Markham, Ontario - March 21, 2003 - ATI Technologies Inc. (TSX: ATY, NASDAQ: ATYT), a world leader in the design and manufacture of innovative 3D graphics and digital media silicon solutions, today announced its financial results for the second quarter of its 2003 fiscal year, which ended February 28, 2003.

Revenues for the second quarter were $318.5(1) million compared to $322.0 million in the first quarter of fiscal 2003. Gross margin was 28.9 per cent, rising 1.6 percentage points from 27.3 per cent in the first quarter. Operating expenses, excluding amortization of intangible assets and other charges(2), increased $0.7 million to $80.3 million compared to the first quarter.

The net loss for the second quarter was $8.3 million or $0.04 per share compared to net income of $5.0 million or $0.02 per share for the first quarter of 2003 and a net loss of $3.0 million or $0.01 per share for the same period a year ago. Adjusted net income(3) for the second quarter was $9.7 million or $0.04 per share compared to $7.0 million or $0.03 per share for the previous quarter, and $17.6 million or $0.07 per share for the same period a year ago.

(1)All dollar amounts are stated in U.S. dollars unless otherwise noted. All per share amounts are stated on a fully diluted basis unless otherwise noted.

(2) The Company incurred other charges during the quarter that are not considered to be part of the Company's normalized ongoing operations and in aggregate represent $16.0 million. These charges include costs relating to the settlement of the U.S. class action lawsuit; costs incurred in connection with the work of the independent Special Committee of the Board relating to the Ontario Securities Commission investigation and Notice of Hearing; costs related to the closure of the European manufacturing operations and lease termination charges related to surplus space in leased buildings. (See Note 7 to the consolidated financial statements.)

(3)Adjusted net income excludes the after-tax effect of gain on investments, after-tax effect of other charges described in Note 7 to the consolidated financial statements, amortization of goodwill and intangible assets related to the Company's acquisitions, and deferred tax recovery of future tax liability pertaining to intangible assets acquired, related to the Company's acquisitions. Each of these items has been excluded from adjusted net income as they are not considered to be part of the Company's normalized ongoing operations. While the Company recognizes that adjusted net income does not have any standardized meaning described by generally accepted accounting principles, or GAAP, and that its adjusted net income calculation cannot be used as a comparison to other companies' financial performance, ATI believes that its adjusted net income more appropriately reflects the Company's operating performance. Please see the table titled "Adjusted Net Income - Reconciliation" in Management's Discussion and Analysis of Interim Financial Results in this release for the reconciliation between adjusted net income and net
income which is determined in accordance with GAAP. "Customer demand for ATI's new products continued to build during the second quarter - a quarter that typically sees a seasonal pullback in the marketplace," said K.Y. Ho, Chairman and Chief Executive Officer, ATI Technologies Inc. "Our RADEON* 9700 and RADEON* IGP families of products continued to capture design wins and gain broad customer acceptance during the quarter. With ATI shipping its one millionth RADEON* 9700-based chip in the second quarter, this has unquestionably been the best new product in our industry - ever."

"With the release of our RADEON* 9800 PRO, RADEON* 9600 and RADEON* 9200 for the desktop, Mobility* RADEON* 9600 for the notebook and MOBILITY* RADEON* 7000 IGP for the value segment, in time for the Spring refresh, ATI again delivers true top-to-bottom leadership in our core PC market," said David Orton, President and Chief Operating Officer, ATI Technologies Inc.

Outlook
ATI expects revenues in the third quarter in the $300 million range. Gross margin, as a percentage of revenues, for the third quarter is expected to improve slightly. Operating expenses, excluding intangibles and other charges, for the third quarter are expected to be slightly higher than the second quarter of this year. As the year progresses, ATI's Consumer products are expected to begin to show a positive and increasing contribution relative to the first half of the year. As a result of the above, overall net income should continue to improve in the third and fourth quarters of fiscal 2003.

Operational Highlights
Desktop
ATI continued to generate strong demand for the RADEON* 9700 and RADEON* 9000 family of products during the second quarter. ATI expanded its product leadership again, in March, with the introduction of the RADEON* 9800 PRO,
RADEON* 9600 and RADEON* 9200 visual processors targeting the high-end enthusiast, performance and mainstream desktop markets respectively. Each is the fastest and highest performing visual processor in its category and represents the second generation of ATI's breakthrough cinematic rendering architecture.

These new products ignited a second wave of design wins with key OEMs such as Fujitsu, Gateway, and NEC as well as gaming-focused system integrators such as Alienware, Falcon Northwest and Voodoo.
With the RADEON* 9700 PRO, ATI was the first company to market with Microsoft® DirectX® 9.0-compatible hardware, one of key enablers of cinematic rendering. ATI was first to market again with DirectX® 9.0 compatible software when it introduced DirectX® 9.0 software drivers simultaneously with the Microsoft® DirectX® 9.0 release, on December 20, 2002.

Notebook
ATI strengthened its leading position in the notebook market during the quarter adding to the array of wins for Mobility* RADEON* based processors - including wins from Acer, Dell, Fujitsu, IBM, NEC and Sony. On March 13, ATI introduced the Mobility* RADEON* 9600 - the world's first mobile DirectX® 9.0-compatible VPU featuring innovative overdrive and memory technologies, astonishing performance levels and vivid cinematic imagery.

In the value portion of the notebook market ATI enjoyed continuing demand for RADEON*-powered IGP solutions. Last week, ATI built on the success of its RADEON* IGP 320 and RADEON* IGP 340 chipsets when it introduced the
MOBILITY* RADEON* 7000 IGP the world's most powerful, feature-rich mobile integrated graphics processor.

Consumer
In ATI's consumer business, set-top box manufacturers including Phillips, Alps and Proton selected ATI's Xilleon* and NxtWave solutions for their new products during the quarter. Subsequent to quarter-end the Company announced further wins in the DTV area, including design wins with ChangHong, China's leading TV manufacturer for both high definition televisions and digital set-top boxes.

ATI also announced, subsequent to quarter-end, that it had entered into a technology development agreement with Nintendo Co., Ltd. Under the agreement, ATI and Nintendo are developing technologies for use in Nintendo products.

Other Corporate Developments
During the second quarter, ATI announced that it was closing its European
manufacturing operations (ATEL) based in Dublin, Ireland. This closure is
a result of the Company's shift to a new business model which resulted in the Company transitioning from supplying board-level product to chip-level product. Consequently, ATI no longer requires manufacturing operations in Europe.

Management's Discussion and Analysis of Interim Financial Results
Revenues
ATI revenues for the second quarter decreased slightly to $318.5 from $322.0 million in the first quarter primarily due to a decline in royalty income.

On a year-over-year basis, revenues in the second quarter and the first six months were up 19.7 and 24.1 per cent respectively. These increases reflect the success of ATI's new products including the RADEON* 9700, RADEON* 9000 and the RADEON* IGP family of visual processing solutions.

Gross Margin
Gross margin for the second quarter improved to 28.9 per cent of revenues compared to 27.3 per cent in the first quarter. Margin for the first quarter was adversely affected by a writedown taken on the value of certain inventories, which was not a factor during the second quarter. Although margin on product sales improved during the quarter, the significant quarterly decline in royalty income substantially offset this improvement. Excluding royalty income, margin improved from 24.0 per cent to 27.9 per cent.

On a year-over-year basis, gross margin as a percentage of revenues for the second quarter and the first six months of the year declined from 33.8 per cent and 33.0 per cent to 28.9 per cent and 28.1 per cent respectively. These declines were largely a result of a general decline in discrete mobile product gross margin during the fiscal 2003 periods.

Operating Expenses
Operating Expenses, Excluding Amortization of Intangibles and Other Charges Operating expenses, excluding the amortization of intangibles and other charges, were $80.3 million in the second quarter, up slightly from the first quarter levels of $79.6 million. The increase came primarily from continued investment in R&D.

On a year-over-year basis, total operating expenses, excluding the amortization of intangibles and other charges, for the second quarter and the first six months of the year increased 15.0 and 15.1 per cent to $80.3 million and $159.9 million respectively. Higher operating expense levels were primarily a result of increasing investments in R&D, both headcount and the cost of technology required to support the increasingly more complex chips; as well as to a lesser extent, volume related selling expenses. Other Charges The Company incurred other charges during the quarter that have been excluded from the Company's adjusted net income calculation. These other charges included $8.0 million to settle the U.S. class action law suit, a portion of which is expected to be paid by ATI's insurer; $2.8 million related to costs incurred in connection with the work of the independent Special Committee of the Board relating to the Ontario Securities Commission investigation and Notice of Hearing; $2.8 million resulting from the closure of the European manufacturing operations (ATEL); and $2.4 million in lease termination charges related to surplus space in leased buildings. These charges are not considered to be part of the Company's normalized ongoing operations. Please see Note 7 to the consolidated financial statements.

Total Operating Expenses
Total operating expenses were $99.5 million in the second quarter, up $16.7 million from first quarter levels of $82.8 million. The increase came primarily from the other charges outlined above.

On a year-over-year basis, total operating expenses for the second quarter increased 9.3 per cent. Higher operating expense levels were mostly a result of: increasing investments in R&D, both headcount and the cost of technology required to support the increasingly more complex chips; other charges outlined above; as well as to a lesser extent volume-related selling expenses. These items were offset by lower expenses for goodwill and intangible assets in fiscal 2003 due to the adoption of the accounting policies relating to the treatment of goodwill and intangible assets.

Total operating expenses for the first six months of the year of $182.2 million increased slightly compared to $181.3 million for the same period a year ago as a result of: increasing investments in R&D, both headcount and the cost of technology required to support the increasingly more complex chips, other charges outlined above; as well as to a lesser extent, volume-related selling expenses. The increase in expense due to these factors was almost entirely offset by lower expenses for goodwill and intangible assets in fiscal 2003 due to the adoption of the accounting policies relating to the treatment of goodwill and intangible assets.

Net Income
The net loss in the second quarter of fiscal 2003 was $8.3 million or $0.04 per share compared to net income of $5.0 million or $0.02 per share for the first quarter of fiscal 2003. Strong revenue and an improving gross margin performance were largely offset by significant, but largely non-recurring other charges described above.

On a year-over-year basis, the net loss for the second quarter widened from $3.0 million in fiscal 2002 to $8.3 million for the same quarter this year as a result of the other charges described above, increased investment in R&D, as well as a decline in gross margin as a percentage of revenues. This was offset by lower expenses for goodwill and intangible assets in fiscal 2003 due to the adoption of the accounting policies relating to the treatment of goodwill and intangible assets.

The net loss for the first six months of fiscal 2003 narrowed to $3.3 million compared to $13.4 million for the same period last year due to lower expenses for goodwill and intangible assets in fiscal 2003 as a result of the adoption of the accounting policies relating to the treatment of goodwill and intangible assets, offset by other charges incurred in the second quarter and increased investment in R&D.

Adjusted net income(1) for the second quarter was $9.7 million or $0.04 per share compared to $7.0 million or $0.03 per share for the previous quarter. Improving gross margin was largely responsible for the increase in adjusted net income.

On a year-over-year basis, adjusted net income for the second quarter and the first six months of the year declined from $0.07 and $0.11 to $0.04 and $0.07 respectively largely as a result of reduced gross margin as a percentage of revenues and higher operating expenses, which were largely due to increased investment in R&D, somewhat offset by an increase in revenue.



(1)Adjusted net income excludes the after-tax effect of gain on investments, after-tax effect of other charges described in Note 7 to the consolidated financial statements, amortization of goodwill and intangible assets related to the Company's acquisitions, and deferred tax recovery of future tax liability pertaining to intangible assets acquired, related to the Company's acquisitions. Each of these items has been excluded from adjusted net income as they are not considered to be part of the Company's normalized ongoing operations. While the Company recognizes that adjusted net income does not have any standardized meaning described by generally accepted accounting principles, or GAAP, and that its adjusted net income calculation cannot be used as a comparison to other companies' financial performance, ATI believes that its adjusted net income more appropriately reflects the Company's operating performance. Please see the table titled "Adjusted Net Income - Reconciliation" below in this news release for the reconciliation between adjusted net income and net income which is determined in accordance with GAAP.

Liquidity and Financial Resources
ATI's cash flow from operations was $46.0 million in the second quarter of fiscal 2003, compared to cash used in operations of $31.0 million in the first quarter of fiscal 2003. The increase in cash flow was primarily a result of lower inventory levels.

Inventory levels declined significantly to $131.3 million at the end of the second quarter compared to both the first quarter of 2003, where inventory was $172.4 million and at year-end where inventory levels were $175.3 million. Inventories were higher in those previous periods due to a major product transition and are now at an appropriate level to support current sales.

As of February 28, 2003, ATI had working capital of $380.3 million, compared to $361.7 million at August 31, 2002. The Company's cash position, including short-term investments, was $240.9 million as of quarter end, compared to $200.1 million last quarter. The increase was largely due to the reduction in inventory levels. The Company's cash position as at February 28, 2003 of $240.9 million was at about the same level as August 31, 2002. The Company is also in the process of renegotiating its credit facility (see Note 3 to the consolidated financial statements).

Intangible assets other than goodwill declined to $13.3 million at the end of the second quarter of fiscal 2003, from $21.9 million at August 31, 2002. The decline in these assets was due to continued amortization. During the first quarter the Company reclassified $2.3 million relating to workforce from intangible assets to goodwill as a result of the adoption of CICA Handbook Section 3062.

As discussed previously, the Company in the first quarter of fiscal 2003 adopted the new accounting policies relating to the treatment of goodwill and intangible assets (CICA Handbook Section 3062) and therefore is no longer amortizing these assets. Goodwill, which is associated primarily with the prior acquisition of ArtX, is currently $190.1 million and will be tested for impairment on an annual basis. The Company has completed the transitional goodwill impairment assessment during the second quarter of 2003 and has determined no impairment existed as of September 1, 2002.

Receivables were $200.4 million, up $36.1 million from the end of fiscal 2002 due to continued strong sales in the first half of the year.

Claims and Proceedings
In January, the Company announced that Staff of the Ontario Securities Commission had filed a Notice of Hearing and Statement of Allegations in relation to ATI and others. The Notice alleged that ATI failed to disclose information concerning the shortfall in revenues and earnings that occurred in the third quarter of fiscal 2000, as required by the listing rules of the Toronto Stock Exchange. The Notice also alleged that ATI made a misleading statement to Staff of the Commission in August 2000 regarding the events leading up to the disclosure on May 24, 2000 of the shortfall. Seven individuals are also named in the Notice. The Notice alleged that six of these individuals, including K.Y. Ho, the Chief Executive Officer of ATI, engaged in insider trading contrary to the Securities Act. A date for the hearing has not been fixed.

A Special Committee consisting of Paul Russo, who joined the board in January 2002, is conducting, on behalf of the Board, an independent review of the concerns raised by Staff with the assistance of independent professional advisors. The Board intends to consider the input from the Special Committee and take action in the best interest of shareholders.

In February, the Company announced that it had reached an agreement for the full and complete settlement of all remaining claims alleged in the shareholder class action lawsuits filed in May 2001 in the United States District Court for the Eastern District of Pennsylvania. The terms of the Stipulation and Agreement of Settlement, which are subject to final court approval and notice to class members, include no admission of liability or wrongdoing by the Company or other defendants. The court will hold a fairness hearing on April 25, 2003 to consider objections, if any, and to determine whether it will approve the settlement. Under the terms of the settlement, ATI has paid $8 million into court pending final approval. A portion of this amount is expected to be paid by ATI's insurer, but has not yet been recognized. Adjusted Net Income - Reconciliation The table below presents adjusted net income and adjusted net income per share, which excludes the after-tax effect of gain on investments, after-tax effect of other charges, amortization of goodwill(1) and intangible assets related to the Company's acquisitions, and deferred tax recovery of future tax liability pertaining to intangible assets acquired, related to the Company's acquisitions.
(Thousands of US dollars, except per share amounts)
Three months ended February 28 Six months ended February 28

2003 2002 2003 2002
(unaudited) (unaudited)
Net loss - GAAP basis $ (8,337) $ (3,039) $ (3,349)
$ (13,358)
Amortization of intangible assets(1) 3,162 21,164 6,327
42,354
Other charges 15,996 - 15,996 -
Gain on investments - - (32)
-
Tax recovery of other charges (992) - (992)
-
Net tax on sale of investments - - 6
-
Deferred tax recovery of future tax liability on intangible assets
(177) (481) (1,318) (967)
Adjusted net income $ 9,652 $ 17,644 $ 16,638 $
28,029
Adjusted net income per share
Basic $ 0.04 $ 0.08 $ 0.07 $ 0.12
Diluted $ 0.04 $ 0.07 $ 0.07 $ 0.11
Weighted average number of shares (000's):

Basic 237,227 234,154 237,087 233,325
Diluted 242,051 249,318 242,675 247,117

(1) Effective September 1, 2002, the Company no longer amortizes
goodwill. See Note 1 to the consolidated financial statements.