China Techfaith Wireless (NASDAQ:CNTF)

BEIJING, May 16, 2011, /PRNewswire-Asia/ -- China TechFaith Wireless Technology Limited today announced it will establish a joint venture company with Beijing E-town International Investment and Development Co Ltd ("BEIID"), a PRC stated owned investment and financing company headquarter in Beijing Economic and Technological Development Area for a period of 30 years. This new joint venture arrangement replaces the previously announced contract between TechFaith and BEIID, signed in September 2010, under which BEIID was given an option to convert its interest in the convertible bonds into TechFaith ordinary shares over the next 5 years at the price of US$5.00 per ADS.

For this joint venture, TechFaith will invest RMB 300 million and BEIID will invest RMB 200 million for their previously announced the development of a 10 million-unit capacity smart phone production line in Beijing. TechFaith shall hold 60% of the shares and BEIID will hold the remaining 40% for the joint venture.

Mr. Li Xiao Ping, Executive Deputy General Manager of BEIID, commented, "We decided to replace the convertible bonds arrangement with a joint venture because we are looking more at the long term growth of the whole industry rather than short term gains, and a joint venture allows us to work more closely together for the long term. We believe with the increase coverage of 3G networks globally, the demand for smart phones will also increase."

Mr. Defu Dong, Chairman and CEO of TechFaith, said, "We appreciate the confidence and trust BEIID has expressed in Techfaith. The joint venture directly helps us in our goal of expansion and technology development. The additional capacity will also provide TechFaith a growth platform to meet the expected demand growth due to the fast increase in smart phone users globally. TecFace's rapid growth is in line with our expectations and we are confident that the smartphone business will continue to grow and become one of our major business segments."