reclassifications

Certain reclassifications have been made to prior year balances in order to conform to the current year’s presentation.

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Income Taxes (Tables)

12 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

Income before provision for income taxes consisted of the following:

	2013		2012			2011
	(in thousands)
United States	$	4,542	$	9,723		$	12,931
International	25,479		(5,816		)	15,854
Total pre-tax income	$	30,021	$	3,907		$	28,785

Schedule of Components of Income Tax Expense (Benefit)

The provision (benefit) for income taxes consisted of the following for the years ended September 30:

	2013		2012			2011
	(in thousands)
Current:
Federal	$	2	$	235		$	—
State	86		141			4
Foreign	2,902		1,120			1,020
Total current	$	2,990	$	1,496		$	1,024
Deferred:
Federal	7,596		5,470			(19,340		)
State	12		95			(4,561		)
Foreign	1,679		(549		)	(4,461		)
Total deferred	9,287		5,016			(28,362		)
Total provision (benefit)	$	12,277	$	6,512		$	(27,338	)

Schedule of Effective Income Tax Rate Reconciliation

The Company’s provision (benefit) for income taxes differs from the amount computed by applying the U.S. federal statutory rate (35%) to income before taxes and minority interest as follows for the years ended September 30:

	2013			2012			2011
	(in thousands)
Income taxes computed at the U.S. federal statutory rate	$	10,507		$	1,367		$	10,075
State income taxes	98			69			3
Research credits	(89		)	757			—
Foreign losses not benefited (benefited)	—			1,377			(5,549		)
Foreign Income Inclusion, net of credit	6,469			—			—
Non-deductible stock compensation	991			672			527
Non-deductible impairment charges	—			3,321			—
U.S. operating loss not benefited (benefited)	—			—			(5,123		)
Valuation allowance changes	(1,334		)	1,384			(28,136		)
Foreign taxes	(4,334		)	(2,523		)	1,020
Other	(31		)	88			(155		)
Total provision (benefit)	$	12,277		$	6,512		$	(27,338	)

Schedule of Deferred Tax Assets and Liabilities

Significant components of deferred taxes consisted of the following at September 30:

	2013			2012
	(in thousands)
Deferred tax assets:
Depreciation	$	217		$	215
Inventory and other valuation reserves	532			1,136
Accrued expenses	5,312			6,255
Federal, state and foreign credit carryforwards	4,310			7,695
Federal, state and foreign net operating loss carryforwards	20,388			27,041
Non-deductible stock options	3,064			2,714
Other, net	38			2,444
Subtotal	33,861			47,500
Valuation allowance	(24,928		)	(24,887		)
Total deferred tax assets	$	8,933		$	22,613
Deferred tax liabilities:
Purchased intangibles	(1,144		)	(1,500		)
Net deferred tax assets	$	7,789		$	21,113
Reported as:
Current deferred tax assets	$	2,326		$	8,940
Non-current deferred tax assets	9,942			13,588
Non-current deferred tax liabilities	(4,479		)	(1,415		)
Net deferred tax assets	$	7,789		$	21,113

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amount of the consolidated liability for unrecognized income tax benefits during the tax year ended September 30 is as follows:

	2013		2012			2011
	(in thousands)
Balance at the beginning of the year	$	2,906	$	4,533		$	3,460
Increases (decreases) related to current year positions	108		68			112
Increases (decreases) related to prior year positions	38		(1,695		)	961
Balance at the end of the year	$	3,052	$	2,906		$	4,533

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Quarterly Financial Information

12 Months Ended

Sep. 30, 2013

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information (unaudited)

Quarterly Financial Information (unaudited)

The following tables show the Company's quarterly results of operations for each of the years ended September 30, 2013 and 2012.

Fiscal 2013	Fourth Quarter				Third Quarter			Second Quarter			First Quarter
	(in thousands, except per share data)
Net sales	$	78,392			$	77,788		$	74,991		$	76,399
Gross profit	$	25,934			$	26,047		$	24,989		$	24,491
Operating income	$	4,693			$	4,635		$	3,951		$	3,379
Consolidated net income	$	4,730		(1)	$	7,246	(2)	$	3,280	(3)	$	2,488
Net income attributable to ISSI	$	4,698		(1)	$	7,064	(2)	$	3,287	(3)	$	2,499
Basic net income per share	$	0.16			$	0.25		$	0.12		$	0.09
Diluted net income per share	$	0.15			$	0.24		$	0.11		$	0.09
Market price range common stock:
High	$	11.99			$	11.31		$	9.92		$	9.73
Low	$	9.99			$	8.31		$	8.33		$	8.18
Fiscal 2012
Net sales	$	72,500			$	64,781		$	62,505		$	66,164
Gross profit	$	18,328		(4)	$	21,337		$	21,121		$	22,198
Operating income (loss)	$	(9,862	)	(5)	$	5,196		$	5,197		$	5,100
Consolidated net income (loss)	$	(13,118	)	(6)	$	3,147		$	3,597		$	3,769
Net income (loss) attributable to ISSI	$	(13,246	)	(6)	$	3,137		$	3,601		$	3,790
Basic net income (loss) per share	$	(0.48	)		$	0.11		$	0.13		$	0.14
Diluted net income (loss) per share	$	(0.48	)		$	0.11		$	0.12		$	0.13
Market price range common stock:
High	$	10.49			$	11.50		$	11.40		$	9.79
Low	$	8.75			$	8.83		$	9.03		$	6.81

________________________

(1) In the September 2013 quarter, the Company realized a gain of $2.9 million from the sale of a portion of its Nanya shares.

(2) In the June 2013 quarter, the Company realized a gain from the sale of investments of $7.3 million including $7.0 million from the sale of a portion of its Nanya shares.

(3) In the March 2013 quarter, the Company realized a gain of $2.1 million from the sale of a portion of its Nanya shares.

(4) In the September 2012 quarter, the Company recorded a charge of approximately $5.4 million for the impairment of certain intangible assets related to the acquisition of Si En.

(5) In the September 2012 quarter, the Company recorded a charge of approximately $14.3 million for the impairment of certain tangible and intangible assets related to the acquisition of Si En.

(6) In the September 2012 quarter, the Company recorded a charge of approximately $14.3 million for the impairment of certain tangible and intangible assets related to the acquisition of Si En and a charge of approximately $2.3 million to write-down its investment in SMIC due to the decline in fair market value being considered other than temporary.

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Inventories (Tables)

12 Months Ended

Sep. 30, 2013

Inventory Disclosure [Abstract]

Schedule of Inventory, Current

Inventories consisted of the following at September 30:

	2013		2012
	(in thousands)
Purchased components	$	14,039	$	17,059
Work-in-process	20,960		28,921
Finished goods	33,470		20,984
	$	68,469	$	66,964

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Stockholders' Equity (Narrative) (Details) (USD $)	12 Months Ended			73 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2013
Equity [Abstract]
Common stock, shares authorized (in shares)	70,000,000	70,000,000		70,000,000
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000		5,000,000
Stock repurchased and retired during period (shares)				14,179,711
Stock repurchased and retired during period, value	$ 555,000	$ 537,000	$ 4,097,000	$ 88,500,000
Stock repurchase program, remaining authorized repurchase amount	19,800,000
Shares paid for tax withholding for share based compensation (shares)	59,501	56,849
Payments related to tax withholding for share-based compensation	$ 555,000	$ 537,000

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Acquisition of Si En (Narrative) (Details) (USD $)			12 Months Ended		0 Months Ended	1 Months Ended			12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 Minimum	Sep. 30, 2013 Maximum	Jan. 31, 2011 Si En	Sep. 30, 2012 Si En	Sep. 30, 2011 Si En	Apr. 27, 2009 Si En	Sep. 30, 2013 Developed technology Si En	Sep. 30, 2013 Customer relationships Si En	Sep. 30, 2013 Other Si En Minimum	Sep. 30, 2013 Other Si En Maximum
Business Acquisition [Line Items]
Percentage of equity acquired								100.00%
Total purchase price					$ 27,400,000
Acquisition related liability	0	4,200,000			4,200,000
Holdback provision period (years)					2 years
Estimated useful lives of purchased definite lived intangible assets			6 months	8 years					8 years	5 years	3 years	4 years
Weighted average useful life for intangibles (years)											3 years	6 months
Goodwill and intangibles acquired asset impairment						13,100,000
Legal fees related to acquisition							$ 300,000

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Accrued Expenses (Tables)

12 Months Ended

Sep. 30, 2013

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued expenses consisted of the following at September 30:

	2013		2012
	(in thousands)
Deferred distributor margin	$	2,301	$	2,122
Acquisition related liability	—		4,200
Other	5,056		4,811
	$	7,357	$	11,133

Other long-term liabilities consisted of the following at September 30:

	2013		2012
	(in thousands)
Pension liability	$	3,790	$	3,537
Non-current deferred tax liabilities	4,479		1,415
Other	443		526
	$	8,712	$	5,478

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Stock Based Compensation (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended												12 Months Ended						0 Months Ended				0 Months Ended	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2013 Chief Financial Officer Common shares reserved under stock option plans	Sep. 30, 2013 Prior to October 1 2005	Sep. 30, 2013 After October 1 2005	Sep. 30, 2013 Minimum	Sep. 30, 2013 Maximum	Sep. 30, 2013 Restricted Stock Units (RSUs)	Sep. 30, 2012 Restricted Stock Units (RSUs)	Sep. 30, 2011 Restricted Stock Units (RSUs)	Sep. 30, 2010 Restricted Stock Units (RSUs)	Sep. 30, 2013 Restricted Stock Units (RSUs) Minimum	Sep. 30, 2013 Restricted Stock Units (RSUs) Maximum	Sep. 30, 2013 Employee Stock	Sep. 30, 2013 Options and Restricted Stock Units [Member]	Sep. 30, 2012 Options and Restricted Stock Units [Member]	Sep. 30, 2011 Options and Restricted Stock Units [Member]	Feb. 08, 2013 2007 Incentive Compensation Plan	Jul. 20, 2011 2007 Incentive Compensation Plan	Jul. 30, 2007 2007 Incentive Compensation Plan	Jul. 20, 2011 2007 Incentive Compensation Plan Restricted Stock Units (RSUs)	Sep. 17, 2012 2012 Inducement Option Plan Chingis	Sep. 30, 2013 1995 Director Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total number of shares subject to options and awards outstanding (shares)	5,621,000								269,000	323,000	382,000	69,000
Shares available for future grant under the 2007 Plan (shares)	2,255,000								35,000
Option vesting period (years)	4 years																							12 months
Option cliff vesting period							6 months	1 year
Options expiration period for grants (years)				7 years	10 years	7 years
Restricted Stock Units vesting period (years)													2 years	4 years
Shares available for future issuance (shares)	581,000																				3,000,000	263,100
Additional shares available for issuance																			2,000,000	2,000,000	4,000,000
Granted (shares)																							439,500
Options exercise price (in dollars per share)																							$ 10.42
Vesting percentage																							12.50%
Option vesting term (years)	4 years																						6 months
Portion vested of total shares																							48
Percentage discount from fair market value for shares purchased under the Employee Stock Purchase Plan	85.00%
Number of new options issued (in shares)	237,000	181,000	167,000
Total unrecognized stock-based compensation expense	$ 10.4														$ 0.2
Nonvested awards, total compensation cost not yet recognized, period for recognition (years)	2 years 5 months 19 days														4 months
Total intrinsic value of options exercised and RSU's vested																$ 7.0	$ 5.7	$ 3.5
Weighted average grant date fair value (in dollars per share)									$ 9.14	$ 9.42	$ 7.82

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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												12 Months Ended
	Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012	Sep. 30, 2012		Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$ 4,698	[1]	$ 7,064	[2]	$ 3,287	[3]	$ 2,499	$ (13,246)	[4]	$ 3,137	$ 3,601	$ 3,790	$ 17,548	$ (2,718)	$ 55,957
Denominator for basic net income (loss) per share:
Weighted average common shares outstanding (in shares)													28,223	27,120	26,568
Dilutive stock options and awards (in shares)													1,471	0	1,740
Denominator for diluted net income (loss) per share (in shares)													29,694	27,120	28,308
Basic net income (loss) per share (in dollars per share)	$ 0.16		$ 0.25		$ 0.12		$ 0.09	$ (0.48)		$ 0.11	$ 0.13	$ 0.14	$ 0.62	$ (0.10)	$ 2.11
Diluted net income (loss) per share (in dollars per share)	$ 0.15		$ 0.24		$ 0.11		$ 0.09	$ (0.48)		$ 0.11	$ 0.12	$ 0.13	$ 0.59	$ (0.10)	$ 1.98

[1] In the September 2013 quarter, the Company realized a gain of $2.9 million from the sale of a portion of its Nanya shares.

[2] In the June 2013 quarter, the Company realized a gain from the sale of investments of $7.3 million including $7.0 million from the sale of a portion of its Nanya shares.

[3] In the March 2013 quarter, the Company realized a gain of $2.1 million from the sale of a portion of its Nanya shares.

[4] In the September 2012 quarter, the Company recorded a charge of approximately $14.3 million for the impairment of certain tangible and intangible assets related to the acquisition of Si En and a charge of approximately $2.3 million to write-down its investment in SMIC due to the decline in fair market value being considered other than temporary.

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Inventories (Schedule of Inventory, Current by major category) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Inventory Disclosure [Abstract]
Purchased components	$ 14,039	$ 17,059
Work-in-process	20,960	28,921
Finished goods	33,470	20,984
Inventories	$ 68,469	$ 66,964

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Organization and Significant Accounting Policies (Schedule of Accounts Receivable Allowance For Doubtful Accounts) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2011
Allowance for Doubtful Accounts Receivable [Roll Forward]
Accounts receivable allowance for doubtful accounts, Balance at Beginning of Year	$ 508		$ 496		$ 154
Adjustments to Costs and Expenses	19	[1]	(2)	[1]	362	[1]
Deductions	(155)	[2]	14	[2]	(20)	[2]
Accounts receivable allowance for doubtful accounts, Balance at End of Year	$ 372		$ 508		$ 496

[1] Includes increases/(decreases) charged or credited to costs and expenses.

[2] Uncollectible accounts written off, net of recoveries.

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Commitments and Contingencies (Tables)

12 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule

Minimum rental commitments under these leases are as follows (in thousands):

Fiscal year ending:
2014	$	802
2015	603
2016	355
2017	—
2018	—
Total minimum rental commitments	$	1,760

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Consolidated Statements of Comprehensive Income Statement (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Statement of Comprehensive Income [Abstract]
Consolidated net income (loss)	$ 17,744	$ (2,605)	$ 56,123
Change in unrealized gain (loss) on investments:
Changes arising during current year, net of tax benefit (expense) of $(7,975), $312 and $716 for fiscal 2013, 2012 and 2011, respectively	13,755	(1,523)	57
Reclassification for (gain) loss included in net income (loss), net of tax expense (benefit) of $3,823, $(716) and $0 for fiscal 2013, 2012 and 2011, respectively	(5,854)	1,213	0
Net change	7,901	(310)	57
Change in cumulative translation adjustment:
Changes arising during current year	(1,261)	3,932	1,850
Reclassification for gain included in net income (loss)	0	0	0
Translation adjustment, net change	(1,261)	3,932	1,850
Change in retirement plan transition obligation:
Changes arising during current year, net of tax benefit (expense) of $(44), $(119) and $0 for fiscal 2013, 2012 and 2011, respectively	(23)	(134)	10
Reclassification for gain included in net income (loss), net of tax expense (benefit) of $15 for fiscal 2013 and $0 for both fiscal 2012 and 2011	(45)	(62)	(60)
Transition obligation, net change	(68)	(196)	(50)
Change in retirement plan actuarial losses:
Changes arising during current year, net of tax benefit (expense) of $160, $323 and $0 for fiscal 2013, 2012 and 2011, respectively	63	127	(885)
Reclassification for gain included in net income (loss), net of tax expense (benefit) of $(13) for fiscal 2013 and $0 for both fiscal 2012 and 2011	87	98	62
Actuarial Losses, net change	150	225	(823)
Other comprehensive income	6,722	3,651	1,034
Comprehensive income	24,466	1,046	57,157
Comprehensive income attributable to noncontrolling interests	(196)	(113)	(166)
Comprehensive income attributable to ISSI	$ 24,270	$ 933	$ 56,991

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Purchased Intangible Assets

12 Months Ended

Sep. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Purchased Intangible Assets and Goodwill

Purchased Intangible Assets and Goodwill

No additions to purchased intangible assets were recorded during fiscal 2013. During fiscal 2012, in connection with its acquisition of Chingis, the Company recorded $7.9 million of intangible assets (See Note 19). During fiscal 2011, in connection with its acquisition of Si En, the Company recorded $11.6 million of intangible assets (See Note 18).

During the fourth quarter of fiscal 2012, in connection with the Company's annual goodwill impairment test, the Company determined that the intangible assets acquired in the acquisition of Si En were impaired. The analysis indicated that there was no value attributable to the intangible assets and accordingly, the Company recorded an impairment charge of $8.9 million of which $5.4 million was included in cost of sales and $3.5 million was included in operating expenses.

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

	Gross		Accumulated Amortization		Net
	(in thousands)
September 30, 2013
Developed technology	$	5,330	$	1,758	$	3,572
Customer relationships	3,340		580		2,760
Other	450		156		294
Total	$	9,120	$	2,494	$	6,626
September 30, 2012
Developed technology	$	4,930	$	879	$	4,051
In-process technology (IPR&D)	400		—		400
Customer relationships	3,340		9		3,331
Other	450		6		444
Total	$	9,120	$	894	$	8,226

The following table presents details of the amortization expense of purchased intangible assets as reported in the Consolidated Statements of Operations:

	Years Ended September 30,
	2013		2012		2011
	(in thousands)
Reported as:
Cost of sales	$	879	$	984	$	1,082
Operating expenses	721		864		616
Total	$	1,600	$	1,848	$	1,698

The following table presents the estimated future amortization expense of the Company’s purchased intangible assets at September 30, 2013 (in thousands). The weighted-average remaining amortization period for developed technology, customer relationships and other intangibles is 4.86 years, 4.96 years and 1.96 years, respectively. If the Company acquires additional purchased intangible assets in the future, its future amortization may be increased by those assets. In fiscal 2013, the IPR&D projects were completed and $0.4 million was transferred from IPR&D to developed technology.

Fiscal year
2014	$	1,533
2015	1,382
2016	1,238
2017	1,239
2018	1,195
Thereafter	39
Total	$	6,626

Goodwill

The following table provides details regarding the changes in the Company's goodwill:

	(in thousands)
Balance at September 30, 2010	$	1,301
Addition arising from acquisition of Si En	8,162
Balance at September 30, 2011	9,463
Addition arising from acquisition of Chingis	3,976
Impairment	(4,261		)
Balance at September 30, 2012	9,178
Impairment	—
Balance at September 30, 2013	$	9,178

During the fourth quarter of fiscal 2012, the Company completed the first step of its annual goodwill impairment test, which included examining the impact of current general economic conditions on its future prospects and the current level of its market capitalization. Based on this analysis, the Company concluded that goodwill related to its analog reporting unit was impaired. The Company's analog reporting unit's goodwill was originally recorded in connection with its acquisition of Si En. Therefore, the Company performed the second step of the impairment test to determine the implied fair value of goodwill. Specifically, the Company hypothetically allocated the estimated fair value of the analog reporting unit's equity as determined in the first step to recognized and unrecognized net assets, including allocations to intangible assets. The analysis indicated that there would be approximately $3.9 million remaining implied value attributable to goodwill and accordingly, the Company wrote off $4.3 million of its goodwill.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Current assets:
Cash and cash equivalents	$ 119,997	$ 75,497
Short-term investments	21,558	6,541
Accounts receivable, net of allowance for doubtful accounts of $372 in 2013 and $508 in 2012	46,088	47,710
Inventories	68,469	66,964
Deferred tax assets	2,326	8,940
Other current assets	14,602	12,264
Total current assets	273,040	217,916
Property and equipment, net	46,504	29,286
Goodwill	9,178	9,178
Purchased intangible assets, net	6,626	8,226
Deferred tax assets	9,942	13,588
Other assets	16,579	38,877
Total assets	361,869	317,071
Current liabilities:
Accounts payable	50,229	44,705
Accrued compensation and benefits	8,072	9,420
Accrued expenses	7,357	11,133
Current portion of long-term debt	195	0
Total current liabilities	65,853	65,258
Long-term debt	4,534	0
Other long-term liabilities	8,712	5,478
Total liabilities	79,099	70,736
Commitments and contingencies (See Note 16)
Stockholders' equity:
Preferred stock, $0.0001 par value: Authorized shares—5,000 in 2013 and 2012. No shares outstanding	0	0
Common stock, $0.0001 par value: Authorized shares—70,000 in 2013 and 2012. Issued and outstanding shares—29,060 in 2013 and 27,594 in 2012	3	3
Additional paid-in capital	343,947	330,473
Accumulated deficit	(72,498)	(90,046)
Accumulated other comprehensive income	9,121	2,399
Total ISSI stockholders’ equity	280,573	242,829
Noncontrolling interest	2,197	3,506
Total stockholders’ equity	282,770	246,335
Total liabilities and stockholders’ equity	$ 361,869	$ 317,071

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Property, Equipment, and Leasehold Improvements, net (Narrative) (Details) (USD $)	12 Months Ended			3 Months Ended	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Operating expenses	Sep. 30, 2013 Minimum	Sep. 30, 2013 Maximum
Property, Plant and Equipment [Line Items]
Impairment for certain assets				$ 1,182,000
Cancellation notice period					2 months	4 months
Rental income	1,200,000	1,300,000	1,400,000
Depreciation	$ 100,000	$ 100,000	$ 100,000

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Income Statement [Abstract]
Net sales	$ 307,570	$ 265,950	$ 270,508
Cost of sales	206,109	182,966	180,100
Gross profit	101,461	82,984	90,408
Operating expenses
Research and development	40,839	30,918	27,622
Selling, general and administrative	43,964	42,174	36,617
Impairment of goodwill	0	4,261	0
Total operating expenses	84,803	77,353	64,239
Operating income	16,658	5,631	26,169
Interest and other income (expense), net	1,247	(1,656)	2,144
Interest expense	(101)	(68)	(88)
Gain on sales of investments, net	12,217	0	560
Income before income taxes	30,021	3,907	28,785
Provision (benefit) for income taxes	12,277	6,512	(27,338)
Consolidated net income (loss)	17,744	(2,605)	56,123
Less net income attributable to noncontrolling interests	(196)	(113)	(166)
Net income (loss) attributable to ISSI	$ 17,548	$ (2,718)	$ 55,957
Basic net income (loss) per share (in dollars per share)	$ 0.62	$ (0.10)	$ 2.11
Shares used in basic per share calculation	28,223	27,120	26,568
Diluted net income (loss) per share (in dollars per share)	$ 0.59	$ (0.10)	$ 1.98
Shares used in diluted per share calculation	29,694	27,120	28,308

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Fair Value Measurements (Narrative) (Details) (USD $) Share data in Millions, unless otherwise specified	1 Months Ended	3 Months Ended	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Segment Reporting Information [Line Items]
Write down of investment		$ 2,300,000
Purchases of available-for-sale securities	27,109,000		0	27,109,000	0
Foreign
Segment Reporting Information [Line Items]
Cash, cash equivalents and short term investments	39,300,000	39,300,000	71,200,000	39,300,000
China
Segment Reporting Information [Line Items]
Cash, cash equivalents and short term investments			4,700,000
Nanya
Segment Reporting Information [Line Items]
Available-for-sale Securities, Equity Securities Shares Sold During Period			143.5
Proceeds from Sale of Available-for-sale Securities, Equity			21,200,000
Available-for-sale Securities, Gross Realized Gains			$ 12,000,000

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Income Taxes (Narrative) (Details) (USD $)	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Operating Loss Carryforwards [Line Items]
Federal statutory rate	35.00%
Income tax benefit from release of valuation allowance for certain deferred tax assets	$ (1,334,000)	$ 1,384,000	$ (28,136,000)
Valuation allowance	24,928,000	24,887,000
Common shares reserved under stock option plans
Operating Loss Carryforwards [Line Items]
Valuation allowance	13,600,000
Expectations of Future Taxable Income
Operating Loss Carryforwards [Line Items]
Income tax benefit from release of valuation allowance for certain deferred tax assets	41,000	2,700,000	40,500,000
Federal
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	36,500,000
Research and development tax credit carryforwards	1,600,000
Minimum tax credit carryforwards	600,000
State
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	78,400,000
Research and development tax credit carryforwards	2,600,000
Foreign
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	17,900,000
Research and development tax credit carryforwards	2,000,000
Foreign tax credit carryforwards	900,000
Tax benefit from tax holiday			$ 57,000

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Stockholders' Equity (Schedule of Accumulated Other Comprehensive Income) (Details) (USD $)	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Schedule of Available-for-sale Securities [Line Items]
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	$ 4,787,000	$ 6,048,000
Accumulated Other Comprehensive Income (Loss) Net Transition Asset (Obligation)	47,000	115,000
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax	(2,091,000)	(2,241,000)
Accumulated other comprehensive income	9,121,000	2,399,000
Accumulated Other Comprehensive Income (Loss) Net Transition Asset (Obligation) Tax	148,000	119,000
Accumulated Other Comprehensive Income Loss Defined Benefit Pension And Other Postretirement Plans Tax	470,000	323,000
Defined Benefit Plan, Future Amortization of Prior Service Cost (Credit)	0
Defined Benefit Plan, Future Amortization of Gain (Loss)	(110,000)
Defined Benefit Plan, Future Amortization of Transition Obligation (Asset)	(60,000)
SMIC
Schedule of Available-for-sale Securities [Line Items]
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	419,000	0
Accumulated Other Comprehensive Income Loss Available For Sale Securities Adjustment Tax	275,000	0
Nanya
Schedule of Available-for-sale Securities [Line Items]
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	5,959,000	(1,523,000)
Accumulated Other Comprehensive Income Loss Available For Sale Securities Adjustment Tax	$ 3,565,000	$ 312,000

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Organization and Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Accounting, Policy

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Integrated Silicon Solution, Inc. and its wholly and majority owned subsidiaries, after elimination of all significant intercompany accounts and transactions.

Cash and Cash Equivalents, Policy

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained at various financial institutions.

Investment, Policy

Investments

Debt securities and marketable equity securities are classified as “available-for-sale”. Available-for-sale securities are recorded at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss). Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in interest and other income, net. The cost of fixed income securities sold is based on the specific identification method and the weighted-average method is used to determine the cost basis of publicly traded equity securities disposed of. Interest and dividends on securities classified as available-for-sale are included in interest and other income, net.

The Company accounts for non-marketable equity and other equity investments for which it does not have control over the investee as equity method investments when the Company has the ability to exercise significant influence, but not control, over the investee. The Company accounts for non-marketable equity and and other equity investments as non-marketable cost method investments when the equity method does not apply. The Company's non-marketable equity and other equity investments are included in other assets in its consolidated balance sheet.

The Company regularly reviews its investments to determine whether a decline in fair value below the cost basis is other than temporary. If the decline in fair value is determined to be other than temporary, the cost basis of the investment is written down to fair value, and the amount of the write-down is included in the consolidated statements of operations.

Inventory, Policy

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market. The Company’s inventory valuation process is done on a part-by-part basis. Lower of cost or market adjustments, specifically identified on a part-by-part basis, reduce the carrying value of the related inventory and take into consideration reductions in sales prices. 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 the Company’s costs, the Company records a charge to cost of goods sold to write down inventories to 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 the Company’s operating results. If actual market conditions are more favorable, the Company may have higher gross margins when such products are sold. The Company writes 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. Once established, these write-downs are considered permanent.

Property, Plant and Equipment, Policy

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method, based upon the shorter of the estimated useful lives ranging from two to ten years for property and equipment and from 25 to 50 years for buildings or the lease term for improvements to leased properties.

Goodwill and Intangible Assets, Policy

Goodwill and Purchased Intangible Assets

The Company tests goodwill and other indefinite-lived intangible assets for impairment on an annual basis and between annual tests if events or circumstances require an interim impairment assessment. For goodwill, the Company either makes a qualitative assessment prior to proceeding to step 1 of the annual goodwill impairment test or performs a two-step impairment test. If the Company makes a qualitative assessment and it determines that the fair value of the reporting unit is less than its carrying amount, the Company would perform step 1 of the annual goodwill impairment test and, if necessary, proceed to step 2. Otherwise, no further evaluation is necessary. For the two-step impairment test, in the first step, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. The Company determines the fair value of the reporting unit based on a weighting of income and market approaches. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company performs the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference.

Purchased intangible assets other than goodwill are amortized over their useful lives unless these lives are determined to be indefinite. Purchased intangible assets with definite lives are carried at cost less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets, generally six months to eight years.

The Company has acquired in-process research and development (IPR&D) projects as the result of its business combinations (see Note 6). The fair values of the acquired IPR&D projects were determined through estimates and valuation techniques based on the terms and details of the related acquisitions. Upon completion of development for each project, the acquired IPR&D will be amortized over its useful life. The Company assesses the status of each IPR&D project quarterly to evaluate whether the carrying value has been impaired.

Valuation of Long-Lived Assets and Certain Identifiable Intangibles

The Company evaluates the recoverability of property, plant and equipment and identifiable intangible assets through the performance of periodic reviews to determine whether facts and circumstances exist that would indicate that the carrying amounts of property, plant and equipment and identifiable intangible assets exceed their fair values. If facts and circumstances indicate that the carrying amount of property, plant and equipment and identifiable intangible assets might not be fully recoverable, projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful life is compared to their respective carrying amounts. In the event that the projected undiscounted cash flows are not sufficient to recover the carrying value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the assets.

Revenue Recognition, Policy

Revenue Recognition and Accounts Receivable Allowances

Revenue from product sales (net of any applicable value added tax) to the Company’s 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. The Company makes estimates of potential future product returns and sales allowances related to current period product revenue. Management analyzes historical returns, changes in customer demand, and acceptance of products when evaluating the adequacy of sales returns and allowances. Estimates made by the Company may differ from actual product returns and sales allowances. These differences may materially impact reported revenue and amounts ultimately collected on accounts receivable.

A portion of the Company’s sales is made to distributors under agreements that provide the possibility of certain price adjustment credits, as discussed below, and to return qualifying products for credit, as determined by the Company, in order to reduce the amounts of slow-moving, discontinued or obsolete product from their inventory. These agreements limit such returns to a certain percentage of the value of the Company's shipments to that distributor during the prior quarter. In addition, distributors are allowed to return unsold products if the Company terminates the relationship with the distributor.

Certain distributors are granted price adjustment credits related to many of their sales to their customers. Price adjustment credits are granted when a distributor’s standard cost (i.e., the Company’s sales price to the distributor) does not provide the distributor with an appropriate margin on its sales to its customers. As a result, the distributor may request and receive a price adjustment credit from the Company to allow the distributor to earn an appropriate margin on the transaction. Certain distributors are also granted price adjustment credits in the event of a price decrease subsequent to the date the product was shipped and billed to the distributor. Generally, the Company will provide a credit equal to the difference between the price paid by the distributor (less any prior credits on such products) and the new price for the product multiplied by the quantity of such product in the distributor’s inventory at the time of the price decrease. Certain of the Company’s distributor arrangements may allow or require the granting of price concessions below the Company’s cost for a product.

Given the uncertainties associated with the levels of returns and other price adjustment credits that will be issued to these distributors, the sales price to distributors is not fixed or determinable until the distributors resell the products to their customers. Therefore, the Company defers revenue recognition from sales to these distributors until the distributors have sold the products to their end customers.

Title to the inventory transfers to a distributor at the time of shipment or delivery to the distributor, and payment from the distributor is due in accordance with the Company's standard payment terms. These payment terms are not contingent upon the distributors’ sale of the products to their customers. Upon title transfer to distributors, inventory is reduced for the cost of goods shipped, the deferred distributor margin (sales less cost of sales) is recorded as a liability and an account receivable is recorded.

The deferred costs of sales to distributors may be subject to impairment. The Company monitors the level and nature of product returns from distributors as well as the levels of inventory held at distributors. On a quarterly basis, the Company reviews the inventory held at distributors in terms of the Company’s inventory valuation policy and records a charge to cost of goods sold for all known lower of cost or market and excess and obsolescence issues.

Accounts Receivable Allowances Policy

In addition, the Company monitors collectibility of accounts receivable primarily through review of its accounts receivable aging. When facts and circumstances indicate the collection of specific amounts or from specific customers is at risk, the Company assesses the impact on amounts recorded for bad debts and, if necessary, will record a charge in the period such determination is made.

Research and Development Expense, Policy

Research and Development

Research and development expenditures are charged to operations as incurred.

Foreign Currency Transactions and Translations Policy

Foreign Currency Translation

The Company uses the local currency as its functional currency for all foreign subsidiaries. Translation adjustments, which result from the process of translating foreign currency financial statements into U.S. dollars, are included in the accumulated other comprehensive income component of stockholders’ equity.

Advertising Costs, Policy

Advertising Costs

The Company expenses advertising costs as incurred and includes these costs in selling, general and administrative expenses in the consolidated statement of operations.

Income Tax, Policy

Income Taxes

The Company accounts for income taxes under an asset and liability approach. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax reporting purposes. Valuation allowances are provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized. Uncertain tax positions are recognized or derecognized based on the threshold and measurement of a tax position taken or expected to be taken in a tax return. U.S. income tax has not been provided on earnings of foreign subsidiaries to the extent that such earnings are considered to be indefinitely reinvested.

Share-based Compensation, Policy

Stock-Based Compensation

Stock-based compensation is measured at the grant date, based on the estimated fair value of the award. The Company amortizes the compensation costs on a straight-line basis over the requisite service period of the option, which is generally the option vesting term of four years. The Company estimates the fair value of stock options using the Black-Scholes valuation model. The Black-Scholes valuation model requires the Company to estimate key assumptions such as expected term, volatility and risk free interest rates to determine the fair value of a stock option. The estimates of these key assumptions are based on historical information and judgment regarding market factors and trends.

Use of Estimates, Policy

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 relate to the useful lives and residual value of fixed assets, the fair value of investments, 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 difference, may be material to the financial statements.

Fair Value of Financial Instruments, Policy

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, marketable securities, accounts receivable and accounts payable. The Company believes that the carrying amounts of the financial instruments approximate their respective fair values. When there is no readily available market data, the Company may make fair value estimates, which may not necessarily represent the amounts that will be realized in a current or future sale of these assets.

Concentration Risk, Credit Risk, Policy

Concentration of Credit Risk

The Company operates in one business segment, which is to design, develop, and market high performance SRAM, DRAM, and other semiconductor products. The Company markets and distributes its products on a worldwide basis, primarily to original equipment manufacturers, contract manufacturers, and distributors. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral. In fiscal 2013, revenue from the Company’s largest and second largest distributor accounted for approximately 17% and 11%, respectively, of the Company's total net sales. In fiscal 2012, revenue from the Company’s largest and second largest distributor accounted for approximately 14% and 13%, respectively, of the Company's total net sales. In fiscal 2011, revenue from the Company’s largest and second largest distributor, accounted for approximately 15% and 12% of the Company's total net sales.

The Company maintains cash, cash equivalents, and short-term investments with various high credit quality financial institutions. The Company’s investment policy is designed to limit exposure to any one institution. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in its investment strategy. The Company is exposed to credit risk in the event of default by the financial institutions or issuers of investments to the extent of the amount recorded on the balance sheet. To date, the Company has not incurred losses related to these investments.

Product Warranty and Indemnifications Policies

Product Warranty and Indemnifications

The Company generally warrants its products against defects in materials and workmanship for a period of 12 months. Liability for a stated warranty period is usually limited to replacement of defective items or return of amounts paid. If there is a material increase in the rate of customer claims or the Company’s estimates of probable losses relating to specifically identified warranty exposures are inaccurate, the Company may record a charge against future cost of sales. Warranty expense has historically been immaterial to the Company’s financial statements.

The Company 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 its products are alleged to infringe third party intellectual property rights, including patents, registered trademarks, or copyrights. The terms of the Company’s indemnification obligations are generally perpetual from the effective date of the agreement. In certain cases, there are limits on and exceptions to the Company’s potential liability for indemnification relating to intellectual property infringement claims. In addition, the Company has entered into indemnification agreements with its officers and directors, and the Company’s bylaws provide that indemnification may be provided to the Company’s agents. The Company has directors’ and officers’ insurance pursuant to which the Company may be reimbursed for certain indemnity expenses, subject to the insurers’ reservation of rights. The Company cannot estimate the amount of potential future indemnity expenses that it may be required to make. The amount of available directors’ and officers’ insurance may not be sufficient to cover the Company’s indemnity obligations, which may have a material adverse effect on the Company’s results of operations in future periods.

Earnings Per Share, Policy

Net Income (Loss) Per Share

Basic and diluted net loss per share and basic net income per share is computed using the weighted average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding, if applicable, during the period. Common equivalent shares consist of the shares issuable upon the assumed exercise of stock options and awards under the treasury stock method.

New Accounting Pronouncements, Policy

Accounting Pronouncements

The following issued accounting pronouncements are not yet effective for the Company as of September 30, 2013.

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. The guidance becomes effective for the Company beginning in the first quarter of fiscal 2015 and is not expected to have a material impact on the Company's consolidated financial statements.

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. The guidance becomes effective for the Company beginning in the first quarter of fiscal 2015 and is not expected to have a material impact on the Company's consolidated financial statements.

Accounting Standards

On October 1, 2012, the Company adopted the following accounting standard, which did not have a material effect on its consolidated results of operations during such period or financial condition at the end of such period:

Comprehensive Income

In June 2011, FASB amended its guidance on the presentation of comprehensive income. This amendment eliminates the currently available option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. Under this amendment, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company elected to present the items of net income and other comprehensive income in two separate, but consecutive statements. Effective January 1, 2013, the Company adopted the FASB's standard regarding the reporting of reclassifications out of accumulated other comprehensive income. The new standard requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts.

Reclassification, Policy

Reclassifications

Certain reclassifications have been made to prior year balances in order to conform to the current year’s presentation.

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Geographic and Segment Information

12 Months Ended

Sep. 30, 2013

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:

	Years Ended September 30,
	2013		2012		2011
	(in thousands)
Net Sales
United States	$	37,954	$	42,527	$	40,864
China	32,170		17,913		10,181
Hong Kong	64,193		57,971		74,604
Taiwan	41,204		26,107		28,990
Japan	30,102		29,664		23,143
Other Asia Pacific countries	37,897		32,987		37,356
Europe	62,065		57,295		53,585
Other	1,985		1,486		1,785
Total net sales	$	307,570	$	265,950	$	270,508
Long-lived assets
United States	$	9,696	$	440	$	1,216
Hong Kong	7		7		5
China	3,424		558		706
Taiwan	33,377		28,281		27,032
Total long-lived assets	$	46,504	$	29,286	$	28,959

Revenues are attributed to countries based on the shipping location of customers.

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

Net foreign currency transaction gains (losses) of approximately $214,000, $(640,000), and $436,000 for the years ended September 30, 2013, 2012, and 2011, respectively, are included in the determination of net income (loss).

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Acquisition of Chingis (Narrative) (Details) (USD $)	3 Months Ended												12 Months Ended			1 Months Ended	0 Months Ended				12 Months Ended
	Sep. 30, 2013		Jun. 30, 2013		Mar. 31, 2013		Dec. 31, 2012	Sep. 30, 2012		Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011	May 31, 2013 Chingis	Sep. 30, 2012 Chingis	Sep. 14, 2012 Chingis	Sep. 30, 2013 Chingis	Sep. 30, 2013 Chingis Selling, general and administrative	Sep. 30, 2013 Developed technology Chingis	Sep. 30, 2013 Customer relationships Chingis	Sep. 30, 2013 Other intangibles Chingis
Business Acquisition [Line Items]
Investment in consolidated subsidiaries, net of cash and cash equivalents acquired													$ 0	$ 13,210,000	$ 15,960,000			$ 13,200,000
Cash on acquired entity's balance sheet																		18,600,000
Estimated useful lives of purchased definite lived intangible assets																					6 years	6 years	3 years
Costs related to acquisition																				400,000
Revenue																	1,200,000
Net loss	(4,730,000)	[1]	(7,246,000)	[2]	(3,280,000)	[3]	(2,488,000)	13,118,000	[4]	(3,147,000)	(3,597,000)	(3,769,000)	(17,744,000)	2,605,000	(56,123,000)		1,200,000
Business Acquisition, Additional Percentage Of Voting Interests Acquired																4.80%
Payments to Acquire Additional Interest in Subsidiaries													1,614,000	2,370,000	0	1,600,000
Percentage of equity acquired																		94.10%
Total purchase price																		$ 31,800,000
Noncontrolling Interest, Ownership Percentage by Parent																			98.90%

[1] In the September 2013 quarter, the Company realized a gain of $2.9 million from the sale of a portion of its Nanya shares.

[2] In the June 2013 quarter, the Company realized a gain from the sale of investments of $7.3 million including $7.0 million from the sale of a portion of its Nanya shares.

[3] In the March 2013 quarter, the Company realized a gain of $2.1 million from the sale of a portion of its Nanya shares.

[4] In the September 2012 quarter, the Company recorded a charge of approximately $14.3 million for the impairment of certain tangible and intangible assets related to the acquisition of Si En and a charge of approximately $2.3 million to write-down its investment in SMIC due to the decline in fair market value being considered other than temporary.

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Geographic and Segment Information (Tables)

12 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

The following table summarizes the Company’s operations in different geographic areas:

	Years Ended September 30,
	2013		2012		2011
	(in thousands)
Net Sales
United States	$	37,954	$	42,527	$	40,864
China	32,170		17,913		10,181
Hong Kong	64,193		57,971		74,604
Taiwan	41,204		26,107		28,990
Japan	30,102		29,664		23,143
Other Asia Pacific countries	37,897		32,987		37,356
Europe	62,065		57,295		53,585
Other	1,985		1,486		1,785
Total net sales	$	307,570	$	265,950	$	270,508
Long-lived assets
United States	$	9,696	$	440	$	1,216
Hong Kong	7		7		5
China	3,424		558		706
Taiwan	33,377		28,281		27,032
Total long-lived assets	$	46,504	$	29,286	$	28,959

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Stock Based Compensation (Schedule of Stock Options Outstanding and Exercisable) (Details) (Common shares reserved under stock option plans, USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, shares	5,351
Options Outstanding, weighted average contractual life (in years)	4 years 2 months 1 day
Options Outstanding, Weighted average Exercise Price (in dollars per share)	$ 7.51
Options Exercisable, Number of Options Exercisable (in shares)	3,173
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 6.25
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, lower range limit	$ 1.50
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, upper range limit	$ 16.08
Stock Options Range of Exercise Prices $1.50 - $2.51
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, shares	1,246
Options Outstanding, weighted average contractual life (in years)	2 years 8 months 5 days
Options Outstanding, Weighted average Exercise Price (in dollars per share)	$ 3.28
Options Exercisable, Number of Options Exercisable (in shares)	1,208
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 3.25
Stock Options Range of Exercise Prices $1.50 - $2.51 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, lower range limit	$ 1.50
Stock Options Range of Exercise Prices $1.50 - $2.51 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, upper range limit	$ 4.34
Stock Options Range of Exercise Prices $2.52 - $4.34
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, shares	1,155
Options Outstanding, weighted average contractual life (in years)	2 years 4 months 24 days
Options Outstanding, Weighted average Exercise Price (in dollars per share)	$ 6.81
Options Exercisable, Number of Options Exercisable (in shares)	989
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 6.73
Stock Options Range of Exercise Prices $2.52 - $4.34 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, lower range limit	$ 4.35
Stock Options Range of Exercise Prices $2.52 - $4.34 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, upper range limit	$ 7.34
Stock Options Range of Exercise Prices $4.35 - $6.56
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, shares	1,172
Options Outstanding, weighted average contractual life (in years)	5 years 8 months 12 days
Options Outstanding, Weighted average Exercise Price (in dollars per share)	$ 8.83
Options Exercisable, Number of Options Exercisable (in shares)	311
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 8.32
Stock Options Range of Exercise Prices $4.35 - $6.56 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, lower range limit	$ 7.35
Stock Options Range of Exercise Prices $4.35 - $6.56 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, upper range limit	$ 9.14
Stock Options Range of Exercise Prices $6.57 - $9.06
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, shares	1,300
Options Outstanding, weighted average contractual life (in years)	5 years 5 months 5 days
Options Outstanding, Weighted average Exercise Price (in dollars per share)	$ 9.77
Options Exercisable, Number of Options Exercisable (in shares)	449
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 9.67
Stock Options Range of Exercise Prices $6.57 - $9.06 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, lower range limit	$ 9.15
Stock Options Range of Exercise Prices $6.57 - $9.06 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, upper range limit	$ 10.42
Stock Options Range of Exercise Prices $9.07 - $16.08
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, shares	478
Options Outstanding, weighted average contractual life (in years)	5 years 1 month 21 days
Options Outstanding, Weighted average Exercise Price (in dollars per share)	$ 10.85
Options Exercisable, Number of Options Exercisable (in shares)	216
Options Exercisable, Weighted Average Exercise Price (in dollars per share)	$ 10.76
Stock Options Range of Exercise Prices $9.07 - $16.08 | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, lower range limit	$ 10.43
Stock Options Range of Exercise Prices $9.07 - $16.08 | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of Exercise Prices, upper range limit	$ 16.08

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Inventories (Narrative) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Inventory Disclosure [Abstract]
Inventory write-down	$ 4.6	$ 5.7	$ 3.5

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Purchased Intangible Assets (Schedule of Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Goodwill [Roll Forward]
Goodwill, Beginning Balance	$ 9,178	$ 9,463	$ 1,301
Addition		3,976	8,162
Impairment	0	(4,261)	0
Goodwill, Ending Balance	$ 9,178	$ 9,178	$ 9,463

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Stock Based Compensation (Tables)

12 Months Ended

Sep. 30, 2013

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

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

The table below outlines the effects of total stock-based compensation.

	Years Ended September 30,
	2013			2012		2011
	(in thousands)
Stock-based compensation
Cost of sales	$	179		$	135	$	157
Research and development	2,310			1,461		1,078
Selling, general and administrative	3,452			3,435		2,807
Total stock-based compensation	5,941			5,031		4,042
Tax effect on stock-based compensation	(1,089		)	—		—
Net effect on net income (loss)	$	4,852		$	5,031	$	4,042

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value

The estimated values of stock option grants and stock purchase rights, as well as the weighted average assumptions used in calculating these values during the fiscal years ended September 30, 2013, 2012 and 2011, were based on estimates at the date of grant as follows:

	Stock Options									ESPP
	2013			2012			2011			2013			2012			2011
Expected life (years)	4.45			4.40			4.37			0.50			0.50			0.50
Expected volatility	58.00		%	60.00		%	58.00		%	31.00		%	42.00		%	46.00		%
Risk-free interest rate	0.57		%	0.61		%	1.21		%	0.09		%	0.11		%	0.12		%
Dividend yield	—		%	—		%	—		%	—		%	—		%	—		%
Weighted-average fair value of grants	$	4.37		$	4.70		$	3.88		$	2.44		$	2.66		$	2.66

Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable

The following table is a summary of the Company’s stock option activity and related information for the last three fiscal years under the 1989 Stock Plan, 1996 Nonstatutory Stock Plan, 1998 Stock Plan, 1995 Director Stock Option Plan and the 2007 Plan (stock option amounts and aggregate intrinsic value are presented in thousands):

	Outstanding Options
	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Balance at September 30, 2010	4,275		$	4.77
Options Granted	1,194		$	8.29
Options Exercised	(524	)	$	4.09
Options Cancelled/Expired	(94	)	$	12.01
Balance at September 30, 2011	4,851		$	5.57
Options Granted	1,608		$	9.91
Options Exercised	(857	)	$	5.18
Options Cancelled/Expired	(125	)	$	9.68
Balance at September 30, 2012	5,477		$	6.81
Options Granted	1,106		$	9.31
Options Exercised	(1,116	)	$	5.61
Options Cancelled/Expired	(116	)	$	9.83
Balance at September 30, 2013	5,351		$	7.51	4.17	$	18,127
Exercisable at September 30, 2013	3,173		$	6.25	3.23	$	14,738
Vested and expected to vest after September 30, 2013	5,245		$	7.47	4.14	$	17,985
Options exercisable at:
September 30, 2011	2,868		$	5.31	3.51
September 30, 2012	3,072		$	5.42	3.28
September 30, 2013	3,173		$	6.25	3.23

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range

The following table summarizes information about options outstanding and exercisable at September 30, 2013:

					Options Outstanding				Options Exercisable
Range of  Exercise Prices					Number of Options Outstanding (in thousands)	Wtd. Average Remaining Contractual Life (in years)	Wtd. Average Exercise Price		Number of Options Exercisable (in thousands)	Wtd. Average Exercise Price
$	1.50	-	$	4.34	1,246	2.68	$	3.28	1,208	$	3.25
$	4.35	-	7.34		1,155	2.40	$	6.81	989	$	6.73
$	7.35	-	9.14		1,172	5.70	$	8.83	311	$	8.32
$	9.15	-	10.42		1,300	5.43	$	9.77	449	$	9.67
$	10.43	-	16.08		478	5.14	$	10.85	216	$	10.76
$	1.50	-	$	16.08	5,351	4.17	$	7.51	3,173	$	6.25

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

The following table is a summary of the Company’s RSU activity and related information under the 2007 Plan (RSU amounts and aggregate intrinsic value are presented in thousands):

	Number of Shares		Weighted- Average Grant-Date Fair Value		Aggregate Intrinsic Value
Outstanding awards at September 30, 2010	69		$	7.21
Granted	362		$	7.82
Vested	(49	)	$	6.75	$	492
Forfeited	—		$	8.80
Outstanding awards at September 30, 2011	382		$	7.84
Granted	106		$	9.42
Vested	(165	)	$	7.73	$	1,563
Forfeited	—		$	10.64
Outstanding awards at September 30, 2012	323		$	8.41
Granted	121		$	9.14
Vested	(172	)	$	7.94	$	1,612
Forfeited	(3	)	$	10.64
Outstanding awards at September 30, 2013	269		$	9.02	$	2,934

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Purchased Intangible Assets (Tables)

12 Months Ended

Sep. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets by Major Class

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

	Gross		Accumulated Amortization		Net
	(in thousands)
September 30, 2013
Developed technology	$	5,330	$	1,758	$	3,572
Customer relationships	3,340		580		2,760
Other	450		156		294
Total	$	9,120	$	2,494	$	6,626
September 30, 2012
Developed technology	$	4,930	$	879	$	4,051
In-process technology (IPR&D)	400		—		400
Customer relationships	3,340		9		3,331
Other	450		6		444
Total	$	9,120	$	894	$	8,226

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 Operations:

	Years Ended September 30,
	2013		2012		2011
	(in thousands)
Reported as:
Cost of sales	$	879	$	984	$	1,082
Operating expenses	721		864		616
Total	$	1,600	$	1,848	$	1,698

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Fiscal year
2014	$	1,533
2015	1,382
2016	1,238
2017	1,239
2018	1,195
Thereafter	39
Total	$	6,626

Schedule of Goodwill

The following table provides details regarding the changes in the Company's goodwill:

	(in thousands)
Balance at September 30, 2010	$	1,301
Addition arising from acquisition of Si En	8,162
Balance at September 30, 2011	9,463
Addition arising from acquisition of Chingis	3,976
Impairment	(4,261		)
Balance at September 30, 2012	9,178
Impairment	—
Balance at September 30, 2013	$	9,178

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Borrowings (Tables)

12 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt

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

Fiscal year
2014	$	195
2015	195
2016	195
2017	195
2018	3,949
Thereafter	—
Total	$	4,729

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Property, Equipment, and Leasehold Improvements, net

12 Months Ended

Sep. 30, 2013

Property, Plant and Equipment [Abstract]

Property, Equipment, and Leasehold Improvements, net

Property and Equipment, net

Property and equipment, net consisted of the following at September 30:

	2013			2012
	(in thousands)
Machinery and equipment	$	56,144		$	47,377
Furniture and fixtures	3,717			2,869
Land, buildings and improvements	40,665			29,553
	100,526			79,799
Less accumulated depreciation and amortization	(54,022		)	(50,513		)
	$	46,504		$	29,286

During the fourth quarter of fiscal 2012, the Company recorded a $1.2 million impairment charge, which was included in operating expenses, to write-down certain assets to their estimated fair value.

The Company rents out certain floors in its office building in Hsinchu, Taiwan. These leases are cancelable with two months to four months notice. The value of the assets leased to others is included in property and equipment, net in the Company’s balance sheet. Rental income and the depreciation of the assets are included in other income (expense), net. Rental income was approximately $1.2 million, $1.3 million and $1.4 million, in fiscal 2013, fiscal 2012 and fiscal 2011, respectively. Depreciation of the assets was approximately $0.1 million in each of fiscal 2013, fiscal 2012 and fiscal 2011.

The assets leased consisted of the following at September 30:

	2013			2012
	(in thousands)
Buildings and improvements	$	9,441		$	10,533
Less accumulated depreciation	(5,650		)	(6,116		)
	$	3,791		$	4,417

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Purchased Intangible Assets (Schedule of Finite-Lived Intangible Assets by Major Class) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Finite-Lived Intangible Assets [Line Items]
Total	$ 6,626
Gross	9,120	9,120
Accumulated Amortization	2,494	894
Total, net	6,626	8,226
Developed technology
Finite-Lived Intangible Assets [Line Items]
Gross	5,330	4,930
Accumulated Amortization	1,758	879
Total	3,572	4,051
In-process technology (IPR&D)
Finite-Lived Intangible Assets [Line Items]
Gross		400
Accumulated Amortization		0
Total		400
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Gross	3,340	3,340
Accumulated Amortization	580	9
Total	2,760	3,331
Other
Finite-Lived Intangible Assets [Line Items]
Gross	450	450
Accumulated Amortization	156	6
Total	$ 294	$ 444

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Retirement Plan (Amounts Recorded to Accumulated Other Comprehensive Income (Loss) Before Taxes) (Details) (Pension Plans, Defined Benefit, USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Net transition asset	$ 195	$ 234
Net actuarial loss	(2,561)	(2,564)
Defined benefit plans, net	$ (2,366)	$ (2,330)

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Organization and Significant Accounting Policies (Tables)

12 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Accounts Receivable Allowance for Doubtful Accounts

The following describes activity in the accounts receivable allowance for doubtful accounts for the years ended September 30, 2013, 2012 and 2011.

Description	Balance at Beginning of Year		Adjustments to Costs and Expenses(1)			Deductions(2)			Balance at End of Year
	(in thousands)
Accounts receivable—Allowance for doubtful accounts:
2011	$	154	$	362		$	(20	)	$	496
2012	$	496	$	(2	)	$	14		$	508
2013	$	508	$	19		$	(155	)	$	372

________________________

(1) Includes increases/(decreases) charged or credited to costs and expenses.

(2) Uncollectible accounts written off, net of recoveries.

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Retirement Plan (Tables)

12 Months Ended

Sep. 30, 2013

Compensation and Retirement Disclosure [Abstract]

Schedule of Defined Benefit Plans Disclosures

The changes in the benefit obligation and plan assets for the Benefit Plan described above were as follows:

	2013			2012
	(in thousands)
Change in projected benefit obligation:
Beginning benefit obligation	$	6,047		$	5,178
Service cost	200			195
Interest cost	119			108
Actuarial loss	90			75
Currency exchange rate changes	(66		)	205
Assumed liability in business combination	—			286
Ending projected benefit obligation	$	6,390		$	6,047

Schedule of Changes in Fair Value of Plan Assets

	2013			2012
	(in thousands)
Change in fair value plan assets:
Beginning fair value of plan assets	$	2,510		$	2,079
Actual return on plan assets	32			19
Employer contributions	86			70
Currency exchange rate changes	(29		)	83
Assets acquired in business combination	—			259
Ending fair value of plan assets	$	2,599		$	2,510

Schedule of Amounts Recognized in Balance Sheet

The following table summarizes the amounts recognized on the consolidated balance sheet as of September 30:

	2013		2012
	(in thousands)
Other long-term liabilities	$	3,790	$	3,537
Accumulated other comprehensive income (net of tax of $322 in 2013 and $204 in 2012)	2,044		2,126
Amount recognized	$	5,834	$	5,663

Schedule of Amounts in Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax, were as follows at September 30:

	2013			2012
	(In thousands)
Accumulated foreign currency translation adjustments	$	4,787		$	6,048
Accumulated net unrealized gain on SMIC (net of tax of $275 in 2013 and $0 in 2012)	419			—
Accumulated net unrealized gain (loss) on Nanya (net of tax of $3,565 in 2013 and $312 in 2012)	5,959			(1,523		)
Accumulated net retirement plan transition asset (net of tax of $148 in 2013 and $119 in 2012)	47			115
Accumulated net retirement plan actuarial losses (net of tax of $470 in 2013 and $323 in 2012)	(2,091		)	(2,241		)
Total accumulated other comprehensive income	$	9,121		$	2,399

The following table summarizes the amounts recorded in accumulated other comprehensive income (loss) before taxes, as of September 30:

	2013			2012
	(in thousands)
Net transition asset	$	195		$	234
Net actuarial loss	(2,561		)	(2,564		)
Defined benefit plans, net	$	(2,366	)	$	(2,330	)

Schedule of Accumulated Benefit Obligations in Excess of Fair Value of Plan Assets

The following table summarizes the accumulated benefit obligation as of September 30:

	2013		2012
	(in thousands)
Accumulated benefit obligation	$	3,940	$	3,745

Schedule of Assumptions Used

Weighted-average actuarial assumptions used to determine benefit obligations and plan assets for the Benefit Plan at September 30 were as follows:

	2013	2012
Discount rate	1.90-2.00%	1.90-2.00%
Expected return on plan assets	1.90-2.00%	1.90-2.00%
Rate of compensation increase	3.00-4.00%	3.00-4.00%

Schedule of Net Benefit Costs

The net periodic benefit cost for the Benefit Plan included the following components at September 30:

	2013			2012			2011
	(in thousands)
Service cost	$	200		$	195		$	165
Interest cost	119			108			83
Expected return on plan assets	(50		)	(44		)	(40		)
Amortization of deferred amount	40			36			2
Net periodic benefit cost	$	309		$	295		$	210

Schedule of Expected Benefit Payments

The following table reflects the benefit payments, which include the amount that will be funded from retiree contributions that the Company expects to pay in the periods noted (in thousands):

Fiscal year ending:
2014	$	760
2015	$	49
2016	$	152
2017	$	69
2018	$	514
2019-2023	$	3,377

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Acquisition of Si En (Schedule of Purchase Price Allocation) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2012 Si En	Jan. 31, 2011 Si En	Jan. 31, 2011 In-process technology Si En	Jan. 31, 2011 Developed technology Si En	Jan. 31, 2011 Customer relationships Si En	Jan. 31, 2011 Other Si En
Business Acquisition [Line Items]
Cash and cash equivalents						$ 7,240
Accounts receivable						2,148
Inventories						2,117
Property, equipment and leasehold improvements						124
Other current and other assets						260
Intangible assets:
Intangible assets						23,519	2,610	4,650	3,800	570
Current liabilities						(2,533)
Deferred tax liability						(1,748)
Total liabilities assumed						(4,281)
Net identifiable assets acquired						19,238
Goodwill	9,178	9,178	9,463	1,301	3,900	8,162
Net assets acquired						$ 27,400

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Accrued Expenses

12 Months Ended

Sep. 30, 2013

Payables and Accruals [Abstract]

Accrued Expenses

Accrued Expenses

Accrued expenses consisted of the following at September 30:

	2013		2012
	(in thousands)
Deferred distributor margin	$	2,301	$	2,122
Acquisition related liability	—		4,200
Other	5,056		4,811
	$	7,357	$	11,133

The Company's acquisition of Si En included a $4.2 million holdback provision for a period of two years from the date of closing to secure certain Si En indemnification obligations. The holdback was paid during fiscal 2013.

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Retirement Plan (Schedule of Weighted Average Actuarial Assumptions Used) (Details) (Pension Plans, Defined Benefit)	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Minimum
Defined Benefit Plan Disclosure [Line Items]
Discount rate	1.90%	1.90%
Expected return on plan assets	1.90%	1.90%
Rate of compensation increase	3.00%	3.00%
Maximum
Defined Benefit Plan Disclosure [Line Items]
Discount rate	2.00%	2.00%
Expected return on plan assets	2.00%	2.00%
Rate of compensation increase	4.00%	4.00%

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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 $)	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Common shares reserved under stock option plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)	4 years 5 months 12 days	4 years 4 months 24 days	4 years 4 months 13 days
Expected volatility	58.00%	60.00%	58.00%
Risk-free interest rate	0.57%	0.61%	1.21%
Weighted-average fair value of grants	$ 4.37	$ 4.70	$ 3.88
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)	6 months	6 months	6 months
Expected volatility	31.00%	42.00%	46.00%
Risk-free interest rate	0.09%	0.11%	0.12%
Weighted-average fair value of grants	$ 2.44	$ 2.66	$ 2.66

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Other Assets

12 Months Ended

Sep. 30, 2013

Other Assets [Abstract]

Other Assets

Other Assets

Other assets consisted of the following at September 30:

	2013		2012
	(in thousands)
Restricted assets	$	811	$	239
Deposits to foundry for capacity	—		3,500
Investment in Giantec	—		4,025
Other investment	1,684		2,000
Nanya common stock	—		14,752
Nanya private placement shares	10,920		11,042
Other	3,164		3,319
	$	16,579	$	38,877

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

In September 2012, the Company invested approximately $27.1 million in Nanya, which was comprised of common shares which are classified as available-for-sale securities and private placement shares which are accounted for on the cost-basis. 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. In addition, as of September 30, 2013, the Company had pledged $5.4 million of its Nanya private placement shares with Nanya as collateral for the Company's accounts payable. During fiscal 2013, the Company reclassified its common shares in Nanya to short-term investments as the Company's intent is to sell these shares within one year.

In March 2012, the Company made an equity investment of $2.0 million in a private technology company headquartered in Hong Kong. At September 30, 2013, the Company's ownership interest was approximately 31%. 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.

On December 30, 2010, Giantec received an additional direct investment of $4.0 million from outside investors, and as a result the Company’s ownership interest was reduced to approximately 44% and the Company was required to deconsolidate Giantec and to record its retained interest in Giantec at fair value at the date of deconsolidation. As the additional investment received by Giantec was from new investors, the Company used the price paid by the new investors as a basis for determining the fair value of its investment in Giantec. As a result, the Company recorded a loss of approximately $30,000 in “Interest and other income, net,” which was the difference between the fair value of the Company’s retained interest in Giantec, and the carrying value of Giantec’s net assets and noncontrolling interest before the deconsolidation. In August 2011, the Company sold approximately 37% of its shares in Giantec for $2.2 million resulting in no gain and on August 31, 2011, Giantec merged with Maxllent Corp. thereby reducing the Company's ownership interest in Giantec to approximately 19.85%. In fiscal 2013, the Company sold its remaining investment in Giantec for approximately $4.3 million which resulted in a pre-tax gain of approximately $0.2 million. The Company's consolidated financial statements reflect accounting for Giantec on a consolidated basis from January 1, 2010 through December 30, 2010. For the period from December 31, 2010 through August 31, 2011, the Company accounted for Giantec on the equity method and the Company's results included its percentage share of Giantec’s results of operations in interest and other income, net. From September 1, 2011 until the sale of its investment in June 2013, the Company accounted for Giantec on the cost basis and its investment in Giantec was included in other assets on the Company's balance sheets.

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Total ISSI Stockholders' Equity	Non-controlling Interest
Total stockholders' equity, balance at Sep. 30, 2010	$ 177,821	$ 3	$ 317,773	$ (143,285)	$ (2,286)	$ 172,205	$ 5,616
Common stock, shares, balance at Sep. 30, 2010		26,217,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Consolidated net income (loss)	56,123			55,957		55,957	166
Other comprehensive income	1,034				1,034	1,034
Stock options exercised and shares issued upon vesting of restricted stock units (RSUs), shares		573,000
Stock options exercised and shares issued upon vesting of restricted stock units (RSUs)	2,146	0	2,146			2,146
Shares issued under stock purchase plan, shares		167,000
Shares issued under stock purchase plan	1,239		1,239			1,239
Stock-based compensation	4,042		4,042			4,042
Shares repurchased and retired, shares		(509,000)
Shares repurchased and retired	(4,097)	0	(4,097)			(4,097)
Noncontrolling interest in Giantec	(3,364)		0			0	(3,364)
Change in noncontrolling interest in Wintram	302		28			28	274
Total stockholders' equity, balance at Sep. 30, 2011	235,246	3	321,131	(87,328)	(1,252)	232,554	2,692
Common stock, shares, balance at Sep. 30, 2011		26,448,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Consolidated net income (loss)	(2,605)			(2,718)		(2,718)	113
Other comprehensive income	3,651				3,651	3,651	0
Stock options exercised and shares issued upon vesting of restricted stock units (RSUs), shares		1,022,000
Stock options exercised and shares issued upon vesting of restricted stock units (RSUs)	4,439	0	4,439			4,439
Shares issued under stock purchase plan, shares		181,000
Shares issued under stock purchase plan	1,413		1,413			1,413
Stock-based compensation	5,031		5,031			5,031
Shares repurchased and retired, shares		(57,000)
Shares repurchased and retired	(537)		(537)			(537)
Change in noncontrolling interest in Wintram	71		8			8	63
Acquisition of noncontrolling interest	(2,370)		(1,012)			(1,012)	(1,358)
Noncontrolling interest in Chingis	1,996						1,996
Total stockholders' equity, balance at Sep. 30, 2012	246,335	3	330,473	(90,046)	2,399	242,829	3,506
Common stock, shares, balance at Sep. 30, 2012	27,594,000	27,594,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Consolidated net income (loss)	17,744			17,548		17,548	196
Other comprehensive income	6,722				6,722	6,722	0
Stock options exercised and shares issued upon vesting of restricted stock units (RSUs), shares		1,288,000
Stock options exercised and shares issued upon vesting of restricted stock units (RSUs)	6,264		6,264			6,264
Shares issued under stock purchase plan, shares		237,000
Shares issued under stock purchase plan	1,915		1,915			1,915
Stock-based compensation	5,941		5,941			5,941
Tax effects from employee stock incentive plans	18		18			18
Shares repurchased and retired, shares		(59,000)
Shares repurchased and retired	(555)		(555)			(555)
Acquisition of noncontrolling interest	1,614		109			109	1,505
Total stockholders' equity, balance at Sep. 30, 2013	$ 282,770	$ 3	$ 343,947	$ (72,498)	$ 9,121	$ 280,573	$ 2,197
Common stock, shares, balance at Sep. 30, 2013	29,060,000	29,060,000

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Retirement Plan (Summary of Accumulated Benefit Obligation) (Details) (Pension Plans, Defined Benefit, USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Accumulated benefit obligation	$ 3,940	$ 3,745

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Fair Value Measurements (Assets and Liabilities that are Measured at Fair Value on a Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Sep. 30, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value	$ 53,330		$ 68,470
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value	37,735		50,168
Money market instruments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value	19,318		34,317
Money market instruments | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value	19,318	[1]	34,317	[1]
Available-for-sale securities | (SMIC) common stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value	1,793		1,099
Available-for-sale securities | (SMIC) common stock | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value	1,793	[2]	1,099	[2]
Available-for-sale securities | Nanya Technology Corporation (Nanya) common stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value	16,624		14,752
Available-for-sale securities | Nanya Technology Corporation (Nanya) common stock | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value	$ 16,624	[3]	$ 14,752	[3]

[1] Included in cash and cash equivalents

[2] Included in short-term investments

[3] Included in short-term investments at September 30, 2013 and in other assets at September 30, 2012

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Acquisition of Chingis (Tables) (Chingis)

12 Months Ended

Sep. 30, 2013

Chingis

Business Acquisition [Line Items]

Schedule of Purchase Price Allocation

The purchase price allocation is as follows (in thousands):

Cash and cash equivalents	$	18,622
Accounts receivable	6,546
Inventories	5,229
Property, equipment and leasehold improvements	117
Other current and other assets	844
Intangible assets:
In-process technology	400
Developed technology	3,690
Customer relationships	3,340
Other intangibles	450
Total identifiable assets acquired	39,238
Current liabilities and other liabilities	(7,946		)
Deferred tax liability	(1,440		)
Total liabilities assumed	(9,386		)
Net identifiable assets acquired	29,852
Noncontrolling interest	(1,996		)
Goodwill	3,976
Net assets acquired	$	31,832

Business Acquisition, Pro Forma Information

The pro forma financial results are as follows:

	Years Ended September 30,
	2013		2012			2011
	(in thousands, except per share data)
Net sales	$	307,570	$	303,299		$	320,516
Net income	$	17,852	$	(2,259	)	$	57,608

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Acquisition of Chingis (Schedule of Purchase Price Allocation) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010	Sep. 14, 2012 Chingis	Sep. 14, 2012 In-process technology Chingis	Sep. 14, 2012 Developed technology Chingis	Sep. 14, 2012 Customer relationships Chingis	Sep. 14, 2012 Other intangibles Chingis
Business Acquisition [Line Items]
Cash and cash equivalents					$ 18,622
Accounts receivable					6,546
Inventories					5,229
Property, equipment and leasehold improvements					117
Other current and other assets					844
Intangible assets					39,238	400	3,690	3,340	450
Current liabilities and other liabilities					(7,946)
Deferred tax liability					(1,440)
Total liabilities assumed					(9,386)
Net identifiable assets acquired					29,852
Noncontrolling interest					(1,996)
Goodwill	9,178	9,178	9,463	1,301	3,976
Net assets acquired					$ 31,832

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Income Taxes (Income Tax Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Income Tax Disclosure [Abstract]
Income taxes computed at the U.S. federal statutory rate	$ 10,507	$ 1,367	$ 10,075
State income taxes	98	69	3
Research credits	(89)	757	0
Foreign losses not benefited (benefited)	0	1,377	(5,549)
Foreign Income Inclusion, net of credit	6,469	0	0
Non-deductible stock compensation	991	672	527
Non-deductible impairment charges	0	3,321	0
U.S. operating loss not benefited (benefited)	0	0	(5,123)
Valuation allowance changes	(1,334)	1,384	(28,136)
Foreign Income Inclusion, net of credit	(4,334)	(2,523)	1,020
Other	(31)	88	(155)
Total provision (benefit)	$ 12,277	$ 6,512	$ (27,338)

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Other Assets (Tables)

12 Months Ended

Sep. 30, 2013

Other Assets [Abstract]

Schedule of Other Assets

Other assets consisted of the following at September 30:

	2013		2012
	(in thousands)
Restricted assets	$	811	$	239
Deposits to foundry for capacity	—		3,500
Investment in Giantec	—		4,025
Other investment	1,684		2,000
Nanya common stock	—		14,752
Nanya private placement shares	10,920		11,042
Other	3,164		3,319
	$	16,579	$	38,877

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Related Party Transactions (Narrative) (Details) (Jimmy S.M. Lee, Executive Chairman, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Jimmy S.M. Lee, Executive Chairman
Related Party Transaction [Line Items]
Revenues from transactions with related party	$ 429	$ 458	$ 938
Accounts receivable, related parties	$ 65	$ 30

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Geographic and Segment Information (Schedule of Revenues, by Geographical Areas) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 78,392	$ 77,788	$ 74,991	$ 76,399	$ 72,500	$ 64,781	$ 62,505	$ 66,164	$ 307,570	$ 265,950	$ 270,508
Long-lived assets	46,504				29,286				46,504	29,286	28,959
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									37,954	42,527	40,864
Long-lived assets	9,696				440				9,696	440	1,216
China
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									32,170	17,913	10,181
Long-lived assets	3,424				558				3,424	558	706
Hong Kong
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									64,193	57,971	74,604
Long-lived assets	7				7				7	7	5
Taiwan
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									41,204	26,107	28,990
Long-lived assets	33,377				28,281				33,377	28,281	27,032
Japan
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									30,102	29,664	23,143
Other Asia Pacific countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									37,897	32,987	37,356
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									62,065	57,295	53,585
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									$ 1,985	$ 1,486	$ 1,785

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Income Taxes (Schedule of Components of Income Tax Expense (Benefit)) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Current:
Federal	$ 2	$ 235	$ 0
State	86	141	4
Foreign	2,902	1,120	1,020
Total current	2,990	1,496	1,024
Deferred:
Federal	7,596	5,470	(19,340)
State	12	95	(4,561)
Foreign	1,679	(549)	(4,461)
Total deferred	9,287	5,016	(28,362)
Total provision (benefit)	$ 12,277	$ 6,512	$ (27,338)

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Retirement Plan (Schedule of Amounts Recognized on the Consolidated Balance Sheet) (Details) (Pension Plans, Defined Benefit, USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Other long-term liabilities	$ 3,790	$ 3,537
Accumulated other comprehensive income (net of tax of $322 in 2013 and $204 in 2012)	2,044	2,126
Amount recognized	5,834	5,663
Accumulated other comprehensive income, tax	$ 322	$ 204

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Borrowings (Narrative) (Details) (USD $) In Millions, unless otherwise specified		1 Months Ended
	Sep. 30, 2013	Dec. 31, 2012 Secured Debt acre sqft	Dec. 31, 2012 London Interbank Offered Rate (LIBOR) Secured Debt
Debt Instrument [Line Items]
Debt Instrument, Description of Variable Rate Basis			LIBOR
Short-term lines of credit borrowing capacity	$ 22.5
Loans Payable to Bank		4.9
Purchase Of Property Plant And Equipment		$ 6.5
Number Of Acres Of Land Purchased		2.85
Area of Real Estate Property		55,612
Debt Instrument, Basis Spread on Variable Rate			1.00%

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Property, Equipment, and Leasehold Improvements, net (Schedule of Property and Equipment) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Property, Plant and Equipment [Abstract]
Machinery and equipment	$ 56,144	$ 47,377
Furniture and fixtures	3,717	2,869
Land, buildings and improvements	40,665	29,553
Property and equipment, gross	100,526	79,799
Less accumulated depreciation and amortization	(54,022)	(50,513)
Total	$ 46,504	$ 29,286

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Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Deferred tax assets:
Depreciation	$ 217	$ 215
Inventory and other valuation reserves	532	1,136
Accrued expenses	5,312	6,255
Federal, state and foreign credit carryforwards	4,310	7,695
Federal, state and foreign net operating loss carryforwards	20,388	27,041
Non-deductible stock options	3,064	2,714
Other, net	38	2,444
Subtotal	33,861	47,500
Valuation allowance	(24,928)	(24,887)
Total deferred tax assets	8,933	22,613
Deferred tax liabilities:
Purchased intangibles	(1,144)	(1,500)
Net deferred tax assets	7,789	21,113
Reported as:
Current deferred tax assets	2,326	8,940
Non-current deferred tax assets	9,942	13,588
Non-current deferred tax liabilities	$ (4,479)	$ (1,415)

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Stockholders' Equity

12 Months Ended

Sep. 30, 2013

Equity [Abstract]

Capital Stock

Stockholders' Equity

The Company’s Restated Certificate of Incorporation provides for 70,000,000 authorized shares of common stock and 5,000,000 authorized shares of preferred stock. The terms of the preferred stock may be fixed by the board of directors, who have the right to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The rights of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future.

As of September 30, 2013, shares of common stock were reserved for future issuance as follows:

Common shares reserved under Employee Stock Purchase Plan	581,000
Common shares reserved under stock option plans	7,876,000

Common Stock Repurchases

In both fiscal 2013 and fiscal 2012, the Company did not repurchase any shares of its common stock in the open market. As of September 30, 2013, 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 September 30, 2013, $19.8 million remained available under the existing share repurchase authorization.

The Company issues RSUs as part of its equity incentive plans. For a portion of 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 fiscal 2013, the Company withheld 59,501 shares to satisfy approximately $555,000 of employees’ tax obligations. During fiscal 2012, the Company withheld 56,849 shares to satisfy approximately $537,000 of employees’ 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.

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax, were as follows at September 30:

	2013			2012
	(In thousands)
Accumulated foreign currency translation adjustments	$	4,787		$	6,048
Accumulated net unrealized gain on SMIC (net of tax of $275 in 2013 and $0 in 2012)	419			—
Accumulated net unrealized gain (loss) on Nanya (net of tax of $3,565 in 2013 and $312 in 2012)	5,959			(1,523		)
Accumulated net retirement plan transition asset (net of tax of $148 in 2013 and $119 in 2012)	47			115
Accumulated net retirement plan actuarial losses (net of tax of $470 in 2013 and $323 in 2012)	(2,091		)	(2,241		)
Total accumulated other comprehensive income	$	9,121		$	2,399

The estimated net prior service cost, actuarial loss, and transition obligation for the Company's defined benefit plan that will be amortized from accumulated other comprehensive income (loss) to net periodic benefit cost during fiscal year 2014 is $0, $110,000, and $(60,000), respectively.

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Borrowings

12 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Borrowings

Borrowings

At September 30, 2013, the Company had short-term lines of credit with various financial institutions in Taiwan whereby it could borrow in aggregate up to approximately $22.5 million denominated in a combination of U.S. and New Taiwan dollars. As of September 30, 2013 and September 30, 2012, the Company had no borrowings outstanding under these lines of credit. These lines of credit expire at various times through August 2014. There were no assets pledged as collateral for short-term debt or notes. Commitment fees relating to these lines are not material.

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

Fiscal year
2014	$	195
2015	195
2016	195
2017	195
2018	3,949
Thereafter	—
Total	$	4,729

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Accrued Expenses (Schedule of Accrued Expenses) (Details) (USD $) In Thousands, unless otherwise specified			0 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Jan. 31, 2011 Si En
Business Acquisition [Line Items]
Deferred distributor margin	$ 2,301	$ 2,122
Business Combination, Consideration Transferred, Holdback Provision	0	4,200	4,200
Other	5,056	4,811
Accrued expenses	$ 7,357	$ 11,133
Holdback provision period (years)			2 years

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Per Share Data

12 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Per Share Data

Per Share Data

The calculations of basic and diluted net income (loss) per share for each of the three years ended September 30, 2013, 2012 and 2011 are as follows:

	Years Ended September 30,
	2013		2012			2011
	(in thousands, except per share data)
Numerator for basic and diluted net income (loss) per share:
Net income (loss)	$	17,548	$	(2,718	)	$	55,957
Denominator for basic net income (loss) per share:
Weighted average common shares outstanding	28,223		27,120			26,568
Dilutive effect of stock options and awards	1,471		—			1,740
Denominator for diluted net income (loss) per share	29,694		27,120			28,308
Basic net income (loss) per share	$	0.62	$	(0.10	)	$	2.11
Diluted net income (loss) per share	$	0.59	$	(0.10	)	$	1.98

The diluted earnings per share calculation for the year ended September 30, 2012 does not include approximately 1,781,000 potential common shares from outstanding stock options and awards because their inclusion would be anti-dilutive. For the years ended September 30, 2013, 2012, and 2011, an additional 2,733,000, 1,499,000 and 1,115,000 stock options and awards were excluded from diluted earnings per share by the application of the treasury stock method.

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Income Taxes (Notes)

12 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income before provision for income taxes consisted of the following:

	2013		2012			2011
	(in thousands)
United States	$	4,542	$	9,723		$	12,931
International	25,479		(5,816		)	15,854
Total pre-tax income	$	30,021	$	3,907		$	28,785

The provision (benefit) for income taxes consisted of the following for the years ended September 30:

	2013		2012			2011
	(in thousands)
Current:
Federal	$	2	$	235		$	—
State	86		141			4
Foreign	2,902		1,120			1,020
Total current	$	2,990	$	1,496		$	1,024
Deferred:
Federal	7,596		5,470			(19,340		)
State	12		95			(4,561		)
Foreign	1,679		(549		)	(4,461		)
Total deferred	9,287		5,016			(28,362		)
Total provision (benefit)	$	12,277	$	6,512		$	(27,338	)

The Company’s provision (benefit) for income taxes differs from the amount computed by applying the U.S. federal statutory rate (35%) to income before taxes and minority interest as follows for the years ended September 30:

	2013			2012			2011
	(in thousands)
Income taxes computed at the U.S. federal statutory rate	$	10,507		$	1,367		$	10,075
State income taxes	98			69			3
Research credits	(89		)	757			—
Foreign losses not benefited (benefited)	—			1,377			(5,549		)
Foreign Income Inclusion, net of credit	6,469			—			—
Non-deductible stock compensation	991			672			527
Non-deductible impairment charges	—			3,321			—
U.S. operating loss not benefited (benefited)	—			—			(5,123		)
Valuation allowance changes	(1,334		)	1,384			(28,136		)
Foreign taxes	(4,334		)	(2,523		)	1,020
Other	(31		)	88			(155		)
Total provision (benefit)	$	12,277		$	6,512		$	(27,338	)

As of September 30, 2013, the Company had net operating loss carryforwards for federal, state and foreign income tax purposes of approximately $36.5 million, $78.4 million and $17.9 million, respectively. The federal, state and foreign net operating loss carryforwards will expire at various dates beginning in 2015, if not utilized. The Company has federal research and development tax credits and foreign tax and minimum tax credit carryforwards of approximately $1.6 million, $0.9 million and $0.6 million, respectively. The Company also has California state research and development tax credit carryforwards of approximately $2.6 million. The Company has foreign research and development tax credit carryforwards of approximately $2.0 million. The federal tax credits will expire in 2019 through 2031, if not utilized. The California state research and development tax credit can be carried forward indefinitely. The foreign research and development tax credit carryforwards will expire by 2014, if not utilized.

Utilization of the federal net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation, should the Company undergo an ownership change, may result in the expiration of federal or state net operating losses and credits before utilization.

The Company’s China operation was under a tax holiday program which began on January 1, 2007 and expired on December 31, 2011. The tax benefit resulting from the holiday was $57,000 for fiscal 2011.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred taxes consisted of the following at September 30:

	2013			2012
	(in thousands)
Deferred tax assets:
Depreciation	$	217		$	215
Inventory and other valuation reserves	532			1,136
Accrued expenses	5,312			6,255
Federal, state and foreign credit carryforwards	4,310			7,695
Federal, state and foreign net operating loss carryforwards	20,388			27,041
Non-deductible stock options	3,064			2,714
Other, net	38			2,444
Subtotal	33,861			47,500
Valuation allowance	(24,928		)	(24,887		)
Total deferred tax assets	$	8,933		$	22,613
Deferred tax liabilities:
Purchased intangibles	(1,144		)	(1,500		)
Net deferred tax assets	$	7,789		$	21,113
Reported as:
Current deferred tax assets	$	2,326		$	8,940
Non-current deferred tax assets	9,942			13,588
Non-current deferred tax liabilities	(4,479		)	(1,415		)
Net deferred tax assets	$	7,789		$	21,113

Non-current deferred tax liabilities are included within other long-term liabilities in the consolidated balance sheets.

Management has established a valuation allowance for a portion of the gross deferred tax assets based on management’s expectations of future taxable income and the actual taxable income during the three years ended September 30, 2013. The valuation allowance for deferred tax assets increased by $41,000 in fiscal 2013, increased by $2.7 million in fiscal 2012 and decreased by $40.5 million in fiscal 2011. Approximately $13.6 million of the valuation allowance is attributable to tax benefits of stock option deductions which will be credited to paid-in capital when recognized.

A reconciliation of the beginning and ending amount of the consolidated liability for unrecognized income tax benefits during the tax year ended September 30 is as follows:

	2013		2012			2011
	(in thousands)
Balance at the beginning of the year	$	2,906	$	4,533		$	3,460
Increases (decreases) related to current year positions	108		68			112
Increases (decreases) related to prior year positions	38		(1,695		)	961
Balance at the end of the year	$	3,052	$	2,906		$	4,533

The remaining amount of the unrecognized tax benefit as of September 30, 2013 is offset by a full valuation allowance. The Company does not anticipate a significant change in unrecognized tax benefits within the next twelve months except for any adjustments related to the expiration of the statute of limitations.

The Company anticipates the unrecognized tax benefits may increase during the year for items that arise in the ordinary course of business. These increases will be considered in the determination of the Company’s annual effective tax rate. The amount of the unrecognized tax benefit classified as a long term tax payable, if recognized, would reduce the annual income tax provision.

The Company’s policy to include interest and penalties related to unrecognized tax benefits within the Company’s provision for (benefit from) income taxes did not change. As of September 30, 2013, the Company has not accrued any potential penalties and interest related to these unrecognized tax benefits.

The Company files U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitations during which such tax returns may be audited and adjusted by the relevant tax authorities. The 2006 through 2013 tax years generally remain subject to examination by federal and most state tax authorities, and tax years 2006 through 2013 generally remain subject to examination by foreign tax authorities. In addition, U.S. tax returns are open from the 2000 tax year through the 2003 tax year to the extent that net operating losses generated during these periods are being utilized in open tax periods. Also, U.S. tax returns are open for the tax years from 1996 through 2003 and from 2007 through 2011 to the extent research and development credits were generated during these periods and are being utilized in open years.

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Acquisition of Chingis (Schedule of Pro Forma Financial Information) (Details) (Chingis, USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Chingis
Business Acquisition [Line Items]
Net sales	$ 307,570	$ 303,299	$ 320,516
Net income	$ 17,852	$ (2,259)	$ 57,608

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Document and Entity Information (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Dec. 07, 2013	Mar. 31, 2013
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-K
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		29,466,567
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 159,413

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Income Taxes (Schedule of Unrecognized Tax Benefits Rollforward) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance at the beginning of the year	$ 2,906	$ 4,533	$ 3,460
Increases (decreases) related to current year positions	108	68	112
Increases (decreases) related to prior year positions	38	(1,695)	961
Balance at the end of the year	$ 3,052	$ 2,906	$ 4,533

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Retirement Plan

12 Months Ended

Sep. 30, 2013

Compensation and Retirement Disclosure [Abstract]

Retirement Plan

Retirement Plan

Pension Plan

The Company has pension plans covering substantially all of its Taiwan-based employees. The pension plans are based on the Labor Standards Law, a defined benefit plan (Benefit Plan), and the Labor Pension Act, a defined contribution plan (Contribution Plan). Under the Labor Standards Law, the Benefit Plan provides for a lump sum payment upon retirement based on years of service and the employee’s compensation during the last six months of employment. In accordance with the Labor Standards Law of Taiwan, the Company makes monthly contributions equal to 2% of its wages and salaries. The fund is administered by the Employees’ Retirement Fund Committee and is registered in this committee’s name. Accordingly, the pension fund assets are not included in the financial statements of the Company.

Under the Labor Pension Act effective July 1, 2005, employees may choose the requirements under the Labor Standards Law or the new statute. For employees subject to the new statute, the Company shall contribute no less than 6% of the employees’ wages and salaries to the Contribution Plan.

Benefit Obligation and Plan Assets

As of September 30, 2013 and 2012, the Company’s Benefit Plan had projected benefit obligations in excess of plan assets. The changes in the benefit obligation and plan assets for the Benefit Plan described above were as follows:

	2013			2012
	(in thousands)
Change in projected benefit obligation:
Beginning benefit obligation	$	6,047		$	5,178
Service cost	200			195
Interest cost	119			108
Actuarial loss	90			75
Currency exchange rate changes	(66		)	205
Assumed liability in business combination	—			286
Ending projected benefit obligation	$	6,390		$	6,047

	2013			2012
	(in thousands)
Change in fair value plan assets:
Beginning fair value of plan assets	$	2,510		$	2,079
Actual return on plan assets	32			19
Employer contributions	86			70
Currency exchange rate changes	(29		)	83
Assets acquired in business combination	—			259
Ending fair value of plan assets	$	2,599		$	2,510

The following table summarizes the amounts recognized on the consolidated balance sheet as of September 30:

	2013		2012
	(in thousands)
Other long-term liabilities	$	3,790	$	3,537
Accumulated other comprehensive income (net of tax of $322 in 2013 and $204 in 2012)	2,044		2,126
Amount recognized	$	5,834	$	5,663

The following table summarizes the amounts recorded in accumulated other comprehensive income (loss) before taxes, as of September 30:

	2013			2012
	(in thousands)
Net transition asset	$	195		$	234
Net actuarial loss	(2,561		)	(2,564		)
Defined benefit plans, net	$	(2,366	)	$	(2,330	)

The following table summarizes the accumulated benefit obligation as of September 30:

	2013		2012
	(in thousands)
Accumulated benefit obligation	$	3,940	$	3,745

Weighted-average actuarial assumptions used to determine benefit obligations and plan assets for the Benefit Plan at September 30 were as follows:

	2013	2012
Discount rate	1.90-2.00%	1.90-2.00%
Expected return on plan assets	1.90-2.00%	1.90-2.00%
Rate of compensation increase	3.00-4.00%	3.00-4.00%

The assumptions used in the expected long-term rate of return on plan assets are determined by the Bureau of Labor Insurance in Taiwan.

The net periodic benefit cost for the Benefit Plan included the following components at September 30:

	2013			2012			2011
	(in thousands)
Service cost	$	200		$	195		$	165
Interest cost	119			108			83
Expected return on plan assets	(50		)	(44		)	(40		)
Amortization of deferred amount	40			36			2
Net periodic benefit cost	$	309		$	295		$	210

The balance of vested benefits was $352,000 and $45,000 as of September 30, 2013 and September 30, 2012, respectively.

Non-U.S. Plan Assets

For the Benefit Plan, the Company deposits funds into government-managed accounts, and accrues for the unfunded portion of its obligation.

Estimated Future Benefit Payments

The following table reflects the benefit payments, which include the amount that will be funded from retiree contributions that the Company expects to pay in the periods noted (in thousands):

Fiscal year ending:
2014	$	760
2015	$	49
2016	$	152
2017	$	69
2018	$	514
2019-2023	$	3,377

Estimated Future Contributions

The Company’s expected contributions to be paid to the Benefit Plan during fiscal 2014 is $43,000.

ISSI 401(k) Plan

The Company sponsors the ISSI 401(k) Plan (401(k) Plan) to provide retirement benefits to its eligible U.S. employees. As allowed under Section 401(k) of the Internal Revenue Code, the 401(k) Plan provides for tax-deferred salary contributions and after-tax contributions for eligible employees. The 401(k) Plan allows employees to contribute up to 75% of their eligible compensation to the 401(k) Plan on a pre-tax and after-tax basis, and effective November 1, 2011, the 401(k) Plan also allows employees to make Roth contributions. Employee contributions are limited to a maximum annual amount as set periodically by the Internal Revenue Code. The 401(k) Plan also allows employees who meet the age requirements and reach the 401(k) Plan contribution limits to make a catch-up contribution not to exceed the lesser of 75% of their eligible compensation or the limit set forth in the Internal Revenue Code. The catch-up contributions are not eligible for matching contributions. The 401(k) Plan allows for employer contributions and the Company has elected to make a contribution for the plan year beginning January 1, 2013 and ending December 31, 2013. The Company will match employee contributions in an amount equal to 50% of every dollar contributed by the employee up to 10% of the employees' eligible earnings. The matching contribution in a year will not exceed $6,000 for any participant. The Company contributions are subject to vesting of 25% for each year of service with the Company. The Company elected to make no matching contributions during the fiscal years ended September 30, 2012 and 2011. Administrative expenses relating to the plan are insignificant.

Deferred Compensation Plan

The Compensation Committee of the Board of Directors of the Company adopted the Non-qualified Deferred Compensation Plan (the Deferred Compensation Plan or NDCP), effective as of March 22, 2013. As required by applicable law, participation in the Deferred Compensation Plan is limited to a select group of management and highly-compensated employees of the Company and its participating subsidiaries and affiliates, which group includes the Company’s executive officers. Under the Deferred Compensation Plan, which is an unfunded and unsecured deferred compensation arrangement, a participant may elect to defer part of his or her base salary and/or commissions (if any), but not more than 50% of his or her base salary or commissions, and all or part of his or her eligible bonus (if any) or performance-based compensation (if any), in each case on a pre-tax basis. Such deferrals made by participants in the NDCP are at all times 100% vested. In addition, the Company and its participating subsidiaries and affiliates may, but are not required to, make matching or discretionary contributions to the accounts of participants in the NDCP. The matching or discretionary contributions (if any) made by the Company and/or its participating subsidiaries and affiliates may be subject to any vesting schedule determined by the Company when any such matching or discretionary contribution is made, but will vest in full upon a participant’s disability, death, separation from service due do retirement, or upon a “change in control” of the Company (as defined in the NDCP). The Company elected to make no matching or discretionary contributions during the fiscal year ended September 30, 2013.

The Company has a prior non-qualified deferred compensation plan; however, no employee contributions have been made to the prior plan since fiscal 1998.

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Purchased Intangible Assets (Narrative) (Details) (USD $)	12 Months Ended				12 Months Ended					3 Months Ended	12 Months Ended		3 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2013 Developed technology	Sep. 30, 2013 Customer relationships	Sep. 30, 2013 Other	Sep. 30, 2012 Chingis	Sep. 14, 2012 Chingis	Sep. 30, 2012 Si En	Sep. 30, 2011 Si En	Jan. 31, 2011 Si En	Sep. 30, 2012 Cost of sales Si En	Sep. 30, 2012 Operating expenses Si En
Acquired Indefinite-lived Intangible Assets [Line Items]
Additions to purchased intangible assets								$ 7,900,000			$ 11,600,000
Impairment of intangible assets	0	8,887,000	145,000							8,900,000			5,400,000	3,500,000
Weighted average useful life for intangibles (years)					4 years 10 months 8 days	4 years 11 months 15 days	1 year 11 months 15 days
In process research and development transferred to developed technology	400,000
Goodwill	9,178,000	9,178,000	9,463,000	1,301,000					3,976,000	3,900,000		8,162,000
Impairment	$ 0	$ 4,261,000	$ 0							$ 4,300,000

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Property, Equipment, and Leasehold Improvements, net (Schedule of Assets Leased) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Sep. 30, 2012
Property, Plant and Equipment [Line Items]
Buildings and improvements	$ 100,526	$ 79,799
Less accumulated depreciation	(54,022)	(50,513)
Total	46,504	29,286
Buildings and Improvements
Property, Plant and Equipment [Line Items]
Buildings and improvements	9,441	10,533
Less accumulated depreciation	(5,650)	(6,116)
Total	$ 3,791	$ 4,417

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Retirement Plan (Narrative) (Details) (USD $)	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Defined Benefit Plan Disclosure [Line Items]
Balance of vested benefits	$ 352,000	$ 45,000
Defined Contribution Plan, Maximum Annual Contribution Per Employee, Percent	75.00%
Defined Contribution Plan, Employer Matching Contribution, Percent of Match	50.00%
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	10.00%
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Amount	6,000
Defined Contribution Plan, Employers Matching Contribution, Annual Vesting Percentage	25.00%
Deferred Compensation Arrangement with Individual, Cash Awards Granted, Percentage	50.00%
Deferred Compensation Arrangement with Individual, Percentage Vested	100.00%
Scenario, Forecast
Defined Benefit Plan Disclosure [Line Items]
Expected contributions to be paid to the Benefit Plan during 2013	$ 43,000
Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure [Line Items]
Monthly contribution percentage of wages and salaries	2.00%
Defined Contribution Pension | Minimum
Defined Benefit Plan Disclosure [Line Items]
Company's contribution percentage of employees' wages and salaries (no less than 6%)	6.00%