SIGMATEL completes acquisition of PROTOCOM CORPORATION

AUSTIN, Texas--Aug. 26, 2005--SigmaTel Inc. (NASDAQ:SGTL), a global leader in analog intensive, mixed-signal integrated circuits for the digital multimedia consumer electronics and computing markets, today announced it finalized the acquisition of Protocom Corporation, a privately held semiconductor provider to the multi-function imaging market.

The acquisition of Protocom provides SigmaTel its first product line focused on imaging applications, as well as technology that can be leveraged into several emerging multimedia consumer electronics markets. The companies are coordinating roadmaps with plans to have SigmaTel's mixed signal technology combined with the acquired imaging technology by the second half of 2006. The addition of Protocom into SigmaTel's technology portfolio allows the company to meet the form, fit and function requirements for devices such as digital video cameras, personal media players (PMPs), video conferencing, remote security cameras, digital still cameras and multimedia mobile phones.

"Based on customer and industry response to the acquisition, SigmaTel now has the industry's best low cost solutions based on the STMP3500 family and the best leading edge technology for PMPs, digital video cameras and other multimedia products," said Ron Edgerton, president and CEO, SigmaTel Inc. "We share in our customers' excitement and look forward to further diversifying SigmaTel's products and technologies to better serve the future market of digital multimedia devices."

With the closing of the acquisition, SigmaTel has acquired all of Protocom's business, including technology assets, current products, customers, and intellectual property. Most of Protocom's employees, more than half of which are engineers, have become full-time SigmaTel employees and remain in their current locations. Protocom's former headquarters in Cupertino, CA, will become SigmaTel's West Coast Imaging Center.

SigmaTel paid $47 million for all of Protocom's outstanding shares of capital stock. This $47 million payment consisted of $28.2 million of SigmaTel common stock (approximately 1,437,000 shares) and $18.8 million in cash. A portion of the shares to be issued were placed into escrow pursuant to the terms of the acquisition agreement. Protocom employees are restricted as to when they can sell the shares they received from the transaction.

SigmaTel assumes all unvested Protocom employee stock options, which entitle the holders to receive up to approximately 200,000 shares of SigmaTel common stock, subject to customary vesting requirements. SigmaTel expects to record a one-time charge for purchased in-process research and development expenses related to the acquisition in its third quarter. The amount of that charge, if any, has not yet been determined.

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About SigmaTel

SigmaTel Inc. a fabless semiconductor company headquartered in Austin, Texas, 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, digital video cameras, multi-functional peripheral products, 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.

Forward-Looking Statements are omitted