2006 News Releases

MOSAID Rejects Activist Hedge Fund Demand

OTTAWA, Ontario - August 23, 2006 - MOSAID Technologies Incorporated (TSX: MSD) today issued a response to the letter from Loeb Partners Corporation, a New York City-based hedge fund, in which Loeb demanded that MOSAID be sold. The following response, which has been sent by letter to Loeb and is being disseminated by press release, was issued by the Special Committee of the board of MOSAID.

Response letter to Loeb Partners follows.

Mr. Gideon J. King                                                                                    August 23, 2006
Loeb Partners Corporation
61 Broadway
New York, NY10006
U.S.A.

Dear Mr. King:

I am writing in response to your August 15, 2006 letter, addressed to the board of directors of MOSAID, in which you demand that we "hire an investment banking firm" in order to effect "the prompt sale of the company to the highest bidder", in a publicly disclosed process.

I am writing as chairman of the Special Committee of the board, comprised of three independent directors, which has been set up to deal with this matter as well as with any potential further related activity. The other two members of this Special Committee are John Millard and Donnie Moore.

At this point in time, I have five points to make.

1. Thank you for your intense interest in MOSAID. Your input is appreciated, and will certainly be taken into account in our ongoing work of shaping strategic directions for our company.

2. MOSAID's management is executing a board-approved business plan which is targeted at delivering superior financial results, both short-term and long-term, while giving thorough consideration to all potential strategic options, including the restructuring or sale of parts or all of the company. (As one might expect, we have sought investment banking advice with respect to such options.) We are confident that the successful execution of these plans will result in optimal value generation and is, therefore, in the best interest of our shareholders.

3. The MOSAID board has full confidence in the current management team of the company, led by George Cwynar and Richard Boadway.

4. We believe that "the prompt sale of the company" at this point in time, forced by a publicly dissenting shareholder demand and in a publicly disclosed process, is not in the best interest of our shareholders. (Nevertheless, we would consider, in good faith, any sufficiently attractive opportunity, consistent with our fiduciary duties.)

5. We would very much like to avoid a highly disruptive and costly proxy battle, with the attendant real risk of value erosion, but we are determined to act in the best interests of our company and our shareholders. We strongly believe that MOSAID's current board, current management team, and current strategic directions are focused on value generation for our shareholders. We have in-depth knowledge of this enterprise, and are driven by the success of our company, the confidence of our shareholders, the satisfaction of our customers, and the loyalty of our employees.

We intend to proceed with our 2006 annual general meeting in the ordinary course but are prepared, if necessary, to engage in a proxy contest to confirm the support of our shareholders.

Sincerely,

Thomas I. Csathy

About MOSAID
MOSAID Technologies Incorporated makes semiconductors better through the development and licensing of intellectual property and the supply of memory test and analysis systems. MOSAID counts many of the world's largest semiconductor companies among its customers. Founded in 1975, MOSAID is based in Ottawa, Ontario, with offices in Santa Clara, California; Newcastle upon Tyne, U.K; and Tokyo, Japan. For more information, visit www.mosaid.com.

Forward Looking Information
This document and certain other public documents incorporated by reference in this document contain forward-looking statements to the extent they relate to MOSAID or its management, including those identified by the expressions "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "will", "would" and similar expressions. These forward-looking statements are not historical facts, but rather reflect MOSAID's current expectations regarding future events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results, performance or achievements to differ materially from current expectations. Assumptions made in preparing forward-looking statements and financial guidance include, but are not limited to, the following: MOSAID's continued expansion of its patent portfolio and of its opportunities for future patent licensing revenue as a result of MOSAID's acquisition of patents and development of new inventions; DRAM manufacturers continuing to infringe MOSAID's patents; the timing and amount of MOSAID's litigation expenses; and MOSAID's ability to sign new licensees.

Factors that could cause actual results to differ materially from expected results include, but are not limited to, the following: declines or unexpected variations in market growth rates for MOSAID's products; the extent of embedded DRAM proliferation in the System-on-a-Chip markets ;variability in customer deployment schedules from quarter to quarter; shifts in the mix of products sold; MOSAID's ability to negotiate settlements with licensees; unfavourable legal rulings in MOSAID's patent litigations; Foreign currency fluctuations; non-payment by customers/licensees; failure to obtain valuable patents as a result of research and development activities, or to acquire valuable patents; loss of key employees; change in MOSAID's financial position; obsolescence of products or inappropriate targeting to markets that fail to materialize; inability to transition to new technologies to meet customer demand; variations in average sales cycles; key component supply restrictions and/or cost increases; and critical industry transitions.

MOSAID assumes no obligation to update or revise any forward-looking statements. Additional information identifying risks and uncertainties affecting MOSAID's business and other factors that could cause MOSAID's financial results to fluctuate are contained in MOSAID's Annual Information Form, under the section entitled "Risk Factors", and in MOSAID's other public filings available online at www.sedar.com.

For more information, please contact:

Michael Salter Director, Corporate Communications 613-599-9539 x1205 salter@mosaid.com