Nordic Semiconductor

Earnings Release • Apr 10, 2014

Q1 2014 Investor Presentation

Svenn-Tore Larsen, CEO Robert Giori, CFO

APRIL 10, 2014

Summary – Q1 2014: Rapid growth in sales and order inflows

• Revenue grows by 27% to MUSD 31.5, in seasonally slowest quarter. EBIT increases by 11% to MUSD 0.8.
• Order inflows grow to MUSD 39.7 (vs. MUSD 23.4 in prior year)
• Demand for Bluetooth Smart wireless solutions drives sales growth. BT Smart sales increase to a record high 30% of revenue (vs. 8% in Q1 2013).
• Very heavy product design activity in new «Internet of Things» applications, with many new BT Smart wireless accessories due for release in 2014.

3

Q1 2014 Investor Presentation

Financial Highlights

Robert Giori, CFO

Q1 2014 Financial Highlights (MUSD)

MUSD
Financial objectives	Q1 2014	Q1 2013	Comments
Growth
Revenue	31.5	24.7	Strong growth in sales of Bluetooth Smart
Order Inflow	39.7	23.4	and RFID solutions
Profitability
Gross Margin %	51%	47%	Gross margin improves due to customer mix
Operating Profit (EBIT)	0.8	0.7	Increased R&D and sales activity,
EBIT Margin %	3%	3%	plus accounting items drive opex growth
Net Profit after tax	0.7	0.3
Cash Flow
Free Cash Flow	1.3	-4.8	Improved cash flow from operations
Cash Balance	33.6	32.3
Accounts Receivable	27.1	23.8
Inventory	24.3	13.3	Restock inventory after change in product lines

Group Revenues

• Q1 2014 Revenue of MUSD 31.5 (27% increase from prior year)
• Growth driven by Bluetooth Smart solutions, which represent 30% of revenue

Segment performance – Q1 2014

PC / Tablet Accessories

Wireless mouse, keyboard, presentation tools

Q1 Revenue: MUSD 13.9 (MUSD 13.3)

• Sales of PC accessories has stabilized during last three quarters

TV / appliance remotes, game controls,

Q1 Revenue: MUSD 1.1 (MUSD 1.1)

• New Bluetooth Smart designs expected to drive growth in 2014

Home electronics devices

wireless charging, toys

Mobile / Wearable devices

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

Q1 Revenue: MUSD 11.4 (MUSD 3.9)

• Record high revenue driven by demand for Bluetooth Smart in wearable electronics

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

Q1 Revenue: MUSD 3.2 (MUSD 2.3)

• Rapid growth in revenue driven by recent RFID design wins

ASICs (application specific IC's) Wide sector span

Q1 Revenue: MUSD 1.8 (MUSD 2.6)

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

Consulting services

Custom electronics design

• Q1 Revenue: MUSD 0.0 (MUSD 1.5)
• Project services for existing ASIC customers

Presentation Q4 2013 Investor

Order inflow / order backlog

• Order inflow of MUSD 39.7 in Q1 2014 (70% increase from prior year)
• Order backlog of MUSD 31.5 at quarter-end
• Order cycle remains shorter than normal based on new design activity

Gross margin

• Gross margin of 51 % in Q1 2014
• Gross margin improves from prior year, as the revenue mix changes toward smaller customers

Operating profit (EBIT)

• Operating profit in Q1 2014 of MUSD 0.8 (11% growth from prior year)

• Higher revenue and gross margin partly offset by increased operating expenses

• Operating expenses (incl. depreciation) of MUSD 15.4 in Q1 2014

• ¹⁰ Operating expenses Presentation Q1 2014 Investor 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
• Much slower growth in operating expenses is projected from 2015 with reduced impact of accounting items

USD '000	Q1 2014	Q1 2013	Growth
Total Operating Expense (non-IFRS), including Depreciation*	13,835	12,148	14%
Add: Options expense Less: Capitalized R&D*	1,704 (161)	365 (1,622)
Total Operating Expense (IFRS), including Depreciation	15,378	10,891	41%

* 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 driven by sales of Bluetooth Smart solutions

12

Q1 2014 Investor Presentation

Business Outlook

Svenn -Tore Larsen, CEO

The «Internet of Things» creates major growth opportunities for Bluetooth Smart

• Wireless connectivity is becoming a standard feature in a growing range of electronic products (aka the «Internet of Things»)
• Bluetooth Smart enables these products to interact with a huge ecosystem of smartphones, tablets and other Bluetooth devices, at very low cost and power consumption
• Tremendous design activity now underway, as many new Bluetooth Smart wireless applications come to market

¹⁴ Nordic's sales of Bluetooth Smart solutions Presentation Q1 2014 Investor Bluetooth Smart sales grew to a record high 30% of revenue in Q1 2014, as demand for new «Internet of Things» applications takes off

¹⁵ Bluetooth Smart technology is spreading into many new product categories

PC / Tablet Accessories

• Mice
• Keyboards
• Tablet pens
• Tablet cases
• Game controllers
• Presentation remotes

Mobile / wearable devices

• Fitness sensors
• Medical monitors
• Proximity sensors
• Smartwatches
• Smartphone controls
• Other wearables

Home electronics

• • Remote controls
• Game controllers
• Wireless toys
• Smart lighting
• Smart appliances
• Wireless chargers
• Home automation

Installed Sensor networks

• RFID
• Retail beacons
• Mobile payments
• Security / locks
• Indoor mapping
• Smart energy
• Environment sensors
• Automotive

Presentation Q1 2014 Investor

¹⁶ PC / Tablet accessories

• PC accessories market has stabilized during last three quarters
• Tablet accessories are a major growth opportunity for Bluetooth Smart

PC accessories

• Nordic maintains dominant market share
• Still mostly using proprietary 2.4 GHz RF solutions due to large installed base of non-Bluetooth and non-Windows 8 PC's (lacking HW/SW support for BT Smart)
• Demand has stabilized since 2H 2013

Tablet accessories

• Wireless accessories provide much greater convenience when writing on tablets
• Previously used «Classic» Bluetooth due to lack of USB dongle or HID support for BT Smart
• Large new market opportunity as tablets now integrate HID support for Bluetooth Smart, with first major new orders received during Q1 2014

Presentation Q1 2014 Investor

¹⁷ Mobile / Wearable devices

Mobile / Wearable devices have been the first large growth market for Bluetooth Smart, and continue to grow at a rapid rate

Sports

Measures athletic performance

• Running speed and distance
• Heart rate monitors
• Cycle meters
• Smart sports equipment

Security

Prevents loss of valuables

• Electronic keys
• Security tag and location finder
• Autolock for PC or mobile
• Child monitor

Smartwatches

Easy access to mobile phone

• Caller ID for incoming voice calls
• Missed call alerts (name and photo)
• Calendar and appointment
• Music control

Health & Wellness Monitors fitness and lifestyle

• Activity monitors
• Weight scales
• Sleep monitor
• Body fat & BMI meter

Medical devices

Management of medical conditions

• Cardiac monitor
• Blood glucose meter
• Blood pressure cuff
• Body temperature meters

Other mobile accessories Diverse applications

• Payment solutions
• Digital jewelry
• Camera controls
• Environment monitors (UV)

Home electronics

• Large market opportunity as wireless technologies are integrated into a broad range of home electronics and appliances
• Remote controls • New Connected TV's and set-top boxes are replacing traditional television • More complex navigation requirements for Connected TVs and other media is driving a transition to Bluetooth Smart remote solutions Home automation Toys and gaming • Wireless technology creates new opportunities for innovative toy designs • Connected TV's and other devices provide an alternative platform for gaming, creating a market for controllers which is not run by console manufacturers • Bluetooth Smart can enable smartphones to control and monitor home environment and major appliances • Indoor sensors, furnishings and kitchen appliances are early markets Wireless Charging • New Rezence wireless charging standard relies on Bluetooth Smart to transfer critical data between the charger and the devices charged • Enables greater spacial freedom and ability to charge multiple devices

¹⁹ Installed Sensor Networks

Nordic's largest and most diverse market opportunity in the longer term – with sensor applications for the home, commercial, automotive, and industrial use

²⁰ Strong competitive advantages

Nordic Semiconductor is the market leader within Bluetooth Smart solutions, with its best-in-class nRF51 product line, software, and customer experience.

Wireless system-on-chip performance

• High radio sensitivity with ultra-low power consumption
• ARM Cortex M0 CPU
• 256kB/128kB Flash memory for application and protocol stacks (non-volatile memory)
• Unique multiprotocol functionality (BT Smart, ANT, proprietary RF)
• Stable and mature system architecture

Software and Developer Support

• Feature rich and stable Bluetooth Smart stack
• Unique separation between application and protocol stack – eases product design
• Unique DFU (design for upgradability) feature – protects from software bugs and obsolescence
• Strong documentation, development tools, application software and reference designs

Experience in Ultra-low power wireless category

• Clear market leader over 1 billion IC's sold
• Major contributor to Bluetooth Smart standard
• Board member of Bluetooth SIG from 2011
• Chairman of Bluetooth SIG from 2012
• Very strong reference customers

• Application design and market know-how

• ²¹ New R&D Office in Krakow, Poland Presentation Q1 2014 Investor Nordic opens new R&D office in January 2014, with focus on software development

• Very attractive nearshoring location, based on availability of highly skilled talent, local technical universities, and proximity to Norway

Business Outlook

• Strong growth in revenues, driven by Bluetooth Smart sales
• Sales of BT Smart expected to more than triple in 2014 (i.e., MUSD 63+ in Bluetooth Smart sales)
• Continued growth in wearable fitness monitors, plus many new designs in emerging product categories
• Gross margin of approximately 50% in 2014
• Operating expenses including depreciation projected to grow to approximately MUSD 60 - 64 in 2014*
• 2014 Opex growth driven heavily by accounting items (options / capitalized R&D), which are expected to diminish in 2015

²³ For more information on Nordic

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

• 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