Philips to transfer remaining mobile phone activities to CEC

Thursday, October 12, 2006 - Amsterdam, the Netherlands and Beijing, the People’s Republic of China – Royal Philips Electronics (NYSE:PHG, AEX:PHI) has signed a letter of intent to transfer its remaining Mobile Phone activities to China Electronics Corporation (CEC) . CEC will take over the responsibility for Philips’ Mobile Phones business, which currently has an annual turnover of approximately EUR 400 million and approximately 240 employees, mainly in Asia Pacific and Eastern Europe.

Under the terms of the letter of intent, CEC will receive a global license to market and sell mobile phones under the Philips brand for the coming five years.



The transaction is still subject to confirmatory due diligence. The transaction will be conditional on all required shareholder, government and regulatory approvals and consents and is expected to be completed by the end of 2006.

About Royal Philips Electronics

Royal Philips Electronics of the Netherlands (NYSE: PHG, AEX: PHI) is a global leader in healthcare, lifestyle and technology, delivering products, services and solutions through the brand promise of “sense and simplicity”. Headquartered in the Netherlands, Philips employs approximately 125,500 employees in more than 60 countries worldwide. With sales of EUR 30.4 billion in 2005, the company is a market leader in medical diagnostic imaging and patient monitoring systems, energy efficient lighting solutions, personal care and home appliances, as well as consumer electronics. News from Philips is located at www.philips.com/newscenter.

About CEC

China Electronics Corporation (CEC) engages mainly in four business fields: semiconductor, computer software/hardware & system integration, telecommunication network & terminals, and digital home appliances. Sales revenue of CEC in 2005 was RMB53.38 billion Yuan. Its business activities cover the complete value chain of the industry, including R&D, design, manufacturing, application, marketing & distribution and technical service. In the fields of semiconductor, computer software & hardware, telecommunication engineering and mobile handsets, CEC takes a pioneering position in China in terms of production scale, technology level and R&D capability. News from CEC is located at www.cec.com.cn.

Forward-looking statements

This release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and certain of the plans and objectives of Philips with respect to these items. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.

Contact Information

Nanda Huizing

Philips Corporate Communications

Philips Consumer Electronics

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