Taipei, Taiwan, May 16, 2006 – System General Corporation (SG) announced today that the Administrative Law Judge (ALJ) of the United States International Trade Commission (ITC) has made an Initial Determination in the patent infringement case in which SG and Power Integrations, Inc. (PI) are the parties (ITC-337-TA-541). The ALJ has Initially Determined that SG has infringed certain claims of US Patent numbers 6,351,398 and 6,538,908. While SG respects this Initial Determination, it strongly disagrees with the same and is considering an appeal. According to SG, most of its products including its new-generation power ICs have been withdrawn from this investigation and shall not be negatively impacted when being imported to the United States, regardless of the final result of this case.

The complaint was filed by Power Integrations (PI) on May 9, 2005, and originally alleged that 20 of SG’s products had infringed a total of 34 claims from four of PI’s US patents. During the ITC investigation, however, PI withdrew its allegations with respect to most of the allegedly infringed claims of the four patents, leaving four claims of the 6,351,398 patent and two claims of the 6,538,908 patent in dispute; the products being disputed are essentially limited to six chips. The Initial Determination yesterday found that SG’s power supply controller ICs infringed the 6,351,398 patent and 6,538,908 patent. This Initial Determination is preliminary in nature, and the full Commission will issue a Final Determination by mid-August of this year. If the Final Determination is unfavorable to SG, an exclusion order will issue and may become effective within 60 days of its issuance. However, a Final Determination by the Commission is still subject to Presidential Review and appeal to the United States Court of Appeals for the Federal Circuit, where SG will continue to defend its products and seek a favorable decision.

To protect the interests of our valued customers, SG has already introduced its new-generation, power IC products. These successor products have improved performance with respect to power conversion efficiency and standby power reduction, and PI and the presiding administrative law judge withdrew these products from the scope of the investigation. Thus, these products are protected from any exclusion order. Moreover, these new products have been manufactured according to SG’s patents. Samples of these new IC products have been sent out for field verification beginning in December 2005 and have received very positive feedback from many power adaptor manufacturers.

“We are disappointed with this ruling because SG respects intellectual property rights, as SG itself develops many new technologies and obtains patents for the same. We will wait to review the Commission's Final Determination, and decide upon our strategy for appealing the same, if it is indeed unfavorable to SG.” said Tom Yang, CEO and founder of SG. “SG’s products are all covered by our own patents,” said Mr. Tom Yang. He further emphasized that SG has always endeavored to protect patent rights, stating, “And over the years, SG has received more than one hundred patents worldwide, including 50 US patents." He continued, “Regardless of the outcome reflected in the Final Determination, we fully support the United States patent system and recognize the importance of patent protection to the industry.”