SpatiaLight Inc., a manufacturer of liquid crystal on silicon (LCoS) microdisplays, announced that site preparation has been completed and fast track construction has begun on its new, state of the art manufacturing facility in Gyeongnam province in the Republic of Korea.

The planned 25,000 square foot facility, in which clean rooms will occupy approximately half the space, has been designed to meet SpatiaLight's specifications for fabrication of its LCoS products by Sung Do Engineering, a designer and manufacturer of high-tech processing plants. Critical long lead process equipment has been ordered and several items have already been received and are in various stages of qualification at SpatiaLight's United States facilities. Hiring of personnel for SpatiaLight Korea, Inc. (SLK) has commenced and will accelerate rapidly in coming months.

In July 2004, SpatiaLight entered into a supply agreement with LG Electronics Inc. for the sale of SpatiaLight's 1920 x 1080, 10-bit progressive scan LCoS microdisplay sets. Under the terms of the agreement, there will be an initial six-month ramp-up delivery period commencing in January 2005. The agreement forecasts that LGE will commence mass production-scale purchases of LCoS sets from SpatiaLight in the second half of 2005. LGE's purchase obligations are subject to a limited quantity of trial LCoS sets, a majority of which have been delivered to LGE, meeting certain final technical specifications. LGE has advised SpatiaLight that it intends to sell high definition LCoS microdisplay products to the worldwide consumer market commencing in early 2005.

SpatiaLight formed SLK, a Korean corporation and a wholly-owned subsidiary of SpatiaLight, Inc., for the purpose of establishing the large-scale manufacturing facility in Korea and for facilitating business relationships in Korea and throughout all of Asia. SpatiaLight plans to open the manufacturing facility in Korea for production in early 2005.

Contact: www.spatialight.com