Cypress Acquires Silicon Packets to Enable OC-192/STM-64 SONET/SDH and 10-Gbps Ethernet Transport Solutions.

Business Editors/High-Tech Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 8, 2002

Devices to Target Network Infrastructure Equipment, Including Wide

Area Network (WAN), Metro Area Network (MAN) Switches and Routers

Cypress Semiconductor (NYSE:CY) today announced that it has acquired Silicon Packets Inc., a company that specializes in designing 10 gigabit-per-second framers for OC-192/STM-64 SONET/SDH and 10G Ethernet transport solutions. The acquisition accelerates Cypress's current schedule to develop 10-Gbps solutions for MAN/WAN infrastructure equipment such as switches and routers. Silicon Packets's framers are complementary to the company's existing communications product portfolio and its roadmap for high-speed networking linecards.

Silicon Packets's framer penetrates both the 10G Ethernet and OC-192/STM-64 SONET/SDH markets with a single device. The framer will be among the first devices with an SPI-4 phase II system interface, which provides maximum flexibility to interface with other networking components. The SPI-4 phase II interface is preferred by most 10G system designers. The new framer is expected to sample in Q102.

"This acquisition brings a roadmap-critical 10G product to Cypress with specific, compelling technical advantages, and it enhances our focus on Metropolitan Area Networks (MANs) -- a segment of the communications market that shows the highest growth potential," said Cypress president and CEO T.J. Rodgers. "Targeting Metro-focused 10G Ethernet and OC-192/STM-64 SONET/SDH designs will enhance Cypress's ability to get a quick start out of the blocks in its core communications markets."

Metropolitan Area Networks, a subset of Wide Area Networks, have continued to grow in 2001. MAN is the intermediate network connecting access equipment to the long-haul network in and around major metropolitan areas. Because of the rapid deployment in recent years of long-haul capacity, recent investment has focused on MAN capabilities.

"Revenues from 10G solutions are expected to expand rapidly over the next several years," said Silicon Packets's CEO Nader Raygani. "Silicon Packets will enable Cypress to offer high-performance solutions ahead of its existing internal schedule and will expand the leadership position of our unified company in high-performance networking silicon."

Cypress's current communications portfolio includes OC-48/STM-16 SONET/SDH SERDES and framer solutions; OC-768 packet processing solutions; and a broad array of communications-focused datapath switching elements, synchronous memories, timing and logic devices. The company is sampling its HOTLink III(TM) PHY, a quad-channel, 3.2-Gbps device targeted at SONET/STM backplanes and 10G Ethernet applications. The HOTLink family offers the industry's largest portfolio of backplane SERDES, operating at transmission speeds from 50 Mbps to 3.2 Gbps.

The acquisition also brings to Cypress a wealth of design resources, including approximately 25 engineers in the areas of circuit, logic, layout, CAD, board/system, software, product, test, application and architecture design.

About Cypress

Cypress Semiconductor (NYSE:CY) is "Driving the Communications Revolution"(TM) with high-performance integrated circuits for network infrastructure and access equipment. Leveraging its process and system-level expertise, the company designs and manufactures solutions targeted across wireless and wireline communications. Cypress supports a wide range of industry standards, such as SONET/SDH (OC-192/STM-64 and above), 10G Ethernet, Voice over Internet Protocol (VoIP) and InfiniBand(TM). The company's communications product lines include programmable high-speed physical layer devices (PHYs), wirespeed network search engines (NSEs) and network coprocessors (NCPs), and datapath switching elements (DSEs). Cypress is also the industry's foremost provider of communications timing solutions, networking-optimized communications memories and personal connectivity solutions, such as USB and Bluetooth.

Cypress is a leader in pure optical and optoelectronic technologies designed to push network transmissions to higher performance levels and to satisfy the increasing demand for network bandwidth. With a focus on emerging communications applications, Cypress aims to become the preferred silicon supplier for network infrastructure solutions and for every network data stream to pass through at least one Cypress IC.

Cypress employs approximately 4,000 people worldwide. Its shares are listed on the New York Stock Exchange under the symbol CY. More information about Cypress is accessible on the Web at http://www.cypress.com.

Safe Harbor Provision

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in the press release regarding Cypress's business that are not historical facts are "forward-looking statements" involving risks and uncertainties, including but not limited to the effect of global economic conditions, shifts in supply and demand, market acceptance risks, the impact of competitive products and pricing, product development, commercialization and technological difficulties, and capacity and supply constraints. Please refer to Cypress's Securities and Exchange Commission filings for a discussion of such risks.

The above news release contains forward-looking statements regarding the impact of the acquisition on Cypress's operating results, future market demand, acceptance of Cypress's and Silicon Packets's products and development of new business and products of the combined company which involve risks and uncertainties. Cypress's actual results may vary materially from the results discussed in the forward-looking statements.

Factors that may cause such a difference include those risks surrounding the timely development, production and continued and increased market acceptance of the combined companies' products, Cypress ability to successfully combine the operation of the two companies, the ability of the combined company to compete in the highly-competitive and rapidly-changing marketplace and the other risks detailed from time to time in Cypress's periodic reports with the Securities and Exchange Commission, including but not limited to its report of Form 10-K for the fiscal year ended January 3, 1999 and its reports of Form 10-Q for the fiscal quarter ended September 30, 2001.

Note to Editors: "Driving the Communications Revolution" is a trademark of Cypress Semiconductor.