NOTE: Intel Corporation and VxTel Inc. executives will host a teleconference to discuss the details of this acquisition and answer questions today at 10:30 a.m. PST. Press and analysts may join the teleconference by dialing (913) 981-5572. To listen to a replay of the conference call, please call (719) 457-0820, using code number 798537. The replay will be available from 1:30 p.m. PST, Feb. 26 until 1:30 p.m. PST, March 5.

Intel Agrees To Acquire VxTel Inc. For $550 Million

Acquisition Brings Intel Voice Processing Technology for Optical Networks

SANTA CLARA, Calif., Feb. 26, 2001 - Intel Corporation today announced it has entered into a definitive agreement to acquire privately held VxTel Inc. in a cash transaction worth approximately $550 million. VxTel is a semiconductor company that has developed unique Voice over Packet (VoP) products that deliver high-quality voice and data communications over next-generation optical networks.

VoP is the critical technology for enabling the transition from circuit-switched networks, such as traditional telephone and wireless networks, to packet-based networks, such as the Internet. The transition to a single, multi-service network enables service providers to take advantage of the efficiency and flexibility of packet-based networks while expanding their ability to provide more differentiated voice, data and video services to their customers over a single broadband connection.

VxTel has developed a high-performance digital signal processor (DSP), software and reference designs that help telecommunication equipment manufacturers deliver voice and data services over a unified packet-based network. VxTel's DSP solution was specifically designed for voice and data processing and therefore is more efficient than solutions based on general-purpose DSPs. The VxTel VoP solution enables more than 2000 simultaneous voice connections on a single card, making it the highest-density solution on the market today. This means that service providers can support more customers with less equipment and at a lower cost, while delivering higher-quality service.

"The telecommunications industry is going through a major transition," said Mark Christensen, vice president and general manager of Intel's Network Communications Group. "The convergence of voice and data traffic through a common network enables service providers and carriers to deliver a wide variety of new services without the cost of expanding and maintaining two different networks. VxTel's Voice over Packet solution, together with the broad family of Intel® Internet Exchange Architecture communications components, will enable our customers to accelerate their designs to take advantage of this new opportunity."

Intel is a leading supplier of communications silicon and software building blocks for networking and telecommunications equipment providers. The Intel Internet Exchange Architecture (Intel IXA) provides a comprehensive framework for rapidly deploying intelligence into networks. The products being developed by VxTel will join a host of other industry-leading products that make up the Intel IXA.

"Our goal has always been to deliver the first complete solution for aggregating voice and data in the next-generation carrier networks to create a truly unified packet-based network infrastructure," said Shri Dodani, president and CEO of VxTel. "To meet this goal, we took a system approach, developing unique, voice-optimized DSP architecture and software and the complete reference designs that enable our customers to substantially reduce their time to market. Joining with Intel will help us more rapidly bring this best-in-class solution to more customers worldwide."

The acquisition is subject to regulatory approval and certain closing conditions. Upon completion of the acquisition, VxTel will become a wholly owned subsidiary of Intel reporting into the Telecom Component Division of Intel's Network Communications Group. Dodani will continue to lead the VxTel operation once it is integrated into Intel.

VxTel is headquartered in Fremont, Calif., and has additional locations in Boulder, Colo.; Irvine, Calif.; and Bangalore, India.

Today's press release contains forward-looking statements based on current expectations or beliefs, as well as a number of assumptions about future events. These statements AND all other statements that may be made on this call that are not historical facts, are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The reader is cautioned not to put undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to a number of uncertainties and other factors, many of which are outside the control of Intel and VxTel. The forward-looking statements in this release address a variety of subjects including, for example, the expected date of closing of the acquisition and the potential benefits of the acquisition. The following factors, among others, could cause actual results to differ materially from those described in these forward-looking statements: the risk that VxTel's businesses will not be successfully integrated with Intel's business; costs associated with the acquisition; the successful completion of the acquisition; matters arising in connection with the parties' efforts to comply with applicable regulatory requirements relating to the transaction; increased competition and technological changes in the industries in which Intel and VxTel compete; impact of events outside the United States such as the business impact of fluctuating currency rates or unrest or political instability in a locale; finally, current negative trends in global economic conditions make it particularly difficult at present to predict product demand and other related matters. For a detailed discussion of these and other cautionary statements, please refer to Intel's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended Dec. 25, 1999, for Intel.

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