Opportunities for Series B Investors

2Company ConfidentialMarch 2001

Agenda

Background

Market Opportunity & Trends

Virtual Wire Progress & Market Position

Strategy & Product Direction

Financial Projections

Investment Highlights


Mission

of mobile data solutions for broadband wireless

services and products

Str

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Pro

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Investment Summary

3G market will launch in Japan and will experience explosive growth to 140M subscribers1 by 2004

Multi-mode 3G and 2.5G will deploy in Europe, 200M Subscribers2 by 2004

Early market entrants will be well positioned to take a reasonable market share

3G chip sets revenue will exceed $8 billion by 2007

Competition will be both existing players and new entrants, room for multiple players

Virtual Wire has a head start in the development of Chipset Solutions for 3G and already has a reference platform

Virtual Wire is well positioned to reward investorsSource1: Ovum Report on 3G

Bac

kgro

und

Source2: Wit SoundView Report on GPRS


Virtual Wire, Inc. Incorporated November 2000 - Sunnyvale California

Joint Venture formed by Virtual Silicon and SASKEN focused on next generation wireless business

Seasoned management team

38 full time employees with locations in Bangalore India and Silicon Valley

Key partners, SASKEN, Virtual Silicon, BOPS, and eASIC

System, Software, Hardware and Silicon experience in wireless communications

Bac

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Technology HouseSASKEN

UMC

Process Technology

Low PowerDesign

RISC, DSPCores

High speedmemories etc.

TechnologyLicense

Physical Libraries

Chipset / SOCHandset

Developers

DeviceDevelopers

End User

3G Silicon Value Chain

SOC Technology

Virtual Silicon

1 Billion

by

2010


Source: NTT DoCoMo Website

3G More than just voiceM

arke

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Agenda

Background


Virtual Wire Progress & Market Position


Financial projections



Why Must Markets Evolve from 2G to 3G? Spectrum is a key motivator:

Access to new spectrum

Better use of existing spectrum

The bandwidth explosion Mobile data is now entrenched and user data rates are growing from 9.6

kbps to 64 kbps and more…

Content is king The need to access more than voice content… context & location sensitive

graphic data is increasing in demand for business and lifestyle

The “Killer Application” is more likely to be the “Killer Business Case” Where Content can be accessed from any source*

All devices communicate Person to Person

Person to Machine

Machine to Machine

Mar

ket

Opp

ortu

nity

& T

rend

s

Source* Herscel Shosteck Associates


CDMA

GSM

TDMA

IS95A IS95B 1xRTT cdma2000

IS136

GPRS

EDGEWCDMA

2.5G

2.5G

3G

3G

14.4kbps 64kbps/ 384kbps 2Mbps 144kbps

GSM

Evolution path to 3GM

arke

t O

ppor

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ty &

Tre

nds


A Wireless Connected World!

RFmodem

Processor

abcde

Base Station

Base Station

ISP

Keyboard

Audio

Display

Visual

GPS

3G

PrinterPC

DSL

PDACamera

Base stn

MSC

Internet

Mar

ket

Opp

ortu

nity

& T

rend

s


Market Trends

EQUIPMENT VENDORS

Legacy- R+D investment in UMTS- Closeness to operator

Expectation- To be leading UMTS equipment

provider, possibly with increased “grip” on the end customer

CONTENT PROVIDERS

Legacy- Popular, strong brands

Expectation- Increase channels of distribution

and move in portal space

CAR MANUFACTURERS

Legacy- Traditional mobile environment

and closeness to consumer Expectation

- Gain multimedia service revenues as “hardware” managing service

FIXED INTERNET PORTALS

Legacy- Very successful in attracting traffic

Expectation- Translate success to mobile

Internet

NEW PLAYERS

Legacy- Entrepreneurs sensing an

opportunity Expectation

- Become a leading point of access to mobile Internet by moving fast

MVNOs

Legacy- Strong brands

Expectation- Expand brand relationship to new

environments to enhance revenues

Players have different legacies and expectations. Competition through partnerships and alliances is sure to become intense…

MOBILE OPERATORS

Legacy- Invested heavily on UMTS licenses

Expectation- To rule over the mobile Internet value

chain, especially through strong portals


Market Segmentation

Based on user groups the market can be split into three groups:

Vertical market The most profitable mobile data applications in the marketplace

today Examples: Transport and Logistics, Public Safety, Vending

machines, telemedicine

Business market (Nature of business dependant) Examples: Unified Messaging, Schedule management, File and

database access, Net meeting etc.

Consumer market (Lifestyle driven market) Defined by user attitudes and needs. Examples: Messaging, Radio, Music, Banking, Chat rooms,

Shopping etc.


Assumptions;

ASP of $20 a chipset1

Rapid revenue growth to over 12 billion, in 6 years

0

200

400

600

800

1000

1200

1400

1600

Total Wless 823 932 1,037 1,142 1,244 1,355

Total 3G Chips 3 15 41 122 216 384

2002 2003 2004 2005 2006 2007

Market for 3G Chipsets

$8B

Chipset Revenue $M 60 300 820 2440 4320 7680

Mill

ion

s o

f U

nit

s

Source: Ovum Report on 3G

Mar

ket

Opp

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& T

rend

s

Note1 : Base band


Agenda

Background


Virtual Wire Progress & Technology





Progress Report March 1999: Participates in the evolution and dedicates a team to

develop a 3G reference platform for the “User Equipment” market

June 1999: Starts development of Broadband IP, RF and mix signal research

November 2000: Virtual Silicon and SASKEN form a joint venture Virtual Wire Inc. to aggressively pursue 3G with baseband chip sets

December 2000: Team of 38 employees assembled to focus development of WCDMA Reference Platform, and Silicon Products

To Date: $8.5M + invested and 250 Person Years of development complete

Implementation of 3GPP Release ‘99 compliant Hardware & Software including the Protocol stack

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Positive Momentum Virtual Wire Inc., formed

Strong wireless Broadband System,Software and Hardware Team

3 Patent Applications for receiver design

Real time demonstration of Speech and Web browsing

Reference Board scheduled for Release Q2 2001

FlexSiTm silicon development started for Release Q4 2001

Actively engaged with customers in defining the 1st generation product

MOU signed with #1 supplier of RF component supplier in Japan

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Management Team

Executive Officers Board of Directors

Michael KlimentCEO and President

Prior: Virtual Silicon, COMPASS, VLSI, Intel

Sylvia ShivelyCorporate Controller

Prior: Virtual Silicon, DSP Group

Michael Kliment CEO and President

Tony MoroyanPresident, Via Sphere

Rajiv Mody1

CEO, SASKEN

Joseph DroriVP Engineering, SOC designPrior: Xicor, National

Suresh Agarwal VP of Marketing & Business Development prior: Neomagic,Chips and Technology,AMD

Dipu Pramani Sr VP of Engineering

Prior: VLSI, AMI

Taylor Scanlon CEO and President of Virtual Silicon

Note1 SASKEN can have up to 2 board seats

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Advisory Board

Technical Advisors

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Dipankar RaychaudhuryChief Scientist, Iospan , San JoseProfessor of Electrical Engineering and Director of the Wireless InformationNetwork Lab (WINLAB) at Rutgers University, New JerseyExpertise in broadband access with emphasis on wireless networks.

Michael J S Smith Professor, Dept of Electrical Engineering , University of Hawaii Expertise in Reconfigurable logic and ASIC design . Georgios Giannakis Professor, Dept of Electrical and Computer Engineering, University of Minnesota, Minneapolis. Expertise in multicarrier wide-band wireless communication and signal processing.

Jen KaoCEO, Artest , SunnyvaleFounder of Test and assembly contract house for rf and digital chips.Expertise in production test of communication chips

David PyeSenior VP of Manufacturing, Triquint semiconductor, Hillsboro, OregonKey supplier of RF components for wireless and high speed optical networks.Expertise in RF and communication markets


Executive Team, Details CEO & President - Michael Kliment

Prior: Was CTO & Co-founder of Virtual Silicon, $20M run rate and 70 employees, top three providers of Physical IP. He has 20 years of management and business experience in the development of IC design technology for custom and ASIC applications. VLSI Technology, Compass Design Automation and Intel

Sr. VP of Engineering & Technology - Dipu Pramanik

Prior: Was Director of SOC Technology at Virtual Silicon and Director of RF Technology at VLSI Technology. Has over 20 years of semiconductor experience in the development of ASIC technology and introduction of advanced products in the areas of computing, networking and communications. Over 25 issued patents, AMI,Signetics

VP of SOC Engineering - Joseph Drori

Prior: Employee #5 Xicor Inc. Was Vice president of Engineering and Product Definition. Has over 20 years of semiconductor experience at Xicor developing over a 100 innovative products in the area of power management, low power DSP, integrated NVM, linear EEpots and specialty memory for smart cards and cellular phone applications.

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Executive Team, Details VP of Marketing & Business Development- Suresh Agarwal

Prior: one of the first 10 employees of NeoMagic, Chips and Technology. Has 17 years of marketing, system and semiconductor experience. Instrumental in bringing NeoMagic from early stage to a successful public company. Suresh lead business unit, marketing and engineering efforts to measurable success. He is US patent holder in audio mixing and digital audio.

Corporate Controller - Sylvia ShivelyPrior: Corporate Controller for, Virtual Silicon, DSP Group Inc. and DSP

Semiconductor. Has over 10 years experience in financial analyst and controller positions.

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Engineering Team Wireless system design and

reference design are being done in Bangalore.

Chip design center is being established in Silicon Valley

Operations will be based in Silicon Valley

Initial wafer fabrication will be done at UMC

Test engineering will be based in Silicon ValleyV

irtua

l Wire

Pro

gres

s &

Tec

hnol

ogy

17

12

3

6

RF

Wireless

VLSI

HW

38 people today doubling

over the next 12 months


An investment in people

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40

60

80

100

120

2000 2001 2002 2003 2004 2005

Calendar Years

Sta

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ea

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ENGINEERINGSALESMARKETINGG&A

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Compliance 3GPP R'99Access Scheme Wideband – Code Division Multiple

Access (W-CDMA)Mode Frequency Division Duplex (FDD)Chip rate 3.84 McpsApplication Data Rates 128 Kbps (uplink)

384 Kbps (downlink)CRC support YesFEC codes Convolution Codes(Rate:1/2,1/3)

Turbo Codes (Rate:1/3) Puncturing and Repetition for

variable data rates

Interleaving Inter and Intra Frame InterleavingSpreading Walsh codes

SF [4 – 512] downlink SF [4 – 256] uplink

Scrambling Gold sequences of length 38400 chips

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System Specs


Roadmap for Development Platform Release 1.0 (Q2 2001)

Command line controller

Ethernet/USB/RS232/SIM card interfaces

Fully functional 3GPP Protocol Stack

3GPP Baseband Physical Layer (Baseline capabilities)

RF module and RF interface

Data Rates: Uplink - 64 Kbps, Downlink - 384 Kbps

Release 2.0 (Q3 2001) GUI interface

Support for speech services

Data Rates: Uplink - 64 Kbps, Downlink - 384 Kbps

Release 3.0 (Q4 2001) Support for Bearer services and simultaneous applications

Support for Turbo Coding

Symmetric Data rates in uplink and downlink (384 Kbps)

Inter-operability testing

Note: A Release implies a hardware-software implementation that has gone through the product verification phase

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Example of a WCDMA SOC with some standard peripheral interfacesHardware accelerator consists of both the transmitter and receiver sections,including the RAKE receiver.Many of the cell search operations and bit processing are done in DSP.

DMASRAMHardware

accelerator

ARM 922T SRAM

PLL/Clock

BOPS

USB

RS232

SIM

AHB

DMA

APB

I/FMem

Memory/Expansionbus

Clock

Digital I/O & Control

PeripheralsMDB

FlexSiTM -Platform Chip


Features to be supported

Circuit switched (Voice) and packet switch (data) to support-Conversational and streaming class-Interactive and background class

Ability to interface baseband chip with third party media processors .

Power budget of 450mW.


Key Technical features

ARM 922T to run protocol stack , RTOS and drivers for peripherals

DSP core with >1000 MIPs to do portions of the physical layer processing and allow changes to the functionality , through firmware.

Low power receiver architecture.

Low power and leakage memory blocks

Low power turbo decoder block

Configurable bus interfaces.


DMASRAMHardware

accelerator

ARM 922T SRAM

PLL/Clock

BOPS

AHB

DMA

I/FMem

Memory/Expansionbus

Clock

Digital I/O & Control

MDB

Programmablecontroller

Media Processor

WCDMA baseband processor with a configurable interface to an external media processor or to a standard computer/industrial bus.

System Level Diagram


Product Rollout

Start of WCDMA Program

Algorithm Development

Hardware/Software Partition

Development Platforms

First Silicon Flexi-platform

Custom Chip Sets

Year

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Agenda

Background







Business Strategy

Build a flexible W-CDMA platform with several industry standard interfaces.

Focus on Japan market where first rollout of W-CDMA will occur first

Provide dual mode capabilities supporting W-CDMA GSM and GPRS for Europe and Americas

Partner with key customers to drive development of products for target markets

Provide a complete hardware/software solution.

Str

ateg

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Pro

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Solutions

Board based platform to verify Hardware/Software solution for W-CDMA.

Platform SOC solutionimplementing W-CDMA

VWI

One chip custom solution Embedded core in multiple

designs

+SP/PESP/PE

SP/PEStr

ateg

y &

Pro

duct

Dire

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Customers PDA providers

Portable computer providers

Auto electronics

Home networking

Consumer electronics

Industrial electronics

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ateg

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Products

Development Platform for development, testing and demonstration

Wireless platform on chip with WCDMA processor and re-configurable logic for prototypes and custom industrial applications.

Digital chips incorporating WCDMA processor , with peripheral logic customized for different markets and applications.

Digital chips with multi-mode capabilities integrating, different standards like WCDMA, GPRS, GSMS

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Competition will be a mix of existing players and new

Existing: TI, Qualcomm, Intel, Conexant, Philips ….

Virtual Wire is focused on 3G and by virtue of building in: Japan deployment through strategic relationship

Multi-mode capability for legacy infrastructure

Re-configurable interfaces for different applications

Proprietary interface with the host processors

Custom features for mobile Industrial and business applications

Competitive StrategyS

trat

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rodu

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irect

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Our experience and proprietary technology positions Virtual Wire to become the leading supplier in this market !


Competitive Strategy In Progress

Currently in discussion with large Japanese companies that are currently building or supplying components to the 2G, 2.5G handsets and need a solution for 3G

Develop complete end to end solution

Use their Sales Channel, cross brand components

Share development platform

In discussion with suppliers of technology to application appliance market that need to add 3G

Real customer / end user

learn the needs of terminals and hand held appliances

Get and grow market share as the market develops

Str

ateg

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Agenda

Background







Financials

FY02 FY03 FY04 FY05 FY06

Total Revenue -$ 2,000$ 54,000$ 140,000$ 220,000$

Total Cost of Goods Sold 171$ 2,228$ 27,957$ 70,000$ 110,000$

Gross Profit (171)$ (228)$ -11% 26,043$ 48% 70,000$ 50% 110,000$ 50%

Total Operating Expenses 6,668$ 8,598$ 10,350$ 12,160$ 13,566$

Operating Profit (Loss) (6,839)$ (8,826)$ 15,693$ 57,840$ 96,434$

Other Income/Expense 618$ 162$ (3)$ -$ -$

Net Income (Loss) (6,221)$ (8,664)$ 15,690$ 57,840$ 96,434$

HeadcountEngineering 60 76 85 86 86 Marketing 6 8 8 8 8 Sales 2 4 6 7 8 G&A 3 4 5 5 5


Financials

Expected Break even in the 3rd year

Revenue to exceed US $ 100 Million within 4 years of operation

Operating Margin targeted 50%

Assumes $16M Series B and $10M Series C

Revenue vs Expenses

-

50,000

100,000

150,000

200,000

250,000

FY02 FY03 FY04 FY05 FY06

Revenue

Expense


Agenda

Background







Investor Summary

Virtual Wire is unique startup opportunity with IP and Engineering capable of producing 3G baseband solutions

3G market is vast and segmentation will allow Virtual Wire to participate in the emerging $8B chipset market

Virtual Wire well poised to capture the early market resulting in significant rewards to investors

Goal is to close series B by early Q2


Ownership View

Employees

Virtual Silicon

SASKEN56%

24%

New Investors

Virtual Silicon

SASKEN

Employees20%

Series A Series B

20%

10 Million Shares

$8.5 + Million Invested

X Million Shares

$16-20 Million New Investment

Opportunities for Series B Investors

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