NeoMagic(R) Corporation Announces The Issuance of a New Embedded DRAM Patent

SANTA CLARA, Calif. -- Sept. 15, 2006 -- NeoMagic Corporation (Nasdaq: NMGC) announced that the United States Patent and Trademark Office (the USPTO) has issued a patent to the Company that covers a number of important aspects of embedded dynamic random-access-memory (DRAM) technology and on-chip semiconductor memories. Specifically, the USPTO granted NeoMagic United States Patent No. 7,106,619, which covers the use of specific on-chip memory structures, circuit configurations and techniques that the Company believes may be employed by several large semiconductor manufacturers and system providers around the world in microchips for such diverse areas as electronic entertainment systems, digital imaging systems and mobile telecommunications devices.

Speaking on behalf of the Company, Mr. Doug Young, NeoMagic Corporation's President and Chief Executive Officer, stated "We consider this new patent to be an especially important addition to NeoMagic's patent portfolio and one that will be of particular strategic importance in our increasing efforts to license that patent portfolio over the months and years ahead."

In the early days of the semiconductor industry, microchips contained mainly logic circuits, analog circuits or memory. In recent years, the industry has sought to reduce chip count, package count, power dissipation and cost by integrating (or "embedding") large amounts of memory into integrated circuits that also contain large amounts of logic circuitry, large amounts of analog circuitry or, in some cases, both.

NeoMagic Corporation is regarded by many industry experts to be the company that pioneered the use of on-chip memories and, in particular, the use of embedded DRAM technology in semiconductor microchips, as a result of its ground-breaking use of embedded DRAMs in the personal computer graphics controller area during the 1990's. Those efforts, which gave rise to what industry sources today typically consider to be the worldwide semiconductor industry's first commercially-successful embedded DRAM product, the NM2070 graphics controller, also established the basis for the broad intellectual property protection that the USPTO has now granted to the Company in issuing United States Patent No. 7,106,619.

About NeoMagic

NeoMagic Corporation delivers semiconductor chips and software providing mobile solutions that enable new multimedia features for handheld devices. These solutions offer low power consumption, small form factor and high performance processing. The Company demonstrated one of the first solutions used for H.264 video decoding in a mobile digital TV phone, and is developing and delivering solutions for audio/video processing of the dominant mobile digital TV standards, including ISDB-T, DMB, and DVB-H. For its complete system solution, NeoMagic delivers a suite of middleware and sample applications for imaging, video and audio functionality, and provides multiple operating system ports with customized drivers for the MiMagic product family. NeoMagic has a patent portfolio of over 20 patents that cover NeoMagic's proprietary array processing technology, embedded DRAM and other technology. Information on the Company may be found on the World Wide Web at www.neomagic.com.