President's Letter

Wednesday, March 26, 2008

Dear Fellow Shareholders,

Rim Semi is pleased to welcome Multi-Carrier Communications, Inc. to the team. I believe that as a result of this acquisition Rim Semi’s future products will deliver even more value to our customers. This transaction touches on many different areas of our business – financial, legal, and technical – and you have asked many questions that I would like to answer. For you to fully understand, though, you will need to first read the press release and our disclosure with the SEC. In addition to these materials, the information below may be of interest to you.

The Acquisition
We bought Multi-Carrier Communications, Inc. (MCCI) because they had two things that we wanted to have: intellectual property and $300,000 in cash. Other than these two assets, MCCI does not have any other assets, liabilities, or operations.

We can use the intellectual property (IP) to make future versions of Cupria™. The part of Cupria™ that manages how data is transmitted across copper wire can potentially stand to benefit greatly from the innovations that The University of Queensland and The University of Sydney created. This IP consists of a patent that was applied for in March 2005, but has not yet been granted. It also consists of white papers, a Ph.D. thesis, prototype hardware and executable software code. Rim Semi is now the only company in the world in our field that will get to use this patent, prototype, code and papers.

In addition to the two assets that we acquired, we have funded some additional research at the University of Queensland. The purpose of the research is to integrate the University’s powerful innovations with Rim Semi’s existing product so that together, data can be transmitted even faster across long distances of copper wire.

Impact on Our Product Plans
The IP that we just acquired is not going to impact the existing generation of Cupria™. It will, however, play a role in our next generation. Just exactly how much benefit it will bring has yet to be determined. But, like the acquisition of IP from BDSI in January, it could greatly improve transmit-side performance.

It is critical that technology companies like Rim Semi always keep setting the stage for future product development. Although we are very pleased that our first generation of IPSL technology outperforms the competition, we also know that IPSL is just in its infancy. Long time shareholders of Rim Semi see that the time from product conception to product availability can be years. If there is to be IPSL 2.0, 3.0 and beyond, then the time to start development is right now. As our technical team launches a product that is based on the completed IPSL 1.0 in 2008, they are looking forward to tearing into the research and development work for IPSL 2.0 that could be available as soon as late 2009.

What Does It Do?
The technology is a method and signal processing configuration for reducing high bit error rates (BER) in data transmission. Normally, web surfing or phone calls which are Ethernet based easily re-transmit and re-assemble to make up for noise-induced packet loss. A BER can be pretty high, like 10-6 or 10-7. But streaming video cannot tolerate such a high BER, because it will result in picture break-up and/or MPEG artifacts. A BER of 10-7 will deliver an annoying picture artifact every 6 seconds for a standard definition video stream! Delivering a cable-competitive grade of digital video service will mandate that the access loop be engineered to deliver a Bit Error Rate of at least 10-9. But existing broadband chipsets do not handle a BER that is this high very well. There are a few reasons why, and one of the main culprits is the extreme peak-to-average ratio (PAR) problems that are inherent in data transmission at this power, frequency and distance.

The MCCI IP limits the effective PAR to about 10% of that which is currently typical. It achieves this by using a unique form of signal processing. This method is inherently less complex than current methods and can therefore also be performed with limited processing power.

The IP was jointly developed by The University of Queensland and The University of Sydney. The technical teams there share with Rim Semi’s technical teams some fundamental beliefs about just what is possible in data transmission across copper wires. Prior approaches, like those that are embodied in discrete multi-tone (DMT) transmission methods, have become mature to the point that there is not a lot of innovation room left. New approaches that are based on new math and new capabilities in silicon, are required if the worldwide data industry is going to meet the challenges of video across the network. The team at Queensland, funded in part by Rim Semi, will continue to press forward with these new approaches. Rim Semi will own, and bring to market, the resulting breakthroughs.

Accounting Treatment
We have accounted for the acquisition in a similar way to the previous acquisition. We paid $2,400,000 by issuing 150 million shares of restricted common stock, valued at an average of the closing price of the last ten trading days, or $0.016 per share. We have prepaid $50,000 worth of R&D, and have received $300,000 in cash and technology valued at $2,050,000. We are immediately writing the technology off, and are charging it to “Acquired in-process research and development”.

Why would we write off an asset that we just acquired? The answer is not, “because it is has no value”! The answer is that we cannot conclusively determine exactly what the value is, so the conservative thing to do is to value it at nothing. Shareholders who are not familiar with accounting rules might wonder why this makes sense. One of the ways to determine the value of an intangible asset is to have it independently appraised. We could do that, but it would cost tens of thousands of dollars initially, plus thousands annually thereafter to maintain the appraisal. I do not think that this is a prudent use of cash. Another way is to look at how much money we project that we will make from it. We could do that, but we simply do not yet know. As we are not yet able to forecast just how much money we will make on this technology, or when, then we are unable to calculate its value. I and the rest of the Board of Directors believe that this new technology, plus all of our existing technology, is worth quite a lot. But we always seek to manage our finances in a conservative manner, and valuing our technology this way is the conservative thing to do.

About UTEK
In a previous letter to you I told you a little about UTEK and great work that they do. They brought the MCCI acquisition opportunity to us in Summer 2007, and it now has finally closed. As a large shareholder of Rim Semi, they have a built-in incentive to leverage their huge business network in order to make their shares – and yours – more valuable.

Some shareholders have expressed concern about the possibility that any shareholder that has as many shares as UTEK has could harm our stock price if they chose to. While it is true that UTEK now controls 210 million shares, all of the shares must be held by them for six months from the dates of issue in January and March. Fortunately, the US stock market is a transparent one, and any interested shareholder can monitor closely UTEK’s future purchases and sales of RSMI. They are required to file a Form 4 on their holdings, and they have met this requirement. They are also required to report on their holdings in their own filings with the SEC.

I believe that UTEK has a very long-term view, and that they want to see RSMI rise. If you look at their filings with the SEC, you will see that they tend to hold stock for a long time. You might also be interested to know that UTEK’s staff has, on their own, introduced Rim Semi and the Cupria™ product to several potential customers, business partners, or investment sources that could benefit us. I believe that at least one of these initiatives could result in a new customer for our product.

More Technology Acquisitions?
At this time, UTEK has not identified any other technologies that I think will be beneficial to Rim Semi. I do not anticipate that we will acquire any more technologies in the foreseeable future. It is always possible that at a later date, and if Rim Semi has more cash to work with, we could simply acquire technology directly from a university without issuing restricted stock.

I know that this is a long and technical letter, but a transaction like this one is technical. There is no doubt in my mind that this transaction helps us, both right now and in the future. Speaking on behalf of our technical team, we believe that our huge investment in technical excellence - both in the past and now - is going to pay off for all of us.

Sincerely,
Brad Ketch
President and CEO
Rim Semiconductor Company

CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This letter contains forward-looking statements that involve substantial uncertainties and risks. These forward-looking statements are based upon our current expectations, estimates and projections about our business and our industry, and that reflect our beliefs and assumptions based upon information available to us at the date of this letter. We caution readers that forward-looking statements are predictions based on our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Our actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements as a result of a number of factors, including but not limited to the risks and uncertainties discussed under the heading "RISK FACTORS" in Item 1 of our Annual Report on Form 10-KSB for the fiscal year ended October 31, 2005, and in our other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statement for any reason.