FOCUS ON CHINA SMIC to build two chip production lines in Shenzhen      SMIC (Semiconductor Manufacturing International Corporation), China’s leading chip foundry, is to build its South China headquarters in Shenzhen, Guangdong Province, and invest US$1.58 billion in building an IC R&D center and two IC production lines.      Wang Yangyuan, chairman of SMIC, and Zhang Rujing, its President, think Shenzhen’s IC-design industry is the best in China, both in terms of scale and technical level. Meanwhile, Shenzhen is the largest whole machine production base and the largest IC market in China. This project will satisfy customers’ needs for nearby service after it’s completed.      The R&D and production base for the front end processing of ICs will be built in phases in this project and consist of an IC R&D center and two production lines, utilizing 8-inch and 12-inch wafers respectively. Advanced technology will be introduced from IBM for the 12-inch wafer chip production line. The first phase of construction of the 8-inch wafer production line will commence in the first half of this year and will be completed at the end of 2009. Its initial monthly output is estimated at 30,000 to 50,000 chips.      Liu Yupu, deputy secretary of the Guangdong Party Committee and secretary of the Shenzhen Party Committee, and Xu Zongheng, mayor of Shenzhen, noted that Shenzhen offers many advantages, such as a sound policy for the environment, solid industrial foundations and rich human resources, and the city welcomes large technical projects with high added value. SMIC’s establishment of the IC chip production lines in Shenzhen will bring Shenzhen to the forefront of the development of the IC industry in China and play an extremely important role in optimizing Shenzhen’s industrial structure, improving the industrial supply chain and raising the level of development of the electronic information industry. Meanwhile, the advantages and solid foundations of Shenzhen’s high-tech industries, especially the electronic information industry, will also help foster the development of this project.      In related news, SMIC has announced its consolidated results for the three months ended December 31, 2007. Revenue was up by 3.0% over 4Q06, rising to US$395.3 million and up by 1.0% from US$391.4 million in 3Q07.      Gross margin was 8.9% in 4Q07, compared to 10.8% in 3Q07, primarily due to the continuous price decline in the DRAM market.      There was a net loss of US$21.2 million in 4Q07, compared to a net loss of US$25.6 million in 3Q07, mainly from the DRAM business. The fully diluted EPS was US$0.0570 per ADS.      Wafer shipments and sales increased by 14.6% and 5.8%, respectively, over the same period in 2006. IBM to build first Cloud Computing Center in China      IBM is to establish the first Cloud Computing Center for software companies in China, which will be situated at the new Wuxi Tai Hu New Town Science and Education Industrial Park in Wuxi.      The center will offer emerging Chinese software companies the ability to tap into a virtual computing environment to support their development activities. It will be established through an agreement between IBM and Wuxi Tai Lake Industry Investment and Development Company Limited (Wuxi Tai Lake).      IBM will work with Wuxi Tai Lake, the Wuxi Municipal Government; and its business partners to build the China Cloud Computing Center, which will be a shared facility providing each software company in the park its own virtualized computing resource. For example, a company will be able to use the allocated resource for designing, developing and testing its software products. Such virtual environments can replace the traditional data center model, in which each company owns and manages its own hardware and software.      Companies in the park will be able to access these common services provided by the center at any time ---- just as they use other shared services. The technologies being offered to the community include IBM Rational software development tools, WebSphere Application Server software and DB2 database software running on IBM System x, System p and BladeCenter servers. IBM Tivoli systems management software will manage the cloud computing environment.      Wuxi is classified as an investment zone by the Chinese government and has been named a “National Model City of Science and Technology Advancement” for five consecutive years.      “Cloud computing is helping to foster the growth of new software companies in China,” said Steve Mills, SVP and group executive, IBM Software Group. “Like many new software companies seeking growth opportunities both locally and abroad, these Chinese software companies will rely on technical infrastructures built on open standards and delivered as a service. This open approach to computing will help them deliver innovation and pursue global market opportunities.”      Cloud computing is an approach to shared information technology (IT) infrastructure, in which large pools of systems are linked together to provide IT services. Cloud computing allows corporate data centers to operate more like the Internet by enabling computing resources to be accessed and shared as virtual resources in a secure and scalable manner. The center will be built using IBM’s “Blue Cloud” technologies, a series of cloud computing offerings based on open standards and open source software that link computers together to deliver Web 2.0 capabilities.” Open mobile platform Vinno-III-Linux, from Vimicro      Vimicro Corporation, a leading fabless semiconductor company that designs advanced mixed-signal multimedia products and solutions, has launched an open mobile platform, Vinno-III-Linux, based on the Linux operating system, as well as two new Vimicro mobile multimedia processors, the VC0848 and VC0878.      The Vinno-III-Linux platform is based on Vimicro’s newly launched Vinno-III application processor running the Linux OS. Along with traditional, strong multimedia processing capabilities enabled by Vimicro chips, the platform also integrates useful applications, such as office file reader, WAP and MMS. Vimicro’s new mobile multimedia processors enhance the user experience in video, audio, imaging and file transfer, when adopted for basic mobile phones.      The Vinno-III-Linux platform features a QVGA touch screen, 3-megapixel camera, MPEG4/ H.263 video, stereo MP3, AAC, AAC+ playback, high speed USB 2.0 connectivity, U-disk, FM radio, Bluetooth support and more. Vinno-III-Linux can be adopted for the design of both 2.5G and 3G smartphones and beyond.      The mobile multimedia processors VC0848 and VC0878 support hardware MPEG4/ H.263, a 3-megapixel camera, stereo ADC/DAC and headphone PA. They are also capable of decoding multiple audio file formats such as MP3, AAC and AAC+. VC0848 and VC0878 can provide a direct interface to USB 2.0 and NAND flash memory, including the SD/ MMC/ T-flash card formats. Additionally, VC0878 has a composite TV output.      “Vimicro is a reliable supplier of mobile processors,” commented Wang Yongzhong, general manager of the GSM Product Line at ZTE, “The open mobile platforms provided by Vimicro consistently meet our design needs as the platforms give our designers the flexibility to develop mobile phones that are easy to customize.”      Vimicro International Corporation designs and develops proprietary digital multimedia signal processing chips and solutions, enabling multimedia applications for mobile phones over 2.5G/3G networks and PCs over broadband Internet.      Vimicro Corporation was founded in 1999, with initial support from the Ministry of Information Industry (MII). Dedicated to the development of advanced mixed-signal multimedia chips, Vimicro has successfully launched a series of products into the domestic and international markets, targeting such applications as computer technology, broadband, mobile communication, and consumer electronics. Vimicro’s chip solutions have been adopted by such multinational companies as Sony, Samsung, HP, Philips, Fujitsu, Logitech, Lenovo, Bird and ZTE. Vimicro Corporation has a website at www. vimicro.com/english. CinTel Corp. subsidiary PSTS to expand capacity      Phoenix Semiconductor Telecommunication Suzhou (“PSTS”) China, a key subsidiary of CinTel Corp., will begin to expand production in the next six months, expanding capacity by approximately 20 million pieces of memory products per year. PSTS’ management anticipates that this will result in an aggregate increase of approximately US$19 million in revenues, of which CinTel will recognize a significant portion. It will allow them to become a more rounded semiconductor solutions provider through the transfer of new high-end products from system LSI packaging to memory packaging products. The expansion supports the CinTel strategy of acquiring properties and assets that can be leveraged for growth and revenue.      This expansion continues CinTel’s expansion and conversion into a competitive player in the semiconductor market. The added capacity will allow additional contracts to be brought into its facilities and will help create a diversified product offering, to reduce the risk inherent in an entity with fewer product lines. CinTel’s CEO, Sang Don Kim, said, “We are committed to growing our company and subsidiaries into a key player in the semiconductor field. We will continue to push our subsidiaries to ensure their continued growth.”      The planned expansion will be supported by investments by several of the shareholders of PSTS, which include CinTel Corp., the majority shareholder, STS Semiconductor Telecommunications, Korean Exchange Bank (KEB) and Shinhan Capital. With this commitment, CinTel has increased its investment in the company by US$4.9 million, and STS Semiconductors Telecommunications has funded the project with an investment of US$4.7 million, providing a total new investment of US9.6 million in PSTS, to fund its expansion project. CinTel’s management feels that this investment will yield a significant return on its investment.      Phoenix Semiconductor and Telecom became a majority-owned subsidiary of CinTel Corp. in October 2006. It was founded by STS Semiconductor and Telecommunication in China in 2004, when it acquired certain parts of the packaging production lines from Samsung Electronics Corporation’s China plant (SESS). It began mass production in 2005, and its main customer is Samsung Electronics Corporation. PSTS’s main products are semiconductor packaging, NAND flash memory and LCD assembly.      Founded in 1997, CinTel has created a mix of technology products that includes NAND flash-memory packaging, LCD assembly, semiconductor packaging and specialized testing. As well, CinTel is a total solution provider for memory applications for home appliances, semiconductor and TFT-LCD application products.