***For Immediate Release***

Canesta Raises $16 Million

Venrock Leads Investment in First Company with Electronic Perception Technology;
Other Investors include Carlyle Venture Partners, Intel Capital, J.P. Morgan Partners,
and Korea Global IT Fund

SAN JOSE, CA – December 16, 2003 – Canesta Inc., the leading provider of electronic perception technology, announced today that it has raised $16 million. This new round, led by Venrock Associates, brings the total investment in the company to $36.3 million. Other investors include Carlyle Venture Partners, Intel Capital, J. P. Morgan Partners, and Korea Global IT Fund (KGIF).

This announcement comes in advance of the first commercial availability of projection keyboard accessories in the first half of 2004. Moreover, in September a prototype projection keyboard accessory, which is based on Canesta's first generation electronic perception technology chipset, was displayed in the Sony Corporation booth at the World PC Expo in Tokyo; and in early October, the world's first public demonstration of the next generation of electronic perception technology took place at MIT (Massachusetts Institute of Technology).

"Canesta is one of the few companies in today's market that is truly introducing something revolutionary," said Tony Sun, managing general partner of Venrock, who joins Canesta's board of directors with this recent round. "We are very excited to help build this breakthrough company."

Canesta's electronic perception technology is the world's first low cost, chip-based technology that enables everyday devices to see and react with the environment around them. It does so by electronically forming true three-dimensional moving images in a special sensor chip, and providing interpretations of these images to devices such as cell phones, PDAs, automobiles, or security systems. The first products to use electronic perception technology are mobile devices with projection keyboards. Additionally, Canesta is working with numerous partners in the automotive, security, and other markets to apply the technology much more broadly over the next few years. Canesta, a fabless semiconductor company focused exclusively on electronic perception, has filed nearly 40 patents surrounding its various breakthrough technologies. Seven of these patents have been granted so far.

"The potential of both the projection keyboard and the broad array of other products that can result from a technology that 'enables everyday devices to see' is enormous," said Allan Thygesen, managing director of The Carlyle Group and member of Canesta's board of directors. "Electronic perception technology is important because it can be applied broadly, sight-enabling even inexpensive, consumer-oriented devices, as well as a wide range of instruments, equipment, vehicles, and machines. This is a contrast to today's complex and generally poor-performing vision systems that are expensive, large, and require a substantial amount of computing power."

According to Nazim Kareemi, Canesta's president and CEO, "We set out to solve a very hard technical problem which, in the long term, will change the way computers and other devices interact with the world. The first commercial products using our technology will be available next year and we are very pleased with the support we have received from our investors and customers."

Moreover, Kareemi explained, some of the key early markets for Canesta's products are in Asia where much of the manufacturing of cell phones, PDA's, and computers takes place. "In addition to the vision our investors have shown, we are very pleased with their assistance in building relationships with our Asian partners."

About Canesta

Canesta is the inventor of a revolutionary, low-cost electronic perception technology that enables ordinary electronic devices to perceive and react to nearby objects or individuals in real time.

When sight-enabled with Canesta's unique electronic perception chips and software, consumer, automotive, industrial, military, and medical products will gain functionality and ease of use not possible in an era when electronics were blind. The first application of electronic perception technology is the Canesta Keyboard Perception Chipset™. The chipset is the foundation for the projection keyboard. When integrated into cell phones, PDAs, or an accessory device, the image of a keyboard is projected onto a nearby flat surface, and then a sensor "reads" the finger movements of a user who types on that image. Canesta's electronic perception technology resolves the user's finger movements in real time into keystrokes electronically provided to the device.

Canesta believes future applications of electronic perception technology are virtually as broad as the imagination. They may include intelligent automobile airbag systems that can sense the size and position of an occupant to control deployment and avoid injury, a low-false-alarm security system that could detect the difference between an intruder and normal activity, such as a pet moving or child visiting the bathroom at night, or video and virtual reality games that would have no mechanical input whatsoever. The game would "see" the player and reacts to his actions.

To date, Canesta has announced customers including NEC Corporation and Advanced Input Devices. Canesta was founded in April 1999, and is located in San Jose, CA. The company has filed in excess of forty patents, seven of which have been granted so far. Investment to date exceeds $36 million, from Apax Partners, Carlyle Venture Partners, Intel Capital, JP Morgan Partners, Korea Global IT Fund (KGIF), TechFund Capital, Thales Corporate Ventures, and Venrock Associates.

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