DIALOG SEMICONDUCTOR Plc.: Restructuring of product test operations

Kirchheim/Teck, Germany, 18 September 2006 – Dialog Semiconductor PLC (NASDAQ: DLGS, FWB: DLG) announces the transfer of its final stage production test operations from Kirchheim/Teck-Nabern, Germany to manufacturing test service providers in Asia.

Dialog is investing significant resources in repositioning the company for growth and profitability in 2007 and beyond. Whilst maintaining the key core competences the repositioning is focused on three initiatives – refocusing the product and sales strategies on more profitable growth sectors, strengthening the board and management teams and providing a cost platform for improved margin performance. Thus, the decision to transfer Dialog Semiconductor’s ‘Wafer Test’, ‘Final Test’ and ‘Tape & Reel’ divisions to dedicated outsourced assembly and test organisations in Asia constitutes one step in improving the operational efficiency of the business.

This transfer will be executed in three phases between October 2006 and March 2007 and is estimated to result in annual cost savings of EUR 3.0m. This action will also obviate the need for the company to invest heavily in capital expenditure for test equipment over the next three years.

Announcing the restructuring Jalal Bagherli, Dialog CEO, commented: “We have not taken this decision lightly, given the contribution made to Dialog by its Nabern workforce over the years. However, the outsourcing of our production test operations to Asia confirms Dialog’s true ‘fabless’ model and puts Dialog in a stronger competitive position to exploit the emerging product opportunities in our chosen sectors. The transfer will cut our unit testing costs and reduce our production cycle times as well as increasing our ability to respond to the rapid changes in our customers’ demands.”

A total restructuring charge is estimated at EUR 4.4m, of which only EUR 1.2m has a cash impact resulting from the severance compensation packages and outplacement services provided to the 33 employees who will be made redundant. The remaining EUR 3.2m has no cash impact as it relates to the write down of manufacturing and test assets associated with the change.

As foreseen in the Q2 2006 announcement the adverse trading conditions are persisting through Q3 2006. Consequently, revenues for this quarter are expected to be close to EUR 15m.

The company remains debt free and has healthy cash balances. It continues to invest in product and market development whilst recent design successes and product launches maintain our confidence in a return to growth in 2007.

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For further information and reader enquiries: Birgit Hummel, Dialog Semiconductor, Neue Strasse 95, D-73230 Kirchheim/Teck-Nabern, Germany. Tel: +49 7021 805 412 Fax: +49 7021 805 200 E-mail: birgit.hummel@diasemi.com Web: www.dialog-semiconductor.com

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Note to editors:

About Dialog Semiconductor Dialog Semiconductor creates energy-efficient, highly integrated, mixed-signal circuits optimised for personal mobile, lighting & display and automotive applications. The company provides flexible and dynamic support, world-class innovation and the assurance of dealing with an established business partner. Customers with a significant contribution to revenue include Sony-Ericsson, Apple, Bosch and TridonicAtco.

With its unique focus and expertise in system power management, Dialog brings decades of experience to the rapid development of integrated circuits for power management, audio, display processing and motor control. Dialog’s processor companion chips are essential for enhancing both the performance of hand-held products and the consumers’ multimedia experience. With world-class manufacturing partners, Dialog operates a fabless business model.

Dialog Semiconductor Plc is headquartered near Stuttgart with a global sales, R&D and marketing organisation. In 2008, it had more than $160 million in revenue and was the fastest growing European public semiconductor company, achieving a growth rate of more than 85%. It currently has approximately 300 employees. The company is listed on the Frankfurt (FWB: DLG) stock exchange.