SpatiaLight Announces Milestone Production Rate as Output Accelerates

SpatiaLight Announces Milestone Production Rate as Output Accelerates

Planned September Shipments Accomplished

NOVATO, Calif., Sept. 28 /PRNewswire-FirstCall/ -- SpatiaLight, Inc. (NASDAQ:HDTV), a leading developer and manufacturer of ultra high-resolution Liquid Crystal on Silicon (LCoS) microdisplays for the high definition television market, announced today that production is progressing as scheduled and that the Company has now achieved the 1,000 imager chipsets (3,000 LCoS microdisplays) per month run-rate milestone. In August, the Company began its ramp to full-scale volume manufacturing.

On September 5, 2006, SpatiaLight announced that it had initiated shipments to LG Electronics of its 1920 x 1080 LCoS imager sets that had been manufactured under SpatiaLight's proprietary mass production process. Currently, SpatiaLight has reached a production run-rate of 1,000 imager chipsets per month. As previously announced, the Company shipped 458 imager sets in August. As of today, the Company has successfully shipped 800 LCoS imager chipsets in the month of September, as projected in the Company's September 5th press release. Management expects production to continue to grow at a similar percentage rate throughout the 4th quarter of this year as it fulfills its initial purchase order from LG Electronics.

The August production lot included 30 LCoS imager sets that were specifically employed by LG to qualify its 62" LCoS High Definition television model in anticipation of full production and product introduction. Similarly, the September production lot included 30 imager sets intended for LG to qualify its anticipated 56" LCoS television model. Both the 62" and 56" models are expected to capture the bulk of the LG Electronics' RPTV volumes in the marketplace.

David Hakala, SpatiaLight's Chief Operating Officer, remarked, "Production output improvements have continued and we are pleased with the improving yield trend and the measured rate at which volume is increasing. The transition from 100% testing to sample testing was efficiently accomplished and we expect that the ramp to full production will continue in a smooth and steady manner. We continue to meet our delivery schedule with consistency and of the highest quality. As we have previously mentioned, we expect LG to move into the U.S. market with LCoS televisions in the 4th quarter of 2006. This will be a significant milestone for the Company," Hakala continued.

About SpatiaLight

SpatiaLight, Inc., founded in 1989, manufactures high-resolution LCoS microdisplays for use in high-definition televisions and other display applications. The company manufactures its products at its production facility in South Korea. SpatiaLight is committed to developing microdisplay technologies that will be the standard for the next generation of high definition televisions and to providing OEMs with the most cost effective, high-resolution microdisplays in the industry.

For more information about SpatiaLight, please visit the Company's website at: http://www.spatialight.com/ .

Safe Harbor Statement

This news release includes forward-looking statements that reflect SpatiaLight's current expectations about its future results, performance, prospects and opportunities. SpatiaLight has tried to identify these forward- looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available to SpatiaLight and are subject to a number of risks, uncertainties and other factors that could cause SpatiaLight's actual results, performance, prospects or opportunities in the remainder of 2006 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements. These risks and uncertainties are outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its most recent reports on Form 10-Q and 10-K.

First Call Analyst:
FCMN Contact: tbanzhaf@spatialight.com

Source: SpatiaLight, Inc.

CONTACT: SpatiaLight, Inc., +1-415-883-1693, or ir@spatialight.com

Web site: http://www.spatialight.com/

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