ZiLOG's Back in a Flash!; Microcontroller Pioneer Lands 2004 Frost & Sullivan 8-bit Market Penetration Leadership Award

Business Wire, July 20, 2004

SAN JOSE, Calif. -- Market analysis firm Frost & Sullivan has awarded leading provider of integrated 8-bit microcontrollers, ZiLOG, Inc. (Nasdaq:ZILG), its 2004 Market Penetration Leadership Award recognizing the successful strategies the company has employed in gaining strong market presence in the embedded 8-bit microcontroller market.

The award is presented each year to the company that has continuously strived to attain excellence and capture market share within the 8-bit industry. After an intense schedule of interviews and judging, based on a number of exacting criteria, Frost and Sullivan analysts were extremely impressed with ZiLOG's performance, competitive pricing strategies, innovation, sales model and customer support. As a result, the company was named this year's recipient of the prestigious award.

Since it was founded by Frederico Faggin in 1974, ZiLOG has undergone significant organizational revamping, particularly in the last few years. Under the leadership of CEO Jim Thorburn, ZiLOG re-focused its core strengths on 8-bit embedded microcontrollers, updating and extending its existing product portfolio while developing new devices with unique features and extended peripherals, including outstanding development tools and software, and strong customer support.

"Receiving the Frost and Sullivan award is great news for ZiLOG. It recognizes and confirms that the decisions taken and strategy put in place in 2001, when the current management team took charge, were absolutely on target," observed Thorburn. "In less than three years the company has been completely restructured and reinvigorated and has gone from a company with debts of some $300 million back to being debt free and on the forefront of cutting-edge technology in the 8-bit microcontroller market. ZiLOG has seen margins increase from 13 percent to 50 percent and successfully moved to a listing on the Nasdaq in March 2004, adding over 1000 new customers in the process."

"The shift of focus back to embedded control, reinforced by product enhancement, sales strategy and strong technical support has enabled ZiLOG to re-emerge as a strong force to reckon with in the 8-bit microcontroller market," commented Ram Rajagopalan, research analyst, semiconductors division, Frost & Sullivan. "The company's ambitious roadmap with product launches over the last three years has evoked positive feedback from its customers. ZiLOG's efforts in continuously reinventing its core product and introducing additional on-chip features are reflected in the updated cores and peripherals in its microcontroller product portfolio that are backward compatible. This not only allows end users to take advantage of older architectures, but also offers convergence and easy migration to its newer products and architectures."

This strategy has proven to be effective, especially with the launch of the Z8 Encore!(R) Family of Flash microcontrollers, closely followed by the eZ80 Acclaim!(TM) line of Flash microcontrollers. ZiLOG's F91 microcontroller, which combines embedded Flash and networking features, won the Electron D'Or Processor of the Year Award in 2003 and continues to gain popularity amongst ZiLOG's wide customer base. In addition, ZiLOG's Z8 Encore! XP(TM) family of Flash microcontrollers, launched in March 2004, offers features such as an on-chip temperature sensor and transimpedance amplifier, and provides the benefits of an extended range of peripherals and Flash memory. These features should enable ZiLOG to magnify its presence in the hand-held medical devices, industrial, security and consumer applications markets.

"ZiLOG's key to customer satisfaction is providing quality products with timely delivery at reasonable prices," continued Rajagopalan. "This has motivated the company to competitively price its hardware and software tools in order to facilitate more design wins. When coupled with long-term working relationships with fabrication companies, this has enabled ZiLOG to offer high specification, low-cost solutions, which are easily tailored to customer demands. ZiLOG also works with industry leading development tool software vendors to enable a higher level of professional service, and with third party and in-system programmers for easier transition from high-end tools to third party applications."

Frost and Sullivan also applauded ZiLOG's three-tier sales strategy, which has been successful for the cost-conscious company. "Direct selling through an experienced and motivated sales force, independent representatives that cater specifically to ZiLOG's products and relationships with global distributors, have been pivotal in selling the ZiLOG product and brand," concluded Rajagopalan. "The company views product definition in terms of meeting the customer's needs and working with them to implement the most suitable solutions at the right price. Such a customer-oriented approach has been instrumental in shaping ZiLOG's success in the embedded 8-bit microcontroller industry. Understanding the critical nature of keeping in touch with and updating its customers, ZiLOG's worldwide workshops, seminars and webinars offer excellent customer service and support."