Philips Semiconductors' Telecommunications Strategy Leverages Acquisition of VLSI Technology - Company Business and Marketing

Cambridge Telcom Report, Sept 27, 1999

With the acquisition of VLSI Technology, Philips Semiconductors Tuesday announced it now has all key wireless technologies and competencies in-house including RF, digital and analog baseband, power management, display drivers, protocol software and power amplifiers.

The combined IP portfolio now provides 100% of the key wireless technologies allowing Philips Semiconductors to offer its customers the most comprehensive portfolio of critical technology building blocks for system solutions.

The acquisition of VLSI will better help Philips Semiconductors to deliver the optimum solutions for the convergence of communications and consumer technologies in mobile Internet, personal multimedia, speech processing and Bluetooth connectivity. These key technologies and competencies, along with VLSI's ASIC heritage, will enable Philips Semiconductors to help its customers rapidly customize products for more competitive solutions and reduce critical time-to-market.

The recent reorganization of Philips Semiconductors' Telecom Terminals Business Unit, announced Tuesday, is designed to leverage the synergy between its established technology strengths and those added by the recent acquisition of VLSI. With the acquisition, Philips Semiconductors joins the top-tier companies in the multi-billion dollar worldwide market for wireless semiconductors.

One-Stop Shopping For All Key Wireless Technologies Philips Semiconductors broad expertise in wireless, multimedia, automotive and consumer electronics is complemented by VLSI's digital expertise and capabilities in wireless communications and computer networking. For Philips Semiconductors' telecommunications customers, this means one-stop shopping for all key wireless competencies and comprehensive support from silicon to turnkey solutions -- an essential approach for success in the dynamic convergence of communications devices. Having all the key technologies in-house will also allow Philips Semiconductors to have greater influence on wireless technology standards.

"Our vision of the future sees a convergence of communications and consumer technologies that will manifest itself in the rapid implementation of wireless remote access to just-in-time news -- from the Internet, corporate Intranets and unified messaging," said Thierry Laurent, managing director of Philips Semiconductors' Telecom Terminals Business Unit. "With demand for worldwide wireless handsets expected to grow by over 360% by 2003, Philips Semiconductors is in a great position to lead the field. We have all key competencies in-house, enabling us to drive technology standards and ensure our customers have access to the best technologies needed to get their products to market more rapidly than ever before."

The New Telecom Terminals Business Unit

In Europe, the Telecom Terminals Business Unit operates from facilities in Nijmegen and Eindhoven, The Netherlands, Zurich, Switzerland, Caen & Sophia-Antipolis, France and Nurnberg, Germany. In the Americas, it operates from facilities in San Jose, Sunnyvale & Irvine, USA and Vancouver, Canada. Telecom Terminals has been restructured into four business lines:

1. Cellular Europe 2. Cellular USA 3. Cordless & Corded 4. Display Drivers

Philips Semiconductors, a subsidiary of Philips Electronics North America Corporation and an affiliate of Royal Philips Electronics, headquartered in Eindhoven, The Netherlands, is the eighth largest semiconductor supplier based on Dataquest's 1998 report(1). Philips Semiconductors' innovations in digital audio, video, and mobile technology position the company as a leader in the consumer, multimedia and wireless communications markets. Sales offices are located in all major markets around the world and are supported by systems labs. Additional information on Philips Semiconductors can be found on the home page at www.semiconductors.philips.com.

Note: (1)Based on Vendor Revenue from Shipments of Total Semiconductors Worldwide according to Dataquest's 1998 Worldwide Semiconductor Market Share report published in May, 1999.