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Beijing Beida Jade Bird Universal Sci-Tech Company Limited

Beijing Beida Jade Bird Universal Sci-Tech Company Limited. Strategic Development. May 2002. Content. Part (I) About the Company Part (II) Strategic Investment in SMIC Part (III) Prospects & Outlook of Semiconductor Industry

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Beijing Beida Jade Bird Universal Sci-Tech Company Limited

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  1. Beijing Beida Jade Bird Universal Sci-Tech Company Limited Strategic Development May 2002

  2. Content Part (I) About the Company Part (II) Strategic Investment in SMIC Part (III) Prospects & Outlook of Semiconductor Industry Part (IV) Proposed Placing of New H Shares

  3. Part (I)About the Company

  4. Company Background • Incorporated as a joint stock limited company • Registered capital : RMB 96,400,000 29 Mar 2000 • The first H Shares Listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong • Stock Code : 8095 • Capital raised : Approx. HK$300 million 27 Jul 2000 18 Dec 2000 • Company subdivided each of the Promoters’ shares and H shares into ten shares`

  5. The Company Shareholder’s Structure Employees of Jade Bird Group & the Company Strategic Investors from Hong Kong Peking University 93.37% 6.63% Jade Bird Group Dynamic Win Strategic Investors from HK& Singapore Public (H Shares) 32.16% 17.63% 22.82% 27.39%

  6. Company Structure (1) The Company 100% 75% 51% Beida Jade Bird Universal Sci-Tech (Cayman) Development Co Ltd Hebei Beida Jade Bird Universal Fire Alarm Device Co Ltd Beijing Jade Bird Hao Di Electric System Co Ltd 100% Beida Jade Bird Universal Sci-Tech (Cayman) Investment Co Ltd 5.29% SMIC

  7. Company Structure (2) • JBU (Cayman) Development: engaged in the sales of computer products • JBU (Cayman) Investment: holding the investment in SMIC • SMIC: an IC foundry factory located in Shanghai Pudong • Hebei JBU Fire Alarm Device: engaged in the manufacture and sales of fire alarm devices • Jade Bird Hao Di: engaged in the manufacture and sales of electric meter remote reading system

  8. Principal Activities • One of the leading software developers and integrated circuit designers in the PRC • Engaged in the design, manufacture, marketing, distribution and sale of proprietary embedded products including: • Application Specific Integrated Circuit (“ASIC”) • Network Security Products • GPS Application System • Smart Card Application System • Wireless Fire Alarm System (“WFAS”)

  9. PRODUCT QUALIFICATION AUTHORITY OF CERTIFICATE Jade Bird Firewall JB-FW1 Sales Certificate Ministry of Public Security Certificate of Information Security Product China National Information Security Testing Evaluation and Certification Center(CNISTEC) Certificate of Military Information Security Product People’s Liberation Army Information Security Testing Evaluation and Certification Center (PLAISTEC) Certificate of Technological Examination China State Cryptography Control Authorities Office (CSCCAO) Passed the JB151A-97 anti-electromagnetic release national standard examination One of the short-listed authorized products People’s Bank of China Awards & Qualifications (1)

  10. PRODUCT QUALIFICATION AUTHORITY OF CERTIFICATE JB-SG2 Security Gateway Certificate of Military Information Security Product PLAISTEC SZD02Bank Terminal Certificate Card Passed system security review CSCCAO SJY-A Data Encryption Card Passed system security review CSCCAO Four Fire Alarm Devices from Hebei Jade Bird Universal Fire Alarm Device Company Limited ISO9002 Certificates for the Fire Products Safety Certification China Certificate Committee for Fire Alarm Products Quality Awards & Qualifications (2)

  11. PRODUCT QUALITY AUTHORITY OF CERTIFICATE GPS 230M Vehicle Box Acceptance quality certificate Ministry of Public Security & National Radio Monitor and Examination Center JB-DT1 GPS Vehicle Box Security Technology Safeguard Product Manufacture Certificate Security Technology Safeguard Certificate Public Security Department of Guangdong Province The Security Technology Safeguard Management office of Shenzhen Public Security Bureau Ministry of Information Technology JB-DT1 Data Transmitter Certificate for Wireless Radio Transmitter Shenzhen Branch of the Company Certificates for Sale, Manufacture and Network Forming of Radio Communication Equipments Shenzhen Radio Management Office Awards & Qualifications (3)

  12. Major Products (1) ASIC • Develop embedded microprocessor and specific integrated circuits • Provide ASIC technologies and customized engineering design, strives to improve the system with optimal performance, smaller size and lower cost • Design and develop ASIC synthesized with cryptographic logic (“Security ICs”) for commercial information security systems

  13. Major Products (2) Network Security Products • Security gateway, firewall and network monitor systems are applied in government branches, financial institutions, large enterprises and the army • Begin mass production of SJY01- A, SZD02 and SJY04 encryption cards • Emphasize security services such as risk evaluation, system optimization, security alarm and consulting • Strengthen cooperation with SYMANTEC and other famous information security providers

  14. Major Products (3) GPS Application System • Box unit installed in moving or static target sending longitude and latitude information via wireless communication network, thus allowing remote monitoring facility and control center to keep track of target • Apply JB-230M GPS system in fleet management monitoring, dispatch and theft alarm of all kinds of vehicles • Strengthen R&D on emerging applications such as logistics distribution and navigation • Strengthen ties with regional governments, and strive to establish markets in Beijing, Guangdong, Sichuan and South-eastern part of the PRC

  15. Major Products (4) Smart Card Application System • Provide contact and contactless smart cards • Products cover intelligence household management system, logistics management system, POS and access control system • Major customers include universities, hotels, financial institutions and large enterprises

  16. Major Products (5) WFAS • Accurate fire detecting and fire alarm functions • More reliable, economic and versatile • Apply in Haikou Fire Alarm Control Center, Zhongnanhai, Yuquan Mountain, the Summer Palace and other projects • Manufacture fire alarm sensors and controllers through subsidiaryHebei Beida Jade Bird Universal Fire Alarm Devices Limited • Strengthen support for upstream R&D and flexible applications of wire and wireless fire alarm solutions

  17. Financial Institutions Business Enterprises Government Authorities Army & Police Force Universities Major Clients

  18. RMB’000 2002 Q1(unaudited) 2001 2000 1999 Turnover 27,733 124,617 60,843 10,419 Profit (Loss) attributable to shareholders 4,469 37,510 31,067 (4,486) Earnings (Loss) before interest, tax, depreciation, amortization and minority interest 11,678 40,641 27,301 (3,237) Earnings (Loss) per share - basic (RMB cents) 0.46 3.9 3.8 (0.64) Dividend per share - (RMB cents) N/A 0.5 0.5 N/A Total assets N/A 831,372 386,800 26,299 Shareholders’ equity N/A 403,997 371,307 11,379 Financial Highlights (1)

  19. Turnover Profit Financial Highlights (2) RMB’000

  20. Part (II) Strategic Investment in SMIC

  21. Reasons for & Benefits of Investing in SMIC • Strengthen and enhance the Company’s technology in the design and development of ICs • Enable the Company to obtain more market intelligence about ICs manufacturing technology, which in turn benefit our design of ICs which are key components of the Company’s products • Ensure stable supply of ICs at competitive price by subcontracting ICs manufacture to SMIC • Enable the Company to receive other support from SMIC in technologies and techniques enhancement

  22. JBU’s Involvement in the Management of SMIC • The Company has an active role in setting up and running of SMIC • As one of the promoters of SMIC, the Company has participated in SMIC’s feasibility study and taken up an important role in its liaison with PRC government authorities • Two of the Company’s directors have been actively participating in the management and operation of SMIC

  23. JBU’s Investment Highlights • Investment vehicle : Beida Jade Bird Universal (Cayman) Investment Company Limited, wholly owned subsidiary • Subscribe for 54,000,540 SMIC Preference Shares at US$1.1111 per share • Subscribe for 54,000,540 SMIC Series A-1 Preference Shares at US$0.00001 per share • Total investment amounting to US$60 million • Hold approximately 5.29% of the total issued voting share capital of SMIC

  24. Pro Forma Financials after the Investment (Based on the actual financials of year 2001) RMB’000 Current Upon Completion of Investment and Share Placing ** Turnover 124,617 124,617 Income Dividend* - 39,840 Profit attributable to shareholders 37,510 77,350 Profit per share - (RMB cents) 3.9 6.7 Total assets 831,372 787,764 Bank loans 390,000 - Shareholders’ equity 403,997 787,764 * Assumed the preference shares dividend rate at 8% ** Based on issuing the additional 192,800,000 H shares and the current market price of HK$1.5 per share (total placing proceeds amounting to HK$289 million or US$37 million)

  25. SMIC’s Competitive Advantages (1) • Strong base of strategic partners and investors • Enormous market potentials • Lower costs : • Building/facilities • Workforce/operations • Supplies/material • Strong government support • Experienced management

  26. SMIC’s Competitive Advantages (2) • Import tax (tariff) exemptions • Equipment • Raw Material • Value added tax (VAT) rebates • 17% Vs <5% • Corporate tax discounts • First profitable year = “5 exempt-5 halves” • Accelerated depreciation (tax purposes) • Preferential treatment for Fabless design houses • Same treatment as software industry (3% VAT)

  27. SMIC’s Initial Financing • Registered Capital : US$1 billion • First phase investment amount : US$ 1.4 billion • Major investors include Strategic Partners Jade Bird Universal Shanghai Industrial Holdings Institutional Investors Goldman Sachs H&Q Asia Pacific Walden International Vertex Management

  28. SMIC’s Capability • Low power static random access memory (SRAM) technology transfer from Toshiba • 0.18-micron baseline logic process technology transfer and patent license rights from Chartered, one of the world's top three silicon foundries • Manufacture 0.22um and 0.18um FCRAMTM (Fast Cycle RAM) Products for Fujitsu Limited • Conclude a non-exclusive alliance with ChipPAC, Inc. (Nasdaq: CHPC) for end-to-end solutions from wafer probe to packaging and test and final distribution in China and global market • Establish partnership in the area of advanced semiconductor process technology with Europe's leading independent R&D centre for microelectronics, IMEC

  29. 2000 2001 2003 2002 Aug Aug Sep Dec Jun Dec June Jun Jan SMIC’s Development Plan Photo mask shop cleanroom completed Equipment installation begin Pilot production begin Half capacity reaches 25,000 wafers/month Combined production to 85,000+ wafers/month 2004 Jan 1H Construction ground breaking Initial products/ processes qualified Volume production commence Possible 2nd phrase financing (2H 2003) SMIC has 1-2 year leads over its competitors in terms of entering into the China market

  30. SMIC’s Employees By Education By Region By Experience Total: 1032 employees as at August 27, 2001

  31. Part (III)Prospects & Outlook of Semiconductor Industry

  32. Supply & Demand of ICs in China Source:CCID

  33. Semiconductor Market : Worldwide and China Source:Dataquest

  34. Company Location Technology Capacity SMIC Shanghai 0.18/ 0.25 micron 8” wafer 85,000+ wafers/month by 2004 NEC Shougang Beijing 0.35 micron 6” wafer N/A Huajing Wuxi 1- 5 micron 4- 5” wafer N/A CSMC-HJ Wuxi 0.5/ 0.6 micron 5- 6“ wafer N/A NEC HuaHong Shanghai 0.25 micron 8“ wafer 20,000+ wafers/month by end of 2001 ASMC Shanghai 0.6/ 1.5 micron 5- 6“ wafer N/A Motorola Tianjin 0.25 micron 8“ wafer 24,000 wafers/month Existing Suppliers in China Grace, Belling, Hua Xia and others are either under the construction or at the planning stage

  35. Year 2000 Existing Fab Technology in China Unit: Inch Unit: Micron Year 2000 Source: Computer World， CLSA Emerging Markets

  36. Market Outlook (1) Expected Growth • Rapid expansion of domestic market • Current market = US$15 Billion (8% global market) • 30.8% Growth p.a. 1998-2000 US$Billion Source: Gartner Dataquest

  37. Product Revenue in 2000 (Unit :US$ million) CAGR (2000- 2005) Motherboard / PC 4,945 12.7% Optical Disk Drive 839 18.4% Handheld PC 273 33.7% Hard Disk Drive 237 4.6% Server Appliance 174 34.3% Market Outlook (2) Data Processing Semiconductor • Growth drivers : • Internet continues to drive growth • Increase investment from Taiwanese motherboard/ notebook/ PC manufacturers • Global OEMs are establishing production in China • Local consumer electronics producers are venturing this sector Source: Gartner Dataquest

  38. Product Revenue in 2000 (Unit: US$ million) CAGR (2000-2005) Cellular Phone 7,608 29.8% Mobile infra. 509 35.3% LAN Switch 401 33.3% Network Line Card 689 11.9% Legacy Phone 593 8.2% Cordless Phone 241 20.7% Market Outlook (3) Communications Semiconductor • Growth drivers : • Government’s effort to enhance the information and networking system • Strong foreign direct investment inflow in electronics and communications equipment sector • Increase percentage of low to mid end communications production Source: Gartner Dataquest

  39. Product Revenue in 2000 (Unit :US$ million) CAGR (2000-2005) DVD 819 17.4% Color TV 806 13.1% Appliance 545 5.2% Digital Camera 489 95.4% Net Audio Player 263 44.4% Digital Camcorder 134 95.6% Market Outlook (4) Consumer Semiconductor • Growth drivers : • Robust GDP growth • Critical mass of middle class consumers Source: Gartner Dataquest

  40. PC Shipment (units in million) Market Outlook (5) PC Market • Only 1.9% PC penetration in 2000 • 48% growth Y/Y in Q1 2001 • Projected 26% CAGR 2001-2003 • Data processing electronics = 43% p.a. growth 1997-2000 Source: IDC, JP Morgan estimates

  41. Market Outlook (6) Mobile Phone Subscribers No. of subscribers (in million) (Accumulative) Source: IDC, JP Morgan estimates

  42. Part (IV)Proposed Placing of NewH Shares

  43. Issuer Shares Offer Size of Offer Use of Proceeds Closing Date : Beijing Beida Jade Bird Universal Sci-Tech Co Ltd (Stock code : 8095.hk) : 192,800,000 ordinary shares (H Shares) : US$ 37 million (estimated) : Repayment of bank loan used for investment in SMIC : June 2002 Proposed Transaction

  44. Special Capital & Price • Record High : HK$2.925 per H share 31 May 2001 • Record Low : HK$1.1 per H share (Placing Price) 27 July 2000 (IPO) Nominal Value RMB 0.1 Number of Promoters’ Shares 700,000,000 Number of H Shares 264,000,000 Total Number of Issued Shares 964,000,000 Total Issued Share Capital RMB 96,400,000 Current Market Capitalization HK$1,426,720,000

  45. 3.00 - 140 Volume - 120 2.50 Price 100 2.00 80 1.50 Price (HK$) Volume (in million) 60 1.00 40 0.50 20 Jul-00 Jul-01 Jan-01 Jan-02 Mar-01 Oct-01 Mar-02 Feb-01 Sep-00 Nov-00 Dec-00 Sep-01 Nov-01 Dec-01 Apr-01 Apr-02 May-01 Aug-00 Aug-01 Stock Performance Stock Price and Volume Performance (IPO Date to Present)

  46. Beijing Beida Jade Bird Universal Sci-Tech Company Limited Thank you!! www.china-jbu.com

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