Kopin Reports Second-Quarter 2001 Financial Results Consistent With Revised Guidance

CyberDisplay Business Achieves 40% Sequential Revenue Growth

July 26, 2001

Taunton, MA. Kopin Corporation (Nasdaq: KOPN), a leading developer and manufacturer of III-V heterojunction bipolar transistor (HBT) products and miniature flat panel displays, today reported financial results for the second quarter ended June 30, 2001.

Kopin reported second-quarter revenue of $9.2 million, compared with $24.4 million for the same period last year, and in line with the expectations outlined by the Company on June 26, 2001. Kopin reported a net loss of $15.2 million, or $0.23 per share for the second quarter of 2001, excluding a net gain on the exchange of its investment in Kendin Communications for shares of Micrel Semiconductor of approximately $20.9 million and an impairment charge of approximately $5.3 million primarily for the write-down of equipment. Including these one-time items,

Kopin reported net income of $351,667, or $0.01 per share. This compares with net income of $3.8 million, or $0.06 per fully diluted share in the second quarter of 2000. Revenue from III-V products was $3.8 million, compared with $19.5 million in the year-ago quarter. CyberDisplay revenue increased to $5.2 million in the second quarter of 2001, from $4.8 million in the second quarter of 2000 and up 44.4 percent sequentially from $3.6 million in the first quarter of 2001.

For the six months ended June 30, 2001, revenue was $24.2 million, compared with $44.1 million for the same period last year, a decrease of 45.1 percent. The net loss for the most recent six-month period, excluding the net gain on the exchange of investments and the impairment charge, was $22.0 million, or $0.34 per share, versus net income of $6.1 million, or $0.09 per share, for the comparable period in 2000. Including the net gain and charges in the second quarter, net loss and loss per share amounts for the first six months of 2001 were $6.4 million and $0.10 respectively. Revenue from III-V products was $14.6 million, compared with $35.9 million for the same period last year. Revenue from CyberDisplay products increased 15.6 percent to $8.9 million for the six months ending June 30, 2001, compared with $7.7 million for the same six-month period one year earlier.

III-V "As we indicated during our conference call on June 26, 2001, demand for our III-V products was weak," said Dr. John C.C. Fan, Kopin s president and chief executive officer. "Many of our larger customers are continuing to work through excess inventory.

"Despite these challenges, we are taking steps to maximize long-term growth opportunities and expand the customer base for our III-V products," continued Fan. "In the second quarter, we entered into agreements to supply InGaP HBTs to Alpha Industries and ANADIGICS. These two new customers represented a significant portion of our III-V revenues for the quarter. In addition, we focused heavily on the development of our InP and GAIN HBTs to ensure that these will be the transistors of choice for next-generation wireless and fiber optic products to be developed in the quarters to come. We have made significant progress in these two new products and we presented our advancements at several international conferences in the second quarter."

CyberDisplay "CyberDisplay sales increased more than 40 percent sequentially in the second quarter," Fan said, "as we capitalized on a significant increase in orders from each of our three major customers -- Matsushita (Panasonic), JVC and Samsung. We also expanded our agreement with Panasonic to integrate the CyberDisplay 320 as the viewfinder in its newest line of digital camcorders."

The number of new product applications for Kopin s CyberDisplay continues to grow. During the second quarter, Kopin announced two new military application contracts, including a production order from SaabTech Electronics of Sweden for the CyberDisplay 640M. In June, the Company announced that Raytheon selected Kopin s CyberDisplay 640M subsystem for the integrated product test version of its Light Thermal Weapon Sight (LTWS), a device that enables soldiers to identify targets in virtually any battlefield condition.

"We also unveiled a number of new product applications at the Society of Information Display (SID) Symposium in early June," said Dr. Fan. "From portable entertainment systems to personal Internet browsers, this collection truly captures the versatility of the CyberDisplay and the diverse range of potential next-generation product applications on the horizon."

Outlook "The continued inventory correction in the wireless handset and infrastructure markets will affect the demand for our III-V products in the third quarter. However, we are gaining traction with new customers and we expect to see some improvement with existing customers. Therefore, III-V revenues should begin to recover and we anticipate double digit sequential growth in the third quarter," continued Dr. Fan. "In our CyberDisplay business, momentum should continue to build in the third quarter and the remainder of the year. We expect camcorder orders to steadily climb and we will continue to leverage opportunities to integrate our displays into various other military and consumer electronic products. Consequently, we expect our CyberDisplay business to grow between 20 and 25 percent sequentially in the third quarter.

"Our cash position is strong, and we are maintaining strict cost controls. We will continue to invest in our technology portfolio to strengthen our position as the leading supplier of HBT wafers and miniature flat panel displays. Based on the strength of our CyberDisplay business and the expected rebound of the wireless market later this year, we are confident of Kopin s prospects for the balance of 2001 and beyond," concluded Dr. Fan.

Second-quarter Conference Call Kopin will provide a live audio Webcast of its second-quarter conference call for investors at 5:00 p.m. ET today, July 26, 2001. Investors who want to hear the call should log on to the investor relations section of Kopin s Web site, www.kopin.com, at least 15 minutes prior to the event s broadcast. Then, follow the instructions provided to assure that the necessary audio applications are downloaded and installed. The call will be available on the investor relations section for one week. After that, investors can access an archived version of the call on Kopin s Web site.

About Kopin Kopin is a leading developer and manufacturer of high-resolution, flat panel display products and HBT wafers for telecommunications and digital imaging applications that enhance the delivery and presentation of video, voice and data. The Company has combined advanced AMLCD and integrated circuit technology to produce its CyberDisplay(TM) family of ultra-small, high-density imaging devices. The Kopin CyberDisplay family has won many international awards for innovation in the past two years, and now includes the CyberDisplay 1280, 640C, 640M, 320 and 320C - providing OEMs with powerful, high-quality display solutions for devices ranging from consumer electronics such as camcorders and digital cameras to next-generation Internet wireless handsets. Telecommunication providers are using Kopin s HBT transistor wafers for power amplifier circuits used in wireless digital phones, and gigabit circuits for broadband and Internet data transmission. For more information, please visit Kopin s Web site at www.kopin.com.

CyberDisplay is a trademark of Kopin Corporation.

Statements in this news release about Kopin Corporation s third-quarter 2001 financial results, its projection of a recovery in wireless demand, growth in its CyberDisplay business, increasing CyberDisplay orders from camcorder customers and the emergence of next-generation CyberDisplay applications may be considered "forward-looking" statements under the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties that could materially affect future results. Among these risk factors are general economic and business conditions and growth in the flat panel display and gallium arsenide integrated circuit and materials industries, the impact of competitive products and pricing, availability of third-party components, availability of integrated circuit fabrication facilities, cost and yields associated with production of the Company s CyberDisplay imaging devices and HBT transistor wafers, loss of significant customers, acceptance of the Company s products, continuation of strategic relationships and other risk factors and cautionary statements listed from time to time in the Company s periodic reports and registration statements filed with the Securities and Exchange Commission, including but not limited to the Company s annual report on Form 10-K for the year ended December 31, 2000.

Contact: Kopin Corporation Richard Sneider Tel: 508 824-6696 rsneider@kopin.com or Sharon Merrill Associates, Inc. Ehren Lister Tel: 617 542-5300 elister@investorrelations.com