For the second quarter of 2011, TechFaith reported net revenue of US$82.8 million, a 26% increase compared to US$65.5 million in the second quarter of 2010, and a 5% increase compared to US$78.7 million in the first quarter of 2011. Gross margin for the second quarter of 2011 was 26% compared to 32% in the first quarter of 2011 and 24% in the second quarter of 2010, reflecting higher unit shipments of products from the Company's ODP (Original Developed Product) business in the second quarter of 2011, the margin for which tend to be lower than the Company's corporate average gross margin. Income from operations for the second quarter of 2011 was US$10.0 million, an 18% increase compared to US$8.5 million in the same quarter last year, and a 37% decrease compared to US$15.8 million in the previous quarter. Net income attributed to TechFaith for the second quarter of 2011 was US$7.3million or US$0.14 per basic and diluted weighted average outstanding ADS, compared to US$7.5 million or US$0.16 per basic weighted average outstanding ADS and US$0.11 per diluted weighted average outstanding ADS in the second quarter of 2010, compared to US$13.8 million or US$0.26 per basic and diluted weighted average outstanding ADS in the first quarter of 2011.

Ms Ouyang Yuping, TechFaith's CFO, said "Healthy demands across our core mobile phone and motion gaming business sectors have contributed positively to our second quarter results. Importantly, we achieved 26% revenue growth for the second quarter compared to the same period from last year. Further, our emphasis on profitable growth is leading to a sustained generation of cash flow from operations. We ended the second quarter of 2011 with US$4.17 per ADS in cash and cash equivalents."

Mr. Deyou Dong, President and COO of TechFaith, said, "Demand for our tailored mobile phone products from enterprise customers remains strong as evidenced by the continued growth in our TecFace branded line. We are also seeing higher customer demand for our Android-based phone solutions, which we expect will further benefit us in the second half of 2011. We plan to extend our competitive advantage with 6 new Android-based smart phones in the third quarter of 2011, along with plans to tailor software applications that we can bundle together with our mobile phones. We are optimistic given that we foresee an increasing demand, in particular, in Latin America, the Middle East, Europe and South East Asia."

Recent Developments

Chairman & CEO Increased Ownership to 32.1%: In a Form 13-G filed with the SEC on July 12, 2011, it was noted that TechFaith's Chairman and CEO, Mr. Defu Dong, increased his equity holdings in the Company to 32.1%, with the purchase of 100,000 ADSs on the open market in June 2011. The average purchase price was US$3.90 per ADS. This follows his purchases of 120,000 ADSs and approximately 143,000 ADSs on the open market during the previous two quarters. Mr. Dong has indicated his intention to purchase additional ADSs in the open market and through privately negotiated transactions. The timing and amount of such purchase transactions will depend on market conditions and corporate and regulatory considerations.

Expanding Internationally: TechFaith announced the shipment of its WCDMA/GSM 3.5G Android-based smart phones to a Telecom operator in South East Asia. The initial shipment is expected to be delivered in the third quarter of 2011. This would be the 6th smart phone model TechFaith ships to this carrier. The Company also announced plans to ship its TecFace branded mobile phone "Jungle" to the Middle East market in the third quarter of 2011.

Building Brand Awareness: As part of its ongoing brand building and marketing efforts, TechFaith showcased its 17Vee Motion Gaming line last month at ChinaJoy in Shanghai. The Company showcased its integrated 17Vee mobile motion gaming platform, motion gaming set-top box, motion gaming devices and new motion games suitable for education and family entertainment purposes. Additionally, the Company introduced 5 new models of its proprietary motion gaming controllers with integrated mobile phone functionality. The Company also had expanded presence this June at one of the largest telecommunication and IT shows in Asia, the CommunicAsia 2011 exhibition and conference in Singapore.

Expanding Android Phone Family: TechFaith announced it will launch six Android-based smartphones in the third quarter of 2011 under its TecFace brand. The phones will feature screen sizes up to 5 inches. Each model will target a different market segment and emphasize unique functions such as customized user interfaces, multimedia, personal financial management, personal secretary and mobile payment, among others.

To Launch Android Based Motion Gaming Solutions: TechFaith announced it will launch a total motion gaming solution package compatible with Android-based smart phone operating systems. The launch, through TechFaith's 17Vee gaming platform, is scheduled for the third quarter of 2011. Android-based smart phone users will be able to play motion games through the 17Vee motion gaming controller packages to convert their mobile phones into motion gaming controller.

Addition to Russell Global Index Further Expands Investor Visibility: TechFaith was added to Russell Investments' Russell Global Index. Membership in Russell Investment's U.S. equity Indices - widely used as benchmarks for both passive and active investment strategies - is determined by objective criteria, such as market capitalization rankings. Accurate benchmarks are an integral part of Russell Investments' ongoing process to monitor investment manager products worldwide for Russell Investments' $161 billion active investment management business.

By: DocMemory
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