Nordic Semiconductor

Earnings Release • Feb 11, 2014

FEBRUARY 11, 2014

Q4 2013 Investor Presentation

Svenn-Tore Larsen, CEO Robert Giori, CFO

Highlights: Strong revenue growth in Q4 2013

• Revenue increases by 29% to MUSD 35.6, driven by rapid growth in demand for Bluetooth Smart wireless solutions.
• Operating profit (EBIT) grows to MUSD 4.6 (vs. MUSD 1.9 in Q4 2012)
• Sales of Bluetooth Smart continue to accelerate, with many new products featuring Nordic's wireless solutions due for release in 2014
• Nordic is well-positioned for long-term growth opportunity within new «Internet of Things» applications

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Q4 2013 Investor Presentation

Financial Highlights

Robert Giori, CFO

Q4 2013 Financial Highlights (MUSD)

MUSD
Financial objectives	Q4 2013	Q4 2012	Comments
Growth
Revenue	35.6	27.5	Strong growth in sales of Bluetooth Smart and RFID solutions
Order Inflow	27.7	25.8
Profitability
Gross Margin %	53%	47%	Gross margin improves due to customer mix
Operating Profit (EBIT)	4.6	1.9	Headcount increases, as company invests in new
EBIT Margin %	13%	7%	product platforms
Net Profit after tax	3.3	1.4
Cash Flow
Free Cash Flow	-2.4	14.4	Cash flow falls as working capital balances
Cash Balance	26.1	40.4	increase in response to growing demand
Accounts Receivable	30.0	26.1
Inventory	22.2	11.7

Group Revenues

• Q4 2013 Revenue of MUSD 35.6 (29% increase from prior year)
• Growth driven by Bluetooth Smart solutions, which represent 27.5% of revenue

Revenue split by technology, 2011 – 2013 (MUSD)

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013

Segment performance – Q4 2013

PC / Tablet Accessories

Wireless mouse, keyboard, presentation tools

Q4 Revenue: MUSD 17.5 (MUSD 17.6)

• Sales of PC accessories stabilizes, after decline in 1H 2013

TV / appliance remotes, game controls,

Q4 Revenue: MUSD 1.0 (MUSD 1.9)

• Lower sales of older wireless

Home electronics devices

wireless charging, toys

Mobile / Wearable devices

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

Q4 Revenue: MUSD 10.5 (MUSD 3.8)

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

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

Q4 Revenue: MUSD 3.6 (MUSD 2.3)

• Rapid growth in revenue driven by recent RFID design wins

ASICs (application specific IC's) Wide sector span

Q4 Revenue: MUSD 2.9 (MUSD 1.5)

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

Consulting services

Custom electronics design

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

toy designs

Presentation Q4 2013 Investor

Order inflow / order backlog

• Order inflow of MUSD 27.7 in Q4 2013
• Order backlog of MUSD 23.2 at quarter-end
• Order cycle shorter than normal based on new design activity

Gross margin

• Gross margin of 53 % in Q4 2013
• Gross margin increases from prior quarters based on a change in the revenue mix toward smaller customers

Operating profit

• Operating profit (EBIT) in Q4 2013 of MUSD 4.6
• Operating profit shows solid improvement from prior year, based on higher revenue and gross margin

Strong revenue growth driven by sales of Bluetooth Smart solutions

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Q4 2013 Investor Presentation

Business Outlook

Svenn -Tore Larsen, CEO

Summary – key themes

• Demand for new «Internet of Things» applications is taking off, driving increased sales of Nordic's ultra-low power wireless solutions
• The market is still in its early stages of growth, with many new products featuring Nordic's Bluetooth Smart solutions due in 2014
• Nordic Semiconductor has a very strong competitive position in the market for ultra-low power wireless solutions, with best-in-class technology, customer experience, and developer support.

Exploding interest in the «Internet of Things»

Wall Street Journal, 8-Jan-2014

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

CNBC, 7-Jan-2014 CES 2014: Wearable tech dominates "Wearable technologies are this year's hottest tech niche, and gadget makers are scrambling to develop their own."

TIME, 13-Jan-2014 "The Next Big Thing for Tech: The Internet of Everything"

CBS, 7-Jan-2014 "Internet of things" all the rage at Consumer Electronics Show

Financial Times, 13-Jan-2014

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

¹⁴ Nordic's sales of Bluetooth Smart solutions Presentation Q4 2013 Investor Sales of Bluetooth Smart solutions have increased to MUSD 9.8 in Q4 2013, or 27.5% of revenue, as demand for «Internet of Things» applications grows

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 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

¹⁶ Nordic launches new Bluetooth Smart solutions for Rezence™ Wireless Charging

• Alliance for Wireless Power (A4WP) launches Rezence™ brand and certification program for new wireless charging standard
• Members of A4WP include Samsung, LG and HTC
• Rezence™ wireless charging has significant advantages over competing standards
• Greater spacial freedom
• Ability to charge multiple devices simultaneously
• Rezence™ standard relies on Bluetooth Smart technology to manage the charge session between the charger and the devices being charged
• Nordic Semiconductor has released a software stack and development kit for designing Rezence™ wireless charging solutions with the Nordic nRF51 Bluetooth Smart chip

¹⁷ New market opportunity: Bluetooth Smart location beacons ("iBeacon")

• Location beacons with Bluetooth Smart can activate multiple functionalities on a nearby smartphone or other Bluetooth device
• Retail promotions
• Indoor mapping
• RFID
• Asset tracking
• Wireless Payments
• Location-specific information
• Beacons are low cost to manufacture, and have years of battery life
• Very large market opportunity for Nordic, with several trial rollouts already underway Example: Estimote Beacon

¹⁸ ARM announces collaboration with Nordic Semiconductor on Bluetooth Smart technology

Companies collaborate on mbed™ project to enable the next generation of Bluetooth Smart (aka Bluetooth low energy) wireless products for the Internet of Things

ARM and Nordic Semiconductor Partner to Accelerate Development of Bluetooth Low Energy Enabled Devices

"ARM® and Nordic Semiconductor today announced an agreement to incorporate Bluetooth® Low Energy (BLE) solutions with the ARM mbed™ IoT development platform.

By supporting Nordic's ARM-based Bluetooth SoCs, ARM mbed™ allows developers to rapidly create Bluetooth connected products, demonstrate proof-of-concept and move quickly to high-volume production of devices."

Press release, October 28, 2013

¹⁹ Strong competitive advantages Presentation Q4 2013 Investor 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

²⁰ Record demand for Nordic development kits Presentation Q4 2013 Investor Growing interest in developing Bluetooth Smart applications is driving record-high demand for Nordic's development kits

Business Outlook

• Strong growth in sales, driven by many new "Internet of Things" applications
• Sports / fitness sensors
• Healthcare sensors
• Other wearable devices
• Proximity tags
• RFID
• Connected TV remotes
• Wireless toys
• Home automation
• Wireless charging

• Revenue from Bluetooth Smart solutions expected to more than triple in 2014

• ²² 1 Billion units sold and counting… Presentation Q4 2013 Investor Nordic celebrates its 1 billionth chip sold in December 2013

• 200 million units sold in 2013 alone...

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 been investing 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

²⁴ For more information on Nordic Presentation Q4 2013 Investor Sign up for a Nordic MyPage account on our website www.nordicsemi.com

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