Wolfson Microelectronics plc (Wolfson or “the Company”), a leading supplier of mixed signal semiconductors for the digital consumer electronics market, provides an update on trading since the announcement of the interim results on 26 July 2004.

Statement on Current Trading

In common with other semiconductor companies, Wolfson is experiencing a slowdown in some of its end markets. Although trading until recently was broadly in line with expectations, order intake levels have led the Company to reassess its outlook for 2004.

In the consumer audio segment, particularly DVDs, the acceleration in orders normally seen at this time of the year is not occurring. This is due to a build up of surplus inventories at manufacturers, causing some customers to cancel orders and delay placing new orders as they deplete their excess inventory.

The Company is continuing to experience strong growth in portable products with sales in this segment expected to more than double in 2004, compared with the previous year, making it the largest contributor to the Company. However, the uptake of multimedia mobile phones in the end market has been slower than expected, causing some customers to scale down their orders.

Trading within the imaging product sector is in line with the Company’s expectations.

As a result, Wolfson now expects its second half revenues to be in the range $56m-$60m. This equates to full year revenues of $113m-$117m, representing an annual growth rate of 50%-55%. Gross margins continue to be in line with previous guidance of 49-51%.

The Company continues to expand its customer base, particularly in Japan and the USA where it has won significant design-ins for major new digital consumer products that are to be launched under global brand names next year. In addition, the Company has expanded its portfolio with new products that are being adopted in the latest digital consumer applications. Hence, in spite of the challenging current market conditions the Company expects to deliver growth in 2005.

David Milne, Chief Executive Officer of Wolfson, said: “We are revising our guidance for the second half because of a lack of the typical pre-Christmas surge in demand for some of our products. Although this is extremely disappointing, Wolfson will still deliver substantial growth in 2004.

“We are continuing to gain market share with our products that are featuring in an increasing number of high profile digital consumer applications supplied by tier-one US and Japanese multinationals. The business remains strong and we expect to deliver growth in 2005.”

Enquiries:

Wolfson Microelectronics
David Milne, CEO
George Elliott, CFO
0131 272 7000

Corfin Communications
Harry Chathli
Neil Thapar
0131 272 7398 on the day and thereafter
0207 645 2990