Media:                        Investors/Analysts:
Rick Myllenbeck               John Danforth
Director, Public Relations    Vice President and General Counsel

SINGAPORE - 10 July 1996 - Creative Technology Ltd. (Nasdaq: CREAF) today announced that, in an effort to reduce future inventory risks and because of current market volatility, it will end its CD-ROM drive manufacturing operations. Due to the planned cessation of its CD-ROM drive manufacturing operations in Singapore, it will take a one-time charge of approximately US$10 million in the fourth quarter of fiscal 1996. In addition, the Company anticipates that it will take inventory adjustment charges of approximately US$20 million due to the recent declined in market value of 8x CD-ROM drives and for the Company's first generation VL-Bus 3D graphics accelerator product.

Creative expects that these inventory adjustments, the one-time charge for cessation of its CD-ROM drive manufacturing operations and the fact that, in certain regions, sales of CD-ROM drive-based products were below expectations or at lower-than-expected prices, will collectively result in a significant loss for the quarter ended 30 June 1996.

Creative decided to terminate its CD-ROM drive manufacturing operations in the fiscal quarter ending 30 September 1996. As a result of this decision, the Company will, for the quarter ended 30 June 1996, take a one-time charge for closure costs, primarily comprising of excess component inventory and write-down of certain manufacturing equipment.

For the 3D graphics accellerator product line, Creative expects that for the quarter ended 30 June 1996, it will take a lower-of-cost or market adjustment for its first generation VL-Bus 3D graphics product. This is due to the general market conditions for this new product category and expected lower prices and costs for the Company's forthcoming next generation 3D graphics products.

Save harbor for forward looking statements

Except for the historical information contained herein, the matters set forth herin are forward looking statements that are subject to certain risks and uncertainties including those set forth in the attached cautionary statements, which are provided pursuant to The Private Securities Litigation Reform Act of 1995.

Creative Technology Ltd is the world's leading provider of advanced multimedia solutions for personal computers including sound, graphics, communications and videoconferencing products. The company's Sound Blaster® technology has been accepted as the worldwide standard sound platform for PCs, and the Company's global distribution network is the most extensive in the multimedia industry. Creative is focused on enhancing the overall user experience by providing powerful, enabling, high-value technolgy for the mass market.

Sound Blaster is a registered trademark and Blaster is a trademark of Creative Technology Ltd.

Statutory safe harbor and cautionary statements for forward looking statements Except for the historical information contained therein, the matters set forth in the accompanying press release are forward looking statements that are subject to certain risks and uncertainties including those set forth in the following cautionary statements, which are provided pursuant to The Private Securities Litigation Reform Act of 1995. Numerous factors could cause actual results to differ materially from set forth in the accompanying forward looking statements. Such risks and uncertainties include, among others: potential fluctuations in quarterly results due to the seasonality of Creative's business and the difficulty of projecting such fluctuations; reductions in the cost of CD-ROM drives, chips and other products sold by Creative; the short product cycles that characterize most of Creative's products; the increasing proliferation of sound functionality at the chip and OEM level; Creative's reliance on sole sources for many of its chips and other key components; the timely ramp, delivery and market acceptance of new products, including Creative's graphics accelerator, videoconferencing, CD-ROM drive and communications products; the availability of operating capital and capital to refinance Creative's outstanding long term dept on acceptable terms; the volatility of share prices for companies in Creative's industry and the effect of those prices of events beyond Creative's control; and the other risk factors described in Creative's filings with the Securities and Exchange Commission over the past twelve months.