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Philips opens Global R&D Center in Shanghai to develop ultra low cost mobiles


November 11, 2005

PHILIPS OPENS GLOBAL R&D CENTER IN SHANGHAI TO DEVELOP ULTRA LOW COST MOBILES
Sub $20 GSM Handsets Seeks to Narrow Divide between China’s Urban & Rural Areas

SHANGHAI, CHINA - Royal Philips Electronics (NYSE: PHG, AEX: PHI) on the occasion of the Board of Management’s 3rd visit to China in the past 3 years, today announced the opening of the ULC Design Center in Shanghai as a further step in the execution of its China growth strategy. This new global R&D center will be focused on enabling handset manufacturers to develop ultra low-cost (ULC) phones with Nexperia™ Cellular System Solutions for emerging markets. The decision is part of an overall initiative to address the growing consumer demand for low-cost mobile communications in China, India, Africa, South America and Eastern Europe to drive down total handset costs below $15 by 2008.

This ULC Design Center will drive Philips ultra-low cost activities in China, working closely with its existing European design facilities and the Bangalore-based Innovation Campus to contribute towards dramatically reducing costs and bringing handsets to the consumer, manufactured at sub-$20. This initiative responds to growing consumer spending in rural China, and plans to offer them affordable access to mobile telephony in order to bridge the digital divide.

"According to studies by the World Bank, 77 percent of the world's population lives within range of a mobile phone network, but only 25 percent of us subscribe to a mobile phone service," said Gerard Kleisterlee, President and CEO, Royal Philips Electronics. "By offering mobile manufacturers an ultra low-cost Nexperia Cellular System Solution, we are bringing affordable access to wireless communications for an untapped global consumer base of 3.3 billion people in key markets such as rural China."

The first commercially available ultra low-cost handsets based on the Nexperia™ Cellular System Solution will offer voice, SMS and basic multimedia capability, with a black and white screen, providing the basic functionality and low cost desired by new subscribers in emerging mobile phone markets.

" As there are no subsidized mobile phones in China, handset manufacturers must provide consumers with mobile phones they can actually afford. By bringing to market a sub-$5 Nexperia Cellular System Solution, Philips is enabling its customers to dramatically reduce costs and bring sub-$20 handsets to the consumer," stated Tony Lear, Senior Vice President and General Manager, Philips Semiconductors China. "Philips is pleased to give consumers in emerging markets such as rural China the ability to connect to each other as well as to entertainment, information and services while on the move via an ultra low cost handset designed around their needs."

Nexperia is a trademark of Koninklijke Philips Electronics N.V.

About Royal Philips Electronics
Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 30.3 billion in 2004. With activities in the three interlocking domains of healthcare, lifestyle and technology and 161,100 employees in more than 60 countries, it has market leadership positions in medical diagnostic imaging and patient monitoring, color television sets, electric shavers, lighting and silicon system solutions. News from Philips is located at www.philips.com/newscenter.

Source : Royal Philips Electronics

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