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Diodes Reports Q3

DALLAS — Diodes Incorporated (Nasdaq: DIOD), a leading global manufacturer and supplier of high-quality application specific standard products within the broad discrete, logic and analog semiconductor markets, today reported financial results for the third quarter ended September 30, 2010.

Third Quarter Highlights

• Achieved sixth consecutive quarter of sequential revenue growth;

• Revenue was a record $163.1 million, an increase of 33.6 percent over the $122.1 million in the third quarter of 2009 and a sequential increase of 9.4 percent over the $149.2 million in the second quarter of 2010;

• Gross profit was a record $61.0 million, an increase of 62.2 percent over the $37.6 million in the third quarter of 2009 and a sequential increase of 14.0 percent over the $53.5 million in the second quarter of 2010;

• Gross margin was a record 37.4 percent, compared to 30.8 percent in the third quarter of 2009 and 35.8 percent in the second quarter of 2010;

• Income before income taxes and noncontrolling interest was a record $27.4 million, compared to $7.2 million in the third quarter of 2009 and $20.6 million in the second quarter of 2010;

• GAAP net income was a record $21.2 million, or $0.46 per diluted share, compared to $7.0 million, or $0.16 per diluted share, in the third quarter of 2009 and $16.6 million, or $0.37 per diluted share, in the second quarter of 2010;

• Non-GAAP adjusted net income was $23.2 million, or $0.51 per diluted share, compared to $9.1 million, or $0.21 per diluted share, in the third quarter of 2009 and $18.7 million, or $0.41 per diluted share, in the second quarter of 2010;

• Excluding $2.1 million of share-based compensation expense, both GAAP and non-GAAP adjusted net income would have increased by $0.05 per diluted share; and

• Achieved $43.1 million cash flow from operations, $18.2 million net cash flow and $17.8 million free cash flow.

Revenue for the third quarter of 2010 was a record $163.1 million, an increase of 33.6 percent over the $122.1 million in the third quarter of 2009 and a sequential increase of 9.4 percent over the $149.2 million in the second quarter of 2010. Revenue increased in the quarter due to strong demand for products across all of the Company’s worldwide markets. The successful capturing of Zetex product synergies has allowed the Company to take advantage of European and North American market strength, which has resulted in higher revenue growth in those regions.

Gross profit for the third quarter of 2010 was a record $61.0 million, an increase of 62.2 percent over the $37.6 million in the third quarter of 2009 and a sequential increase of 14.0 percent over the $53.5 million in the second quarter of 2010. Gross margin in the third quarter of 2010 was a record 37.4 percent, compared to 30.8 percent in the third quarter of 2009 and 35.8 percent in the second quarter of 2010. Gross margin improved in the quarter due to a favorable mix of higher margin products, generally stable ASP’s, another quarterly record of output at our packaging facilities and continued high utilization at the Company’s wafer fabs.

Commenting on the quarter, Dr. Keh-Shew Lu, President and Chief Executive Officer of Diodes Incorporated, stated, “The third quarter represents the Company’s sixth consecutive quarter of sequential revenue growth and was complemented by our achievement of record net income in the quarter. Over that time, we have consistently executed on our new product development plans and expanded our design wins, which have contributed to our market share gains at key customers and record results. Additionally, the capital investments that we made to expand capacity at our packaging facilities over the last twelve months have enabled us to achieve record output during this year. Although capacity remains tight, we have proactively shifted our product mix toward higher margin products to achieve the highest gross margin in the Company’s history. These results reflect Diodes’ continued commitment to grow faster than our addressable markets as we secure greater market share in key end-equipment, launch additional products in new markets and leverage our broadened product portfolio to maintain a higher level of design wins.”

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