Southwall Europe GmbH Delivers First Product to Automotive Industry

    PALO ALTO, Calif.--March 20, 2001--Southwall Technologies Inc. reported today that its new production machine, PM8, has been approved by all of its major customers in Europe and has now shipped over $2,000,000 worth of automotive XIR(R) film from PM8 to OEM automotive glass customers in the first quarter of 2001. Southwall's new production plant near Dresden, Germany, opened officially on June 30, 2000, and PM8 is the first of several machines planned for this facility. PM9, a second production machine, is installed and expected to begin commissioning in the second quarter, with commercial shipments expected to begin in the third quarter of this year. Southwall has been servicing the European automotive glass market with XIR(R) film production from its Palo Alto, Calif., plant, and will continue to do so along with this new German plant.
    "We are pleased that both Saint-Gobain Sekurit and Pilkington Plc have performed quality audits at our Dresden plant and have approved PM8 and the new plant for supply of quality XIR(R) film for their automotive glass applications," stated Wolfgang Heinze, Vice President for Southwall Europe GmbH. "The machine and our new operating staff are performing well and are ahead of our plans for ramping up production. We are confident that we will continue to improve the yields and throughputs, allowing us to meet our production targets in our first year in operation."
    "The second production machine at Dresden, PM9, is based on the same design as PM8, although there are several areas where we believe we will see improved performance due to engineering enhancements. We are expecting to see a comparatively fast product qualification with our automotive glass customers due to the fact that they have already completed extensive testing on our XIR(R) films from PM8," continued Heinze.
    "With the progress made to date with PM8 and PM9 and our backlog of orders from automotive glass customers, we expect Dresden will ship up to $14 million worth of automotive XIR(R) film in 2001," added Thomas G. Hood, President and CEO. "This new machine tool is showing very exciting potential for producing large quantities of material. The European automotive production numbers appear to be holding at a high level and the continued adoption of IR-reflecting glass technology bodes well for XIR(R) products. The additional volume from Dresden, along with enhanced manufacturing flexibility and close physical proximity to our customers, will improve Southwall's abilities to service our European accounts, which are expected to grow by over 50% this year."

    About Southwall Technologies Inc.

    Southwall Technologies (www.southwall.com) designs and produces technologically advanced thin film coatings that selectively absorb, reflect or transmit electromagnetic radiation. Southwall products are used in a number of architectural, automotive and electronic products to enhance optical and thermal performance characteristics, improve user comfort and reduce energy costs. Southwall exports advanced thin film coatings to over 25 countries around the world for use in products manufactured by such companies as Audi, BMW, DaimlerChrysler, Renault, Peugeot-Citroen, Volvo, Mitsubishi Electric and Samsung.

    This press release may contain forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995), including, without limitation, statements regarding the Company's expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements in this press release are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those presented. These risks include the possibility that shipments to customers will be materially less than those discussed above, that the schedule for the commencement of production on PM9 will be materially longer than described above, that yields and throughputs will not be improved and production targets may not be met, or that the customers discussed above will continue to purchase product from the Company, as well as risks associated with its failure to meet covenants under credit facilities and strains on the Company's liquidity. Further risks are detailed in the Company's filling with the Securities and Exchange Commission, including those set forth in the Company's most recent Form 10-K/A.