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News Release
DSP Group, Inc.


DSP Group, Inc. Reports Financial Results

For the First Quarter 1998

SANTA CLARA, CALIFORNIA -- April 20, 1998 -- DSP Group, Inc. (NASDAQ: DSPG) today announced its financial results for the first quarter ended March 31, 1998.

Revenues for the first quarter of 1998 were $15,676,000, an increase of 11% compared to $14,178,000 in the first quarter of 1997. Net income for the first quarter increased by 59% to $3,211,000 or $0.31 per share (diluted) compared to net income of $2,016,000 or $0.21 per share (diluted), for the first quarter of 1997.

Eli Ayalon, President and CEO of DSP Group stated, "the company marked a significant achievement this quarter, in signing its two first licensing agreements for the new TeakDSPCoreTM. The two licensees of "TEAK" are: National Semiconductor Corp. and Xemics S.A., a Swiss corporation. These two licensing deals, concluded shortly after the announcement of the new TEAK DSP core, strengthen our confidence in the attraction of the new core for advanced DSP applications."

Ayalon added, " The deal with Xemics S.A. includes the porting of the TEAK to one voltage technology by Using the Xemics S.A. cell library. This will open to us new fields of low voltage applications, such as hearing aids and hand held devices, which will broaden the use of our DSP cores by companies we do not address now."

Statements contained in this release concerning future business opportunities pertaining to the company new core technology, new fields of applications and broadening of core usage by companies not currently addressed may constitute forward-looking statements. These statements involve certain risks and uncertainties such as the volume and timing of product orders, the number and timing of new licensing agreements, the Company's reliance on independent foundries and dependence on a limited number of OEM customers and the turbulent economics in southeast Asia. These and other risks are detailed in the Company's Form 10K report for 1997.

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 communications, 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.

This press release is also available through the company's News on Call fax service, which can be reached at (800) 758-5804, company code 112025.

For more information, please contact DSP Group at Santa Clara, CA. (408) 986-4300.

TeakDSPCore is a trademark of DSP Group, Inc.

DSP GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

  Three Months Ended
March 31,
  1998 1997
Revenues:    
Product sales 13,401 11,898
Royalties, licensing and other 2,275 2,280
- - - - - - - -
Total revenues 15,676 14,178
Cost of revenues:    
Cost of product sales 7,727 7,530
Cost of royalties, licensing and other 66 343
- - - - - - - -
Total cost of revenues 7,793 7,873
- - - - - - - - - -
Gross profit 7,883 6,305
Operating expenses    
Research and development 2,028 1,941
Sales and marketing 1,313 1,256
General and administrative 1,092 1,079
- - - - - - - -
Total operating expenses 4,433 4,276
- - - - - - - - - -
Operating income 3,450 2,029
Other income (expense):    
Interest and other income 940 610
Interest expense and other (42) (63)

Equity in income (loss) of equity method investees, net

(66) (204)
- - - - - - - - - -
Income before income taxes 4,282 2,372
Provision for income taxes 1,071 356
- - - - - - - - - -
Net income 3,211 2,016
Net earning per share:    
Basic 0.32 0.21
Diluted 0.31 0.21
Shares used in per share computation:    
Basic 10,080 9,559
Diluted 10,387 9,686


DSP GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

  March 31, December 31,
  1998 1997

ASSETS

   
CURRENT ASSETS    
Cash, cash equivalents and 64,247 65,944
marketable securities    
Accounts receivable, net 4,751 3,594
Inventories 3,502 4,116
Deferred income taxes 2,850 2850
Prepaid expenses and others 1,979 1,441
  - - - - - - - - - -
Total current assets 77,329 77,945
     
Property and equipment,net 3,417 3,488
  - - - - - - - - - -
     
Other investments, net 2,905 2,935
Other assets, net 150 150
Deferred income taxes 650 650
  - - - - - - - - - -
TOTAL ASSETS 84,451 85,168
     
     

LIABILITIES AND STOCKHOLDERS' EQUITY

 
CURRENT LIABILITIES  
Accounts payable 2,788 3,319
Other current liabilities 6,063 7,679
  - - - - - - - - - -

Total current liabilities

8,851

10,988

     
STOCKHOLDERS' EQUITY 75,600

74,170

  - - - - - - - - - -
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 84,451 85,168