2003 News Releases

"FOR IMMEDIATE RELEASE"

MOSAID Announces Results For Third Quarter Of Fiscal Year 2003

OTTAWA, Ontario, Canada – February 20, 2003 – MOSAID Technologies Incorporated (TSE:MSD) today announced financial results for the third quarter of fiscal year 2003 ended January 24, 2003.

Revenues for the third quarter of fiscal year 2003 were $11,144,000 compared to $9,196,000 in the third quarter of fiscal year 2002. Net loss for the quarter was $2,703,000 ($0.26 per diluted share), compared to a net loss of $4,545,000 ($0.45 per diluted share) a year ago.

Revenues for the fiscal year 2003 to date were $26,729,000 compared to revenues of $42,099,000 reported for the same period last year. Net loss for the year to date was $11,508,000 ($1.12 per diluted share), compared to a net loss of $21,500,000 ($2.14 per diluted share) reported in the first nine months of fiscal 2002.

The Company's cash balance and short-term marketable securities at the end of the third quarter was $44,955,000 compared with $49,713,000 in the second quarter of fiscal 2003.

"While the memory markets improved in 2002, with DRAM revenues up 36%, the industry continues to suffer from overcapacity," said George Cwynar, President and Chief Executive Officer for MOSAID. "The environment has further suffered from weak PC demand and recent global political tensions, making it a difficult time to sell our testers or license our intellectual property. In the networking markets, a similarly cautious posture by OEMs has pushed out design activity. As a result, design wins for our content addressable memory (CAM) products have been slower than expected."

"Against this backdrop, our Systems Division still managed to double its revenues from the previous quarter, but largely at the expense of backlog generated in earlier quarters," added Cwynar. "Our Intellectual Property Division commenced litigation with Infineon regarding the same seven patents at issue in the Samsung court case. Finally, our Semiconductor Division continues to deliver new offerings to address the two major trends in its market: the requirement for larger CAMs and their seamless operation with network processors."

Operating Highlights

· New Jersey Court Orders Next Steps in Samsung Litigation

A status conference for the Samsung Litigation was held on January 10, 2003 to review the progress of the discovery phase under Magistrate Judge Hedges. As a result, the New Jersey court issued an Order on January 31, 2003 establishing the timeline and process to complete fact discovery by May 30, 2003. The court also set a claims-construction, or "Markman" hearing date, for July 15, 2003.

On February 7, 2003 MOSAID filed a suit against Infineon in the US District Court for the District of Northern California for infringement of seven of MOSAID's United States patents. MOSAID's suit is in response to a request by Infineon for a declaration by the Court that Infineon's products do not infringe the seven patents at issue. MOSAID claims that Infineon is infringing these patents by making and selling semiconductor products, including DRAMs, that utililize MOSAID's patents.

During the quarter, the Intellectual Property Division placed another semiconductor manufacturer on notice for patent infringement, bringing the total number of companies on notice to thirteen. MOSAID is in active licensing discussions with several of these companies. At the end of the third quarter, MOSAID had 486 issued or pending patents, representing an increase of 64 over the second quarter of fiscal 2003.

· Solid Increase in Memory Test System Shipments

The Systems Division recorded a 97% increase in revenues over last quarter. However, this increase in revenue reduced our backlog, as capital equipment spending did not continue to ramp after initial signs of improvement earlier in the fiscal year. ATE customers continue to restrict capital expenditures making the near term outlook difficult to predict. The Division has maintained focus on its leading family of MS4205 memory test systems, providing customers with the ability to test the most widely adopted high-speed memory devices today, as well as advanced high-speed memories for years to come.

· Launched Search Engine Development Platform at Intel Developers Forum

After the close of the quarter, the Semiconductor Division unveiled the availability of its co-processor development environment at the Intel Developers Forum in San Jose, California. The platform integrates MOSAID's family of network search engines with Intel® IXP2400 and IXP2800 network processors. The development environment includes a software development kit and the DC9000EV1 hardware evaluation platform to provide customers with the ability to accelerate development and reduce the costs of developing new switches and routers. The Division also continues to aggressively pursue demand for larger content addressable memories, with the 18 Mbit offering announced last quarter.

Conference Call and Webcast
Management will hold a conference call and webcast on Thursday, February 20 at 10:00 a.m. (EST). Participants wishing to access the conference call should dial 1-800-814-4853. The conference call will also be webcast live at www.mosaid.com and www.newswire.ca, and subsequently archived on MOSAID's web site. A rebroadcast of the conference call will be available until midnight on Friday, February 28, 2003. To access the rebroadcast, please dial 1-877-289-8525 and enter passcode 235561#.

About MOSAID
MOSAID Technologies Incorporated is an independent semiconductor company operating through three divisions:

• Semiconductor – a fabless provider of networking chips
• Intellectual Property – a licensor of intellectual property to semiconductor manufacturers worldwide
• Systems – the leading supplier of engineering memory test and analysis systems to memory manufacturers, foundries and fabless chip companies.

Founded in 1975, MOSAID is based in Ottawa, Ontario, Canada, with offices in Santa Clara, California; Newcastle upon Tyne, U.K; and Tokyo, Japan. For more information, visit the Company’s web site at www.mosaid.com.

Forward Looking Information
This document may contain forward-looking statements relating to the Company’s operations or to the environment in which the Company operates. Such statements are based on current expectations that are subject to a variety of risks and uncertainties that are difficult to predict and/or beyond MOSAID’s control. Actual results may differ materially from those expressed in any forward-looking statements, due to factors such as customer demand and timing of purchasing decisions, product and business mix, competitive products, pricing pressures as well as general economic and industry conditions. MOSAID assumes no obligation to update these forward-looking statements, or to update the reasons why actual results could differ from those reflected in any forward-looking statements. Additional information identifying risks and uncertainties is contained in other public filings with the Ontario Securities Commission.

For more information, please contact:

Investor Inquiries Heidi Vincent Director, Investor Relations & Communications 613-599-9539 x1205 vincent@mosaid.com

Media Inquiries Sara Haskill Communications Specialist 613-599-9539 x1228 haskill@mosaid.com

FINANCIAL STATEMENTS AND NOTES FOLLOW

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

The following discussion and analysis should be read in conjunction with the unaudited Consolidated Financial Statements of MOSAID Technologies Incorporated ("MOSAID" or "the Company") for the period ended January 24, 2003 appearing elsewhere in this report and with the audited annual Consolidated Financial Statements and the Management's Discussion and Analysis (MD&A) included in the Company's most recent Annual Report for the fiscal year ended April 26, 2002. All dollar amounts are in Canadian dollars, except where otherwise indicated.

Overview

The Company reported revenues of $11.1 million for the 13 weeks ended January 24, 2003 ("Q3 fiscal 2003"), representing an increase of 21% from revenues of $9.2 million for the 13 weeks ended January 25, 2002 ("Q3 fiscal 2002"). The net loss for Q3 fiscal 2003 was $2.7 million or $0.26 per diluted share, compared to a net loss of $4.5 million or $0.45 per diluted share for Q3 fiscal 2002. The loss from operations for Q3 fiscal 2003 was $2.6 million as compared to $3.8 million for the same period last year. Revenues of $26.7 million for the 39 weeks ended January 24, 2003 represent a decrease of 37% from revenues of $42.1 million for the same period a year ago. The net loss for the 39 weeks ended January 24, 2003 was $11.5 million or $1.12 per diluted share, compared to a net loss of $21.5 million or $2.14 per diluted share for the same period a year ago. The loss from operations for the 39 weeks ended January 24, 2003 was $10.1 million as compared to $16.4 million for the same period a year ago.

Results of Operations

The following table shows the percentage of revenues represented by certain items in the Company's consolidated statement of earnings for the fiscal periods indicated.

The Semiconductor Division showed a net loss of $5.0 million for the third quarter of fiscal 2003, compared to a net loss of $4.3 million for the same period last year. For the 39 weeks ended January 24, 2003, the net loss was $14.5 million, compared to $27.7 million for the same period last year. The net loss for the 39 weeks ended January 25, 2002 was higher than for the current year to date mainly due to the restructuring charge recorded in fiscal 2002 and the resulting reduction in labour costs. Without the effect of the Division's $10.5 million restructuring charge, the loss would have been $17.2 million for the 39 weeks ended January 25, 2002.

The Intellectual Property ("IP") Division's net profit of $3.2 million for Q3 fiscal 2003 was 7% higher than the $3.0 million net profit for the same quarter in the previous year. The net profit of $11.1 million for the 39 weeks ended January 24, 2003 was 39% lower than the net profit of $18.3 million for the same period last year. The decrease between the 39 weeks ended for fiscal 2003 and the same period last year is mainly due to the decrease in licensing revenues from Q1 fiscal 2002 to Q1 fiscal 2003, offset by a decrease in sales and marketing expenses.

A net loss of $919,000 for the Systems Division for the 13 weeks ended January 24, 2003 compares to a net loss of $2.6 million for the same period last year. The decrease is the result of a decrease in spending and the 36% increase in revenues quarter over quarter. For the 39 weeks ended January 24, 2003, the net loss was $7.7 million, compared to a net loss of $8.2 million for the same period a year ago.

In Q3 fiscal 2003, the Semiconductor Division generated revenues from product sales and design services. Revenues in the Semiconductor Division may vary significantly from period to period, depending on chip volumes, pricing and the extent of design services.

In the IP Division, revenues increased $595,000 in Q3 fiscal 2003 from Q3 fiscal 2002 and decreased $11.9 million in the 39 weeks ended January 24, 2003 from the same period last year. Revenues from the IP Division can vary significantly from period to period depending on licensing fees and contracted payment schedules.

Systems Division revenues for Q3 fiscal 2003 were 36% higher than revenues for the same quarter in the previous year. Revenues for the 39 weeks ended January 24, 2003 were 24% lower than revenues for the same period last year. Although the Systems Division generated more revenue in the current quarter than in the same period last year, year to date revenue is lower than in the previous year due to poor market conditions, which resulted in a significant reduction in capital expenditures by memory manufacturers.

For the 13 weeks ended January 24, 2003, an increase in revenue from the Systems Division, as compared to the same period last year, caused the shift in the revenue split. For the 39 weeks ended January 24, 2003, the change in the revenue split, with proportionately more revenues coming from the Systems Division, reflects the decline in revenues from the IP Division as payments from existing licensees decreased.

Interest income in Q3 fiscal 2003 has decreased 12% from interest income in Q3 fiscal 2002. Interest income in the 39 weeks ended January 24, 2003 decreased 35%, compared to interest income for the same period last year. In both cases, this is primarily as a result of the decrease in interest rates and reduced cash balances.

The approximate geographic breakdown of revenues from operations is as follows:

The Company markets its products and services globally. For Q3 fiscal 2003, the percentage decrease in the Japanese market, as compared to the same period last year, is due to the increase in Systems Division revenue. For the 39 weeks ended January 24, 2003, the percentage decrease in the Japanese market is due to the decrease in patent licensing revenues. The increase in the percentage of sales from Korea, Taiwan, the United States and other countries is driven by the sales mix in the Systems Division, which can vary from quarter to quarter.

This category comprises the chip product costs and labour, materials and subcontracting costs to assemble, integrate, test and service the memory test systems.

For Q3 fiscal 2003, chip costs for the Semiconductor Division were negligible. Labour and materials have increased as a percentage of Systems Division revenues and as a percentage of total revenues for Q3 fiscal 2003 as compared to the same period last year. After adjusting the margins for inventory provisions taken in Q3 fiscal 2003 and the sale of a refurbished system in Q3 fiscal 2002, margins have improved from Q3 fiscal 2002 to Q3 fiscal 2003 by 10%

For the 39 weeks ended January 24, 2003, labour and materials have increased as a percentage of Systems Division revenues and of total revenues. This is due to an increase in the provision for obsolete inventory in Q1 fiscal 2003, overall lower margins on the MS4205 product line and the downturn in the market for test equipment. Without the provision for obsolete inventory in Q1 fiscal 2003, labour and materials as a percentage of Systems Division revenues would have been 55%.

The increase in labour and materials in absolute amounts, from Q3 fiscal 2002 to Q3 fiscal 2003, is mainly due to the increase in the number of test systems produced and sold quarter over quarter. The decrease in labour and materials in absolute terms for the 39 weeks ended January 24, 2003 compared to the same period last year is primarily due to a lower number of test systems produced and sold in the first half of the fiscal year.

The increase in research and development expenditures in absolute amounts for the current quarter as compared to the same period last year, is mainly due to the increase in patent costs as the company is filing more patent applications and the increase in reverse engineering costs. The decrease in research and development in absolute terms for the 39 weeks ended January 24, 2003 as compared to the same period last year, is as a result of the reduction in the number of employees and projects since the restructurings that were undertaken in Q2 fiscal 2002 and Q1 fiscal 2003.

For Q3 fiscal 2003, research and development, as a percentage of total revenues, decreased from Q3 fiscal 2002. This is due to the increase in revenues from the Systems and IP Divisions quarter over quarter. For the 39 weeks ended January 24, 2003, research and development increased as a percentage of total revenues as compared to the same period last year, as a result of the significant decrease in revenues from the IP Division in the first half of the fiscal year and the increase in patent-related costs.

Investment tax credits of $425,000 in Q3 fiscal 2003 compared to $569,000 in Q3 fiscal 2002 were applied to reduce current R&D expenses. The decrease in investment tax credits results from an increase in R&D expenses ineligible for investment tax credit purposes such as patent-related costs.

The decrease in S&M expenses in absolute terms for the current quarter and for the 39 weeks ended January 24, 2003 as compared to the same periods last year, is primarily related to a decrease in commissions in the IP Division. Commissions were paid to an agent until Q2 fiscal 2003 when the relationship was terminated. This is partially offset by an increase in litigation expenses related to patent infringement cases.

The decrease in S&M expenses as a percentage of revenues is mainly due to the termination of a commission agreement, offset by the increase in litigation expenses.

The decrease in G&A expenses in absolute amounts is driven by decreases in professional fees and subcontract expenses as the Company makes efforts to contain costs, as well as reduced labour costs resulting from the restructuring in fiscal 2002 and 2003. This decrease was partially offset by an increase in foreign exchange costs in the quarter as compared to the same period last year, as a result of the appreciation in the Canadian dollar.

G&A expenses have decreased as a percentage of revenues for the current quarter as compared to the same period last year due to efforts to contain costs. For the 39 weeks ended January 24, 2003, G&A expenses have increased as a percentage of revenues as compared to the same period last year, mainly due to the decline in revenues in the IP and Systems Divisions.

Bad Debt
The Company had a recovery of bad debts of $5,000 during Q3 fiscal 2003, compared with a bad debt expense of $136,000 in Q3 fiscal 2002. For the 39 weeks ended January 24, 2003, the Company had a recovery of bad debts of $178,000, compared with a bad debt expense of $88,000 in the same period last year. Persistent efforts to collect receivables resulted in the collection of balances that were doubtful.

Loss on write-down of long-term investment
During Q2 fiscal 2003, the Company recorded a $518,000 write-down, from $1.8 million to $1.3 million, of its portfolio investment in Acuid Corporation Limited. The write-down reflects the Company's assessment that an other than temporary decline in the carrying value of the investment has occurred following the completion of a financing by Acuid.

Loss on disposal of long-term investment
During Q2 fiscal 2003, the Company announced the sale of its investment in ATMOS Corporation to MoSys for net proceeds of $3.2 million. A loss of $426,000 resulted from the disposal of the investment, which had a book value of $3.6 million. The loss includes an estimate by management of escrowed funds that may be utilized.

Income Taxes
Income tax expense of $136,000 for Q3 fiscal 2003 and $427,000 for the 39 weeks ended January 24, 2003 was recorded to reflect the tax effect of ITC's recorded at an effective tax rate of 32%. In comparison, no tax expense was reported for Q3 fiscal 2002 and $4.4 million was reported for the 39 weeks ended January 25, 2002, which resulted from a write-down of future income tax assets due to announced reductions in corporate tax rates and deferred profitability.

Restructuring Costs
During the first quarter of fiscal 2003, the Company announced a reduction in its workforce by 15 employees, mainly in the Systems Division, in light of continuing uncertainty in the market for memory test equipment and ongoing divisional and Company losses. A restructuring charge of $783,000 was recorded primarily for severance costs and other related payments due to the terminations.

Liquidity and Capital Resources
During the 39 weeks ended January 24, 2003, the Company generated a negative cashflow of $9.8 million from operations, as compared to a net cash inflow from operations of $4.5 million in the same period last year. The decrease in operating cashflow from the prior year is due to the timing of collection in accounts receivable in fiscal 2002 which stem from fiscal 2001.

Cash and short term marketable securities
As of January 24, 2003, the Company had cash and short-term marketable securities of $45.0 million, compared to $53.4 million as of the end of fiscal 2002. Working capital decreased to $46.6 million at the end of Q3 fiscal 2003 from $53.6 million at the end of fiscal 2002. The decrease is mainly due to the use of cash to fund operations. Management believes that the Company is well capitalized with sufficient working capital to fund ongoing operations.

During Q2 fiscal 2003, the Company began a normal course issuer bid, as approved by the Toront Stock Exchange. During Q3 fiscal 2003, the Company repurchased 8,000 common shares in accordance with the normal course issuer bid for a total cost of approximately $42,000. To date, the Company has repurchased 63,600 common shares in accordance with the normal course issuer bid for a total cost of approximately $359,000. Of this amount paid, $165,000 has been credited directly to contributed surplus, representing a discount paid on redemption of common shares, with the balance charged to share capital.

A $10,000,000 bank credit facility is available to cover the fluctuations in cash requirements but was not used during the quarter. The available operating line is calculated using a formula based on accounts receivable.

Accounts receivable
Accounts receivable increased to $5.5 million at the end of Q3 fiscal 2003, from $5.0 million at the end of fiscal 2002 due to timing of collections.

Inventory
Inventory levels decreased to $3.9 million at the end of Q3 fiscal 2003, from $4.5 million at the end of fiscal 2002, primarily due to the Q1 fiscal 2003 adjustment of inventory to bring it in line with sales expectations for the coming year.

Capital assets
During the 39 weeks ended January 24, 2003, the Company expended $1.8 million (net) for capital purchases, compared to $6.5 million (net) during the same period last year. The capital purchases in fiscal 2003 were primarily for the Semiconductor Division.

Future income taxes recoverable
The January 24, 2003 balance for Future Income Taxes Recoverable is $12.7 million, compared with $10.3 million at April 26, 2002, reflecting an increase in investment tax credits and payments withheld in foreign countries. The intellectual property licensing revenues generated from companies in foreign countries results in withholdings when payments are received from those countries. The Company continues to record investment tax credits earned (netted against the appropriate R&D capital cost or expense), as well as any withholding taxes related to payments withheld in foreign countries and applicable to taxes to be paid in Canada. To the extent that these items, in total, exceed the income tax expense for a given quarter, they have contributed to an increase in future taxes recoverable. The future income taxes recoverable balance reflects management's estimate of loss carry-forwards, investment tax credits and other tax balances that are more likely than not to be utilized in future periods to offset income taxes payable.

Accounts payable and accrued liabilities
Accounts payable and accrued liabilities decreased to $8.5 million at January 24, 2003, from $9.6 million at April 26, 2002. This is due to a decrease in commissions payable as a result of the termination of a commission agreement, offset by an increase in the accrual for litigation expenses.

Deferred revenue
Deferred revenue decreased to $332,000 at the end of Q3 fiscal 2003, from $675,000 at the end of fiscal 2002, mainly due to the payment received from a customer for which there had been extended payment terms.

Mortgage payable
A mortgage of $6,000,000, at a fixed rate of 8.24% per annum and for a ten-year term, has been put in place to finance the Company's principal physical facility, which went into service in December 1997. The remaining principal amount at the end of Q3 fiscal 2003 was $5.3 million, of which $186,000 is due within 12 months. The cost of the land and building was $7.9 million, less amortization of $1.4 million at the end of the quarter.

Risks and Uncertainties
The Company expects that its future operating results may be subject to quarterly and annual fluctuations resulting from a variety of factors, including market conditions, changes in customer and geographic distribution, potential schedule slippages, and the possibility that its patents might be declared invalid. Sales to a relatively small number of customers account for a substantial portion of the Company's total revenues. In the IP Division, revenues are primarily derived from a small number of large contracts, principally related to patent licensing agreements, each with finite payment terms. In the Systems Division, a portion of revenues in any fiscal quarter may result from customer orders received in the same quarter. Delays in booking patent licensing agreements, Systems orders, and schedule slippages in one or more Semiconductor contracts or in networking chip product development projects, may lead to significant volatility in financial performance, particularly in terms of quarterly results. The semiconductor industry is characterized by rapid technological change and evolving industry and customer requirements, specifications and standards. The Company's success will depend on its ability to enhance its existing designs, create new intellectual property, chips and test systems and to develop new designs, patent licensing agreements, chips and test systems on a timely and cost-effective basis. Furthermore, the Company's current orientation to the semiconductor memory and networking equipment markets exposes its quarterly operating results to the influence of the business cycles in these markets.

See accompanying Notes to the Consolidated Financial Statements.

MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF EARNINGS AND (DEFICIT) RETAINED EARNINGS
(in thousands, except per share amounts)
(unaudited)

		13 weeks ended January 24, 2003	13 weeks ended January 25, 2002	39 weeks ended January 24, 2003	39 weeks ended January 25, 2002
Revenues
	Operations	$10,852	$8,863	$25,838	$40,736
	Interest	292	333	891	1,363
		11,144	9,196	26,729	42,099
Expenses
	Labour and materials	2,447	1,722	6,231	6709
	Research and development	6,532	5,674	17,970	22,059
	Selling and marketing	2,873	3,294	6,823	11,967
	General and administration	1,864	2,070	5,237	6,519
	Bad debts	(5)	136	(178)	88
	Restructuring (Note 6)	-	145	783	11,162
		13,711	13,041	36,866	58,504
Loss from operations		(2,567)	(3,845)	(10,137)	(16,405)
Loss on write-down of long-term investment (Note 2)		-	700	518	700
Loss on disposal of long-term investment (Note 2)		-	-	426	-
Income tax expense		136	-	427	4,395
Net loss		(2,703)	(4,545)	(11,508)	(21,500)
(Deficit) retained earnings, beginning of period		(9,267)	7,269	(462)	24,552
Premium on redemption of common shares		-	-	-	(328)
(Deficit) retained earnings, end of period		$(11,970)	$2,724	$(11,970)	$2,724
Loss per share (Note 5)
	Basic	$(0.26)	$(0.45)	$(1.12)	$(2.14)
	Diluted	$(0.26)	$(0.45)	$(1.12)	$(2.14)

See accompanying Notes to the Consolidated Financial Statements.

MOSAID TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)