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November 22, 2009

TechFaith Q3 net revenues up 5.3% sequentially to $52.8m

Expects revenues to be in the range of $52m to $55m for fourth quarter

By CBR Staff Writer

China Techfaith Wireless Communication Technology has reported net revenues of $52.8m for the third quarter of 2009, exceeding its prior guidance of in between $47m and $52m. Net revenues increased 5.9% sequentially, compared to $49.8m.

For the quarter ended September 30, 2009, the company has posted a gross profit of $10.3m, an 8.4% increase compared to $9.5m for the second quarter of 2009. Gross margin was 19.5%, compared to 19% in the previous quarter.

The company has posted an operating income of $5.6m, compared to $0.28m for the same period last year. Operating income increased 156.4% from $2.2m sequentially.

Net loss attributable to TechFaith for the third quarter of 2009 was $3.4m, compared to net income of $0.45m for the same period last year. The net loss attributable to TechFaith for the third quarter included a $9.2m non-cash charge as a result of change in fair value of the derivatives associated with a convertible debt.

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Defu Dong, chairman and CEO of TechFaith, said, In the third quarter we achieved better than expected results due to our team’s execution on opportunities in our core original developed product business. Revenue growth in our smartphone business was led by our high-end models, which carry a higher average selling price in the domestic China market.

“Feature phone sales increased significantly due to the increased sales of our high-end GSM phones and dual mode WCDMA plus GSM phones and the continued sales of our 3G data cards in China.

TechFaith expects revenues to be in the range of $52m to $55m for the fourth quarter of 2009, including incremental revenues from the company’s mobile gaming business. It is targeting initial profitability of its mobile gaming business in the fourth quarter of 2009.

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