SwitchCore initiates process for significant cost cutting measures. Special balance sheet to be prepared

As previously communicated, SwitchCore has for some time been engaged
in  discussions  of  increasing  intensity  with  potential  partners
regarding a  solution which  would take  advantage of  the  company's
efforts in developing the new, third generation product Xpeedium3 (or
X3), expand  the  company's  line  of  products  and  strengthen  the
company's position on a highly competitive market.

Xpeedium3 may  generate revenue  in 2008  but, considering  that  the
sales cycle  is  long, a  significant  effect  on sales  can  not  be
expected until 2009. Meanwhile,  the sales of the  X2 family has  not
developed in line with the  expectations upon which the financing  of
the X3 effort was based. The first product family, Xpeedium, is still
dominating the  sales. On  balance,  this is  such  a strain  on  the
company's cash flow that the present  financing of the X3 project  is
insufficient.

In the  semiconductor  industry, large  volumes,  or at  least  large
market shares  within  a certain  field,  is  needed to  be  able  to
generate the profitability and  cash flow required  to invest in  new
product development. The strategic work  of the company in  searching
for cooperation partners has been based upon this. Thus, the work has
focused on  investigating the  possibilities  of selling  the  entire
business or  part  thereof.  During  the  first  months  of  2007,  a
significant  number  of  contacts  were  established  and  some   ten
credible, potential alternatives were  at hand. However, the  further
efforts made have yet  to result in  an actual option  crystallizing.
Discussions are continuing with a number of potential partners,  with
the aim of completing  a transaction in  two, three months.  However,
whether such a transaction may take place is uncertain.

It is now imperative -  in order to avoid  a liquidity crisis -  that
the company implements significant cost  cutting measures.  In  light
of the  company's  cost  structure, terminating  the  X3  project  is
considered to be the only viable option. The company intends to do so
within a time frame of about  three months. As a consequence  hereof,
the company will as soon as  possible call for negotiations with  the
trade unions concerned in order to  enable the company to effect  the
planned reorganisation and give notices of termination to  employees.
Sales of existing products and support services to existing costumers
will be made a priority and are not intended to be affected. However,
a divestment of this business might be considered as well. Meanwhile,
other efforts to take advantage of the values accrued in the  company
continue. The intention is to try to dispose of intellectual property
rights relating to future products as well as to change the  business
of the parent company, SwitchCore AB,  in order to take advantage  of
financial assets, mainly the company's losses carried forward. In the
latter respect,  a  completely  new,  profitable  business  might  be
transferred into the company by a third party.

The company applies IFRS  accounting and has significant  development
costs for the X3 project booked  as an asset (MSEK 131). However,  in
light of the above, the board has concluded that this asset is to  be
written down to zero. Accordingly,  the board has reasons to  believe
the company's equity is less than  half of the share capital and  has
decided to prepare a special  balance sheet according to the  Swedish
Company Act and have it reviewed by the auditor.

The company does  not expect the  above-mentioned measures to  affect
the 2007 revenues from existing  products. The 2007 revenue level  is
expected to remain low.  However,  inflow of orders and sales  during
the second  quarter will  exceed the  corresponding figures  for  the
first quarter due to a couple of large orders for Xpeedium products.

As previously  announced, the  postponed  annual general  meeting  of
SwitchCore will take place  on 14 June 2007.  A notice convening  the
meeting is published in  a separate press release  today. Due to  the
decision to prepare a special  balance sheet, the notice includes  an
agenda item pursuant to which the meeting shall decide whether or not
the company shall  be liquidated.  The board's proposal  is that  the
company shall not be liquidated but  that the business shall be  kept
going as  set forth  above. The  board also  proposes to  the  annual
general meeting that  the purpose  of the  company be  expanded by  a
change of the  articles of association,  whereby the  above-mentioned
change of  the  business of  the  parent company  is  made  possible.
Further, the board proposes that the annual general meeting approve a
divestment  of  the  entire  existing   business  in  case  such   an
opportunity arises and is  considered to be in  the best interest  of
the company.

The board of directors of SwitchCore AB (publ)


Press conference
In light of the  above, SwitchCore invites to  a press conference  in
the offices of the  company, Emdalavägen 18,  Lund, Sweden, today  at
10.30 a.m.  It is  possible to  attend the  press conference  on  the
phone:

Tel: +46 8 672 8150
Code:  SwitchCore

For further information please contact:
Per Andersson, Chairman of the Board of SwitchCore
E-mail: per.andersson@switchcore.com
Telephone: +46 708 89 13 62

Erwin Leichtle, CEO of SwitchCore
E-mail: erwin.leichtle@switchcore.com
Telephone: +46 703 38 93 00

About SwitchCore
SwitchCore AB develops, markets and sells integrated network  devices
for data,  voice  and  video  communication  based  on  the  Ethernet
standard.  The  core  of  SwitchCore's   expertise  is  in  its   CXE
technology, which  allows for  significantly higher  network  product
capacity.  Using  SwitchCore's  components,  customers  can   develop
network products that  cost-efficiently manage  and prioritize  data,
video and voice  traffic for many  demanding applications.  Customers
and partners  are  network  equipment  manufacturers  and  suppliers.
SwitchCore's headquarters is in Lund,  Sweden. The company is  listed
on the  Nordic  list  of  the  Stockholm  Stock  Exchange.  For  more
information visit www.switchcore.com