Quality Semiconductor Announces Wafer Fab Purchase in Australia.

SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 12, 1996--Quality Semiconductor, Inc. (NASDAQ: QUAL)("QSI") today announced that it has signed a definitive agreement to acquire certain assets of AWA Microelectronics Pty Ltd. ("AWAM"), a subsidiary of AWA Limited, based in Sydney, Australia.

The AWAM assets to be acquired by a new subsidiary of QSI, Quality Semiconductor Australia, Pty, Ltd. ("QSA"), include a fully operational wafer foundry business and product design center. The company has also signed a strategic alliance agreement with AWA Limited, to jointly develop new products and technologies.

The six inch wafer fab facility is currently operating seven days per week, 24 hours per day, and will continue to service its existing AWAM foundry customers while providing QSI additional flexibility. Over the next two quarters QSI intends to secure additional capital equipment through leasing and other financing arrangements, in order to migrate the existing facility to deep submicron process technologies.

"Quality Semicondutor's strategic thrust is to continually reinforce its position in the high-performance logic and specialty memory semiconductor product segments. This acquisition and strategic alliance is an important step in furthering this strategy," stated Paul Gupta, President and Chief Operating Officer of Quality Semiconductor. "Through this acquisition we will improve our product and proprietary process development, improve our time to market, and through shorter lead times, improve our productivity."

AWA Limited, established 83 years ago, is Australia's leading electronics company, with a strong export business especially in Asia. John Dougall, Managing Director of AWA Limited, commented, "We are very pleased to become strategic partners with Quality Semiconductor, and believe this arrangement will enable AWA Limited to stay in the forefront of technological innovation." Upon closing of the agreement, Dougall will join the Board of Directors of Quality Semiconductor Australia, Pty, Ltd.

The purchase price of the AWAM facility is US$5.6 million and payable upon closing, which is anticipated by the end of January. In addition, AWA Limited will subscribe US$1.125 million of preferred shares in the new subsidiary, QSA, to provide working capital. Between July 1997 and July 1999, QSI will make the final payment of approximately US$7.5 million.

Quality Semiconductor designs, develops and markets high-performance logic as well as logic-intensive specialty memory semiconductor products. The company targets systems manufacturers principally in the networking, personal computer and workstation markets. The company's logic products include the QSFCT family of high-speed, low noise interface logic devices, the QuickSwitch family of high-speed, low-resistance bus switches, and a family of low-skew clock management products. Quality's specialty memory products include some of the fastest FIFO (First-in, First-out) devices currently available.

CONTACT: Quality Semiconductor, Inc.

Stephen Vonderach, 408/450-8000 (CFO)

or

Morgen-Walke Associates, Inc.

Doug Sherk/Suzanne Craig/Lisa Laukkanen, 415/296-7383

Jill Ruja/Elissa Grabowski, 212/850-5600