Xicor Announces Strategic Initiative To Accelerate Product Transition And Discusses Business Outlook.

Business & Technology Editors

MILPITAS, Calif.--(BUSINESS WIRE)--March 22, 2001

Company Intends to Sell Serial Memory Business and

Aggressively Move Forward with Focus

On Programmable Mixed-Signal ICs

Xicor(R), Inc. (NASDAQ/NMS: XICO), a leading supplier of programmable mixed-signal integrated circuits today announced that the Company will increase its engineering, sales and marketing focus in the programmable mixed-signal IC area.

The Company intends to exit from offering stand alone low-density Serial E2PROM products and is exploring the sale of the product line.

Commenting on the Company's strategy, President and Chief Executive Officer Lou DiNardo noted, "Our vision is to execute a programmable mixed-signal strategy that is predicated on innovation, value pricing and diversity. We will continue to build on our non-volatile memory expertise, as this capability is a differentiator and a value-added feature of our mixed-signal products. We will also continue to support our parallel E2PROM business as this segment of the memory business generates higher gross margins."

Xicor Chairman Dan McCranie added, "This is an essential strategic initiative and a positive step for the Company and its shareholders. It was simply a question of when, not if, the Company would accelerate its transition to a differentiated product strategy. The Board is pleased with the focus and commitment that the new management team has brought to Xicor."

Mr. DiNardo noted, "We believe that an increased focus on our mixed-signal business will provide a better opportunity for consistent financial performance and increased shareholder value. We will be able to increase our focus on new product development and mixed-signal product design wins with our customers.

"We will be a smaller company. In order to complete this transition we will reduce our workforce by approximately 125 employees and complete the move to fully out-sourced assembly and test operations. It is important that we make it clear that we will continue to support our customers and distributors throughout this process. We have been a valued supplier of serial E2PROMs for many years and we want to make sure our customers have ample opportunity to transition."

Mr. DiNardo added, "The compound effect of uncertain sales in the low-density serial memory business and the expenses necessary to support that business were also factors in making this decision now. Primarily due to reduced sales in the memory business associated with the overall weak economic and industry-wide conditions, we are revising our outlook for first quarter revenue down from the outlook we provided on January 24, 2001. We now expect first quarter revenue to be down 17-19 percent sequentially. However, due to a favorable change in product mix, improved gross margin and spending discipline, we expect to achieve earnings ranging from $0.04 to $0.05 per share. All earnings per share amounts exclude costs and charges related to this restructuring."

The Company's first quarter results will reflect the impact of restructuring charges and charges to cost-of-sales to eliminate the serial E2PROM product line from its business processes. "The charges will include inventory write-downs, severance and other expenses directly associated with activities supporting this business," noted Mr. DiNardo. "Our second quarter is expected to be a transition quarter as we under-absorb fixed costs in order to effectively manage the organization and operational changes necessary to complete this process.

"We are acting in a proactive and strategic fashion to better our position in the marketplace. We had a successful fiscal 2000. Sales in mixed-signal products grew 44 percent. We completed the sale of the fab. We also appointed a new Chairman of the Board and a new CEO. It is now time for this Company to move on and fulfill its vision as a leader in the programmable mixed-signal product area," concluded Mr. DiNardo.

Xicor plans to issue its first quarter fiscal year 2001 financial results on April 18, 2001, after the close of market. A conference call will be held that day at 5:00 p.m. Eastern Time to discuss its results and the company's outlook for the upcoming quarter. Information on how to access a webcast of the conference call will be provided on the company's website at http://www.xicor.com

Xicor Corporate Information

Xicor designs, develops, manufactures and markets a wide variety of programmable mixed-signal integrated circuits and nonvolatile memory products used in networking, computing, communication and industrial applications. The Company's products include digitally controlled potentiometers and system management IC's that allow system designers to digitally control analog functions in signal processing, microprocessor monitoring and power management.

Xicor product, corporate and financial information is readily available on the World Wide Web at http://www.xicor.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

The statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding the intent to sell the serial memory business; the belief that increased focus on our mixed-signal business will provide a better opportunity for consistent financial performance and increased shareholder value; the plan to reduce our workforce by approximately 125 employees and complete the move to fully out-sourced assembly and test operations; the expectation that first quarter 2001 revenues will be down 17-19 percent sequentially and that first quarter 2001 earnings per share will range between $0.04 and $0.05 excluding costs and charges related to the restructuring and associated inventory write-downs; and the expectation that the second quarter of 2001 will be a transition quarter as we under-absorb fixed costs in order to effectively manage the organization and operational changes necessary to complete this process.

Factors that could cause actual results to differ materially include the following: general economic conditions and conditions specific to the semiconductor industry; the ability of Xicor to secure a buyer for the Serial E2PROM business; fluctuations in customer demand, including loss of key customers, order cancellations or reduced bookings; product mix; competitive factors such as pricing pressures on existing products and the timing and market acceptance of new product introductions (both by Xicor and its competitors); Xicor's ability to have available an appropriate amount of low cost foundry production capacity in a timely manner; our foundry partners' timely ability to successfully manufacture products for Xicor using Xicor's proprietary technology; any disruptions of our foundry relationships; manufacturing efficiencies; the ability to continue effective cost reductions; currency fluctuations; the timely development and introduction of new products and submicron processes, and the risk factors listed from time to time in Xicor's SEC reports, including but not limited to the Annual Report on Form 10-K for the year ended December 31, 1999 and the Quarterly Reports on Form 10-Q for the quarters ended April 2, 2000, July 2, 2000 and October 1, 2000 (Management's Discussion and Analysis of Financial Condition and Results of Operations, Factors Affecting Future Results section). Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. Xicor undertakes no obligation to publicly release or otherwise disclose the result of any revision to these forward-looking statements that may be made as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.