SMSC Announces Acquisition of Kleer Semiconductor Corporation

SMSC (NASDAQ: SMSC), a leading semiconductor company providing Smart Mixed-Signal Connectivity™ solutions, today announced that it has acquired substantially all the assets and certain liabilities of Kleer Semiconductor Corporation (Kleer), a designer of high quality, interoperable wireless audio technology addressing headphones and earphones, home audio/theater systems and speakers, portable audio/media players and automotive sound systems. This transaction brings a robust, high-quality audio and low-power radio frequency (RF) capability that will allow consumer and automotive OEMs to integrate wireless audio technology into portable audio devices and sound systems without compromising high-grade audio quality or battery life.

"Kleer technology provides a natural extension to SMSC’s consumer and automotive connectivity portfolio,” said Christine King, President & Chief Executive Officer of SMSC. "With its Media Oriented Systems Transport (MOST^®) technology, SMSC’s automotive product line already provides a wired network that allows passengers to enjoy multimedia content without sacrificing quality or performance. MOST is widely recognized as the de-facto standard to move high-bandwidth content among various components within the vehicle. Kleer technology provides a high quality wireless extension of MOST without quality degradation and with low power consumption. This technology extends our ability to service our OEM customers with a broad portfolio of solutions that significantly enhance the user experience in the car and elsewhere.”

Kleer-based products are designed to provide high quality media transmission in various environments with strong interference robustness and WiFi coexistence to enhance the user experience. The technology has many natural applications in the consumer world to create high-fidelity home theater environments and distribute audio in the home and other environments. Several consumer customers already offer products with Kleer technology, including Sennheiser, the well-known headphone brand, which offers several models of digital wireless headphones and earbuds with high audio quality and long battery life. TDK recently introduced the highly-regarded Kleer-based TH-WR700 wireless headphones. In addition, DigiFi’s wireless earbuds and CyFi’s speaker system for bicycles both rely on Kleer’s low power consumption.

Under terms of the asset purchase agreement, SMSC paid approximately $5.5 million in cash and additional cash payments of up to $2.0 million may occur upon achievement of certain performance goals. The acquisition closed on February 16, 2010.

Forward Looking Statements

Except for historical information contained herein, the matters discussed in this announcement are forward-looking statements about expected future events and financial and operating results that involve risks and uncertainties. These uncertainties may cause our actual future results to be materially different from those discussed in forward-looking statements. Our risks and uncertainties include the timely development and market acceptance of new products; the impact of competitive products and pricing; our ability to procure capacity from our suppliers and the timely performance of their obligations, commodity prices, interest rates and foreign exchange, potential investment losses as a result of liquidity conditions, the effects of changing economic and political conditions in the market domestically and internationally and on our customers; our relationships with and dependence on customers and growth rates in the personal computer, consumer electronics and embedded and automotive markets and within our sales channel; changes in customer order patterns, including order cancellations or reduced bookings; the effects of tariff, import and currency regulation; potential or actual litigation; and excess or obsolete inventory and variations in inventory valuation, among others. In addition, SMSC competes in the semiconductor industry, which has historically been characterized by intense competition, rapid technological change, cyclical market patterns, price erosion and periods of mismatched supply and demand.

Our forward looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations and may not reflect the potential impact of any future acquisitions, mergers or divestitures. All forward-looking statements speak only as of the date hereof and are based upon the information available to SMSC at this time. Such statements are subject to change, and the Company does not undertake to update such statements, except to the extent required under applicable law and regulation. These and other risks and uncertainties, including potential liability resulting from pending or future litigation, are detailed from time to time in the Company's reports filed with the SEC. Investors are advised to read the Company's Annual Report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission, particularly those sections entitled "Other Factors That May Affect Future Operating Results” or "Risk Factors” for a more complete discussion of these and other risks and uncertainties.

About SMSC

SMSC is a leading developer of Smart Mixed-Signal Connectivity™ solutions. SMSC employs a unique systems level approach that incorporates a broad set of technologies and intellectual property to deliver differentiating products to its customers. The company is focused on delivering connectivity solutions that enable the proliferation of data in personal computers, automobiles, portable consumer devices and other applications. SMSC’s feature-rich products drive a number of industry standards and include USB, MOST^® automotive networking, embedded system control and analog solutions, including thermal management and RightTouch™ capacitive sensing. SMSC is headquartered in New York and has offices and research facilities in North America, Asia, Europe and India. Additional information is available at www.smsc.com.

SMSC and MOST are registered trademarks and Smart Mixed-Signal Connectivity, TrueAuto and RightTouch are trademarks of Standard Microsystems Corporation.