NXP Semiconductors to Purchase SSMC Shares.

EINDHOVEN, The Netherlands -- NXP Semiconductors today announced that it has decided to purchase the SSMC (Systems on Silicon Manufacturing Co. Pte. Ltd.) shares currently held by EDBI (EDB Investments Pte. Ltd.) in the three months following completion of the separation of NXP from Royal Philips. SSMC is a manufacturing joint venture between Philips (50.5%), TSMC (32%) (Taiwan Semiconductor Manufacturing Company Limited) and EDBI (17.5%) located in Singapore. SSMC is recognized as a leading manufacturer of semiconductor technology.

The purchase price for the shares will be approximately US$ 185 million. Pursuant to the SSMC shareholders agreement, TSMC has the right to acquire a pro rata portion of these shares. In that case, NXP will acquire approximately 10.7% of SSMC at a purchase price of approximately US$ 113 million. NXP expects to fund the purchase with cash on hand. EDBI has confirmed it would sell its shares in SSMC at the price specified in the option agreement currently in place between Philips and EDBI, as long as the sale is completed by 31 December 2006.

"This is a significant transaction as it increases our shareholding in a great company with a good cash flow," said Frans van Houten, President & Chief Executive Officer, NXP Semiconductors.

The share purchase announcement follows an agreement between Philips and Kohlberg Kravis Roberts & Co. (KKR), Bain Capital, Silver Lake Partners, Apax and AlpInvest Partners NV that will see the consortium take an 80.1% stake in the semiconductor operation with Philips retaining a 19.9% interest. NXP is Europe's second largest semiconductor company and one of the world's top 10 player semiconductor providers.

About NXP:

NXP is a top 10 semiconductor company founded by Philips more than 50 years ago. Headquartered in the Netherlands, the company has 37,000 employees working in 20 countries across the world. NXP creates semiconductors, system solutions and software that deliver better sensory experiences in mobile phones, personal media players, TVs, set-top boxes, identification applications, cars and a wide range of other electronic devices. News from NXP is located at www.NXP.com.

Forward-looking Statements

This release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of NXP and certain plans and objectives of NXP with respect to these items. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.

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