Centillium Communications Targets Broadband Optical Access Market with Launch of New Business Unit.

Business Editors/High-Tech Writers

CeBIT 2004

TOKYO & FREMONT, Calif.--(BUSINESS WIRE)--March 22, 2004

New Optical Business Unit Primed to Deliver

First-Mile Optical Infrastructure Solutions

Centillium Communications, Inc. (Nasdaq:CTLM), a leading provider of broadband access solutions, today unveiled its plans to enter the broadband optical access market with the launch of the company's new Optical Business Unit.

Under the leadership of General Manager, Armando Pereira, former Co-founder, President and CEO of optical access equipment pioneer Alloptic, Inc., Centillium's Optical Business Unit is leveraging the company's expertise in mixed-signal system-on-chip (SoC) technology to enable point-to-point and point-to-multipoint optical broadband networks with products that target the emerging fiber-to-the-premises (FTTP) market.

Centillium's Optical Business Unit will deliver infrastructure solutions that offer higher integration, broader functionality, smaller footprints and lower power consumption for both central office (CO) and customer premises equipment (CPE). These products include optical transceivers to control the bi-directional traffic on a fiber cable; FTTP chipsets to manage the high-speed protocols between the CO and the CPE terminals; and broadband service processors to facilitate in-premises networking and delivery of voice, video and data to the end-users.

"The launch of our new Optical Business Unit is a significant step in Centillium's overall diversification strategy and complements our leadership position in DSL and VoIP to include next-generation optical access solutions," said Faraj Aalaei, CEO and Co-founder of Centillium. "Armando and his team are well positioned to participate in the emerging optical network buildouts."

Pereira added, "The Optical Business Unit has been successful in attracting an outstanding team of optical experts and has been working to develop differentiated products that are unique in the market. Our products will not only support equipment designers to meet the desired feature and performance specifications but also enable these optical access companies to finally push the market to critical mass with the necessary pricing per line of service. We plan to roll out a family of both CO and CPE solutions throughout 2004 to address FTTP opportunities worldwide."

FTTP Market Opportunity

Widely anticipated to be the early adopter of FTTP solutions, the Japanese market has seen a rapid increase in NTT's capital expenditures (CAPEX) budget for optical access. As recently as this month in a public filing, Japan's national incumbent operator NTT Group announced plans to spend 280 billion Yen (U.S. $2.56 billion) on expanding its fiber access networks during its 2004 fiscal year. According to the company's published plans, this is expected to account for more than one-third of the carrier's total planned CAPEX outlay for the year. The investment indicates a dramatic step up in FTTP activity, expanding NTT's fiber footprint to upwards of 80 percent of its total number of subscribers and adding an estimated one million new broadband subscribers.

In North America, the FTTP opportunity is also gaining momentum -- empowered by the Federal Communications Commission's (FCC) Triennial Review of the Network Unbundling Rules. The decisions within the Triennial Review included significant relief from the unbundling rules for investment in first-mile broadband access facilities. As a direct consequence of these developments, several U.S.-based Regional Bell operating companies (RBOCs) cooperated in a joint procurement contract in 2003. At a press conference in December 2003, Verizon's CTO Mark Wegleitner said the carrier would spend between $600 million and $800 million (at least 10 percent of its roughly $6 billion wireline capital expenditures budget) on FTTP during 2004.

Organizations such as the Telecommunications Industry Association (TIA) and the Fiber-to-the-Home Council (FTTH Council) have been laying the regulatory groundwork for the deployment of these new high-speed optical access networks. TIA President Matthew J. Flanigan adds, "In the United States, we believe the FCC's August 2003 ruling concerning the unbundling obligations of incumbent local exchange carriers has lifted the clouds of uncertainty, clearing the way for new investments and creating incentives for carriers to invest in FTTP broadband access. When you combine this ruling with FCC Chairman Michael Powell's recent statements on the importance of broadband and the momentum created by the joint procurement contract issued by carriers for passive optical networks (PONs), the future of FTTP in the U.S. looks bright."

Note to Editors

For additional information on NTT Group's publicly announced 2004 financial year CAPEX plans, see NTT's press release dated March 1, 2004 titled, "Submission for Approval of Business Operation Plan for Fiscal Year Ending March 31, 2005."

About Centillium Communications

Centillium Communications, Inc. is a leading provider of broadband access solutions with innovative systems-level products for the consumer, enterprise and service provider markets. The Company's high-performance and cost-effective infrastructure and service enabler products give its customers the winning edge in broadband access. Centillium Communications' products include mixed-signal integrated circuits and related hardware and software applications for Digital Subscriber Line (DSL) and Optical Networking equipment deployed in central offices and customer premises, and Voice over Internet Protocol (VoIP) products for carrier- and enterprise-class gateways and consumer telephony. The Centillium Communications headquarters is located at 47211 Lakeview Blvd., Fremont, CA 94538. Additional information is available at www.centillium.com.

Forward-Looking Statements

Except for statements of historical fact, this release includes statements that are forward-looking statements within the meaning of U.S. Federal securities laws, including statements relating to Centillium's products targeting the FTTP market, optical access deployment and the market for FTTP products. Actual results may differ materially from those indicated by such forward-looking statements based on a variety of risks and uncertainties, including without limitation the risks and uncertainties relating to rate and breadth of deployment of broadband access in general and optical access and Centillium's technology solutions in particular; Centillium's ability to continue and expand on its relationships with communications equipment manufacturers; and the successful development and market acceptance of Centillium's new products and technology. Centillium undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release. Information about potential factors that could affect Centillium's financial results is included in Centillium's Annual Report on Form 10-K and in other documents on file with the Securities and Exchange Commission.

Centillium Communications and Centillium's logo are trademarks of Centillium Communications, Inc.