Alliance Revolutionizes Security for Financial Transactions, Electronic Commerce, Data Communications.

CHANDLER, Ariz.--(BUSINESS WIRE)--Oct. 12, 1998--An agreement signed Monday between Microchip Technology Inc. (NASDAQ:MCHP) and XTec Inc. of Miami, will create a unique, universal security solution for data communications and financial transaction systems, providing the backbone for highly secure electronic commerce.

The alliance enables Microchip to integrate its proprietary PICmicro(R) 8-bit RISC microcontroller core with XTec's patented Mediametric(R) technology to provide a new level of security for all forms of data and electronic transaction processing, transmission and storage.

"Today's announcement elevates security for electronic commerce to a new level, giving consumers confidence that their transactions are secure and their electronic communications remain private," said Steve Sanghi, president and chief executive officer of Microchip.

"With XTec's highly secure Mediametric technology, this alliance propels Microchip's PICmicro architecture--the second most popular 8-bit microcontroller in the world (Dataquest)--into fast-growing Internet, electronic commerce and data communications markets."

Applications are wide ranging from set-top boxes, point-of-sale terminals, automatic teller machines, servers, routers, PCs, digital television, cell phones, pay phones, gaming and smart cards.

Traditional Security Systems Have Been Breached

Conventional code protection using finite state techniques (security based on a known entity--for example an algorithm) can ultimately be learned, compromising the entire system. Security systems typically use a hardware-only or software-only approach which incorporate a finite state technique, making them more susceptible to unwanted access.

Recent major breaches of software-based security systems have demonstrated the need for a low-cost solution which integrates both software and hardware to increase security levels in many applications.

New Integrated Approach Provides Trusted Security

The XTec/Microchip alliance provides this low-cost integrated software and hardware methodology to create a highly secure solution. Leading manufacturers have completed field testing of the XTec/Microchip solution and are moving to the implementation phase.

XTec's Mediametric software technology provides out-of-band security by using the unique physical signature of the hardware device combined with code protection, integrated cryptography and key management capabilities to produce highly secure trusted devices. Designers have traditionally focused their efforts on implementing a highly secure algorithm as the basis for the system's security.

Less emphasis is placed on key management for the security function, which then becomes the Achilles' heel in compromising the system. The security components of the Mediametric solution eliminates this potential problem by including the unique device signature which is tamper-resistant, key generation, transfer key and cryptograms.

The XTec/Microchip solution is being implemented on Microchip's high-end PIC17 8-bit microcontroller architecture. The PICmicro architecture combines high performance, low cost and a variety of package sizes, offering one of the best price/performance ratios in the industry.

The high-performance RISC architecture offers high computational power to execute the most sophisticated cryptographic algorithms, including Triple DES, RSA (1024 bit) signature and verification, and Elliptic Curve signature and verification.

The XTec/Microchip solution is backward compatible with existing magnetic card and smart card systems, as well as forward compatible with all forms of developing electronic commerce. It can be easily incorporated to existing systems.

"The convergence of the Internet, computing, and in-home entertainment/commerce applications is creating a need for a universally trusted, out-of-band, security solution," said Albert Fernandez, president and CEO of XTec.

"When integrated, Microchip's PICmicro architecture and XTec's Mediametric technology provide a trusted, universal solution ideally suited for securing all forms of electronic commerce, and multi-domain key and application management system. Our combined technologies offer unique protection against both side channel cryptanalysis and all forms of direct probing."

XTec Inc. is an independent developer, producer, and licensor of security solutions for electronic commerce, domain and key management, transaction and data processing, access control, communications, and information systems. XTec was founded in 1990, and is headquartered in Miami. The company's products, services, and operating systems are based on its proprietary Mediametric technology.

Mediametric is a revolutionary, non-algorithm based, technology founded on the premise that it will always be possible to measure a physical quantity more precisely than it can be duplicated--the Magnetic Fingerprint(R). XTec's technology enables others to securely process, store, and manage their proprietary information.

XTec's patents, engineers, and development teams are highly respected by the cryptographic community. The company is well versed in the integration of the Mediametric technology to a vast array of electronic commerce, communications, and access control applications.

Microchip Technology Inc. manufactures the PICmicro(R) family of 8-bit RISC-based microcontrollers--with OTP, FLASH, and ROM memory technologies; serial EEPROMs and related specialty memory products; and KEELOQ(R) code hopping devices for access control. These products target thousands of embedded control applications in the consumer, office automation, communications and industrial markets. Microchip's quality systems are ISO 9001 certified.

Headquartered near Phoenix in Chandler, Microchip employs approximately 2,200 people worldwide and has sales offices throughout Asia, Europe, Japan and the Americas.

Note to Editors: The Microchip name and logo, PIC, PICmicro and KEELOQ are registered trademarks of Microchip Technology Inc. in the United States and other countries. Mediametric and Magnetic Fingerprint are registered trademark of XTec Inc. All other trademarks are the property of their respective owners.