STMicroelectronics to Develop &Manufacture LCD Driver ICs for Tecdis, Three-Five Systems Design Center.

Business Editors

TEMPE, Ariz.--(BUSINESS WIRE)--Feb. 8, 2000

Agreement calls for ST to join design center in Italy to develop

specialized driver chips for small LCDs used in cellular telephones

and other portable devices.

STMicroelectronics (NYSE: STM) has announced the signing of a technical and commercial agreement with Tecdis Europe's leading manufacturer of Liquid Crystal Displays (LCDs). Under the agreement, STMicroelectronics will join the design center in Chatillon, Valle d'Aosta, Italy, close to the Tecdis headquarters and main manufacturing plant. The design center was announced by Tecdis and Three-Five Systems (NYSE: TFS), a large U.S.-based producer of LCDs, in October of 1999. The center will develop specialized drivers for small LCDs aimed at high growth industrial, telecom and automotive applications. ST will assure production volumes of the resulting integrated circuits, which it will supply to Tecdis and Three-Five Systems and sell on the open market. The first devices are expected to be available in mid-2000.

&uot;Through this agreement ST makes a significant entry into a new area for our company--the fast-growing market for chips that drive small LCD displays&uot;, commented Aldo Romano, General Manager of STMicroelectronics' Telecommunication and Peripheral/Industrial Groups. &uot;This new product family complements ST's existing portfolio of differentiated ICs specifically developed for mobile phone applications and reflects our commitment to being a leading supplier to this market&uot;.

LCD driver chips produced through this agreement are expected to be used primarily in mobile phones--a market expected to reach 550 million units in 2001 - plus a broad range of other applications, including pagers, automotive displays and printers.

&uot;Our relationship with ST gives Tecdis and our new design center access to the silicon design expertise and volume manufacturing capacity of one of the world's leading chip suppliers, allowing us not only to respond to the exploding demand but also to maintain our track record of innovation&uot;, said Ettore Morezzi, President and Chairman of Tecdis. &uot;This agreement will also support the participation in the design center of the US-based LCD manufacturer Three-Five Systems, which is already a partner to the new company and with which we have recently also announced a global sourcing alliance. Furthermore, we foresee the future participation also of other institutions, such as FINAOSTA (the Financial Agency of Aosta Valley Region) and the Politecnico of Turin, State University.&uot;

Jack Saltich, President and CEO of Three-Five Systems, Inc., commented, &uot;This significant agreement completes another step in expanding our company's global presence. Our relationship with the design center, combined with the manufacturing prowess of STMicroelectronics, allows us to function as a completely vertically integrated company, from the design of LCD drivers to the assembly of LCD modules.&uot;

About STMicroelectronics

STMicroelectronics (formerly SGS-THOMSON Microelectronics) is a global independent semiconductor company, whose shares are traded on the New York Stock Exchange, on the Paris Bourse and on the Milan Stock Exchange. The Company designs, develops, manufactures and markets a broad range of semiconductor integrated circuits (ICs) and discrete devices used in a wide variety of microelectronics applications, including telecommunications systems, computer systems, consumer products, automotive products and industrial automation and control systems. Further information on ST can be found at www.st.com.

About Tecdis

Tecdis S.p.A. designs and manufactures liquid crystal display (LCD) modules for OEM customers in the telecommunications, industrial, automotive and consumer marketplaces. Tecdis has manufacturing operations in Italy and Spain and is a leading manufacturer of passive matrix LCDs in Europe with annual sales in excess of $80 million. At its Chatillon, Aosta Valley, headquarters in Italy and its fully owned subsidiary Dicryl (which in 2000 will become Tecdis Display Iberica) in Valladolid, Spain, Tecdis offers LCD manufacturing and high tech capability in the traditional passive matrix display technologies, in addition to ECB and Filter CSTN color solutions. The company's web site is located at www.tecdis.com

About Three-Five Systems

Three-Five Systems, Inc. is a recognized leader in the design and manufacture of liquid crystal display (LCD) modules for OEM customers in the communications, medical electronics, industrial process control, wireless data collection, and office automation marketplaces. At its Tempe, Arizona headquarters, Three-Five operates the highest volume LCD manufacturing line in North America and houses the David R. Buchanan LCD laboratory, dedicated to the development of advanced display technologies. The company has developed three proprietary display technologies: LCiD(TM) (Liquid Crystal intense Display); LCaD(R) (Liquid Crystal active Drive), and LCoS(TM) (Liquid Crystal on Silicon) microdisplays. The company's web site is located at www.threefive.com.

Certain statements contained in this document may be deemed to be forward-looking statements under federal securities laws, and Three-Five Systems intends that such forward-looking statements be subject to the safe-harbor created thereby. Such forward-looking statements include but are not limited to (i) expectations regarding the silicon design center, (ii) expectations regarding the timing and availability of LCD driver ICs, and (iii) expectations regarding the manufacture of LCD driver ICs by STMicroelectronics. Three-Five Systems cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements contained herein. Such factors include, but are not limited to, (a) changes in the markets for the company's products; (b) changes in the market for customers' products; (c) the failure of the designed ASICs to deliver commercially acceptable performance; (d) the ability of Three-Five Systems' management, individually or collectively, to guide the company in a successful manner, and other risks as detailed from time to time in Three-Five Systems' SEC reports, including Quarterly Reports on Form 10Q, Current Reports on Form 8-K and Annual Reports on Form 10-K.