Mentor Graphics Adds Serial ATA IP with Acquisition of Palmchip Intellectual Property Business

WILSONVILLE, Ore., August 23, 2004 - Mentor Graphics Corporation (Nasdaq: MENT) today announced it has acquired Palmchip Corporation's complete Parallel and Serial ATA Intellectual Property (IP) business. The acquisition extends Mentor's position as the leading provider of communication standards-based IP by adding Palmchip's industry-leading ATA IP to its broad portfolio of standards-certified cores, and increases its IP offerings for the growing storage market.

"This acquisition advances Mentor's IP strategy by broadening our portfolio with a continued emphasis on providing our customers with certified, standards-based IP," said Michael Kaskowitz, general manager of the Mentor Graphics IP division. "When we look to augment our IP portfolio, we look to those vendors that uphold the same high standards we do. This acquisition enables us to offer our customers and Palmchip's IP customer base a broader selection of certified cores for the storage market that provide them with a smooth transition as their design needs evolve."

Palmchip is a leader in the development and licensing of reusable, configurable processor platform semiconductor IP building blocks for system-on-chip (SOC) designs. By divesting its storage IP product line, it will be able to directly focus its efforts on its growing media storage semiconductor business that will develop and market single chip ASSPs for wireless storage products. Mentor Graphics will integrate product engineering and marketing resources into its own IP division.

"This move is a natural progression for Palmchip. We have been creating storage SoCs and ASICs through our AcurX platform for the past eight years. Transferring our IP business to Mentor Graphics allows us to refocus on our expanding set of turnkey wireless storage solutions for the growing media storage semiconductor industry," said Jauher Zaidi, president and CEO, Palmchip. "We are convinced that our IP customers will benefit from the expanded support they will receive from one of the industry's largest IP providers."

ATA IP products are crucial for developing the complex designs used in storage system products, from hard disk drives to large area networks. Palmchip's Parallel and Serial ATA cores are widely used, silicon-proven in multiple process technologies and interoperable with a variety of discrete and proprietary SerDes solutions. The complete ATA line of cores offers users a smooth and scalable path to meet their changing storage design needs. All Palmchip IP products have undergone rigorous testing and verification to help ensure full functionality and adherence to the applicable technical specifications.

About Mentor Graphics
Mentor Graphics Corporation (Nasdaq: MENT) is a world leader in electronic hardware and software design solutions, providing products, consulting services and award-winning support for the world's most successful electronics and semiconductor companies. Established in 1981, the company reported revenues over the last 12 months of about $675 million and employs approximately 3,800 people worldwide. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777; Silicon Valley headquarters are located at 1001 Ridder Park Drive, San Jose, California 95131-2314. World Wide Web site: http://www.mentor.com/.

Mentor Graphics is a registered trademark of Mentor Graphics Corporation. All other company or product names are the registered trademarks or trademarks of their respective owners.

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