Q3 Revenues Up 18% Sequentially; Restructuring Plan Announced to Position the Company for Profitability

Statement of Operations and Balance Sheet

SHELTON, CT – November 10, 2008 ─ TranSwitch Corporation (NASDAQ: TXCC), a leading provider of semiconductor solutions for the converging voice, data and video network, today announced financial results for the third quarter ended September 30, 2008.

Net revenues for the third quarter of 2008 were approximately $10.5 million, and the net loss was ($3.0) million, or ($0.02) per basic and diluted common share, both slightly better than the previously announced guidance. This compares with net revenues of approximately $8.9 million and a net loss of ($4.3) million, or ($0.03) per basic and diluted common share during the second quarter of 2008, and net revenues of approximately $7.2 million and a net loss of ($4.5) million, or ($0.03) per basic and diluted common share, during the third quarter of 2007.

For the nine months ended September 30, 2008, the Company posted net revenues of approximately $26.9 million and a net loss of ($12.8) million, or ($0.10) per basic and diluted common share, compared with net revenues of approximately $25.4 million and a net loss of ($14.1) million, or ($0.11) per basic and diluted common share during the comparable period in 2007.

During the third quarter of 2008, TranSwitch reported a gross profit of $6.0 million, or a gross margin of 57% on total revenues. This is slightly lower than the second quarter gross margin, due to the product mix variance in the Company’s Israel-based business.

“On October 24, 2008, TranSwitch completed its acquisition of Centillium Communications,” stated Dr. Santanu Das, president and CEO of TranSwitch Corporation. “We would like to welcome all of Centillium’s former shareholders to our family, and we would also like to introduce the combined shareholder base to what we call the new TranSwitch. We believe the new TranSwitch is poised to be a global leader in the communications semiconductor industry, offering a broad range of next-generation telecom products addressing Broadband Access (including PON), Optical Transport, Carrier Ethernet, and Voice-over-IP opportunities, along with an important emerging capability in high-definition video transport,” said Dr. Das.

“Along with the completion of the Centillium acquisition, we are also implementing a significant company-wide restructuring plan aimed at achieving sustained and growing profitability, beginning with the first quarter of 2009. While TranSwitch and Centillium each had a separate plan to reach profitability, the combined company’s plan allows for accelerating this sustained profitability, due to expense synergies and strategic redirection. The company-wide restructuring plan calls for additional expense savings measures along with the previously identified $10.5 million of Centillium merger-related synergies, the $3.5 million of cost-savings announced on October 6, 2008, plus ongoing steps taken earlier by TranSwitch in order to reach profitability. All told, this restructuring, plus other ongoing expense control measures, should result in total operating expense savings of around $29 million during 2009, compared with TranSwitch’s and Centillium’s combined annualized expense run rate during the second quarter of 2008.

The new TranSwitch will target a total annual operating expense level of less than $36 million, which is substantially the same as the Company’s operating expense level prior to the Centillium acquisition. The addition of Centillium’s products and revenues, with virtually no net increase in operating expenses, should result in a dramatic improvement in profitability relative to the standalone companies,” said Dr. Das.

“TranSwitch’s past investments in product development were in anticipation of the architectural change that is now occurring as carriers worldwide transition from legacy to Ethernet and IP technologies. Our product lines have been incorporated into many of the next-generation platforms, and we anticipate that these deployments will provide us with stable revenue growth for years to come. While we will continue to invest systematically in the communications space, it will be more selective and focused to ensure shorter term return-on-investment,” continued Dr. Das.

“Going forward, TranSwitch has a unique opportunity to become a leader in the large and rapidly growing field of digital video transport, which complements the Company’s traditional communications business,” said Dr. Das. “We have already successfully begun to license our HDMI™ intellectual property, which offers industry-leading performance and functionality. We recently signed a new multi-year, royalty-bearing licensing agreement with one of the world’s largest semiconductor companies that is planning to incorporate TranSwitch’s DisplayPort technology inside multiple proprietary products.

“We believe that the video transport business presents an opportunity for faster return on investment. Our plan is to increase investment in this area to take advantage of our technology leadership with the goal of developing a rapidly growing revenue stream,” added Dr. Das.

“Based on our total current order position, we project our fourth quarter 2008 revenues to be around $15.3 million, which includes approximately two months of revenue contribution from product lines acquired through the Centillium transaction. Excluding anticipated one-time restructuring charges, we estimate our fourth quarter 2008 net loss to be roughly ($0.03) per basic and diluted common share,” concluded Dr. Das.

Additional details on TranSwitch’s third quarter 2008 financial results will be discussed during a conference call regarding this announcement today at 5:30 pm Eastern time. To listen to the live call, investors can dial 719-325-4835 and reference confirmation code: 9148116. The call will be recorded and a replay will be available two hours after the conclusion of the live broadcast through November 20, 2008. To access the replay, dial 719-457-0820 and enter confirmation code: 9148116. Investors can also access an audio webcast via www.vcall.com by clicking on the TranSwitch Corporation conference call link. This audio webcast will also be available on a replay basis for 10 business days.