SigmaTel Secures Intellectual Property and Adds Renowned Design Team from D&M Holdings Inc.

Acquisition Strengthens SigmaTel IP; Addition of Respected Rio(R) Technology Design Team Increases SigmaTel's Hard Drive System Expertise and Expands Global Reach

AUSTIN, Texas--July 26, 2005-- SigmaTel, Inc. (NASDAQ:SGTL), a global leader in analog intensive, mixed-signal integrated circuits for the portable consumer electronics and computing markets, has agreed to acquire the software, patents and engineering resources associated with the Rio(R) portable audio product line. The cash acquisition from D&M Holdings Inc. (TSE II:6735), also joins Rio's Cambridge, England-based design team with SigmaTel's existing designers. This acquisition broadens and strengthens SigmaTel's already impressive intellectual property (IP) base, particularly in the expanding hard disk drive (HDD) MP3 player market segment. The acquisition does not include any rights to ownership of the portable audio player products, inventory or trademarks associated with the Rio brand.

The Cambridge design team's intellectual property (IP) and execution have resulted in highly regarded hard drive designs based on SigmaTel's 3500 family of audio system on chip (SoC) solutions. These cost-effective hard drive designs, which have recently been augmented with Microsoft(R) PlaysForSure capability, will now be available to SigmaTel's general customer base. Additionally, the Cambridge team's work developing ARM-based hard drive players has produced significant IP relating to one of the industry's most-used CPU designs, which will be leveraged in the design team's focus on SigmaTel's new 3600 product family.

"The addition of the Cambridge team and its IP, combined with our team in Austin, Texas, will provide us with the software resources to support both the 3500 and 3600 product lines in flash and hard drive implementations," said SigmaTel's President and CEO, Ron Edgerton. "Not only will SigmaTel be able to more rapidly meet the needs of our large and growing customer base in the flash and hard drive digital audio market, but we will also be able to accelerate the development of our multimedia solutions."

Through the acquisition, SigmaTel gains as many as 15 patents and patent applications, some of which are among the earliest MP3 player patents ever granted and many of which have been granted or are pending in Europe and Asia. The design team, currently comprised of software and hardware engineers in Cambridge and Santa Clara, CA, was responsible for developing the technology of the Forge, Carbon and ARM-based Karma MP3 players. The team will remain principally in the United Kingdom, which further increases SigmaTel's capability to serve the European market, adding to the company's existing points of presence in the United States, China, Singapore, Taiwan, Japan and Korea.

"This acquisition demonstrates SigmaTel's commitment to continuously extending our position as the industry leader in developing innovative technologies for the benefit of our customers and the end consumer," Edgerton said. "By providing solutions that enable companies to develop devices with the longest battery life, smallest form factors and lowest system design costs, SigmaTel has built a customer list that includes some of the most popular makers of MP3 player devices around the world. With the Cambridge design team in place, we're taking the necessary steps to make sure we maintain our market leading position and competitive advantage across market segments."

In connection with the acquisition, SigmaTel will pay an undisclosed sum of cash consideration for certain assets of D&M Holdings, Inc. A portion of the consideration will be subject to escrow pursuant to the terms of the acquisition agreement. The parties intend to close the acquisition in a very short time. SigmaTel may record a one-time charge for purchased in-process research and development expenses related to the acquisition in its third quarter, ending September 30, 2005. The amount of that charge, if any, has not yet been determined.

For more information on SigmaTel, please visit the SigmaTel website at www.sigmatel.com.

SigmaTel will discuss some specifics about this acquisition in its Second Quarter 2005 earnings conference call to be held today, July 26, 2005, beginning at 4:00 P.M. Central Time. This call will be simulcast via SigmaTel's website at www.sigmatel.com/investor.relations. Replays of the call will be available at this web address and via telephone at 800-633-8284 (U.S.) and 402-977-9140 (international) by entering reservation number 21250066. These replays will be available through August 26, 2005.

About D&M Holdings Inc.:

D&M Holdings Inc. (TSE II:6735) is based in Tokyo and owns the Denon, Marantz, McIntosh Laboratory, D&M Professional, ReplayTV(R), Rio(R) and Escient(R) brands. Denon, Marantz, McIntosh and D&M Professional are global industry leaders in the specialist home theater, audio/video consumer electronics or professional audio markets, with a strong and long-standing heritage of manufacturing and marketing high-performance audio and video components. The ReplayTV, Rio and Escient brands represent award-winning technologies in digital home entertainment. Additional information is available at www.dm-holdings.com.

About SigmaTel:

SigmaTel, Inc., a fabless semiconductor company headquartered in Austin, Texas, designs, develops, and markets proprietary, analog intensive, mixed-signal ICs for a variety of products in the consumer electronics and computing markets, including portable compressed audio players, such as MP3 players, notebook and desktop PCs, DVD players, digital televisions, and set-top boxes. SigmaTel provides complete, system-level solutions that include highly-integrated ICs, customizable firmware and software, software development tools, reference designs, and applications support. The Company's focus is on providing system-level solutions that enable customers to rapidly introduce and offer electronic products that are small, light-weight, power-efficient, reliable, and cost-effective. SigmaTel is ISO 9001:2000 certified and is committed to providing customers with high performance, quality products along with superior customer service.

Cautionary Language:

This press release contains forward-looking statements based on current SigmaTel expectations. The words "expect," "will," "should," "would," "anticipate," "project," "outlook," "believe," "intend," and similar phrases as they relate to SigmaTel or future events are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of SigmaTel, but are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. A number of important factors could cause actual results to differ materially from those in the forward-looking statements, and there will be events in the future that SigmaTel is not able to accurately predict or control. For a discussion of factors that could impact SigmaTel's financial results and cause actual results to differ materially from those in the forward-looking statements, please refer to recent SigmaTel filings with the SEC, particularly the Form 10-K that was filed on February 8, 2005 and the Form 10-Q that was filed on April 19, 2005.

SigmaTel is a registered trademark of SigmaTel, Inc. All other products and brand names as they appear in this release are trademarks or registered trademarks of their respective holders. All specifications may be changed without notice.