MICROCHIP TECHNOLOGY signs definitive agreement to acquire Gresham, Oregon wafer fabrication facility from FUJITSU MICROELECTRONICS

GRESHAM, Oregon - July 17, 2002 -- Microchip Technology Incorporated (NASDAQ:MCHP) announced today that it has executed an agreement to acquire a semiconductor manufacturing complex in Gresham, Oregon from Fujitsu Microelectronics, Inc. for $183.5 million in cash. The Gresham facility, which the Company is referring to as "Fab 4," will substantially enhance Microchip's short-term and long-term global manufacturing capacity and will help accommodate Microchip's projected worldwide demand for its field-programmable microcontrollers, analog, Serial EEPROMs, and complementary microperipheral products. Initial hiring is expected to reach approximately 60 people during pre-production phases. Over time, Microchip believes it could employ approximately 360 people as the facility reaches high volume manufacturing capacity over the next 5 to 6 years. The transaction is subject to results of Microchip's due diligence and other closing conditions. Closing of the transaction is expected to occur by the end of October, however, Fujitsu Microelectronics has the option to accelerate closing to the end of August 2002 upon completion of all closing conditions.

Situated on a 196-acre campus east of Portland, the Gresham campus comprises approximately 826,500 square feet, including approximately 200,000 square feet of clean room space. The facility is designed to be capable of producing process technologies down to 0.13 micron and to support more than $1 billion in annual sales at full capacity. The facility comes equipped with approximately 350 process tools and 170 support tools, which will reduce the time required to commence production. Microchip plans to initially produce 8-inch wafers on its 0.5 micron and 0.35 micron process technologies at the Gresham facility. The facility will also house manufacturing operations, offices, meeting rooms and support functions. Microchip currently expects volume production to commence at the facility by July 2003.

Microchip currently intends to maintain its Fab 3 (Puyallup, Washington) manufacturing facility until it is required for future production. Microchip is, however, evaluating its Fab 3 facility to determine if an impairment charge would be required. Microchip will relocate the process equipment from Fab 3 to its wafer fabrication facilities in Tempe and Chandler, Arizona, to further enhance the Company's short-term manufacturing capacity and to reduce its otherwise planned capital expenditures. Following the closing of the acquisition of the Gresham, Oregon facility, Microchip intends to relocate certain equipment from Fab 3 to Fab 4 to create a closer equipment match to the Company's Tempe wafer fabrication facility in order to facilitate a quicker process start at Fab 4.

"Microchip's ability to offer the best lead times on product delivery has been one of the reasons why engineers migrate their designs to our PICmicro„µ microcontroller solutions," said Steve Sanghi, Microchip's CEO and President. "As we expect demand for our semiconductor devices to continue to increase going forward, Microchip is responding quickly to secure additional manufacturing capacity. Without Fab 4, we believe we would have had sufficient manufacturing capacity through the end of September 2003, at our current rate of growth. Beyond that, we would need to add substantial new advance manufacturing equipment at 0.5 and 0.35 micron process technologies in our Tempe, Arizona wafer fabrication facility and at Fab 3 in Puyallup. This acquisition will provide us with extremely cost effective additional manufacturing capacity in a much shorter time frame and on more favorable terms than either the expansion of our Tempe fab or the start up of Fab 3 in Puyallup."

Mr. Sanghi added, "The acquisition of this facility will also accelerate Microchip's technology roadmap. Because of the availability of sufficient advance manufacturing equipment, Microchip will be adding a 0.25 micron advance Technology Development Program in Fab 4 and will relocate certain personnel from its facility in Tempe, Arizona. These actions will preserve Microchip's captive and very cost effective manufacturing strategy to process technologies up to 0.25 microns and below."

Mr. Sanghi continued, The acquisition is subject to several closing conditions, including the qualification of the facility under Oregon's Strategic Investment Program that caps the property taxes similar to the programs currently granted to Intel Corporation and LSI Logic. "Microchip is pleased with the initial strong support we have received from local and state officials, and we look forward to their continuing efforts to ensure Microchip qualifies under this important program. Microchip has been a very strong supporter and a good citizen of the communities in which we operate. We plan to operate Fab 4 in Gresham, Oregon with similar values."

About Microchip:

Microchip Technology Inc. manufactures the popular PICmicro® field-programmable RISC microcontrollers, which serve 8- and 16-bit embedded control applications, and a broad spectrum of high-performance linear and mixed-signal, power management and thermal management devices. The Company also offers complementary microperipheral products including interface devices; 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.

The Company's quality systems are ISO 9001 (1994 version) and QS9000 (1998 version) certified. Microchip is headquartered in Chandler, Arizona with design facilities in Mountain View, California and Bangalore, India; semiconductor fabrication facilities in Tempe and Chandler, Arizona and Puyallup, Washington; and assembly and test operations near Bangkok, Thailand. Microchip employs approximately 3,200 people worldwide and has sales offices throughout Asia, Europe, Japan and the Americas. More information on the Company can be found at www.microchip.com.