DSP Group and NXP Semiconductors Announce Combination of Cordless & Voice Over IP Terminals Businesses

Deal doubles size of DSP Group - NXP becomes 12% stockholder

EINDHOVEN, Netherlands and SANTA CLARA, Calif., May 14

May 14, 2007, 01:00 ET from DSP Group

/PRNewswire-FirstCall/ -- NXP Semiconductors, the newly independent
 semiconductor company founded by Philips, and DSP Group, Inc. (Nasdaq:  
 DSPG) today announced that they will combine their Cordless & VoIP
 terminals businesses within DSP Group to create a market leader in the
 cordless and VoIP residential telephony market. The transaction can reach a
 total value of $345 million and will provide NXP with a shareholding of
 approximately 12% in DSP Group.
     DSP Group will pay $270 million, consisting of $200 million in cash and
 $70 million in the issuance of DSP Group's common stock on the basis of the
 average closing price per share for DSP Group's common stock on NASDAQ
 Global Market during the twenty business days ending on the fifth business
 day prior to the closing of the transaction, for NXP's Cordless & VoIP
 terminals business, currently part of the company's Mobile and Personal
 Business Unit. DSP Group has also agreed to a contingent cash payment of up
 to $75 million payable based on future revenue performance. The transaction
 is expected to be positive to earnings per share of DSPG in 2007 and
 beyond, excluding transaction expenses, intangible amortization and other
 one time charges in connection with the acquisition. The transaction is
 expected to close in the third quarter of 2007, subject to closing
 conditions, including regulatory approvals.
     NXP's Cordless & VoIP terminals business generated approximately $220
 million revenue in 2006 and comprises some 200 staff based at locations
 around the world, most of whom will transfer to the DSP Group.
     "Combining our operations creates a powerful force that will put DSP
 Group firmly into a leadership position in terms of scale and technology
 for the benefit of all major customers in our industry. We will have a much
 stronger European presence to help us accelerate the penetration of VoIP
 and DECT technologies in the region and will have a more powerful research
 and development engine that will benefit from the advanced NXP process
 technologies. NXP will also become a strategic investor and will get a seat
 on the Board of Directors of DSP Group, and will not transfer its shares of
 DSP Group common stock for at least two years following the closing," said
 Eli Ayalon Chairman and CEO, DSP Group.
     "This transaction will create a strong combination with the scale to
 grow its business. It allows NXP to focus our growth on the six chosen
 market segments: cellular phones, personal entertainment, home electronics,
 automotive, identification and multi market semiconductors. Additionally
 with the proceeds we will be able to strengthen these segments, for example
 with future acquisitions. I am confident that this deal will benefit our
 global customers in the cordless market, as they will be served well by
 this new strong market leader, "said Frans van Houten, NXP President and
     Commenting on the deal, Egon Durban, Managing Director of Silver Lake,
 on behalf of the group of private equity investors in NXP, observed, "We
 continue to be excited by our investment in NXP. This transaction
 illustrates the tremendous strategic benefit of industry consolidation to
 create market leaders, and will generate substantial benefits for both
 parties and their customers."
     NXP Cordless & IP Terminals business line supplies RF chipsets,
 basebands, software and system solutions for: DECT, DECT 6.0, WDCT 2.4,
 5.8, Analog 900, 2.4, 5.8, VoIP/MTA, USB Softphones, and VoIP Gateways. In
 2006, the group sold approx. 300 million products in digital cordless.
     DSP Group was advised by UBS Investment Bank and Morrison Foerster. NXP
 was advised by Merrill Lynch and De Brauw Blackstone Westbroek.
     About DSP Group
     DSP Group, Inc. is a fabless semiconductor company, offering advanced
 chip-set solutions for a variety of applications. DSP Group is a worldwide
 leader in the short-range wireless communication market, enabling home
 networking convergence for voice, video & data. By combining its in-house
 technologies of Digital Signal Processors (DSPs), portfolio of wireless
 communication protocols, including DECT, Bluetooth and Wi-Fi, most advanced
 Radio Frequency CMOS and SiGe, as well as VoIP ICs, DSP Group is a
 worldwide leader and a one-stop-shop for a wide range of applications.
 These applications include ISM band digital 900MHz, 2.4GHz and 5.8GHz
 telephony, European DECT (1.9GHz) telephony, Bluetooth systems for voice,
 data and video communication and deployment in residential, SOHO, SME,
 enterprise and automotive applications. DSP Group ICs provide solutions for
 MP3 players, VoIP Phones, Gateways, and Integrated Access Devices and are
 widely used in Digital Voice Recorders. More information about DSP Group is
 available at www.dspg.com.
     About NXP
     NXP is a top 10 semiconductor company founded by Philips more than 50
 years ago. Headquartered in Europe, the company has 37,000 employees
 working in more than 20 countries and posted sales of EUR 5 billion in
 2006. NXP creates semiconductors, system solutions and software that
 deliver better sensory experiences in mobile phones, personal media
 players, TVs, set-top boxes, identification applications, cars and a wide
 range of other electronic devices. News from NXP is located at www.nxp.com.
     Forward-looking statements of DSP Group
     This release contains certain forward-looking statements with respect
 to the financial condition, results of operations and business of DSP Group
 and certain of the plans and objectives of DSP Group with respect to the
 proposed transaction, including statements regarding the timetable for
 completion of the transaction and the benefits of the transaction,
 including the accretive effect on EPS, increase of revenues and expansion
 of the company. Forward-looking statements are subject to certain risks,
 trends and uncertainties that could cause actual results to differ
 materially from those projected, expressed or implied by such
 forward-looking statements, including, but not limited to: the ability to
 obtain regulatory approvals of the transaction on the proposed terms and
 schedule; the risk that the businesses will not be integrated successfully;
 the risk that the revenue potentials, cost savings and any other synergies
 from the transaction may not be fully realized or may take longer to
 realize than expected; disruption relating to the transaction that makes it
 more difficult for DSP Group to maintain relationships with customers,
 employees or suppliers and other risks and uncertainties associated with
 the contemplated transaction. Actual results could differ materially from
 those discussed in or implied by forward-looking statements for various
 reasons, including those discussed in "Risk Factors" in DSP Group's Form
 10-K. You should not place undue reliance on any forward-looking
 statements. Except as expressly required by the federal securities laws,
 DSP Group undertakes no obligation to publish, update or revise any
 forward-looking statements, whether as a result of new information, future
 events, changed circumstances or any other reason.
     Forward-looking statements NXP
     This release may contain certain forward-looking statements with
 respect to the financial condition, results of operations and business of
 NXP and certain of the plans and objectives of NXP with respect to these
 items. By their nature, forward-looking statements involve risk and
 uncertainty because they relate to events and depend on circumstances that
 will occur in the future and there are many factors that could cause actual
 results and developments to differ materially from those expressed or
 implied by these forward-looking statements
     DSP Group - Special Conference Call Details
     DSP Group has scheduled a conference call for 8:30 a.m. EDT today to
 discuss this special announcement and we invites you to listen to the call.
     The conference call dial-in number is 1-800-688-0836 for US and
 1-617-614-4072 for international calls, the pass code is DSP Group. The
 call also may be accessed via webcast through the Investor Relations
 section (investor message board) of DSP Group's Web site at www.dspg.com or
 link to: http://ir.dspg.com./phoenix.zhtml?c=101665&p=irol-calendar.
     If you cannot join the call, please listen to the replay, which will be
 available for approximately two weeks after the call on DSP Group's Web
 site or by calling the following numbers:
     --US Dial-In # 1-888-286-8010 (passcode: 60724020)
     --International Dial-In # 1-617-801-6888 (passcode: 60724020)
     NXP                                 DSP Group
     Lieke de Jong-Tops                  Ofer Elyakim
     lieke.de.jong-tops@nxp.com          ofere@dsp.co.il
     +31 (0)40 2725202                   +1 (408) 986-4421