AUSTIN, Texas -- Cirrus Logic Inc. (NASDAQ:CRUS) the market leader in audio chips worldwide, and S3's Diamond Multimedia™ Communications Division today announced at the South by Southwest Conference that Cirrus Logic's Maverick™ system-on-chip (SOC) solution will be featured in the third generation of Rio™ digital audio players.

Diamond also is the first company to announce that its new audio player will meet the latest Secure Digital Music Initiative (SDMI) requirements through the Maverick processor's support of digital rights management software. The new Rio players will ship later this spring.

Sales of portable Internet audio players are expected to exceed 2.8 million units in 2000, up from approximately 700,000 in 1999 according to Mike Paxton, senior analyst at Cahners/In-stat Group, an industry research firm. He adds that Diamond Multimedia is the number one supplier in that market.

"Our third generation players will help customers get more music more quickly while embracing the needs of the music industry for true digital rights management on a portable player,'' says Mike Reed, director of marketing for S3's Diamond Multimedia Communications Division. "Here at South by Southwest, we've been providing people with a look at the trend-setting style and design that houses this cutting-edge technology.''

"This is the first significant product announcement with Diamond that results from our partnership announced earlier this year,'' says Matthew Perry, vice president and general manager of Cirrus Logic's Embedded Processors Division. "We look forward to building a strong future together with additional new products that capture the momentum of the digital audio market, and solidifying our respective market leadership positions.''

Added Security

Diamond is the first company to announce that its line of Internet audio players will feature built-in digital rights management security using the Maverick processor. The Maverick EP7209, announced last June, was the first in Cirrus Logic's growing Maverick family of market specific processors (MSPs). It is the first chip to support both the Windows Media Format and InterTrust digital rights management solutions.

"The Maverick technology represents a giant leap in solving what has been, and still is, an important issue for the music industry,'' says Perry. "By making digital rights management an integral part of the chip, we have given digital-audio manufacturers the ability to meet the market demand for such devices, while satisfying the copyright and security issues of the music industry.''

Enhanced Design and Audio Features

Until now, Rio players have been square in shape and increasingly smaller with each generation. The third generation devices continue to take a shrinking design, but now build in a revolutionary shape. The new style, a specially shaped body that fits in the palm of a hand, appeals to a rapidly growing market of consumers who enjoy music in various lifestyle applications.

The new Rio will feature Cirrus Logic's Maverick technology. Specifically designed for Internet audio players, the Maverick processor is the industry's first chip solution to support both the Windows Media Format and MP3. In addition, the Maverick processor provides a number of enhanced features directly related to sound quality, furthering the excellent audio performance associated with Rio players. Those features include digital bass, treble and volume controls, low-power playback modes, graphic equalizer, spectrum analyzer display and graphic level meter.

The Maverick processor can also be quickly modified to support other audio compression standards (codecs) as they emerge, or add valuable features such as equalization without redesigning the players. As an off-the-shelf MSP, the Maverick processor features a programmable ARM® processor core that enables Diamond Multimedia to easily upgrade and customize future digital-audio players with minimal manufacturing costs and shortened overall time-to-market.

Because of the Maverick processor's customizable ARM processor, the new Rio players will support not only the Windows Media Format and MP3 audio, but will also embrace any audio formats appealing to the music industry -- while providing the appropriate platform for secure music releases.

About Diamond Multimedia

A division of S3 Incorporated, Diamond Multimedia has been the leader in communications, digital music players and home networking since its introduction of the HomeFree product line in January 1999, and the introduction of the Rio player in November 1998.

About S3 Incorporated

Building on the technology, distribution and brand strengths of its Communications, Multimedia and Professional Graphics divisions, S3 is committed to delivering targeted products for the personal computer and Consumer/Internet Appliance markets.

Rounding out its PC silicon offerings, S3's recent acquisition of Diamond Multimedia adds consumer brands such as the Viper™ and Stealth™ series of graphics accelerators, Rio series of Internet audio appliances, the Supra™ series of modems, and the HomeFree™ line of home networking products.

About Cirrus Logic

Cirrus Logic is a premier supplier of high-performance analog circuits and advanced mixed-signal chip solutions. The company's products, sold under its own name and the Crystal product brand, enable system-level applications in mass storage, audio, and precision data conversion. Additional information about Cirrus Logic is available at www.cirrus.com

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Except for historical information contained herein, the matters set forth in this press release are forward-looking statements that are subject to risk and uncertainties, including the impact of competitive products and pricing and of alternative technological advances, and other risks detailed from time to time in S3's SEC reports, including its quarterly report on Form 10-Q for the quarter ended September 30, 1999. S3 is a registered trademark of S3 Incorporated. The S3 corporate logo, Diamond Multimedia, Viper, Stealth, Rio, Supra and HomeFree are trademarks of S3 Incorporated. Other marks referenced herein are the property of their respective owners.

Note to editors: Cirrus Logic and Maverick are registered trademarks of Cirrus Logic Inc. All other product names noted herein may be trademarks of their respective holders.