The Future of Connectivity

The Future of Connectivity September 15th 2016, Oslo Pål Elstad – CFO at Nordic Semiconductor © NORDIC SEMICONDUCTOR Presentation Highlights Norway’s first pure IoT Company Nordic Semiconductor is the market leader in short-range wireless solutions with ultra-low power consumption

 Proprietary wireless and Bluetooth Smart technologies

 Dominant competitive position in key product segments

This market is expected to grow into a wide range of products (dubbed the “Internet of Things”)

 IoT creates vast new market opportunities for wireless connectivity solutions

 Bluetooth Smart will be a central part of the IoT infrastructure, as a low cost and low power standard for connecting to billions of smartphones and other devices.

Nordic Semiconductor is well-positioned for these growth opportunities, based on its industry-leading wireless solutions and market position

 Bluetooth Smart Leading technology for battery powered wireless applications

 Nordic CTO was Chairman of Bluetooth organization to January 2015 (20,000+ member companies), and key contributor to Bluetooth Smart wireless standard. © NORDIC SEMICONDUCTOR More than 20 years history of low-power wireless circuits

1990´s 2003 2010 2015 Today Tomorrow Revenue MUSD >~10 Revenue MUSD ~18 Revenue MUSD 142 Revenue MUSD 193

Long-Range Low-Power Focus on ASIC’s Launched low-power Pioneered (Application Specific proprietary 2.4GHz Bluetooth Smart Integrated Circuit chip. Shifted entire technology Redefined Bluetooth A pure-play provider focus to low-power Smart with of the most wireless devices nRF52 Family competitive low-power Low-Power wireless circuits «Green» self-powered IoT (e.g. Solar)

Leading and reliable low-power wireless provider

Strong history of innovation and growth © NORDIC SEMICONDUCTOR

Nordic-The IoT Company Vision

A leading vendor of wireless connectivity and embedded processing solutions for internet connected things

Things :  we wear  we carry around  around us at home WAN (1km+)  around us at work  around us in the city LAN (100m+)  around us in the country side PAN  Machine to Machine (M2M) (10m+)

Nordic is about THINGS

 It´s about making things smarter  It´s about making services smarter  Wireless connectivity is important  Power consumption is important  Size and cost is important  It´s about “my things”  It´s about “things around us”

*Source: IOT analytics 5 © NORDIC SEMICONDUCTOR

Challenges with IoT

Many Standards Low Interoperatability Power Consumption Cost

Keeping connected Security And finally- Widespread internet globally

Rational to expect even higher IoT Growth We expect economic rational of the industrial applications to create a strong “need to have” pull

Source: McKinsey Global Institute, Swedbank Research © NORDIC SEMICONDUCTOR Bluetooth Smart is one of many low-power wireless technologies

HaLow

Low-power technologies enable devices to operate for months or years on coin cell batteries ISA100.11a

Other 802.15.4

Other 2.4 GHz Other Sub-GHz Source IHS 2016

8 © NORDIC SEMICONDUCTOR Bluetooth Smart has a major advantage over competing standards

Bluetooth Smart is the only low- power wireless protocol that is native to all mobile platforms

9 © NORDIC SEMICONDUCTOR

The Rise of the Smartphone

Ascension of Pope Benedict XVI

Ascension of Pope Francis

10 © NORDIC SEMICONDUCTOR An emerging market for powering “Things around us” “My things” “Things around us”

The low-power technology has created Cloud Internet an unlimited potential of possible connected products

I’m dropping temperature and making strange Internet noises WiFi

Nearest service provider is immediately notified to schedule preventative maintenance

Bluetooth smart Bluetooth smart and other low power technologies © NORDIC SEMICONDUCTOR Expanding ecosystems enabling growth in “Things around us”

It`s happening now Emerging hubs with Bluetooth smart support © NORDIC SEMICONDUCTOR Connecting the gap: Long Range Low Power Wireless (LPWAN)

Short-range Long-Range “All Things Connected”

Platform

< [5-40km] < [30 meters]

 Cellular-based IoT: Enabling Low-Power Long-Range applications to connect directly to the existing network of cellular base stations across the globe  Highly complementary to short-range wireless; a natural extension of our current business  Technology built upon; Low cost – Long-Range – Low-power – High security © NORDIC SEMICONDUCTOR

Massive market opportunity in LPWAN

Industrial Smart cities

Nordic’s intensified R&D Transport and logistics Above 3.8 billion connected units expected in 2024 Vehicle telematics within LPWAN is expected to materialize revenue from 2019 with a vast number of use cases* with a substantial expected margin uplift from a $4-5 Wearables Object tracking higher chip price

And Environment Connected Utilities monitoring healthcare

Agriculture Predictive maintenance

Nordic is Geared For Growth

Continued Leadership Continued Expansion in Expansion into Low Power in Bluetooth Smart Short-range Wireless Wide Area Network

Fast Growing Market Wider offering for existing verticals Unique synergy with Finland team Leading Customers Base Expansion into new Verticals Fast Growing market for IoT Aggressive Roadmap Leveraging existing platforms Complementing Short-range