Scenix Semiconductor Dismisses Validity of Lawsuit Filed By Microchip Technology; Effort In German Court Follows Recent Denial of Injunctive Relief In U.S. Court.

SANTA CLARA, Calif.--(BUSINESS WIRE)--April 26, 1999--

Scenix Semiconductor, Inc. today said that it believes a lawsuit filed in Munich, Germany, by Microchip Technology (Nasdaq:MCHP), has no merit.

The suit, which also names German distributor Scantec Mikroelektronik, claims that the Scenix SX Series 8-bit microcontrollers (MCUs) violate Microchip's copyright of its PIC16C5X(R) microcode. Scenix does not use microcode in its MCUs, and maintains that the claim is totally baseless.

A previous effort by Microchip to obtain a preliminary injunction in a patent infringement suit against Scenix in a U.S. court was recently denied. The judge hearing that case noted in part that, "Scenix has raised a substantial question as to whether the (Microchip) patent is anticipated by (a previous) patent and is, thus, invalid." He also found Scenix likely to prevail in its non-infringement position. Microchip previously dismissed several patent claims against Scenix.

"It appears that, having suffered setbacks in the domestic court, Microchip intends to try elsewhere," said Bulent Celebi, president and CEO of Scenix. "Microchip does not compete with us in our target markets, so we are surprised by its repeated attempts to use the court system to impede our progress."

According to Chuck Cheng, vice president of engineering and co-founder of Scenix, "We find this second lawsuit almost laughable because the SX Series MCUs have a RISC architecture that does not contain any microcode. Instead, we use hardwired logic to implement our instruction set. I don't understand how we can violate a copyright on something that we haven't ever used."

"Microcode" is software used to implement instructions recognized by a processor. A microcode program uses a series of "microinstructions" to control the processor's operation. Several microinstructions are usually required to fetch, decode and execute each "macroinstruction" in an instruction set. The alternative to microcode is "hardwiring," in which logic circuitry is used to control the processor directly from the instruction set. Because it is faster than the software-based microcode, hardwiring is more common in such modern RISC architectures as the SX Series.

"We designed the SX Series to take advantage of developments in processor technology that have occurred in the 20 years since Microchip introduced its first products," Celebi noted. "Part of that design decision was to use a pipelined RISC architecture that gives us up to 50 times more processing power than other 8-bit MCUs. This approach makes microcode irrelevant to the architecture and results in superior performance. This in turn allows us to pursue markets, such as video processing, telecommunications and Internet connectivity, that the previous generations of 8-bit MCUs do not have the performance to address.

"We also find the timing of the lawsuit service suspicious because, as with the suit Microchip filed in October 1997, it comes just before we anticipate the closing of an equity investment round. On the face of it, it appears that Microchip is attempting to intimidate our potential investors. However, as in the prior case, we fully expect that all of our investors will continue to support us."

Scenix Semiconductor

Scenix Semiconductor Inc. is headquartered in Santa Clara. Founded in 1996, the company announced the 50 MIPS SX Series family of 8-bit microcontrollers (MCUs) in August 1997. In October 1998, the company announced SX Series MCUs that set a new industry standard with 100 MIPS performance, followed in February 1999 by MCUs with expanded memory and I/O capabilities. In December 1998, Cahners Publishing placed the SX Series on its "10 Top Processor List of 1998."

Scenix is the industry leader in using Virtual Peripheral(tm) software modules, which reduce system costs and increase flexibility by eliminating the need to "hardwire" peripheral functions into chips or to use external components. The combination of Virtual Peripheral software functions with the industry's highest performance MCUs is an ideal solution for a wide range of embedded applications.

Additional information on Scenix and the SX Series products can be found on the Web at www.scenix.com.

Note to Editors: Virtual Peripheral is a trademark of Scenix Semiconductor Inc. All other trademarks used herein are the property of their respective owners.