China HDTV Subscribers Pass 2 Million Mark, Driving Upside for Cogo

Friday, July 9th, 2010

SHENZHEN, China — Cogo Group, Inc. (Nasdaq: COGO), a leading embedded solutions and software provider for the technology and industrial sectors in China, today announced that upgrades to High Definition Television (“HDTV”) in China are accelerating with total subscribers reaching over 2 million. A combination of strong consumer demand and aggressive roll-out schedules are helping to fuel this growth.

Cogo previously revealed its design wins for HD solutions, which it will provide to multiple top-tier set-top box (“STB”) manufacturers. The company had already begun to record material revenue by the end of 2009. Currently, Cogo is working with over 20 manufacturers of HDTV set top boxes, and the company continues to pursue new customers. Over the last few years, Cogo has worked closely with its key HDTV component supplier to develop customized solutions. Management believes its partner, a global leader in semiconductors, has gained material share in HDTV set-top boxes versus other standard digital TV solutions in China.

Based on current projections, HDTV subscribers are expected to reach 6 million by the end of 2010. Cogo expects that over time the majority of China’s over 1,000 city-based cable operators will ultimately roll out HDTV. Given the country’s increase in cable subscribers and base of 60 million digital subscribers, Cogo believes HDTV in China will reach over 30 million by the end of 2012. The company continues to believe that the preferred method for upgrade will include the purchase of a new set-top box.

“In our press release dated June 3, 2010, we indicated that Cogo was experiencing better than expected second quarter results in part driven by consumer demand for HDTV and its subsequent increase in subscribers,” commented Jeffrey Kang, CEO of Cogo. “We are benefiting from a continued strong macro backdrop in China across both the industrials and consumer segments. This, combined with a series of new revenue streams, will continue to drive improvements across all our businesses throughout the second half of 2010.”