CHANDLER, Arizona -- October 27, 2000 -- Microchip Technology Incorporated and TelCom Semiconductor, Inc. today announced that Microchip will acquire TelCom in a stock-for-stock transaction valued at approximately $300 million on a fully-diluted basis based on Thursday’s closing prices. TelCom is a provider of a broad spectrum of high performance linear and mixed-signal integrated circuits solutions that are used worldwide in a range of applications in the wireless communications, computing, consumer electronics, networking, industrial and other markets.

Microchip expects the transaction to be completed during the first calendar quarter of 2001 and to be immediately accretive.

"TelCom Semiconductor designs, develops and markets a broad spectrum of high performance linear and mixed-signal integrated circuit solutions. We find nearly 1.5 dollars of analog product for every dollar of microcontroller in the embedded control boards of our customers. One and a half years ago, we started selling stand-alone analog products to our customers by attaching them to our microcontrollers. TelCom’s products are highly synergistic and will substantially enhance the attach rate to our growing list of over 30,000 customers," said Steve Sanghi, Microchip’s President and CEO.

TelCom’s high performance analog expertise will substantially expand Microchip’s product initiatives and position the Company as a leading producer of power management, thermal management and other linear/mixed-signal integrated circuits, including op-amps, voltage references, and comparators, and adds substantially to Microchip’s analog product initiative.

"We are pleased to join forces with an industry leader like Microchip," said Bob Gargus, President and CEO of TelCom. "This is an excellent fit from both a customer and technology perspective. We believe our strength in analog products will further Microchip’s leadership in embedded control applications. Microchip’s larger sales force, much larger customer base and strong OEM and distributor relationships will significantly expand the market opportunity for TelCom’s products."

TelCom will become a subsidiary of Microchip and TelCom’s team of over 250 employees will become part of Microchip’s existing analog product group. Microchip expects to keep all of TelCom’s employees, and no reductions in workforce are expected. TelCom’s team of over 250 employees will merge with Microchip’s existing analog products group.

Microchip and TelCom expect the transaction to be completed during the first calendar quarter of 2001.

About Microchip
Microchip Technology Inc. manufactures the widely popular PICmicro® RISC microcontrollers which serve embedded control applications. Specializing in field-programmable and mixed-signal solutions, the company also offers complementary microperipheral products including stand-alone analog, interface and microID™ RFID devices; serial EEPROMs; and the patented KEELOQ®  security devices. This synergistic product portfolio targets thousands of applications and a growing demand for high-performance designs in the automotive, communications, computing, consumer and industrial control markets.