NXP Semiconductors Announces Third Quarter 2008 Results

Positive operational cash flow in Q3

Q3 Highlights

• Q3 sales USD 1,336M* versus USD 1,644M in Q3 2007 and USD 1,524M in Q2 2008
• Comparable YoY sales decrease of 4.2% and comparable QoQ sales increase of 1.0%
• Q3 adjusted EBITDA (excluding effects of Purchase Price Accounting) USD 147M, compared to USD 310M in Q3 2007 and USD 114M in Q2 2008
• Cash position of USD 1,535M at the end of Q3 after repayment of the revolving credit facility of USD 450 million and following the closing of ST-NXP Wireless JV, compared to USD 660M at the end of Q2 2008
• Cash management actions resulting in lower inventories as a percentage of sales, lower capex and positive net operational cash flow of USD 107M
• Completed acquisition of the Conexant Set-top-Box operations
• Considerable advances made towards the execution of the redesign plans announced during the quarter for which USD 500M has been provided
• Softer demand resulting in factory loading of 68% in Q3 compared to 85% in Q3 2007 and 78% in Q2 2008
• Book to bill ratio in Q3 2008 at 1.00 compared to 1.03 in Q2 2008

* Including USD 120 million sales in July 2008 of the divested wireless business and excluding USD 38 million subsequent wafer sales to ST-NXP Wireless

Eindhoven, The Netherlands, October 21, 2008 - NXP Semiconductors today announced third quarter sales in line with expectations of USD 1,336 million, a comparable decrease of 4.2% on the third quarter of 2007 and a comparable increase of 1.0% over the second quarter of 2008. Adjusted EBITDA improved sequentially in the third quarter to USD 147 million, down from USD 310 million in the third quarter of 2007 and up from USD 114 million in the second quarter of 2008. Adjusted EBITA showed a profit of USD 15 million this quarter compared to a profit of USD 136 million in the same period last year and a loss of USD 29 million in the previous quarter.

Notwithstanding the difficult conditions, benefits from cash management actions taken can already be seen in lower inventory as a percentage of sales and lower capex, both of which have contributed to a positive net operational cash flow of USD 107 million. The cash position improved to USD 1,535 million, largely as a result of the closing of the ST-NXP Wireless joint venture and includes the repayment of the revolving credit facility and the acquisition of Conexant STB business.

In September 2008 NXP Semiconductors announced a large redesign program targeted at reducing its annual cost base by USD 550 million through major reductions of the manufacturing base, rightsizing of central R&D, and reduction of support functions in order to improve the company’s financial strength, as well as to position NXP for future growth in its core businesses. Meanwhile significant progress has been made in detailing the redesign program and deploying the measures in the organization, for which USD 500 million has been provided for in the third quarter. As part of the annual impairment test based on US GAAP, the company has taken into account the current market environment, the divestiture of the wireless business and the implementation of the redesign program. The impairment test resulted in the write-down of goodwill and intangibles of USD 706 million. Furthermore, a write-down of deferred tax assets of USD 254 million was recorded in the third quarter of 2008.

Frans van Houten, President and CEO of NXP Semiconductors, commented:

“Our sales for the Q3 period were broadly in line with guidance. The financial crisis and semiconductor market conditions have caused a rapid deterioration of demand towards the end of the third quarter, especially in the automotive and consumer sectors. We are convinced of the necessity to act decisively and to lower our cost base in order to be prepared for a difficult market. Our redesign program announcement of September 12 to reduce our annual cost base by USD 550 million is timely, given the developments in the market.”

“We are strongly focused on our customers and see opportunities to sell our products to a wider customer base. In this context we are pleased to note that we have made inroads with new customers like HuaWei in China, as a supplier of chips for their telecom infrastructure. Also the Home unit made progress in digital TV driven by Japanese and European customers.”

“I am confident that our focus on cost management, the prudent approach to cash management, and the rapid execution of our redesign plans will help ensure resilience through the cycle and create a stronger NXP, positioned for future growth.”

Outlook: Visibility of sales development going forward is limited. As a consequence of deteriorating macro-economic conditions in combination with the overall consumer sentiment and recent order book development, we expect an 8 to14% sequential sales decline in the fourth quarter on a business and currency comparable basis.

The full report is available on NXP website (www.nxp.com/investor).

About NXP Semiconductors

NXP is a leading semiconductor company founded by Philips more than 50 years ago. Headquartered in Europe, the company has about 33,500 employees working in more than 20 countries and posted sales of USD 6.3 billion (including the Mobile & Personal business) in 2007. NXP creates semiconductors, system solutions and software that deliver better sensory experiences in TVs, set-top boxes, identification applications, mobile phones, cars and a wide range of other electronic devices. News from NXP is located at www.nxp.com.