New eSilicon Direct Model Lowers Risks and Costs for Custom Chip Developers

SUNNYVALE, Calif.--July 10, 2006--eSilicon Corporation, a leading supplier of custom integrated circuits (ICs), today announced its new eSilicon Direct(TM) business model. The innovative, new approach expands upon the proven benefits of the eSilicon(R) fabless ASIC model to provide custom chip developers such as fabless semiconductor companies and system OEMs with the lower risk of a traditional ASIC model combined with the lower per-unit cost of working directly with the semiconductor supply chain. This new model enables a wider range of companies, from start-ups to more established organizations, to easily, reliably and cost-effectively develop and manufacture their custom ICs.

Companies of all sizes are facing growing challenges with the development of their custom chips. From shrinking product lifecycles and supply chain management issues to cost and margin pressures and increasingly complex manufacturing technologies, it is becoming significantly more difficult for companies to have all of the in-house expertise necessary to successfully engage directly with the fabless semiconductor supply chain.

The new eSilicon Direct model expands upon the company's fabless ASIC model with the introduction of a significantly lower cost structure for volume production. During product development, companies have the benefit of full access to eSilicon's design and manufacturing engineering expertise to speed their products to market. Once their products are in production, customers can rely on pre-negotiated, committed pricing while their products are immature, their yields are less predictable and their manufacturing costs are uncertain. After reaching a pre-defined, revenue-based production milestone, the eSilicon Direct model transitions to a 'cost plus' structure based on the true cost to manufacture, providing companies with lower per-unit costs as their chip production increases.

"Our partnership with eSilicon has been extremely successful," said Dan Sweeney, Chief Operating Officer, MathStar. "For our next generation of Field Programmable Object Arrays, going direct didn't make sense - the low risk of working with eSilicon combined with the compelling economics of the eSilicon Direct business model meant that working with eSilicon was the best choice for us."

The unique eSilicon fabless ASIC model enables fast time-to-market and right-first-time silicon success, providing companies with the services required to take a product from concept to volume production. Rather than taking on the risk and cost of building an internal operations team, companies can focus on their value-added activities at the system and application level, relying on eSilicon to manage the production of their custom chips. With the introduction of the eSilicon Direct business model, this relationship can be extended, enabling all sizes of companies to benefit from eSilicon's capabilities while maintaining a cost structure that is better than they could achieve themselves.

"In recent years, the costs and risks of designing and building ASICs have locked an increasing number of would-be designers out of the market," said Jordan Selburn, Principal Analyst at iSuppli. "Innovative business models such as eSilicon Direct enable these customers to choose an ASIC solution for their systems."

"The eSilicon Direct model is designed to provide our customers with the cost structure of a direct engagement model, but without the up-front costs and associated risks of doing everything themselves," said Jack Harding, Chairman, President and CEO, eSilicon. "This extension of our successful fabless ASIC model provides a cost-effective solution to an even wider range of companies, significantly expanding the depth and breadth of eSilicon's customer base."

About eSilicon

eSilicon designs and manufactures custom integrated circuits for leading electronics companies. The company serves both system OEMs and fabless semiconductor companies who apply custom silicon to create innovative new products. eSilicon designs and ships custom chips for a wide variety of markets and applications, including high-volume MP3 players, home gateways, complex storage networks and high-speed communications devices.

Established in 2000 and led by a team of industry veterans, eSilicon is a pioneer and award-winning market leader, widely recognized for innovation and operational excellence. The company combines in-house design and manufacturing expertise to provide customers with a low-cost and lower-risk, path to best-in-class technology. eSilicon is headquartered in Sunnyvale, CA, with offices in Allentown, PA; New Providence (Murray Hill), NJ; Shin Yokohama, Japan; and Bucharest, Romania. For more information, please visit http://www.esilicon.com.