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Exhibit 11.1

# SILICOM LTD. CODE OF ETHICS

This Code of Ethics (the Code
of Ethics) has been unanimously adopted by the Board of Directors (the Board
of Directors) of Silicom Ltd. (the Company) and is intended to apply to
all employees, officers and directors of the Company (Company Personnel).
References in this Code of Ethics to the Company are references to the Company and its
subsidiaries.

# 1. Purpose of Code of
Ethics

The purpose of this Code of Ethics is
to promote honest and ethical conduct by Company Personnel, including the ethical handling
of actual or apparent conflicts of interest between personal and professional
relationships; avoidance of conflicts of interest, including disclosure to the CFO of the
Company (the Compliance Officer) of any material transaction or relationship
that reasonably could be expected to give rise to such a conflict; full, fair, accurate,
timely and understandable disclosure in periodic reports filed by Company as well as in
its other public communications; compliance with all applicable governmental rules and
regulations; prompt internal reporting of violations of this Code of Ethics; and
accountability for adherence to this Code of Ethics.

# 2. Conflicts of Interest

Company Personnel should strive to
avoid a conflict of interest with regard to the Companys interests.

The Company acknowledges and values
the right and will of Company Personnel to engage in activities other than the
Companys business and activities, so long as such activities do not create a
conflict of interest and do not interfere with the responsibility to the Company of such
Company Personnel or their efficiency in performing such responsibilities.

A conflict of interest
may exist whenever an individuals private interests, including the interests of the
family members (meaning spouse, siblings, parents, grandparents, children, stepchildren
and the spouse of each of these) of such individual, conflict in any way (or even appear
to conflict) with the interests of the Company. A conflict situation can arise when
Company Personnel or their family members take actions or have interests that may make it
difficult to perform their Company work objectively. Conflicts of interest may also arise
when Company Personnel or their family members, receive improper personal benefits as a
result of their position in the Company. Loans to, or guarantees of obligations of,
Company Personnel and their respective family members may create conflicts of interest.



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The following are examples of
situations which should be avoided:

| | 1. | Company
Personnel engaging in other jobs, which interfere with their efficiency           or the
performance of their tasks in the Company.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Company
Personnel or their family members possessing ownership interests in any           of the
Companys recent, current or prospective customers, competitors,           suppliers
or service providers. However, with respect to recent, current or           prospective
customers, competitors, suppliers or service providers that are           public
companies, it is acceptable to hold ownership interests, including the
          interests of family members, in an amount equal to the lesser of (i) 1% of the
          outstanding share capital of such company, and (ii) 5% of the funds that such
          individual has invested in public companies at such time.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | The
provision of services of any kind, including service as a director, officer,
          employee or consultant, to a recent, current or prospective customer,
          competitor, supplier or service provider of the Company by Company Personnel or
          their family members.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The
conduct of business on behalf of the Company by Company Personnel with a
          competitor, supplier, customer or other business partner of the Company, if
such           Company Personnel or their family members directly or indirectly own a
financial           interest in, or have an obligation to, such entity or person which
interest or           obligation is significant to such individual or their family
members.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | Any
investment, interest or association that interferes, might interfere, or           might
be thought to interfere, with the exercise of judgment in the           Companys
best interests by Company Personnel.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | Company
Personnel or their family members acting as a broker, finder or other
          intermediary in a transaction involving the Company.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------

| | 7. | The
receipt by Company Personnel or their family members of money, loans, gifts,
          benefits, services or anything of monetary value from any of the Companys
          recent, current or prospective customers, competitors, suppliers or service
          providers, including common courtesies and hospitalities if their scale or
          nature would in any way appear to affect the impartiality of Company Personnel
          or imply a conflict of interest. However, if there is no reasonable likelihood
          of improper influence in the performance of duties on the part of Company
          Personnel on behalf of the Company, it is acceptable to receive:
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | normal
business courtesies that are reasonable in nature, frequency and cost, such as meals,
occasional athletic, social or cultural events, or participation in corporate promotional
events, all involving no more than ordinary amenities;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | paid
trips or guest accommodations in connection with proper Company business with the prior
written approval of the Compliance Officer;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

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| |  | fees
or other compensation received from any organization in which membership or an official
position is held with the prior written approval of the Compliance Officer;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | loans
from financial institutions made in the ordinary course of their business on customary
terms and at prevailing rates; or
| | - | ------------------------------------------------------------------------------------------------------------------------------

| |  | gifts
of nominal value (less than $200) during the holiday season.
| | - | ------------------------------------------------------------------

Although it is not always possible to
avoid conflicts of interest, it is the Companys policy to minimize such conflicts
when possible. Conflicts of interest may not always be clear-cut, so if you have a
question, you should consult with the Compliance Officer.

Company Personnel who become aware of
a conflict or potential conflict should bring it to the attention of the Compliance
Officer who, subject to applicable law and in consultation with the CEO of the Company if
deemed appropriate, can provide guidelines for behavior.

# 3. Corporate Opportunity

Except as may be approved by the
Board of Directors and in accordance with applicable law, Company Personnel are prohibited
from (a) taking for themselves personally opportunities that belong to the Company or are
discovered through the use of corporate property, information or position; (b) using
corporate property, information or position for personal gain; and (c) competing with
the Company.

# 4. Confidentiality

All Company Personnel must maintain
the confidentiality of Confidential Information entrusted to them by the Company or its
suppliers or customers, except when disclosure is authorized by the Company or required by
laws, regulations or legal proceedings.

Confidential Information
includes, but is not limited to, non-public information that might be of use to
competitors of the Company, or harmful to the Company or its customers if disclosed.
Whenever feasible, employees, officers and directors should consult with the
Companys Compliance Officer if they believe they have a legal obligation to disclose
confidential information.

# 5. Fair Dealing

Company Personnel are required to
deal fairly with the Companys customers, suppliers, competitors, officers and
employees. None should take unfair advantage of anyone through manipulation, concealment,
abuse of privileged information, misrepresentation of material facts or any other unfair
dealing practice. Stealing proprietary information, misusing trade secret information that
was obtained without the owners consent, or inducing such disclosures by past or
present employees of other companies is prohibited.

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# 6. Protections and
Proper Use of Company Assets

Company Personnel should protect the
Companys assets and ensure their efficient use. Theft, carelessness, and waste have
a direct impact on the Companys profitability. All Company assets should be used for
legitimate business purposes. For purposes of clarity, it is acceptable to make reasonable
personal use of the Companys assets while at work. Questions as to whether a
specific use of the Companys assets constitutes reasonable personal use
should be directed to the Compliance Officer before making personal use of the
Companys assets.

# 7. Proper Accounting and
Financial Integrity; Accurate Periodic Reports

All transactions must be executed
only in accordance with managements general or specific authorization. The
Companys books, records and accounts must reflect, accurately and fairly and within
the Companys regular system of accountability, all of the Companys
transactions and the acquisition and disposition of its assets. All transactions shall be
accurately recorded to permit the preparation of financial statements in conformity with
generally accepted accounting principles consistently applied and other applicable rules,
regulations and criteria, and to insure full accountability for all assets and activities
of the Company. Under no circumstances shall there be any unrecorded funds or assets of
the Company, regardless of the purposes for which such fund or asset may have been
intended, or any improper or inaccurate entry, knowingly made on the books and records of
the Company. No payment on behalf of the Company shall be approved or made with the
intention or understanding that any part of such payment is to be used for a purpose other
than that described by the documents supporting the payment.

Full, fair, accurate, timely and
understandable disclosure in the periodic reports filed with the SEC and Nasdaq is
required by SEC and Nasdaq rules and is essential to the continued success of the Company.
Depending on their respective positions with the Company, employees, officers or directors
may be called upon to provide information necessary to assure that the Companys
public reports are full, fair, accurate, timely and understandable. The Company expects
employees, officers and directors to take this responsibility very seriously and to
provide prompt and accurate answers to inquiries related to the Companys public
disclosure requirements and to exercise the highest standard of care in preparing the
Companys public reports in accordance with the guidelines set forth below,
including, without limitation, the following:

| |  | All
Company accounting records, as well as reports produced from those records, must be kept
and presented in accordance with the laws of each applicable jurisdiction.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | All
records must fairly and accurately reflect the transactions or occurrences to which they
relate.
| | - | ----------------------------------------------------------------------------------------------------

| |  | All
records must fairly and accurately reflect in reasonable detail the Companys
assets, liabilities, revenues and expenses.
| | - | -----------------------------------------------------------------------------------------------------------------------------

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| |  | The
Companys accounting records must not contain any intentionally false or
intentionally misleading entries.
| | - | --------------------------------------------------------------------------------------------------------------

| |  | No
transaction may be intentionally misclassified as to accounts, departments or accounting
periods.
| | - | ----------------------------------------------------------------------------------------------------

| |  | All
transactions must be supported by accurate documentation in reasonable detail and
recorded in the proper accounts and in the proper accounting period.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | No
information may be concealed from the internal auditors, the independent auditors, the
Audit Committee of the Board of Directors or the Board of Directors.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Compliance
with generally accepted accounting principles and the Companys system of internal
accounting controls is required at all times.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------

The Company has formed a Disclosure
Committee led by its CFO, to oversee the preparation and review of public disclosure
documents.

# 8. Accounting Complaints

Company Personnel who have concerns
or complaints regarding questionable accounting or auditing practices are encouraged to
promptly submit those concerns or complaints (anonymously, confidentially or otherwise) to
the Chairman of the Audit Committee whose contact details are set forth in Exhibit
A hereto, who will, subject to his or her duties arising under applicable law,
regulations and legal proceedings, treat such submissions confidentially. Such submissions
may be directed to the attention of the Chairman of the Audit Committee at the principal
executive offices of the Company or at the address or telephone number set forth in
Exhibit A.

# 9. Reporting any Illegal
or Unethical Behavior

Company Personnel are encouraged to
talk to supervisors, managers or other appropriate personnel about observed illegal or
unethical behavior and, when in doubt, about the best course of action in a particular
situation. Company Personnel who believe that a violation of this Code or other illegal or
unethical conduct by any employee, officer or director has occurred or may occur should
promptly contact a supervisor, a corporate officer, the Compliance Officer or the Chairman
of the Audit Committee at the address or telephone number set forth in Exhibit A.
Such reports may be made confidentially or anonymously. Confidentiality will be protected,
subject to applicable law, regulation or legal proceedings.

# 10. No Retaliation

The Company will not permit
retaliation of any kind by or on behalf of the Company and its employees, officers and
directors against good faith reports or complaints of violations of this Code or other
illegal or unethical conduct.

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# 11. Compliance with
Laws, Rules and regulations

The activities of the Company and all
Company Personnel acting on its behalf must always be in full compliance with both the
letter and spirit of all laws, rules and regulations applicable to the Company and its
business. Furthermore, Company Personnel shall not assist any third party in violating any
applicable law, rule or regulation. This principle applies whether or not such assistance
is, itself, unlawful. All Company Personnel must respect and obey the laws of the cities,
states and countries in which the Company operates and avoid even the appearance of
impropriety. When there is a doubt as to the lawfulness of any proposed activity, advice
must be sought from the Compliance Officer.

This Code of Ethics does not
summarize all applicable laws, rules and regulations. Violation of applicable laws, rules
or regulations may subject the Company, as well as any Company Personnel involved, to
severe adverse consequences, including imposition of injunctions, monetary damages (which
could far exceed the value of any gain realized as a result of the violation), fines and
criminal penalties, including imprisonment. In addition, actual or apparent violations of
applicable laws, rules and regulations by the Company or Company Personnel can undermine
the confidence of the Companys customers, investors, creditors and bankers, as well
as that of the general public.

# 12. Internal
Communication and Enforcement of Policy

Communication of the policies contained
in this Code of Ethics will be made to all Company Personnel.

It is important that Company
Personnel comply not only with the letter but, equally importantly, the spirit of these
policies. If you believe that a one of the Companys employees, officers or directors
is acting in a manner that is not in compliance with this policy, or that you have been
requested to so act in such a manner, you should immediately bring this matter to the
attention of the Compliance Officer. In order to encourage uninhibited communication of
such matters, such communications will be treated confidentially to the fullest extent
possible and no disciplinary or other retaliatory action will be taken against anyone who
communicates such matters.

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# 13. Effect of Failure to
Comply

Any questions regarding this Code of
Ethics or its application should be discussed with the Compliance Officer. Conduct that
violates this Code of Ethics or applicable law is expressly outside the scope of the
relationship between the Company and Company Personnel. Company Personnel who are
suspected of having violated this Code of Ethics or applicable law will receive an
opportunity to present and defend their actions in a hearing before the Compliance
Officer. Following such hearing, Company Personnel whose conduct is found by the
Compliance Officer (in consultation with the CEO of the Company if deemed appropriate) to
violate this Code of Ethics or applicable law will be subject to disciplinary action by
the Company, including, in the Companys discretion, discharge and/or forfeiture of
any benefits or rights (including contractual rights) which, under applicable law, are
forfeitable upon discharge for cause, and to the enforcement of such other remedies as the
Company may have under applicable law.

# 14. Amendment,
Modification and Waiver

This Code may be amended, modified or
waived by the Board of Directors, subject to the disclosure and other provisions of the
U.S. Securities Exchange Act of 1934 and other applicable laws and the rules and
regulations thereunder and the applicable rules of the Nasdaq National Market.

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# Exhibit A

Chairman of the Audit
Committee:

Einat Domb-Har

Phone: 054-444-5262

Email:
einathar@netvision.net.il

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