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                                                                    EXHIBIT 99.2


                                                                    NEWS RELEASE


COMPANY CONTACT
Sara Breuer, Corporate Communications Manager
SI Diamond Technology, Inc.
512.339.5020 x104


FOR IMMEDIATE RELEASE


                     SI DIAMOND TECHNOLOGY, INC. ANNOUNCES

         LETTER OF INTENT TO SELL ELECTRONIC BILLBOARD TECHNOLOGY, INC.

                                   SUBSIDIARY


AUSTIN, Texas, September 17, 1998 -- SI Diamond Technology, Inc. (OTCBB: SIDT)
announced today that it has signed a letter of intent to sell its Electronic
Billboard Technology, Inc. subsidiary for a total of approximately $5,000,000
in cash, subject to minor working capital adjustments, to EBT Acquisition
Company. SIDT will also have the right to acquire warrants that, if exercised,
would result in SIDT owning approximately 8% of EBT Acquisition Company. EBT
Acquisition Company is a newly-formed Delaware corporation. Certain Directors,
Officers, and employees of SIDT will be shareholders of EBT Acquisition
Company. The sale is contingent upon EBT Acquisition Company raising sufficient
capital to complete the transaction and the receipt of a favorable fairness
opinion to be issued by an investment banker retained by SIDT.

     SIDT will use the proceeds from this transaction to fully capitalize its
remaining subsidiary, FEPET, and buy back shares of its common stock in the
open market.

     "This transaction will be a tremendous win/win situation for both
subsidiaries. EBT is moving into a stage of needing significant capital (which
will be easier to raise as a private company) to produce and promote its
products, while FEPET is very close to becoming self sufficient," said Marc
Eller, Chairman and CEO of SI Diamond. "Furthermore, by using a significant
portion of the funds to buy back shares, SI Diamond will offset a portion of
the substantial dilution that was created by the issuance of convertible
preferred securities," added Eller.

     An SIDT investor conference call is set for Friday, September 18, 1998 at
10:30 a.m. E.S.T. to discuss this release. Interested participants should call
(719) 457-0700 five to ten minutes before the scheduled start time.

     SI Diamond Technology is a holding company consisting of two subsidiaries.
The Field Emission Picture Element Technology subsidiary utilizes SIDT's
proprietary technology for the development of diamond films for use in flat
panel displays -- the display of the future. The Electronic Billboard
Technology subsidiary is geared toward the commercialization of electronic
digitized sign technology.

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