[June 26, 2019]

Jury Unanimously Finds Huawei Misappropriated CNEX's Advanced Semiconductor Trade Secrets

CNEX Labs Inc., developer of a transformative architecture for solid state drive (SSD) controllers, today announced that a federal jury has found that Huawei (News - Alert) Technologies Co. misappropriated CNEX's trade secrets.

After 18 days of testimony, argument and deliberation in the U.S. District Court for the Eastern District of Texas, the eight-member jury on Wednesday unanimously found that Huawei misappropriated CNEX's advanced, emerging and foundational semiconductor technology. The jury rejected all claims Huawei brought against CNEX, including its allegation that CNEX misappropriated Huawei's trade secrets. Strikingly, the jury found that Huawei had failed to prove that any of its claimed trade secrets were in fact trade secrets.

The jury also rejected Huawei's claims that Yiren "Ronnie" Huang, CNEX co-founder and chief technical officer, had misappropriated Huawei's trade secrets or improperly solicited employees. While the jury found that Mr. Huang failed to comply with an employment contract provision that he inform Huawei's Futurewei unit about any patents he filed within 12 months after leaving Futurewei, it ruled that Huawei and Futurewei had failed to prove any resulting harm.

"This is a victory for the rule of law and for global standards of ethical corporate behavior," said Matthew Gloss, CNEX Vice President, General Counsel and Corporate Secretary. "This case was never about money, it was about proving Huawei's wide-ranging scheme to steal our trade secrets and then to weaponize the U.S. Federal Court system against us for purposes of acquiring CNEX's advanced semiconductor technology outside of CFIUS and U.S. export control restrictions."

Huawei filed its claim against CNEX and Mr. Huang in December 2017, and CNEX and Mr. Huang filed counterclaims against Huawei in October 2018.

"While this case has progressed over the past three years, CNEX's 150-plus employees have been busy building the next great semiconductor company," said CNEX CEO and co-founder Alan Armstrong. "Our technical and market progress can now accelerate. We are excited to be able to direct our resources to building market share rather than to litigation."

CNEX's technology enables a new business model for the SSD market supplying enterprise storage and servers, hyperscale data centers and cloud computing platforms. CNEX's patentd, ground-up redesign of traditional SSD controller architecture plus its turn-key SSD design capability allow these customers to procure SSDs customized for their own needs, while reducing their exposure to the cyclical swings in SSD supply that have constrained business growth.

CNEX's SSD controller technologies enable high-volume SSD users to customize their drives to deliver higher throughput, lower power consumption and significantly better QoS (quality of service, measured as low and predictable latency), while achieving improved cost control.

About CNEX Labs Inc.

CNEX is a privately held company founded in 2013 and funded by venture capital and strategic investments from Fortune 500 companies in storage and networking. CNEX delivers innovative storage semiconductor and software solutions, partnering with solid-state storage manufacturers, data center and systems customers to develop revolutionary NVMe and Open-Channel SSD controller ASICs that deliver high-performance with low and predictable latency, scalability and flexibility for software-defined-storage. CNEX controller products are key to accelerating the capabilities of big data computing and analytics for the next generation of cloud, hyperscale and enterprise data centers. For more information, please visit www.cnexlabs.com.

All statements included or incorporated by reference herein, other than statements or characterizations of historical fact, are forward-looking statements related to trends in the market for our solutions and services, opportunities for our company in 2019 and beyond, and future product capabilities. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management's beliefs and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "projects," "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," and similar expressions and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include the continued expansion of our product line, customer base and the total available market of our products, the continued growth in demand for our products, the continued, increased demand for industry standards-based technology, our ability to react to trends and challenges in our business and the markets in which we operate, our ability to anticipate market needs or develop new or enhanced products to meet those needs, the adoption rate of our products, our ability to establish and maintain successful relationships with our OEM partners, our ability to effectively compete in our industry, fluctuations in demand, sales cycles and prices for our products and services, our success converting design wins to revenue-generating product shipments, the continued launch and volume ramp of large customer sales opportunities, and our ability to protect our intellectual property rights. In addition, current uncertainty in the global economic environment poses a risk to the overall economy as businesses may defer purchases in response to tighter credit conditions, changing overall demand for our products, and negative financial news. Consequently, our results could differ materially from our anticipated results due to these general economic and market conditions, political events and other risks and uncertainties. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

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