Press Release - March 8, 2004

NANOCHIP RECEIVES $20 MILLION IN NEW FUNDING AND EXPANDS BOARD OF DIRECTORS

Series B Round Underscores Venture Capital and Corporate Interest in Micro-Electrical Mechanical Storage for Consumer Electronic Applications

Fremont, Calif. - March 8, 2004 - Nanochip, Inc., a MEMS-based storage company, today announced that it has secured $20 million in its Series B financing. JK&B Capital led this round, and was joined by leading institutional and corporate investors, including New Enterprise Associates, Microsoft and AKN Technology. MEMS (Micro-Electro-Mechanical Systems) are microscopic devices that are produced on semiconductor chips and are measured in micrometers.

Nanochip is developing a new class of MEMS-based storage products that are smaller, faster, use less power, and achieve dramatically higher storage densities than anything available in today's market. These multi-gigabyte storage chips are designed to be used in a wide range of consumer electronic products, including Web phones, digital cameras, MP3 players, PDAs, mobile PCs, and related wireless and remote storage appliances.

"We are extremely pleased with the interest and confidence these world-class investors share in the commercialization of Nanochip's MEMS-based storage vision," said Gordon Knight, Ph.D., CEO of Nanochip. "The fact that our investors are leaders in their respective industries, and represent both industry and the investment community, affirms our belief in the broad appeal of our technology."

Nanochip will use the proceeds from this investment round to fund continued development and initial manufacturing of the company's first commercially available products. In addition, Nanochip has moved its corporate headquarters from Oakland, Calif. to 48041 Fremont Blvd., Fremont, Calif. 94538.

In conjunction with this round of financing, Nanochip has expanded its Board of Directors with the addition of Al DaValle, partner, JK&B Capital, and Forest Baskett, Ph.D., venture partner, New Enterprise Associates.

"JK&B Capital is very excited about Nanochip's future and the impact we believe the company will have on next-generation consumer, business and industrial electronics," said Al DaValle, partner, JK&B Capital. "I personally look forward to working on the board with Gordon Knight, Tom Rust and my other esteemed colleagues."

"At New Enterprise Associates, we look for embryonic companies that we believe have the potential to become serious industry players," said Forest Baskett, Ph.D., venture partner, New Enterprise Associates. "I am honored to be a member of the Nanochip board of directors and look forward to a very exciting future."

About Nanochip (www.nanochip.com) Nanochip, Inc. was formed in 1996 to develop MEMS storage chips for consumer electronic applications. The company's products address the need for low-power, high-capacity, high-performance, non-volatile memory at a price very competitive in consumer markets. Nanochip is a private company headquartered in Fremont, Calif.