ILOG SIGNS AGREEMENT WITH IBM FOR SEMICONDUCTOR SOLUTIONS

Mountain View, Calif. and Paris – 19 December 2006

ILOG Fab PowerOps To Be Incorporated Into IBM’s Portfolio Of Semiconductor Solutions Sold To IBM MES Customer

ILOG® (NASDAQ: ILOG; Euronext: ILO, ISIN: FR0004042364) today announced that it has signed an agreement with IBM to market ILOG Fab PowerOps™ (FPO) -- ILOG’s solution for semiconductor production scheduling – to IBM’s manufacturing execution systems (MES) customers, among others.

IBM will market ILOG FPO under the ILOG brand name to its installed base of SiView, LCDView and other View MES product customers. The agreement between ILOG and IBM is expected to result in new product revenue opportunities and service engagements for both companies. The services will be provided through IBM Technology Collaboration Solutions and IBM Global Business Services, with support from ILOG’s Professional Services group.

Already implemented in early stages at IBM’s state-of-the-art 300 millimeter (mm) fab facility in East Fishkill, NY, in the photolithography and diffusion areas, ILOG FPO reduced cycle time by up to fifteen percent in those specific areas, and significantly reduced hot lot (urgent order) processing times as well. ILOG’s FPO also improved visibility over in-process fab status, resulting in a more efficient plant that is more responsive to change. In addition to marketing ILOG FPO, IBM will demonstrate the products to customers at its 300 mm East Fishkill fab facility.

“IBM is a leading technology provider to the semiconductor industry, so there is no better company from our perspective to market FPO in conjunction with their SiView and LCDView offerings,” said ILOG Chairman and CEO, Pierre Haren. “This alliance with IBM will enable us to increase both our market reach and technology advantage, especially in Asia, where much of the growth in semiconductor manufacturing is happening. Today’s agreement is the latest example of our growing collaboration with IBM. “

“We’ve already seen increases in fab productivity due to the relationship with ILOG,” said Dr. Elizabeth Williamson, IBM Director of 300mm Manufacturing Operations. “The enhanced dispatch scheduling capabilities that are provided by FPO have resulted in quantifiable benefits in IBM’s 300mm facility, resulting in faster time to market for our customers.”

Leveraging ILOG’s market-leading optimization, business rule and visualization technologies, combined with detailed fab status information, ILOG FPO optimizes production scheduling across multiple process areas: diffusion, wets, photo, etch, and thin film. ILOG FPO fills a gap in the market for detailed production scheduling solutions, and this relationship with ILOG is expected to give IBM a competitive advantage over other semiconductor solutions providers. With ILOG FPO, a scheduling problem can be addressed based on the current status of the fab environment, giving users more control over unplanned events, such as tool interruptions, recipe qualifications and hot lots. The tools are expected to reduce capital equipment outlay by leveraging existing capacity. In addition, FPO’s custom configuration options mean that each process can be tailored to meet the requirements of each individual customer’s fab.

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