SST and Nanotech Corporation Sign Licensing Agreement for Advanced Flash Memory Solutions

SUNNYVALE, Calif., Jan. 31 /PRNewswire-FirstCall/ -- SST (Silicon Storage Technology, Inc., a leader in flash memory technology, and Nanotech Corp., an emerging semiconductor foundry located in Changzhou, China, today announced the companies have entered into a multi-faceted investment, technology licensing and foundry relationship. Under terms of the agreement, Nanotech, will license SST's 0.25micron self-aligned SuperFlash technology, thus providing Nanotech's foundry customers, who are developing programmable logic and embedded flash memory products, access to SST's high-performance flash memory technology. Additionally, Nanotech's fabrication facility in the Changzhou National Hi-Tech District of the People's Republic of China (PRC) will serve as a foundry for SST, manufacturing SST's

SuperFlash-based products at 0.25 micron process geometry. This relationship significantly increases SST's access to low cost manufacturing capacity, enabling the company to continue its dominance in the low-density flash market.

"Along with Shanghai, where we have foundry and technology licensing partnerships with Grace Semiconductor, Hua Hong NEC and TSMC, Changzhou is emerging as a critical center for microelectronics in China," said Bing Yeh, president and CEO of SST. "We have received strong interest for our SuperFlash technology from fabless semiconductor suppliers and system designers throughout China, and this new relationship with Nanotech will help broaden the availability of our embedded flash memory to meet growing demand."

As part of the agreement, SST, through its subsidiary SST International, has purchased Series B preferred shares of Nanotech Corporation, incorporated in Cayman Islands. Proceeds from the Series B and a new round of Series C financing are expected to be used to build a new fabrication facility in Changzhou, Jiangsu Province, China.

"SST's SuperFlash technology represents the gold standard in embedded flash memory and we are pleased to be able to provide this industry-leading technology to our customers," said James Koo, CEO of Nanotech. "We thank SST for its participation in our Series B funding and look forward to working with the company for years to come as we serve the global market with a cost-optimized, technically robust foundry facility."

SST was among the first U.S.-based flash memory companies to implement a strategy addressing China's rapidly growing semiconductor industry, and was the first embedded flash provider to serve the Chinese design community. SST established its wholly owned subsidiary, SST China, in March 2001 to provide embedded flash memory design and manufacturing to Chinese design houses, as well as to develop and sell flash memory, flash/RAM ComboMemory and embedded controller products in the Chinese marketplace.

Nanotech is an emerging semiconductor foundry with an innovative technology that will provide its customers with superior quality, cost and time to market.

About SuperFlash Technology

SST's SuperFlash technology is a NOR type, split-gate cell architecture which uses a reliable thick-oxide process with fewer manufacturing steps resulting in a low-cost, nonvolatile memory solution with excellent data retention and higher reliability. The split-gate NOR SuperFlash architecture facilitates a simple and flexible design suitable for high performance, high reliability, small or medium sector size, in- or off-system programming and a variety of densities, all in a single CMOS-compatible technology.

About Silicon Storage Technology, Inc.

Headquartered in Sunnyvale, California, SST designs, manufactures and markets a diversified range of nonvolatile memory solutions, based on proprietary, patented SuperFlash technology, for high volume applications in the digital consumer, networking, wireless communications and Internet computing markets. SST's product families include various densities of high functionality flash memory components, flash mass storage products and flash microcontrollers. SST also offers its SuperFlash technology for embedded applications through its world-class manufacturing partners and technology licensees including 1st Silicon (Malaysia) Sdn. Bhd., Grace Semiconductor Manufacturing Corporation (Grace), IBM, Motorola, Inc., National Semiconductor Corporation, NEC Corporation, Oki Electric Industry Co. Ltd., Samsung Electronics Co. Ltd., SANYO Electric Co., Ltd., Seiko Epson Corp., Shanghai Hua Hong NEC Electronics Co., Ltd., Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), Toshiba Corporation, Vanguard International Semiconductor Corporation and Winbond Electronics Corp. TSMC offers embedded SuperFlash under its trademark Emb-FLASH. Further information on SST can be found on the company's Web site at http://www.sst.com .

Forward-Looking Statements

Except for the historical information contained herein, this news release contains forward-looking statements regarding flash memory market conditions, the company's future financial performance, the performance of new products and the company's ability to bring new products to market that involve risks and uncertainties. These risks may include timely development, acceptance and pricing of new products, the terms and conditions associated with licensees' royalty payments, the impact of competitive products and pricing, and general economic conditions as they affect the company's customers, as well as other risks detailed from time to time in the company's SEC reports, including the Annual Report on Form 10-K for the year ended December 31, 2003 and on Form 10-Q for the quarter ended March 31, June 30 and September 30, 2004.

For more information about SST and the company's comprehensive list of product offerings, please call 1-888/SST-CHIP. Information can also be requested via email to literature@sst.com or through SST's Web site at http://www.sst.com . SST's head office is located at 1171 Sonora Court, Sunnyvale, Calif.; telephone: 408-735-9110; fax: 408-735-9036.

NOTE: The SST logo and SuperFlash are registered trademarks of Silicon Storage Technology, Inc. Emb-FLASH is a trademark of TSMC. All other trademarks or registered trademarks are the property of their respective holders.