SI Diamond completes acquisition of facilities and technologies from MCC; "Diamond Tech One" to be SIDT subsidiary.

HOUSTON--(BUSINESS WIRE)--April 26, 1995--SI Diamond Technology Inc. (NASDAQ:SIDT) has completed its acquisition of the Microelectronics and Computer Technology Corp. (MCC) principal semiconductor packaging/interconnect facility.

In January, SIDT and MCC announced they had reached an "agreement in principle" for the purchase. As part of the transaction, SIDT will obtain equipment and leasehold improvements, as well as a license to approximately 100 patents and rights to commercialize a significant portion of MCC's packaging/interconnect and electronics technology.

Additionally, approximately 22 MCC employees, currently responsible for research, development, and operations at the facility have accepted employment with SIDT.

Under the terms of the agreement, SIDT has agreed to pay MCC approximately $1 million in cash and to provide an equal amount in laboratory and fab services over the next two years, replacing an existing agreement under which SIDT paid MCC a similar annual amount for services. As additional consideration, SIDT will pay a 3 percent royalty on commercial sales of products or services based on the MCC technology. The royalty is capped at $2 million.

"Through this agreement, SIDT obtains a world-class facility with an estimated replacement cost of over $10 million and an exceptional base of talent and technology. Diamond Tech One will provide SIDT with a state-of-the-art development center for its diamond field emission flat panel display (DFED), as well as open an entire new business area in advanced electronic packaging and assembly," according to Dr. Howard K. Schmidt, chairman and chief executive officer of SIDT.

"With the DFED research focused at Diamond Tech One, SIDT will have the ability to closely control development and engineering, including prototype manufacturing. Furthermore, the technologies that the company is licensing from MCC are extremely important in achieving the full potential of advanced flat panel displays."

According to Schmidt, "The trends to miniaturization, increased power and portability, and low-cost mass customization all demand the kinds of advanced electronic capabilities that Diamond Tech One will offer. We will have an immediate competitive advantage due to the technologies we are transferring from MCC and the commercial quality of the facilities and services we are acquiring."

SIDT will operate the facility as a wholly owned subsidiary, to be called Diamond Tech One Inc., providing advanced packaging, assembly, and prototyping services for electronic components and systems. In addition to DFED development, Diamond Tech One will focus initially on three areas:

-- Display electronics packaging: Advanced technologies that support high density interconnect and chip-on-glass are well suited to the assembly of advanced flat panel display systems. The flat panel market is expected to grow to $15 billion by the year 2000, according to industry experts, as flat panels are applied in a wide range of devices such as portable computers, consumer electronics, and automotive displays.

Diamond Tech One capabilities such as glass substrate fabrication, electrolyses nickel processes for the spacers used to separate the glass plates, chip-on-board and flip chip, and compliance bumping are especially well suited to address the needs of the growing display industry.

-- Post wafer processing services: As wafers leave the fab, several processing steps are necessary before they are sliced into the chips that are assembled into the most advanced electronic systems. For example, Diamond Tech One will offer bumping, a process for forming the microscopic bumps on the surface of chips and substrates that serve as the interconnection method instead of traditional wire bond.

Bumping services will include MCC's patent-pending compliant bumping process that produces a highly reliable and manufacturable connection, tolerating temperature-induced expansion and contraction and other environmental effects that often lead to failure.

-- Advanced electronic packaging and assembly: Diamond Tech One will offer a wide range of services to companies seeking advanced approaches to encapsulating and assembling electronic devices and systems. The services will include wirebonding, tape automated bonding (TAB) and flip chip for single chip, few chip and multichip packages. Diamond Tech One will also offer device encapsulation and/or hermetic package sealing, with particular emphasis on advanced methods of plastic packaging suitable for the emerging PC card market.

Diamond Tech One is a 30,000 square foot, custom designed electronics development facility, including approximately 10,000 square feet of clean room space and specialized laboratories for materials research, assembly, testing and plating. The facility has served as MCC's primary electronic research facility since 1984. SIDT will assume MCC's current lease on the building and will, in turn, sublease a small portion of the laboratory facilities back to MCC for use in consortial projects or other MCC initiatives.

The Diamond Tech One facility includes several state-of-the-art capabilities, including 6-inch wafer fabrication (suitable for preparation of 6-inch plates for flat panel displays); plating, thin film and polishing; microelectronics assembly and packaging; and machine shop facilities.

In addition to the consortium's research and development activities conducted at Diamond Tech One, MCC has used the facility to provide a variety of commercial services to government and commercial clients including, for example, assembly of advanced modules, substrate preparation and rapid prototyping.

Houston-based SI Diamond is engaged in the development and commercialization of novel products based on the company's proprietary man-made diamond technologies, including thin film diamond coatings and flat panel displays utilizing a patented diamond field emission display technology. In addition to Diamond Tech One, SIDT also owns Plasmatron Coating Systems Inc., a highly regarded maker of sophisticated coating equipment and systems. SIDT has been awarded more than 40 Small Business Innovation Research awards since 1989.

CONTACT: SI Diamond Technology Inc., Houston

Marijane Ensminger, 713/529-9040