Diamond Multimedia Announces Adjournment of Special Meeting; Additional Shareholder Votes Required to Approve Merger with S3 Incorporated.

SAN JOSE, Calif.--(BUSINESS WIRE)--Sept. 20, 1999--

Diamond Multimedia Systems, Inc. (Nasdaq:DIMD) a leader in PC multimedia and Internet connectivity, today announced that the special meeting of shareholders today called to approve the acquisition of Diamond Multimedia by S3 Incorporated (Nasdaq:SIII) has been adjourned.

The Diamond meeting has been adjourned until Thursday, Sept. 23, 1999 at 4:00 p.m. (PDT) at Diamond's offices at 2880 Junction Avenue, San Jose, CA 95134. The meeting was adjourned for the purpose of soliciting additional votes for approval of the merger. The approval of the merger requires a vote of a majority of the outstanding shares of Diamond Multimedia. The companies expect to press forward with their plans to integrate their businesses after the merger and do not believe that this postponement will have any material operational or financial impact.

"Due to the logistical challenges of communicating with our widespread investor base, we have not received enough proxy votes by close of business, September 17," said Bill Schroeder, president and chief executive officer of Diamond Multimedia. "Of the votes we have received, a significant majority are in favor of the merger. While we believe that Diamond's shareholders recognize the upside to the merger, we are concerned that many of them may not realize how important their individual votes are to moving this merger forward."

"Given Diamond's current financial constraints, we believe that partnering with S3 is an essential step toward ensuring we have the resources to pursue our long-term strategies," added Schroeder. "We strongly encourage everyone to vote as soon as possible by calling the toll-free number provided in their proxy materials, their broker, or their broker's proxy department. If shareholders have not yet received or have misplaced their proxy, they should call their broker or their broker's proxy department to request the necessary documents."

Proxy materials in connection with the special meetings were first mailed on Wednesday, August 18, 1999, to shareholders of record of Diamond and S3 as of August 10, 1999. Under the terms of the merger, first announced June 22, 1999, Diamond shareholders will receive 0.52 of a share of S3 common stock for each share of Diamond common stock.

Shareholders who require additional copies of the proxy solicitation materials should contact:

Morrow & Co., Inc. 445 Park Avenue, 5th Floor New York, New York 10022 212 754-8000

The merger remains subject to approval by the shareholders of Diamond Multimedia, as well as to other customary conditions of closing. S3 shareholders have already approved the merger. If the shareholders of Diamond approve the merger, it is expected that the merger will close as soon as practicable thereafter. Shareholders who have already given a proxy may revoke it at anytime in accordance with the instructions contained in the Joint Proxy Statement/Prospectus delivered to shareholders.

About Diamond Multimedia

Diamond Multimedia is a leader in PC multimedia and Internet connectivity, providing advanced products that enable desktop computer users to create, access and experience compelling new media content from their PC's and through the Internet.

Products include the Rio series of Internet audio appliances, the Stealth and Viper(R) series of video accelerators, the Monster series of 3D gaming accelerators, the Fire series of professional graphics accelerators, the Supra(R) series of modems, and the HomeFree line of home networking products. Diamond's common stock is traded on the NASDAQ under the symbol DIMD and its web site address is www.diamondmm.com.

The company's Internet music portal site is at www.RioPort.com and its e-commerce sites at www.estore.diamondmm.com and eAuction.diamondmm.com.

Certain of the statements in this press release, including the statement relating to expectations about the impact of the postponement of the shareholder meeting, are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Such risks and uncertainties include but are not limited to, risks associated with acquisition transactions and the related integration of operations. Investors are advised to read each company's annual and quarterly reports on Forms 10-K and 10-Q, the Joint Proxy Statement/Prospectus dated August 16, 1999 of Diamond Multimedia Systems, Inc. and S3 Incorporated and each company's other filings with the Securities and Exchange Commission for a fuller discussion of such risks and uncertainties.