Applied Micro Circuits Corp Announces Agreement to Settle Class-Action

Applied Micro Circuits Corporation (Nasdaq: AMCC) today announced that it has reached an agreement to settle the securities class-action litigation currently pending against the company and certain current and former officers and directors. The company and the
defendants denied any wrongdoing as part of the settlement, which is subject
to court approval. The total settlement amount is $60 million, of which the
company expects its insurers to pay approximately $31 million. The company
has recorded a charge of approximately $29 million in its third fiscal
quarter, which ended December 31, 2004. Court approval for the settlement
will be sought in this fourth quarter of the company's 2005 fiscal year.

"The company has vigorously contested this litigation and remains
steadfast in its position. However, putting this four-year-old litigation
behind us removes the uncertainty and distraction of the litigation, and
allows the company to focus on its business," said Cesar Cesaratto, AMCC's
lead director and the chairman of the company's Governance and Nominating
Committee.

AMCC will file a current report on Form 8-K regarding the agreement to
settle the litigation with the U.S. Securities and Exchange Commission within
four business days. A copy of the filed current report will be accessible at
http://www.sec.gov or through the company's website at http://www.amcc.com.

This news release contains forward-looking statements, including, but not
limited to, statements regarding the settlement and magnitude of charges
resulting from the settlement. These forward looking statements are only
predictions based on current information and expectations and are subject to
certain risks and uncertainties, including, but not limited to, the risk that
the settlement will not be approved by the court or that the charges resulting
from the settlement will be higher than expected due to inability to obtain
the company's insurers' agreed upon contribution to the settlement or other
reasons. More information about potential factors that could affect the
company's business and financial results is included in the "Risk Factors" set
forth in the company's Annual Report on Form 10-K for the year ended March 31,
2004, and the company's subsequent filings with the Securities and Exchange
Commission. Actual results could differ materially from those set forth in
the forward-looking statements as a result of such risk factors as well as
other risks and uncertainties.