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S3's New Rio Players Will Offer Music from `Mission:Impossible-2' Soundtrack `Out-of-the-Box'

``S3's Rio Group is taking the right steps to ensure a first-rate consumer experience with the new players,'' said Ken Bunt, director of digital marketing for Hollywood Records. ``This agreement helps us introduce music fans to exciting new artists and adds to an incredible introduction for the Rio 600.''

``This is the first example of a record label promoting their artists in a secure digital format on a digital audio player,'' said Mike Reed, director of marketing for S3's Rio division. ``Rio and the music industry have really come full circle to help consumers enjoy the music that they want to hear using the top selling digital audio player.''

Pre-loaded content

As part of the agreement, the third-generation family of Rio players will feature ``Karma'' by Diffuser and ``Immune'' by Tinfed, tracks from the hit movie soundtrack ``Mission:Impossible-2'' and their forthcoming debut albums. Also featured will be pre-loaded songs ``I Don't Wanna Break-up,'' by Tsar, and ``Basic Breakdown,'' by Apartment 26.

These artists will also be featured on S3/Rio websites when the third-generation Rio players launch later this month. The sites will provide consumers with images of the artists, information on the songs as well as links to the artists' sites and label site.

Microsoft's Windows Media will be used to encode the files to insure that the usage rights of the pre-load content are not violated.

About S3 Incorporated

Following its acquisition of Diamond Multimedia and the transfer of its graphics chip assets to a joint venture company, S3 has been relaunched as a digital media company focused on creating products and partnerships that help build the digital home. Combining significant financial assets with a strong technology portfolio, that includes the Rio family of digital audio players and the HomeFree series of home networking solutions, S3 is uniquely positioned to capitalize on high growth opportunities in the rapidly converging Internet and consumer device markets.

About Hollywood Records

Hollywood Records is part of the Buena Vista Music Group, which is the recorded music and music publishing arm of The Walt Disney Company.

Except for historical information contained herein, the matters set forth in this press release are forward-looking statements that are subject to risk and uncertainties, including the impact of competitive products and pricing and of alternative technological advances and other risks detailed from time to time in S3's SEC reports, including its quarterly report on Form 10-Q for the quarter ended March 31, 2000. S3 is a registered trademark of S3 Incorporated. The S3 corporate logo, Diamond Multimedia and HomeFree are trademarks of S3 Incorporated. Rio is a trademark of RioPort.com, Inc. and is used by S3 under license from RioPort.com, Inc. Other marks referenced herein are the property of their respective owners.

Contact:

     Porter Novelli Convergence Group
     Rob McMurtrie, 206/727-2880
     rob.mcmurtrie@pnicg.com