Silicon Image Signs Definitive Agreement To Acquire DVDO

Augments Digital Visual Interface (DVI) Technology Leadership With Digital TV And Video Processing Capability

31-Mar-00

Silicon Image, Inc. (NASDAQ: SIMG), a leading provider of high-bandwidth semiconductor solutions, announced that it has entered into a definitive agreement to acquire DVDO Inc. (Campbell, California), a privately-held provider of digital video processing semiconductors for the consumer electronics industry. With this acquisition, Silicon Image extends its high-bandwidth Digital Visual Interface (DVI) technology leadership beyond the PC market and into emerging digital consumer electronics applications such as digital TVs, DVD players and set-top boxes for high-definition video. The transaction will be accounted for as a purchase and is expected to become effective in the quarter ending June 30, 2000. Upon close of the acquisition, Silicon Image will issue Common Stock, currently estimated to total approximately 585,000 shares, in exchange for all outstanding shares and options of DVDO. Dr. David Lee, President and CEO of Silicon Image, noted, ""We are excited about our company's future prospects as we progress on our strategic roadmap. DVDO's new digital video image processing capability is very synergistic with our DVI technology, and they have excellent engineering talent -- making this a logical and sound investment. DVDO's products are targeted at suppliers of digital hosts and entertainment displays for the consumer electronics market, another mass market we have targeted with our new High-bandwidth Digital Content Protection (HDCP) capability for DVI."" Silicon Image Executive Vice President of Marketing and Business Development Steve Tirado noted, ""The PC and home entertainment markets are converging as PCs, Internet appliances and TVs are starting to share the same functionality. To capitalize on this trend, many OEMs are looking for ways to best leverage integrated, high-bandwidth digital solutions for hosts and displays in both markets. Silicon Image has established a strong presence in the PC market, where our PanelLinkÆ technology is the leading DVI implementation. With the acquisition of DVDO and its all-digital video image processing technology for DVD players, digital TVs and digital set-top boxes, we are well positioned to extend our presence in the consumer electronics market as well."" The acquisition of DVDO's technology, technical expertise and intellectual property in digital video processing algorithms and semiconductor development, will enable Silicon Image to aggressively pursue the growing number of host and display applications in the consumer electronics market. According to market research firms Dataquest, DisplaySearch, and SRI, the market for PC hosts and displays is projected to reach 346 million units in 2002. With the addition of an anticipated 212-million unit market for consumer electronics devices in 2002, this represents a total addressable market of 558 million units in 2002 for Silicon Image. Silicon Image plans to incorporate functionality from DVDO's technology into its existing line of PanelLink products, enabling the company's existing PC display customers to benefit from DVDO's technology. DVDO's employees will relocate to Silicon Image soon after the transaction is completed. About DVDO DVDO is a privately-held company that designs, manufactures and markets chip and system-level solutions for the next generation of digital television and digital video electronic products. The target market spaces for DVDO's products include DVD Players, digital television (DTV), digital satellite receivers, digital cable set-top boxes, home theater, automotive and airline entertainment applications, as well as other display technologies that require high performance video deinterlacing, scaling, and processing for PC/TV convergence and Internet display applications. DVDO is home to the proprietary PureProgressiveô Image Enhancement Engineô technology, a new high-performance and cost-effective solution for single-chip digital video processing. DVDO has 14 US and international patents pending on this technology. About Silicon Image Silicon Image designs, develops and markets semiconductor solutions for applications that require cost-effective, high-bandwidth, integrated solutions for high-speed data communications. The company's PanelLink technology provides scalable, end-to-end, all-digital connectivity between computers, controllers, or other sources of video and digital video display devices such as flat-panel monitors or digital CRTs. Silicon Image's products have been incorporated in host systems and displays sold by leading manufacturers such as Apple, ATI, Compaq, Fujitsu, Gateway, Hitachi, IBM, LG, Matrox, NEC, Princeton Graphics, Samsung, Sharp, Toshiba and ViewSonic. The PanelLink protocol has been adopted by the Digital Display Working Group (DDWG) in the now established Digital Visual Interface (DVI) specification. Silicon Image, Inc. is based in Sunnyvale, California. For more information on Silicon Image, Inc. and its solutions visit www.siimage.com .

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