CLOUD & Cyber-Security Driven Inflection Point

November 14, 2017 Safe Harbor Guidelines & Legal Notes

The information presented today contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, anticipated future financial and operating results and Silicom’s outlook and prospects. Those statements are based on management’s current beliefs, expectations and assumptions, which may be affected by subsequent business, political, environmental, regulatory, economic and other conditions, and necessarily involve known and unknown risks and uncertainties, which include, but are not limited to, Silicom’s increasing dependence for substantial revenue growth on a limited number of customers in the evolving cloud-based market, the speed and extent to which cloud-based and cloud-focused solutions are adopted by the market, likelihood that Silicom will rely increasingly on customers which provide cloud-based and cloud-focused solutions in this evolving market, resulting in an increasing dependence on a smaller number of larger customers, difficulty in commercializing and marketing of Silicom’s products and services, maintaining and protecting brand recognition, protection of intellectual property, competition and other factors which Silicom discusses in its public filings. Therefore, there can be no assurance that actual future results will not differ significantly from anticipated results. Therefore, you are cautioned not to rely on these forward-looking statements. Silicom does not undertake to update any forward-looking statements as a result of new information or future events or developments except as may be required by law. Financial information as of 2010, as presented herein, may be considered "non- GAAP financial measures" under Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission ("SEC") as they apply to Silicom. Please note that any financial information presented for the period prior to 2010 is in accordance with GAAP. Please refer to Silicom’s disclosure documents filed or furnished with the SEC, including Silicom’s Annual Reports on Form 20-F and/or Quarterly Reports on Form 6-K, for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Silicom provides such non-GAAP data to investors as supplemental data and not in substitution or replacement for GAAP measures, because Silicom's management believes such data provides useful information to investors.

2 Silicom (SILC) at a Glance

. Industry-leading provider of high-performance networking & data infrastructure solutions for Cloud and Data Center environments Critical performance and efficiency needs of our customers are aligned with our technical/solution capabilities . Exceptional track record of revenue growth and profitability Last 7 years: Revenues - 26% CAGR; Operating profit - 37% CAGR . Improved Visibility & long-term growth . Large, strong base of customers with multi-year Design Wins . 96% Repeat revenues . Robust industry environment We are poised to benefit from the growth of multiple “hot” end markets: Cloud, Data Centers, Cyber Security, SD-WAN, NFV and Storage

3 Key Business Achievements

Revenues- 26% CAGR X5 in 7 years

Operating Profit- 37% CAGR X9 in 7 years (in $M) 100.3 22% Growth 87.9 82.7 75.6 73.3 72

48.7 39.6 30.4 (19%) 20.5 18.3 18.7 19.2 19.4 17.3 (11%) 13.5 8.9 10.7 2.2 6.1 2009 2010 2011 2012 2013 2014 2015 2016 Q1-Q3/16 Q1-Q3/17 EPS: $0.41 $0.82 $1.24 $1.52 $2.45 $2.22 $2.35 $2.24 $1.58 $1.96

4 Business Overview

Smart Server Depth Multiple Technologies Adapters Adapters DIFFERENTIATION PRODUCTS Cyber App. Customer Security Delivery Intel VCPEs Centric Network Appliances Edge

MonitoringCyber SILICOM Security

Network SD-WAN High FPGAs Appliances NFV Speed Future Legacy MARKET SEGMENTS IP & TECHNOLOGY CLOUD Next Cloud Compute Generation

5 Industry-Leading Products

Comprehensive set of high-performance networking and data infrastructure solutions for Cloud, Cyber Security, Data Centers, Networking, Storage, Service providers and Telecom platforms Our solutions: Flexible product formats: - Boost performance - Add-On - Provide additional functionality - Standalone - Full platforms Silicom’s product portfolio is diversified across products & markets, with over 300 different SKUs

6 Broad range of innovative solutions

Data center Switches Bypass

Server Adapters Cloud Switch on a NIC

Time Stamp & Virtualized Network Capture Edge/CPE Appliances Smart NICs & FPGA

SETAC

Encryption

Ultra-Low Latency

Networking and Data infrastructure vendors desire to outsource their hardware from an expert with a complete portfolio of mission-critical products to focus on their unique software 7 Diverse Markets

APAC Government 7% Service Provider /Cloud 13% 36% EMEA 20% Broad Global Customer Markets Demand

Other 4% Enterprise 47% North America 73%

% of Last Twelve Months Revenues Based on proprietary Company data and analysis

8 Diverse Markets

Others Storage 4% 9%

Cyber Network Monitoring / Security Traffic Management 33% 9% Attractive Market Segments

Platforms / WAN Opt. / Infrastructure SD-WAN 27% 6% Application Delivery 12%

% of Last Twelve Months Revenues Based on proprietary Company data and analysis

9 Global Customers

More than 400 Active Design Wins with over 150 customers, including many market leaders

Cloud

Cyber Security

SD-WAN / NFV Service Providers

Application Delivery

Data Centers Storage

Exploding data and Internet traffic dramatically increase the need for connectivity and bandwidth - and the need for higher performance solutions 10 The Silicom Edge - Enabling Our Customer’s Success Hand in hand with our clients from concept through design to implementation

Strong track record of providing superior, purpose-built building blocks that meet fundamental customer needs at COTS time-to-market and cost . Products that combine technologies – Networking, Encryption, FPGA, Embedded CPU . FW and SW packages . Custom driver support and specific application use case development . Full APIs (Application Programming Interfaces) for added functionality and performance . FPGA IP cores for Capture, Packet recording, TOE offload, Filtering, DPI and HFT . FPGA overlay packages for customer code integration (BYOC) Unique, engineering-driven customer relationships . Customer integration support and POC hand holding

11 Customers as Partners

DESIGN WINS TRUSTED PARTNERSHIPS

Initial Effort Production Ongoing Partnership Long sales cycle 2-4 years secured Additional product (6-18 months) revenue streams qualifications

. We offer outstanding . Trusted relationships lead to sharing of road pre-sale engineer-to- maps & joint development of new products engineer technical . Over time, we design additional Silicom consulting products into more of our customers’ systems, increasing sales per system and sales per customer Start small and scale out

12 Seed and Grow

Cyber Security customer Storage customer

14 4 12 Active DWs 2 Active DWs 12 3.5

3 10 2.5 8 2 6 1.5

4 1

2 0.5

0 0 2009 2010 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016

Revenues in $ millions

13 Growth Strategy

Expanding Customer Base Substantial Repeat Revenues

160 100% New customers Number of Customers 98% 140 96% 120 94% 100 92%

80 90%

88% Existing customers 60 86% 40 84% 20 82%

0 80% 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016

% of revenues from new customers acquired in each year versus existing customers

14 Supplier as Partner Silicom & Intel

“Higher-performance encryption and compression offloads are two of the significant challenges that high-performance servers must overcome to achieve target performance levels, especially Innovative product CPUs, Ethernet in the SDN and Cloud space. Silicom is addressing this pain point design, Reference controllers, encryption, with a comprehensive suite of cards that integrate encryption Designs & application- compression, DPDK, and compression functionality.” related solutions Quick Assist “This is an important offering that we believe will answer the needs of performance-hungry servers in both the SDN and Cloud markets, as well as in the traditional networking appliances markets…” Frank Schapfel, Director of Marketing, Intel Communications & Server “Intel Plus” Infrastructure Division Product Family “We are delighted to have ADI Silicom enhances and complements Intel’s Engineering’s support on our next- latest Red Rock Canyon / FM10K architecture generation communications and offers Network Preprocessing, Load infrastructure platform. ADI Engineering Balancing and other solutions featuring an helps Intel customers launch innovative embedded fully capable network switch. Intel new products that use the full potential introduces Silicom to various customers of the new platform.” active in the Cloud, Data Centers, Service Steve Price, general manager, Intel Providers and Enterprise markets requiring Communication Infrastructure FM10K related solutions.

15 Synergistic Acquisitions

. Increase and expand our offerings for existing strong customer base . Strengthen IP and technology base with a focus on: . FPGA-based designs – IP cores and customer code integration . Intel X86-based platforms . Open vSwitch and Virtualization . Ultra-low latency . Increase utilization of Silicom’s efficient, high-quality manufacturing, sales and customer support infrastructure . Increase TAM: . Cloud, Data centers and Service providers . SD-WAN and NFV . Financial services – HFT

16 IT Market Trends Become Our Growth Drivers

. Next Gen Cloud – Fast innovative switches and FPGA-based acceleration solutions for scale-up and scale-out cloud infrastructures . Cyber Security – line-speed capture, encryption and FPGA-based acceleration . SD-WAN and NFV – Virtualized/Universal CPE . Ethernet – from Networking to Storage and Telecom . Evolution to higher speeds (from 1G to 100G) – tasks moving from SW to HW (e.g. encryption, time stamping) . SDN – the use of standard platforms increases the need for add-on products . Complex networks – Higher demand for Monitoring, Capture and Line-rate processing

17 Next Gen Cloud Momentum

. Recently announced record Design Win from a scaled-out cloud customer . Potential for revenues of $75M per year once full deployment run-rate will be achieved. Expected in 2019. . Innovative Cloud fabric solution . Switch on a NIC in every server to replace ToR (Top of Rack) switch to achieve:  Lower cost of deployment (reduction of cabling, space and power)  Reduced latency, fewer number of hops between nodes  Improved overall performance of East-West traffic  Full management by SDN/Virtual tools  Real-time network topology changes . The revenue potential per Design Win with major Cloud, Data Center and Service Provider customers in the pipeline today is higher by an order of magnitude than our Design Wins of the past

18 FPGA Momentum Builds

. FPGA is the main technology considered nowadays for infrastructure differentiation . Amazon’s FPGA-as-a-service runs customizable FPGAs in the AWS Cloud . Microsoft Azure uses FPGAs . Cloud, Cyber Security, Telcos and Service providers are moving towards many new FPGA-based solutions . Both, Intel/Altera and Xilinx, partnered with Silicom to offer innovative FPGA-based products . Huge potential FPGA-based designs are already in motion:  IPSEC encryption solution for Cloud  Packet Capturing and GTP tunneling for Telcos  Packet Capturing, DPI and other processing solutions for Cyber Security and Network Visibility  OVS offload, P4 acceleration and fabric switch for Data Center infrastructure . Silicom’s unique combination of IP, skills, experience and knowhow in Networking, high speed FPGA card design, IP cores, SW development and FPGA overlay package for easy integration of the customer own IP onto the FPGA are key in building cutting-edge FPGA-based solutions

19 Financials

20 Visibility & Upside Revenues by quarter

40

35

30

25 Guidance 20 Upside Plan 15

10

5

0 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17

Plan is midpoint of revenue guidance range. Upside is actual quarterly revenue reported above the original plan

21 Financial Achievements

CONSISTENT PROFITABILITY 51 quarters (~13 years) of continuous profitability

. 96% Repeat orders IMPROVED VISIBILITY . Over 400 Active Design Wins with Over 150 Customers

EXCELLENT PROFITABILITY 19.7% operating margin in Q1-Q3/2017

TRACK RECORD OF . Revenues – X5 during 2009-2016 (CAGR – 26%) SIGNIFICANT GROWTH . Operating Profit – X9 over the same period (CAGR – 37%) STRONG CASH POSITION . $36.9M . Dividends paid yearly since 2013 DIVIDEND POLICY . 2016 dividend: $1.00/share (paid in April 2017)

22 Q3/2017 Financials (Non-GAAP) (in millions, except EPS data)

Q3/2017 % of sales Sales $32.3 100% Gross Profit $11.8 36.4% Operating Income $6.6 20.3% Net Income $5.7 17.7% EPS (diluted) $0.75 Total number of 7.54 issued shares

23 Income Statement & Long-Term Model (Non-GAAP) ($ in millions, except EPS data)

9 Months 2014 2015 2016 Target Margins Ending 9/30/17

Revenue $75.6 $82.7 100.3 $87.9 $250

Gross Margin 40.9% 42.2% 39.0% 37.1% 32%

Operating $18.7 $19.2 $19.4 $17.3 $53 Income Operating 24.8% 23.2% 19.3% 19.7% 21.2% Margin

Net Income $16.2 $17.3 $16.6 $14.8 $45

Net Income 21.5% 20.9% 16.6% 16.9% 18.0% Margin

EPS $2.22 $2.35 $2.24 $1.96 $5.51

24 Balance Sheet ($ in millions)

Q3 2017

Cash & Cash Equivalents $36.9 Working Capital $102.6 Total Assets $161.8 Total Debt -- Total Liabilities $32.3 Stockholders’ Equity $129.5

Strong Balance Sheet with No Debt

25