About EZchip

EZchip is a fabless semiconductor company that provides Ethernet network processors for networking equipment.  EZchip provides its customers with solutions that scale from 1-Gigabit to 200-Gigabits per second with a common architecture and software across all products.  EZchip's network processors provide the flexibility and integration that enable triple-play data, voice and video services in systems that make up the new Carrier Ethernet networks.  Flexibility and integration make EZchip's solutions ideal for building systems for a wide range of applications in telecom networks, enterprise backbones and data centers.  For more information on our company, visit the web site at http://www.ezchip.com.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements are statements that are not historical facts and may include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance.  These statements are only predictions based on EZchip's current expectations and projections about future events.  There are important factors that could cause EZchip's actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements.  Those factors include, but are not limited to, the impact of general economic conditions, competitive products, product demand and market acceptance risks, customer order cancellations, reliance on key strategic alliances, fluctuations in operating results, delays in development of highly-complex products and other factors indicated in EZchip's filings with the Securities and Exchange Commission (SEC).  For more details, refer to EZchip's SEC filings and the amendments thereto, including its Annual Report on Form 20-F filed on March 31, 2011, as amended on September 27, 2011, and its Current Reports on Form 6-K. EZchip undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in our expectations, except as may be required by law.

EZchip Semiconductor Ltd.

Condensed Consolidated Statements of Operations

(U.S. Dollars in thousands, except per share amounts)

(Unaudited)

------------

 
                              Three Months Ended              Twelve Months Ended
                     --------------------------------------  -----------------------
                     December     September      December    December      December
                        31,           30,           31,         31,           31,
                       2011          2011          2010        2011          2010
                     ----------   ----------     ----------  ----------   ----------
 
    Revenues          $ 14,269      $ 18,703      $ 17,136    $ 63,457      $ 61,998
    Cost of
    revenues             3,386         4,509         4,461      14,409        15,668
    Amortization
    of purchased
    technology              --            --           453         597         1,915
    Repayment of
    OCS grants           9,938            --            --       9,938            --
                     ----------   ----------     ----------  ----------   ----------
    Gross profit           945        14,194        12,222      38,513        44,415
 
    Operating
    expenses:
    Research and
    development, net     4,352         4,052         3,577      16,695        13,665
    Selling,
    general and
    administrative       3,097         2,956         2,617      12,059        10,001
                     ----------   ----------     ----------  ----------   ----------
    Total
    operating                                                
    expenses             7,449         7,008         6,194      28,754        23,666 

                     ----------   ----------     ----------  ----------   ----------
    Operating    
    income (loss)       (6,504)        7,186         6,028       9,759        20,749
    Financial
    income, net            551           467           312       1,713         1,130
                     ----------   ----------     ----------  ----------   ----------
    Income (loss)
    before taxes       (5,953)         7,653         6,340      11,472        21,879
 
       Taxes  on                  
        income                                    --                        (3)              (2,314)          (3,530)              (8,236)
        Net  income              ----------      -----------        ----------    ----------      -----------
        (loss)                      $  (5,953)              $  7,650              $  4,026          $  7,942            $  13,643
                                          ==========      ===========        ==========    ==========      ===========
  
        Net  income
        (loss)  per
        share:
        Basic                          $  (0.22)                $  0.28                $  0.16            $  0.30                $  0.54
        Diluted                      $  (0.22)                $  0.27                $  0.15            $  0.28                $  0.52

        Weighted
        average  shares
        used  in  per
        share  calculation:
                  
        Basic                      27,015,478        26,900,439        25,877,546    26,681,749        25,281,651
                      
        Diluted                  27,015,478        28,046,688        27,130,392    28,001,428        26,110,132

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