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Spreadtrum Communications, Inc. Announces Fourth Quarter and Fiscal Year 2010 Results

SHANGHAI,, Mar. 3, 2011 /PRNewswire via COMTEX/ --

Spreadtrum Communications, Inc. (Nasdaq: SPRD; "Spreadtrum" or the "Company"), a leading fabless semiconductor provider in China with advanced technology in both 2G and 3G wireless communications standards, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2010.

FOURTH QUARTER 2010 FINANCIAL SUMMARY:

  • Total revenue increased 31.5% quarter-over-quarter and 199.5% year-over-year to US$126.5 million, exceeding the Company's previously guided range of US$118-125 million.
  • Gross profit was US$54.4 million compared to US$42.5 million in the previous quarter and US$17.8 million in 4Q09. Gross margin was 43.0% compared to 44.1% in the previous quarter and 42.2% in 4Q09.
  • Cash flows from operations were US$37.1 million, compared with US$67.0 million in the previous quarter and US$9.5 million in 4Q09.
  • GAAP net income was US$30.0 million, compared with US$19.5 million in the previous quarter and US$1.4 million in 4Q09.
  • GAAP net income per basic and diluted ADS was US$0.62 and US$0.56, respectively, an improvement from US$0.41 and US$0.37 per basic and diluted ADS, respectively, in 3Q10 and US$0.03 per basic and diluted ADS in 4Q09.
  • Non-GAAP net income was US$32.7 million, compared to US$22.9 million in 3Q10 and US$2.9 million in 4Q09. Non-GAAP net income per diluted ADS was US$0.61, an improvement from US$0.43 per diluted ADS in 3Q10 and US$0.06 per diluted ADS in 4Q09.

FISCAL YEAR 2010 FINANCIAL SUMMARY:

  • Total revenue increased 229.6% from 2009 to US$346.3 million.
  • Gross profit was US$152.5 million, up 299.2% from 2009. Gross margin was 44.0% compared to 36.4% in the previous year.
  • Cash flows from operations were US$168.1 million, compared with US$19.7 million for the full year 2009.
  • GAAP net income was US$67.2 million, compared to a net loss of US$19.3 million in 2009.
  • GAAP net income per basic and diluted ADS was US$1.42 and US$1.28, respectively, an improvement from a loss of US$0.43 per basic and diluted ADS in 2009.
  • Non-GAAP net income was US$82.0 million, compared to a loss of US$9.6 million in 2009. Non-GAAP net income per diluted ADS was US$1.56, an improvement from a loss of US$0.21 per diluted ADS in 2009.

BUSINESS HIGHLIGHTS:

Commenting on the results, Spreadtrum's Chairman and CEO, Dr. Leo Li said, "We concluded 2010 with yet another impressive performance despite a toughening competitive environment as we made strides to constantly develop innovative technologies and offer our customers world class services. Fourth quarter sequential revenue growth of 31.5% and sequential net income growth of 53.4% are representative of our further market share gain and ability to deliver value to our shareholders.

"We recently introduced the world's first 40nm TD-SCDMA baseband processor, the SC8800G, which offers a low power and cost efficient platform while simultaneously achieving high level performance and integration. It also demonstrates our design and time-to-production ability to deliver cutting-edge technology in the 3G communications industry. In the 2G/2.5G space, we have accelerated our roll out of Triple-SIM solutions within emerging markets and also launched the world's first Quad-SIM in single chip solution. Thus far, it has been well received and successfully captured much attention in multiple-operator-markets where operators attract end users via various promotional offers and discounts.

"For the first quarter of 2011, we anticipate revenue to be in the range of US$130 -- $135 million with gross margin in the range of 41.5% -- 42.5% as we remain confident in our ability to continue growing our business."

Further commenting on the Q4 financial results, Shannon Gao, Spreadtrum CFO, added, "Our ability to execute on our key initiatives and improve our cost structure allowed us to maintain healthy margin levels. In addition, underpinned by incremental cash flow in 2010, our cash balance has increased from US$114 million to US$272 million, which will support our consistent investment in innovative frontiers. We expect operating expenses as a percentage of revenue in Q1 2011 will increase from Q4 2010 level due to higher R&D expenses."

FOURTH QUARTER AND FISCAL YEAR 2010 FINANCIAL REVIEW:

Revenue

Revenue in 4Q10 totaled US$126.5 million, up from US$96.2 million in 3Q10 and US$42.3 million in 4Q09. Revenue for the fiscal year 2010 totaled US$346.3 million, up 229.6% from US$105.1 million in 2009.

Sales volume of 2G/2.5G baseband and radio frequency bundle semiconductors ("bundle semiconductors") realized in 4Q10 increased 45.5% sequentially and increased 323.3% year-over-year. Sales volume of 3G bundle semiconductors realized in 4Q10 increased 6.7% sequentially and increased 340.7% year-over-year. In 2010, sales volume of 2G/2.5G bundle semiconductors increased 253.6% from 2009 and sales volume of 3G bundle semiconductors increased 907.5% over the same period.

The average selling price per unit of 2G/2.5G bundle semiconductors in 4Q10 decreased 2.4% sequentially and 25.6% year-over-year. The average selling price per unit of 3G bundle semiconductors in 4Q10 decreased 14.3% sequentially and 55.2% year-over-year.

Gross Profit and Margin

Gross profit for the quarter was US$54.4 million, up 28.0% from US$42.5 million in 3Q10 and up 205.6% from US$17.8 million in 4Q09. Gross margin for the quarter was 43.0%, down from 44.1 % in 3Q10 and up from 42.2% in 4Q09. Non-GAAP gross margin, adjusted to exclude share-based compensation, was 43.1%, a sequential decrease from 44.3% in 3Q10 and a year-over-year increase from 42.4% in 4Q09. For the fiscal year 2010, gross profit increased 299.2% to US$152.5 million from US$38.2 million in 2009, with a gross margin of 44.0% in 2010 compared to 36.4% in 2009. Non-GAAP gross margin for the full year 2010 was 44.1%, compared to 36.7% in 2009.

Cost of revenue in 4Q10 totaled US$72.1 million, representing an increase of 34.1% from the previous quarter and up 195.0% from 4Q09 levels, which is relatively in line with the increase in sales. Total cost of revenue for fiscal year 2010 was US$193.9 million, up 189.8% from US$66.9 million in 2009.

Operating Expense and Margin

The Company's operating margin for the quarter was 22.3%, compared to 21.5% in the previous quarter and 5.9% in 4Q09. The sequential and year-over-year improvements in operating margin were primarily driven by an increase in sales and gross profit, partially offset by higher operating expense. Non-GAAP operating margin, adjusted to exclude share-based compensation expense was 24.5% in 4Q10, down from 25.1% in 3Q10 and up from 9.4% in 4Q09. Operating margin for the fiscal year 2010 was 20.0%, compared to an operating margin of a negative 18.4% for the fiscal year 2009.

Total operating expenses in 4Q10, including selling, general and administrative (SG&A) expenses and research and development (R&D) expenses, were US$26.2 million, representing an increase from US$21.7 million in 3Q10 and an increase from US$15.3 million in 4Q09. The sequential and year-over-year rises in operating expenses were primarily due to increases in engineering expense related to the development of new products and employee compensation, partially offset by subsidies from government and other party. Total operating expenses for fiscal year 2010 were US$83.4 million, up 44.8% from US$57.6 million in 2009. This increase was primarily attributable to increases in engineering expense related to the development of new products and employee compensation, partially offset by increased government subsidies.

R&D expenses increased 17.8% sequentially and increased 71.0% year-over-year to US$19.6 million in 4Q10. The sequential increase was primarily attributable to increases in engineering expenses related to the development of new products, partially offset by subsidy recorded as a deduction of R&D expenses, relating to TD-SCDMA product development. The year-over-year rise in R&D expenses was primarily due to the aforementioned reasons, as well as increases in employee compensation expenses. R&D expenses for 2010 totaled US$63.2 million, representing a 70.8% increase from US$37.0 million in 2009.

SG&A expenses increased 28.8% sequentially and increased 70.1% year-over-year to US$6.6 million in 4Q10. The sequential increase in SG&A expenses was primarily due to a contingent loss of US$0.8 million in connection with a pending litigation and a rise in market promotion expense. The year-over-year rise in SG&A expenses was primarily due to the aforementioned reasons, as well as increases in employee compensation expenses. SG&A expenses were US$20.2 million in the full year 2010, compared to US$20.5 million in 2009.

Non-Operating Income

In 4Q10, the Company recorded interest income of US$1.3 million, up from both the previous quarter and 4Q09 as a result of investing a higher balance of cash combined with an increase in deposit saving rate. Interest expense in 4Q10 was a gain of US$0.8 million, compared to an expense of US$0.6 million in 3Q10 and US$0.7 million in 4Q09, which was primarily due to the reimbursement of the interest expense from the Chinese government which was in excess of actual interest expenses incurred in 4Q10. Other income (net) in 4Q10 was a gain of US$2.4 million, compared to a gain of US$1.3 million in 3Q10 and a loss of US$32 thousand in 4Q09. The sequential and year-over-year increases were primarily due to foreign exchange gain.

Non-operating income for the full year 2010 totaled US$6.3 million, compared to US$1.1 million in 2009. The increase was primarily due to higher interest income and foreign exchange gain.

Net Income

The Company's net income totaled US$30.0 million in 4Q10, compared to US$19.5 million in 3Q10 and US$1.4 million in 4Q09. The increase in net income in the fourth quarter 2010 was primarily due to increased sales and stable gross profit margin. Net profit margin was 23.7%, up from 20.3% in 3Q10 and 3.4% in 4Q09. Basic and diluted income per ADS was US$0.62 and US$0.56, respectively, in 4Q10, compared to US0.41 and US$0.37, respectively, in 3Q10 and US$0.03 per basic and diluted ADS in 4Q09. Net income for the fiscal year 2010 totaled US$67.2 million, up from a loss of US$19.3 million in 2009. Net margin for the year was 19.4%, compared to a negative 18.4% for the full year 2009. For the full year 2010, basic and diluted income per ADS was US$1.42 and US$1.28, respectively, compared to a loss of US$0.43 per basic and diluted ADS in 2009.

Excluding share-based compensation expenses, the Company's non-GAAP net income for 4Q10 was US$32.7 million, up from a non-GAAP net income of US$22.9 million in 3Q10 and up from US$2.9 million in 4Q09. Diluted non-GAAP income per ADS in 4Q10 was US$0.61, compared with US$0.43 per ADS in the prior quarter and US$0.06 per diluted ADS in 4Q09. Excluding share-based compensation expenses and impairment loss for long-term asset, non-GAAP net income for the full year 2010 was US$82.0 million, compared to a non-GAAP net loss of US$9.6 million in 2009. Diluted non-GAAP income per ADS for 2010 was US$1.56, compared with a loss of US$0.21 per ADS in 2009.

Balance Sheet and Cash Flow

As of December 31, 2010, the total balance of cash and cash equivalents and term deposit with maturity dates over 90 days was US$252.8 million, an increase of US$39.6 million from US$213.2 million as of September 30, 2010. The increase primarily resulted from 4Q10 net profit and a rise in accounts payable and advances from customers, partially offset by an increase in inventory and accounts receivable. The total balance of restricted cash which is available to use when the related expenses occurred and appropriate obligations are satisfied was US$19.5 million, compared with $19.1 million as of September 30, 2010. In 4Q10, the Company generated US$37.1 million in cash from operating activities and used $1.2 million cash on property and equipment as well as US$4.3 million relating to intangible asset acquisitions.

Accounts receivable increased by US$1.8 million from US$4.3 million as of September 30, 2010 to US$6.1 million as of December 31, 2010. Average A/R days increased sequentially from 3 days to 4 days. Inventory as of December 31, 2010 was US$133.1 million, an increase of US$67.8 million from September 30, 2010. This increase resulted partially from a rise in deferred costs included within inventories, which consisted of products shipped to customers where the rights and obligations of ownership had passed to the customers, but revenue had not yet been recognized due to pending customer acceptance. Inventory days were 127 days based on the average inventory amount of this quarter as a result of the higher inventory balance, partially offset by higher sales. Total assets as of December 31, 2010 were US$508.2 million, up US$132.1 million from US$376.1 million as of September 30, 2010. The increase in total assets was primarily attributable to increases of US$67.8 million in inventory, US$40.0 million in cash, US$13.2 million in intangible assets, US$5.0 million in prepaid expenses and other current assets, US$1.8 million in accounts receivable, and US$1.8 million in deferred tax assets.

Current liabilities increased from US$161.5 million as of September 30, 2010 to US$258.9 million as of December 31, 2010, primarily due to the increases of US$60.8 million in accounts payable, US$29.3 million in advance from customers and US$4.6 million in income tax payable. Long-term liabilities as of December 31, 2010 were US$50.7 million, compared to US$51.0 million as of September 30, 2010.

BUSINESS OUTLOOK:

Spreadtrum currently expects revenue for the first quarter of 2011 to be in the range of US$130 - $135 million with gross margin in the range of 41.5% - 42.5%.

WEBCAST OF CONFERENCE CALL:

The Company's senior management will host a conference call at 8:00 pm (Eastern) / 5:00 pm (Pacific) on Thursday, March 3, 2011, which is 9:00 am (Hong Kong) on Friday, March 4, 2011 to discuss the financial results and recent business activities. The conference call may be accessed by calling:



Toll

  • United States / International

+1-617-614-2705

  • Hong Kong

+852 30021672

  • United Kingdom

+44 2073658426

+44 2073654163

+44 2073658425

Participant Passcode

"SPRD" or "Spreadtrum"


A telephone replay will be available shortly after the call until March 10, 2011 at (US Toll / International) +1-617-801-6888. Passcode: 74083344.

A live webcast of the conference call and replay will be available in the investor relations section of the Company's website.

DISCUSSION OF NON-GAAP FINANCIAL MEASURES:

In addition to disclosing financial results prepared in accordance with US GAAP, the Company's earnings release contains non-GAAP financial measures that exclude the effects of share-based compensation and other non-recurring items. The non-GAAP financial measures used by management and disclosed by the Company exclude the income statement effects of all forms of share-based compensation.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for financial measures prepared in accordance with US GAAP. The financial results reported in accordance with US GAAP and reconciliation of GAAP to non-GAAP results should be carefully evaluated. The non-GAAP financial measures used by the Company may be prepared differently from and, therefore, may not be comparable to similarly titled measures used by other companies.

The Company provides the presentation of non-GAAP gross margin, non-GAAP operating margin, non-GAAP net income, and non-GAAP diluted earnings per ADS, all excluding share-based compensation expenses. The Company believes that these non-GAAP financial measures provide important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. The non-GAAP diluted earnings per ADS are calculated by dividing non-GAAP net income by the US GAAP weighted average diluted shares outstanding.

Spreadtrum Communications, Inc.

Condensed Consolidated Income Statements

(in thousands of US dollars, except per share data and percentages)

(unaudited)


Three months ended



December 31,

September 30,

December 31,

Change From


2009

2010

2010

4Q09

3Q10







Revenue

42,257

96,230

126,547

200%

32%

Cost of revenue

24,444

53,760

72,117

195%

34%







Gross profit

17,813

42,470

54,430

206%

28%







Operating expenses






Research & development

11,459

16,631

19,596

71%

18%

Selling, general & administrative

3,865

5,102

6,573

70%

29%







Total operating expenses

15,324

21,733

26,169

71%

20%

Operating income

2,489

20,737

28,261

1,035%

36%







Non-operating income (expense)






Interest income

511

976

1,263

147%

29%

Interest expense

(710)

(621)

804

(213%)

(230%)

Other income, net

(32)

1,263

2,362

(7,481%)

87%

Total non-operating income

(231)

1,618

4,429

(2,017%)

174%

Income before tax and equity in loss of affiliates

2,258

22,355

32,690

1,348%

46%

Income tax expense

(809)

2,798

2,761

(441%)

(1%)

Equity in loss of affiliates, net of taxes

-

(30)

26

-

(187%)

Net income

1,449

19,527

29,955

1,967%

53%







Income per ADS, basic

0.03

0.41

0.62



Income per ADS, diluted

0.03

0.37

0.56









Margin analysis:






Gross margin

42.2%

44.1%

43.0%



Operating margin

5.9%

21.5%

22.3%



Net margin

3.4%

20.3%

23.7%









Weighted average ADS equivalent: [1]






Basic

45,523,939

47,457,465

47,979,503



Diluted

49,123,130

52,729,515

53,822,796



ADS equivalent outstanding at end of period

46,030,473

47,706,621

48,273,204



[1] Assumes all outstanding ordinary shares are represented by ADSs. Each ADS represents three ordinary shares.

Spreadtrum Communications, Inc.

Consolidated Income Statements

(in thousands of US dollars, except per share data and percentages)

(unaudited)


Twelve months ended



December 31,

December 31,



2009

2010

Change

Revenue

105,070

346,338

230%

Cost of revenue

66,876

193,873

190%





Gross profit

38,194

152,465

299%





Operating expenses




Research & development

37,039

63,173

71%

Selling, general & administrative

20,539

20,188

(2%)

Total operating expenses

57,578

83,361

45%

Operating income (loss)

(19,384)

69,104

(457%)





Non-operating income (expense)




Interest income

1,552

3,601

132%

Interest expense

(1,171)

(1,145)

(2%)

Other income, net

711

3,879

446%

Total non-operating income

1,092

6,335

480%

Income (loss) before tax and equity

in loss of affiliates

(18,292)

75,439

(512%)

Income tax expense

1,024

8,130

694%

Equity in loss of affiliates, net of taxes

-

(115)


Net income (loss)

(19,316)

67,194

(448%)





Income (loss) per ADS, basic

(0.43)

1.42


Income (loss) per ADS, diluted

(0.43)

1.28






Margin analysis:




Gross margin

36.4%

44.0%


Operating margin

(18.4%)

20.0%


Net margin

(18.4%)

19.4%






Weighted average ADS equivalent: [1]




Basic

44,810,378

47,246,420


Diluted

44,810,378

52,447,510


[1] Assumes all outstanding ordinary shares are represented by ADSs. Each ADS represents three ordinary shares.

Spreadtrum Communications, Inc.

Condensed Consolidated Balance Sheets

(in thousands of US dollars)

(unaudited)


As of


December 31,

2009

September 30,

2010

December 31,

2010





ASSETS




Current assets




Cash and cash equivalents

37,809

36,339

82,195

Restricted cash

11,496

19,142

19,487

Short term deposits

20,504

132,068

125,340

Notes receivable

1,383

-

-

Accounts receivable, net

7,008

4,317

6,074

Inventories

25,541

65,301

133,096

Deferred tax assets

1,347

1,373

2,983

Prepaid expenses and other current assets

5,562

10,599

15,643

Total current assets

110,650

269,139

384,818





Property and equipment, net

27,090

28,219

28,597

Acquired intangible assets, net

26,621

23,269

36,448

Equity Investment

1,001

7,366

9,467

Deferred tax assets

570

573

794

Goodwill

2,000

2,000

2,000

Long term deposits

43,935

44,769

45,299

Other long term assets

7,227

734

794

Total assets

219,094

376,069

508,217





LIABILITIES AND SHAREHOLDER'S EQUITY




Current liabilities




Accounts payable

19,498

42,269

103,110

Advances from customers

14,667

73,803

103,068

Income tax payable

3,071

8,431

13,026

Accrued expenses and other current liabilities

17,888

37,026

39,649

Total current liabilities

55,124

161,529

258,853





Long term loan

43,935

44,769

45,299

Other long-term obligations

5,464

6,209

5,482

Total long term liabilities

49,399

50,978

50,781

Total liabilities

104,523

212,507

309,634





Shareholders' equity

114,571

163,562

198,583

Total liabilities and shareholders' equity

219,094

376,069

508,217


Spreadtrum Communications, Inc.

Reconciliation of GAAP to Non-GAAP Results

(in thousands of US dollars, except per share data and percentages)

(unaudited)


Three months ended


December 31,

September 30,

December 31,


2009

2010

2010

Cost of revenue

24,444

53,760

72,117

Adjustment for share-based compensation

(83)

(137)

(107)

Cost of revenue (non-GAAP)

24,361

53,623

72,010

Operating income

2,489

20,737

28,261

Adjustment for share-based compensation within: Cost of revenue

83

137

107

Research and development

801

1,877

1,470

Selling, general, and administrative

575

1,373

1,183

Operating income (non-GAAP)

3,948

24,124

31,021

Net income

1,449

19,527

29,955

Adjustment for share-based compensation within: Cost of revenue

83

137

107

Research and development

801

1,877

1,470

Selling, general, and administrative

575

1,373

1,183

Net income (non-GAAP)*

2,908

22,914

32,715

Income per ADS, diluted

0.03

0.37

0.56

Adjustment for share-based compensation

0.03

0.06

0.05

Income per ADS, diluted (non- GAAP)*

0.06

0.43

0.61

Gross margin

42.2%

44.1%

43.0%

Adjustment for share-based compensation

0.2%

0.2%

0.1%

Gross margin (non-GAAP)

42.4%

44.3%

43.1%

Operating margin

5.9%

21.5%

22.3%

Adjustment for share-based compensation

3.5%

3.6%

2.2%

Operating margin (non-GAAP)

9.4%

25.1%

24.5%

Net margin

3.4%

20.3%

23.7%

Adjustment for share-based compensation

3.5%

3.6%

2.2%

Net margin (non-GAAP)*

6.9%

23.9%

25.9%

Operating expenses

15,324

21,733

26,169

Adjustment for share-based compensation:




Research and development

(801)

(1,877)

(1,470)

Selling, general, and administrative

(575)

(1,373)

(1,183)

Adjustment for impairment loss of long-lived assets




Adjustment for amortization of intangibles from Quorum acquisition




Operating expenses (non-GAAP)

13,948

18,483

23,516

* The non-GAAP adjustment does not take into consideration the impact of taxes.

Spreadtrum Communications, Inc.

Reconciliation of GAAP to Non-GAAP Results

(in thousands of US dollars, except per share data and percentages)

(unaudited)


Twelve months ended


December 31,

December 31,


2009

2010

Cost of revenue

66,876

193,873

Adjustment for share-based compensation

(278)

(437)

Cost of revenue (non-GAAP)

66,598

193,436

Operating income (loss)

(19,384)

69,104

Adjustment for share-based compensation within: Cost of revenue

278

437

Research and development

2,871

5,723

Selling, general, and administrative

6,550

4,131

Adjustment for impairment loss of long-lived assets

-

4,486

Operating income (loss) (non-GAAP)

(9,685)

83,881

Net income

(19,316)

67,194

Adjustment for share-based compensation within: Cost of revenue

278

437

Research and development

2,871

5,723

Selling, general, and administrative

6,550

4,131

Adjustment for impairment loss of long-lived assets


4,486

Net income (loss) (non-GAAP)*

(9,617)

81,971

Income per ADS, diluted

(0.43)

1.28

Adjustment for share-based compensation

0.22

0.20

Adjustment for impairment loss of long-lived assets


0.08

Income (loss) per ADS, diluted (non- GAAP)*

(0.21)

1.56

Gross margin

36.4%

44.0%

Adjustment for share-based compensation

0.3%

0.1%

Gross margin (non-GAAP)

36.7%

44.1%

Operating margin

(18.4%)

20.0%

Adjustment for share-based compensation

9.2%

3.0%

Adjustment for impairment loss of long-lived assets


1.3%

Operating margin (non-GAAP)

(9.2%)

24.3%

Net margin

(18.4%)

19.4%

Adjustment for share-based compensation

9.2%

3.0%

Adjustment for impairment loss of long-lived assets

-

1.3%

Net margin (non-GAAP)*

(9.2%)

23.7%

* The non-GAAP adjustment does not take into consideration the impact of taxes.

ABOUT SPREADTRUM COMMUNICATIONS, INC.

Spreadtrum Communications, Inc. (Nasdaq: SPRD; "Spreadtrum") is a fabless semiconductor company that develops baseband and radio frequency processor solutions for the wireless communications market. Spreadtrum combines its semiconductor design expertise with its software development capabilities to deliver highly-integrated baseband processors with multimedia functionality and power management. Spreadtrum has developed its solutions based on an open development platform, enabling its customers to develop customized wireless products that are feature-rich to meet their cost and time-to-market requirements.

SAFE HARBOR STATEMENT:

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding the Company's ability to constantly develop innovative technologies and offer its customers world class services, the Company's ability to make further market share gain and deliver value to its shareholders, the Company's design and time-to-production ability to deliver cutting-edge technology in the 3G communications industry, the Company's success of its Triple-SIM and Quad-SIM solutions within emerging markets and multiple-operator markets, the Company's expectations with respect to revenue being in the range of US$130 - $135 million in the first quarter of 2011 with gross margin in the range of 41.5%-42.5%, the Company's confidence in its ability to continue growing its business, the Company's ability to execute on its key initiatives and improve its cost structure, the Company's ability to maintain healthy margin levels, that the Company's increased cash flow will support its consistent investment in innovative frontiers, and the Company's expectation on operating expenses as a percentage of revenue in Q1 2011 to increase from Q4 2010 level due to higher R&D expenses. The Company uses words like "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These statements are forward-looking in nature and involve risks and uncertainties that may cause actual market trends and the Company's actual results to differ materially from those expressed or implied in these forward-looking statements for a variety of reasons. Potential risks and uncertainties include, but are not limited to, continuing competitive pressure in the semiconductor industry and the effect of such pressure on prices; unpredictable changes in technology and consumer demand for mobile phones; the rate at which the commercial deployment of TD-SCDMA technology will grow; market acceptance of the Company's 8800G, Triple-SIM solutions and Quad-SIM solutions; the Company's ability to sustain recent rates of growth; the state of and any change in the Company's relationship with its major domestic and international customers and Chinese government agencies; the Company's ability to successfully complete the projects of the Chinese TD-SCDMA operator; and changes in political, economic, legal and social conditions in China. For additional discussion of these risks and uncertainties and other factors, please consider the information contained in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC") and the annual report on Form 20-F filed on May 7, 2010, as amended, especially the section under "Risk Factors" and such other documents that the Company may file with the SEC from time to time, including on Form 6-K. The Company assumes no obligation to update any forward-looking statements, which apply only as of the date of this press release, and does not intend to update any forward-looking statement whether as a result of new information, future events or otherwise except as required by law.

For further information, please contact:

Investor Relations

Tel:+86-21-5080-2727

Email:ir@spreadtrum.com

Web:http://www.spreadtrum.com

SOURCE Spreadtrum Communications, Inc.