Alliance Semiconductor Announces Sale of Mixed Signal Business to Shah Capital

Alliance Semiconductor Corporation (Nasdaq:ALSC)("Alliance") announced that it entered into a definitive agreement forthe sale of its Analog and Mixed Signal Business Unit to a group ofinvestors led by Shah Capital Partners, LP for $9,250,000, all cash.This transaction represents the second agreement to sell an operatingBusiness Unit executed by Alliance during the past two weeks. Thetransaction is expected to close before May 31, 2006.

Mel Keating, President and CEO of Alliance, said, "In addition tothe cash being generated by these sales, we will be ending the yearsof losses generated by the semiconductor manufacturing operations thatoccurred under the prior management. Furthermore, we will besignificantly reducing our overhead run rate. When the new Board waselected in October, 2005, Alliance had a worldwide headcount of 238.Following the completion of these two transactions, our headcount willbe approximately 30. As a consequence of our reduced headcount, byJuly 31, 2006, we plan to relocate our corporate headquarters tosmaller, much less expensive space. This real estate action aloneshould further reduce expenses by over $150,000 per month."

Bryant Riley, Chairman of Alliance, said, "This agreement is asignificant step in our plan to return value for Alliancestockholders. Now that we have taken steps to stop the operatinglosses, we can focus on realizing value from the Alliance venturecapital investments."

Alliance continues to explore the possible disposition of itsremaining memory chip operations.

Forward-Looking Statements

Except for historical information contained in this release,statements in this release may constitute forward-looking statementsregarding our assumptions, projections, expectations, targets,intentions or beliefs about future events. Words or phrases such as"anticipates," "believes," "estimates," "expects," "is expected,""intends," "plans," "predicts," "projects," "targets," "will be,""will continue," "may," "becoming," "receiving" or similar expressionsidentify forward-looking statements. Forward-looking statementsinvolve risks and uncertainties, which could cause actual results oroutcomes to differ materially from those expressed. We caution thatwhile we make such statements in good faith and we believe suchstatements are based on reasonable assumptions, including withoutlimitation, management's examination of historical operating trends,data contained in records, and other data available from thirdparties, we cannot assure you that our projections will be achieved.In addition to other factors and matters discussed from time to timein our filings with the U.S. Securities and Exchange Commission, orthe SEC, some important factors that could cause actual results oroutcomes for the Company or our subsidiaries to differ materially fromthose discussed in forward-looking statements include: changes ingeneral economic conditions in the markets in which we may compete andfluctuations in demand in the semiconductor and communicationsindustries; the possibility of unsatisfied closing conditions relatedto announced transactions; our ability to sustain historical margins;increased competition; increased costs; increases in our cost ofborrowings or unavailability of debt or equity capital on termsconsidered reasonable by management if the need for financing arises;litigation; and adverse state, federal or foreign legislation orregulation or adverse determinations by regulators. Anyforward-looking statement speaks only as of the date on which suchstatement is made, and, except as required by law, we undertake noobligation to update any forward-looking statement to reflect eventsor circumstances after the date on which such statement is made or toreflect the occurrence of unanticipated events. New factors emergefrom time to time, and it is not possible for management to predictall such factors.