DESWELL INDUSTRIES INC. SUBSIDIARY, JETCROWN INDUSTRIAL LTD., ANNOUNCES NEW CUSTOMER RELATIONSHIP WITH EMERSON

HONG KONG (December 12, 2000) - Deswell Industries, Inc. (Nasdaq NM Symbol: DSWL) today announced its plastic injection subsidiary, Jetcrown Industrial Ltd. ("Jetcrown"), has established a new customer relationship with Emerson (NYSE: EMR).

The master agreement allows Jetcrown to negotiate with Emerson and its worldwide subsidiaries for mold design, tooling, plastic injection and plastic parts supply. Emerson completed the agreement after months of frequent facility visits, quality standard reviews, hardware and software inspections.

Emerson (www.gotoemerson.com), located in St. Louis, Mo., is a global leader in bringing together technology and engineering to provide customers with innovative solutions in electronics and telecommunications; process control; industrial automation; heating, ventilating and air conditioning; and appliance and tools. With fiscal 2000 sales of $15.5 billion, Emerson has more than 60 divisions selling products in more than 150 countries. Currently, Jetcrown is developing relationships with more than eight divisions of Emerson, including Fisher Rosemount Systems, Alco Controls, Mallory Controls, Chromalox, EGS Electrical Group, and ASCO Valve.

Richard Lau, chief executive officer of Deswell, said, "We are very pleased to have the opportunity to work with Emerson, one of the world's leading technology companies, and we look forward to building a long-term relationship with them. This new relationship dramatically strengthens our leadership position in the injection molding industry. We continue to gain market share due to our expertise and expanding state-of-the-art manufacturing capabilities. Our growing customer base will surely help to secure our capacity and revenue expansion in the years 2001 to 2004."

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.