Nordic Semiconductor

Earnings Release • Oct 16, 2015

Q3 2015 Investor Presentation

Svenn-Tore Larsen, CEO Pål Elstad, CFO

Summary – Q3 2015:

• Record MUSD 53.9 revenue in quarter despite the previously announced guidance
• Strong Bluetooth Smart Sales at MUSD 34.2
• Improvements in manufacturing drives margins above 50%
• nRF 52 progresses as planned with volume shipments expected in Q4
• Strong design wins in Bluetooth Smart continues to drive growth

Financial Highlights

Pål Elstad, CFO

Q3 2015 Financial Highlights

MUSD
Financial objectives	Q3 2015	Q2 2015	Q3 2014	Comments
Growth
				Record high revenue despite lower proprietary
Revenue	53,9	52,6	49,0	sales
Order Inflow	43,1	60,2	43,7	Seasonal reduction in orders
Profitability
Gross Margin %	50,2 %	49,5 %	50,8 %	Improved manufacuring improves margins
Operating Profit (EBIT)	10,9	10,6	9,8	Higher revenue drives EBIT growth
EBIT Margin %	20,2 %	20,2 %	20,1 %	Capitalization of devl. cost reduces OPEX
Net Profit after tax	8,8	7,5	7,0
Cash Flow
Free Cash Flow	6,3	-9,4	13,9	Improved DSO and profits improve cash flow Improved WC
Cash Balance	29,2	25,4	24,4
Accounts Receivable	52,5	54,4	41,1	Higher revenues offset by improved DSO
Inventory	51,0	45,6	20,6	Lower proprietary sales increase inventories

⁵ Group Revenues

• Q3 2015 Revenue of MUSD 53.9 (10% increase from prior year)
• BT Smart Revenue of MUSD 34.2 (63.4% of total revenue)

Revenue split by technology, 2012 – Q3 2015 (MUSD)

Bluetooth Smart Revenues – Drives Growth 2014-2015 More than 100% Year over Year

Total Nordic revenue from Bluetooth Smart Quarterly comparison 2014/2015 (MUSD)

6

Order inflow / order backlog

• Order inflow of MUSD 43.1 in Q3 2015
• Order backlog of MUSD 30.3 at quarter-end
• Nordic will effective from December 31, 2015 cease to report orders and only report backlog at end of Quarter

Growth Markets

• Growth of 6 % compared to Q3 last year.
• Decline of 11.4% compared to last quarter
• Growth compared to last year driven by design wins within Home Entertainment and Mobile offset by decline in PC Peripherals

• Decline from last quarter explained by PC Peripherals and large gaming and toys sales in Q2

• Marginal decline compared to Q3 last year

• Growth of 8.2 % compared to last quarter
• Accelerated sales momentum observed after a moderate start of 2015

8

Emerging Markets

• Growth of 18.1 % revenues compared to Q3 2014. Shift from RFID to Beacons and Home Automation
• Growth of 8.6 % compared to last quarter
• The market for beacons and RFID are still in the early stages of adoption. It has been identified by Nordic as a market with large potential
• Strong growth from previous periods (45.2 % compared to last quarter)
• Strong sales compared to Q3 2014 is driven by a handful of existing customers gaining volume, plus a mix of new customer design wins

Presentation Q3 2015 Investor

• Others reflects products which do not map into our four main markets, hence revenues generated here will fluctuate on a regular basis. Modules is the largest product group within this market
• Decline of 54 % compared to Q3 last year.
• Decline of 10.1 % compared to last quarter.
• Nordic are not investing in this segment anymore. All revenues are from existing projects and will fluctuate from quarter to quarter based on project deliveries

¹¹ Gross Margin

• Gross margin of 50.2 % in Q3 2015
• Gross margin improved from last quarter, due to improved manufacturing
• Expected to stabilize around 50% in 2H-2015

¹² Operating Expenses

• Operating expenses (incl. depreciation) of MUSD 16.2 in Q3 2015
• Total operating expenses excluding depreciation and adjusted for options and capitalized R&D increased from MUSD 15.9 in Q2 2015 to MUSD 17.0 in Q3 2015 – higher number of employees and marketing expenses – offset by favourable FX *** Net Opex impact of Capitalized R&D Presentation Q3 2015 Investor
• Finland Q3 2015 operating expenses at MUSD 3.4.

USD '000	Q3 2015	Q2 2015	Q3 2014	Growth Y-o-Y
Total Cash Operating Expenses , excluding Depreciation*	17 010	15 846	12 258	39 %
Add: Options expense Less: Capitalized R&D*	(763) (2 400)	197 (2 644)	1 323 (300)
Total Reported Operating Expenses, excluding Depreciation	13 847	13 399	13 281	4 %

* Cash Operating expenses are adjusted for options and capitalized R&D ** IFRS accounting expense from grant of options, plus related payroll taxes

Group Employees ¹³

¹⁴ Operating profit (EBIT %)

• Operating profit in Q3 2015 of MUSD 10.9
• Q3 2015 Margin excluding Finland at 26.5%

Operating Profit Margin (%) by quarter 2012 – Q3 2015 (MUSD)

• Blue % indicate ex-finland EBIT margin
• Red lines and % indicates equal weight average per year. 2015 line and % includes finland.

¹⁵ Q3 2015 Financial Summary

Presentation Q3 2015 Investor

Business Outlook

Svenn-Tore Larsen, CEO

¹⁷ High Sales of Bluetooth Smart

Q3 Bluetooth Smart revenues of 34.2 MUSD, taking the total for Q3 YTD to MUSD 82.1

Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15

¹⁸ Bluetooth Smart Active Customers

• Number of active BT Smart customers continues to grow
• More than 100% growth in active customers in 2015

Number of "Active" Bluetooth Smart customers*, 2013 – 2015

* Definition of "Active" Customer: An end customer which has purchased a larger volume during prior six months (i.e., a customer actively selling product to end customers or preparing a high volume prototype)

Addressing a bigger market

More things around us than we wear and carry

28 billion

internet connected things in 2020 (Source: hbr.org)

Emerging Markets Asset Tracking- Development driven by cheap sensors and low battery consumption

• Hospitals locate equipment/persons
• Inventory Inventory Optimization
• Shipments –BLE combined with GPS/GSM
• Tools/materials where is it when we need it? Construction sites
• Agriculture monitoring livestock

Interoperatibility is key; most data are not used today

Emerging Markets Wireless Charger – Cutting the last wire

Massive Market Opportunity

• Mobile Devices
• Chargers
• Covers / Battery Packs
• Rechargable Devices

Success factors for Nordic

• Broad adoption of wireless charging
• Success of Rezence
• Maintain and strengthen our lead

Nordic Semiconductor Finland operations progressing great and according to plan

Nine months since Finland office kicked off

• Teams fully staffed in Oulu and Turku

Finland teams highly integrated with Norway operations

• Also contributed to the nRF52 Tape-Out early this year

Projects are progressing as planned

• Customer and partner discussions ongoing
• Key IP licenses in place
• Lab facilities and lab equipment in place
• Architecture and design well underway

First test chip in production – record fast development

23

nRF52 World Tour

• Growth in revenues driven by Bluetooth Smart sales
• nRF 52 family will contribute from Q4
• Gross margin of approximately 50%
• We see new products in other segments growing with a broader diversity of customers
• Expanding operations into mainland China by establishing local sales offices

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