Touch screen market will continue to grow strongly in 2011

We believe that touch screens will continue to grow strongly in 2011, with some predicting that touch-screen handset shipments will reach 300 million units. Some of this increase will come from the introduction of low-cost mobile phones using touch screens, because consumers are eager to touch screens, and manufacturers will provide more touch-screen-enabled mobile phones to meet this demand.

The main development trend of the touch screen market will be to add more features to the touch screen and support new consumer usage patterns. For example, support for 1mm stylus, hover and distance sensing capabilities will add new capabilities to mobile phones. Cypress is a leader in capacitive touch technology. It has advanced algorithms and technologies that can achieve unique features, and it has exceptional strength in areas such as noise suppression. We can also provide new solutions that can help drive growth.

As for the 2011 market growth prospects, most analysts believe that the growth rate is about 5%, some people are higher, some are lower. This is of course based on the rapid growth in 2010. But for us, Cypress’s outlook continues to be bright because of our strengths in touch services, PSoC solutions and emerging businesses. We expect the growth rate in 2011 will exceed the overall level of the industry.

We are eagerly looking forward to the arrival of 2011. Our 2010 performance was very strong and our touch product line has grown significantly. In 2011, we expect to continue to grow strongly in touch-related applications. Our TrueTouch touchscreen solution has been adopted by major OEMs in South Korea and other regions in 2010. We will introduce new solutions for handheld devices such as mobile phones, tablet PCs and notebook PCs. We expect to maintain this momentum. We also expect that our CapSense business will continue to grow as more high-volume products are switched to capacitive sensing technology.

In addition, we are also excited about the PSoC3 and PSoC5 products. Our design business is very active and it is expected that it will begin to generate considerable revenue in 2011. These products have excellent programmable analog accuracy and flexible digital logic, thus providing customers with a clear value proposition in a variety of applications. Our initial design business for PSoC3 and PSoC5 was three times that of PSoC1.

In addition, as a market leader in the SRAM field, we will continue to increase speed and density to meet the needs of high-performance network applications. Customers expect Cypress to provide the industry's most complete product portfolio and act as a stable source of supply.

Cypress is also among the best in the USB market, with wired and wireless low-speed USB for HIFD applications, and USB 2.0 solutions for handheld and PC peripherals. In 2011, we will launch our first USB 3.0 solution to provide high-definition video data transmission performance. As we did with USB 2.0, we will also provide customers with differentiated solutions and our patented West Bridge architecture based on superior flexibility.

We expect that our emerging businesses (such as AGIGA Tech's non-volatile memory, Trackpads for PCs and remote controls, and finger navigation) will have a good development next year.

Finally, we would like to thank our customers for their long-term trust and support. China is very important to Cypress and we promise to continue to work closely with Chinese customers to understand their challenges and help them introduce innovative new products to the market. We have invested a lot of money in China, and our employees have grown faster than Cypress’s business in other regions. We plan to continue this momentum in 2011.