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CREATIVE TECHNOLOGY ANNOUNCES COST-CUTTING MEASURES AND WRITE DOWN OF INVESTMENTS

SINGAPORE - March 19, 2001 - Creative Technology Ltd. (NASDAQ: CREAF), the worldwide leader in digital entertainment products for the personal computer and the Internet, today announced multiple measures to reduce expenses.

Cost-cutting measures will include, among other things, a workforce reduction of approximately 10% worldwide, the closure of Creative's Malvern, PA manufacturing location and consolidation of those manufacturing efforts to Creative's Singapore facilities, and sharp cutbacks in selected non-revenue generating Internet initiatives. As a result of these measures, including those already taken in the quarter to date, the Company expects to take a one-time restructuring charge of approximately $15 to $20 million in the current fiscal quarter.

Additionally, given the recent steep downturn in global equity markets and the resulting valuation outlook for privately held technology holdings, the Company plans to take a write-down during the current quarter of approximately $65 million against its investment portfolio.

"Although we are still targeting our guidance of $260 to $270 million for revenue and 27%-28% gross margins for the current quarter, we believe that we need to take more aggressive actions than originally planned, given the severity of the economic climate and prolonged difficulties in the system builder space," noted Craig McHugh, president of Creative Labs, Inc. "We have cultivated a strong family of hard-working individuals at Creative, and letting people go who have made positive contributions here is very difficult. However, we have no current visibility that the economic climate will change in the near future and, as a result, need to aggressively cut costs."

Creative (Nasdaq: CREAF) is the worldwide leader in digital entertainment products for the personal computer and the Internet. Famous for its Sound Blaster and for launching the multimedia revolution, Creative is now driving digital entertainment on the PC platform with products like its highly acclaimed NOMAD Jukebox. Creative's innovative hardware, proprietary technology, applications and services leverage the Internet, enabling consumers to experience high-quality digital entertainment -- anytime, anywhere.

This announcement relates to products launched in the United States of America. The product names, contents, prices and availability are subject to change and may differ elsewhere in the world according to local factors and requirements.

Safe Harbor for Forward-Looking Statements Under The Private Securities Litigation Reform Act of 1995:
Except for the historical information contained in this press release, the matters set forth in this press release (including all references to future financial performance, products and marketing efforts) are forward-looking statements within the meaning of the ``safe harbor'' provisions of The Private Securities Litigation Reform Act of 1995. Readers of this press release are cautioned not to place undue emphasis or reliance on these forward-looking statements which reflect management's analysis, judgement, belief or expectation only as of the date of this press release. These forward-looking statements are subject to certain assumptions, risks and uncertainties that could cause actual results to differ materially from those set forth or implied in the forward looking statements. Such assumptions, risks and uncertainties include, among others: the cost-cutting measures Creative plans to take will be insufficient; reduction or cancellation of sales orders for Creative products or other unexpected or unplanned events that could cause Creative to miss its revenue guidance or negatively impact its margins; the timely development, ramp, shipment, delivery, and market acceptance of new products, including Creative's next generation audio, personal digital entertainment appliances, including the WebCam line of products and specifically, the NOMAD and NOMAD Jukebox line of products, CD-ROM, CD-RW and DVD drives, and communications products; the increasing proliferation of sound functionality in new products from new and existing competitors and at the application software, chip and operating system levels; reductions in the market value of products sold by Creative, including increases in inventory or declines in demand or prices for storage devices, digital entertainment appliances, board and chip-level products, software, speakers, and other products; reductions in revenues and gross margins due to numerous factors, including declines in average selling prices of Creative's products, failure to reduce costs, divestments of low margin businesses, and increased inventories and pricing pressure from competitors; the short product cycles that characterize most of Creative's products; fluctuations in the value and liquidity of Creative's investee companies, including any losses that may result from the recent trend of increased volatility for technology stocks and potential price reductions of carrying values of our investee companies; potential fluctuations in quarterly results due to the seasonality of Creative's business and the difficulty of projecting such fluctuations; the vulnerability of certain markets to current and future currency fluctuations, including the exchange rate of the Euro; labor shortages or work stoppages; credit shortages; effects of restricted fuel availability and rising costs of fuel; 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; the timing or completion of a subsidiary IPO and/or the valuation that would apply in the event of a consummation of a subsidiary IPO; the volatility of share prices for companies in Creative's industry and the effect of those prices or other events beyond Creative's control, including adverse changes in general economic conditions; and other risk factors described in Creative's filings with the Securities and Exchange Commission over the past twelve months, including without limitation, Creative's Annual Report on Form 20-F and the Form 6-K dated January 19, 2001. Creative urges you to consider all such factors. Creative undertakes no obligation to publicly release the results of any revisions to such forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.