BRUSSELS, Belgium and SUNNYVALE, Calif. - July 17, 2001-Alcatel (NYSE: ALA), a leader in communication chips, and UMC (NYSE: UMC), a world-leading semiconductor foundry, today announced Alcatel's selection of UMC's 0.13-micron CMOS process for the production of its next-generation ICs.

"UMC leads the foundry industry in 0.13-micron technology, as it is the only foundry to offer low-k dielectric, and the only foundry to have passed 1000 hour reliability testing on 0.13-micron products," said Jim Kupec, senior vice president of worldwide sales and marketing at UMC. "The fact that Alcatel will be taking advantage of this latest process technology and the Fusion option, that enables the combination of high speed and low power logic transistors into one design, is testament to the fact that UMC meets the requirements of today's most innovative companies. Alcatel's commitment to leverage the 0.13-micron process follows a long history of close cooperation between the two companies at previous generation technologies, 0.35-micron BiCMOS and CMOS to 0.25 and 0.18-micron CMOS."

"As Alcatel continues to develop increasingly more sophisticated communication chips, it needs to take advantage of the most advanced semiconductor process technologies. UMC is meeting our foundry requirements with its 0.13-micron technology, and the innovative Fusion design option," commented Paul Defraeye, vice president, technology development for Alcatel's microelectronics activities. "Cooperating with UMC allows us to adopt, as one of the first semiconductor companies in the world, the 0.13-micron process for chip production. This technology advance sets us apart in communications chipset size, speed, and power savings, offering our customer optimized ICs for wireless and wired applications, notably for GSM and ADSL."

Alcatel's design activity will be facilitated by the Fusion library that includes standard cells, I/O and memory compilers that are available from Virtual Silicon Technologies, Inc.

Alcatel builds next generation networks and the chips that power them, delivering integrated end-to-end voice and data networking solutions to established and new carriers, as well as enterprises and consumers worldwide. With 110,000 employees and sales of EURO 31 billion in 2000, Alcatel operates in more than 130 countries. For more information, visit Alcatel on the Internet www.alcatel.com/microelectronics

Fusion is the foundry industry's only transistor option that addresses the processor speed requirements of next-generation semiconductor products, while maintaining the flexibility to simultaneously meet demanding low power requirements, by combining both high speed and low leakage transistors onto a single IC.

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