Southwall Announces New Automotive Capacity is Now Online

    PALO ALTO, Calif.--May 15, 2001--Southwall Technologies Inc. announced today that its newest production machine, PM9, has produced and shipped commercial quantities of Southwall's XIR(R) films for use in the European automotive glass market. This coated film was manufactured at Southwall's European plant located in Dresden, Germany and was shipped to France to meet the growing demand for XIR(R) infrared-reflecting product by the PSA (Peugeot-Citroen) Group. Southwall previously stated that it expected PM9 to commence commercial production during the third calendar quarter of 2001.
    PM9 is the second production machine to be placed in service in Southwall's new European production facility. On March 20, 2001 the Company announced that it had begun shipping automotive XIR(R) from PM8, its first Dresden machine.
    "We are very pleased to be producing XIR(R) ahead of schedule on PM9," stated Thomas G. Hood, Southwall's President and CEO. "Together with the successful start-up of PM8, which has now produced over 5 million square feet of automotive XIR(R) in 2001, this is an important signal of our ability to grow our production to meet the near-term needs of our automotive glass customers."
    "Our production has been significantly constrained in this market for some time," Hood continued. "And we are being asked to step up production commitments in the near future for additional new vehicle models. To continue to meet these customer needs, Southwall is evaluating financing alternatives for additional production machines that could be commissioned in Dresden in 2002. While the Company does not have financing commitments in place, we believe that, as with PM8 and PM9, these machines would be substantially financed by loans from German banks and by German government grants."

    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, Saint-Gobain Sekurit, Pilkington, 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 anticipated, that orders in backlog are subject to cancellation and that backlog is not indicative of actual revenues, that PM8 and/or PM9 may experience production difficulties in the future, that the schedule for the commencement of production on new machines will be materially longer than described above, that additional machines in Dresden may not be built or commissioned on schedule or at all, that financing from German banks and the German government will be received in sufficient amount or at all, 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 filing with the Securities and Exchange Commission, including those set forth in the Company's most recent Form 10-K/A.