Vimicro International Enters Into Strategic Partnership with Fuzhou Municipal Government for Security-Surveillance Facility

BEIJING, June 7, 2012 /PRNewswire-Asia-FirstCall/ -- Vimicro International Corporation (NASDAQ: VIMC) ("Vimicro" or the "Company"), a leading PC-camera processor and IP-based surveillance solution provider, today announced that, as part of its efforts to develop and ramp-up its surveillance business, the Company recently entered into a strategic cooperative framework agreement (the "Agreement") with the local municipal government to jointly develop, produce, and market Surveillance Video and Audio Coding (SVAC)-based security surveillance products in Fuzhou, the capital city of Fujian province. The new venture will be named Fuzhou Vimicro. Mr. Raymond Zhang, Company's Chief Technology Officer, will be responsible for leading all business and development activities in Fuzhou Vimicro.

Under the terms of the Agreement, the Fuzhou municipal government has committed to provide several forms of support to Fuzhou Vimicro, and the main initiatives include:

• The Fuzhou government will award Vimicro "preferred supplier" status in the procurement of security surveillance-related products;
• All security surveillance projects installed in Fuzhou will be required to comply with the SVAC national standard. The SVAC standard was co-founded by Vimicro and the Ministry of Public Security and is one of the core required industry standards in the Ministry of Public Security's ("MPS") officially released technology requirements for video and audio-security digital-surveillance products;
• The Fuzhou municipal government will provide 3,000 square meters of land (equivalent to approximately 0.7 acres) to Fuzhou Vimicro for its research and manufacturing center, free of charge for the first two years; and
• The Fuzhou municipal government will also provide Fuzhou Vimicro with an interest-free loan of RMB 60 million (approximately $9.5 million) with a five-year term, in addition to a RMB 30 million (approximately $4.8 million) subsidy.

"We are very excited about the formation of this strategic partnership with the Fuzhou municipal government," said Dr. John Deng, Chairman and CEO of Vimicro. "The signing of this strategic cooperative agreement signifies an important step forward for our security surveillance business. We look forward to working closely with the Fuzhou government to effectively roll out our SVAC-based products and services in the region and generate meaningful economic benefits over time. The agreement also comprises just one part of our detailed plan to put capacity in place on a national scale ahead of an expected surge in demand, which will prove exciting for Vimicro and our investors."

About Vimicro International Corporation

Vimicro International Corporation is a leading multimedia semiconductor and solution provider that designs, develops and markets mixed-signal semiconductor products and system-level solutions that enable multimedia capabilities in a variety of products for PC/Notebook, consumer electronics and surveillance markets. Vimicro is aggressively expanding business into the surveillance market with system-level solutions and semiconductor products to capitalize on China's domestic demand. Vimicro's ADSs, each of which represents four ordinary shares, are currently trading on the NASDAQ Global Market under the ticker symbol "VIMC".

Forward-Looking Statements

This announcement 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," "confident" and similar statements. Among other things, the quotations from management in this announcement, as well as Vimicro's expectations and forecasts, contain forward-looking statements. Vimicro 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 Vimicro's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the company's ability to develop and sell new mobile multimedia products; the expected growth of the mobile multimedia market; the company's ability to increase sales of notebook camera multimedia processors; the company's ability to retain existing customers and acquire new customers and respond to competitive market conditions; the company's ability to respond in a timely manner to the evolving multimedia market and changing consumer preferences and industry standards and to stay abreast of technological changes; the company's ability to secure sufficient foundry capacity in a timely manner; the company's ability to effectively protect its intellectual property and the risk that it may infringe on the intellectual property of others; and cyclicality of the semiconductor industry. Further information regarding these and other risks is included in Vimicro's annual report on Form 20-F filed with the Securities and Exchange Commission. Vimicro does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release is as of the date hereof, and Vimicro undertakes no duty to update such information, except as required under applicable law.