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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0001178913-08-002490.txt : 20080924
<SEC-HEADER>0001178913-08-002490.hdr.sgml : 20080924
<ACCEPTANCE-DATETIME>20080924081910
ACCESSION NUMBER:		0001178913-08-002490
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20080924
FILED AS OF DATE:		20080924
DATE AS OF CHANGE:		20080924

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SILICOM LTD
		CENTRAL INDEX KEY:			0000916793
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-23288
		FILM NUMBER:		081085666

	BUSINESS ADDRESS:	
		STREET 1:		08 HANAGAR ST
		CITY:			KFAR-SAVA ISRAEL
		STATE:			L3
		ZIP:			44000
		BUSINESS PHONE:		97297644555

	MAIL ADDRESS:	
		STREET 1:		P.O.BOX 2164
		CITY:			KFAR-SAVA
		STATE:			L3
		ZIP:			44000
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>zk85836.htm
<TEXT>

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     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        F:\EDGAR Filing\Silicom Ltd\85836\a85836.eep                     -->
     <!-- Control Number: 85836                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=4>SECURITIES AND
EXCHANGE COMMISSION </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>WASHINGTON, D.C. 20549 </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=4>FORM 6-K </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>REPORT OF FOREIGN
PRIVATE ISSUER </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>PURSUANT TO RULE
13a-16 OR 15d-16 OF </font></h1>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>THE SECURITIES
EXCHANGE ACT OF 1934 </font></h1>

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<P Align=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><I>For the month of
September, 2008</I></B> </FONT> </p>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=5>SILICOM LTD. </font></h1>

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<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>(Translation of
Registrant&#146;s name into English) </font></p>

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<Hr Size=1 Noshade Width=15% Align=CENTER>

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<H1 Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=3>8 Hanagar St., P.O.Box
2164, Kfar-Sava 44425, Israel </font></h1>

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<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>(Address of Principal
Executive Offices) </font></p>

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<Hr Size=1 Noshade Width=15% Align=CENTER>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>Indicate by check mark whether the
registrant files or will file annual reports under cover of Form 20-F or Form 40-F: </font></p>

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<P Align=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Form 20-F</B> </FONT> <FONT FACE="Wingdings" SIZE="3">x </FONT>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Form 40-F</B> </FONT> <FONT FACE="Wingdings" SIZE="3">o </FONT>
</p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>Indicate by check mark whether the registrant
by furnishing the information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934: </font></p>

<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Workstation" -->
<P Align=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Yes</B> </FONT> <FONT FACE="Wingdings" SIZE="3">o </FONT>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>No</B> </FONT> <FONT FACE="Wingdings" SIZE="3">x </FONT> </p>


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<P><Font Face="Times New Roman, Times, Serif" Size=2>On September 24, 2008 the Registrant
issued unaudited condensed interim consolidated financial statements as of June 30, 2008
and for the six months then ended. Attached hereto are the following exhibits: </font></p>

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<td Width=9%><Font Face="Times New Roman, Times, Serif" Size=2>Exhibit 99.1</font></td>
<td Width=3%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=83%><Font Face="Times New Roman, Times, Serif" Size=2>
Registrant&#146;s unaudited condensed interim consolidated financial statements as of
&nbsp; June 30, 2008 and for the six months then ended. </font></td>
</tr>
</table>
<br>


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<td Width=9%><Font Face="Times New Roman, Times, Serif" Size=2>Exhibit 99.2 </font></td>
<td Width=3%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=83%><Font Face="Times New Roman, Times, Serif" Size=2>Management's Discussion and Analysis of Financial Condition and Results of
                      Operations </font></td>
</tr>
</table>
<br>

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<font size=2></font></p>
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<P><Font Face="Times New Roman, Times, Serif" Size=2>This report on Form 6-K is
incorporated by reference into the Registrant&#146;s Registration Statement on Form F-3,
Registration Statement No. 333-143565. This report on Form 6-K is also incorporated by
reference into all other effective registration statements filed by the Registrant under
the Securities Act of 1933. </font></p>


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<P Align=CENTER><Font Face="Times New Roman, Times, Serif" Size=2>Signature </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized. </font></p>



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<td Width=10%><Font Face="Times New Roman, Times, Serif" Size=2></font></td>
<td Width=50%><Font Face="Times New Roman, Times, Serif" Size=2>SILICOM  Ltd.<Br>(Registrant)<Br>
<br>By: /s/ Eran Gilad<br>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
Eran Gilad<br>CFO</font></td>
</tr>
</table>
<br>



<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Dated: September
24<Sup>th</sup>, 2008 </font></p>


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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>exhibit_99-1.htm
<TEXT>
<HTML>
<HEAD>
     <!-- Created by EDGAR Ease Plus (EDGAR Ease+) -->
     <!-- Project:        F:\EDGAR Filing\Silicom Ltd\85836\a85836.eep                     -->
     <!-- Control Number: 85836                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
</HEAD>
<BODY>


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<P Align="Right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 99.1</B></U> </FONT> </P>


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<P Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>Silicom Ltd.</B> </FONT></p>

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<P Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>(An Israeli Corporation)<Br>and its Consolidated Subsidiary</B> </FONT></p>


<!-- MARKER FORMAT-SHEET="Head Sub 1 Left-TNR" FSL="Workstation" -->
<P Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>Unaudited Condensed Interim <Br>Consolidated Financial Statements</B> </FONT></p>

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<P Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>June 30, 2008</B> </FONT></p>


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<font size=2></font></p>
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<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli Corporation) and its Consolidated Subsidiary </font></p>


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<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Unaudited Condensed
Interim Consolidated Financial Statements as of June 30, 2008</B> </FONT>
</td>
</tr>
<tr Valign=TOP>
<td Width=100%><Hr Size=1 Noshade Width=100% Align=LEFT></td>
</tr>
</table>
<br>




<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Contents</B> </FONT></P>




<TABLE CELLPADDING=4 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1>Page</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=90% ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Unaudited Condensed Interim Consolidated Financial Statements:</B> </FONT></TD>
     <TD WIDTH=10% ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Unaudited Condensed Interim Consolidated Balance Sheets</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>2-3</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Unaudited Condensed Interim Consolidated Statements of Income</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>4</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Unaudited Condensed Interim Consolidated Statements of Changes in Shareholders' Equity</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>5</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Unaudited Condensed Interim Consolidated Statements of Cash Flows</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>6</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Notes to the Unaudited Condensed Interim Consolidated Financial Statements</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>7-8</FONT></TD></TR>
</TABLE>



<p align=center>
<font size=2>1</font></p>
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<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli Corporation) and its Consolidated Subsidiary </font></p>


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<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Unaudited Condensed
Interim Consolidated Balance Sheets at June 30, 2008</B> </FONT>
</td>
</tr>
<tr Valign=TOP>
<td Width=100%><Hr Size=1 Noshade Width=100% Align=LEFT></td>
</tr>
</table>
<br>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>June 30,<BR>
2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>December 31,<BR>
2007</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S. dollars<BR>
in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S. dollars<BR>
in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT>&nbsp;</TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="73%" Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Assets</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="9%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="9%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Current assets</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Cash and cash equivalents</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>9,613</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>14,216</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Marketable Securities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>6,129</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>3,516</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="Left" Colspan="7"><FONT FACE="Times New Roman" SIZE=2>Accounts receivables:</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;Trade, net</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>4,201</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6,545</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;Other</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>341</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>338</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Inventories</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>5,493</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>4,078</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Deferred taxes</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>262</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>73</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Total Current Assets</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>26,039</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>28,766</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Marketable Securities</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>21,799</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>15,210</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Assets held for employees' severance benefits</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,183</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>952</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Property, plant and equipment, net</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>931</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>675</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Other assets, net</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>35</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>39</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Total assets</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>49,987</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>45,642</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>


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<td Width=100%><Font Face="Times New Roman, Times, Serif" Size=2>The accompanying notes are an
integrated part of these unaudited condensed interim consolidated financial statements
 </font></td>
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<br>

<p align=center>
<font size=2>2</font></p>
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<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli Corporation)
and its Consolidated Subsidiary </font></p>

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<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Unaudited Condensed
Interim Consolidated Balance Sheets at June 30, 2008</B> </FONT>
</td>
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<td Width=100%><Hr Size=1 Noshade Width=100% Align=LEFT></td>
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<br>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>June 30,<BR>
2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>December 31,<BR>
2007</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S. dollars<BR>
in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S. dollars<BR>
in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="73%" Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Liabilities and shareholder's equity</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="9%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="9%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Current liabilities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Trade accounts payable</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>3,258</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,997</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Other accounts payable and accrued expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>2,106</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>1,715</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Total current liabilities</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>5,364</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>4,712</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Long-term liability</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Liability for employees' severance benefits</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>2,120</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,596</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Total liabilities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>7,484</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6,308</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="Left" Colspan="9"><FONT FACE="Times New Roman" SIZE="2"><B>Shareholders' Equity</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Share capital and additional paid in capital</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>32,857</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>31,747</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Treasury shares</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>(38</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2><B>)</B></FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(38</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2">) </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Retained earnings</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>9,684</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>7,625</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Total Shareholders' equity</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>42,503</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>39,334</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Total liabilities and shareholders equity</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>49,987</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>45,642</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>

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<td Width=100%><Font Face="Times New Roman, Times, Serif" Size=2>The accompanying notes are an
integrated part of these unaudited condensed interim consolidated financial statements.
 </font></td>
</tr>
</table>
<br>





<p align=center>
<font size=2>3</font></p>
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<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli Corporation)
and its Consolidated Subsidiary </font></p>


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<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Unaudited Condensed
Interim Consolidated Statements of Income for the Six-month period Ended June 30, 2008</B> </FONT>
</td>
</tr>
<tr Valign=TOP>
<td Width=100%><Hr Size=1 Noshade Width=100% Align=LEFT></td>
</tr>
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<br>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Three-month period<BR>
ended June 30,</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Six-month period<BR>
ended June 30,</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2007</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2007</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>U.S dollars in thousands<BR>
(Except for share and<BR>
per-share data)</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>U.S dollars in thousands<BR>
(Except for share and<BR>
per-share data)</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="53%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Sales</FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B> 5,172</B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2> 6,617</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B> 12,875</B> </FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="8%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2> 12,666</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Cost of sales</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>3,196</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>3,983</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>7,641</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>7,634</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Gross profit</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,976</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,634</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>5,234</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>5,032</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Operating Expenses</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Research and development costs</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>827</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>524</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,684</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,063</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Selling and marketing expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>629</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>382</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,173</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>782</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>General and administrative expenses</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>382</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>289</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>791</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>542</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Total operating expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>1,838</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>1,195</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>3,648</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2,387</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Operating income</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>138</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,439</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>1,586</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,645</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Financial income, net</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>262</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>283</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>509</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>352</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Income before income taxes</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>400</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,722</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>2,095</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,997</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Income tax expenses</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>77</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>153</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>36</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>183</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Net income</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>323</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,569</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>2,059</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,814</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Income per share</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Basic income per ordinary share</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>0.05</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>0.26</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>0.31</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>0.49</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Weighted average number of ordinary</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>shares used to compute basic income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>per-share (in thousands)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>6,688</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6,067</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>6,676</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>5,716</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Diluted income per ordinary share</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>0.05</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>0.25</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>0.30</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>0.47</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Weighted average number of ordinary</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>shares used to compute diluted income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>per-share (in thousands)</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>6,770</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6,328</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>6,777</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>5,951</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=3></TD></TR>
</TABLE>
<Br>







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<td Width=100%><Font Face="Times New Roman, Times, Serif" Size=2>The accompanying notes are an
integrated part of these unaudited consolidated condensed interim financial statements
 </font></td>
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<br>



<p align=center>
<font size=2>4</font></p>
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<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli Corporation)
and its Consolidated Subsidiary </font></p>


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<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Unaudited Condensed
Interim Consolidated Statements of Changes in Shareholders&#146; Equity</B> </FONT>
</td>
</tr>
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<td Width=100%><Hr Size=1 Noshade Width=100% Align=LEFT></td>
</tr>
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<br>






<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<Tr Valign="Bottom">
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="6"><FONT FACE="Times New Roman" SIZE=1>Ordinary shares</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1>Additional<BR>
paid-in<BR>
capital</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1>Treasury<BR>
shares</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1>Retained<BR>
earnings</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1>Total<BR>
shareholders'<BR>
equity</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<Tr Valign="Bottom">
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1>Number<BR>
of shares <sup> (1) </sup></FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <Th Colspan="15"><FONT FACE="Times New Roman" SIZE=1>US$ thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<Tr Valign="Bottom">
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom">
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<Tr Valign="Bottom">
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <Th Colspan="3"><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="43%" Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Balance at</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="6%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="6%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="6%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="6%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="6%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="6%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;December 31, 2006</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>5,198,629</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>16</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>11,858</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(38</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,345</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>13,181</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Changes during 2007</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Exercise of options</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>205,800</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>569</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>570</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Exercise of warrants</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>291,447</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,471</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2,472</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Issuance of shares and warrants <sup>(2)</sup></FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>875,000</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>2</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>16,778</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>16,780</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Share-based compensation</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>51</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>51</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Net income</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>6,280</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>6,280</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr>
     <Td Colspan="3"></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="Left" Colspan="19"><FONT FACE="Times New Roman" SIZE="2"><B>Balance at</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;December 31, 2007</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>6,570,876</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>20</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>31,727</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(38</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>7,625</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>39,334</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr>
     <Td Colspan="3"></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="Left" Colspan="19"><FONT FACE="Times New Roman" SIZE="2"><B>Changes during Six-month</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="Left" Colspan="19"><FONT FACE="Times New Roman" SIZE="2"><B>period Ended June 30, 2008</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2">Exercise of options</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>8,700</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>38</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>38</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2">Exercise of warrants </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>108,487</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>926</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>926</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2">Share-based compensation</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>146</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>146</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Net income</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>2,059</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>2,059</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr>
     <Td Colspan="3"></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=1></TD><Td></TD></TR>
<Tr Valign="Bottom">
     <Td Align="Left" Colspan="19"><FONT FACE="Times New Roman" SIZE="2"><B>Balance at</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;June 30, 2008</B> </FONT> </TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>6,688,063</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>20</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>32,837</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>(38</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>9,684</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>42,503</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD></TR>
<Tr>
     <Td Colspan="3"></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD>
     <Td Colspan="2" Align="RIGHT"><HR NOSHADE COLOR=#808080 SIZE=3></TD><Td></TD></TR>
</TABLE>
<Br>





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<P><Font Face="Times New Roman, Times, Serif" Size=2><Sup> (1) </sup> Net
of 14,971 shares held by the subsidiary <Br><Sup> (2) </sup> Net of issuance cost
of US$ 1,192 thousands  </font></p>


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<td Width=100%><Font Face="Times New Roman, Times, Serif" Size=2>The accompanying notes are an
integrated part of these unaudited condensed interim consolidated financial statements
 </font></td>
</tr>
</table>
<br>






<p align=center>
<font size=2>5</font></p>
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<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
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<P Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Silicom Ltd. (An Israeli Corporation)
and its Consolidated Subsidiary </font></p>


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<td Width=100%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Unaudited Condensed
Interim Consolidated Statements of Cash Flows for the Six-month period Ended June 30, 2008</B> </FONT>
</td>
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<td Width=100%><Hr Size=1 Noshade Width=100% Align=LEFT></td>
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</table>
<br>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Six-month period<BR>
ended<BR>
June 30, 2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>Six-month<BR>
period ended<BR>
June 30, 2007</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S$ in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>U.S$ in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="73%" Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Cash flows from operating activities</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="9%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="9%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2></FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Net Income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>2,059</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2,814</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="Left" Colspan="7"><FONT FACE="Times New Roman" SIZE="2"><B><U>Adjustments required to reconcile net income to net cash</U></B> </FONT> </TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="Left" Colspan="7"><FONT FACE="Times New Roman" SIZE="2"><B><U>&nbsp;provided by operating activities:</U></B> </FONT> </TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Depreciation and amortization</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>207</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>109</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Liability for Employees' severance benefits, net</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>293</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>126</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Expenses (income) from marketable securities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>2</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(131</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Share based compensation expense</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>146</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>26</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Deferred tax assets</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>(189</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(17</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Accounts receivable - trade</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>2,344</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(904</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Accounts receivable - other</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>(3</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(420</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Inventories</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>(1,415</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(2,327</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Trade accounts payable</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>261</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>1,729</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Other accounts payable and accrued expenses</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>391</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>129</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Capital gains from sales of property, plant and equipment</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>(12</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT> </TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Net cash provided by operating activities</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>4,084</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,134</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Cash flows from investing activities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Purchase of property, plant and equipment</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>(460</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(221</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Proceeds from sales of property, plant and equipment</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>13</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>-</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Proceeds from maturity of marketable securities</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>3,200</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>1,000</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Purchase of marketable securities</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>(12,404</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>(11,933</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Net cash used in investing activities</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>(9,651</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>(11,154</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Cash flows from financing activities</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom Bgcolor="#cceeff">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Issuance of shares and option certificates, net of issuance cost</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>-</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>16,763</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Exercise of options and warrants</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>964</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2,509</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Net cash provided by financing activities</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>964</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>19,272</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Increase (decrease) in cash and cash equivalents</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>(4,603</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>)</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>9,252</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Cash and cash equivalents at beginning of period</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>14,216</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>4,513</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Cash and cash equivalents at end of period</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>9,613</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>13,765</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="Left" Colspan="7"><FONT FACE="Times New Roman" SIZE="2"><B>Supplementary disclosure of cash flow information:</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;Cash paid during the year for:</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;Financing expenses</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE="2"><B>48</B> </FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>19</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;Taxes on income</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE="2"><B>37</B> </FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>11</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>






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<td Width=100%><Font Face="Times New Roman, Times, Serif" Size=2>The accompanying notes are an
integrated part of these unaudited condensed interim consolidated financial statements
 </font></td>
</tr>
</table>
<br>




<p align=center>
<font size=2>6</font></p>
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<HR SIZE="4" NOSHADE  STYLE="margin-top: -10px">
<Page>


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<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=3>Silicom Ltd. and its
Consolidated Subsidiary <Br>Notes to the Unaudited Condensed Interim Consolidated Financial Statements</font></h1>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Note 1 &#150; General</B> </FONT> </p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2><B>A. Description of Business</b> <Br><Br>Silicom
Ltd. is           an Israeli corporation engaged in designing, manufacturing, marketing
and           supporting server networking solutions for a broad range of servers and
server           based systems. It also offers a broad range of its traditional PC cards,
PCI           cards and USB products.  </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>The Company&#146;s shares have been
traded in the United States on the National Association of Securities Dealers Automated
Quotation System (&#147;NASDAQ&#148;), since February 1994 and in Israel on the Tel Aviv
Stock Exchange (&#147;TASE&#148;), since December 2005. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>Silicom markets its products
directly, through (i) Original Equipment Manufacturers (&#147;OEMs&#148;) which sell the
Company&#146;s connectivity products under their own private labels or incorporate the
Company&#146;s products into their products, (ii)&nbsp;a worldwide network of independent
distributors and (iii) its US-based subsidiary. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>In these Interim financial statements
the terms &#147;Company&#148; or &#147;Silicom&#148; refer to Silicom Ltd. and its wholly
owned subsidiary, Silicom Connectivity Solutions, Inc., whereas the term
&#147;subsidiary&#148; refers to Silicom Connectivity Solutions, Inc., a wholly owned
subsidiary of Silicom Ltd. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2><B>B. Basis of Presentation </b><Br><Br> The
accompanying           condensed interim consolidated financial statements have been
prepared in           accordance with generally accepted accounting principles in the
United States           for interim financial information and contain all adjustments
(consisting only           of normal recurring adjustments) which, in the opinion of
management, are           necessary to present fairly the financial information included
therein. It is           suggested that these financial statements be read in conjunction
with the           audited consolidated financial statements and related notes included
in the           Company&#146;s Annual Report on Form 20-F for the year ended December
31, 2007.           Results for the interim period presented are not necessarily
indicative of the           results to be expected for the full year.  </font></p>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Note 2 &#150; Significant Accounting
Policies</B> </FONT> </p>

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<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Use of Estimates and
Assumptions </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>The preparation of the Condensed
Interim Consolidated financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the Condensed Interim Consolidated
financial statements, and the reported amounts of revenue and expenses during the
reporting years. Actual results may vary from these estimates. </font></p>


<p align=center>
<font size=2>7</font></p>
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<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Note 3 &#150; Inventories </font></h1>






<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>June 30, 2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>December 31, 2007</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>US$ in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>US$ in thousands</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <Th> </th>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="5%"> </td>
     <Td Width="66%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Raw materials and components</FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><Td Width="10%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2> 3,129</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><Td Width="10%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2> 1,585</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Work in progress</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2> 2,249</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2> 2,402</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td> </td>
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>Finished goods</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>   115</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>    91</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <Td> </td>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2> 5,493</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>$</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2> 4,078</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <Td> </td>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#808080 SIZE=3></TD><TD></TD></TR>
</TABLE>
<Br>






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<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Note 4 &#150; Events in the current period </font></h1>

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<td Width=5%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>A.</B> </FONT> </td>
<td Width=95%><Font Face="Times New Roman, Times, Serif" Size=2>In
January 2008, approximately 108 thousand stock option certificates (Series
               1), which were due to expire on January 31, 2008, were exercised. As a
result,                net proceeds to the Company were approximately US$ 900 thousand. </font></td>
</tr>
</table>
<br>

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<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
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<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2><B>B.</b></font></td>
<td Width=95%><Font Face="Times New Roman, Times, Serif" Size=2>On
January 24, 2008 the Company granted, in the aggregate, 200,000 options to
               certain of its directors and employees under its Share Option Plan (2004)
and US                Share Option Plan (2000). In relation to this grant: </font></td>
</tr>
</table>
<br>

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<tr Valign=TOP>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;</font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>1. </font></td>
<td Width=90%><Font Face="Times New Roman, Times, Serif" Size=2>The
exercise price for the options (per ordinary share) was $US 11.20 and the
               Option Expiration Date was the earlier to occur of: (a) January 24, 2016;
and                (b) the closing price of the Shares falling below $US 5.60 at any time
after the                Date of Grant. </font></td>
</tr>
</table>
<br>

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<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;</font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>2. </font></td>
<td Width=90%><Font Face="Times New Roman, Times, Serif" Size=2>The
Company recognizes compensation expense based on estimated grant date fair
               value using the Monte Carlo option-pricing model with the following
assumptions: </font></td>
</tr>
</table>
<br>

<Table Cellpadding="0" Cellspacing="0" Border="1" Width="600" Align="Center">
<TR VALIGN=Bottom>
     <TD WIDTH=70% ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Average Risk-free interest rate&nbsp;<sup>(1)</sup></FONT></TD>
     <TD WIDTH=30% ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>3.36%</FONT></TD></TR>
<TR VALIGN=Bottom>

     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Expected dividend yield</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>0.0%</FONT></TD></TR>
<TR VALIGN=Bottom>

     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Average expected volatility&nbsp;<sup>(2)</sup></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>116.24%</FONT></TD></TR>
<TR VALIGN=Bottom>

     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>Weighted average expected life</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman" SIZE=2>2.5 Years</FONT></TD></TR>
</TABLE>
<Br>




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<td Width=10%><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;</font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2><Sup>(1) </sup></font></td>
<td Width=85%><Font Face="Times New Roman, Times, Serif" Size=2>Risk-free
interest rate represents risk free US$ zero coupon Government Bonds at
                    time of grant.  </font></td>
</tr>
</table>
<br>


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<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=10%><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;</font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2><Sup>(2)</sup> </font></td>
<td Width=85%><Font Face="Times New Roman, Times, Serif" Size=2>Expected
average volatility represents a weighted average standard deviation
                    rate for the price of the Company&#146;s ordinary shares on the
NASDAQ National                     Market.  </font></td>
</tr>
</table>
<br>

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<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;</font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>3. </font></td>
<td Width=90%><Font Face="Times New Roman, Times, Serif" Size=2>Expenses
incurred during the six months ended June 30, 2008 in relation to this
               grant were approximately $140 thousand. As at June 30, 2008, there was
               approximately US$ 617 thousand of unrecognized compensation costs related
to                this grant to be recognized over a weighted average period of 2.06
years. </font></td>
</tr>
</table>
<br>

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<Table Width=100% Cellpadding=0 Cellspacing=0 Border=0>
<tr Valign=TOP>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>&nbsp;</font></td>
<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2>4. </font></td>
<td Width=90%><Font Face="Times New Roman, Times, Serif" Size=2>All
of these options expired by their terms on July 30, 2008 without exercise. </font></td>
</tr>
</table>
<br>

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<td Width=5%><Font Face="Times New Roman, Times, Serif" Size=2><B>C.</b></font></td>
<td Width=95%><Font Face="Times New Roman, Times, Serif" Size=2>Since
February 11, 2008, the Company&#146;s shares have been traded on the           NASDAQ
Global Market (prior thereto they were traded on the NASDAQ Capital           Market). </font></td>
</tr>
</table>
<br>



<p align=center>
<font size=2>8</font></p>
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<TYPE>EX-99
<SEQUENCE>3
<FILENAME>exhibit_99-2.htm
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     <!-- Project:        F:\EDGAR Filing\Silicom Ltd\85836\a85836.eep                     -->
     <!-- Control Number: 85836                                                            -->
     <!-- Rev Number:     1                                                                -->
     <!-- Client Name:    Silicom Ltd                                                      -->
     <!-- Project Name:   6-K                                                              -->
     <!-- Firm Name:      Zadok-Keinan Ltd                                                 -->
     <TITLE>6-K</TITLE>
</HEAD>
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<P Align="Right"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B>Exhibit 99.2</B></U> </FONT> </P>



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<P Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL</B> </FONT></p>

<!-- MARKER FORMAT-SHEET="Head Sub 1 Left-TNR" FSL="Workstation" -->
<P Align="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>CONDITION
AND RESULTS OF OPERATIONS</B> </FONT></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>THE INFORMATION CONTAINED IN THIS
SECTION SHOULD BE READ IN CONJUNCTION WITH (1) OUR UNAUDITED CONDENSED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2008 AND FOR THE SIX MONTHS THEN ENDED
AND RELATED NOTES INCLUDED IN THIS REPORT AND (2) OUR AUDITED CONSOLIDATED FINANCIAL
STATEMENTS AND RELATED NOTES INCLUDED IN OUR ANNUAL REPORT ON FORM 20-F FOR THE YEAR ENDED
DECEMBER 31, 2007 AND THE OTHER INFORMATION CONTAINED IN SUCH ANNUAL REPORT AND (3) OUR
REPORT OF FORM 6-K, FILED JULY 28, 2008. </font></p>

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<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Results of Operations </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>The following table sets forth
certain statement of operations data as a percentage of total sales for the periods
indicated. </font></p>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT FACE="Times New Roman" SIZE=1>Six Months Ended<BR>
June 30,</FONT><HR WIDTH=98% SIZE=1 COLOR=BLACK NOSHADE></TH>
</TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2007</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>2008</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT FACE="Times New Roman" SIZE=1>&nbsp;</FONT></TH></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Width="73%" Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Sales</B> </FONT></TD>
     <Td Width="1%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="9%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>100</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD>
     <Td Width="1%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Width="9%" Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>100</FONT></TD>
        <Td Width="2%" Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>%</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Cost of sales</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>60.27</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>59.35</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Gross profit</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>39.73</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>40.65</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Research and development costs</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>8.39</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>13.08</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Selling and marketing expenses</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>6.18</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>9.11</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>General and administrative expenses</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>4.28</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>6.14</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Operating Income</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>20.88</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>12.32</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Financial income, net</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>2.78</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>3.95</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Income before income taxes</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>23.66</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>16.27</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>Income tax expenses</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>1.44</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT FACE="Times New Roman" SIZE=2>0.28</FONT></TD>
        <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE="2"><B>&nbsp;</B> </FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
<Tr Valign="Bottom" Bgcolor="#cceeff">
     <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE="2"><B>Net Income</B> </FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>22.22</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD>
     <Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD><Td Align="RIGHT"><FONT FACE="Times New Roman" SIZE=2>15.99</FONT></TD>
        <Td Align="LEFT"><FONT FACE="Times New Roman" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>
<Br>


<p align=center>
<font size=2></font></p>
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<Page>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Sales in the six months ended June
30, 2008 increased by 1.7% to $12,875 thousand compared to $12,666 thousand in the six
months ended June 30, 2007. Sales in the three months ended March 31, 2008 were $7,703
thousand. Sales in the three months ended June 30, 2008 were $5,172 thousand, a 21.8%
decrease compared to sales in the three months ended June 30, 2007. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Gross profit in the six months ended
June 30, 2008 was $5,234 thousand compared to $5,032 thousand in the six months ended June
30, 2008. Gross profit as a percentage of sales in the six months ended June 30, 2008 was
40.7%, compared to 39.7% in the six months ended June 30, 2007. Our gross profit is
largely dependent on the mix of products we sell during a specific period. The slightly
higher gross profit percentage in the six months ended June 30, 2008 was primarily a
result of such a change to the mix of sold products. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>Research and development expenses,
gross, in the six months ended June 30, 2008 increased by 58.4% to $1,684 thousand
compared to $1,063 thousand in the six months ended June 30, 2007. This increase was
mainly attributed to a continued weakening of the US Dollar against the New Israeli Shekel
(a significant portion of our Research and development expenses are incurred in New
Israeli Shekels) and to our continued investment in new product development, enhancements
to existing products, and the development of new networking and connectivity technologies. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Selling and marketing expenses in the
six months ended June 30, 2008 increased by 50.0% to $1,173 thousand compared to $782
thousand in the six months ended June 30, 2007, mainly due to a continued weakening of the
US Dollar against the New Israeli Shekel (a significant portion of our selling and
marketing expenses are incurred in New Israeli Shekels) and to our continued investment in
the promotion of our server networking products. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>General and administrative expenses
in the six months ended June 30, 2008 increased by 45.9% to $791 thousand compared to $542
thousand in the six months ended June 30, 2007, primarily due to a continued weakening of
the US Dollar against the New Israeli Shekel (a significant portion of our General and
administrative expenses are incurred in New Israeli Shekels). </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Financial income in the six months
ended June 30, 2008 increased by 44.6% to $509 thousand compared to $352 thousand in the
six months ended June 30, 2007. The increase was primarily a result of an increase in
funds available for investments. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>In the six months ended June 30, 2008
we recorded current income tax expenses of $225 thousand and deferred income tax of $189
thousand, compared to $200 thousand income tax expenses and deferred income tax of $17
thousand in the six months ended June 30, 2007. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>In the six months ended June 30, 2008
we recorded net income of $2,059 thousand compared to net income of $2,814 thousand in the
six months ended June 30, 2007 , a 26.8% decrease, despite comparable sales in the
respective periods. This decrease was mainly due to the increase in our operational
expenses as described above. </font></p>

<p align=center>
<font size=2>2</font></p>
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<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Impact of Inflation and
Currency Fluctuations on Results of Operations, Liabilities and Assets </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>Since the majority of our revenues
are denominated and paid in U.S. dollars, we believe that inflation and fluctuations in
the U.S. dollar exchange rate have no material effect on our revenue. Inflation in Israel
and the Israeli currency as well as U.S. dollar exchange rate fluctuations, may however,
have an effect on our expenses and, as a result, on our net income/loss. The cost of our
Israeli operations, as expressed in U.S. dollars, is influenced by the extent to which any
change in the rate of inflation in Israel is not offset (or is offset on a lagging basis)
by the change in valuation of the NIS in relation to the U.S. dollar. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>We do not presently engage in any
hedging or other transactions intended to manage the risks relating to foreign currency
exchange rate or interest rate fluctuations. However, we may in the future undertake such
transactions, if management determines that it is necessary to offset such risks. </font></p>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Workstation" -->
<H1 Align=LEFT><Font Face="Times New Roman, Times, Serif" Size=2>Liquidity and Capital
Resources </font></h1>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>As of June 30, 2008, we had working
capital of $20,675 thousand and our current ratio (current assets to current liabilities)
was 4.85. Cash and cash equivalents as of June 30, 2008 decreased by $4,603 thousand to
$9,613 thousand compared with $14,216 thousand as of December 31, 2007. Short-term
marketable securities increased by $2,613 thousand and long-term marketable securities
increased by $6,589 thousand. The net increase of $4,559 thousand in these three balance
sheet items in the six months ended June 30, 2008 was mainly due to the net cash provided
by operating activities, and to the exercise of warrants. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Trade receivables decreased to $4,201
thousand as of June 30, 2008 from $6,545 thousand as of December 31, 2007, mainly due to
the decrease in sales in the second quarter of 2008, as compared to sales in the fourth
quarter of 2007. Other receivables increased from $338 thousand to $341 thousand. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>Trade payables increased from $2,997
thousand at the end of 2007 to $3,258 thousand at June 30, 2008. Other payables and
accrued liabilities increased from $1,715 thousand at the end of 2007 to $2,106 thousand
at June 30, 2008. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>Cash provided by operating activities
in the six months ended June 30, 2008 amounted to $4,084 thousand compared to cash
provided by operating activities in the amount of $1,134 thousand in the six months ended
June 30, 2007. The cash provided by operating activities in the six months ended June 30,
2008 was the result of our positive operating income. </font></p>

<p align=center>
<font size=2>3</font></p>
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<P><Font Face="Times New Roman, Times, Serif" Size=2>Inventories increased from $4,078
thousand at the end of 2007 to $5,493 thousand as of June 30, 2008. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>Capital expenditures on property and
equipment in the six months ended June 30, 2008 were $460 thousand compared with $221
thousand in the six months ended June 30, 2007, mainly due to the fact that in the six
months ended June 30, 2008 we increased investment in development and testing tools for
our new product lines of server networking cards, and due to the upgrading of our IT
systems. </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>In January 2006, we completed an
offering and sale of 10,000 units in Israel, composed of 800,000 of our ordinary shares
and 400,000 warrants, pursuant to a prospectus filed with the Israeli Securities Authority
and TASE. The sale of units resulted in net proceeds of approximately $5.6 million. As of
January 31, 2008 (i.e. the expiration date of the warrants), 399,934 warrants were
exercised, of which approximately 108 thousand were exercised in January 2008, resulting
in additional net proceeds of approximately $3.5 million in the aggregate (approximately
$900 thousand for the month of January 2008). </font></p>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Workstation" -->
<P><Font Face="Times New Roman, Times, Serif" Size=2>In May 2007, we conducted a private
placement, pursuant to which we issued to certain &#147;accredited investors&#148; and
&#147;qualified institutional purchasers&#148; 875,000 ordinary shares at a purchase price
of $20.50 per share and warrants to purchase up to 218,750 ordinary shares at an exercise
price of $28.25 per share. The warrants issued to the investors will expire in July 2010.
Net proceeds from the private placement were approximately $16.7 million, net of $1.2
million of issuance costs. We issued to the placement agents warrants to purchase up to an
aggregate of 10,937 ordinary shares on the same terms as the warrants issued to the
investors. </font></p>

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<P><Font Face="Times New Roman, Times, Serif" Size=2>We have cash and cash equivalents
that we believe are sufficient for our present requirements. </font></p>


<p align=center>
<font size=2>4</font></p>
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