Exhibit 99.1

DSP Group, Inc. Reports Third Quarter 2005 Earnings

Record high revenues and 20% revenue increase YoY

SANTA CLARA, Calif., October 27, 2005—DSP Group, Inc. (NASDAQ: DSPG), a worldwide leader in developing and providing chip-set solutions for residential wireless connectivity announced today its results for the third quarter of 2005.

Revenues for the third quarter of 2005 were $55,614,000, an increase of 20% from revenues of $46,232,000 for the third quarter of 2004. Net income for the third quarter of 2005 decreased 48% to $10,510,000, as compared to $20,380,000 for the third quarter of 2004. Diluted earnings per share (EPS) for the third quarter of 2005 decreased 49% to $0.35, as compared to $0.69 for the third quarter of 2004.

Results for the third quarter of 2004 included a capital gain of $15,460,000 resulting from the sale of 1,650,000 shares of AudioCodes Ltd.

Pro-forma net income and diluted EPS for the third quarter of 2004, excluding the effects of the capital gain and related taxes of $4,865,000, would have been $9,785,000 and $0.33, respectively.

Net income and diluted EPS for the third quarter of 2005, in accordance with US GAAP, increased 7% and 6%, respectively, as compared to the pro-forma net income and diluted EPS for the third quarter of 2004.

Eli Ayalon, Executive Chairman of DSP Group, stated: “We are very pleased with our third quarter results. Our traditional tight management control of expenses and top line growth, enabled us to increase our operating profit compared to the third quarter of 2004, despite our decision last year to expand our long term R&D activities in order to secure our future growth”.

Inon Beracha, CEO of DSP Group, stated: “Record high revenues were achieved by the company in the third quarter of 2005, reflecting increased demand and market share in North America for our products as well as a ramp up in our shipments of DECT products and products targeted at the Japanese domestic market. During the third quarter of 2005 we also delivered commercial shipments to our second DECT customer. These trends in the third quarter of 2005 provide us with good visibility into the last quarter of 2005.”

Moshe Zelnik, CFO of DSP Group, stated: “In the third quarter of 2005 the Company repurchased 385,200 shares of its Common Stock, at an average price of $24.72 per share, for an aggregate price of approximately $9.5 million. We have strong confidence in our future business prospects and our ability to capitalize on new market opportunities. We believe that the buyback program that we have in place, with 3.3 million shares that remain authorized for future repurchase, is a wise use of our cash and a good return on investment to our shareholders.”

The company believes that the above pro forma presentation of net income and diluted EPS is useful to investors in comparing results for the quarter ended September 30, 2005 to the same period during 2004, because it excludes items that management does not consider meaningful for purposes of analyzing the company’s core operating results and making budget-planning decisions.

About DSP Group

DSP Group, Inc. is a fabless semiconductor company, offering advanced chip-set solutions for a variety of applications. DSP Group is a worldwide leader in the short-range wireless communication market, enabling home networking convergence for voice, video & data. By combining its in-house technologies of Digital Signal Processors (DSPs), portfolio of wireless communication protocols, including DECT, Bluetooth and Wi-Fi, most advanced Radio

Frequency CMOS and SiGe, as well as VoIP ICs, DSP Group is a worldwide leader and a one-stop-shop for a wide range of applications. These applications include ISM band digital 900MHz, 2.4GHz and 5.8GHz telephony, European DECT (1.9GHz) telephony, Bluetooth systems for voice, data and video communication and deployment in residential, SOHO, SME, enterprise and automotive applications. DSP Group ICs provide solutions for MP3 players, VoIP Phones, Gateways, and Integrated Access Devices and are widely used in Digital Voice Recorders. More information about DSP Group is available at www.dspg.com.

This press release may contain statements that qualify as “forward-looking statements” under the Private Securities Litigation Reform Act of 1995, including statements made by Mr. Ayalon about the benefits of increased investment in research and development, Mr. Beracha’s statements about revenue visibility for the last quarter of 2005 and Mr. Zelnik’s statements about management’s confidence in DSP Group’s business prospects and ability to capitalize on new market opportunities and the merits of DSP Group’s share buy-back program. These forward-looking 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. DSP Group’s actual results could differ materially from those described in this press release as a result of various factors, including unexpected delays in the introduction of new products; failure to achieve broad market acceptance of existing and new products by existing and potential OEM customers; DSP Group’s inability to add new customers and develop and produce new products at competitive costs and in a timely manner; decline or fluctuations in gross margins and the effect on revenues and profitability; and general market demand for products that incorporate DSP Group’s technology in the market. These factors and other factors which may affect future operating results or DSP Group’s stock price are discussed under “RISK FACTORS” in the Form 10-K for fiscal 2004 as well as other reports DSP Group has filed with the Securities and Exchange Commission and which are available on DSP Group’s Web site (www.dspg.com) under Investor Relations.

Earnings conference call

DSP Group has scheduled a conference call for 8:30 a.m. EDT today to discuss the financial results for the third quarter of 2005 and invites you to listen to a live broadcast over the Internet. The broadcast can be accessed by all interested parties through the Investor Relations section (investor message board) of DSP Group’s Web site at www.dspg.com or link to: http://ir.dspg.com./phoenix.zhtml?c=101665&p=irol-calendar

If you cannot join the call, please listen to the replay, which will be available for approximately two weeks after the call on DSP Group’s Web site or by calling the following numbers:

—US Dial-In # 1-888-286-8010 (passcode: 96472796)

—International Dial-In # 617-801-6888 (passcode: 96472796)

For more information, please contact Moshe Zelnik, CFO , Investor Relations, DSP Group Inc. at (408) 986-4421 ; or e-mail: mosheze@dsp.co.il

DSP GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME – US GAAP

(In thousands, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
	(Unaudited)				(Unaudited)
Product revenues and other	$	55,614	$	46,232	$	144,824	$	128,956
Cost of product revenues and other		29,420		23,401		77,654		66,177
Gross profit		26,194		22,831		67,170		62,779
Operating expenses:
Research and development		10,487		8,463		30,428		23,327
Sales and marketing		3,706		2,929		9,882		9,014
General and administrative		1,904		1,718		5,552		5,258
Impairment of goodwill				—				4,304
Total operating expenses		16,097		13,110		45,862		41,903
Operating income		10,097		9,721		21,308		20,876
Other income :
Interest and other income, net		2,565		2,069		7,336		6,353
Capital gains		—		15,460		—		44,448
Income before provision for income taxes		12,662		27,250		28,644		71,677
Provision for income taxes		2,152		6,870		4,879		21,812
Net income	$	10,510	$	20,380	$	23,765	$	49,865
Net earnings per share:
Basic	$	0.37	$	0.72	$	0.84	$	1.73
Diluted	$	0.35	$	0.69	$	0.80	$	1.64
Weighted average number of shares of Common Stock used in the computation of:
Basic		28,663		28,411		28,368		28,779
Diluted		30,079		29,358		29,801		30,337

DSP GROUP, INC.

CONSOLIDATED PRO FORMA STATEMENTS OF INCOME

(In thousands, except per share amounts)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2005		2004			2005		2004
	(Unaudited)					(Unaudited)
Product revenues and other	$	55,614	$	46,232		$	144,824	$	128,956
Cost of product revenues and other		29,420		23,401			77,654		66,177
Gross profit		26,194		22,831			67,170		62,779
Operating expenses:
Research and development		10,487		8,463			30,428		23,327
Sales and marketing		3,706		2,929			9,882		9,014
General and administrative		1,904		1,718			5,552		5,258
Total operating expenses		16,097		13,110			45,862		37,599
Operating income		10,097		9,721			21,308		25,180
Other income :
Interest and other income, net		2,565		2,069			7,336		6,353
Income before provision for income taxes		12,662		11,790			28,644		31,533
Provision for income taxes		2,152		2,005			4,879		5,362
Net income	$	10,510	$	9,785		$	23,765	$	26,171
Net earnings per share:
Basic	$	0.37	$	0.34		$	0.84	$	0.91
Diluted	$	0.35	$	0.33		$	0.80	$	0.86
Weighted average number of shares of Common Stock used in the computation of:
Basic		28,663		28,411			28,368		28,779
Diluted		30,079		29,358			29,801		30,337
The above pro forma consolidated statements of income have been adjusted to exclude the following items to US GAAP reported net income:
Reported net income per US GAAP	$	10,510	$	20,380		$	23,765	$	49,865
Adjustments:
Impairment of goodwill		—		—			—		4,304
Capital gains		—		(15,460	)		—		(44,448	)
Tax expenses		—		4,865			—		16,450
Pro forma net income	$	10,510	$	9,785		$	23,765	$	26,171

DSP GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

	September 30, 2005			December 31, 2004
	(Unaudited)			(Audited)
Assets
Current assets:
Cash and cash equivalents	$	61,019		$	60,827
Marketable securities and cash deposits		75,216			74,497
Trade receivables, net		21,567			5,976
Inventories		11,795			9,469
Other accounts receivable		1,515			2,213
Deferred income taxes		1,168			1,168
Total current assets		172,280			154,150
Property and equipment, net		12,225			6,683
Long term marketable securities		203,400			195,671
Severance pay fund		4,117			3,437
Long term pre-paid expenses and lease deposits		674			628
Goodwill		1,500			1,500
Deferred income taxes		1,410			1,410
Other intangible assets		2,625			3,482
Total assets	$	398,231		$	366,961
Liabilities and Stockholders’ Equity
Current liabilities:
Trade payable	$	18,811		$	7,830
Other current liabilities		30,941			39,857
Total current liabilities		49,752			47,687
Accrued severance pay		4,461			3,784
Stockholders’ equity:
Common Stock		28			28
Additional paid-in capital		187,642			187,471
Accumulated other comprehensive income		(20	)		65
Retained earnings		176,997			157,723
Less – Cost of treasury stock		(20,629	)		(29,797	)
Total stockholders’ equity		344,018			315,490
Total liabilities and stockholders’ equity	$	398,231		$	366,961