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CREATIVE TECHNOLOGY ANNOUNCES FIRST QUARTER FY 2003 REVENUES AND OPERATING PROFIT AT TOP END OF EXPECTATIONS

SINGAPORE - October 24, 2002 - Creative Technology Ltd. (Nasdaq: CREAF), the worldwide leader in digital entertainment products for PC users, today announced financial results for the first quarter of fiscal year 2003, ended September 30, 2002. All financial results are stated in U.S. dollars.

Sales for the first quarter were at the high end of the Company's guidance at $160.6 million. This compares to sales of $180.4 million for the same quarter of last year.

Creative achieved net income for the first quarter of $1.3 million or $0.02 per share before write-downs on listed investments of $6.3 million or $0.08 per share. Including the write-downs, the Company reported a net loss for the quarter of $5.0 million or $0.06 per share. Comparative results for the first quarter of last year were net income of $3.6 million or $0.05 per share before net investment write-downs of $16.4 million or $0.22 per share. Including the write-downs, the Company incurred a net loss of $12.8 million or $0.17 per share in the first quarter of last year.

The effects of the 3Dlabs acquisition in the quarter included: a revenue contribution of $13.0 million; gross profit of $6.1 million; and operating expenses of $10.7 million including $2.5 million for amortization of intangible assets.

Excluding the impact of the 3Dlabs acquisition and investment write-downs in the quarter, Creative achieved net income for the first quarter of $6.2 million or $0.08 per share. This compares to last year's first quarter net income of $3.6 million or $0.05 per share before investment write-downs.

"We came in at the top end of our revenue guidance with solid sales performance in a very tough economic climate," said Craig McHugh, president of Creative Labs, Inc. "We saw year-over-year growth of more than 50% in both our personal digital entertainment (PDE) and communications product categories. Overall, we achieved our highest quarterly gross margin percentage in many years, reflecting our year-long initiative to move away from lower margin, higher risk products and to concentrate on our higher-margin products and profitability. The high gross margins and our ongoing focus on reducing operating expenses were key contributors to our achieving EPS of eight cents per share for the first quarter, excluding the impact of 3Dlabs and investment write-downs, which is 60% ahead of last year's first quarter EPS of five cents."

"Creative has always had an enormously strong brand name within the PC industry," said Sim Wong Hoo, chairman and CEO of Creative Technology Ltd. "We are going to be enhancing that this quarter with the introduction of the Sound Blaster Audigy 2, which again takes audio to a whole new level - delivering to the PC platform an astounding 106dB SNR, 24-bit ADVANCED HD and, for the first time ever, the new music industry audio standard, Advanced Resolution DVD-Audio at 24-bit/192 kHz. We will extend our brand presence by offering our broadest and most exciting holiday lineup ever, with products that can transcend the traditional PC space and offer a compelling digital entertainment experience both when tethered to or away from the PC. With the breadth of our product offerings across a wide range of price points providing such great deals, I believe that even in these economically challenging times, consumers will buy a Creative product with unbeatable value to enrich their PC capabilities and create a fabulous digital entertainment experience."

Sim continued, "We have been directing our R&D resources toward innovation in both the technical product design and the visual industrial design (ID) of our products, as we significantly increase the overall number of product offerings. We have new offerings in our Creative Inspire family of speakers including the Inspire 6.1 6600 series speaker system, the ideal combination with the Sound Blaster Audigy 2, and another soon-to-be-announced speaker brand with a sleek, new visual ID. In our PDE product category, we just announced the Nomad Jukebox 2 as well as the Nomad Jukebox ZEN, our first pocket-sized Nomad Jukebox, which will allow us to compete head-to-head with the Apple iPod but at a much lower price point and with significantly more features. These two new Nomad products join the Nomad MuVo, the world's smallest MP3 player and USB storage device, which was launched last quarter. With its compact size and innovative design, people just love the Nomad MuVo, which is winning awards all over the world. We will also soon be adding two exciting new digital cameras to our expanding Creative WebCam family."

"This week we announced two new 3Dlabs workstation graphics products, the high-end Wildcat 4 AGP 8x optimized professional graphics accelerator and the entry-level, dual-screen Wildcat VP560. The Wildcat VP560 is based on a new, lower-cost chip which utilizes our scalable visual processing architecture to deliver workstation-grade performance and functionality at a breakthrough price," said Hock Leow, president of 3Dlabs. "3Dlabs achieved very good gross margins of 47% during the first quarter through the acceptance of our high-end workstation products and, with the introduction of these two new products, we have extended our product offerings to address the broader workstation market."

Share Buyback Program
During the quarter, Creative did not repurchase any shares under its share buyback program.

This announcement refers to products and pricing sold in the United States of America. Pricing and product availability is subject to change. Sound Blaster and the Creative logo are registered trademarks and Live! is a trademark of Creative Technology Ltd. in the United States and other countries. Cambridge SoundWorks is a registered trademark of Cambridge SoundWorks, Inc. in the United States and/or other countries. 3Dlabs and Wildcat are trademarks or registered trademarks of 3Dlabs Inc. Ltd. NOMAD is a registered trademark of Aonix and is used by Creative Technology Ltd. and/or its affiliates under license. Apple and iPod are trademarks of Apple Computer, Inc., registered in the U.S. and other countries. All other brand and product names are either trademarks or registered trademarks of their respective holder and are hereby recognized as such.

Safe Harbor for Forward-Looking Statements Under The Private Securities Litigation Reform Act of 1995:
Except for the historical information contained herein and in the corresponding conference call, the matters set forth in this release and in the call are forward-looking statements and are subject to certain risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include: Creative's ability to timely develop new products that gain market acceptance and to manage frequent product transitions; competitive pressures in the marketplace; Creative's ability to successfully integrate acquisitions; potential fluctuations in quarterly results due to the seasonality of Creative's business and the difficulty of projecting such fluctuations; possible disruption in commercial activities caused by factors outside of Creative's control, such as terrorism, armed conflict and labor disputes; a reduction in demand for computer systems, peripherals and related products, including Creative's products, as a result of poor economic conditions and social and political turmoil; the proliferation of sound functionality in new products from competitors at the application software, chip and operating system levels; the failure of cost-cutting measures to achieve anticipated cost reduction benefits; the continued deterioration of global equity markets; increased exposure to excess and obsolete inventory; Creative's reliance on sole sources for many of its chips and other key components; component shortages which may impact Creative's ability to meet customer demand; Creative's ability to protect its proprietary rights; a reduction or cancellation of sales orders for Creative products or other unexpected or unplanned events that could cause Creative to miss its revenue guidance, operating expense projections or negatively impact its margins; accelerated declines in the average selling prices of Creative's products; the vulnerability of certain markets to current and future currency fluctuations; the effects of restricted fuel availability and rising costs of fuel; and fluctuations in the value and liquidity of Creative's investee companies. For further information regarding the risks and uncertainties associated with Creative's business, please refer to its filings with the SEC, its press release, dated March 11, 2002, announcing the signing of a definitive agreement to acquire 3Dlabs and its Form 20-F for fiscal 2002 to be filed with the SEC. Creative undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in Creative's expectations.