TechFaith A Handset Original Developed Product (ODP) & Original Developed Content (ODC) Provider Jan 2008 (Nasdaq: CNTF) Page 1 HK000KRB
Disclaimer This presentation contains forward-looking statements. These statements are made under the ''safe harbor'' provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as ''will,'' ''expects,'' ''anticipates,'' ''future,'' ''intends,'' ''plans,'' ''believes,'' ''estimates'' and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as TechFaith's strategic and operational plans, contain forward- looking statements. TechFaith may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about TechFaith's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward- looking statement. Potential risks and uncertainties include, but are not limited to, TechFaith's limited operating history, mobile handset brand owners' discontinuation or reduction of the use of independent design houses, TechFaith's ability to retain existing or attract additional international customers, TechFaith's earnings or margin declines, failure of competing against new and existing competitors, and other risks outlined in TechFaith's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1, as amended. TechFaith does not undertake any obligation to update any forward- looking statement, except as required under applicable law. (Nasdaq: CNTF) Page 2 HK000KRB
Contents � Industry Evolution � Unique ODP Provider � Product Development Status � Customer Base � Appendix (Nasdaq: CNTF) Page 3 HK000KRB
Global Handset Players Get More Diversified 1980 － 1995 2008 － Future 1998 － 2000 2000 － 2005 2006 － 2007 1995 － 1998 2008 - Future Top Five Brands Japanese Brands European Brands Chinese Brands Niche Brands Carrier Brands Local Brands Premium Brands (Nasdaq: CNTF) Page 4 HK000KRB
Wireless Standards and OS Get More Complicated HSUPA 3.5G/3.9G HSDPA WiMAX WiFi 3G TD-SCDMA WCDMA CDMA 2000/EVDO GSM/GPRS/EDGE 2G/2.5G to 2.75G CDMA1X GSM/GPRS Mid-90s 2000 2002 2005 2007 2010 (Nasdaq: CNTF) Page 5 HK000KRB
Software Becomes the Key Value Driver Software workload in handset R&D 50% in 2G GSM 75% in 2.5G GPRS 85% in 3G WCDMA & EVDO Mobile Solutions Suite MMS Browser PictBridge SyncML Other UMB App App App App Apps SMS / WAP PUSH Engine PictBridge Engine Browser MMS Email PUSH SyncML EMS Engine Engine Engine Engine Engine Engine Stack DRM WAP 1.2 / 2.0 HTTP 1.1 DRM DRM 1.0 2.0 SSL 3 / TLS1 TechSoft Universal Platform OS / RTOS (Nasdaq: CNTF) Page 6 HK000KRB
Fast-Growth Opportunities for TechFaith � Small players are not capable of providing original developed products; � Big players can not cover a full spectrum of technologies from 2G to 3.5G; � Carriers are promoting their own services with rich software applications; � Dual-mode handsets are in high demand by carriers running two network systems or by international roamers. (Nasdaq: CNTF) Page 7 HK000KRB
Contents � Industry Evolution � Unique ODP Provider � Product Development Status � Customer Base � Appendix (Nasdaq: CNTF) Page 8 HK000KRB
Total Handset Software & Design Solutions � TechFaith owns customer relationship � EMS is available for production if brand owner Application outsources Software manufacturing MMI: Customer MMI: Drivers on Specific Frame Brand Common Different Chipset Features for U I work Owner OS Different API Features Operators EMS Hardware Design Production Line Industrial Design/Mechanical Design (Nasdaq: CNTF) Page 9 HK000KRB
Cutting-Edge Technology Alliances Enabler of CDMA technology Strategic investor Collaborative founding “TechSoft” Strategic partner to develop Smartphone technology (Nasdaq: CNTF) Page 10 HK000KRB
Company Profile – NASDAQ: CNTF Original Dev. Product Company Founded ODP & Content Independent Design (ODP) 2002 Provider House Provider 2002-2005 2008 2006-2007 � May ’06 - Application Software Co. - Jointly Invested by Qualcomm � July ’02- Founded � May ’05 - NASDAQ IPO � Q1’08 – Online � Sep ’06 - Launched Interactive Game � Oct ’05 - Launched Window’s Smartphone Business Unit Plan � First 3G WCDMA/UMTS � Apr ’07 - Launched to Found Handset HSDPA Smartphone � Nov ’07- Launched HSDPA Data/Voice Card � Volume based business � Project based business � Higher ASP from games � Revenue mainly from NRE � Volume based business and other contents. � Share the volume business via Royalty � Extra revenue from game income. service, game terminals and UMPC. (Nasdaq: CNTF) Page 11 HK000KRB
Business Model - ODP & ODC Provider 2008 Original Developed Products Contents PC CDMA/EVDO R&D in Chengdu UMTS/HSDPA Web R&D in Hangzhou GMS/TD-SCDMA Server Windows R&D in Beijing Application Software PSP Phone � ODP facilitates Contents to test and run on a variety of platforms � Contents enrich application of ODP � Contents work for both PC and handsets creating a new business opportunity (Nasdaq: CNTF) Page 12 HK000KRB
Revenue Generation from New Business Model 2008 Contents PC R&D in Chengdu Web R&D in Hangzhou Server R&D in Beijing PSP Phone Higher handset ASP from enrich application contents New revenue from game services (points, ads, license fee…) New revenue from game terminals (Nasdaq: CNTF) Page 13 HK000KRB
Contents � Industry Evolution � Unique ODP Provider � Product Development Status � Customer Base � Appendix (Nasdaq: CNTF) Page 14 HK000KRB
TechFaith’s Product Position - Focusing on Mid to High Tier 450 Unit: US$ Smartphone & PPC Phone Gross Margin > 25% High Tier Feature Phone 180 170 Gross Margin > 20% 100 90 58 Middle Low Tier 45 50 35 Gross Margin > 10% 35 Low Tier 20 Cost Wholesale Price (Nasdaq: CNTF) Page 15 HK000KRB
TechFaith’s Product Position - Focusing on Mid to High Tier 450 Unit: US$ HSDPA Gross Margin 20%-40 % WCDMA 170 GSM Gross Margin High Tier Gross Margin 180 15%-30% 10%-30% CDMA1X 100 90 Gross Margin Middle 58 10%-40% 50 45 35 35 Low Tier 20 Cost Wholesale Price (Nasdaq: CNTF) Page 16 HK000KRB
HSDPA Data/Voice Card - Pike Band HSDPA2100/GPRS10/GSM900/DCS1800/PCS1900MHz Memory 160MB LCD 0.8’’ OLED Camera N/A Entertainments Modem/MP3 AAC /AAC+ Communication Mini USB Talk time 3G: 47~120 mins /2.5G: 100~220 mins Standby time 150-270 hrs Battery 580mAh Size 98*36*16mm/56g Schedule Oct, 2007 (Nasdaq: CNTF) Page 17 HK000KRB
Technology Combinations in High Demand PPC GSM CDMA GSM GSM Phones Gallic Cynthia 850 GSM WCDMA Twins Feature Phones GSM CDMA CDMA WCDMA GSM TD-SCDMA T7620 Twins Yin Tai GSM GSM GSM GSM GSM GSM T7620+ T7630 Digo S26 Q1’ 2008 Q4’ 2007 Launched (Nasdaq: CNTF) Page 18 HK000KRB
Slim Windows Mobile – Vista 850 Platform TI OMAP 850 (200MHz) Band EDGE / GSM / GPRS 850/900/1800/1900MHz Memory 2GB + 64MB LCD 2.4’ QVGA TFT Camera 2.0 M Main camera Entertainments 64 Poly MP3 / MP4 / MIDI / AAC / WMA / WMV / MSM / MMS Communication ActiveSync / WAP / JAVA / WiFi 802.11b/g / Bluetooth 2.0 / Mini USB / Windows IE browser Talk time 200 mins Standby time 120 hrs Battery 1100mAH Size 111*53*12.5mm Schedule Nov, 2007 (Nasdaq: CNTF) Page 19 HK000KRB
Music Phone - Rock Band GPRS10/GSM900/DCS1800 /PCS1900MHz/EDGE Memory 256Mb+64Mb /A2DP LCD 2.2’’QVGA TFT Camera 2.0 M/ 1.3 M optional Entertainments MP3/AMR/AAC/AAC+/MP4 /3GP/Voice video recorder Communication MMS/STK/PC Sync/WAP 2.0 /Bluetooth 2.0 A2DP/Java 2.0 Standby time 220 hrs Talk time 180 mins Battery 770mAh Size 110*47*10.9mm Weight About 100g Schedule Dec, 2007 (Nasdaq: CNTF) Page 20 HK000KRB
Contents � Industry Evolution � Unique ODP Provider � Product Development Status � Customer Base � Appendix (Nasdaq: CNTF) Page 21 HK000KRB
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