Nordic Semiconductor

Earnings Release • Feb 10, 2015

February 10, 2015

Q4 2014 Investor Presentation

Svenn-Tore Larsen, CEO Pål Elstad, CFO

Summary – Q4 2014:

• Revenue of MUSD 45.2, a 27% increase from Q4 2013, with growth across all key market areas
• BT Smart sales of MUSD 22.9, a 24.5% increase from last quarter
• 2014 Total Revenue of MUSD 167.0 with Bluetooth Smart revenue of MUSD 62.9. First year with total revenue in excess of NOK 1 Billion
• Successfully launched operations in Finland
• Design activity for Bluetooth Smart will continue to drive high growth

Financial Highlights

Pål Elstad, CFO

Q4 2014 Financial Highlights (MUSD)

MUSD
Financial objectives	Q4 2014	Q3 2014	Q4 2013	Comments
Growth
Revenue Order Inflow	45,2 32,9	49,0 43,7	35,6 27,7	Exceptionally strong growth within BT Smart. Q4 2014 > 2013
Profitability
Gross Margin %	52,4 %	50,8 %	53,4 %	Higher BT Smart revenue increase gross margin.
Operating Profit (EBIT)	6,3	9,8	4,6	Higher revenue drives EBIT growth
EBIT Margin %	13,9 %	20,1 %	13,0 %	Opex increases with higher R&D and sales activity
Net Profit after tax	6,7	7,0	3,3
Cash Flow
Free Cash Flow	9,7	13,9	-2,4	Strong cashflow
Cash Balance	34,1	24,4	26,1
Accounts Receivable	39,3	41,1	30,0	Strong sales
Inventory	27,9	20,6	22,2	Inventory normalized after Q3, however still low

• Q4 2014 Revenue of MUSD 45.2 (27% increase from prior year)
• ⁵ Group Revenues Presentation Q4 2014 Investor First year with total revenue in excess of NOK 1 Billion (MUSD 167)

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

⁶ Market segments – Q4 2014 (Q4 2013) Presentation Q4 2014 Investor

PC / Tablet Accessories Wireless PC mouse and keyboard, tablet accessories

Q4 Revenue: MUSD 18.4 (MUSD 17.5)

• Sales of PC accessories stabilize
• First contribution from Tablets

Q4 Revenue: MUSD 2.6 (MUSD 1.0)

• New Bluetooth Smart toy and home media designs drive growth

Home electronics devices

wireless charging, toys

Mobile / Wearable devices

Sports, medical monitors, mobile accessories, proximity tags, watches

Q4 Revenue: MUSD 18.1 (MUSD 10.5)

• New product launches from main customers

Installed Sensor networks RFID systems, building sensors, industrial automation, automotive

• Strong growth in Beacons and stable sales to large RFID customer

ASICs (application specific IC's) Wide sector span

Q4 Revenue: MUSD 2.0 (MUSD 2.9)

• Supporting existing customers only, not a focus area for growth. Sales fluctuates based on few designs.

Consulting services

Custom electronics design

• Q4 Revenue: MUSD 0.3 (MUSD 0.1)
• Project services for existing ASIC customers

TV / appliance remotes, game controls,

Q4 Revenue: MUSD 3.7 (MUSD 3.6)

Order inflow / order backlog

• Order inflow of MUSD 32.9 in Q4 2014
• Order backlog of MUSD 20.3 at quarter-end
• Order cycle remains short as BLE Revenue drives new revenue streams
• Mid-life update on nRF-51 to XLR3 managed transition closely

Gross margin

• Gross margin of 52.4 % in Q4 2014
• Gross margin increases from prior quarters, due to product mix within BT Smart

Operating profit (EBIT)

• Operating profit in Q4 2014 of MUSD 6.3 (36.5% growth from prior year)
• Higher revenue offset by increased operating expenses

¹⁰ Operating Expenses

Operating expenses (incl. depreciation) of MUSD 17.4 in Q4 2014

• Growth in expenses is driven by higher staffing and activity in R&D and Sales, plus IFRS accounting impact of options and capitalized R&D. Currency adjusted increase is 17%
• Increased growth in operating expenses is projected from 2015 with the establishment of team in Finland

USD '000	Q4 2014	Q3 2014	Q4 2013	Growth Y-o-Y
Total Operating Expense (non-IFRS), excluding Depreciation*	13 673	12 129	13 085	4 %
Add: Options expense**	2 071	1 337	853
Less: Capitalized R&D***	(206)	(185)	(1 009)
Total Operating Expense (IFRS), excluding Depreciation	15 538	13 281	12 930	20 %

* Non-IFRS Operating expense is adjusted for options, capitalized R&D and related depreciation costs

** IFRS accounting expense from grant of options, plus related payroll taxes

*** Net Opex impact of Capitalized R&D and related depreciation costs

Strong revenue growth across all targeted product segments

Business Outlook

Svenn-Tore Larsen, CEO

¹³ CES – 2015 Great Interest for Nordic

• IPV6 More than 3 500 downloads since release
• 15 unique vendors of Rezence Charges with Nordic inside
• Major players displays wearable Bluetooth Smart Modules
• Major players display remote controls with Bluetooth Smart
• Massive publicity in Media in connection with CES

¹⁴ Record sales of Bluetooth Smart solutions

Sales of Bluetooth Smart solutions increase to MUSD 22.9 in Q4 2014, as demand for «Internet of Things» applications grows

¹⁵ Exploding interest in the «IoT» is driving record sales of Nordic's development kits

• Record high 11862 development kits sold in 2H 2014
• Close to a tripling compared to 2013
• Huge growth in demand for Bluetooth Smart development kits

¹⁶ Massive opportunity in IoT for Nordic Product Strategy CONFIDENTIAL

28 billion

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

¹⁷ Nordic's IoT vision A large scale heterogeneous network

• Ultimately bigger than the "core" internet
• Not a single technology to rule the IoT
• Some will be more relevant
• … wireless is key
• … open standard is key
• … interoperability is key
• … infrastructure / adoption is key
• … native IP support is key
• Different technologies for different things
• Range, throughput, infrastructure, power, cost etc.

Wireless Charging Vendors are ¹⁸ ready to «Take-Off»

• Witricity Massachusetts based company that are holders of patented technology for rezence spaced products
• From CES2015 Kaynam Hedayat : VP Product Management & Marketing at Witricity
• «Our products are smart because A4WP are smart with Bluetooth»
• «Nordic had the most mature bluetooth chip with A4WP stack»

¹⁹ A major leap forward for Nordic R&D Finland up & running

• Recent years have proven the importance of technological leadership. Nordic is now starting to see results of being an innovator in BLE
• Nordic has taken advantage of a large pool of available talents in Oulu, Finland to set up a R & D center and invest in a related field with enormous market potential
• In fierce competition with other tech giants Nordic secured the best talent available due to:
• Culture
• Speed of execution
• Reputation
• Reliable road map to success

²⁰ Core information regarding Finland

• 100 employees
• USD 5 million/quarter expected cost going forward
• Will be reported as a separate item
• 3-4 years of development until revenue can be expected
• Product to be developed is within LTE

• The project is based on Nordic`s existing technology platform coupled with the unique experience and skill within LTE of the Finnish engineers

• Strong growth in revenues, driven by Bluetooth Smart sales

• Gross margin of approximately 50% in 2015
• Higher OPEX in 2015 as a result of higher R&D spending in order to take advantage of upcoming complementary standards
• Change in reporting format from 2015
• No revenue guidance
• Further development of market reporting

²² Mobile World Congress 2-5 March 2015 Presentation Q4 2014 Investor

²³ For more information on Nordic

Sign up for a Nordic MyPage account on our website www.nordicsemi.com

Provides latest company and investor news directly to your Email address

• Wireless Quarterly magazine learn more about Nordic's products and markets
• Direct links to Nordic content on YouTube, Facebook, LinkedIn, Twitter
• Press releases
• Stock exchange notices

Presentation Q4 2014 Investor