Nordic Semiconductor Strategy and Vision

Nordic Semiconductor Strategy and Vision

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Description: Nordic Business Summary, Bluetooth Low Energy Markets and Sales, Media controller segment, Strong semiconductor market supports growth trend, Nordic's market strategy, Leading technology low energy wireless, Penetrate mass market total wireless solutions, Crash course in short range wireless technologies, Low power short range wireless solutions, market leading low power wireless solutions, R&D.

 
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Contents:
wireless living ...

Capital Markets Day
Hotel Continental, Oslo May 11, 2010

1

2

Forward looking statements
This Presentation includes and is based, inter alia, on forwardlooking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Nordic Semiconductor ASA and Nordic Semiconductor ASA's lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Nordic Semiconductor ASA's businesses, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Presentation. Although Nordic Semiconductor ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Nordic Semiconductor ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Nordic Semiconductor ASA nor any of its directors, officers or employees will have any liability resulting from its use. This presentation was prepared for the Capital Markets Day held on May 11, 2010. Information contained within will not be updated. The following slides should be read and considered in connection with the information given orally during the presentation.

3

Agenda
� Introduction (12.00 � 12.35) � Opening statement: SvennTore Larsen, Chief Executive Officer � Business summary: Robert Giori, Chief Financial Officer � Business Overview (12.45 � 14.15) � Sales outlook (shortterm): Geir Langeland, Sales Director � Market outlook (longterm): Thomas Bonnerud, Product Manager � Research & Development priorities: BertelEivind Flaten, R&D Director � External Perspective (14.30 � 16.00) � Bluetooth Low Energy: Fiona Thomson, IMS Research � Customer Perspective: Leif Askeland, Hasbro � Closing comments

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INTRODUCTION SvennTore Larsen, CEO

4

,

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BUSINESS SUMMARY Robert Giori, CFO
5

6

Our vision

Short-range personal interface devices will soon become entirely wireless. Nordic Semiconductor shall be the preferred global vendor of low power radio solutions that enable wireless transmission of information across these devices.

7

Nordic Semiconductor business highlights
Company Overview Nordic Semiconductor is a leading developer and provider of semiconductors for shortrange wireless applications. � Founded in 1983, listed on OSE during 1996 � Specializes in ultralow power wireless applications from a proprietary platform (2.4 GHz RF standard) � Sold 92M semiconductor chips during 2009 Key market segments include: � PC Peripherals � Media remote controls � Sports / Health monitoring � Audio � Other applications Organization of 129 people, of which 84 work in R&D � Sales primarily handled via a global network of distributors � Manufacturing subcontracted to leading semiconductor manufacturer in Taiwan
27 84 18

Key figures
Revenue (MUSD) and EBIT Margin %
70 60 50 40 30 20 10 0 2006 2007 2008 2009 0 % 15 % 10 % 5 % 20 %

Employees
Trondheim (R&D / Admin) Oslo (R&D / Admin / Sales) Abroad (Sales); Hong Kong, Japan, Korea, USA; Taiwan, Philippines

8

Financial performance
� Nordic's revenue growth has accelerated during the past quarters, and has driven a very strong improvement in operating profit margins (EBIT %). � Operating expenses have not increased substantially while revenue grows, as functions which increase with sales (manufacturing, distribution) are primarily outsourced
Revenue (MUSD) and EBIT Margin (%) by quarter 2008 2010
30 30 %

25 20 % 20

Exceptional revenue growth in past few quarters (182% growth in Q1 2010) High gross margin and moderate growth in operating expenses drive EBIT margin % improvement

15

10 %

10 0% 5

0 Q 1/ 0 8 Q2 / 0 8 Q3 / 0 8 Q4 / 0 8 Q 1/ 0 9 Q2 / 0 9 Q3 / 0 9 Q4 / 0 9 Q 1/ 10

-10 %

Revenue (MNOK)

EBIT Margin (%)

9

Investor relations
� Current investor relations activities are focused on increasing awareness of Nordic Semiconductor among international investors Major expansion of IR activities starting in May � � � � � London roadshow (Enskilda): May 13 US East Coast roadshow (Handelsbanken): May 19, 21 European MidCap Forum � NYC (ABG): May 20 US West Coast roadshow (First): May 25 � 27 Meetings with semiconductor analysts from global financial institutions

� In order to facilitate an increase in the liquidity of NOD shares, the Board will propose to the Annual General Meeting a 5:1 share split � Share split will bring the price of each NOD share more in line with the price of other shares listed on the Oslo Stock Exchange

10

Extend product portfolio for new growth opportunities
Sensor device Proprietary Proprietary Communications Communications Protocol Protocol Host device

Current Products PROPRIETARY 2.4 GHz

System Advantages Lowest cost Maximum flexibility/ customization No predetermined qualification or listing fees

System components

� � �

Sensor device with Nordic 2.4GHz low energy wireless solution Proprietary communications protocol (through device vendor, Nordic, 3rd party) Host device with Nordic 2.4GHz low energy wireless solution

One base platform (2.4GHz radio frequency standard) Product evolution for multiple enduser solutions

Sensor device

Host device Low Energy Low Energy Protocol Protocol Dualmode Bluetooth Chip

System Advantages Interoperability with mobile phone, or other Bluetooth Low Energy host device (PC, etc.) Host device can then communicate information onward via mobile network / internet

Bluetooth Low Energy

BlueTM

System components

Ultralow power requirements. Coin cell battery can provide months/years of service.

� � �

Sensor device with Nordic BlueTM singlemode Bluetooth Low Energy solution Bluetooth Low Energy communications protocol (open standard) Host device with Dualmode Bluetooth solution (e.g., mobile phone from outside vendor)

11

What is Bluetooth Low Energy?
Overview � Bluetooth Low Energy is the first open standard for low energy, short range radio technology (available to consumers in 2010) � Offers interconnectivity between small, button cell battery devices (sports / health sensors, watches, etc.) and mobile devices (phones / PC's) � Nordic Semiconductor has taken a leading role in developing the standard within the Bluetooth SIG, and expects to be firsttomarket with singlemode chipsets based on Nordic's existing 2.4 GHz platform
Bluetooth Low Energy peripherals
Link to Phone Health sensor Autolock sensor





Host device



Other Communications Classic Bluetooth GPS Web / data services



Source: Bluetooth Low Energy SIG

12

Positive growth outlook for 2010 and longerterm
Shortterm (2010) � Rapid growth driven by conversion from older wireless technologies to Nordic's 2.4 GHz solutions, particularly within PC peripherals category � Current action: Expand production to meet demand through close integration with supply chain partners, as well as acquisition of additional tester capacity

Longerterm (2011 ) � Primary growth driver is overall increase in wireless units sold, with new product releases across all business segments. Bluetooth low energy standard to further drive market growth for wireless applications. � Current action: Investments in R&D, technical account managers to secure continued competitive advantage in product and customer support

13

Agenda
� Introduction (12.00 � 12.35) � Opening statement: SvennTore Larsen, Chief Executive Officer � Business Summary: Robert Giori, Chief Financial Officer � Business Overview (12.45 � 14.15) � Sales outlook (shortterm): Geir Langeland, Sales Director � Market outlook (longterm): Thomas Bonnerud, Product Manager � Research & Development priorities: BertelEivind Flaten, R&D Director � External Perspective (14.30 � 16.00) � Bluetooth Low Energy: Fiona Thomson, IMS Research � Customer Perspective: Leif Askeland, Hasbro � Closing comments

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SALES OUTLOOK (SHORTTERM) Geir Langeland, Sales Director
14

15

Sales at Nordic Semiconductor
Worldclass technical sales and marketing organization � 22 sales and marketing engineers across 6 offices in Europe, Asia and North America � Direct sales relationships with largest customers, local support to distributors and smaller customers

16

Supported by leading distributors worldwide
Global network of 44 distributors � Distributors provide additional dedicated staff to Nordic, including local development, product and support engineers � Distributors responsible for smaller accounts, as well as all physical distribution

Rapid sales growth in 2010 � key drivers
� Favorable market trends and a strong competitive position drive sales momentum Market growth: PC / Media controllers � Main driver of growth as 2.4 GHz technology captures very high percentage of wireless keyboard / mouse market during 2010 Other segments � Increased adoption of 2.4 GHz, particularly in Sports / Health monitors and Other applications Improved economic environment � Strong growth within semiconductor and related PC / consumer electronics industries � Large temporary boost to order inflow as a result of lengthening order cycles Nordic's competitive position: Product leadership � Nordic is now widely recognized as the market leader in lowenergy wireless solutions � Focus on low energy category results in advanced solutions (systemonchips, reference designs) tailored to the specific needs of the market Longterm customer relations � Many recent product launches with 3+ year expected lifetime and high switching costs � Vendors are increasingly building entire product lines based on Nordic's components

Rapid sales growth in 2010 � key drivers
� Favorable market trends and a strong competitive position drive sales momentum Market growth: PC / Media controllers � Main driver of growth as 2.4 GHz technology captures very high percentage of wireless keyboard / mouse market during 2010 Other segments � Increased adoption of 2.4 GHz, particularly in Sports / Health monitors and Other applications Improved economic environment � Strong growth within semiconductor and related PC / consumer electronics industries � Large temporary boost to order inflow as a result of lengthening order cycles Nordic's competitive position: Product leadership � Nordic is now widely recognized as the market leader in lowenergy wireless solutions � Focus on low energy category results in advanced solutions (systemonchips, reference designs) tailored to the specific needs of the market Longterm customer relations � Many recent product launches with 3+ year expected lifetime and high switching costs � Vendors are increasingly building entire product lines based on Nordic's components

19

Current growth driver is PC/Media controller segment
� Q1 2010 Revenue of MUSD 29.5 (182% annual growth) � PC / Media controllers segment is key revenue driver, with 249% annual growth � Increasing adoption of Nordic's 2.4 GHz components among PC peripherals vendors
Segment revenue by quarter 2008 � Q1 2010 (MUSD)

30 25 20 15

Total Revenue growth: 182 %

Key revenue driver: PC / Media controllers

10 5 0
Q1/08 Q2/08 Q3/08 Q4/08
Other applications ASIC / Consulting

(249 % annual growth)

Q1/09

Q2/09

Q3/09

Q4/09

Q1/10

PC / Media controllers Sports / Health monitors Audio devices

20

With solid performance across other product segments
PC / Media controllers Wireless PC mouse / keyboard, Game controller, Media center remote control Q1 Revenue*: MUSD 19.9 (MUSD 5.7) � PC Peripherals: Conversion from 27MHz to Nordic 2,4GHz solution in lowend / high volume segment � Game controller: New designs for interactive controllers under development � Media remotes: RFbased remote controls for advanced media centers under development Other applications Toys, RFID, etc. Q1 Revenue*: MUSD 3.6 (MUSD 1.4) � One emerging application is currently driving revenue growth ASIC components / consulting Wide sector span Q1 Revenue*: MUSD 3.0 (MUSD 2.2) � Sales of custom ASIC components to support existing customers; not a focus area for growth Sports / Health monitors Sensors, watches, GPS Q1 Revenue*: MUSD 2.5 (MUSD 0.7) � Growth driven by increased penetration of entrylevel and midmarket vendors Audio devices Wireless audio streaming, microphones, gaming headsets Q1 Revenue*: MUSD 0.4 (MUSD 0.5) � Audio streaming for gaming headsets is primary revenue source

* Reflects Q1 2010 revenue (Q1 2009 in parenthesis)

21

Strong semiconductor market supports growth trend
� Nordic's 182% annual growth rate in Q1 2010 compares with revenue growth of 58% for the global semiconductor industry during the quarter � Analysts project growth of 20%+ in semiconductor market during full year 2010
Revenue growth by quarter 2008 � Q1 2010 (MUSD)
200 % 180 % 160 % 140 % 120 % 100 % 80 % 60 % 40 % 20 % 0% -20 % -40 %

High growth premium vs. global semiconductor market � Nordic Q1/10 growth rate: 182% � Market Q1/10 growth rate: 58%

Q1/ 0 8

Q2 / 0 8

Q3 / 0 8

Q4 / 0 8

Q1/ 0 9

Q2 / 0 9

Q3 / 0 9

Q4 / 0 9

Q1/ 10 *

Nordic Semiconductor

Global Semiconductor Market*

* Source: World Semiconductor Trade Statistics.

Rapid sales growth in 2010 � key drivers
� Favorable market trends and a strong competitive position drive sales momentum Market growth: PC / Media controllers � Main driver of growth as 2.4 GHz technology captures very high percentage of wireless keyboard / mouse market during 2010 Other segments � Increased adoption of 2.4 GHz, particularly in Sports / Health monitors and Other applications Improved economic environment � Strong growth within semiconductor and related PC / consumer electronics industries � Large temporary boost to order inflow as a result of lengthening order cycles Nordic's competitive position: Product leadership � Nordic is now widely recognized as the market leader in lowenergy wireless solutions � Focus on low energy category results in advanced solutions (systemonchips, reference designs) tailored to the specific needs of the market Longterm customer relations � Many recent product launches with 3+ year expected lifetime and high switching costs � Vendors are increasingly building entire product lines based on Nordic's components

Nordic's market strategy
Develop market leading RF technology to attract highend brands / then design total solutions at competitive cost to capture mass market share

Key Purchase Criteria Performance

Market entry

High End

Develop marketleading RF technology and sell to top brands in each segment � Gain reference customers � Direct sales

Mid Market

Market penetration Build total RF solutions at competitive cost to attract massmarket customers

Entry Level
Cost

� Establish reference designs / systemonchip solutions to lower integration costs � Distributor sales

Leading technology in lowenergy wireless
� Market leading technology for wireless personal interface devices � High data transfer rate � Coexistance with other wireless devices (low interference) � Rapid response time � Ultralow power consumption Competitive technologies
� Strong data transfer rate and coexistence, but power consumption

Bluetooth

is major limitation � Dominant in voice applications � Limitations in data transfer rate, interference from other wireless applications, antenna size (27 MHz) � Losing market share to 2.4 GHz solutions in many applications

Sub1 GHz RF (e.g. 27 MHz)

Infrared

� Severe limitations in data transfer (one way), interference and range � Most commonly used technology in remote controls

25

Technology advantages (vs. 2.4 GHz competitors)
Leads market with ultra low power requirements ....
Peak current requirements (mA)

... and strong performance over key purchase criteria

40 36 35 30 25 20 15 10 5 0 Zigbee (TI CC2430) TI CC2500 Bluetooth (CSR BC4) Cypress Wireless USD LP Nordic RF24Lo1+

Purchase criteria Solution cost

Nordic

Texas

Cypress

AlfaPlus (Taiwan)

Size

27

25 21

Peak current: coin cell battery* (20 mA)

Performance

13,5

System-onchip solutions Development tools Reference designs Technical support

* Peak current for coin cell battery (CR 2032)

26

Penetrate mass market with total wireless solutions
Design total solutions at competitive cost to attract entrylevel and midmarket vendors 1. 2.4 GHz transceiver 2. Systemonchip solution 3. Reference designs

� Nordic proprietary 2.4GHz RF transceiver � Market leading technology for low energy wireless applications

� + + +

Nordic 2.4GHz transceiver, plus builtin microcontroller memory application peripherals (e.g., USB controller)

� Complete application prototype (includes PCB + plastics) � Total solution with application specific firmware that operates on systemonchip

= Key components built on chip

Benefits for Customer � Reduce component costs � Systemonchip solutions cost less than purchasing and integrating components separately � Reduce development requirements � Reference designs reduce demands on product development

Benefits for Nordic Semiconductor � Capture additional revenue from added components � Improve ASP / gross margin � Increase sales volumes � Target midmarket and entrylevel product lines where cost is critical

New product designs generate longterm customer relations
Systemonchip solutions and reference designs drive increased development activity among customers

Unit sales of development kits � Significant growth (172%) in sales of product development kits ordered in 2H 2009 vs. 2H 2008
1092 892

1200 1000 800 600 400 200 0 2H/08 1H/09

� Sales of development kits indicate high design activity among customers � Rapid adoption of systemonchip solutions and reference designs within customer engineering teams � Typical product lifetime of 3+ years following design win and product release � Design requirements create barrier to entry from competition during product lifetime
24%

402

2H/09

Action: Expand production to meet demand growth
� Focus on increasing capacity across supply chain

Wafer processing

Encapsulation & Test
Amkor, Philippines � Hire local onsite supply chain management � Acquisition of additional testers

Distribution

TSMC, Taiwan � Increase production to meet demand for processed wafers � Expand to multiple foundries within TSMC

Global distributor network � Expand key account management to support leading customers � Manage deliveries to customer requirements

Implications � Nordic Semiconductor is expanding capacity across all stages of the supply chain, in response to customer demand � Nordic's production capacity will increase further with the expansion to multiple wafer foundries within TSMC (end2010)

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MARKET OUTLOOK (LONG TERM) Thomas Bonnerud, Product Manager
29

Crash course in shortrange wireless technologies
There a quite a few of them (the alphabet soup...)
WiFi a/b/g/n WiFi Direct 2.4GHz ISM Sub. 1GHz ISM Zigbee Bluetooth low energy

They all have their unique advantages and disadvantages Data rate Range Power consumption Interoperability

Bluetooth BR/EDR RF4CE NFC 47 MHz Bluetooth Highspeed ANT Infrared 27 MHz 6lowpan

Network topologies Operation frequency/method

UWB

Chipset price

31

Low power shortrange wireless solutions
Key low power category requirements � Medium (1 � 3 Mbps) � Approx. 10 meters in typical use � Months to years of battery lifetime Low power technologies � 2.4GHz ISM (proprietary) Range � Bluetooth low energy � ANT Power consumption Operation/ Frequency Chipset price � Zigbee � RF4CE � 27 MHz / 5 kHz RF � Worldwide operation � Infrared

Data rate

� Low cost ($29 retail end product)

Projected market growth of 2.4 GHz low power solutions*

Media remotes Toys Sports and fitness PC Peripherals

1.1B units
(Est. 2013)

Gaming

300M units
(Est. 2009)
Others... Mobile phone peripherals Automation Healthcare Audio

* Note: 2.4 GHz low power solutions include proprietary solutions (including game consoles, ANT), Bluetooth low energy components (single mode), other low power standards (Zigbee, RF4CE)

Nordic's market leading low power wireless solutions
Proprietary 2.4GHz
� Maximum flexibility � Excellent cost structure

Ultra low power consumption
Years of battery lifetime Coin cell battery operation

Vertically integrated solutions
SoCs, firmware, software Reference designs

Single mode Bluetooth low energy
� Open standard � Interoperability � Dual mode Bluetooth solutions � High penetration of Bluetooth in mobile phones � Focused on sensor and control applications � Bluetooth brand awareness

Low cost Quality Robust and reliable

ANTTM

� Close to 10M sensors on the market � "defacto" standard for sports and fitness � Interoperability � Dual mode ANT + Bluetooth solutions available � Advanced network topologies � Focused on sensor applications

PC Peripherals
Growth drivers: Conversion to 2.4 GHz technology + sales of PC with bundled wireless mouse / keyboard

Estimated IC component sales

Solid growth in aftermarket products � Wireless category is growing

500
421

400 300

64

� 2.4GHz goes mainstream for new designs across all categories � Rapid replacement of 27MHz � Nordic has a dominant market position

200 100

189 105

357

24% � Shift from transceivers to SoCs

Growth opportunity in bundling
84

0
2009 2013

� 90%+ of all new PC still ships with wired � Leading vendors are moving towards bundling with wireless

2.4 GHz low power solutions* Other wireless solutions

Source: Company estimates based on multiple sources * See definition on previous page

Sports / Health monitors
Growth drivers: Sports goes mainstream consumer, expansion with healthcare

Estimated IC component sales

Sports monitors � Major brands entering the market

100 80 60 40 20 0

95 9

� New innovation products targeting a broader audience � 2.4GHz / ANT goes mainstream for new designs across all categories

86 33 27 6
2009 2013

� Nordic has a dominant market position Healthcare � Wireless technologies enable health monitoring in a more effective, convenient and less costly manner � Bluetooth low energy and ANT can provide an interoperable standard, with connectivity to mobile phone

2.4 GHz low power solutions* Other wireless solutions

Source: Company estimates based on multiple sources * See definition on previous page

Media remote controls
Growth drivers: New generations of home entertainment devices will require RF remote controls

Estimated IC component sales

How we consume media is changing � Internet / ondemand delivery model � All in one devices � media servers

150

150

100

� Large selection of content � modern user interfaces � RF is required for smooth navigation

50

� Requirements fit well with Nordics product lineup
2

0
2009 2013

2.4 GHz low power solutions*

Source: Company estimates based on multiple sources * See definition on previous page

Game controllers
Growth drivers: Next generations of game consoles and new games requiring specialized controllers

Estimated IC component sales

Gaming is changing � Market is currently dominated by proprietary 2.4 GHz technologies, defined by the game console manufacturer � New devices broadening the gaming experience needs different technology � Sensors, 3D glasses and beyond

250 200
167

231

150 100

� Some are good fit with Nordics technology
50 0
2009 2013

2.4 GHz low power solutions*

Source: Company estimates based on multiple sources * See definition on previous page

Toys
Growth opportunities: New wireless technologies enable development of innovative new products

Estimated IC component sales

Challenging, but solid long term potential � Still dominated by 27 and 47MHz solutions � Price gap to 2.4GHz shrinking

250 200 150 100 50 0
5
2009

240 190

� Very competitive market
211 185

� 2.4GHz enables new features for existing applications � 2.4GHz enables new applications not possible with legacy technologies

29
2013

� Strong interest from several leading vendors

2.4 GHz low power solutions* Other wireless solutions

Source: Company estimates based on multiple sources * See definition on previous page

Audio devices
Growth drivers: Demand for wireless audio streaming to eliminate need for inconvenient wires

Estimated IC component sales

Selected opportunities in wireless audio outside of Bluetooth headsets � Wireless audio is gaining momentum in applications beyond mobile phone headsets � New opportunities for Nordics technology in home entertainment systems and gaming

350 300 250 200 150 100 50 0
13
2009

335

246 285 233

� Examples are wireless microphones, headsets and subwoofers

50
2013

2.4 GHz low power solutions* Other wireless solutions (incl. Bluetooth)

Source: Company estimates based on multiple sources * See definition on previous page

Emerging opportunities with mobile phone
Smartphone OS and third party APPS is a key enabling technology for innovative mobile phone peripherals

Fitness APP

Fitness sensor 1.2B+ mobile phones per year

Nordic is well positioned for further growth

High growth market opportunity in low power wireless

Strong market position and leading products

1.1B units 300M units
(Est. 2009) (Est. 2013)

Competitive advantages in a fast growing market
Nordic's competitive advantages Potential entrants Advanced established companies
Expanding existing product lines

Market leading technology platforms
� Competitive products

Vertically integrated product offering
� SoCs, protocol stacks, software, reference design

Strong customer relationships Smaller aggressive companies
Price killers Targets lowend products
� Knowing which products to design

Application/market knowhow
� Designing and supporting products that fits the application requirement

Other technologies
Zigbee / RF4CE Bluetooth BR/EDR

Competitive cost structure Focused product portfolio Flexible technology platforms
� Supporting new wireless technologies

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RESEARCH & DEVELOPMENT BertelEivind Flaten, R&D Director
43

44

Background: R&D at Nordic Semiconductor
Nordic's R&D team � Very highly qualified team of 84 engineers, including 13 PhD's and 65 Masters graduates � 15 years of experience related to design of wireless solutions � Recruiting top class engineers worldwide to Trondheim, Norway. � 20% of the R&D team is foreignborn, from 13 countries and 4 continents � Wireless design areas � Nordic 2.4 GHz proprietary � ANT � Bluetooth low energy

45

Investing in R&D to secure longterm market leadership
Expand R&D team in 2010, with focus on maintaining longterm competitive advantage
RF IC design

� Development of nextgeneration transceiver platform, with industryleading performance and power consumption � Release of Bluetooth low energy solutions � Upgrades to existing SystemonChip components � Next generation SoC platform � Bluetooth low energy link layer and protocol stack � Embedded firmware for nextgeneration product platform � Software for new product applications � Complete reference design for new applications, including PCB / Antenna and applicationspecific hardware � Focus on Bluetooth low energy reference designs � Support customers with design and release of new products containing Nordic components

SystemonChip integration

Embedded Firmware design

Application design

TAM and technical support

RF Integrated Circuit Design
Key R&D focus: Development of nextgeneration transceiver platform, with � industryleading performance and power consumption � Stateoftheart transceiver design for short range wireless solutions in 2.4 GHz ISM band � ultra low power consumption � excellent coexistence � exploiting CMOS technology in new and unique ways � continuous focus on mixedmode design methodology � Transceiver design for proprietary solutions and for Bluetooth low energy � Developed in close cooperation with TSMC � All semiconductor technologies needed for Nordic Semiconductor is available from TSMC

SystemonChip Integration
Key R&D focus: Release of Bluetooth Low Energy solutions, systemonchip upgrades, and nextgeneration SoC platform � System on Chip (SoC) solutions designed in collaboration with key customers and markets � power management � integration of Nordic's transceivers with other electronic components � application peripherals � microcontrollers � memory � etc. � Continuous focus on SoC design methodology including design for test � Developed with stateoftheart tools from leading CAD vendors

Embedded Firmware Design
� Key R&D focus: Bluetooth low energy link layer and protocol stack; embedded firmware for nextgeneration product platform

� Development of application peripheral software and protocols for Nordic's SoC solutions � protocol development to minimize energy consumption and interference � Protocols include: � GazellTM, proprietary protocol optimized for PC peripherals � Bluetooth low energy � first wireless standard to combine interoperability with ultralow power consumption � standardization work � implementation work � link layer � host stack � profiles � ANT in cooperation with Dynastream

Application Design
� Key R&D focus: Complete reference design for new applications, with focus on Bluetooth low energy technology
� Example: Remote control car reference design (2010) Key features enabled by Nordic's technology � 2way communication � no practical limits of number of cars in one race � sensors in car with communication back to remote control/PC � race course with waypoints � logging of race data to PC � share data on internet � Reference design includes � hardware design � circuit board design � protocol development � application software

Technical Support
Key R&D focus: Support customers with design and release of new products � containing Nordic components � Nordic's products can be used in many applications with different requirements � Customers competence rarely covers the whole range needed to design in our products into their application in an optimal way � Nordic's technical support team has engineers that are experts on our products and key applications � Technical support to minimize design in time, eg. time to market

51

Agenda
� Introduction (12.00 � 12.35) � Opening statement: SvennTore Larsen, Chief Executive Officer � Business summary: Robert Giori, Chief Financial Officer � Business Overview (12.45 � 14.15) � Sales outlook (shortterm): Geir Langeland, Sales Director � Market outlook (longterm): Thomas Bonnerud, Product Manager � Research & Development priorities: BertelEivind Flaten, R&D Director � External Perspective (14.30 � 16.00) � Bluetooth Low Energy: Fiona Thomson, IMS Research � Customer Perspective: Leif Askeland, Hasbro � Closing comments

wireless living ....

BLUETOOTH LOW ENERGY Fiona Thomson, IMS Research
52

Market Analysis � Size of Opportunity
IMS Research Fiona Thomson, Research Director Connectivity Group

Bluetooth low energy

www.imsresearch.com

� Copyright 2010 IMS Research

IMS Research Credentials
Independent market research company Focused on the electronics industry 80 analysts, 16 research groups, 3 worldwide locations

Wellingborough, UK

Austin, Texas Shanghai, China

1989 � IMS Research founded 1996 � First connectivity report published 1999 - First Bluetooth report published 2004 � First Bluetooth SIG research agreement

www.imsresearch.com

� Copyright 2010 IMS Research

Presentation Content
Setting the Scene Top Level Picture � Revenues & Unit Shipments Dual-mode Situation Device & Use-cases Driving Single-mode Single-mode Forecasts Conclusions / Q&A

www.imsresearch.com

� Copyright 2010 IMS Research

Setting the Scene

Potential to be fastest shipping wireless technology ever! Total available market = billions of units Hardware completed 4Q09, ICs in 2010, devices in 2011 Dual-mode - replacing existing Bluetooth ICs Single-mode � driving Bluetooth into new markets

www.imsresearch.com

� Copyright 2010 IMS Research

Revenues
World Revenues for Bluetooth Low Energy Technology
1,500,000 Single Mode Bluetooth Low Energy Dual Mode Bluetooth Low Energy 1,000,000 Revenues ($m)

500,000

Source: IMS Research 0

2009 Source: IMS Research

2010

2011

2012

2013

2014 Aug-09

www.imsresearch.com

� Copyright 2010 IMS Research

Unit Shipments
World Market for Bluetooth low energy Technology
1,000,000 Dual-mode Bluetooth Low Energy Single-mode Bluetooth Low Energy

750,000 Thousands of Units Shipped

500,000

250,000

Source: IMS Research

0

2009 Source: IMS Research

2010

2011

2012

2013

2014 Aug-09

www.imsresearch.com

� Copyright 2010 IMS Research

Factors Affecting Forecasts
Short-term volumes dependent on: When the final specification is complete Bundling of single-mode devices A critical momentum of dual-mode and single-mode products Further out, forecasts dependent on: How quickly dual mode is integrated into devices as standard Marketing partnerships Consumer uptake of new devices and use-cases

www.imsresearch.com

� Copyright 2010 IMS Research

Dual-mode Situation
Handsets Needed to excite single-mode device developers Real enablers Standard component Over 80% of dual-mode shipments in 2014 "Other" Notebook PCs Home entertainment Default devices due to replacement scenario
Figure 4.10a High, Central & Low Cellular Handset Forecast Scenarios
1,400,000.0 High Forecast

1,200,000.0 Central Forecast

1,000,000.0 Thousands of Units Shipped Low Forecast 800,000.0

600,000.0

400,000.0

200,000.0

0.0 2009 2010 2011 2012 2013 2014

Source: IMS Research

Aug-09

www.imsresearch.com

� Copyright 2010 IMS Research

Single-mode Device Drivers
This standard is creating a whole new market ecosystem & singlemode Bluetooth low energy is making it all possible Major device drivers:
Dual-mode replacing classic Bluetooth Installed wireless base Industry backing Negligible cost adder for dual-mode Demand for a low power wireless standard Rapid market acceptance & strong awareness of Bluetooth New services/applications

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� Copyright 2010 IMS Research

Use-cases Driving Single-mode
Main Bluetooth low energy driver is new services/applications

www.imsresearch.com

� Copyright 2010 IMS Research

Mobile / Watch
Around 1 billion watches shipped last year For this industry, the main use-case is providing caller ID and SMS alert Bluetooth low energy-enabled watches expected 1H11 Will replace classic Bluetooth at first (Fossil/Sony Ericsson collaboration) but lots of support from other watch OEMs Barriers include:
- battery concerns - difficulties of implementation - a declining market

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� Copyright 2010 IMS Research

Health Monitors
Wireless communication enables OEMs to differentiate their products Bluetooth low energy best targeted where there is a clear need for interoperability There are already million of Bluetooth-enabled medical devices available Home health monitors = initial target
A wireless health scale device from Fairbanks Scales

BodyTel: GlucoTel, a Bluetooth-enabled blood glucose meter

Bluetooth-enabled blood pressure monitor from A&D

Live wireless streaming of vital signs via Bluetooth

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� Copyright 2010 IMS Research

Single-mode
ICs in 2010, devices in 2010/2011 2014 = 150M devices & 160-200M ICs Room for upside Multiple single-mode device connections Unlimited number of potential use-cases Profiles � actuator, sensor, alert, gateway

Figure ES.3 World Market for Single-mode Bluetooth Low Energy Technology by Application
Relative Market Sizes - 2014

PCPC &PC Periperhals & PC Periperhals
Proximity Sports Sensors

Heathcare Watch
2014
Heathcare Watch Home Entertainment

Sports

Home Entertainment Automotive Automotive Industrial Industrial

0

10,000 10000

20,000 20000

30,000 30000

40,000 40000

50,000 50000

60,000 60000

Thousands Shipments Unit of Units Shipped Source: IMS Research Aug-09

www.imsresearch.com

� Copyright 2010 IMS Research

Nordic
Strategic Interest in Nordic / BTLE Working silicon demonstrations = quick to market Competitive single-chip solution

Single-mode is critical to BTLE & Nordic is central to its development

Work closely with Bluetooth SIG & member companies Good Brand / Heavily marketed

Opportunities within BTLE & within wireless industry extensive

www.imsresearch.com

� Copyright 2010 IMS Research

Conclusions
Dual-mode unit shipments � low hanging fruit Single-mode devices � Unlimited number of use-cases � Success dependent on a number of factors but huge potential Acquisition a distinct possibility

Q&A
Presentation data taken from the following IMS Research report:

"Bluetooth low energy: Diversifying Bluetooth Technology - 2009"
Available for purchase � please contact IMS Research; +44 1933 402255

www.imsresearch.com

� Copyright 2010 IMS Research

wireless living ....

CUSTOMER PERSPECTIVE Leif Askeland, Hasbro

52

Wireless Technologies in Toys
May 11, 2010

Hasbro Overview

Hasbro, Inc. Established 1923 5800 Employees Revenue 2009: 4.12 billion 2500 new products yearly

Hasbro Presentation Video

To be in the Toy-Business Is to be in the "Forecasting Business"

Forecasting Foibles

"The techie-dominated Web holds limited appeal for today's mainstream consumers."
-Jupiter Communications, August 1996

Forecasting Foibles

"There is no reason for any individual to have a computer in his home."

-Ken Olson, President, Digital Equipment Corporation, 1977

Forecasting Foibles

"The wireless music box [radio] has no imaginable value. Who would pay for a message sent to nobody in particular?"

-1920s financiers in response to pleas for investment

Forecasting Foibles

"The Americans have need of the telephone, but we do not. We have plenty of messenger boys."

-Sir William Preece, Chief Engineer, British Post Office, 1876

Wireless in the Toy Space
Hasbro Overview History, Key Milestones Technology - Trends
o o o o o o o Ecological Sensitivity User Interface Solutions Embedded Internet Wireless

Predictions
Future of Story Telling Future of Play Future of Learning

Why Nordic?

Key Milestones in Toy Development

1978- Speak and Spell

The first Speak & Spell was introduced by TI in 1978, making it one of the earliest electronic toys using synthesized speech.

1980- Pack Man

Pack Man was first introduced in 1980 and gave birth to the video game category.

1998- Furby

The low cost of computing and memory enabled the production of low cost robotic toys which earlier seemed impossible.

2002- FurReal Friends, Robotic Pets

The introduction of FurReal Friends in 2002 broke new ground in the animatronics category.

Use of Technology in Toys - Examples

Technology in Toys

Furby contains more computing power than that of the Apollo Lunar Module.

Unique Challenges- Cost Restraints

Unique Challenges- Cost Restraints

Unique Challenges- Cost Restraints

Unique Challenges- Cost Restraints

Unique Challenges- Cost Restraints

Unique Challenges

Unique Challenges

Technology Trends

Consumer Electronics- 2004
Time to plateau: Digital photo printers
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