Vimicro Corporation (Nasdaq: VIMC), a leading fabless semiconductor company and Ningbo BIRD Co. a Chinese famous mobile phones manufacturer today signed a technology collaboration agreement to develop multimedia terminals that are in compliance with the existing 3G standards. This collaboration is funded by Chinese Ministry of Information Industry (MII), operated within the national electronic information industry development project - "3G Multimedia Terminals." Vimicro and BIRD will henceforth form a long-term strategic partnership based upon this collaboration. The mid-end to high-end 3G mobile phones developed in this project are anticipated to be the first batch to fully adopt the mobile multimedia chips innovated in China.

In this project, Vimicro will lead the innovation effort of the multimedia system chips, while BIRD will direct the 3G mobile terminals development. The project will roll into December 2006 with a total investment of 60 million RMB, in which 40 million RMB and 20 million RMB will be spent on chip design and mobile terminal R&D respectively. The goal of this project is to reach total annual sales of 2 million units of 3G mobile multimedia chips, plus a domestic market share of 20% or more within 3 years.

3G applications are an inevitable direction of mobile communication development. In contrast to the previous two generations, the third generation mobile communication system is characterized by a broader spectrum of multimedia services available to subscribers, including voice, video telephony, streaming multimedia, internet browsing, and many more. The addition of these multimedia functions is believed to enable 3G mobile terminals to meet people's needs in information, communications and entertainment by the services provided, such as mobile office and mobile administration, which drives huge market potentials.

Facing this remarkable opportunity led and subsidized by MII, both Vimicro and BIRD endeavour to develop mobile multimedia communication terminals which adopt fully-owned IPR and 3G applications, elaborating and leveraging their advantages and strengths. The collaboration will undoubtedly drive forward the 3G technology breakthroughs on core chips, terminals and equipments in China, elevating the core competitiveness of Chinese information industry and terminating the monopoly of European and US suppliers.

The Director of Department of Electronics and Information Product Administration of MII says "Vimicro has devoted in the digital multimedia chips and mobile multimedia technologies arenas for many years, having successfully accumulated solid commercialization experiences and R&D capabilities. The company is proficient and well-equipped for a mega-scale project involving digital multimedia chip design and digital image system research and development. On the other hand, since entering the mobile market in 1998, BIRD has been focusing on the innovation and technology advancement of mobile terminals. So far BIRD has procured many key technologies for mobile terminals, being able to perform stand-alone R&D and commercialization. The collaboration between the two companies will secure the success of this project.

"Vimicro and BIRD both have shifted tremendous efforts and resources onto this collaborative project," said Dr. Tom Zhang, executive VP of Vimicro and Vice Chairman/Secretary-General of Multimedia Mobile Technology Alliance (MMTA). Dr. Zhang further addressed that "Vimicro is committed to join force with other technology sources to develop 3G multimedia terminals for commercial use, and in turn to promote the progress of Chinese 3G industry."

Mr. Guangtao Jin, VP of BIRD also affirmed that: "BIRD regards this 3G terminal development collaboration with Vimicro as a very important strategy. We have long developed a successful cooperative relationship with Vimicro. And this time, we will consolidate our strategic partnership with Vimicro to exploit the broad 3G terminal market by leveraging this project of 3G multimedia terminals development.

Upon completion of the project, Vimicro and BIRD will continue developing 3G terminals tailored to the market needs, forming series of terminal products covering low-end, mid-end, and high-end markets.

About Vimicro
Vimicro International Corporation is a leading fabless semiconductor company in China that designs, develops and markets proprietary embedded multimedia signal processing chips and solutions that enable multimedia applications for mobile phones over 2.5G/3G networks and PCs over broadband Internet.

About Ningbo BIRD Co.
Ningbo BIRD CO., LTD. is a publicly listed high-tech company, established in 1992 and specializing in the R&D, manufacturing and marketing of mobile communication equipments. Its products cover mobile phones, handheld computers and systems equipment.