SUNNYVALE, Calif.—March 15, 1999 - Kawasaki LSI, based in Japan, and UMC Group today announced a strategic alliance for 0.18m process technology developments, including implementations of copper and low-k dielectric layers.

As part of the agreement, UMC Group will provide Kawasaki with foundry services to support Kawasaki's growing ASIC and standard product business. Kawasaki has agreed to contract to UMC Group all ASIC manufacturing that exceeds Kawasaki's current capacity.

Kawasaki started its ASIC business with 0.25m process technology in early 1999, and proposed to establish a second fab for the development of 0.18m processes in July 1999. However, Kawasaki cancelled this later project after forming this strategic alliance—it determined UMC Group will provide a more economical and competitive alternative.

Kawasaki will begin re-targeting its extensive ASIC library to UMC Group's 0.18m rules in Q2 '99 with the assistance of UMC Group. Kawasaki anticipates volume 0.18m ASIC production before the end of Q4 '99. This alliance allows Kawasaki to begin offering 0.18m ASICs more than one and one half (1.5) years before originally planned, enabling the company to remain competitive in ASICs in terms of deep sub-micron process technology. Kawasaki is specifically targeting its ASIC business in the network, telecommunications, and mobile computing areas.

To show support for the alliance, Kawasaki will make a capital investment into Nippon Foundry Inc. (NFI), UMC Group's newest fab, in March 1999. Following this investment, Kawasaki will also make a capital investment in a UMC Group joint venture fab in Taiwan by mid-1999.

This alliance with UMC Group is not limited to 0.18m process business but extends to its 0.25m process, 0.25m embedded DRAM process and to all other processes. UMC Group also anticipates that Kawasaki's ASIC business expansion will contribute to the UMC Group's pure-play foundry business.

Kawasaki LSI U.S.A., Inc. is a subsidiary of the LSI Division of Kawasaki Steel Corporation, a manufacturer and marketer or ASICs, USB controllers, CAMs and other chips for connectivity and communications applications.