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Featuring ESS Technology's Canyon 3D(TM) processor, and advanced 3D positional audio technology from Sensaura Inc., the Diamond Monster Sound MX400 provides a phenomenal audio experience for the PC digital music enthusiast and gamer. The Diamond Sonic Impact S100, powered by the ESS Allegro(TM) processor, offers a lower cost, best-of-class sound solution for today's PC consumers.

``As the exclusive provider of ESS Technology's Canyon 3D and Allegro processors to the Western Hemisphere, we are excited to announce the shipment of the Diamond Monster Sound MX400 and the Diamond Sonic Impact S100 into retail stores this week,'' said Michael Buchanan, Senior Director of Desktop Marketing for S3's Multimedia Business Unit. ``S3's audio solutions continue to push the envelope by providing consumers with the absolute best in PC sound technology.''

With MP3 support for Liquid Player(TM) from Liquid Audio and RioPort Inc.'s AudioManager(TM) as well as a compelling suite of gaming titles, both the Diamond Monster Sound MX400 and the Diamond Sonic Impact S100 include an extensive software bundle.

S3's Monster Sound MX400 is shipping at the U.S. estimated retail price point of $79.95, while the Sonic Impact S100 is shipping at the U.S. estimated retail price of $39.95. Both audio solutions will be distributed to U.S. retail stores, OEM's, systems integrators and VAR's the week of January 10, 2000.

About S3 Incorporated

Building on the technology, distribution and brand strengths of its Communications, Multimedia and Professional Graphics divisions, S3 is committed to delivering targeted products for the Personal Computer and Consumer/Internet Appliance markets. Rounding out its PC silicon offerings, S3's recent acquisition of Diamond Multimedia adds consumer brands such as the Monster Sound and Sonic Impact series of audio accelerators, the Viper(TM) and Stealth(TM) series of graphics accelerators, the Rio(TM) series of Internet audio appliances, the Supra(TM) series of modems, and the HomeFree line of home networking products.

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 September 30, 1999. S3 is a registered trademark of S3 Incorporated. The S3 corporate logo, Diamond Multimedia, Monster Sound, Sonic Impact,Viper, Stealth, Rio, Supra and HomeFree are trademarks of S3 Incorporated. Other marks referenced herein are the property of their respective owners.

Contact:

     S3 Incorporated
     Stacey Long, 408/325-7349 (Press Contact)
     staceyl@diamondmm.com
     Eugene Anton, 408/588-8086 (Investor Contact
     http://www.s3.com