Micronas to Acquire WISchip International, a Leader in Video Compression and Streaming Technology

Combination of Micronas and WISchip technologies enables a broad range of HDTV solutions

Zurich, Switzerland, October 26, 2005 - Micronas Semiconductor Holding AG (SWX Swiss Exchange: MASN, Frankfurt: MNSN, Prime Standard Segment, TecDAX) today announced the signing of a definitive agreement to acquire all shares of privately held fabless semiconductor company WISchip International Ltd. with operational headquarters in Santa Clara, CA. WISchip is focused on the development of advanced audio and video system-on-chip IC and software solutions, implementing the latest generation MPEG1/2/4, H.264 and VC-1 HDTV standards. These are the key technologies for a variety of emerging markets utilizing broadband networks and mass storage for next generation entertainment and communications applications.

Founded in 1998, WISchip will complement Micronas' team by adding the in-depth expertise of 104 additional staff members, including 78 experienced video and computer engineers, 32 of which are based in the company's Shanghai R&D facility. Micronas will pay around USD 80 million in cash for the entire share capital of WISchip. The transaction is expected to close prior to the end of this year.

WISchip's technology supports not only the existing MPEG-1/2/4 compression standards, but also the most advanced new compression standards such as H.264 and Microsoft's Windows Media® 9/VC-1 at full high definition resolutions. This is crucial to support all the latest HDTV standards and related consumer applications like BluRay/HD DVD devices, Internet Protocol (IP) set-top boxes and DVB (Digital Video Broadcasting). The next generation of TV signals regardless if being distributed via satellite, cable, terrestrial or Internet, will all be based on advanced codecs, such as the H.264 standard (also known as MPEG-4 part 10/AVC (Advanced Video Coding)) and/or Microsoft's WM9/VC-1. These new codecs dramatically reduce the required bandwidth for the transmission of audio and video content. EICTA, the European Industry Association for Information Systems, Communication Technologies and Consumer Electronics recently adopted H.264/MPEG-4 AVC as the European DVB HDTV standard. WISchip's latest decoder is already fully compliant with H.264 HD and Microsoft's WM9/VC-1 HD.

"WISchip's exciting portfolio of products and important IP for HDTV from whatever source, be it broadcast, IPTV or delivered from storage media, makes the company the perfect complement for Micronas' state-of-the-art HD display products," said Wolfgang Kalsbach, CEO of the Micronas Group. "WISchip has assembled a great team of industry experts in the field of advanced algorithms and SOC architectures. Its activities significantly strengthen our worldwide R&D efforts."

"The combination of technologies and products from Micronas and WISchip will enable Micronas' customers to quickly bring to market next-generation audio/video solutions for a broad range of products, including Integrated Digital HDTVs, enhanced cable, satellite and terrestrial TV set-top boxes, personal video recorders (PVRs), next generation high definition DVD recorders (HD DVD and BluRay) and players, Internet Protocol (IP) set-top boxes, IP AV streaming systems as well as IP surveillance cameras", said Hans-Jürgen Désor, VP Consumer Products of Micronas. "Together with WISchip's world-leading multi-standard compression IC products, Micronas will be uniquely positioned to provide these emerging markets with complete cost- and time efficient turn-key solutions."

"Micronas' comprehensive, complementary TV product portfolio, strong market penetration and broad installed customer base make the company a perfect partner to leverage our innovative digital media technologies into exciting new markets," said James L. Mannos, CEO of WISchip. "Micronas offers unmatched IC design expertise and global reach. WISchip delivers leading encode and decode engineering capabilities. The combined company will be excellently positioned to successfully bring the most innovative video and consumer electronic products to customers worldwide. Our team is eager to join with the leader in the TV industry."

WISchip products

The company's latest product, the DeCypher(TM) 8100, is a breakthrough multi-stream, high-definition, audio/video system-on-chip (SoC) decoder with integrated digital rights management and networking support, compliant with the H.264 HD standard and Microsoft's WM9/VC-1.The DeCypher 8100 is a flexible and scalable single-chip solution that will enable OEM consumer electronics customers to develop next-generation IP set-top boxes, high-definition television sets and BluRay (BD)/HD-DVD products.

WISchip's Cypher(TM) 7108 system-on-chip (SoC) is a highly integrated video/audio encoding solution designed to address the increasingly demanding multimedia data storage and transmission requirements of next-generation home entertainment systems, PC and Mac "media centers" and commercial/home surveillance systems. Based on advanced hardware compression technology, the Cypher 7108 supports a broad range of audio and video encoding formats including MPEG-4 Advanced Simple Profile (without GMC), MPEG-2/1, Motion JPEG, and H.263.

WISchip's GO7007SB is a broadly applicable video encoder chip that provides superior image quality. The WISchip GO7007SB is designed for devices, such as DVRs, PVRs, or STBs, and for streaming IP solutions over Ethernet, such as video conferencing or surveillance.

WISchip's System-on-Chip products include processors based on the MIPS32® architecture offering customers a wide breadth of industry standard tools and applications including support for both the Linux and MS Windows(TM) CE operating systems.

WISchip(TM), Cypher(TM), DeCypher(TM) are trademarks of WISchip International Ltd. in the United States, certain other countries and/or the EU. MIPS32® is a trademark of MIPS Technologies, Inc. Any other trademarks or trade names mentioned are the property of their respective owners.

Safe Harbor Statement: This press release contains forward-looking statements based on current expectations or beliefs, as well as a number of assumptions about future events. These statements and all other statements that are not historical facts are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The reader is cautioned not to put undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to a number of uncertainties and other factors, many of which are outside the control of WISchip and Micronas.

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About Micronas

Micronas (SWX Swiss Exchange: MASN, Frankfurt: MNSN, Prime Standard Segment, TecDAX), a semiconductor designer and manufacturer with worldwide operations, is a leading supplier of cutting-edge IC and sensor system solutions for consumer and automotive electronics. As a market leader in innovative, global TV system solutions, Micronas leverages its expertise into new markets emerging through the digitization of audio and video content. Micronas serves all major consumer brands worldwide, many of them in continuous partnerships seeking joint success. While the holding company is headquartered in Zurich (Switzerland), operational headquarters are based in Freiburg (Germany). Currently, the Micronas Group employs about 2000 people. In 2004, it generated CHF 963 million in sales. For more information on Micronas and its products, please visit www.micronas.com

About WISchip

Wischip International is a privately held, venture-backed global provider of digital video and audio semiconductor solutions that enable new classes of powerful multimedia products. The company's portfolio of high-performance, low-power stand-alone and system-on-chip integrated circuits incorporates next-generation standards that enable system developers to quickly bring leading-edge products to market. Patented WISchip technology maximizes digital video and audio quality in a wide range of end-user computing, surveillance, and electronic entertainment products. WISchip International offices are located in Santa Clara, California, with operations, distribution partners, and strategic alliance partners in Asia, Europe, and the Middle East. For more information, visit www.wischip.com

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