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National Semiconductor Revises Revenue Outlook for Third Quarter of Fiscal 2007

Feb 5, 2007

February 5, 2007 -- National Semiconductor Corporation (NYSE:NSM) today announced that it is lowering the company’s revenue outlook for the third quarter of fiscal 2007, ending February 25, 2007.  The company now anticipates that revenue for the third quarter of fiscal 2007 will be down approximately 14 to 15 percent sequentially from the $501.6 million in revenues that were achieved in the second quarter of fiscal 2007.  National had originally guided on December 7, 2006, that third quarter revenues were expected to be down 8 to 11 percent sequentially, of which approximately 2 percentage points was attributable to reduced foundry revenue from the previously disposed of Cordless and PC Super I/O businesses.

National’s revised outlook is being driven primarily by lower-than-expected shipments into the distribution channel, mainly in the Asia Pacific region due to distribution resale activity being lower over the holiday period than was originally anticipated.  The revised outlook also reflects lower-than-expected shipments of display products during the third quarter.

The company is not changing its guidance on gross margin percentage for the third quarter.  When National reported financial results on December 7, 2006, it indicated during the conference call that gross margin percentage for the third quarter of fiscal 2007 was expected to range from 58 to 59 percent, which includes approximately $7 million of stock compensation expense.

National’s third quarter financial announcement and conference call are scheduled for March 8, 2007, at which time the company will discuss financial results in more detail and provide an outlook for the fourth quarter of fiscal 2007.

Special Note
This release contains forward-looking statements dependent on a number of risks and uncertainties pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These factors include, but are not restricted to, new orders received and shipped during the quarter, the degree of factory utilization, the sale of inventories at existing prices, and the ramp up and sale of new analog products.

About National Semiconductor
National Semiconductor, the industry's premier analog company, creates high performance analog devices and subsystems.  National's leading-edge products include power management circuits, display drivers, audio and operational amplifiers, communication interface products and data conversion solutions. National's key analog markets include wireless handsets, displays and a variety of broad electronics markets, including medical, automotive, industrial, and test and measurement applications. Headquartered in Santa Clara, California, National reported sales of $2.16 billion for fiscal 2006, which ended May 28, 2006.  Additional company and product information is available at www.national.com.