DSP Group Third Quarter Revenues Increase to $47 Million

10/21/2003 - DSP Group, Inc. (Nasdaq: DSPG) announced its results for the quarter ended September 30, 2003.

Revenues for the third quarter of 2003 were $47,178,000, an increase of 7% from revenues of $44,005,000 for the third quarter of 2002. Net income for the third quarter of 2003 was $9,640,000 compared with $8,772,000 for the third quarter of 2002 (which included net income of $981,000 related to the discontinued operations of the DSP cores licensing business). Diluted earnings per share (EPS) for both the third quarter of 2003 and 2002 was $0.32. Diluted EPS for the third Quarter of 2002 included an amount of $0.03 related to the discontinued operations.

Eli Ayalon, Chairman & CEO of DSP Group, stated, "We are very pleased with the third quarter results, especially for our continuous quarterly revenue growth on a year-over-year basis for the 9th consecutive quarter. The third quarter is usually the strongest seasonal quarter in our business, we have encountered strong demand for all of our product lines in the third quarter of 2003. We continue to have strong bookings and good visibility into the fourth quarter of 2003."

Moshe Zelnik, CFO of DSP Group, stated: "As previously announced, during the third quarter of 2003, we repurchased 360,000 shares of our Common Stock for a total amount of $7,871,000, at an average price of $21.86 per share. As of September 30, 2003, our cash position, consisting of cash, cash equivalents and marketable securities, reached a level of approximately $267.7 million, reflecting approximately $23.8 million of positive cash flow from operations during the first nine months of 2003."

About DSP Group
DSP Group, Inc. is a fabless semiconductor company that is a leader in the short-range wireless market. By combining its DSP cores technology with advanced RF, communication, video technology and speech-processing algorithms, DSP Group is a worldwide leader in developing and providing short-range communication applications that include digital 900MHz, 2.4GHz, DECT (1.9GHz), 5.8GHz and Bluetooth for voice, data and video communication in residential, SOHO, SME, enterprise and automotive applications. DSP Group's products include advanced RF CMOS and communications technology. DSP Group also develops and markets embedded, integrated silicon/software solution for Voice-over-Digital-Subscriber Line (VoDSL) and Voice-over-Internet-Protocol (VoIP) applications, as well as other Voice-over-Packet applications for Integrated Access Device (IAD) and IP phone. More information about DSP Group is available at www.dspg.com.

This press release may contain statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including statements made by Mr. Ayalon relating to strong booking and good visibility into the fourth quarter of 2003. These forward-looking statements are based on current expectations and DSP Group assumes no obligation to update this information. In addition, the events described in these forward-looking statements may not actually arise. DSP Group's actual results could differ materially from those described in this press release as a result of various factors, including unexpected delays in the introduction of new products; failure to achieve broad market acceptance of existing and new products by existing and potential OEM customers; DSP Group's inability to add new customers and develop and produce new products at competitive costs and in a timely manner; and general market demand for products that incorporate DSP Group's technology in the market. These factors and other factors which may affect future operating results or DSP Group's stock price are discussed under "RISK FACTORS" in the Form 10-K for the year ended December 31, 2002, as well as other reports, including Form 10-Qs, DSP Group has filed with the Securities and Exchange Commission and which are available on DSP Group's Web site (www.dspg.com) under Investor Relations.

Earnings conference call
DSP Group has scheduled a conference call for 8:30 a.m. EDT today to discuss third quarter results and invites you to listen to a live broadcast over the Internet. The broadcast can be accessed by all interested parties through the Investor Relations section (investor message board) of DSP Group's Web site at www.dspg.com or link to: http://phx.corporate-ir.net/phoenix.zhtml?c=101665&p=irol-calendar

If you cannot join the call, please listen to the replay, which will be available for approximately two weeks after the call on DSP Group's Web site or by calling the following numbers:

US Dial-In # 1-888-286-8010 (passcode: 93262663)
International Dial-In # 617-801-6888 (passcode: 93262663)

For more information, please contact Yaniv Arieli, President of US Operations, Investor Relations, DSP Group at (408) 986-4423.

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