SANTA CLARA, Calif. --- December 7, 1998 - S3 Incorporated (Nasdaq: SIII) and UMC Group today announced that they have successfully produced the graphics industry's first 0.18 micron design. UMC Group's .18 micron technology will enable S3 to deliver significantly higher-performing graphics accelerators that exceed even Intel's Pentium II processor in terms of gate complexity.

"By breaking the barrier to advanced process technologies, S3 has surpassed every graphics competitor," said Ken Potashner, president, CEO and chairman of S3 Incorporated. "This technology lead gives us significant advantages that we can quickly pass on to our customers in terms of higher performance, lower power consumption and increased levels of integration."

"Consistent and substantial investment in research and development has made us the undisputed technology leader in the dedicated foundry world," said Jim Kupec president of UMC Group (USA). "Although we were not the first dedicated foundry, we were clearly the first to offer production capacity at 0.25 and 0.22 micron. Furthermore, our production volumes and yields at .25 micron are significantly ahead of the competition. It is only natural that we will be the first to offer .18 micron capacity due to our successful relationships with industry leaders like S3."

"S3 and UMC Group have a history of delivering leading-edge technologies," said Paul Franklin, senior vice president of Operations for S3 Incorporated. "While many other graphics competitors are still taping out their initial .25um designs, we have already successfully produced three .25 micron designs with UMC Group. The yields for our 0.25um products have already reached levels comparable to our best achievements at the previous generation (.35 micron)."

S3 Incorporated, founded in 1989 with headquarters in Santa Clara, California, is a premier supplier of multimedia acceleration hardware and its associated software. S3 is committed to applying its expertise in 2D graphics, 3D graphics, and video to create innovative and affordable products for the home, desktop and mobile markets.