Philips acquires Systemonic, a technology leader in 802.11a/b and g wireless lan semiconductor solutions

Amsterdam, The Netherlands – December 19, 2002 –Royal Philips Electronics (AEX: PHI, NYSE:PHG) today announced a definitive agreement to acquire Systemonic, a leading developer of complete silicon system solutions for multi-protocol, multi-band wireless local area networks (LANs). Systemonic's 802.11a/b and g wireless LAN silicon solution is an extremely high performance, power-efficient chipset. Systemonic has publicly demonstrated multi-band system solutions that deliver wireless streaming audio/video, data and voice in offices, homes and public "hotspots". Philips expects to lead the connectivity silicon solutions market with the addition of wireless audio/video streaming capabilities to create pervasive connectivity in the home, the office and "on-the-go".

The terms of the agreement are not disclosed, and closing is expected to take place within the first quarter of 2003.

Today, 802.11 wireless technology is experiencing tremendous growth in computing and networking products for home and office. This technology will be used in virtually every consumer and business product that needs high-speed wireless connectivity to digital content. Wireless products will include desktops, laptops, peripherals, handhelds, webpads, personal video recording devices and digital entertainment servers. The 802.11a/b and g wireless LAN standards are expected to dominate the wireless connectivity market in the next two years. Systemonic's products, intellectual property and systems expertise will add high-speed wireless capabilities to Philips Nexperia System-on-Chip solutions.

"The acquisition of Systemonic complements Philips vision of the "Connected Home". By adding high-speed wireless connectivity to our strong portfolio of audio/video, connectivity and broadband access technologies, Philips can now integrate all of these key technologies on a single chip so consumers can easily connect to information, entertainment and services anywhere in the home," said Phil Pollok, senior vice president of Emerging Businesses Unit, Philips Semiconductors. "Systemonic created unique technology resulting in one of the highest performance, most power-efficient 802.11a/b and g capabilities. It also serves as the ideal platform to rapidly incorporate new enhancements to 802.11 standards such as Quality-of-Service and security."

"Philips provides the consumer and communications expertise, global sales and marketing reach and manufacturing strength that will give our team the solid foundation to make our vision of wireless connectivity in the home, office and on-the-go come alive faster than ever," said Ruediger Stroh, CEO, Systemonic. "We have developed a unique, flexible platform that is ideal to support new features and wireless standards. Philips understands the value of our innovations, and we are looking forward to quickly incorporate them into sophisticated Nexperia System-on-Chip products."

Systemonic provides technology for a complete two-chip 802.11a/b and g solution that will offer a combination of performance throughput, power efficiency and range that is expected to lead the market. The technology offers better range of up to 70 meters, higher throughput of up to 72 Mbps, and lower power usage than most other products currently available. Systemonic developed a compelling configurable architecture optimized for multi-protocol 802.11 applications with the flexibility to extend to future enhancements of the standard. The architecture also incorporates sophisticated power management features that dynamically power-down functions in the chip that are not being used – dramatically reducing power consumption and extending battery-life for portable products. Systemonic's products, intellectual property and systems expertise will add high-speed wireless capabilities to Philips Nexperia System-on-Chip solutions.

Systemonic has 89 employees located in San Jose, California, Maynard, Massachusetts, and Dresden, Germany. The privately held company was founded in 1999. The company received funding from Apax Partners Funds, Atlas Venture, Bayview, Krone mt, and Lehman Brothers as well as from corporate investors Raytheon and Sony Ventures. Lehman Brothers served as financial advisor to Systemonic in the transaction.

About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 32.3 billion in 2001. It is a global leader in color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products. Its 184,000 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, components, semiconductors, and medical systems. Philips is quoted on the NYSE (symbol: PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips is located at www.philips.com/newscenter

Safe Harbor Statement
This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips 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. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, levels of consumer and business spending in major economies, changes in consumer tastes and preferences, the levels of marketing and promotional expenditures by Philips and its competitors, raw materials and employee costs, changes in future exchange and interest rates (in particular, changes in the euro and the US dollar can materially effect results), tax rates and future business combinations, acquisitions or dispositions and the rate of technical changes. Market share estimates contained in this report are based on outside sources such as specialized research institutes, industry and dealer panels, etc. in combination with management estimates.