M-Systems and Digi-Key Sign Distribution Agreement; DiskOnChip(R) and FFD(TM) Flash Disk Product Soon to Be Available to Digi-Key's Worldwide Catalog and Online Customer Base

SUNNYVALE, Calif. & THIEF RIVER FALLS, Minn.--Oct. 1, 20051, 2005--M-Systems , an industry leader and innovator of flash-based data storage devices, and Digi-Key Corporation, a U.S.-based electronic component distributor, today announced that the companies have signed a worldwide distribution agreement.

M-Systems' embedded flash disk products will be featured in Digi-Key's printed and online catalog and will be available for purchase directly from Digi-Key.

"Many design engineers have a Digi-Key catalog and, with M-Systems inside, it will be a great outlet for us into new designs," said Scott Deutsch, M-Systems' vice president of sales for the Americas. "Digi-Key has a huge catalog and online customer base that will now have access to our DiskOnChip(R) and FFD(TM) products for all of their product development needs."

M-Systems' DiskOnChip and FFD products provide reliable and fast non-volatile memory (NVM) to store data and code locally. They are available in a wide range of capacities, form factors, and bus interfaces, targeting applications such as gaming machines, point of sale (POS), thin clients, servers, printers, single-board computers (SBCs) and computers used for military, telecom and aviation needs. Based on leading-edge NAND flash technology, an ultra-thin controller and advanced flash management software, M-Systems embedded flash drive products provide an optimized NVM solution with an ideal cost structure.

"We are pleased to be able to offer M-Systems' line of data storage products to our worldwide base of engineering and procurement customers" said Mark Larson, president of Digi-Key. "M-Systems' innovative products will help to broaden our line card offering and enable us to better serve the diverse electronic component needs of our customers."

About Digi-Key Corporation

Digi-Key Corporation is one of the fastest growing electronic component distributors in the world. From its beginnings, Digi-Key Corporation has attained a reputation of leadership in the electronic distribution business for its total commitment to service and performance. As a full-service provider of prototype/design as well as production volume quantities of electronic components, Digi-Key consistently rates #1 for overall performance among more than 600 distributors in the United States. They offer over 530,000 different products from more than 320 quality name-brand manufacturers. Their commitment to inventory is second- to- none. Access to this broad product offering is available 24 hours-a-day, seven-days-a-week by going online at www.digikey.com.

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) solutions 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.

Note to Editors: High-resolution photo images of M-Systems' products can be found on the Internet at www.m-systems.com/site/en-US/Corporate/PressRoom/ImageLibrary.

All company and product names mentioned may be trademarks or registered trademarks of their respective holders and are used for identification purposes only.

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.