AT&T Bell Laboratories and VLSI to make security on the information superhighway dramatically more pervasive; companies to develop solutions to address rapidly growing privacy problems in communications.

NEW YORK--(BUSINESS WIRE)--Jan. 31, 1995--AT&T Bell Laboratories and VLSI Technology Inc. (VLSI) have agreed to develop a new generation of security chips that will make built-in privacy readily available in a wide variety of "information superhighway" applications.

The companies will produce silicon chips with built-in data and privacy protection features for products in the areas of communications, access control and connectivity.

These chips can be embedded in commercial products such as cellular phones, wireless networks and controllers, smartcards, and delivery systems for entertainment and information. By embedding protection features into systems during initial design, the incremental cost associated with their addition is small.

The need for the benefits offered by security-protected equipment is growing dramatically with the increasing number of people on the internet and other common data and voice networks, the spread of cellular technology, and the expansion of electronic commerce into the consumer market for tasks such as home banking and bill payment.

Bell Laboratories' system and security expertise will be matched with VLSI's experience in the design and manufacturing of high-performance, high-complexity integrated circuits with secure features to enable an effective and practical solution to the growing problem.

The first product developed by the companies is the AT&T IVES(TM) Information Vending Encryption System. AT&T Network Systems is using the system in set-top cable receivers as part of an end-to-end digital video solution for Cablevision Systems Corp., announced in November. Cablevision, the nation's fifth largest cable service provider, plans to reach significant numbers of subscribers with enhanced pay-per-view and video-on-demand services this year.

"The information superhighway won't really become practical until everyone can be sure that their transactions and communications are both private and secure against tampering," said Mike Kaplan, director of the Secure Technologies Department, AT&T Bell Laboratories.

"Whether to provide privacy, protect intellectual property or authenticate electronic commerce, these systems will not reach their full potential unless security is designed up-front. Bell Laboratories and VLSI will provide our customers with the technology required to put secure features into all key products that are used in these arenas. Furthermore, by embedding these features in chips that perform other system functions, adding security is extremely cost efficient."

Don Ciffone, vice president and general manager of VLSI's Product Divisions, added, "Computer and communication systems of the future will require data and voice privacy protection just as today they need microprocessors, memories and other logic functions. Literally any system that transmits, processes or stores important data is a candidate for incorporating AT&T and VLSI secure information technology solutions. Our efforts will allow manufacturers to differentiate their products through the addition of embedded security features."

The market for embeddable security chips has huge potential, according to a report published in March 1994 by Dataquest of San Jose, Calif. "In an information age ushered in by the rapid growth of ... distributed corporate and personal communications and global LAN and WAN connectivity, the need for improved information security is becoming vital," Dataquest reported.

Dataquest projects that 2.86 million electronic data processing, data communication and voice communication nodes will employ some type of hardware encryption in 1997, with this number growing to 5 million to 7 million by the year 2000. They also stated that, while the current semiconductor content of hardware encrpytion modules ranges from $50 to $100, it is expected to drop to $10 to $15 in 1997.

Markets for embedded, high-performance technology for data and privacy protection include delivery systems of companies that provide information or entertainment directly to consumers and businesses. These systems need privacy, authentication, digital signature and data integrity capabilities for salea, billing and payment functions, making this technology attractive to financial institutions, retailers and utilities.

AT&T Bell Laboratories is the research and development arm of AT&T, the global communications and computer company. The Bell Laboratories Secure Technologies Department, based in Andover, Mass., provides security solutions in the form of products and consultation services for voice, data, fax and video applications.

VLSI Technology Inc. (NASDAQ:VLSI) designs and manufactures application-specific integrated circuits and application-specific standard products based on its proprietary FSB(TM) library technology. Targeting its offerings towards the computing, communications and consumer marketplaces, its products are designed into desktop and portable computers, network and wireless voice and data equipment, and other state-of-the-art systems. The company is based in San Jose and has approximately 2,700 employees worldwide.

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Note to Editors: FSB is a trademark of VLSI Technology Inc. This news release was jointly released by AT&T Bell Laboratories and VLSI Technology Inc.

CONTACT: AT&T Bell Laboratories

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