Strategy Award for innovation and unparalleled growth in the global smart card arena. This accolade is the first of its kind given to a company in the smart card market and has been presented to Philips in recognition of its move into the number two position worldwide for the supply of smart card chips.

Philips’ tremendous 80 percent increase in semiconductor revenues for the chip card market during 2001 surpassed all other competitor efforts in the smart card market. The company moved into the number two position in a category comprising all types of smart card ICs.

“Philips’ growth in all of its identification chips strengthens the company’s status as a leading global player in the smart card market,” said Anoop Ubhey, chief technology analyst at Frost & Sullivan. “By focusing on its core strengths and using innovative thinking to move into new application areas, Philips is in an ideal position to drive the identification market forward. What makes this growth particularly impressive is that it was achieved despite the slow down in the economy and the drastic downturn in the SIM card market.”

Philips’ achievement is mainly based on its strong position in the banking and transport markets. The business saw an impressive growth in the banking smart card world based upon its success with the VISA-Java card program in addition to its excellent performance levels in the transport arena with its MIFARE(R) technology – with the shipment of Philips’ 200 millionth MIFARE(R) smart card. Philips has also experienced a growth in the SIM card market.

“This award reaffirms our tremendous capabilities in the chip card IC market fuelled by our leadership in security and contactless interface technology. It highlights our commitment to the market in terms of creating new business opportunities with our partners, identifying new application trends and possibilities and driving industry standards,” said Karsten Ottenberg, senior vice president and general manager of Identification at Philips Semiconductors. “We are on target with our aim to become the number one provider of chip card IC solutions worldwide.”

Philips is a leading player in the identification semiconductor market. It has a broad portfolio of semiconductor chip solutions for smart card, RFID and smart label applications and is already the number one supplier of contactless chip technology used in smart card and smart label applications, car immobilizers and the corresponding read/write ICs for the reader infrastructure in these applications.

Frost & Sullivan’s annual Competitive Strategy Award is presented to companies who have yielded significant gains in market share and shown strategic thinking in the development of new applications areas. Its decision process is based on interviews with industry experts and participants as well as end users and secondary data research.

About Frost & Sullivan

Frost & Sullivan, a global leader in international strategic market consulting and training, bestows Market Engineering Awards to companies demonstrating exceptional market share and leadership skills in the increasingly competitive marketplace. Frost & Sullivan rigorously analyzes specific criteria to determine market engineering award recipients in a variety of regional and global landscapes. Founded in 1961, Frost & Sullivan has offices located worldwide. For further information, visit http://www.frost.com .

Contact: Jamie Frizzell, Tel - 210.247.2496, jfrizzell@frost.com

About Philips

Royal Philips Electronics (NYSE: PHG) of the Netherlands is one of the world’s biggest electronics companies and Europe’s largest, with sales of EUR 32.3 billion in 2001. It is a global leader in color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products. Its 184,000 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, components, semiconductors, and medical systems. Philips is quoted on the NYSE (symbol: PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips is located at http://www.semiconductors.philips.com