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DSP Group Announces The Acquisition Of Technology And Products Related To 900-MHz Spread-Spectrum From AMD

Santa Clara, California, February 16, 1999 - DSP Group, Inc., today announced that it has acquired products and technology related to 900-MHz direct sequence spread spectrum (DSS) and 900-MHz RF for cordless telephone applications, from Advanced Micro Devices, Inc., (AMD). The technology acquired from AMD also includes the intellectual property rights specifically related to these products.

As part of the acquisition, DSP Group also gains substantially all of AMD's team of RF engineers who developed the RF products and technology, as well as AMD's RF laboratory equipment, located in Sunnyvale, California.

"This acquisition is in line with our strategy of entering fast-growing markets, using our DSP and speech technologies," said Igal Kohavi, chairman of the board of DSP Group. "The acquisition will enable our company to ship 900-MHz spread spectrum products as early as the second half of 1999. This acquisition will not have any one-time effect on the company's earnings and its effect on the EPS of DSP Group is expected to become accretive during the fourth quarter of 1999."

"AMD's decision to sell our 900-MHz DSS products and technology to DSP Group reflects our strategic focus on designing and producing semiconductor products for the personal computer and PC-connectivity industries, including home networking," said Gary Ashcraft, vice president and general manager of AMD's Communication Solutions & Products. "To ensure a smooth transition during the acquisition, AMD and DSP Group are working closely with prospective 900-MHz DSS customers to address their needs and concerns."

"This acquisition, following our recent acquisition of an integrated group of communication engineers in Israel, will give DSP Group extensive capabilities in the design of base-band and RF Products," said Eli Ayalon, president and CEO of DSP Group.

"We have added 25 wireless communication engineers in these new activities, an increase of approximately 20 percent in the company's headcount," added Ayalon. "We believe that DSP Group's entry into the wireless communication market, together with the introduction of our new line of integrated telephony products, will enable us to significantly grow our revenues in the year 2000."

Statements contained in this release concerning the impact on the company's earnings of the acquisition and the ability of the company to increase revenues during 2000 are forward-looking statements which are based on management's current expectations. Results may differ from those currently anticipated and the company has no obligation to update these statements. Among the factors that could impact the company's ability to increase earnings per share and revenues are the risk that the company will fail to integrate the RF group into its operations, the risks that new products will not be developed when anticipated, that the company will not be successful in marketing those products and that their cost or performance will not be competitive with products of the company's competitors, and the risk that sales by the company's customers of equipment incorporating the company's integrated telephony products will not achieve expected levels. For a more complete discussion of the risk factors which could impact the company's earnings and revenue, see "Factors Affecting Future Operating Results" in the company's report on Form 10-Q for the quarter ended September 30, 1998.

About DSP Group

DSP Group, Inc., is a leader in the development and marketing of high-performance, cost-effective digital signal processing cores used in a wide range of applications for industries such as wireless communication, telephony and personal computing. By combining its DSP core technology with its advanced speech processing algorithms, DSP Group also delivers a wide range of enabling application-specific DSPs. DSP Group is located in Santa Clara, California. (NASDAQ: DSPG)

Additional information about DSP Group is available by calling (408) 986-4300. This and other press releases are also available through the company's News on Call fax service, which can be reached at (800) 758-5804, company code 112025.

About AMD

AMD is a global supplier of integrated circuits for the personal and networked computer and communications markets. AMD produces processors, flash memories, programmable logic devices, and products for communication and networking applications. Founded in 1969 and based in Sunnyvale, California, AMD had revenues of $2.5 billion in 1998. (NYSE: AMD).

Michael Cohen
Investor Relations
DSP Group, Inc.
408-986-4300
mcohen@dspg.com