DESWELL INDUSTRIES INC. SUBSIDIARY, KWANASIA ELECTRONICS CO., LTD., ANNOUNCES NEW CUSTOMER RELATIONSHIP WITH PEAVEY ELECTRONICS CORPORATION

HONG KONG (September 18, 2000) - Deswell Industries, Inc. (Nasdaq NM Symbol: DSWL) today announced its electronics subsidiary, Kwanasia Electonics Co., Ltd., has established a new customer relationship with Peavey Electronics Corporation.

Mr. Richard Lau, Chief Executive Officer of Deswell, commented, "We are pleased about expanding our customer base with this new relationship. Peavey is a very well-respected company and we look forward to a long-term relationship with them."

Deswell manufactures injection-molded plastic parts and components, electronic products and subassemblies, and metallic products for original equipment manufacturers ("OEMs") and contract manufacturers at its factories in the People's Republic of China. The Company produces a wide variety of plastic parts and components used in the manufacture of consumer and industrial products; printed circuit board assemblies using surface mount ("SMT"), and pin-through hole ("PHT") interconnection technologies; and finished products such as telephones, telephone answering machines, sophisticated studio-quality audio equipment and computer peripherals. The Company's customers include Kyocera Mita Industrial Co. (H.K.) Limited, Epson Precision (H.K.) Ltd., Namtai Electronics (Shenzhen) Co. Ltd., Inter-Tel Incorporated, Vtech Communications Ltd. and Peavey Electronics Corporation.

To learn more about Deswell Industries, Inc., please visit the Company’s web site at www.deswell.com.