Vimicro Announces Business Restructuring

BEIJING, Jan. 1, 2010 /PRNewswire-Asia-FirstCall/ -- Vimicro International Corporation (Nasdaq: VIMC) ("Vimicro" or the "Company"), a leading multimedia semiconductor and solution provider, today announced it has entered into definitive business restructuring agreements to divest certain non-core business lines and land use rights as part of its previously announced cost control initiatives. The Company expects this divestiture of loss generating businesses and undeveloped assets to improve its operating performance and financial strength, further enabling Vimicro to focus resources on its new growing surveillance business.

Under the terms of the agreement, Vimicro will divest the non-core businesses and associated land use rights. Dr. Xiaodong (Dave) Yang, a director and the former Chief Technology Officer of the Company, will take over the divested businesses and assets. The non-core businesses include analog integrated circuit, MP4, advanced multimedia and Bluetooth products. Based on an independent third-party valuation, Vimicro will receive $1.6 million from Vimicro Management Foundation ("VMF"), managed by Dr. Yang, for the transfer of these non-core businesses. Additionally, Vimicro will receive $11.1 million from VMF for its land use rights in Jiangsu, Shenzhen and Shanghai to recover the original cash use in purchasing these rights. Vimico will hold 5% equity interest in the new non-core business entity.

The Company's audit committee and a special independent committee, each comprised entirely of independent directors, have approved the transactions and transactional agreements. The board of directors and its committees considered, among other things, the advice from external advisors, including third party valuation and legal counsels to assess the transactions for the best interests of shareholders. In addition, the completion of the transactions will be subject to the necessary approvals from local governmental authorities in China.

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 the consumer electronics and communications markets. Vimicro is also expanding business into the surveillance market with system-level solutions and semiconductor products. Vimicro's ADSs, each of which represents four ordinary shares, are currently trading on the NASDAQ Global Market under the ticker symbol "VIMC."

About Vimicro Management Foundation ("VMF")

VMF is a stand-alone entity established in Beijing ("Beijing Zhongxing Tianshi Investment Center") in 2008 by Dr. Xiaodong (Dave) Yang, Dr. Zhonghan (John) Deng and Zhaowei (Kevin) Jin as limited partners for investment, charity and consulting. Under VMF, Beijing Zhongxing Tianshi Consulting Company, where Dr. Xiaodong (Dave) Yang serves as general manager and chairman, will conduct the business restructuring agreements and work with local government authorities in China.

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.