Oak Technology and Cheertek, a Spin-off of Winbond, Combine Optical Storage Businesses

1/27/2003 - Oak Technology, Inc., (Nasdaq: OAKT) announced a strategic partnership with Cheertek Incorporation, a recent spin-off from Winbond Electronics Corporation of Taiwan (TSE: 2344), the largest brand name integrated circuit supplier in the Taiwan integrated circuit industry. Under the terms of a letter of intent, Oak will transfer its Optical Storage business and certain Optical Storage assets to Cheertek, Winbond's privately-held, new multimedia integrated circuit product design company, based in Taiwan. In return, Oak will receive a significant minority equity position in Cheertek. The joint venture is focused on developing consumer and computer video products including DVD, optical recording products and power amplifiers for use in multimedia computer and home electronics. The parties intend to expedite the execution of a definitive agreement and the transition of the Optical Storage Group business to Cheertek. Further financial details were not disclosed.

Cheertek employs over 100 engineers in Taiwan. Based upon unaudited financial statements, the company currently has approximately $60 million in annual DVD Player- and VCD-related revenue, which they believe is more than sufficient to generate positive cash flow from operations. The joint venture should allow Oak to leverage and optimize the value of its optical storage assets, and achieve a competitive cost structure. With its rich set of intellectual property, channel of distribution, customer partnerships and leading SOC technology invested in an offshore cost structure, Oak believes that Cheertek will emerge as a strong and profitable leader in the optical storage market. It is anticipated that the addition of Oak's optical storage business should accelerate Cheertek's competitive position and increase its revenue stream, leaving the company in an even better position for a potential future initial public offering.

"We anticipate Oak's investment in Cheertek will add value for Oak's shareholders and help us to be better positioned for the growing China market," said Young Sohn, chairman and chief executive officer of Oak Technology. "With this joint venture, we will significantly reduce our cost structure, accelerating Oak's movement along the road to profitability. In addition, by holding an equity position in a growing optical storage player in Taiwan, our shareholders may continue to benefit from their prior investment in our optical storage assets and intellectual property. The potential gains from a Cheertek initial public offering in the future may well be an added bonus for Oak shareholders."

About Oak Technology
Oak Technology, Inc., a leading provider of solutions for the storage, manipulation and distribution of digital content, is committed to driving the emerging world of connected consumer appliances. The company's fully integrated products and technologies target three key markets: optical storage (CD-RW, Combo and DVD for PC and consumer), digital imaging (advanced copiers, printers, faxes, scanners and MFPs) and digital home entertainment (digital TV, HDTV and PVRs). Founded in 1987, Oak is headquartered in Sunnyvale, California, and has sales offices, design centers and research facilities around the world. The company trades on the Nasdaq Stock Exchange under the symbol OAKT. Additional information about Oak and its digital solutions can be found at www.oaktech.com.

About Winbond
Winbond is the largest brand name integrated circuit supplier in the Taiwan IC industry in search of excellence in process technology, worldwide marketing networks and wafer processing. Winbond is dedicated to helping customers increase their competitive edge by creating IC solutions that meet today's rapidly changing product requirements. To meet the constantly expanding need for regional customer support and services, Winbond has established sales and marketing subsidiaries in the US, Europe, China, Hong Kong, Japan and Singapore. In addition, to address global customer needs more efficiently, the Company has established more than 60 sales distributorships and technical support centers throughout Asia, Europe and the Americas. Winbond is listed on the Taiwan Stock Exchange (TSE) under ticker 2344. Further information about Winbond can be found at www.Winbond.com.

About Cheertek
Cheertek Inc. was established by Winbond in January 1, 2002 with main focus in the development, marketing and sales of digital audio/video and optical storage IC products. The company presently has NT$400mn in capital. Cheertek is dedicated to providing customers with turn-key solutions in VCD and DVD players to lower customers' entry barrier and expedite their development cycle. Current product lines include DVD Player chipset (Servo/DSP, MPEGII Decoder), VCD chipset (RF, Servo, MPEGI, MCU, TV Encoder, Audio DAC), and CD-ROM (Servo, Decoder). Cheertek's main office is in Hsinchu Science Park Taiwan, and has sales offices in Shenzhen and Shanghai China.

Oak Technology is a registered trademark of Oak Technology, Inc. The Oak logo is a common law trademark of Oak Technology, Inc.

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