SigmaTel, Inc. Sues Actions Semiconductor for MP3 Player Technology Patent Infringement

-- SigmaTel, Inc. (NASDAQ:SGTL) the Austin, Texas-based market leader for portable MP3 player technologies, filed suit in United States federal court on January 04, 2005 against Actions Semiconductor, based in Zhuhai, Guangdong, China, seeking to halt the infringement of SigmaTel's intellectual property rights.

SigmaTel asserts that Actions Semiconductor infringed multiple SigmaTel patents in the design of System-on-Chip controllers for the Portable Digital Music player market. Actions' products have recently begun shipping into the United States retail market as components of MP3 players. SigmaTel seeks to stop shipment of products into the U.S. that use Actions Semiconductor integrated circuits or "ICs."

In addition, SigmaTel is seeking Actions' payment of damages and an injunction to prohibit Actions design, manufacturing and selling the infringing MP3 IC's in the U.S. The court case was filed in Austin, Texas.

"We are committed to taking whatever measures are necessary to protect the integrity of our company's intellectual property and our customer's products," said Ron Edgerton, chief executive officer and president of SigmaTel. "Patent protection is vital to sustaining healthy marketplace evolution and competition. Without such protection, no company would have the incentive to invest in research and development, which is an important driver of the semiconductor industry."

Additionally, SigmaTel is strongly considering asking the United States International Trade Commission (ITC) to institute an Investigation pursuant to Section 337 in early 2005 based on the importation of the infringing MP3 ICs. SigmaTel will ask the ITC to grant all possible relief, including an exclusionary order, enforced by U.S. Customs, prohibiting the importation into the U.S. of MP3 players that contain Actions' MP3 ICs. Further, SigmaTel will ask the ITC to issue a cease-and-desist order requiring retailers and distributors to remove from their shelves and destroy all MP3 players containing Actions infringing MP3 ICs.

SigmaTel introduced its first highly integrated MP3 IC more than three years ago and is currently working on its fourth generation solution. The company owns 41 issued U.S. patents and has more than 60 patent applications pending at the U.S. Patent Office, many of which are close to being issued. Additionally, the company is preparing or has identified more than 90 additional patents that can be filed with the U.S. Patent Office and selected foreign jurisdictions within the next few months.

About SigmaTel

SigmaTel is a fabless semiconductor company that designs, develops, and markets proprietary, analog intensive, mixed-signal ICs for a variety of products in the consumer electronics and computing markets, including portable compressed audio players, such as MP3 players, notebook and desktop PCs, DVD players, digital televisions, and set-top boxes. SigmaTel provides complete, system-level solutions that include highly-integrated ICs, customizable firmware and software, software development tools, reference designs, and applications support. The Company's focus is on providing system-level solutions that enable customers to rapidly introduce and offer electronic products that are small, light-weight, power-efficient, reliable, and cost-effective. SigmaTel is ISO 9001:2000 certified and is committed to providing customers with high performance, quality products along with superior customer service.

Cautionary Language

This press release contains forward-looking statements based on current SigmaTel expectations. The words "expect," "will," "should," "would," "anticipate," "project," "outlook," "believe," "intend," and similar phrases as they relate to SigmaTel or future events are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of SigmaTel, but are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. A number of important factors could cause actual results to differ materially from those in the forward-looking statements, and there will be events in the future that SigmaTel is not able to accurately predict or control. For a discussion of factors that could impact SigmaTel's financial results and cause actual results to differ materially from those in the forward-looking statements, please refer to recent SigmaTel filings with the SEC, particularly the 424(b)(4) final prospectuses filed September 19, 2003 and February 19, 2004, the Form 10-Qs that were filed on October 29, 2003, April 20, 2004, July 20, 2004, and October 19, 2004,and the Form 10-K that was filed on February 17, 2004.

SOURCE: SigmaTel, Inc.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SigmaTel, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.