News Release：Philips Components and Pioneer to Develop the Next Generation of PDP Technology

TOKYO, Japan, October 8, 1998 --- Philips Components International B.V. of The Netherlands and Pioneer Electronic Corporation of Japan have today announced a partnership agreement to develop the next generation of Plasma Display Panel (PDP) technology - one of the most promising technologies for large flat displays. The agreement was signed today in Tokyo by Y.C.Lo, Executive Vice-President of Royal Philips Electronics and Chairman of Philips Components, and Kaneo Ito, President of Pioneer.

The co-operation between the two companies will help accelerate the development of PDP technology to the stage where it becomes widely available to both the professional and consumer mass markets at acceptable cost. Both companies will work on improving the efficiency of optical output power, the development of phosphor materials and finding more cost effective manufacturing processes.

The partnership combines the strengths of two of the world's largest electronics corporations: Philips with its skills in overcoming technological barriers and a long history in the consumer product market, and Pioneer with existing experience in PDP product technology and manufacturing.

Plasma display technology will become commercially successful if essential issues can be overcome: namely high production costs, a need to increase manufacturing efficiencies and to improve certain specifications when compared to CRT, such as brightness and power consumption. These existing obstacles require considerable financial investment and development time.

Initially the new partnership is for research and development only, although in the future it may be extended to encompass manufacturing and marketing agreements.

Philips Components, headquartered in Eindhoven, The Netherlands, is a world leader in supplying display, storage, key components and power management systems to global customers. It employs more than 46,000 people in over 40 countries around the world. Information about Philips Components is available through the Philips home page.

Royal Philips Electronics of The Netherlands is one of the world's biggest electronics companies, with sales of over US$ 39 billion in 1997. It is a global leader in color television sets, lighting, home telephony products, electric shavers and recorded music (PolyGram). Its 255,000 employees in more than 60 countries are active in the areas of lighting, consumer products, components, semiconductors and professional. Philips is quoted on the NYSE, London, Frankfurt, Amsterdam and other stock exchanges.

Pioneer Electronic Corporation, headquartered in Tokyo, Japan, is a world leader in supplying audio and visual products for home, car and industrial use to global customers. It employs more than 19,000 people in over 25 countries and has more than 75 subsidiaries, including over 20 manufacturing companies worldwide.