DESWELL INDUSTRIES, INC. LEASES 1.3 MILLION SQUARE FEET OF LAND TO EXPAND PLASTIC INJECTION OPERATIONS

HONG KONG (February 12, 2001) - Deswell Industries, Inc. (Nasdaq Symbol: DSWL) today announced that it has leased 1.3 million square feet, or 29.8 acres of land in Dongguan from the Chinese government to continue the aggressive expansion of its plastic injection operations.

The cost for the registration and lease over the term of the agreement is approximately $2.8 million to $3 million.

Mr. Richard Lau, chief executive officer of Deswell, said, "We are very pleased to secure this land use permit, especially considering how difficult it is to obtain a large piece of land in such a prime location in Dongguan. We plan to gradually invest in building state-of-the-art injection molding facilities on the new property. As we construct new plastic injection facilities, we will migrate our existing plastic facilities to Dongguan. This should cut our annual rental and labor cost by $1.5 million to $2 million, as compared to our current costs in Shekou. Over the next five years, our intention is to triple the capacity of our plastics operation."

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., Peavey Electronics Corporation and Emerson.

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