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SST Announces Increased Equity Investment in Grace Semiconductor

Posted on: Monday, 8 March 2004, 06:00 CST

SUNNYVALE, Calif., March 8 /PRNewswire-FirstCall/ -- SST (Silicon Storage Technology, Inc.) , a leader in flash memory technology, today announced that it has participated in Grace Semiconductor Manufacturing Corporation (GSMC) Series B financing with an equity investment of $33 million (USD). SST invested $50 million (USD) in GSMC's Series A financing in March of 2001.

Incorporated in Cayman Islands, GSMC is the holding company of Shanghai Grace Semiconductor Manufacturing Corporation (Grace), an advanced, state-of-the-art, deep sub-micron wafer foundry. Grace is a strategic manufacturing partner of SST. The foundry is currently mass-producing SST's self-aligned second-generation SuperFlash technology at 0.25 micron with 0.18 micron slated for mass production in the second half of 2004. Proceeds from the Series B financing are expected to be utilized for capacity expansion and investments in leading-edge technology. At this point, the factory is positioned to support the requirements of 0.13 micron technology.

"We are very confident in Grace's capability as a development site as well as a manufacturing site for SST," said Bing Yeh, SST president and CEO. "Earlier in 2003, after its equipment installation, Grace brought up our first product vehicle to a respectable yield level in record time. After the full qualification by SST during the fourth quarter of 2003, Grace has demonstrated its manufacturing maturity with the shipment of more than five million SuperFlash products to SST. We expect to ramp our production volume at Grace to more than 3000 wafers per week by the end of 2004. The incremental production output from Grace will allow us to meet the expected strong demand in the DVD player, Bluetooth, digital camera, notebook PC and cellular phone markets. This investment is another step in developing SST's presence globally in areas that are strategically important to our long-term goals. We are pleased to be a part of this round of financing and believe that the funds raised will help to support SST's aggressive technology roadmap beyond 0.18 micron."

"With this new investment, SST has become one of our largest equity investors," said Winston Wong, chairman and chief executive of Grace Group. "We appreciate SST's participation in this round and deeply value our strategic partnership in the development of our fab and business. The manufacturing of SST's world-renowned SuperFlash-based products at our facility can help to differentiate us as a leading foundry serving the rapidly growing embedded flash integrated circuit market. We are strongly committed to providing SST with state-of-the-art facilities to support the roll-out of its technology roadmap and provide the capacity to meet its future growth needs."

About SuperFlash Technology

SST's SuperFlash technology is a NOR type, split-gate cell architecture which uses a reliable thick-oxide process with fewer manufacturing steps resulting in a low-cost, nonvolatile memory solution with excellent data retention and higher reliability. The split-gate NOR SuperFlash architecture facilitates a simple and flexible design suitable for high performance, high reliability, small or medium sector size, in- or off-system programming and a variety of densities, all in a single CMOS-compatible technology.

About Silicon Storage Technology, Inc.

Headquartered in Sunnyvale, California, SST designs, manufactures and markets a diversified range of nonvolatile memory solutions, based on proprietary, patented SuperFlash technology, for high volume applications in the digital consumer, networking, wireless communications and Internet computing markets. SST's product families include various densities of high functionality flash memory components, flash mass storage products and flash microcontrollers. SST also offers its SuperFlash technology for embedded applications through its world-class manufacturing partners and technology licensees including 1st Silicon (Malaysia) Sdn. Bhd., Grace Semiconductor Manufacturing Corporation (Grace), IBM, Motorola, Inc., National Semiconductor Corporation, NEC Corporation, Oki Electric Industry Co. Ltd., Samsung Electronics Co. Ltd., SANYO Electric Co., Ltd., Seiko Epson Corp., Shanghai Hua Hong NEC Electronics Co., Ltd., Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), Toshiba Corporation, Vanguard International Semiconductor Corporation, and Winbond Electronics Corp. TSMC offers embedded SuperFlash under its trademark Emb-FLASH. Further information on SST can be found on the company's Web site at http://www.sst.com/ .

Forward-Looking Statements

Except for the historical information contained herein, this news release contains forward-looking statements regarding flash memory market conditions, the company's future financial performance, the performance of new products and the company's ability to bring new products to market that involve risks and uncertainties. These risks may include timely development, acceptance and pricing of new products, the terms and conditions associated with licensees' royalty payments, the impact of competitive products and pricing, and general economic conditions as they affect the company's customers, as well as other risks detailed from time to time in the company's SEC reports, including the Annual Report on Form 10-K for the year ended December 31, 2002 and on Form 10-Q for the quarters ended March 31, June 30, and September 30, 2003.

For more information about SST and the company's comprehensive list of product offerings, please call 1-888/SST-CHIP. Information can also be requested via email to literature@sst.com or through SST's Web site at http://www.sst.com/ . SST's head office is located at 1171 Sonora Court, Sunnyvale, Calif.; telephone: 408-735-9110; fax: 408-735-9036.

NOTE: The SST logo and SuperFlash are registered trademarks of Silicon Storage Technology, Inc. Emb-FLASH is a trademark of TSMC. All other trademarks or registered trademarks are the property of their respective holders.

CONTACT:

Leslie Green

Stapleton Communications Inc.

+1-650-470-0200

Jack Lai

Vice President & Chief Financial Officer

Silicon Storage Technology, Inc.

jlai@sst.com

+1-408-735-9110

Silicon Storage Technology, Inc.

CONTACT: Leslie Green of Stapleton Communications Inc., +1-650-470-0200,for Silicon Storage Technology, Inc.; or Jack Lai, Vice President & ChiefFinancial Officer of Silicon Storage Technology, Inc., +1-408-735-9110, orjlai@sst.com

Web site: http://www.sst.com/

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