Compaq Selects S3 for Second AGP-Enabled Series of Notebook PCs; S3's ViRGE/MX Mobile 3D Accelerator Powers New Compaq Armada 7400 Series.

SANTA CLARA, Calif.--(BUSINESS WIRE)--Aug. 13, 1998--S3(R) Incorporated (NASDAQ:SIII) announced today that Compaq Computer Corp.(NYSE:CPQ) has selected S3's ViRGE(R)/MX accelerator for its powerful new Armada 7400 Series of notebooks.

Compaq's second AGP-enabled series of notebooks based on S3's ViRGE/MX accelerator, the Armada 7400 Series offers 3D graphics on a dedicated 66-MHz AGP bus to provide outstanding graphics and video performance.

"According to a study done by Mercury Research(a), S3's ViRGE/MX accelerator currently dominates the 3D-enabled notebook PC market with nearly 60% market share," said Rick Bergman, vice president of marketing, S3 Incorporated. "Moving forward, we look to build on this leadership position with a series of even higher performance mobile accelerators based on our recently announced Savage3D(TM) architecture and by continuing to work with industry leaders such as Compaq."

Compaq's Armada 7400 Series

Following in the footsteps of its predecessor,the Armada 7300, the new Armada 7400 Series targets mobile executives who demand outstanding system performance and portability with desktop-equivalent capabilities.

In keeping with the feature set offered by the Armada 7800 Series, the Armada 7400 Series includes Intel's Mobile Pentium II 266MHz processor, industry-leading AGP graphics with a 66MHz dedicated graphics bus, a 4GB SMART hard drive with fault prediction and DriveLock for data security, a 24X Max CD-ROM, 32 MB SDRAM expandable to 128MB and 512K Level 2 cache.

For easy viewing and superior graphics performance, the Armada 7400 features a 13.3-inch color thin film transistor (TFT) 1024x768 display. Additionally, the notebook features the S3 ViRGE/MX graphics accelerator with 4MB of SGRAM and 3D graphics acceleration, simultaneous display capability, true 24-bit color and higher resolution. The exceptional graphics capabilities of the Armada 7400 combined with a 24X Max CD-ROM, dual integrated speakers and Compaq PremierSound provide a rich multimedia experience.

S3's ViRGE/MX

Combining the same level of 2D, 3D and video capabilities found in S3's desktop accelerators with advanced power management and flat panel display support, S3's ViRGE/MX accelerator brings new capabilities to notebook PC users. These new and innovative capabilities include: -0-

--   DuoView(TM) -- S3 is the first in the industry to provide DuoView
     technology, which enables users to display different images
     (graphics and video) simultaneously on separate displays and to
     optimize display quality when showing the same image on multiple
     displays.

     S3 has worked with Microsoft to incorporate support for S3's
     DuoView in the multi-monitor interface for Windows 98. With this
     support, notebook users will be able to use the LCD display and a
     monitor simultaneously as a larger desktop display space --
     enabling greater user productivity.

--   Advanced 3D Performance -- The industry's first mobile 3D
     accelerator, the ViRGE/MX accelerator delivers a full set of 3D
     rendering capabilities, including MIP mapping, tri-linear
     filtering and perspective correction textures to deliver images
     that are free of annoying visual artifacts such as "sparkle" and
     "jaggies." Other features include transparency for enabling
     realistic rendering of glass, water and plastic objects;
     atmospheric effects such as fog and depth cueing to enable
     rendering of real-world environments; and Z-buffering to speed
     the removal of hidden surfaces for improved performance and
     visual quality.

-0- About S3 Incorporated

S3 Incorporated, founded in 1989 with headquarters in Santa Clara, is a premier supplier of multimedia acceleration hardware and its associated software. S3 is committed to applying its expertise in video, graphics and multimedia acceleration to create innovative and affordable products for the home, desktop and mobile markets.

Except for historical information contained herein, the matters set forth in this press release, such as statements relating to the company's ability to achieve a greater percentage share of the mobile notebook market, are forward-looking statements that are subject to risk and uncertainties, including the impact of competitive products and pricing and of alternative technological advances, market acceptance of the company's and its customers' new products, and other risks detailed from time to time in S3's SEC reports, including its Quarterly Report on Form 10-Q for the year ended March 31, 1998.

Note to Editors: S3 and ViRGE are registered trademarks of S3 Incorporated. The S3 corporate logo, Savage3D and DuoView are trademarks of S3 Incorporated. Other marks referenced herein are the property of their respective owners. All third party quotes and product information are furnished by the respective companies.

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