Nordic Semiconductor

Investor Presentation • Sep 15, 2014

CAPITAL MARKETS DAY

NEWYORK, SEPTEMBER 15, 2014

Capital Market Day ‐ September 15th 2014

Wonderful WirelessWorld

Thenext Big Thing is ^a trillion Small Things

Agenda

• Introduction
• Svenn‐Tore Larsen (CEO)
• How will Nordic expand on our leading market position
• Geir Langeland (Sales and Marketing Director)
• Nordics Competitive Position
• Thomas Bonnerud (Director of Product Management)

Exploding interest in the «Internet of Things»

Wall StreetJournal, 8‐Jan‐2014

"The Internet of Things attracted more excited pronouncements than almost any other topic at this week's Consumer ElectronicsShow."

TIME, 13‐Jan‐2014

"The Next Big Thing for Tech: The Internet of Everything"

CNBC, 7‐Jan‐2014

CES 2014: Wearabletechdominates

"Wearable technologies are this year's hottest tech niche, and gadget makers are scrambling to develop their own."

"Internet of things" all the rage at Consumer Electronics ShowCBS, 7‐Jan‐2014

FinancialTimes, 13‐Jan‐2014

"Google has made ^a bold bet on the emerging 'internet of things' with the \$3.2bn acquisition of Nest Labs"

WorldThis is Nordic Semiconductor

The market leader in ultra‐lowpower wireless solutions

• Nordic Semiconductor is ^a leading developer of semiconductors for short‐range wireless applications.
• Founded in 1983, listed on OSE during 1996
• Specializes in 2.4 GHz RF technology for ultra‐lowpower wireless applications
• Sold 200Msemiconductor units during 2013
• MUSD124 revenue (2013)
• Chairman of Bluetooth SIG / Key contributor to Bluetooth® Smart standard
• Organization of 250 people, of which 179 work in R&D
• Headquarters in Norway, with offices in US, Europe, Asia
• Fabless business model: TSMC manufactures wafers, Amkor/ ASE are partners for assembly and test
• Physical distribution handled via ^a global network of electronicsdistributors

Connecting things to the internet

2013–

• Internet is the biggest growth driver
• Connecting things to services
• "The last mile" connection to the gateway
• Things we wear, we carry, things around us
• Wireless is ^a key enabler
• Ultra lowpower is important
• Improving things and services
• Enabling new things and services
• The Internet of Things era for Nordic

SmarterThings, Smarter Services

Fundamental volume drivers in"Internet of Things"

SmarterThings with cloud services

• Improving existing things – enabling new
• Value add, differentiation and or cost savings
• Expanding the customer base
• Innovation shortening the replacement cycle

Smarter Services withThings

• Improving existing services – enabling new
• Value add, differentiation and/or cost savings
• Services driving volume of things

Bluetooth Smart – Ourentry point into the "Internet of Things"

8

Bluetooth Smart Ready devices 1.3B 20133.3B in 2016 2013 2016

• Things depends on gateways to the internet
• Gateway installed base is crucial
• Massive installed base of Bluetooth Smart
• Phone, tablets and PC can acts as gateways
• Apps acts as the bridge to the cloud service
• Same league as Wi‐Fi and Cellular
• Dwarfing ZigBee and other technologies
• Lowest power, cost and smallest size
• Extremely attractive "last mile" option

Internet connectivity ‐ Driving growth in our core markets

• Sports and fitness
• Consumer health
• Connected toys
• Location beacons
• Smart watches

Youwill be surrounded by Bluetooth Smart

Internet connectivity ‐ Creating ^a pull from new markets

• Home and building automation
• Industrial automation
• Automotive
• Smart Appliances
• Asset tracking and management
• Retail and POS systems

Industrial market expected outgrow personal area sensors

• Several technologies will co‐exist in industrial internet, such as Bluetooth Smart, Wifi, Zigbee and Radio Frequency Identification
• We believe Bluetooth Smart is the wireless standard of choice for the Internet of Things, especially for personal applications (Morgan Stanley Research September 2013)
• Industrial internet will contribute USD 70 trillion toworld GDP (General Electric)
• Smart factories, smart buildings and smart grid will be the most prominent (Cisco, 2013)

Logistics

Productionand manufacturing

Indoorlocation

Payment systems

Agriculture

NordicSemiconductor ‐ Cutting the wire

The first 1 BillionnRF ICs

2003 to2013

• Connecting things to PCs
• Connecting things to things
• All about things, not PCs or phones
• Cutting the wire
• Replacing legacy technologies
• Improving existing things
• 2.4GHz proprietary technology
• Ultra lowpower for prime cells

Preparing for the next billion(s) of units

The«Internet of Things» presents ^a vast long‐term growth opportunity

• Current growth wave will be driven by Bluetooth Smart technology, where Nordic has beeninvesting since 2006
• Future growth wave will be driven by Bluetooth Smart and complementary technologies within the «Internet of Things»
• Nordic creating new programs for the next generation of opportunities
• Technology portfolio
• Strategic partnerships / acquisitions
• Intellectual property
• Staffing
• Incentive programs

Our market isgrowing fast

Nordic'sTarget

• Nordic targeted to become the dominant semiconductor vendor in this marketplace:
• More than 40% market share thru:
  • Technology Leadership
  • Customer Support
  • Application Knowhow
• Nordic is setting the standard for the competition
• Maintain margins

Nordic has ^aunique and established position

• Sole focus on ultra lowpower wireless
• Pioneer and leader with 2.4GHz since 2002
• Founding member of Wibree initiative
• First Bluetooth Smart solution in 2010
• Broad and leading customer base
• Visibility on customer needs
• Technology Leadership

How we will expand on our leading marketposition

GeirLangeland, Director of Sales and Marketing

Agenda

• Overview
• Market catalysts
• Segments
• Current
• Emerging

Small company – wide footprint

• Nordic uses standard semiconductor sales/distribution models
• Scalability to track 1000's of customers
• Extensive sales of small and affordable development kits through traditional distributors andonline retailers
• Engage actively in hackathons, meetups, conferences, and exibitions
• Cooperation with ARM® through mbedand academic programmes
• Dedicated geographical FAE teams

How we will expand on our leading market position

21

Internet of Things is driving record sales of Nordic's development kits Salesof development kits (units)

• Record high 10218 development kits sold in 1H 2014, with strong accelerationin Q2 2014
• Significantly more than all of the development kits sold last year
• Huge growth in demand for Bluetooth Smart development kits

Marketcatalysts for new segments

• Samsung
• S Health – health app that collects data from 3rd party devices
• Simband – platform for cloud‐sourced health tracking
• Smart Home service control home appliances, TV's, lights etc.
• Apple
• HealthKit – health and fitness apps work together and share data
• HomeKit – smart home control
• WatchKit – smart watch app API
• iBeacon – location services
• Google
• Google Fit SDK easier to build fitness apps and devices
• Android Wear – smart watch development platform
• Google owned Nest Labs one of founders of Thread Group
• Microsoft
• HealthVault – cloud service for health data
• Bing health and fitness app – app for health data

HID

Mouse, keyboard, stylus, remote and gaming

How we will expand on our leading market position

MARKET

• Nordic dominant in proprietary
• V Bluetooth Smart readiness in PCs, tablets, smart phones
• Expect TVs, set top boxes and game consoles to follow

NORDICSTRENGTHS

• Concurrent proprietary and Bluetooth Smart solution
• VCost effective single chip solution
• Ultra lowpower
• On chip flash for DFU Device Firmware Update
• Mouse, keyboard & remote reference design

EARLY ADOPTERS INSEGMENT

• Logitech
• Microsoft
• Philips
• SteelSeries

SPORTS

Running, biking, gym, team sports

MARKET

• Nordic dominant in proprietary and ANT+
• VNatural migration to smart phone connectivity
• ANT+ and Bluetooth Smart major drivers
• Traditional and newcustomers emerge

NORDICSTRENGTHS

• Concurrent ANT+ and Bluetooth Smart
• VCost effective single chip solution for sensors
• Ultra lowpower
• On chip flash for DFU – Device Firmware Update

EARLY ADOPTERS INSEGMENT

• Suunto
• Wahoo
• Adidas
• Garmin

Adidas– Fit Smart

• Measures heart rate, calories, speed, pace, distance, and stride and sync with BluetoothSmart Ready smartphones
• Eliminates the need for separate monitoring devices (heart rate‐straps andpedometers)
• Nordic's multiple award‐winning nRF51822 SoC enables the FIT SMART to run for up to five days on ^a single charge
• FIT SMART, SPEED_CELL, XCELL and SMART BALL – All products from Adidas myCoach with Nordic inside

Fitnesstrackers How

Beltclip, wristbands, shoe pods

MARKET

• First major mobile accessory to adopt Bluetooth Smart
• V Evolved from sports‐related products for athletes to the broadconsumer market for monitoring healthy lifestyle
• Data sharing across social networks
• Corporate, Insurance and government initiatives

NORDICSTRENGTHS

• Early solution for connectivity ‐ nRF8001
• V Small footprint ‐ 3.6x3.8mm solution and minimum ofexternal components with nRF51 Series
• On chip flash for DFU – Device Firmware Update
• Power consumption

EARLY ADOPTERS INSEGMENT

• Fitbit
• Jawbone
• Nike
• Fitlinxx
• Garmin

we will expand on our leading market position

BeaconsHow

Proximity, advertising, location

MARKET

• 1st wave of proximity tags in 2013/14
• V2nd wave based on beacons for retail/info
• 3rd wave expected around positioning & payment

NORDICSTRENGTHS

• Single chip solution – nRF51822
• Power consumption
• Partner network for HW& SWsolutions (ODM's)
• Nordic beacon reference design

EARLYADOPTERS

• Sticknfind
• Tile
• Estimote
• Kontakt

we will expand on our

Beacons ‐Estimote

• One of the most recognized beaconbrands
• Lowprice points
• Wants to pioneer "Nearables" with new sticker beacon hardware
• Tag objects
• Location
• Temperature
• Motion

Beacons ‐Kontakt.io

• Wide deployment
• OEMstrategy ‐ branding
• Cloud based platform
• Corporate customer focus eg:
• Parking
• Shop installations
• Airports
• Gas stations
• Coffe shops

market

position

expand

Healthcare/Medical Monitors How we will expand on our

Bloodglucose & pressure, SPO2, weight, vitals

MARKET

• Long development cycles and FDA approvals
• V Large potential due to diabetes epidemic and outpatient/elderly care
• Predominantly Bluetooth Smart technology for phone connectivity

NORDICSTRENGTHS

• Robust and relaiable SWframework
• V 3.6x3.8mm solution with minimum of external components – nRF51822
• On chip flash for DFU – Device Firmware Update

EARLY ADOPTERS INSEGMENT

• Lifescan
• iHealth Labs
• Nonin
• A&DMedical

leading market position

Toys and games How we will expand on our

Remotecontrol, gameplay with connectivity

MARKET

• Proprietary in traditional RC toys
• VBluetooth Smart technology used for connectivity
• Leading toy companies can generate revenue through new smart phone platform and still sell hardware as before

NORDICSTRENGTHS

• Proprietary and Bluetooth Smart roadmap
• VCost effective single chip solution for system
• On chip flash for DFU – Device Firmware Update
• Lowpower consumption

EARLY ADOPTERS INSEGMENT

• ANKI
• Scalectrix
• Parrot
• Sphero

leading market position

SMART HOME ANDINDUSTRIAL AUTOMATIONSensors, security, light control, locks

MARKET

• Early adopters betting on Zigbee, WiFi, Zwave or proprietary
• V New implementations trending towards Bluetooth Smart due tophone connectivity as well as low power and cost effectivity
• Large players starting to engage – creates momentum

NORDICSTRENGTHS

• Cost effective single chip solution for system
• Lowpower
• On chip flash for DFU – Device Firmware Update future proofs solutions
• Flexible architecture allows for advanced network topologies

EARLY ADOPTERS INSEGMENT

• Nest
• Philips
• Belkin
• Honeywell

How we will expand on our leading market position

WIRELESS CHARGINGHow

Chargers for phones & wearables

MARKET

• V Rezence™ (A4WP) standard uses Bluetooth Smart technology to control charge session
• Spatial freedom and multiple devices
• First deployment expected in 2015

NORDICSTRENGTHS

• Cost effective single chip solution for system
• V On chip flash for DFU – Device Firmware Update futureproofs solutions
• Supports 8 devices charging at the same time

EARLY ADOPTERS INSEGMENT

• Rezence™ (A4WP) backed by leading players
• Samsung
• HTC
• Intel
• LG

we will expand on our leading market position

MONITORS

Pettrackers, kids & babies

MARKET

• In its infancy now spending on pets escalating
• V Bluetooth Smart connectivity and low cost gps important for several of these applications
• Newgeneration of baby monitors

NORDICSTRENGTHS

• Leading system architecture
• Power consumption
• On chip flash for DFU – Device Firmware Update futureproofs solutions

EARLY ADOPTERS INSEGMENT

• Tractive
• Whistle
• Mimo
• BeLuvv

How we will expand on our leading market position

CONNECTEDAPPLIANCES How

Refrigerators, coffee makers, dishwashers

MARKET

• Technology around for long time ‐ expensive
• VEarly implementations predominantly WiFi
• Bluetooth Smart connectivity enables lower cost implementations

NORDICSTRENGTHS

• Cost effective
• VSingle chip solution for simple non display systems
• On chip flash for DFU – Device Firmware Update futureproofs solutions

EARLY ADOPTERS INSEGMENT

• Samsung
• Nespresso
• Whirlpool
• LG

we will expand on our leading market position

WEARABLES

Hearing aids, watches, clothing, jewelery

MARKET

• Emerging market enabled by new technology
• VBluetooth Smart enabeling unlimited oportunities
• Descrete convenience
• Fashionable technology

NORDICSTRENGTHS

• Small footprint ‐ 3.6x3.8mm solution and minimum ofexternal components with nRF51 Series
• VOn chip flash for DFU – Device Firmware Update
• Power consumption
• Lowcost

EARLY ADOPTERS INSEGMENT

• GNResound
• Pebble
• Samsung
• Netatmo

How we will expand on our leading market position

Connected Watch Connectedevice

• Classic analog watch with connectivity features
• Long battery life
• Leading developer of wearables and award‐winning Bluetooth Smart watches.
• Mobile payment (mPayment) solutions for wearabledevices
• Winning value proposition through enhanced convenience, durability andsecurity
• Will decrease cost, complexity and risk of implementing wearable mPayment

AUTOMOTIVE

Keyless entry,remote sart, infotainment, diagonistics

MARKET

• Currently dominated by proprietary low freq. keyless
• V Bluetooth Smart creating new opportunities for integration with smart phone
• Use phone as remote, or remote to control phone e.g. GPS

NORDICSTRENGTHS

• Lowpower
• Single chip

EARLY ADOPTERS INSEGMENT

• BlueID
• Bluetooth Keyless
• Cobra
• Automatic

How we will expand on our leading market position

RF ID AND TRACKINGHow

Fleetmanagement,parcels, containers,access&presence

MARKET

• Today served by multiple wireless standards
• Cellular
• NFC
• Sub 1 GHz
• Bluetooth Smart offers alternative with longer range and tablet/smart phone connectivity

NORDICSTRENGTHS

• Wide selection of IC's
• Lowpower
• Single chip

EARLY ADOPTERS INSEGMENT

• AgoraBee
• mesh

we will expand on our

Competitive Edge

Capital Market Day, New York City, September 15 2014

Thomas EmblaBonnerud, Director of Product Management

Introduction

Competitive landscape Our history and current position Customer selection criteria´s Competitive differentiation Products, services and company Howcan we compete moving forward

Competitive landscape

Selectioncriteria´s

Maturity and ease of adoption

Features, power and performance

Coststructure

Maintaining and strengthening our edge

Competitive Edge 43

Competitive landscape

Selectioncriteria´s

Maturity and ease of adoption

Features, power and performance

Coststructure

Maintaining and strengthening our edge

Very competitive landscape for Bluetooth Smart

Nordic first to market in 2010 All recognizing the opportunity Big and established companies Small and emerging companies Connectivity and microcontroller A handful left in 3‐5 years Nordic toremain the leading vendor

nRF51Series was disruptive in 2012

• Bluetooth®Smart SoC
• Cortex‐MProcessor
• Embeddedflash
• Protocol andapplication separation
• Over‐the‐air firmwareupdates
• Ultra lowpower and high performance

The newbenchmark

.. on ICand software architecture

Easeof use

Level ofintegration – single chip

Developers love it

Our 2'ndgeneration Bluetooth Smart

Competitors still trying to catch up

Competitive Edge 46

Competitive landscape

Selectioncriteria´s

Maturity and ease of adoption

Features, power and performance

Coststructure

Maintaining and strengthening our edge

Customer selectioncriteria´s

Beyond the elevator pith

Customerengineers are key

8key selection criteria's

Compare Nordic vs. competition

Diversifiedset applications and customers

Variationin priorities

8key criteria's and solution overview

Competitive Edge 49

Competitive landscape

Selectioncriteria´s

Maturity and ease of adoption

Features, power and performance

Coststructure

Maintaining and strengthening our edge

Maturity is #1 selection criteria

Immature solution ⁼ risk for customer Known and unknown technical issues Functional, performance and reliability Development schedule and resourcing End product features, performance End product quality Products are not mature at launchICrevisions and firmware updates

Maturity and Intel's 'Tick‐Tock' model

IC architecture and process is fundamental Defines features, performance and power Major advancement require change Change impacts maturity 'Tick‐tock' ‐ change one at the time ICarchitecture often affect software

Maturity vs. architecture

Architecture(IC and Software)

• Mature solution (2 years)
• Cortex‐MEmbedded flash
• Continuous improvement of software

Processvs. architecture

Architecture(IC and Software)

Processgeometry

• 180nmdown to 55nm
• Affect size, performance,
• power and cost structure
• Smaller ⁼ \$ and longer cycles

Nordiccompetitive edge

• Best in class architecture
• Mature process
• Competitive specs and cost
• Short revision cycles

Easeof adoption is more important than ever

End product complexity increasing Especially software Design cycle shortening Minimize development schedule Minimize development resourcing Bestpossible end product

Maturity vs. ease of adoption

Easeof adoption

• Reference designs and SDK
• Embedded flash
• Distribution channel

Competitive Edge 56

Competitive landscape

Selectioncriteria´s

Maturity and ease of adoption

Features, power and performance

Coststructure

Maintaining and strengthening our edge

Connectivity features vs. performance/robustness

Connectivity performance/robustness

• Continuous improvement
• Run‐time protected stack

Powerconsumption vs. flexibility

Flexibility

• Over the air software update
• Advanced power management
• Dynamic pin mapping

Power consumption vs. single chip application coverage

Single‐chip application coverage

• Different stack variant with flash

Competitive Edge 60

Competitive landscape

Selectioncriteria´s

Maturity and ease of adoption

Features, power and performance

Coststructure

Maintaining and strengthening our edge

Lotsof apple and oranges

Total bill‐of‐materialsis key

More than the ICcost

Sometimesapplication dependent

Sometimes featuredependent

Costof ownership

Softwarechanges

IC cost and eBOMvssingle chip application coverage

Single‐chip application coverage

• No need for external memory
• No need for 32kHz crystal

Competitive Edge 63

Competitive landscape

Selectioncriteria´s

Maturity and ease of adoption

Features, power and performance

Coststructure

Maintaining and strengthening our edge

Strengthening our leadership moving forward

Established and leading position Market and technology Powerful and fine‐tuned organization Unique market insight Rapid advancements on software 'Tick' nextgeneration IC

Powerful andfine‐tuned organization

Oneof the biggest teams on Bluetooth Smart

Experienced, focused and dedicated

R&D, Tech support, FAEs and sales

Proventrack‐record ^> 15 years with RF

In‐house software and ICdesign

Scalable ‐engineering talent in Scandinavia

Off theshelf business model

Unique insight into customer/market needs

Broad and leading customer base Long term relationships Deep engagements Connectivity and application Short term and long term view > 10 years market experience Buildthe 'right' products

Continuous and rapid advancements onsoftware for nRF51

ANT Single chip ANT * ICs/solutions	PRODUCT SPECIFICATION
	Code	Name	Version
2.4GHz RF Ultra low power 2,4GHz RF ICs/solutions	nRF51822-PAN	nRF51822 Product Anomaly Notification (PAN)	Ω
	nRF51822-PS	nRF51822 Product Specification	Đ
	PCN-082	This PCN describes the changes in build codes QFAAGO, QFABBO, and CEAADO.	$\Omega$
Sub 1-GHz RF Low power sub 1-GHz RF ICs/solutions NORDIC DEVELOPER ZONE	PCN-083	Calibration of Radio Deviation	1.1
	PCN-085	nRF51822 alternate assembly site notice	1.0
	PCN-086	Change in Seven Inch Plastic Reel	1.0
	PCN-088	Second source assembly process for QFN variants	1.0
	PCN-089	Second source wafer fabrication	1.0
	PCN-091	Second source wafer bump process for CSP variants	1.0
	S110-SD5	nRF51822 5110 SoftDevice Specification	Q
	S120-SDS	nRF51822 S120 SoftDevice Specification	Q
	S130-SDS	\$130 nRF51822 SoftDevice Specification
	REFERENCE MANUAL
nRFready DEMO APPS	Code	Name	Version
	nRF51 RM	nRF51 Series Reference Manual	B
	SOFTDEVICES
	Code	Name	Version
	$5110 - 5D - v5$	S110 nRF51822 SoftDevice (Production ready)	ēΙ
	S110-5D-v6	5110 nRF51822 SoftDevice (Production ready)	û
	$$110-5D-v7$	S110 nRF51822 SoftDevice (Production ready)	Ġ.
	S120-SD	S120 nRF51822 SoftDevice (Production ready)	6
	\$130-SD	5130 nRF51822 SoftDevice (alpha)
	SOFTWARE
	Code	Name	Version
	nRF-MCP-x64	Master Control Panel with Master Emulator API (64-bit)
	nRF-MCP-x86	Master Control Panel with Master Emulator API (32-bit)	畝 а
	nRF-Sniffer	nRF Sniffer (First Production release) - PC Software and Device Firmware that allow you to see all Bluetooth low energy packets on the air between two devices.	偤
	nRF51-BLE-Driver	nRF51 Bluetooth Smart GATT/GAP driver for Windows, Used to set up and interact with BLE on an nRF51 device with connectivity firmware and \$110 SoftDevice.	傠
	nRF51-SDK-zip	nRF51 SDK Zip File
	nRF51-Tools	nRF51 toolset installer (JLinkARM, JLink CDC, nRFjprog, and mergehex)

Speed, speed, speed! Features, performance and power Single‐chip application coverage Flexibility and ease of adoption Maturity Enabled by flash and IC architecture Competitors need to spin ROM Competitors have IC constrains

Unique position to 'Tick' next generation IC

3‐4 years IC series to series cycle time nRF52 ‐ upcoming 3'rd generation series Aggressive process scaling Leverage current IC architecture Power, performance, level of integration Leverage and build on existing software Minimize impact on maturity Smoothmigration for customer

Competitive Edge 69

Competitive landscape

Selectioncriteria´s

Maturity and ease of adoption

Features, power and performance

Coststructure

Maintaining and strengthening our edge

Summary

Market leadership, experience and insight Deeply engaged with segment leaders Leading technology platform Powerful and fine‐tuned organization Strong and aggressive roadmap Leverage current architecture and software

Competitive Edge

Capital Market Day, New York City, September 15 2014

Thomas EmblaBonnerud, Director of Product Management

www.nordicsemi.com