Mosaid Announces First Quarter Results for Fiscal Year 2005

OTTAWA, Ontario – August 19, 2004 – MOSAID Technologies Incorporated (TSX:MSD) today announced financial results for the first quarter of fiscal 2005, ended July 23, 2004.

As a result of adopting the fair value provisions of CICA Handbook section 3870, Stock-based compensation and other stock-based payments, on a retroactive basis, the Company has revised certain previously disclosed information in the balance sheet, results of operations and statement of cash flows, in accordance with Canadian generally accepted accounting principles. The Company has also changed the manner of presentation of interest income and interest expense in the statement of operations, both currently and for previous periods.

Revenues for the first quarter of fiscal year 2005 were $9,255,000 compared to $5,148,000 in the first quarter of fiscal year 2004. Net earnings for the quarter was $92,000 or $0.01 per diluted share, compared to a net loss of $3,713,000 or $0.36 per diluted share a year ago. Before discontinued operations, related to the termination of the Semiconductor Division in September 2003, earnings for the quarter were $72,000 or $0.01 per diluted share compared with a net loss of $1,538,000 or $0.15 per diluted share a year ago.

The Company’s cash balance and short-term marketable securities at the end of the first quarter was $41.5 million, an increase of $3.3 million over the $38.2 million at the end of fiscal year 2004.

"We are pleased with our business performance in the first quarter," said George Cwynar, President and Chief Executive Officer of MOSAID. "Our Systems Division delivered another solid quarter of improved revenues and profitability while making good progress towards the next generation of tester products, and our Intellectual Property Division secured a lead customer for its memory controller offering. Finally, in MOSAID’s litigation against Samsung, we were successful with our sanctions motion in the New Jersey Court."

Operating Highlights

Court Granted Sanctions Against Samsung in Litigation

In recent months, three hearings were held in the New Jersey District Court to consider MOSAID's motion for sanctions against Samsung. Filed in April 2004, MOSAID had requested a number of sanctions related to Samsung’s failure to deliver certain documentation, as required by law, in the discovery phase of the case.

On July 8, 2004, Magistrate Judge Hedges granted the majority of MOSAID’s requested sanctions against Samsung. As a result of Samsung’s failure to deliver documentation and its destruction of email related to the case the following sanctions were imposed: a monetary penalty payable to MOSAID; an order that proof of infringement by MOSAID of certain representative Samsung parts of MOSAID’s choosing will determine infringement; an order that Samsung is precluded from challenging MOSAID’s expert evidence as to the operation of Samsung parts, to the extent that such challenges rest on any assumptions made in performing analysis on representative parts; and an order that the trial Jury should receive an instruction adverse to Samsung based on its destruction and non-production of emails. MOSAID is currently waiting for the final Court order concerning the text of the jury instruction, and the value of monetary sanctions that will be paid to MOSAID by Samsung.

On August 10, 2004, Magistrate Judge Hedges granted MOSAID's request to delay the submission of expert reports, and the identification of asserted patent claims, until after the expected appeal of Judge Hedge's sanctions ruling by Samsung. Judge Hedges also vacated all scheduled dates in the case to accommodate the delay of expert reports. MOSAID believes that the trial date, which had been scheduled for December 7, 2004, may now be delayed by approximately three months.

Fact discovery proceedings in the Infineon litigation are now largely complete and the next step will be the submission of expert reports. The case will eventually be transferred back to the Northern District of California for trial but the date of that transfer is unknown at this time.

At the end of the first quarter, there were fifteen companies on notice for patent infringement and MOSAID is in licensing discussions with a number of these manufacturers. MOSAID has a total of 527 issued or pending patents in its portfolio.

Design Licensing Group Adds to Portfolio of Semiconductor IP Products

At the start of the first quarter, the Design Licensing group announced a lead customer for another new semiconductor IP product. The customer, a leader in advanced ASIC technology, signed a multi-use license for MOSAID’s complete memory controller solution. The design and tape-out of the QDR® II SRAM memory controller IP block is now complete and the product is available for licensing to other customers. Targeted at TSMC's 130nm process geometry, the memory controller solution includes MOSAID’s high-performance HSTL (High Speed Transceiver Logic) I/O library and integrated DLL (Delay Locked Loop) for an optimized overall system timing budget.

MOSAID’s BIST (built in self-test) engine for embedded memories is also being added to the portfolio of IP products as a result of work with a lead customer. A contract with this major semiconductor manufacturer was announced at the end of fiscal year 2004 with the signing of an agreement to develop a high-speed embedded DRAM macrocell. The BIST engine is for use with embedded memories, including SRAM and DRAM, with or without redundancy, and can be used for embedded memory inside the die or on a port for testing off-chip memories. The BIST is a highly advanced, fully programmable engine, which includes a user-friendly test program instruction compiler. The MOSAID BIST engine is scheduled to be available for license in the second fiscal quarter.

Systems Division Records Another Strong Profitable Quarter

During the first quarter, the Systems Division business continued to improve, recording revenues of $6,260,000 and an operating profit of $1,437,000. Shipments of the MS4205 and MS4205ex test systems continue to reflect recovery in the memory markets and increased demand from semiconductor manufacturers to acquire high performance test capability for the latest high-speed Flash and DRAM memories. The Division increased its investment in new product development during the first quarter. Future products will target market requirements for increased data width and pin count, larger bitmap capacity and more logic test capability.

Financial Tables

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About MOSAID

MOSAID Technologies Incorporated is an independent semiconductor company operating through two divisions:

• <>Intellectual Property - a developer and licensor of memory intellectual property. >

• <>Systems - the leading supplier of engineering memory test and analysis systems to memory manufacturers, foundries and fabless chip companies around the world. >

Founded in 1975, MOSAID is based in Ottawa, Ontario, Canada, with offices in Santa Clara, California; Newcastle upon Tyne, U.K; and Tokyo, Japan. For more information, visit the Company’s web site at www.mosaid.com.

Forward Looking Information

This document may contain forward-looking statements relating to the Company’s operations or to the environment in which the Company operates. Such statements are based on current expectations that are subject to a variety of risks and uncertainties that are difficult to predict and/or beyond MOSAID’s control. Actual results may differ materially from those expressed in any forward-looking statements, due to factors such as customer demand and timing of purchasing decisions, product and business mix, competitive products, pricing pressures as well as general economic and industry conditions. MOSAID assumes no obligation to update these forward-looking statements, or to update the reasons why actual results could differ from those reflected in any forward-looking statements. Additional information identifying risks and uncertainties is contained in other public filings with the Ontario Securities Commission.