*EPS calculation is based on the weighted average number of shares for the period

• Unit shipment grew by 16%, year-on-year 

• Sales amounted to approximately US$150 million 

• Net profit was about US$18 million 

• Basic earnings per share was 0.73 US cents (5.7 HK cents) 

• The Board resolved to declare an interim dividend per share of 2.0 HK cents (0.26 US cents) 

• The Group is progressing to grow the business with products diversification

(Hong Kong - 3 August 2006) - Solomon Systech (International) Limited ("Solomon Systech" or the "Group", SEHK: 2878) today announced its interim results for FY2006.

For the period under review, the Group reported a unit shipment growth of 16% at a sales of US$149.4 million (HK$1,159.5 million). The Group's gross profit was US$37 million (HK$286.7 million), representing a gross margin of 25%. Its net profit was US$17.9 million (HK$138.8 million) and net profit margin was 12%. Basic earnings per share was 0.73 US cents per share (5.7 HK cents per share).

In light of the Group's earnings and healthy financial position with net cash at US$106 million, the Board of Directors resolved to declare an interim dividend of 2.0 HK cents per share for the six months ended 30 June 2006.

The Group's Managing Director, Mr. Humphrey Leung, said, "Dynamic changes in market situation made the first half of 2006 challenging for the Group. However, we achieved 16% increase in unit shipment. Based on our estimation, we had about 20% share in the global mobile phone display ICs market and thus maintained our leadership position. In spite of market price erosion of more than 30% versus same period last year, we managed to keep our gross margin up at industry average by adopting a series of cost reduction measures."

During the review period, the Group's total shipment of display ICs was 125 million units.

Among the Group's products, monochrome STN display ICs found rising application in lower-price mobile phones and MP3 players, and their shipment grew by 28%. Shipment of color STN display ICs also recorded solid growth of 31%, indicating the Group's strong product offering in this area. m-TFT display ICs shipment remained broadly flat at 12 million units owing to longer than expected design-in cycle time. OLED display ICs had an unusual decline in annual shipment, because of weak adoption of the OLED display in MP3 players. In the first half year, a small volume of large display TFT driver ICs was shipped. The Group believes it will take more time for the product to grow to become one of the major future growth drivers.

In the past six months, research and development costs were approximately US$7.9 million. The Group will keep enhancing the features of existing products and developing new products, such as high speed interface ICs, LTPS m-TFT display ICs, AM-OLED display ICs and multimedia processors. Its R&D team has been turning out new products using various wafer technologies as advanced as 0.13µm.

"On the whole, we see the market in the second half will stay healthy and continue to grow. In particular, our new display driver IC has been successfully applied in end product applications of electrophoretic display. We expect it will have volume production in the second half this year. As for microdisplay ICs, this new technology has already captured market attention. And we are pleased to see various eyepiece end products using our microdisplay ICs for sale in the market. These represent the success of our strategy in diversifying businesses. We believe our investment in R&D of these new technologies is going to pay off. Thus, we will continue our effort in the development and launch of new products, and in turn, provide our customers with a comprehensive portfolio of display IC products and solutions that meet their specific product application needs," Mr. Leung concluded.