As we look back on a great 2006, I want to be sure to thank our many customers, partners, and the entire Sequence team who helped make this such a successful and rewarding year.

I am eager to carry this momentum into 2007 and beyond, and am buoyed by optimistic reports from the SIA and others predicting double-digit growth in semiconductor sales over the next few years. One of the factors I believe will contribute to this progress are emerging standards for common power formats that have broad industry support, and promise to ease interoperability and power-aware design.

On the technology front, we have made tremendous strides this year across all product lines, and I am particularly proud that we have received our 22nd patent for another breakthrough in low-power design. PowerTheater 65 has been upgraded with a host of new features specific to the challenges inherent in designs at 65nm and below. Our CoolProducts now enable much finer analysis and optimization for power-hungry items such as clock trees, and offer support for the most advanced power-aware techniques, including voltage islands. We also continue to lead the way in extraction technologies with Columbus, enhanced with a range of user-friendly features.

It has also been a terrific year for relationships with our customers and partners. We have set attendance records at a number of low-power design seminars held around the world, thanks in large part to our corporate co-sponsors Cadence, HP, and NEC, as well as the invaluable support of local distributors, such as D'Gipro. We also had the pleasure of adding new members to our In-Sequence family, promoting EDA interoperability and advanced design methodologies, including our first design-services partner, Ausdia, Arithmatica, Bluespec and Synfora. We capped the year with the remarkable announcement of a 240X reduction in leakage power achieved through advanced research with one of our foundry partners, Dongbu Electronics.

Well, nostalgia is nice, but we are a forward-looking industry. I believe next five years will require unprecedented levels of cooperation among all industry segments in order to achieve success at these incredible shrinking processes. For our part, we will maintain our commit to, and leadership in, power-aware design technologies as we have for the past decade. At the same time, we welcome open standards and the chance to partner with other innovative companies around the world to take on any and all challenges the laws of physics may throw at us. After all, success is a journey best enjoyed in the company of friends!

Happy New Year, and may you enjoy continued happiness and success in all things.

Vic Kulkarni
President and CEO
Sequence Design, Inc.