Dialog Semiconductor Reports First Quarter 2005 Results

KIRCHHEIM/TECK, Germany—(BUSINESS WIRE)—April 20, 2005— Dialog Semiconductor Plc (FWB: DLG)(Nasdaq:DLGS):

-- First quarter revenues of EUR 18.6 million, loss per share EUR 0.09

-- Doubling of LCD display driver IC revenue compared to Q4 2004; ramp up of color LCD drivers to Sharp for major mobile phone manufacturers

-- Diversification of customer base - five major customers each representing 10% or more of revenue; no single customer greater than 25%

-- Reduction in operational costs of 8.2% compared to Q1 2004

-- Positive free cash flow

Dialog Semiconductor Plc (FWB: DLG, Nasdaq:DLGS) today reported sales of EUR 18.6 million for the first quarter of 2005 (compared to EUR 23 million for Q1 2004). Sales from products for automotive/industrial increased by 16% compared to Q1 2004; however this was not sufficient to offset the lower wireless revenue for Q1 2005 which were down by EUR 5.3 million compared to Q1 2004. The Company's operational costs in Q1 2005 have been reduced by 8.2% compared to Q1 2004, and by 13.8% compared with Q4 2004. This optimization of costs together with tight control of the Company's working capital cost and capital expenditure resulted in a positive free cash flow. Key developments during the quarter were strong growth in demand for LCD display drivers, including the start of volume shipments to Sharp for leading mobile handset manufacturers; and the success in developing a broader customer base for the company's products. These factors place Dialog Semiconductor in a good position to achieve single digit percentage growth for the full year 2005.

Roland Pudelko, CEO & president said, "Q1 2005 revenues have decreased from levels achieved in Q1 2004 as a major customer consolidated its inventory holdings given its challenging market conditions. Revenues from other customers grew more than 70% compared to Q1 2004. The most encouraging development for Dialog Semiconductor during the first quarter of 2005 is our success in LCD display drivers. The forecast consumer demand for handsets with more sophisticated multiple displays is being reflected in the interest we are seeing in our ICs. As both 2.5G and 3G service providers push improved entertainment, information and gaming capabilities on handsets, we expect to see a continuation of the strong demand in display driver ICs."

Pudelko added, "Dialog Semiconductor's revenue continues to be driven by demand for integrated power management and audio ICs. However display driver ICs and system-on-chip (SoC) solutions for automotive are now providing a much higher proportion of our revenues. This product portfolio has allowed us to widen our customer base: we can report five customers each representing 10% or more of our Q1 revenue. Of these, two are among the top 10 global mobile handset manufacturers."

The Company's interim report as of March 31, 2005 has been prepared for the first time in accordance with International Financial Reporting Standards (IFRS) and is available at www.dialog-semiconductor.com.

Information about Dialog Semiconductor

Dialog Semiconductor develops and supplies power management, audio and imaging technology, delivering innovative mixed signal standard products as well as application specific IC solutions for wireless, automotive and industrial applications. The company's expertise in mixed signal design, with products manufactured entirely in CMOS technology, enhances the performance and features of wireless, hand-held and portable electronic products. Its technology is also used in intelligent control circuits in automotive and industrial applications. Dialog Semiconductor Plc is headquartered near Stuttgart, Germany with additional design facilities in the UK, the USA, Austria and Japan. The company is listed on the Frankfurt (FWB: DLG) and NASDAQ (DLGS) stock exchanges.

Forward Looking Statement

This press release contains "forward-looking statements" that reflect management's current views with respect to future events. The words "anticipate," "believe," "estimate, "expect," "intend," "may," "plan," "project" and "should" and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, including, but not limited to: an economic downturn in the semiconductor and telecommunications markets; changes in currency exchange rates and interest rates, the timing of customer orders and manufacturing lead times, insufficient, excess or obsolete inventory, the impact of competing products and their pricing, political risks in the countries in which we operate or sale and supply constraints. If any of these or other risks and uncertainties occur (some of which are described under the heading "Risk Factors" in Dialog Semiconductor's most recent Annual Report and under the heading "Risk Factors" in Dialog Semiconductor's most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission), or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. We do not intend or assume any obligation to update any forward-looking statement, which speaks only as of the date on which it is made.

Selected Financial Data (in accordance with IFRS)

Earnings data
Revenues                                       18,596  23,000 116,044
Research and development                       (6,861) (7,474)(29,592)
Operating loss                                 (4,646) (2,674) (6,739)
Net loss                                       (3,990) (1,536) (6,393)
Cash flow from operations                       1,828   3,843  (8,601)

Balance Sheet data
Cash and cash equivalents                      14,787   6,650  13,977
Marketable securities                          17,162  46,802  17,542
Liquid Assets                                  31,949  53,452  31,519
Shareholders' equity                          104,502 112,545 108,227
Equity ratio in %                                90.2    86.0    84.5
Total assets                                  115,913 130,842 128,024
Capital expenditures                            1,068   3,256  12,321

Share data
Basic loss per share                            (0.09)  (0.03)  (0.13)
Number of shares in thousands (period end)     44,094  44,069  44,025

Other data
Employees (period end)                            280     276     296

Investor Information

Corporate Calendar

   May 11, 2005          Annual shareholders' meeting
   July 20, 2005         Release of second quarter results
   October 19, 2005      Release of third quarter results

Dialog Semiconductor
Birgit Hummel
Telephone +49-7021-805-412
Fax +49-7021-805-200
Email Contact

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