Monolithic Power Systems, Inc. Announces Financial Results for First Fiscal Quarter of 2006

May 4 2006

Monolithic Power Systems, Inc. (MPS) (Nasdaq: MPWR), a leading fabless manufacturer of high- performance analog and mixed-signal semiconductors, today announced its financial results for the first quarter ended March 31, 2006:

* Net revenues of $24.8 million, up 69% from $14.6 million for the same

quarter of 2005

* Gross margin of 62.1%, compared with 62.1% for the same quarter of 2005

* GAAP operating expenses of $16.6 million, including $10.0 million for

research and development, selling, general and administrative; $4.1

million for patent litigation; $2.5 million for stock-based

compensation

* Non-GAAP(1) operating expenses of $14.0 million, excluding $2.5 million

for stock-based compensation

* GAAP net loss of $408,000, or ($0.01) per diluted share, compared

with a GAAP net loss of $1.4 million, or ($0.05) per diluted share, for

the same quarter of 2005

* Non-GAAP(1) net income of $2.2 million, or $0.07 per diluted share,

compared with non-GAAP net income of $0.2 million, or $0.01 per diluted

share, for the same quarter of 2005

* Cash, cash equivalents, restricted cash and investments of $68.2

million, compared with $66.8 million at December 31, 2005.

"We are pleased to have achieved 69% revenue growth year over year," said MPS Chief Executive Officer Michael Hsing. "Our DC to DC product family grew 125% year over year, reflecting very positive market acceptance of our power management solutions. In the first quarter, we also qualified our new BCD Plus(TM) process technology, which enables higher current density and increased switching frequencies using a smaller die size. We believe that this technology provides a competitive advantage that will allow us to address additional networking and high-volume consumer applications."

Business Outlook

The following are MPS' financial targets for the second quarter ending June 30, 2006:

* Net revenues in the range of approximately $25 million to $27 million

* Gross margin in the middle of our target range of 58% to 63%

* Non-GAAP operating expense between $8.75 million and $9.50 million,

which excludes an estimate of litigation expense in the range of $2.5

million to $3.5 million and excludes an estimate of stock-based

compensation expense in the range of $2.5 million to $3.0 million.

Conference Call

MPS plans to conduct a management teleconference covering first-quarter results at 2:00 p.m. PDT / 5:00 p.m. EDT today, May 1, 2006. Dial-in number: 719-457-2731, code number 4022372. The call will be webcast live and archived for all investors for one year on the MPS website at http://www.monolithicpower.com/cmp_02_inv_rel.htm. This press release and any other information related to the call will also be posted on the website at that location. In addition, a phone replay of the call will be available for seven days at 719-457-0820, code number 4022372.

(1) Non-GAAP net income and non-GAAP operating expenses differ from net income and operating expenses determined in accordance with GAAP (Generally Accepted Accounting Principles in the United States). A schedule reconciling these amounts is included in this news release. MPS' non-GAAP net income and non-GAAP operating expenses differ from GAAP net income and operating expenses in that the non-GAAP financial measures exclude stock-based compensation expense. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. MPS utilizes both GAAP and non-GAAP net income and operating expenses in assessing what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. MPS believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors' understanding of MPS' core operating results and trends. Additionally, MPS believes that the inclusion of non-GAAP measures, together with GAAP measures, provides investors with an additional dimension of comparability to similar companies. However, investors should be aware that non-GAAP financial measures utilized by other companies are not likely to be comparable in most cases to the non-GAAP financials measures used by MPS.

About MPS

Monolithic Power Systems, Inc. (MPS) develops and markets proprietary, advanced analog and mixed-signal semiconductors. The Company combines advanced process technology with its highly experienced analog designers to produce high-performance power management integrated circuits (ICs) for Cold Cathode Fluorescent Lamp (CCFL) backlight controllers, LED drivers, DC to DC converters, Class D audio amplifiers, and Linear ICs. MPS products are used extensively in computing and network communications products, LCD monitors and TVs, and a wide variety of consumer and portable electronics products. MPS partners with world-class manufacturing organizations to deliver top quality, ultra-compact, high-performance solutions through the most productive, cost- efficient channels. Founded in 1997 and headquartered in Los Gatos, California, the Company has expanded its global presence with offices in Taiwan, China, Korea, Japan, and Europe, which operate under MPS International, Ltd.

Safe Harbor Statement

This press release contains forward-looking statements regarding the company's targeted net revenues, gross margin, non-GAAP operating expenses and litigation expenses for the fiscal quarter ending June 30, 2006. These statements are not historical facts or guarantees of future performance or events, are based on current expectations, estimates, beliefs, assumptions, goals, and objectives, and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results expressed by these statements. Readers of this press release and listeners to the accompanying conference call are cautioned not to place undue reliance on any forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, the risks, uncertainties and costs of litigation in which the company is involved; the outcome of any upcoming trials, hearings, motions, and appeals; any interruptions in the company's schedule of new product development; adverse changes in government regulations in foreign countries where the company has offices; acceptance of, or demand for, the company's products being lower than expected; the adverse impact that excess inventory in the company's distribution channel would have on its financial performance; the adverse impact on the company's financial performance if its tax and litigation provisions are inadequate; difficulty in predicting or budgeting for future expenses and financial contingencies; and other important risk factors identified in the company's SEC filings, including, but not limited to, its Annual Report on Form 10-K filed on March 28, 2006.

The forward-looking statements in this press release represent MPS' targets, not predictions of actual performance. MPS assumes no obligation to update the information in this press release or in the accompanying conference call. Any statements by persons outside of MPS speculating on the progress of the quarter or other aspects of MPS' business are not based on internal MPS information and should be assessed accordingly by investors.

Trademarks

MPS, Monolithic Power Systems, the MPS logo and BCD Plus are trademarks of Monolithic Power Systems, Inc. in the U.S. and certain other countries.

Monolithic Power Systems, Inc.

CONDENSED CONSOLIDATED BALANCE SHEET

(in thousands, except per share amounts)

(unaudited)

Balance at Period Ended

March 31, December 31,

2006 2005

ASSETS

Current assets:

Cash and cash equivalents $25,938 $25,091

Investments 38,724 38,814

Accounts receivable, net 7,364 9,537

Inventories 8,543 6,165

Deferred income tax asset--current 3,774 3,671

Prepaid expenses and other current assets 1,751 1,501

Restricted assets--current 3,502 2,938

Total current assets 89,596 87,717

Property and equipment, net 9,480 6,238

Other assets 403 387

Restricted assets 6,514 6,433

TOTAL ASSETS $105,993 $100,775

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $10,655 $6,583

Accrued compensation and related benefits 2,273 2,974

Accrued income tax payable 645 2,913

Accrued liabilities 10,046 9,797

Total current liabilities 23,619 22,267

Deferred rent -- non-current 212 209

Deferred income tax liability 212 131

Total liabilities 24,043 22,607

Stockholders' equity:

Common stock 99,231 98,342

Deferred stock compensation (1,762) (4,544)

Notes receivable from stockholders -- (398)

Accumulated other comprehensive income (loss) (17) (138)

Accumulated deficit (15,502) (15,094)

Total stockholders' equity 81,950 78,168

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $105,993 $100,775

Monolithic Power Systems, Inc.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Three Months Ending

March 31, March 31,

2006 2005

Net Revenues $24,763 $14,637

Total cost of revenues 9,373 5,546

Gross profit 15,390 9,091

Gross profit % 62.1% 62.1%

Operating expenses:

Research and development 5,067 3,182

Selling, general and administrative 7,427 3,555

Patent litigation 4,064 4,498

Total operating expenses 16,558 11,235

Loss from operations (1,168) (2,144)

Other income (expense):

Interest income 599 372

Other expense (70) (41)

Total other income, net 529 331

Loss before income taxes (639) (1,813)

Income tax benefit (231) (430)

Net loss (408) (1,383)

Net loss attributable to common stockholders $(408) $(1,383)

Basic net loss per common share $(0.01) $(0.05)

Diluted net loss per common share $(0.01) $(0.05)

Shares used in basic net loss per common share 28,816 27,537

Shares used in diluted net loss per common share 28,816 27,537

Monolithic Power Systems, Inc.

NON-GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Three Months Ending

March 31, March 31,

2006 2005

Net Revenues $24,763 $14,639

Total cost of revenues 9,232 5,417

Gross profit 15,531 9,222

Gross profit % 62.7% 63.0%

Operating expenses:

Research and development 3,704 2,404

Selling, general and administrative 6,248 2,803

Patent litigation 4,064 4,498

Total operating expenses 14,016 9,705

Income (loss) from operations 1,515 (483)

Other income (expense):

Interest income 599 372

Other expense (70) (41)

Total other income, net 529 331

Income (loss) before income taxes 2,044 (152)

Income tax benefit (152) (356)

Net income 2,196 204

Net income attributable to common stockholders $2,196 $204

Basic net income per common share $0.08 $0.01

Diluted net income per common share $0.07 $0.01

Shares used in basic net income per common share 28,816 27,537

Shares used in diluted net income per common share 33,201 30,811

GAAP TO NON-GAAP RECONCILIATION

Three Months Ending

March 31, March 31,

2006 2005

Net Loss - GAAP Basis $(408) $(1,383)

Non-GAAP Adjustments for Stock-Based Compensation

Contra Revenues -- 2

Cost of Revenues 141 129

S,G&A 1,179 752

R&D 1,363 778

Tax effect of adjustments (79) (74)

Net Income - Non-GAAP Basis $2,196 $204