SANTA CLARA, Calif. and SAO PAULO, Brazil, June 18 /PRNewswire-FirstCall/ -- Gradiente Eletronica S.A., a leading Brazilian consumer electronics manufacturer, and NeoMagic Corporation (Nasdaq: NMGC), a pioneer in developing mobile multimedia solutions, today announced that they have signed a joint development agreement to bring to market a mobile TV enabled smart phone for the ISDB-T/b (Integrated Service Digital Broadcasting Terrestrial/Brazil) standard based on NeoMagic's MiMagic 8 application processor.

The ISDBT/b standard is supported by the Brazilian government and was launched in December 2007 in Sao Paulo. Other major cities are going live this year, including Rio de Janeiro and Belo Horizante; and it is expected that tens of millions of people in Brazil will be able to receive live mobile television by 2009. The Brazilian market, with more than 100 million cellular subscribers, is the 5th largest mobile handset market in the world; and the addition of the mobile TV feature is expected to see rapid adoption since mobile TV reception is free for the consumer. The free-to-air model, in contrast to the subscription-based model, has shown to be a key contributor to a successful deployment. This deployment success has been experienced in Japan, where in less than 2 years, the attach rate of the mobile TV feature on cellular phones has reached more than 50%.

Gradiente brings more than 40 years of experience producing and marketing televisions, flat panels, LCDs, plasma displays, DVDs, hi-fi systems, home theater equipments, portable audio players and mobile phones. As a major Brazilian consumer electronics brand in both television and cellular markets, Gradiente is an ideal provider for this convergence product.

The MiMagic 8 processor is a cost effective solution that acts, in a single chip, as both the applications processor for the smart phone and the multi-media processor for mobile TV decoding. The solution is based on NeoMagic's smart phone manufacturing kit demonstrated at CES 2008 and NeoMagic's ISDB-T reference design developed for the Japanese market. The unique proprietary array processor architecture and leading edge implementation of the multimedia codecs provide very high quality video for both the mobile TV functionality as well as the smart phone multimedia applications. NeoMagic will integrate all the hardware and software required for this mobile TV enabled smart phone and has worked closely with NXP semiconductors who provides the cellular RF/Baseband chip. NeoMagic will be able to leverage NXP's proven solution and efficient power management to extend the battery life of the smart phone.

The product is targeted for launch in Brazil at the end of 2008.

"I am excited for NeoMagic to participate in the Brazilian mobile TV growth market." said Douglas Young, President and CEO of NeoMagic Corporation. "It is a natural evolution to integrate our smart phone and mobile TV solutions into a single product; and we are proud to partner with Gradiente, one of the leading suppliers of television and mobile products in Brazil."

"We have been impressed by the capabilities of NeoMagic to cost effectively integrate the Brazilian mobile TV feature into a smart phone," stated Moris Arditti, Vice President Business Development of Gradiente Eletronica S.A. "We are thrilled that our cooperation with NeoMagic has the potential to enable a high quality mobile TV experience on a smart phone for the fast growing Brazilian market."

About NeoMagic

NeoMagic Corporation delivers semiconductor chips and software that enable new multimedia features for handheld devices. These solutions offer low power consumption, small form-factor and high performance processing. The Company demonstrated one of the first solutions used for H.264 video decoding in a mobile digital TV phone, and is developing and delivering solutions for audio/video processing of the dominant mobile digital TV standards, including ISDB-T, T-DMB and DVB-H. For its complete system solution, NeoMagic delivers a suite of middleware and sample applications for imaging, video and audio functionality, and provides multiple operating system ports with customized drivers for the MiMagic product family. NeoMagic has a strong patent portfolio that covers NeoMagic's proprietary array processing and other technology. Information on the Company may be found at http://www.neomagic.com.

NeoMagic and the NeoMagic circle logo are registered trademarks, and MiMagic and NeoMobileTV are trademarks, of NeoMagic Corporation. All other trademarks are the property of their respective owners. NeoMagic disclaims any proprietary interest in the marks and names of others.

About Gradiente

Gradiente Eletronica S.A., a publicly traded company on the Sao Paulo Stock Exchange, is active in the audio, video and telecommunications markets. It combines diversification, innovation, excellence and the latest generation technology. The company delivers a variety of products and services that are synonymous with quality and novelty for the Brazilian consumer. Gradiente fosters partnerships with global leaders to enter new high growth markets. Information on the Company may be found at http://www.gradiente.com/site/empresa/us/nossaempresa.asp.

Safe Harbor Statement for NeoMagic

This press release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including the launch of our customer's product at the end of 2008. These forward-looking statements reflect current expectations. However, actual events and results could vary significantly based on a variety of factors, including but not limited to delays in development of our customer's product, customer acceptance of the jointly developed product, market acceptance of the mobile TV smart phone developed and marketed by this customer using NeoMagic's product and the timely availability of sufficient manufacturing capacity at NeoMagic's foundry to meet future customer demand for products. There is no certainty that customer forecasts will be accurate. Customers may cancel or delay their production plans or switch to other vendors. In addition, customers may fail to achieve their expected sales objectives due to competitive or other reasons resulting in excess or obsolete inventory requiring write-downs and charges to cost of revenue. Additional risks that could affect NeoMagic's future operating results are more fully described in our most recent annual report and other filings with the United States Securities and Exchange Commission (SEC), and are available online at http://www.sec.gov. NeoMagic may, from time to time, make additional written or oral forward-looking statements, including statements contained in filings with the SEC and reports to shareholders. NeoMagic does not undertake the obligation to update any forward-looking statements that may be made by or on behalf of the company, except as may be required by law.

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SOURCE NeoMagic Corporation