M-Systems Introduces the First Multi-Sourced, Plug-and-Play, Bootable Embedded Flash Drive for Mobile and Consumer Electronics Devices.

SUNNYVALE, Calif. -- DOC H3 with Built-in TrueFFS(R) Flash Management Software Makes Integrating the Latest NAND Technologies from Any Vendor Virtually as Simple as Plugging a Hard Drive into a Personal Computer

M-Systems (Nasdaq:FLSH), an industry leader and innovator of flash-based data storage devices, today announced DOC H3 - its next generation Embedded Flash Drive (EFD) based on DiskOnChip(R) architecture.

DOC H3 solves complex NAND media issues allowing for a quick integration of the latest and most cost-effective NAND flash media into mobile handsets and consumer electronics devices. DOC H3 offers boot capabilities and allows for a faster time to market from inception to production, crucial for today's demanding product design cycles. DOC H3 is most suitable for memory-hungry devices such as multimedia mobile handsets, digital music players, GPS devices, portable media players and car infotainment systems.

DOC H3 features an advanced controller with Execute in Place (XIP) boot capabilities and a built-in version of M-Systems' patented TrueFFS(R) flash management software running internally as firmware from within the device. The result is a plug-and-play storage device, which practically eliminates the inherent difficulties of raw NAND media integration, providing a standard, self-contained storage solution, requiring virtually zero software support.

"As NAND flash vendors continue to push higher densities at lower costs, they are breaking compatibility with legacy NAND devices. As a result, OEMs can be limited to relatively older NAND devices while the newer, more cost-effective flash devices are not supported by popular chipsets without additional firmware or other modifications," said Joseph Unsworth, semiconductor memory senior analyst for Gartner. "The ability to have a simple, self-contained solution that is interoperable with the latest NAND flash devices from several sources will prove attractive to OEMs to satisfy their data storage needs while providing the reliability inherent to NOR flash."

"As penetration of embedded flash drives into mainstream handsets and consumer electronics devices increases, they must offer a simple and stable interface to eliminate the need for massive investments in engineering and support, typical with NAND flash media implementation," said Dov Moran president and CEO of M-Systems. "DOC H3 answers these needs by providing an easy and standard integration process. In addition, M-Systems' strategic flash supply agreements enable access to cost-effective NAND flash media from multiple sources, thus enabling us to overcome possible supply chain risks."

M-Systems' strategic flash supply agreements enable utilization of the most advantageous flash technologies available per given density. In addition, the advanced controller design and built-in TrueFFS flash management technology improve on the basic capabilities of raw flash media, offering low power consumption, superior performance and strong security features.

"The new DiskOnChip H3 architecture enriches the ecosystem we are building for our customers by making integration and testing of the latest raw flash technologies with TI's family of OMAP processors and OMAP-Vox solutions virtually effortless," said Markus Tremmel worldwide manager of Texas Instruments' Cellular Systems Ecosystem. "It will help our customers focus their efforts on making superior products, faster."

Engineering samples of DOC H3 will be available in the first quarter of 2006, with availability for mass production planned for the second quarter. It will be available in densities of 128 Megabytes (1Gbit) to 2 Gigabytes (16Gbit), in 9x12 and 12x18 FBGA packages and will have the capability to work in 1.8V and 3.3V.

About M-Systems

M-Systems develops, manufactures and markets innovative flash-based data storage solutions for consumer electronics and embedded markets. The Company targets the fast growing multimedia mobile handset market with its DiskOnChip(R) and MegaSIM(TM) products and the popular USB flash drive market with its DiskOnKey(R) product. More information about M-Systems is available online at www.m-systems.com.

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This press release includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties which may cause actual results to vary significantly. These risks include, but are not limited to: the effect of global economic conditions in general and conditions in M-Systems' industry and target markets in particular, shifts in supply and demand, market acceptance, the impact of competitive products and pricing, product development, commercialization and technological difficulties, and capacity and supply constraints including dependence on flash component suppliers; changes in M-Systems' and its customers' inventory levels and inventory valuations; timely product and technology development/upgrades and the ability to manage changes in market conditions as needed; market acceptance of new products and continuing product demand; the impact of competitive products and pricing on M-Systems' and its customers' products and markets; the development, release and sale of new products by strategic suppliers and customers; the development and growth of anticipated markets for M-Systems' and its customers' products; and other risk factors detailed from time to time in M-Systems' filings with the Securities and Exchange Commission. M-Systems assumes no obligation to update the information in this press release and disclaims any obligation to publicly update or revise any such forward-looking statements to reflect any change in its expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements. Reference to M-Systems' website above does not constitute incorporation of any of the information thereon into this press release.