Alliance Semiconductor Announces Sale of Mixed Signal Business to Shah Capital

SANTA CLARA, Calif.--May 1, 2006--Alliance Semiconductor Corporation (Nasdaq:ALSC) ("Alliance") announced that it entered into a definitive agreement for the sale of its Analog and Mixed Signal Business Unit to a group of investors led by Shah Capital Partners, LP for $9,250,000, all cash. This transaction represents the second agreement to sell an operating Business Unit executed by Alliance during the past two weeks. The transaction is expected to close before May 31, 2006.

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

Bryant Riley, Chairman of Alliance, said, "This agreement is a significant step in our plan to return value for Alliance stockholders. Now that we have taken steps to stop the operating losses, we can focus on realizing value from the Alliance venture capital investments."

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