CSR plc: Acquisition of UbiNetics' software business for $48 million

Cambridge, UK - 28 July 2005 – CSR plc (“CSR” or the “Company”) (LSE:CSR), today announces that it has entered into an agreement with UbiNetics Holdings Limited to acquire UbiNetics’ software business (“UbiNetics”), for a cash consideration of $48 million (the “Acquisition”). UbiNetics is based in Cambridge UK and specialises in communication protocol software for mobile phone manufacturers. The Acquisition will be financed entirely from CSR’s existing cash resources.

The Acquisition will provide CSR with a strong R&D team to accelerate its existing software developments in Bluetooth, Wi-Fi and UWB (Ultra Wide Band). UbiNetics’ team will also give CSR the capacity to extend its software offering to mobile handset customers. UbiNetics has 170 engineers located in Bangalore India and Shenzhen China, in addition to its Cambridge UK headquarters.

UbiNetics has been developing protocol stacks for GSM, GPRS, EDGE, WCDMA (UMTS) and HSDPA since 1999 and this valuable expertise will help to reinforce CSR’s offering to cellular handset customers. CSR plans to use this existing intellectual property to provide multimode software to handset makers and to “bundle” UbiNetics’ cellular multimode and HSDPA stacks with CSR’s existing wireless protocol and DSP software. CSR will support UbiNetics’ existing customers for its cellular multimode software, and will seek new business in this area, licensing its software to mobile phone companies.

The Board believes that the Acquisition will provide CSR with significant additional research and development engineering talent. CSR expects that this additional resource will increase R&D expenditure by approximately $4.5 million a quarter. UbiNetics currently has limited ongoing revenues.

UbiNetics’ R&D team will also help CSR to develop UMA (Unlicenced Mobile Access) voice and data software for fixed-mobile convergence (FMC) handsets. UMA makes FMC a reality since it enables mobile networks to seamlessly extend across Wi-Fi or Bluetooth. CSR expects UMA to extend the potential market for its UniFi, BlueCore and in future, UWB integrated circuits. Examples of FMC networks already in development today include BT’s Fusion and Korea Telecom’s OnePhone. The combination of the HSDPA protocol stack and Wi-Fi with their well-matched data rates will allow UMA to be extended from today’s voice-centric solutions to high-speed wireless data applications.

The strength of CSR’s software development team has increasingly proven to be a key differentiator between CSR and its competitors, and with today’s acquisition, CSR will move closer to its target of 60 percent of its headcount being involved in software. CSR’s stated aim has been to continue investing in R&D to preserve the long-term future of the business.

Completion of the Acquisition is conditional inter alia on an agreed pre-sale reorganisation taking place within the UbiNetics group.

James Collier, Technical Director and Co-founder of CSR commented, “CSR continues to grow its software development activities. In the mobile phone market we see both call hand-off between cellular and local area networks and high speed data handling as key drivers for the widespread deployment of PAN and LAN. Together with UbiNetics, we will have all the experience, skills, track record and staff required to design the software for Universal Mobile Access and fixed-mobile converged phones. Looking ahead, we plan to extend the range of our products in order to simplify the complex integration task of the mixed hardware/software and multi-standard system that a cellular phone has become.”

John Hodgson, CEO of CSR added, “In acquiring UbiNetics, we are exploiting our distinctive capabilities by extending CSR’s capacity for sustainable innovation and by improving our ability to be flexible to market needs.” Hodgson continued, “There is great synergy here, the UbiNetics team will join CSR to give us a world leading wireless software capability that will help sustain our clear competitive advantage.”

JPMorgan Cazenove acted as financial adviser to CSR.

About CSR
CSR plc (Cambridge Silicon Radio) is a leading global provider of wireless personal area network technology including Bluetooth and Wi-Fi. CSR offers the market leading solutions for Bluetooth, based on BlueCore and UniFi for 802.11a/b/g.

CSR is now producing its fourth generation BlueCore devices for Bluetooth. BlueCore4 supports the Enhanced Data Rate (EDR) standard, which was ratified at the end of 2004. BlueCore4 remains the only EDR silicon to be shipping in volume today. In November 2004 CSR launched UniFi, the first single chip 802.11a/b/g embedded solution specifically targeting the mobile phone and consumer electronics markets.

BlueCore features in over 50 per cent of all Bluetooth devices shipped and over 60 per cent of all qualified Bluetooth enabled products and modules listed on the Bluetooth website with industry leaders including Nokia, Dell, Samsung, Panasonic, Sharp, Motorola, IBM, Apple, NEC, Toshiba, RIM and Sony using BlueCore devices in their range of Bluetooth products.

In March 2005, CSR acquired Clarity Technologies, Inc., for its Clear Voice Capture (CVC) technology that enhances the audio performance of any voice-based product or system. Applications for CVC include wireless headsets, handsets and automotive hands free systems.

CSR has its headquarters in Cambridge, UK, and offices in Richardson, Texas, and Detroit, Michigan, USA; Tokyo, Japan; Seoul, Korea; Taipei, Taiwan; Aalborg, Denmark and Lund, Sweden.

More information can be found at www.csr.com and the partner web site www.btdesigner.com

More information about Bluetooth can be found on the SIG web site at www.bluetooth.com

About UbiNetics Holdings Limited
UbiNetics Holdings Limited is a Cambridge UK based company specialising in communication protocol software for mobile phone makers. In May 2005, UbiNetics Holdings Limited sold its test and measurement business which accounted for the majority of revenues and assets to Aeroflex Test Solutions Limited. The remaining business which is being acquired by CSR had gross assets of £3.6m and incurred an operating loss of £11.1m for the year ended 31 December 2004.