DSP Group, Inc. Reports Second Quarter 2010 Earnings

Non-GAAP net income and diluted EPS for the second quarter of 2010 were $4,354,000 and $0.18 per share, respectively, as compared to non-GAAP net income of $718,000 and diluted EPS of $0.03 per share for the second quarter of 2009. Non-GAAP net income and diluted EPS for the second quarter of 2010 excluded the impact of amortization of acquired intangible assets of $2,488,000 associated with the acquisition of NXP's CIPT business and equity-based compensation expenses of $2,233,000. Non-GAAP net income and diluted EPS for the second quarter of 2009 excluded the impact of amortization of acquired intangible assets of $3,058,000 associated with the acquisition of NXP's CIPT business; equity-based compensation expenses of $2,825,000; and a tax benefit of $3,488,000 resulting from a partial reversal of tax reserves.

Ofer Elyakim, CEO of DSP Group, stated, "Our results for the second quarter reflects solid execution and a continued improvement in our business; sales of our DECT products grew sequentially and year over year for both the U.S. and European end markets. We ended the quarter with non-GAAP operating income of approximately $4 million and a strong balance sheet of $121 million in cash and equivalents. Moreover, having focused our R&D resources over the last several quarters on developing our next generation products, we are excited to announce that during the third quarter of 2010 several new innovative products based on our XpandR platform are expected to be launched worldwide."

The Private Securities Litigation Reform Act of 1995

This press release contains statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including Mr. Elyakim's statements about XpandR-based products launching in the third quarter. 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 as a result of various factors, including the sustainability of the market recovery; unexpected delays in the introduction of new products; especially the new generation of multimedia products; fluctuations in gross margins associated with the sale of existing products; the impact of reductions in lead times and inventory levels by DSP Group customers and their customers; slower than expected change in the nature of residential communications domain; DSP Group's inability to develop and produce new products at competitive costs and in a timely manner or failure of such products to achieve broad market acceptance; 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 fiscal 2009 as well as other reports 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.

DSP Group, Inc. (Nasdaq:DSPG) is a leading global provider of wireless chipset solutions for converged communications at home. Delivering system solutions that combine semiconductors and software with reference designs, DSP Group enables consumer electronics (CE) manufacturers to cost-effectively develop new revenue-generating applications with fast time to market. At the forefront of semiconductor innovation and operational excellence for over two decades, and with a growing share of the wireless home telephony market, DSP Group provides a broad portfolio of wireless chipsets integrating DECT, Wi-Fi, PSTN and VoIP technologies with state-of-the-art application processors. Enabling converged voice, audio, video and data connectivity across diverse consumer products - from cordless and VoIP phones to home gateways and connected multimedia screens - DSP Group proactively partners with CE manufacturers to shape the future of converged communications at home. For more information, visit www.dspg.com.