MILPITAS, CA--(Marketwire - Jul 23, 2012) -  Sigma Designs, Inc. (NASDAQ: [ SIGM ]), a leading provider of connected media platforms, today announced that it is mailing the following letter to its shareholders:

Dear Fellow Shareholders:

We are writing to provide you a very important update about the election of directors at the Annual Meeting of Shareholders of Sigma Designs, Inc., which is currently scheduled to be held on August 7, 2012.

Your Board has determined to reduce the number of nominees that it recommends for Sigma's slate of directors from four to three nominees to ensure that one Potomac nominee is elected to the Board at the Annual Meeting even if you vote on the Company's WHITE proxy card. We believe our new WHITE proxy card will provide many shareholders the voting alternative they most desire -- an opportunity to guarantee the addition of a new perspective to the Board without the risk of creating a split, and potentially stalemated, board, or turning over control of the Company to Potomac's nominees through the unpredictability of cumulative voting, which can produce results contrary to the shareholders' real intent.

In light of the number of shares held by Potomac and the mechanics of cumulative voting, the Board believes there is a significant risk that the ultimate outcome of the election of directors may not reflect the true desire of the Company's shareholders. While cumulative voting is a shareholder friendly process, it can also lead to unintended results when a shareholder, particularly a dissident hedge fund seeking to obtain control of the Company, can cumulate votes in a manner that ultimately results in an election outcome that may not be desired by more than a majority of the votes cast.

Your Board continues to believe now is not the time to disrupt the recent momentum gained from the Company's strategic plan by turning over control of the Board to a dissident hedge fund that only recently began acquiring shares earlier this year. We believe that we are at a critical junction in the implementation of our strategic plan, with some significant successes already realized, and that any delay in executing our plan could have significant adverse consequences. We also believe the negative impact that this turnover would have on our key employees and our relationships with our customers and strategic partners would be very detrimental to shareholder value. However, we also accept that having a new perspective on the Board will help us execute on one of our top priorities of streamlining expenses as well as evaluate and focus our progress in the future. In fact, in addition to welcoming one of Potomac's nominees to the Board, we are committed to continue our search for new independent directors with appropriate qualifications to join the Board following the Annual Meeting.

As we have navigated through this proxy contest, we have had an opportunity to visit and speak with many of our shareholders. We appreciate the time that shareholders have taken to read our written materials and listen to our message. Likewise, we too have listened to you, the shareholders. We have heard your feedback, both positive and negative. One thing that we have heard clearly from you is that shareholders would like a new perspective on the Board. 

Accordingly, we are amending our proxy materials to nominate three directors for election to the Board. We strongly urge you (1) to read the accompanying supplemental proxy material carefully and vote FOR the nominees proposed by the Board of Directors by using the enclosed amended WHITE proxy card and (2) not to return any gold proxy card sent to you by Potomac. If you vote using a gold proxy card sent to you by Potomac, you can subsequently revoke it by using the WHITE proxy card to vote by telephone, by Internet, or by signing, dating and returning the WHITE proxy card in the postage-paid envelope provided. Only your last-dated proxy will count -- any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in our proxy materials. 

If you already submitted a WHITE proxy card or voted, your vote remains valid and you do not need to vote again in connection with this supplement. 

If you have any questions on how to vote, please contact the firm assisting us in the solicitation of proxies at:

INNISFREE M&A INCORPORATED
Shareholders Call Toll-Free: (888) 750-5834
Banks and Brokers Call Collect: (212) 750-5833

Forward-LookingInformation
This communication contains forward-looking statements, which address a variety of subjects including, for example, statements that imply the future success of Sigma's strategic plan. All statements other than statements of historical fact, including without limitation, those with respect to the Company's strategic plan are forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: general economic conditions, the rate of growth of the IPTV, connected home technologies, connected media player and consumer and industrial audio/video markets in general, the ramp in demand from Sigma's set-top box, television and telecommunication customers, the ability of Sigma's SoCs to compete with other technologies or products and the risk that design wins will not translate into volume product sales. For a detailed discussion of cautionary statements that may affect the Company's future results of operations and financial results, please refer to the Company's filings with the Securities and Exchange Commission, including the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Forward-looking statements represent management's current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements made by us.

Important Additional Information
On June 19, 2012, Sigma Designs filed with the Securities and Exchange Commission (the "SEC") a definitive proxy statement in connection with its 2012 annual meeting of shareholders (the "2012 Annual Meeting"). On July 23, 2012, Sigma Designs filed with the SEC a proxy supplement (the "Proxy Supplement") amending its proposed slate of directors. The Proxy Supplement should be read together with the definitive proxy statement (collectively, the "Proxy Materials"). Sigma Designs has mailed the Proxy Materials to its shareholders. The Proxy Materials contain important information concerning the identity and interests of Sigma Designs' directors, director nominees and certain of its officers and employees that may be deemed, along with Sigma Designs, to be participants in the solicitation of Sigma Designs' shareholders in connection with the 2012 Annual Meeting.

Copies of Sigma Designs' definitive proxy statement, Proxy Supplement, any other relevant documents and other materials filed with the SEC concerning Sigma Designs, when filed, may be obtained free of charge at [ www.sec.gov ] and [ www.sigmadesigns.com/IR ]. The definitive proxy statement, Proxy Supplement and any other relevant documents filed with the SEC contain (or will contain) important information, and shareholders should carefully read the Proxy Materials, the accompanying WHITE proxy card and other materials filed with the SEC when they become available before making any voting decision.