Dialog Semiconductor acquires CMOS imaging business from Sarnoff Corporation

Kirchheim/Teck-Nabern (Germany) – July 1, 2002 – Dialog Semiconductor Plc (Neuer Markt: DLG, Nasdaq & Nasdaq Europe: DLGS), today announced that it has acquired the CMOS imaging business and associated CMOS Active Pixel Sensor (APS) patent portfolio from the New Jersey, USA based Sarnoff Corporation, the research and development institute formerly known as RCA Laboratories. The two companies will partner for long term development of imaging technology and Sarnoff will continue its CMOS business in advanced imaging for medical, government and low volume applications.

Effective immediately, the new technology extends Dialog's product portfolio. Its power management and audio chipsets are already established in mobile phones, and now Dialog can offer advanced camera-on-a-chip technology as a highvolume fabless CMOS imaging company. As part of the agreement, a core team from Sarnoff is designated to transfer and implement the technology at Dialog. The financial terms of the deal were not disclosed.

Commenting on the significance of the acquisition, Roland Pudelko, CEO & President of Dialog Semiconductor, said, "The advantage to our customers is that we will own the key element which helps to drive down the cost and power consumption of camera modules for high volume markets".

Sarnoff's CEO, Dr. Satyam Cherukuri said "We are very excited about combining Dialog's excellent design, manufacturing and marketing expertise along with our advanced design technology which together will make a competitive, world class imaging business."

Sarnoff is a pioneer in CMOS imaging, with an extensive patent portfolio, and several high volume image sensor design wins. Its CMOS active pixel sensor (APS) design, first used in radiography applications in 1998, is a key enabling technology which offers unique competitive advantages in low cost digital cameras, mobile phones and automotive applications.

Sensors using CMOS imaging technology are expected to replace the CCD sensors used in the majority of the current generation of digital still and motion cameras and in other equipment requiring image sensing and processing.

According to market research from iSuppli Corp's market intelligence service, unit volumes of CMOS sensors are projected to grow from 18 million devices worth $367 million in 2001, to 72 million units worth more than $1 billion by 2005. On this basis, CMOS image sensors will represent about 47% of all image sensor devices shipped by 2005, up from 23% in 2001. Cahner's In-Stat on the other hand believes the market is larger, forecasting 200 million units being shipped by 2005, representing about 80% of all image sensors shipped in that year.

Whatever the differences in the figures, some analysts in North America and Asia predict that one of the key applications driving the present growth of CMOS image sensors is mobile video image messaging, and in the long-term automotive applications will be a major driver of growth. In addition applications such as digital still cameras, dual mode cameras (still and video pictures) and web cameras, other areas that may benefit from the new technology acquired by Dialog include:
 

• Portable wireless imaging – when mobile users want to send real-time video whilst on the move, the camera needs a wide dynamic range with fast response times to capture a truly panoramic image.
• Automotive guidance and collision avoidance systems – using night vision infrared illumination, it is possible to improve visibility with fast and accurate responses.
• Finger print recognition
• Security and surveillance
• Digital watch cameras
• Personal digital assistants (PDAs) and notebooks
• Television and video conferencing

Advanced camera-on-a-chip features
Dialog's acquisition brings together complimentary skills.  Sarnoff has developed the unique CMOS active pixel sensor (APS) design, fabricated in standard foundry rules with protected imaging intellectual property.  Dialog has proven mixed signal circuit design and high volume fabless manufacturing.

The advanced camera-on-a-chip design features full functionality on a single 3.3V standard CMOS integrated circuit, enabling the smallest, low power vision system currently available. The chip offers 100 frames per second operation with on-chip timing and control, contrast enhance, rapid exposure/gain control, DMA formatted DSP data interface, real-time image processing, a video 10-bit ADC, and JTAG I/O configured for chip scale packaging.  The chip design is also available as an embedded re-useable 2.5V core with isolation test wrapper.

Extended dynamic range – for natural looking images
A major feature of the APS design is extended dynamic range (XDR), which offers a response almost equivalent to human vision and film responses, for the highest quality imagery.  XDR is more robust than the standard logarithmic compression used by typical cameras, providing a piecewise linear transfer function at each pixel.  This enhances performance in low-light conditions, for example in automotive, surveillance, PC web camera, mobile wireless and medical imaging applications.

The APS also uses individual pixel addressing to reduce column overload, or  ‘blooming' as it is commonly known in photography.  The excess charge is absorbed in substrate and adjacent pixel drain regions.

Information about Dialog Semiconductor
Dialog Semiconductor develops and supplies mixed signal component and system level solutions for wireless communications and automotive applications. Dialog's innovative products developed in 100% CMOS are used by major OEMs (original equipment manufacturers) across the world. The company focuses on high volume applications where it can exploit its mixed signal expertise, IP design library and effective execution from specification to delivery. The company is headquartered near Stuttgart, Germany with additional design facilities in the UK, the USA, Sweden, Austria and Japan.
Dialog Semiconductor Plc is listed on the Frankfurt (Neuer Markt: DLG), on the NASDAQ (DLGS) and NASDAQ Europe (DLGS) exchanges and included in the Nemax50 since December 27, 2001.

Information about Sarnoff
Sarnoff Corporation, a subsidiary of SRI International, creates and commercialises electronic, biomedical and information technology for clients worldwide. Founded in 1942 as RCA Laboratories, it produces innovations in such areas as integrated circuits, lasers, and imagers; computational drug discovery and drug manufacture and delivery; digital TV and video; vision processing software and hardware; high-performance networking; and wireless communications. Its history includes the development of color TV, the liquid-crystal display, the disposable hearing aid, and a leadership role in creating the new U.S. digital and HDTV standard. Sarnoff also founds new companies to bring its technologies to market. Twenty such companies are in various stages of development.

D I S C L A I M E R
This press release contains "forward-looking statements". All statements regarding our future financial condition, results of operations and businesses, strategy, plans and objectives are forward-looking. Statements containing the words "believes", "intends", "expects" and words of similar meaning are also forward-looking. Such statements involve unknown risks, uncertainties and other factors that may cause our results, performance or achievements or conditions in the markets in which we operate to differ from those expressed or implied in such statements. These factors include, among others, product demand, the effect of economic conditions, exchange-rate and interest-rate movements, capital- and credit market developments, the timing of customer orders and manufacturing lead times, the changes in customer order and payment patterns, the financial condition and strategic plans of our major customers, insufficient, excess or obsolete inventory, and the impact of competing products and their pricing, product development, commercialisation and technological difficulties, political risks in the countries in which we operate or sale and supply constraints. It is not possible to predict or identify all such factors. Consequently, any such list should not be considered to be a complete statement of all potential risks or uncertainties. We do not assume the obligations to update forward-looking statements.