Cypress Ships First Devices Made by China Foundry Partner, Grace Semiconductor, Several Months Ahead of Plan; Cypress Will Begin Transferring 0.13-micron Process Technology to Grace in Q3.

SAN JOSE, Calif. -- Cypress Semiconductor Corp. (NYSE:CY) announced that it has shipped its first devices manufactured by Chinese foundry partner Grace Semiconductor Manufacturing Corp. -- several months ahead of plan.

The foundry will become a major supplier of Cypress's Programmable System-on-Chip(TM) (PSoC(R)) mixed-signal arrays, which integrate configurable analog and digital circuitry with an eight-bit microcontroller, and are used in applications as diverse as consumer electronics, handsets, computing and networking equipment, industrial systems, and automotive systems.

Cypress expects to ship significant PSoC revenue on two devices this quarter and qualify a third PSoC device in the fourth quarter.

Cypress also announced it will begin transferring its 0.13-micron C8(TM) process technology to Grace Semiconductor in the third quarter.

"We are pleased with how quickly the team at Grace has been able to ramp to volume production," said Shahin Sharifzadeh, executive vice president of wafer fabs and technology at Cypress. "To get from concept to production in under two quarters far exceeded our expectations."

Sharifzadeh said the C8 process technology being transferred to Grace Semiconductor will enable the foundry to build a wide array of Cypress's low-power devices, including USB and clock chips, starting early in the second quarter of 2007.

"We're excited with the success of this transfer, as a result of the two companies' combined efforts. This demonstrates Grace's ability to be a flexible and virtual extension to large multinational IDMs, like Cypress, as well as to the worldwide fabless community," said Grace Semiconductor CEO Dong YeShun.

About the PSoC Family

PSoC devices are configurable mixed signal arrays that integrate a fast 8-bit microcontroller with many peripheral functions typically found in an embedded design. PSoC devices provide the advantages of an ASIC without the ASIC NRE or turn-around time. A single PSoC device can integrate as many as 100 peripheral functions with a microcontroller, saving customers design time, board space and power consumption. Customers can save from 5 cents to as much as $10 in system costs. Easy to use development tools enable designers to select configurable library elements to provide analog functions such as amplifiers, ADCs, DACs, filters and comparators and digital functions such as timers, counters, PWMs, SPI and UARTs. The PSoC family's analog features include rail-to-rail inputs, programmable gain amplifiers and up to 14-bit ADCs with exceptionally low noise, input leakage and voltage offset. PSoC devices include up to 32KB of Flash memory, 2KB of SRAM, an 8x8 multiplier with 32-bit accumulator, power and sleep monitoring circuits, and hardware I2C communications.

All PSoC devices are dynamically reconfigurable, enabling designers to create new system functions on-the-fly. Designers can achieve more than 120 percent utilization of the die in many cases, by reconfiguring the same silicon for different functions at different times.

About Cypress:

Cypress solutions perform: consumer, computation, data communications, automotive, industrial, and solar. Leveraging proprietary silicon processes, Cypress's product portfolio includes a broad selection of wired and wireless USB devices, CMOS image sensors, timing solutions, specialty memories, high-bandwidth synchronous and micropower memory products, optical solutions and reconfigurable mixed-signal arrays. Cypress trades on the NYSE under the ticker symbol CY. Visit us at www.cypress.com.

Safe Harbor Statement:

Statements made in this release that are not historical in nature and that refer to Cypress or its subsidiaries' plans and expectations for the future, including but not limited to the ability of Cypress or Grace Semiconductor to achieve their stated objectives, and Cypress and/or Grace's ability to ship and qualify products and transfer technology to Grace as proposed in Q3 and Q4, and that Grace will become a major supplier of PSoC devices, are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially due a variety of factors, including but not limited to the risks identified in our filings with the Securities and Exchange Commission. All forward-looking statements included in this release are based upon information available to Cypress as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statement. We use words such as "anticipates," "believes," "expects," "future," "look forward," "planning," "intends" and similar expressions to identify such forward-looking statements.

Cypress and the Cypress logo are registered trademarks of Cypress Semiconductor Corporation.