Cogo Announces Design Wins With Chery, China's Largest Domestic Auto Vendor

SHENZHEN, China, Nov. 16, 2010 /PRNewswire/ -- Cogo Group, Inc. (Nasdaq: COGO), a leading embedded solutions and software provider for the technology and industrial sectors in China, today announced a series of design wins with Chery, China's largest domestic automobile vendor. Cogo, in conjunction with its partner, a leading global semiconductor supplier for the auto industry, will provide highly technical module and software solutions for a variety of applications, including Anti-Lock Braking Systems ("ABS") and Adaptive Front-Lighting System ("AFS").  

Chery is the third major auto vendor relationship announced by Cogo in the past year, following BYD (November 2009) and Geely (June 2010).  The number of automobile models in which Cogo participates and the content per auto at both BYD and Geely has both trended positively since the deals were first announced.

Currently, Cogo has design wins in two Chery automobile models (the A3 and the Karry H5) and expects to add more models in 2011 and 2012. Revenue from these wins is expected to begin in early 2011. Chery has been the largest domestic auto vendor in China for the last 6 years and is the only domestic Chinese auto brand in the top 10 in China in terms of automobile unit sales. Chery auto sales, according to a variety of research sources, are expected to reach 700 thousand in 2010 and 1 million units in 2011.

While the annual auto unit growth rates have slowed in 2010 vs. 2009, China is now the largest auto market in the world. In October 2010, total passenger vehicle sales in China reached 1.2 million units, up 27% from the prior year period. In the first ten months of 2010, total passenger vehicle sales in China sales were 11.1 million units, up over 35% from the same period in 2009.  

Additionally, various studies indicate that the ratio of automobiles to people in the United States is approximately 750:1000, while in China this ratio is about ten times lower, at around 75:1000.  As automobile ownership increases across China, especially in second and third tier cities, industry experts expect that the gap in this ratio should shrink over time. This, combined with the natural automobile replacement cycle that should occur due to wealth creation in China across all demographic levels, should continue to support an attractive auto market in which Cogo can participate.  

"The addition of Chery as our third named auto customer is a tribute to the continued great execution of our team. Chery is the best-selling domestic China auto brand and we are honored to have key design slots as they continue to gain share in both the rapidly growing China auto market and in an increasing array of export markets," commented Jeffrey Kang, CEO of Cogo. "We expect to continue to add new auto customers as we move through 2011 and I believe that we will be able to increase our content per auto. As a result, I believe that our auto business will be poised to reach quarterly revenue of double-digit millions of dollars per quarter over the next two to three years."

About Cogo Group, Inc.:

Cogo Group, Inc. (NASDAQ: COGO) is a leading embedded solutions and software provider for the technology and industrial sectors in China. The Company believes it acts as a proxy to China's technology industry as it works with virtually all the major ODMs and OEMs in China. Cogo leverages these relationships and combines their IP to create designs that Cogo then sells to electronic manufacturers. These designs allow manufacturers to reduce their time to market for new products and ultimately increase sales. Cogo focuses on the telecommunications equipment, digital media and industrial applications end-markets for their customized design modules while also offering business and engineering services to their large telecommunications equipment vendor customers. Over the last fifteen years, Cogo has grown its customer list to include nearly 1,500 manufacturers across the telecommunications equipment, digital media and industrial applications markets, covering both multinational Chinese subsidiaries and Chinese domestic companies.

Safe Harbor Statement:

This press release includes certain statements that are not descriptions of historical facts, but are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include statements about our proposed discussions related to our business or growth strategy such as growth in auto electronics business, such as business with BYD, Geely and Chery, which are subject to change. Such information is based upon expectations of our management that were reasonable when made, but may prove to be incorrect. All such assumptions are inherently subject to uncertainties and contingencies beyond our control and upon assumptions with respect to future business decisions, which are subject to change. For further descriptions of other risks and uncertainties, see our most recent Annual Report filed with the Securities and Exchange Commission (SEC) on Form 10-K, and our subsequent SEC filings. Copies of filings made with the SEC are available through the SEC's electronic data gathering analysis retrieval system (EDGAR) at www.sec.gov.

SOURCE Cogo Group, Inc.