TranSwitch Corporation to Acquire Centillium Communications, Inc.

Combination Will Increase Scale, Addresses Fast Growing Markets and Creates a New Leader in Next-Generation Communications ICs

$10.5 Million in Identified Annual Expense Savings

Anticipated to be Accretive to Earnings in the First Full Quarter after Closing

SHELTON, Conn.--()--TranSwitch® Corporation (NASDAQ: TXCC), today announced that it has entered into a definitive agreement to acquire Centillium Communications, Inc. (Centillium) (Nasdaq:CTLM). With this acquisition, TranSwitch, a leading provider of carrier-class semiconductor solutions for EoS (Ethernet over SONET/SDH), Broadband Access and Carrier Ethernet applications, will further diversify its product portfolio to include rapidly growing Fiber-to-the-Home (FTTH) and Voice-over-Internet-Protocol (VoIP) solutions.

The combination strengthens TranSwitchs leadership position in the next-generation communications semiconductor market. The combined companies will have greater scale, a significantly improved expense structure and a truly global reach. Management of TranSwitch has identified approximately $10.5 million of annual expense savings and expects the transaction to be accretive to earnings in the first full quarter after closing and significantly accretive in 2009.

Under the terms of the agreement, TranSwitch will issue an aggregate of 25 million shares of common stock and $15 million, which will be allocated pro rata among holders of Centillium common stock and vested, in-the-money, stock options outstanding at the closing of the merger. Based on Centilliums capitalization as of July 9, 2009, Centillium shareholders would receive 0.5958 shares of TranSwitch common stock and $0.36 in cash for each share of Centillium common stock. Based on TranSwitchs closing share price on July 9, 2008, the total consideration values Centillium at $42.8 million or approximately $1.02 per share on a fully-diluted basis. Centillium shareholders will own approximately 16% of the combined company.

We are delighted to welcome Centilliums customers, employees and shareholders to join the TranSwitch team said Dr. Santanu Das, CEO of TranSwitch. Centillium has a large number of important customers including Alcatel-Lucent, OKI, Samsung, ZTE and Tellabs. Their products have won significant industry recognition, and their Mustang chip is currently being used in OKIs ONU platform which is part of NTTs EPON based FTTH deployment. We are particularly excited about Centilliums second recent design win in the FTTH platform of a second prominent supplier for this deployment. This platform is currently being qualified and we anticipate a ramp in early 2009. The Japanese government has made a major commitment to rolling out FTTH, and NTTs goal is to reach 20 million homes by 2010. This represents a major revenue opportunity for the company.

This combination further strengthens TranSwitchs position in the platforms of Tier-1 equipment suppliers with contracts at carriers that have made significant financial commitments to upgrade their current infrastructures. These contracts include carriers in the UK, Korea, China, India and now Japan, continued Dr. Santanu Das. We believe that as these deployments begin to ramp in volume, the combined company has the potential to significantly increase its revenue in 2009. As a larger company, we will enjoy a significantly better expense structure as well as stronger relationships with both customers and suppliers.

"We are very pleased to be joining the TranSwitch team," said Faraj Aalaei, Co-Founder and CEO of Centillium, who will also serve on TranSwitchs board upon closing of the transaction. "Consolidation in the communications industry is both good and necessary, and the combined company will be significantly stronger and more profitable than either one by itself.

Centillium shares TranSwitchs culture of strong focus on product innovation, engineering excellence and best-in-class customer support. This is evident in the deep customer relationships both companies enjoy, concluded Mr. Aalaei.

About the Transaction

The boards of directors of both companies have unanimously approved the transaction which is subject to customary closing conditions, including the approval of Centilliums shareholders. The transaction is expected to close in the fourth quarter of 2008. Upon completion of the transaction, TranSwitch will have approximately 158 million fully diluted shares outstanding, with current TranSwitch shareholders owning approximately 84% and current Centillium shareholders owning approximately 16% of the combined company's shares.

Thomas Weisel Partners LLC, Signal Hill Capital Group LLC, and Northland Securities, Inc. served as financial advisors to TranSwitch. Pagemill Partners served as financial advisor to Centillium.

Conference Call on July 9, 2008

Management will be hosting a webcast conference call today, July 9, 2008 at 5:00 p.m. EDT that will be accessible on the Transwitchs website under the Investor Relations and Webcasts section at To listen to the conference call live by telephone, dial 1-719-955-1425 and enter access code 730024 approximately ten minutes before the start time. A telephone playback will be available after the completion of the call and can be accessed by calling 1-719-884-8882 and using the access code 730024. A replay of the webcast will be available for 10 business days.

About TranSwitch Corporation

TranSwitch Corporation (Nasdaq: TXCC) designs, develops and markets innovative semiconductors that provide core functionality and complete solutions for voice, data and video communications network equipment. As a leading supplier to telecom, datacom, cable television and wireless markets, TranSwitch customers include the major OEMs that serve the worldwide public network, the Internet, and corporate Wide Area Networks (WANs). TranSwitch devices are inherently flexible, many incorporating embedded programmable microcontrollers to rapidly meet customers new requirements or evolving network standards by modifying a function via software instruction. TranSwitch implements global communications standards in its VLSI solutions and is committed to providing high-quality products and services. TranSwitch, Shelton, CT, is an ISO 9001:2000 registered company. For more information, visit

About Centillium Communications Inc.

Centillium Communications, Inc. (Nasdaq: CTLM) delivers highly innovative communications processing technology for global systems vendors targeting service provider, enterprise and consumer markets. Centillium's high performance Systems-on-Chip (SoC) products power leading edge optical, Voice- over-Internet Protocol (VoIP), security and data systems requiring top quality, highly integrated, very low power processing solutions that help minimize the energy footprint of communications networks. With a long heritage of technology leadership and first-to-market product development, Centillium provides semiconductor solutions that keep customers and end users at the forefront of the communications evolution. Centillium is a global company with headquarters in Fremont, CA. Additional information is available at

Information set forth in this communication contains forward-looking statements, which involve a number of risks and uncertainties. Such forward-looking statements include, but are not limited to, statements about the timing of the completion of the transaction, the anticipated benefits of the transaction, including future financial and operating results and estimated cost savings and synergies, and other statements that are not historical facts. TranSwitch and Centillium caution readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information due to various risks and uncertainties.

These include risks and uncertainties relating to: the parties potential inability to complete the transaction because conditions to the closing of the transaction may not be satisfied; the risk that the businesses will not be integrated successfully and without delay; the risk that the transaction may involve unexpected costs or unexpected liabilities; uncertainties concerning the effect of the transaction on relationships with customers, employees and suppliers of either or both companies; risks associated with downturns in economic conditions generally and in the telecommunications and data communications markets and the semiconductor industry specifically; risks in product development and market acceptance of and demand for both companies products and products developed by the companies customers; risks relating to TranSwitch's indebtedness; risks of failing to attract and retain key managerial and technical personnel; risks associated with foreign sales and high customer concentration; risks associated with competition and competitive pricing pressures; risks associated with investing in new businesses; risks of dependence on third-party VLSI fabrication facilities; risks related to intellectual property rights and litigation; risks in technology development and commercialization. The risks included above are not exhaustive. The annual reports on Form 10-K, the quarterly reports on Form 10-Q, current reports on Form 8-K, any amendments thereto, and other documents TranSwitch and Centillium have filed and will file with the SEC contain additional factors that could impact the companys businesses and financial performance. TranSwitch and Centillium expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in expectations or any change in events, conditions or circumstances on which any such statement is based.

Important Information for Investors and Stockholders


Investors and stockholders will be able to obtain the proxy statement/prospectus and other documents filed with the SEC free of charge at the website maintained by the SEC at In addition, documents filed with the SEC by TranSwitch will be available free of charge on the investor relations portion of the TranSwitch website at Documents filed with the SEC by Centillium will be available free of charge on the investor relations portion of the Centillium website at


TranSwitch Corporation
Ted Chung, 203-929-8810 ext. 2004
Vice President, Business Development


TranSwitch Corporation
Ted Chung, 203-929-8810 ext. 2004
Vice President, Business Development