SHANGHAI -- Spreadtrum Communications, Inc. (Nasdaq: SPRD; "Spreadtrum" or the "Company"), one of China's leading wireless baseband chipset providers, today announced its fourth quarter 2008 and first quarter 2009 financial results.

FOURTH QUARTER 2008 (4Q08) FINANCIAL SUMMARY:

-- Total revenue in 4Q08 was US$10.2 million, down 79% year over year and 49% sequentially. Baseband and RF revenue in 4Q08 was US$9.3 million, down 79% year over year and 50% sequentially.

-- Diluted loss per American Depositary Share (ADS) was US$1.19, compared to diluted earnings per ADS of US$0.22 in 4Q07 and diluted loss per ADS of US$0.71 in 3Q08.

-- Gross margin in 4Q08 was -26.8% compared to 45.5% in 4Q07 and 43.7% in 3Q08.

-- GAAP net loss in 4Q08 was US$52.3 million, compared to net income of US$10.2 million in 4Q07 and net loss of US$31.3 million in 3Q08.

FIRST QUARTER 2009 (1Q09) FINANCIAL SUMMARY:

-- Total revenue in 1Q09 was US$8.2 million, down 79% year over year and 20% sequentially. Baseband and RF revenue in 1Q09 was US$8.0 million, down 77% year over year and 14% sequentially.

-- Diluted loss per American Depositary Share (ADS) was US$0.19, compared to diluted earnings per ADS of US$0.06 in 1Q08 and diluted loss per ADS of US$1.19 in 4Q08.

-- Gross margin in 1Q09 was 19.4% compared to 44.9% in 1Q08 and-26.8% in 4Q08.

-- GAAP net loss in 1Q09 was US$8.3 million, compared to net income of US$2.8 million in 1Q08 and net loss of US$52.3 million in 4Q08.

BUSINESS HIGHLIGHTS:

-- Samsung selected Spreadtrum as a new chipset supplier for its mobile phone models. Volume shipment of QS520 GSM/GPRS and QS1001 EDGE transceivers commenced in 1Q09.

-- During the 2009 GSMA Mobile World Congress, Spreadtrum launched the world's first TD-SCDMA/HSDPA/EDGE/GPRS/GSM single-chip RF transceiver, the QS3200.

-- Spreadtrum received RMB300 million (approximately US$44 million) of new financing from a Chinese bank in the form of a fixed-term loan. The interest on borrowings under this bank loan will be mostly covered by Chinese government subsidy funds.

-- Spreadtrum was chosen by China Mobile as one of a select few companies to participate in its "Low Cost 3G Handset" project.

-- Spreadtrum promoted Dr. Leo Li from the Company's President to President and Chief Executive Officer (CEO). Dr. Ping Wu, previously the CEO and Chairman of the Board of Directors, will retain his role as Chairman of the Board.

Commenting on the results, Spreadtrum's CEO, Dr. Leo Li, said: "It is clear that market conditions have not been in our favor for the last several quarters. However, we are actively taking measures to counter the effects and ensure that the Company performs reasonably well against the backdrop of a difficult operating environment. We intend to stay ahead of the technological curve as 3G rollout continues in China, and remain focused on driving long-term growth. We took some non-cash charges in 4Q08 including, a US$32.3 million impairment loss of goodwill, a US$3.0 million impairment loss of long-lived assets, US$2.4 million in share-based compensation, US$2.1 million in depreciation and intangible assets amortization, US$5.4 million in inventory valuation allowance and US$2.8 million in bad debt expenses. These items have impacted our results on paper; however they are not reflective of our operational performance or potential for long-term success.

"Spreadtrum scored some key victories during the past two quarters, most notably our selection by Samsung to supply chipsets for its mobile phones. Our QS520 GSM/GPRS and QS1001 EDGE transceivers have been designed into Samsung's mobile phones in 4Q08, which will be shipped internationally. I am extremely pleased that a well-respected company like Samsung has selected Spreadtrum as a supplier and we view this partnership as a testament to the quality of our products and the advantages they offer.

"We have new leadership in place, and my colleagues and I are committed to navigating the business through these difficult times. We are well along with our search for a new CFO, and I expect to announce an appointment in the coming weeks. To stay ahead of the competition, it is important that we continue to improve the quality of products and enhance the overall effectiveness and efficiency of our operations. To this end, we plan to continue to strengthen our technological leadership via increased investment in new GSM and TD-SCDMA products. We are also taking measures to strengthen our financial position, recently securing nearly $44 million from a Chinese bank in financing with support from the Chinese government, resulting in a nearly interest free loan. In order to cut costs and drive improvements in our financial performance, we have implemented a 15% headcount reduction and reduced inventory. We are also taking steps to improve the sales cycle, and have already seen some improvement in accounts receivable metrics in 1Q09. Currently we expect 2Q 09 revenue will be in the range of US$10million to US$14 million with improved margins, sequentially," Dr. Li concluded.

Spreadtrum Communications Inc.