Eindhoven, The Netherlands, December 21, 2006 - NXP Semiconductors, the newly independent semiconductor company founded by Philips, today announced its results for the first nine months of 2006.

Total sales in the nine months ending September 28, 2006 were €3,770 million, an increase of 10.6% compared to the same period last year. Excluding foreign currency effects, sales increased by 9.7%. Sales growth was particularly strong in our Multimarket Semiconductors and Automotive & Identification business units. Direct and indirect sales to the Philips Group decreased from 8.5% to 6.6% of sales.

Cost of sales for the reporting period was €2,331 million, or 61.8% of sales, compared with 63.1% in the previous year, mainly as a result of higher utilization, reduced manufacturing costs and yield improvements.

Gross margin was €1,439 million which represents 38.2% of total sales for the reporting period, compared to €1,257 million, or 36.9% of total sales for the corresponding period in 2005.

As a percentage of total sales, selling expenses increased from 6.7% to 7.3%. This included restructuring charges of €11 million, which were recognized in the first nine months of 2006, representing relocation and severance costs. General and administrative expenses were €299 million for the first nine months, compared to €322 million in the corresponding period of 2005. As a percentage of total sales, these expenses were reduced from 9.4% to 7.9%.

Research and development expenses were €737 million, compared to €754 million last year, a decrease of 2.3% primarily caused by our portfolio management, in particular in respect of DVD-R and Mobile Display Drivers.

Other business income was €18 million for the reporting period, mainly reflecting the sale of certain U.S. real estate. Over the same period last year the amount was €12 million, reflecting the sale of property in Albuquerque, New Mexico and San Antonio, Texas.

Income from operations was €146 million, representing 3.9% of total sales, compared to a loss of €35 million in the same period of 2005. Restructuring charges for the first nine months were €19 million, compared to €5 million in the corresponding period of 2005. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased from €556 million to €568 million.

Net financial income and expenses decreased to €22 million in the nine months ended September 28, 2006 (September 30, 2005: €52 million), mainly due to lower financing by Philips.

The tax expense on income before tax amounted to €75 million in the first nine months of 2006, compared to €20 million in this period in 2005. Both amounts were determined based on the tax allocation methodology used by Philips.
Results related to unconsolidated entities showed a profit of €3 million for the reporting period, compared with a loss of €7 million for the nine months ended September 30, 2005. These results mainly relate to our investment in Advanced Semiconductor Manufacturing Company (ASMC).

The share of minority interests in the Company reduced income by €50 million, compared to €18 million for the first nine months in 2005; this was mainly related to the 49.5% stake held by third parties in Systems on Silicon Manufacturing Company (SSMC).

Net income improved from a net loss of €132 million in the first nine months of 2005 to a profit of €2 million in the reporting period.

"We have made good progress in NXP. Our move outside Philips has helped us to accelerate our business. Our Income from Operations is higher and more predictable, our portfolio is more focused, and we have achieved visible sales growth. With the positive effects of Business Renewal, we are well positioned to achieve our objectives," stated Frans van Houten, NXP President and Chief Executive Officer.

About NXP

NXP is a top 10 semiconductor company founded by Philips more than 50 years ago. Headquartered in the Netherlands, the company has 37,000 employees working in 20 countries across the world. 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

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.