DSP Group, Inc. Reports Third Quarter 2002 Earnings

Achieves all time revenue record 62% increase YoY

SANTA CLARA, Calif., October 22, 2002 -- DSP Group, Inc. (NASDAQ: DSPG) today announced results for the third quarter of 2002, ending September 30, 2002.

Record high revenues for our semiconductor business for the third quarter of 2002 were $44,005,000, compared with revenues of $27,143,000 for the third quarter of 2001, an increase of 62%. Net income for the third quarter of 2002 was $8,772,000 and EPS was $0.32 (diluted), compared with net income of $6,854,000 and EPS $0.25 (diluted) for the third quarter of 2001. The discontinued operations, the DSP Core Licensing business, had revenues of $4,852,000 and net income of $981,000 for the third quarter of 2002.

Boaz Edan, COO of DSP Group said: "The successful launch of our 2.4 GHz line of products in the first half of 2002 is reflected in our substantial growth in revenues in the third quarter of 2002 compared with the third quarter of 2001. The 2.4 GHz line of products is driving our sales growth and significantly increasing our market share".

Eli Ayalon, Chairman & CEO of DSP Group stated: "In what may possibly be the most challenging downturn ever faced by the technology sector in general and semiconductor industry in particular, remarkably we have reached all time records in Revenues, Operating profit and Net Profit (excluding one time capital gains). The cash position of the company increased this quarter by $13,152,000.
Mr. Ayalon went on saying: "These results show that following the spin off of our DSP Core Licensing business, we will be left with a strong fabless semiconductor company, having an exceptional level of annual revenues per employee, expected to exceed $800,000 in 2002. Our employees and managers continue to show leadership in these tough times by achieving these excellent results.

In connection with the closing of the deal with Parthus Technologies plc, Moshe Zelnik, CFO of DSP Group stated: "The High Court of Ireland approved the scheme of arrangement that allows the combination of Parthus and Ceva into one Company. We are currently, together with Parthus, completing the process of registering the combination under the U.S. and U.K. Securities Laws, and expect that the transaction will close and trading of the common stock of ParthusCeva on NASDAQ and the London Stock Exchange will commence immediately following completion of the registration process.

About DSP Group, Inc.

DSP Group, Inc. is a semiconductor fabless company that is a leader in the wireless residential market. By combining its DSP Core technology with advanced RF, communication technology and speech-processing algorithms, DSP Group is a worldwide leader in developing and providing Total Telephony Solutions™. These applications include digital 900MHz, 2.4GHz, DECT and Bluetooth for residential and automotive applications. DSP Group's advanced RF CMOS and communications technology provides the company with a clear path to a Phone-on-a-Chip™ solution. DSP Group also develops and markets embedded, integrated silicon/software solution for Voice-over-Digital-Subscriber Line (VoDSL), voice-over-Internet-Protocol (VoIP) applications, and other voice over packet applications for Integrated Access Device (IAD) and IP Phone.

This press release contains statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including statements concerning the success of our 2.4GHz line of products and the completion of the spin-off of our DSP Core Licensing Business. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. In addition, the events anticipated in these forward-looking statements, including the proposed combination with Parthus, may not actually arise. The Company's actual results could differ materially from those described in this press release if for any reason the spin-off of our DSP Cores licensing business does not occur. Other factors which may effect future operating results or our stock price are discussed under "RISK FACTORS" in our reports on form 10-K for the year ended December 31, 2001 and form 10-Q for the quarter and six months ended June 30, 2002, both of which have been filed with the Securities and Exchange Commission and are available on our 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 website at www.dspg.com or through PRnewswire's web site at http://www.firstcallevents.com/service/ajwz365625949gf12.html. For more information, please contact Yaniv Arieli, Investor Relations, DSP Group at (408) 986-4423.

	Three Months Ended		Six Months Ended
	September 30,		September 30,
	2002	2001	2002	2001
Product revenues and other	$ 44,005	$ 27,143	$ 97,029	$ 64,687
Cost of product revenues and other	26,433	17,300	58,199	38,458
	__ __ __	__ __ __	__ __ __	__ __ __
Gross profit	17,572	9,843	38,830	26,229
Operating expenses:
Research and development	5,245	5,273	15,124	15,259
Sales and marketing	3,501	2,411	7,978	6,844
General and administrative	1,608	1,391	3,524	3,627
Aborted spin off expenses and other	---	---	865	---
	__ __ __	__ __ __	__ __ __	__ __ __
Total operating expenses	10,354	9,075	27,491	25,730
	__ __ __	__ __ __	__ __ __	__ __ __
Operating income	7,218	768	11,339	499
Other income :
Interest and other income, net	2,416	3,022	7,566	9,637
Equity in earnings of affiliates	--	--	--	105
Minority interest in loss of subsidiary	--	--	--	173
	__	__	__	__
Income after financial and other income Impairment of available-for-sale     marketable securities	9,634 -- __ __ __	3,790 -- __ __ __	18,905 (*) (9,815) __ __ __	10,414 -- __ __ __
Income before provision for     income taxes	9,634	3,790	9,090	10,414
Provision for income     taxes	1,843	96	(**)44	1,825
	__ __ __	__ __ __	__ __ __	__ __ __
Net income from continuing operations Net income from discontinued operations (***)	7,791 981 __ __ __	3,694 3,160 __ __ __	9,046 2,492 __ __ __	8,589 9,284 __ __ __
Net income	$    8,772 _______ _______	$ 6,854 _______ _______	$ 11,538 _______ _______	$ 17,873 _______ _______
Net earnings per share for continuing operations:
Basic	$0.29	$ 0.14	$0.34	$ 0.32
Diluted	$ 0.29	$ 0.14	$ 0.32	$ 0.31
Net earnings per share for discontinued operations:
Basic	$0.03	$ 0.12	$0.09	$ 0.35
Diluted	$ 0.03	$ 0.11	$ 0.09	$ 0.34
Net earnings per share (combined):
Basic	$0.32	$ 0.26	$0.43	$ 0.67
Diluted	$ 0.32	$ 0.25	$ 0.41	$ 0.65
Weighted average number of shares of Common Stock used in computing of:
Basic	27,104	26,732	27,030	26,576
Diluted	27,707	27,790	27,848	27,539

(*) Related to impairment of AudioCodes Ltd. Stock (**) Including tax credit related to impairment of Audiocodes Ltd. (***) (***) Related to the DSP Licensing activities which are planned        to be discontinued following the merger with Parthus

	Three Months Ended		Six Months Ended
	September 30,		September 30,
	2002	2001	2002	2001
Product revenues and other	$ 44,005	$ 27,143	$ 97,029	$ 64,687
Cost of product revenues and other	26,433	17,300	58,199	38,459
	__ __ __	__ __ __	__ __ __	__ __ __
Gross profit	17,572	9,843	38,830	26,228
Operating expenses:
Research and development	5,245	5,273	15,124	15,259
Sales and marketing	3,501	2,411	7,978	6,844
General and administrative	1,608	1,391	3,524	3,627
	__ __ __	__ __ __	__ __ __	__ __ __
Total operating expenses	10,354	9,075	26,626	25,730
	__ __ __	__ __ __	__ __ __	__ __ __
Operating income	7,218	768	12,204	499
Other income :
Interest and other income, net	2,416	3,022	7,566	9,637
Equity in earnings of affiliates Minority interest in loss of subsidiary	-- -- __ __ __	-- -- __ __ __	-- -- __ __ __	105 173 __ __ __
Income after financial and other Provision for income taxes Net income from continuing operations	9,634 1,843 __ __ __ 7,791	3,790 96 __ __ __ 3,694	19,770 3,800 __ __ __ 15,970	10,414 1,825 __ __ __ 8,589
Net income from discontinued operations Net income	981 __ __ __ $ 8,772 ______ ______	3,160 __ __ __ $ 6,854 ______ ______	2,491 __ __ __ $ 18,461 ______ ______	9,284 __ __ __ $ 17,873 ______ ______
Net earnings per share for continuing operations::
Basic	$ 0.29	$ 0.14	$ 0.59	$ 0.32
Diluted	$ 0.29	$ 0.14	$ 0.57	$ 0.31
Net earnings per share for discontinued operations:
Basic	$ 0.03	$ 0.12	$ 0.09	$ 0.35
Diluted	$ 0.03	$ 0.11	$ 0.09	$ 0.34
Net earnings per share (combined):
Basic	$ 0.32	$ 0.26	$ 0.68	$ 0.67
Diluted	$ 0.32	$ 0.25	$ 0.66	$ 0.65
Weighted average number of shares of Common Stock used in computing of:
Basic	27,104	26,732	27,030	26,576
Diluted	27,707	27,790	27,848	27,539

The above pro forma consolidated statements of income have been adjusted to exclude the following items to US GAAP reported net income:

Reported net income per US GAAP Adjustments: Aborted spin off expenses and other	$ 8,772   --	$ 6,854   --	$ 11,538   865	$17,873   --
Impairment of available-for-sale marketable securities (AudioCodes Ltd.) Tax benefit	-- --	-- --	9,815 (3,757)	-- --
	__ __ __	__ __ __	__ __ __	__ __ __
Pro forma net income	$ 8,772 _______ _______	$ 6,854 _______ _______	$ 18,461 _______ _______	$17,873 _______ _______

	September 30,	December 31,
Assets	2002	2001
Current Assets:
Cash and cash equivalents Cash designated to combination Marketable securities and short term bank deposits	$ 21,361 40,759 46,903	$ 39,146   70,893
Trade receivable, net	7,558	6,315
Inventories	9,347	2,048
Deferred income taxes	2,098	2,098
Other accounts receivable and prepaid Expenses	1,149	1,547
Assets of discontinued operation	15,322	12,197
Total current assets	144,497	134,244
Property and equipment, net	4,572	5,390
Long term marketable securities	158,026	139,752
Other investments	8,627	25,536
Other assets, net	6,144	6,229
Severance pay fund	1,302	1,228
	__ __ __	__ __ __
Total Assets	$ 323,138 ________ ________	$ 312,379 ________ ________
Liabilities and Stockholders' Equity
Current liabilities:
Trade payable	$ 7,225	$ 5,123
Other current liabilities	19,308	11,592
Liabilities of discontinued operation	5,454	7,852
Total current liabilities	31,987	24,567
Long term liabilities:
Accrued severance pay	1,365	1,294
Deferred income taxes	1,200	7,541
Total long term liabilities	2,565	8,835
Stockholders' equity:
Common stock	27	27
Additional paid-in capital	155,969	155,969
Less cost of treasury stock	(2,744)	(8,623)
Accumulated other comprehensive income (loss)	(2,057)	2,652
Retained earnings	137,391	128,952
Total stockholders' equity	288,586	278,977
	__ __ __	__ __ __
Total liabilities and stockholders' equity	$ 323,138 ________ ________	$ 312,379 ________ ________