Dialog Semiconductor

14 Feb 2006

Spin out of Imaging Division 
€22.25m raised from financial investors

Frankfurt / London - Dialog Imaging Systems (DIS) has today announced that it has successfully spun out from publicly-listed Dialog Semiconductor (NASDAQ: DLGS, FWB: DLG) and has raised €22.25m from leading venture capital firms.

DIS makes camera modules for mobile phones which offer the same superior quality as stand-alone digital still cameras. The modules offer the smallest footprint, the lowest power consumption and the highest quality on the market. The modules incorporate innovations in CMOS sensor technology, optics and micro-motors. The company employs 40 people near Stuttgart, Germany, and in Clinton (New Jersey) in the U.S.A. It will be led by Roland Pudelko, former CEO of Dialog Semiconductor.

The funding round was led by 3i, Europe's leading private equity and venture capital company, together with Doughty Hanson Technology Ventures. It includes, in addition, GIMV and L-EA/SEED and Dialog Semiconductor, the former parent company. Achim Lederle and Hansjörg Sage of 3i, Soren Hein of Doughty Hanson, and Bart Diels of GIMV will join the board as non-executives.

CEO DIS Roland Pudelko commented: "We are delighted to have attracted one of the largest funding rounds in recent times from a strong consortium, and we look forward to showing real industry leadership."

Jalal Bagherli, Dialog CEO, added: "Last summer we pledged to find external investment partners for our Imaging division and I am pleased that we have now completed this step. Going forward, we can now focus our strategic efforts on our core semiconductor products in the wireless and automotive and industrial markets."

Achim Lederle, Partner with 3i Germany, said: "We consider the DIS spin-out one of the most attractive early-stage investments in recent years. Through 3i's international network and experience in this marketplace, we will support DIS to become the market leader in high-end camera phone modules."

Hansjörg Sage, Director with 3i Germany added: "We were impressed by the rare maturity of this early-stage company and with the depth of partnerships which it has already built up. In particular the close co-operation with renowned optics companies was an important reason for us to invest."

Soren Hein, Partner with Doughty Hanson said: "Most people always carry their mobile phone with them, and many would like to use their mobile phone as their primary camera, but the user experience has been poor. DIS and its partners will change that."

Bart Diels, Executive Investment Manager from GIMV mentioned: "We couldn't have picked a better investment opportunity for our first technology deal in Germany. Particularly, we were very pleased with the strength of the management team, the level of partnerships they have put together and the quality of the investment syndicate".

Notes to editors

About 3i 
3i is a world leader in private equity and venture capital. We focus on Buyouts, Growth Capital and Venture Capital and invest across Europe, in the United States and in Asia Pacific. Our competitive advantage comes from our international network and the strength and breadth of our relationships in business. These underpin the value that we deliver to our portfolio and to our shareholders. 
For further information, visit: www.3i.com

About Doughty Hanson Technology Ventures
Doughty Hanson Technology Ventures aims to help talented entrepreneurs in Europe to build world-class technology companies. Founded in 2000, Doughty Hanson Technology Ventures is an early-stage, venture capital fund with $272 million under management. The Fund is independently managed by a dedicated team of professionals with substantial personal experience in the technology and financial sectors. The fund is focused on three sectors: software; communications technologies and semiconductors.www.doughtyhanson.com

About GIMV
Since its incorporation in 1980 GIMV has grown into Belgium's most important venture capital provider and company builder. Today it is a major European and international market player. Both in Belgium and abroad, GIMV invests in information and communication technology, life sciences, as well as in growth financing and management buy-outs (MBOs) of companies in more traditional sectors. With its own portfolio and third party fund activities together GIMV today manages more than EUR 1.4 billion. GIMV has been listed on Euronext Brussels since 1997. www.gimv.com

About Dialog Semiconductor
Dialog Semiconductor develops and supplies power management, audio and imaging technology, delivering innovative mixed signal standard products as well as application specific IC solutions for wireless, automotive and industrial applications. The company's expertise in mixed signal design, with products manufactured entirely in CMOS technology, enhances the performance and features of wireless, hand-held and portable electronic products. Its technology is also used in intelligent control circuits in automotive and industrial applications. Dialog Semiconductor Plc is headquartered near Stuttgart, Germany with additional design facilities in the UK, the USA, Austria and Japan. The company is listed on the Frankfurt (FWB: DLG) and on the NASDAQ (DLGS) exchanges.

About L-EA
L-EA (L-EigenkapitalAgentur) is the equity agency of the L-Bank, Karlsruhe/Stuttgart. L-EA has split its core activities in three funds: Venture Fund, Private Equity Fund und Guarantee Fund.
With its 125 million EURO-sized Venture Fund, L-EA finances the development of innovative ideas by start-ups in the high-tech sector, primarily in Baden-Württemberg. The main focus of these investments is on information and communication technologies, as well as biotechnology. L-EA´s activities are supported and accompanied by SEED GmbH, its exclusive management partner.