Hynix and M-Systems to Offer a New Generation of DiskOnChip Embedded Flash Drives for Use in Mobile Handsets and Consumer Electronics Devices

DOC H3, the companies’ first jointly introduced product, will utilize the latest NAND flash from Hynix and M-Systems’ built-in TrueFFS® flash management software

SEOUL and SUNNYVALE, Calif., Jan. 4, 2006  Hynix Semiconductor Inc. (KSE: 000660.KS) , one of the world’s leading memory semiconductor manufacturers, and M-Systems (Nasdaq: FLSH), an industry leader and innovator of flash-based data storage devices, today announced plans to offer their first-ever jointly introduced DiskOnChip (DOC) embedded flash drive (EFD) - DOC H3, based on the field-proven DiskOnChip architecture.

DOC H3 is designed to be a self-contained EFD with M-Systems’ TrueFFS flash management software running internally as firmware from within the flash controller inside the chip. This architecture is designed to minimize overall system integration complexity and help reduce end-product design cycles by offering mobile handset and consumer electronics device manufacturers a virtually plug-and-play EFD.

“We are truly excited to announce the first jointly introduced fruit of our recently established partnership with Hynix, a world leader in memory technology. Hynix’s adoption of DOC H3 sends a strong endorsement signal to the industry on behalf of our DiskOnChip architecture and is definitely exciting news for mobile handset and consumer electronics device manufacturers,” said Dov Moran, president and CEO of M-Systems.  “This new collaboration also represents a first jointly announced embodiment of our firm commitment to providing our customers with multiple sources for DiskOnChip architecture-based EFDs. As a result of this joint development effort, our customers will now have the assurance and peace of mind of having an additional, reliable and robust source for easy-to-integrate, high-density, quality EFDs containing the optimum flash technology from Hynix. We at M-Systems certainly look forward to the continuation of this very promising collaboration with Hynix.”

“We are very pleased to announce our first jointly introduced product with M-Systems. DOC H3 provides us with the ability to expand our product offering for the mobile handset and consumer electronics devices markets,” said C.S. Oh, COO of Hynix.  “By combining our latest flash technology with M-Systems’ advanced technology, we can now offer our customers an immediate path to the benefits of our most advanced technology and cost competitive solution. We at Hynix anticipate this fruitful partnership to yield many more such jointly developed products in the future.”

“The DOC H3 architecture holds great promise for designers of Windows Mobile and Windows Embedded consumer electronics and mobile devices that have robust flash memory requirements,” said Jonas Hasselberg, group product manager, Mobile & Embedded Devices Division, Microsoft Corp. “With the DOC H3’s plug-and-play design, our partners can quickly and easily implement the latest flash technology in their devices for improved performance and functionality, with shorter development cycles and lower costs.” 

Engineering samples of DOC H3 will be available in the first quarter of 2006, with availability for mass production planned for the second quarter. It will be available in densities of 128 megabytes (1Gbit) to 2 gigabytes (16Gbit), in 9x12 and 12x18 FBGA packages and will have the capability to work in 1.8V and 3.3V.

About Hynix Semiconductor Inc.

Hynix Semiconductor Inc. (HSI) of Icheon, Korea, is the world’s top tier memory semiconductor supplier offering Dynamic Random Access Memory chips (“DRAMs”), Static Random Access Memory chips (“SRAMs”) and Flash memory chips to a wide range of established international customers. The Company’s shares are traded on the Korea Stock Exchange, and the Global Depository shares are listed on the Luxemburg Stock Exchange. Further information about Hynix is available at www.hynix.com.

About M-Systems

M-Systems develops, manufactures and markets innovative flash-based data storage solutions for consumer electronics and embedded markets.  The Company targets the fast growing multimedia mobile handset market with its DiskOnChip® and MegaSIM™ products and the popular USB flash drive market with its DiskOnKey® product.  More information about M Systems is available online at www.m-systems.com.