O2Micro(R) International Limited (Nasdaq:OIIM), a

leading supplier of innovative power management and security ICs,

reported its financial results today for the fourth quarter and the

fiscal year ended December 31, 2003.

Net sales for the fourth quarter were $25.2 million, a record high

quarter for O2Micro. Fourth quarter revenue of $25.2 million was an

increase of 9% over the preceding quarter, and 37% over the comparable

quarter of the prior year. Earnings per share for the fourth quarter,

fully diluted, were 13 cents per share, compared to 10 cents per share

in the preceding quarter and 6 cents per share in the comparable

quarter of the prior year.

Net income for the fourth quarter of $5,116,000 was an increase of

29% from the preceding quarter, and an increase of 138% from the

comparable quarter of the prior year. Fourth quarter R&D expenditures

were $4,619,000, a decrease of 5% over the preceding quarter, and 7%

from the comparable quarter of the prior year.

For the fiscal year ended December 31, 2003, total revenues were

$88.6 million, an increase of 26% from $70.2 million in fiscal year

2002. Earnings per share for the year ended December 31, 2003 were 33

cents fully diluted, compared to 27 cents for the previous year. Net

income was $13.2 million, compared to $10.7 million for the previous

year. R&D expenditures were $19.2 million, compared to $18.9 million

for the previous year, an increase of 1%.

"In Q4 we continued to grow revenue and market share in key

product areas," said Sterling Du, Chairman and CEO of O2Micro. "We

also focused on IP protection, an area that is key to our future

growth."

Conference Call: O2Micro will hold its fourth quarter conference

call today at 2:00 p.m. PST, 5:00 p.m. EST. You may participate by

dialing (800) 915-4836 or (973) 317-5319 (for International

participants), no passcode required. A replay of the call will be

available by phone until February 11th by dialing (800) 428-6051 or

(973) 709-2089 (for International participants), passcode #329728. A

live simulcast will also be available on the company website at

www.o2micro.com, and an online replay will be available on the site

for one week.

About O2Micro

Founded in April 1995, O2Micro designs, develops and markets

innovative power management and security components for mobile

communication, computer, information appliance, and LCD products.

Products include Intelligent Lighting, Battery Charger and Management,

DC/DC Converter, SmartCardBus(R) and 4-in-1 MemoryCardBus(TM) ICs.

O2Micro International maintains an extensive portfolio of

intellectual property with 1391 patent claims granted, and over 5000

more pending. The company maintains offices worldwide. Additional

company and product information can be found on the company website at

www.o2micro.com.

Statements made in this release that are not historical, including

statements regarding O2Micro's or management's intentions, hopes,

beliefs, expectations, representations, projections, plans or

predictions of the future, are forward-looking statements within the

meaning of the Private Securities Litigation Reform Act of 1995. Such

statements involve risks and uncertainties that may cause actual

results to differ materially from those set forth in these statements.

Factors that could cause actual results to differ materially include

risks and uncertainties such as reduced demand for products of

electronic equipment manufacturers which include O2Micro's products

due to adverse economic conditions in general or specifically

affecting O2Micro's markets, technical difficulties and delays in the

developments process, and errors in the products. You are also

referred to the Form F-1 in connection with the company's initial

public offering in August 2000, Form F-3 in connection with the

company's public offering in November 2001, and the annual reports on

Form 20-F, which identify important risk factors that could cause

actual results to differ from those contained in the forward-looking

statements. The company assumes no obligation to update or revise any

forward-looking information, whether as a result of new information,

future events or otherwise.

Note: In "O2Micro," the 2 should read as subscript.

-0-

O2Micro International Limited and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

(In Thousand U.S. Dollars, Except Per Share Amounts)

Three Months Ended Years Ended

December 31, December 31,

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

(Unaudited) (Unaudited)

2003 2002 2003 2002

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

NET SALES $25,170 $18,393 $88,599 $70,187

COST OF SALES 10,665 7,736 38,314 28,143

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

GROSS PROFIT 14,505 10,657 50,285 42,044

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

OPERATING EXPENSES

Research and development 4,619 4,987 19,219 18,935

Selling, general and

administrative 4,279 3,529 17,476 12,325

Stock-based compensation - 2 - 44

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

Total Operating Expenses 8,898 8,518 36,695 31,304

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

INCOME FROM OPERATIONS 5,607 2,139 13,590 10,740

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

NONOPERATING INCOME (EXPENSES)

Interest income 331 313 1,283 1,802

Impairment loss on investment

in shares of stocks - - (17) (483)

Interest expenses - (1) (1) (4)

Exchange gain (loss) (166) (79) 287 4

Other - net (3) 141 (115) 343

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

Total Nonoperating Income 162 374 1,437 1,662

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

INCOME BEFORE INCOME TAX 5,769 2,513 15,027 12,402

INCOME TAX EXPENSES 653 366 1,826 1,673

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

NET INCOME 5,116 2,147 13,201 10,729

OTHER COMPREHENSIVE GAIN (LOSS)

Translation adjustments

on subsidiaries - 61 (90) 132

Unrealized gain (loss) on

available-for-sale securities (83) (59) 261 (127)

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

Total Other Comprehensive

Gain (Loss) (83) 2 171 5

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

COMPREHENSIVE INCOME $ 5,033 $ 2,149 $13,372 $10,734

======= ======= ======= =======

EARNINGS PER SHARE:

Basic $ 0.13 $ 0.06 $ 0.34 $ 0.28

======= ======= ======= =======

Diluted $ 0.13 $ 0.06 $ 0.33 $ 0.27

======= ======= ======= =======

SHARES USED IN EARNINGS

PER SHARE CALCULATION:

Basic (in thousands) 38,846 38,116 38,374 38,300

======= ======= ======= =======

Diluted (in thousands) 40,683 38,921 39,736 39,590

======= ======= ======= =======

O2Micro International Limited and Subsidiaries

Consolidated Balance Sheets

(In Thousand U.S. Dollars, Except Share Amounts)

December 31, December 31,

ASSETS 2003 2002

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

CURRENT ASSETS

Cash and cash equivalents $ 66,489 $ 69,334

Restricted cash 1,892 2,019

Short-term investments 53,923 42,675

Accounts receivable - net 9,794 7,595

Inventories 9,613 6,967

Prepaid expenses and other current assets 3,365 2,891

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

Total Current Assets 145,076 131,481

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

INVESTMENT IN SHARES OF STOCKS 7,865 5,985

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

FIXED ASSETS - NET 4,880 5,611

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

OTHER ASSETS

Restricted assets - net 10,044 -

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

Convertible loans to 3600 Web Ltd. - 1,750

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

Other Assets 1,428 1,009

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

TOTAL ASSETS $ 169,293 $ 145,836

======== =========

LIABILITIES AND SHAREHOLDERS' EQUITY

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

CURRENT LIABILITIES

Notes and accounts payable $ 6,334 $ 5,202

Income tax payable 2,852 1,957

Current portion of obligations under

capital lease 1 7

Accrued expenses and other current

liabilities 5,379 3,522

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

Total Current Liabilities 14,566 10,688

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

OBLIGATIONS UNDER CAPITAL LEASE - NET OF

CURRENT PORTION - -

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

Total Liabilities 14,566 10,688

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

CONTINGENCIES AND COMMITMENTS

SHAREHOLDERS' EQUITY

Preference shares at $0.001 par value

per share - -

Ordinary shares at $0.001 par value

per share

Authorized - 95,000,000 shares

Issued - 39,032,616 shares as of

December 31, 2003 and 38,857,094

shares including 720,700 shares of

treasury stock as of December 31, 2002,

respectively 39 39

Treasury Stock - (6,823)

Additional paid-in capital 137,076 133,016

Accumulated other comprehensive loss (521) (692)

Retained earnings 18,133 9,608

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

Total Shareholders' Equity 154,727 135,148

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

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 169,293 $ 145,836

======== =========

CONTACT: O2Micro

Gil Goodrich, 408-987-5920 x8013

gil.goodrich@o2micro.com