Alliance Semiconductor Announces Settlement of Lawsuit.

SANTA CLARA, Calif. -- Alliance Semiconductor Corporation (Nasdaq:ALSC) ("Alliance") today announced that on July 7, 2006, it entered into a settlement agreement with Prabhakara Balla and Trit Tek Research Ltd. (collectively, "Plaintiffs") that resolved Plaintiffs' twenty-one year-old lawsuit against Alliance. Trit Tek had a contractual relationship with Alliance in the company's first year in existence, and Prabhakara Balla claimed to be a principal in that company. In 1985, Plaintiffs filed a lawsuit in Canada against a number of defendants, including Alliance. Asserting a misappropriation by Alliance of certain technology, Plaintiffs obtained a default judgment for approximately $172 million against Alliance in Canada in 1998, which was set aside both as to the default and damages in 1999. The default, but not the damages assessment, was later reinstated after further proceedings in the trial court. Alliance, after learning of the purported judgment, initially contested the lawsuit on the basis that it was not served properly and that the Canadian courts lacked jurisdiction over Alliance. Alliance also recently filed related litigation in California to establish that any judgment in Canada could not be enforced against Alliance, and also that Alliance's 1991 bankruptcy discharged Plaintiffs' claims. This settlement ends for all parties the continued expense of these protracted proceedings. Pursuant to the settlement agreement, although continuing to deny liability, Alliance agreed to a cash payment to Plaintiffs in exchange for full settlement of all proceedings and a mutual general release of all claims. In reaching the settlement, Alliance recognizes the contributions of Prabhakara Balla to the origins of certain of Alliance's semiconductor products.

Forward-Looking Statements 

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