LAS VEGAS - Jan. 6, 2001 -- Oak Technology, Inc. (NASDAQ: OAKT), a leading provider of embedded solutions for optical storage and digital imaging, announced today a strategic relationship with PortalPlayer, Inc., which provides platform solutions for PC- Free recording and playback of digital media content to consumer electronics manufacturers. The companies intend to jointly develop a reference design for a next- generation digital media player/recorder, as well as future digital music products and technologies.

Initial collaboration will focus on development of a reference design for recordable optical storage products that support direct encoding of digital audio content in MP3 file formats, without the need for a personal computer. The reference design will incorporate Oak's recently introduced OTI-8001 consumer CD recordable controller and PortalPlayer's Tango™ digital media platform, which is based on the industry's first single chip embedded controller capable of real-time MP3 recording and playback.

"PortalPlayer's system-on-a-chip digital media platform, combined with Oak's CD recording technology, make a very powerful combination well suited to address the growing market for recordable digital media systems," said Akyra Pagoulatos, vice president, marketing and business development, for Oak Technology. "The time is right for digital content recording to move into the mass market of audio products. Our goal is to make it as easy as possible for consumer electronics manufacturers to bring these products to market."

"Oak's leadership position in recordable optical storage, and its new audio and video recordable CD controller for the consumer digital media market, are an excellent complement to our digital media platforms," said Michael Maia, vice president of marketing for PortalPlayer. "We are we pleased to enter into this partnership, which will enable us to offer even more powerful solutions to our customers."

Oak's Optical Storage Controller Technology

Oak, founded in 1987, has established a leadership position in the optical storage segment. The company is recognized as one of the leading suppliers of optical storage controllers, having sold more than 130 million optical storage controllers to date. Oak's latest generation of advanced CD-RW optical storage controllers have been selected by most of the top OEM suppliers of CD-RW drives. The Company's recent product development efforts in this area have focused on emerging segments such as optical storage solutions for the consumer market, as well as CD-RW and Combo drives, which are fast becoming the mainstream optical storage device for the PC market.

Oak recently introduced one of the industry's first CD Recording controllers optimized for non-PC audio and video recording applications, leveraging its state-of-the-art optical recording expertise to produce an efficient and affordable integrated solution that meets the criteria for consumer electronics industry. Oak's new OTI-8001 controller, the first in a family of Oak solutions for consumer applications and appliances, will enable the market for affordable CD-audio and video player/recorders. The OTI-8001 controller is an 8X Read/8X Write CD-Recordable/ReWritable controller intended for use in a recordable audio or video CD system with an inexpensive microprocessor and a minimal number of additional components

PortalPlayer's Digital Media Platform

The Tango digital media player/recorder platform - which includes a SuperIntegration™ silicon chip, firmware suite with codec and digital rights management technology, and companion digital media manager application software - enables consumer electronics providers to quickly implement new types of battery- and line-powered digital audio recording and playback systems.

About PortalPlayer, Inc.

PortalPlayer, Inc. supplies consumer electronics manufacturers with complete platform solutions for open and secure delivery and management of digital media. The company develops and markets advanced systems for digital audio recording and playback, using MP3 and other popular digital compression technologies, tightly integrated with e-commerce and digital rights management. Founded in May 1999, PortalPlayer is headquartered in Santa Clara, California, with operations in Seattle, Washington, Charlotte, North Carolina, and Hyderabad, India. More information on PortalPlayer, Inc., and its products is available on the company's website, www.portalplayer.com.

About Oak Technology

Oak Technology, Inc., a leading provider of solutions for the storage, capture and sharing of digital content, is committed to driving the emerging world of connected Information Appliances. The company's fully integrated products and technologies target two key markets: optical storage (CD-RW and DVD for PC and consumer) and digital imaging (advanced copiers, printers, faxes, scanners, MFPs and iAppliances). Founded in 1987, Oak is headquartered in Sunnyvale, CA, and has sales offices, design centers and research facilities around the world. The company trades on the NASDAQ Stock Exchange under the symbol OAKT. Additional information about Oak and its digital solutions can be found at www.oaktech.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: In addition to the historical information contained herein, statements in this press release may contain forward-looking statements within the meaning of the Federal securities laws and are subject to the safe harbors created thereby. The following are among the factors that could cause actual results to differ materially from the forward-looking statements: The foregoing statements may consist of forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Factors that could cause actual outcome to differ materially from those set forth include, without limitation, the rate of adoption of new technology, the rate of growth of the CD-RW market, changes in product mix or distribution channels; the demand for semiconductors and end-user products that incorporate semiconductors; technological difficulties and resource constraints encountered in developing and/or introducing new products, and market acceptance of new products. Forward-looking statements contained in this press release regarding expected financial results, industry trends, sales and future product development and business strategies and activities should be considered in light of these factors, and those factors discussed from time to time the Company's public reports filed with the Securities and Exchange Commission, such as those discussed under "Risk Factors" in the Company's Annual Report on Form 10K for fiscal year ending June 30, 2000, and in quarterly reports on Form 10Q.

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Oak Technology is a registered trademark and the Oak logo is a trademark of Oak Technology, Inc. PortalPlayer, the PortalPlayer logo, Tango and SuperIntegration are trademarks of PortalPlayer, Inc. All other product names or company names are mentioned for identification purposes only, and may be trademarks of their respective owners.