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DSP Group Issues Letter To Shareholders Regarding Potential Proxy Contest

As always, the board and management are committed to create shareholder value and welcome an open and collaborative dialog with all of the company's shareholders, and we will keep you informed as these matters develop further.

Truly yours,

Eliyahu Ayalon,   Ofer Elyakim
Chairman of the Board   Chief Executive Officer.

Forward-Looking Information

Certain statements in this letter, including those denoted with *, qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations and DSP Group assumes no obligation to update this information. In addition, the events described in these forward-looking statements may not actually arise as a result of various factors, including DSP Group's inability to develop and produce new products at competitive costs and in a timely manner, unexpected delays in the commercial launch of such products or failure of such products to achieve broad market acceptance; slower than expected changes in the nature of residential communications domain; DSPG Group's ability to control operating costs; and other factors discussed under "RISK FACTORS" in DSP Group's current report on Form 10-K for the fiscal year ended December 31, 2011, which is available on DSP Group's Web site ( www.dspg.com) under Investor Relations. 

Non-GAAP Financial Information

This letter contains references to non-GAAP financial measures. See DSP Group's current report on Form 8-K, filed with the Securities and Exchange Commission (the "SEC") on January 30, 2013, for a reconciliation of the company's GAAP and non-GAAP net income (loss) and diluted net income (loss) per share for the three- and twelve-month periods ended December 31, 2011 and 2012.

Important Additional Information

DSP Group, Inc., its directors and certain of its executive officers may be deemed to be participants in the solicitation of proxies from DSP Group's shareholders in connection with the matters to be considered at DSP Group's 2013 Annual Meeting. DSP Group intends to file a proxy statement with the SEC in connection with any such solicitation of proxies from DSP Group shareholders. DSP GROUP SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT AND ACCOMPANYING PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. Information regarding the ownership of DSP Group's directors and executive officers in DSP Group stock, restricted stock and options is included in their SEC filings on Forms 3, 4 and 5, which can be found at the company's investor relations website ( www.dspg.com ) under Investor Relations. More detailed information regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with the SEC in connection with DSP Group's 2013 Annual Meeting. Information can also be found in DSP Group's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which is also available on DSP Group's Web site ( www.dspg.com) under Investor Relations. Shareholders will be able to obtain any proxy statement, any amendments or supplements to the proxy statement and other documents filed by DSP Group with the SEC for no charge at the SEC's website at www.sec.gov. Copies will also be available at no charge at DSP Group's website at www.dspg.com or by writing to DSP Group at 2580 North First Street, Suite 460, San Jose, CA 95131.

The DSP Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6171

CONTACT: Investor Relations
         Christopher Basta
         Director of Investor Relations, DSP Group
         Work: 1-408-240-6844
         Cell: 1-631-796-5644
         chris.basta@dspg.com
         
         Daniel H. Burch, CEO
         MacKenzie Partners, Inc.
         Work: 1-212-929-5748
         Cell: 1-516-429-2722
         dburch@mackenziepartners.com
         
         Media Relations
         Mike Sitrick and Jeff Lloyd
         Sitrick And Company
         Work: 1-310- 788-2850
         Jeff_Lloyd@sitrick.com
         Mike_Sitrick@sitrick.com

DSP Group

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