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

1

Beijing Beida Jade Bird Universal Beijing Beida Jade Bird Universal

Sci-Tech Company LimitedSci-Tech Company Limited

Strategic DevelopmentStrategic Development

May 2002May 2002

2

ContentContent

Part (I) About the Company Part (I) About the Company

Part (II) Strategic Investment in SMICPart (II) Strategic Investment in SMIC

Part (III) Prospects & Outlook of SemiconductorPart (III) Prospects & Outlook of Semiconductor

IndustryIndustry

Part (IV) Proposed Placing of New H SharesPart (IV) Proposed Placing of New H Shares

3

Part (I)Part (I)About the CompanyAbout the Company

4

Company BackgroundCompany Background

29 Mar 2000

27 Jul 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

• Incorporated as a joint stock limited company

• Registered capital : RMB 96,400,000

18 Dec 2000 • Company subdivided each of the Promoters’ shares and H shares into ten shares`

5

Shareholder’s StructureShareholder’s Structure

The Company

Employees ofJade Bird Group & the Company

93.37% 6.63%

22.82% 27.39%32.16%

Peking University

17.63%

Strategic Investors from

Hong Kong

Public

(H Shares)

Dynamic

Win

Strategic Investors from HK& Singapore

Jade Bird

Group

6

Company Structure (1)Company Structure (1)

100%

100%

5.29%

75% 51%

Hebei Beida Jade Bird Universal Fire Alarm

Device Co Ltd

Beijing Jade Bird Hao Di Electric System Co Ltd

Beida Jade Bird Universal Sci-Tech (Cayman)

Development Co Ltd

Beida Jade Bird Universal Sci-Tech (Cayman) Investment Co Ltd

SMIC

The Company

7

Company Structure (2)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 ActivitiesPrincipal 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

Awards & Qualifications (1)Awards & Qualifications (1)

People’s Bank of China One of the short-listed authorized products

Passed the JB151A-97 anti-electromagnetic release

national standard examination

China State Cryptography Control Authorities Office (CSCCAO)

Certificate of Technological Examination

People’s Liberation Army Information Security Testing Evaluation and Certification Center (PLAISTEC)

Certificate of Military Information Security Product

China National Information Security Testing Evaluation and Certification

Center(CNISTEC)

Certificate of Information Security Product

Ministry of Public SecuritySales CertificateJade Bird Firewall JB-

FW1

AUTHORITY OF CERTIFICATEQUALIFICATIONPRODUCT

10


China Certificate Committee for Fire Alarm Products Quality

ISO9002 Certificates for the Fire Products Safety

Certification

Four Fire Alarm Devices from Hebei Jade Bird Universal Fire Alarm

Device Company Limited

CSCCAO Passed system security review

SJY-A Data

Encryption Card

CSCCAO Passed system security review

SZD02 Bank Terminal Certificate Card

PLAISTECCertificate of Military Information Security

Product

JB-SG2 Security Gateway

AUTHORITY OF CERTIFICATEQUALIFICATIONPRODUCT

11


Shenzhen Radio Management OfficeCertificates for Sale, Manufacture and Network

Forming of Radio Communication Equipments

Shenzhen Branch of the

Company

Ministry of Information TechnologyCertificate for Wireless Radio Transmitter

JB-DT1 Data Transmitter

Public Security Department of Guangdong Province

The Security Technology Safeguard Management office of Shenzhen Public

Security Bureau

Security Technology Safeguard Product

Manufacture Certificate

Security Technology Safeguard Certificate

JB-DT1 GPS Vehicle Box

Ministry of Public Security & National Radio Monitor and Examination Center

Acceptance quality certificate

GPS 230M Vehicle Box

AUTHORITY OF CERTIFICATEQUALITY PRODUCT

12

Major Products (1)Major Products (1)

ASIC• Develop embedded microprocessor and specific integ

rated 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


Network Security Products• Security gateway, firewall and network monitor syste

ms 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


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


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


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 subsidiary Hebei 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

Major ClientsMajor Clients

Financial InstitutionsFinancial Institutions Business EnterprisesBusiness Enterprises

UniversitiesUniversitiesArmy & Army &

Police ForcePolice Force

Government AuthoritiesGovernment Authorities

18

Financial Highlights (1)Financial Highlights (1)

11,379371,307403,997N/AShareholders’ equity

26,299386,800831,372N/ATotal assets

N/A0.50.5N/ADividend per share

- (RMB cents)

(0.64)3.83.90.46Earnings (Loss) per share

- basic (RMB cents)

(3,237)27,30140,64111,678Earnings (Loss) before interest, tax, depreciation, amortization and minority interest

(4,486)31,06737,5104,469Profit (Loss) attributable to shareholders

10,41960,843124,61727,733Turnover

1999200020012002 Q1(unaudited)

RMB’000

19

Financial Highlights (2)Financial Highlights (2)

-20,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1998 1999 2000 2001-20,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1998 1999 2000 2001

RMB’000

Turnover Profit

20

Part (II) Part (II) Strategic Investment in SMICStrategic Investment in SMIC

21

Reasons for & Benefits of Reasons for & Benefits of Investing in SMICInvesting in SMIC• Strengthen and enhance the Company’s technology in the desig

n 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 JBU’s Involvement in the Management of SMICManagement 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 HighlightsJBU’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 InvestmentPro Forma Financials after the Investment

* 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)

(Based on the actual financials of year 2001)

787,764403,997Shareholders’ equity

-390,000Bank loans

787,764831,372Total assets

6.73.9Profit per share

- (RMB cents)

77,35037,510Profit attributable to shareholders

39,840-Income Dividend*

124,617124,617Turnover

Upon Completion of Investment and Share Placing **

CurrentRMB’000

25

SMIC’s Competitive Advantages (1)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)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 FinancingSMIC’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 CapabilitySMIC’s Capability• Low power static random access memory (SRAM) technology transfer fr

om 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

SMIC’s Development PlanSMIC’s Development Plan

Initial products/ processes qualified

Initial products/ processes qualified

Volume production commence

Volume production commence

Possible 2nd phrase

financing(2H 2003)

Possible 2nd phrase

financing(2H 2003)

Jan

2004

Aug

2000

June

2003

JunJan

2002

DecJun

2001

Aug Sep Dec

Equipment installation

begin

Equipment installation

begin

Pilot production

begin

Pilot production

begin

Half capacity reaches 25,000 wafers/month

Half capacity reaches 25,000 wafers/month

Combined productionto 85,000+

wafers/month

Combined productionto 85,000+

wafers/month

Construction ground

breaking

Construction ground

breaking

Photo mask shop

cleanroom completed

Photo mask shop

cleanroom completed

1H

SMIC has 1-2 year leads over its competitors in terms of entering into the China market

30

SMIC’s EmployeesSMIC’s Employees

Total: 1032 employees as at August 27, 2001

721

212

1253 12

22

PRC

Taiwan

Singapore

USA

Italy

Others

41

511

152

183 145

PhD

Master

Bachelor

College

Others

4160

151

60

43677

Over 15 yrs

10 - 15 yrs

5 - 10 yrs

3 - 5 yrs

1 - 3 yrs

0 - 1 yr

By Experience

By Region By Education

31

Part (III)Part (III)Prospects & Outlook of Prospects & Outlook of Semiconductor IndustrySemiconductor Industry

32

Supply & Demand of ICs in ChinaSupply & Demand of ICs in China

Source:CCID

0.962.35 2.61

3.354.38

6.63

8.46

0.41 0.47 0.63 0.711.27

4.843.63

2.782.121. 63

10. 8

24.18

20.56

16.93

13.3

0

5

10

15

20

25

30

95 96 97 98 99 00 01 02 03 04 05Year

Billio

n $

China IC RevenueChina IC Revenue (E)China DemandChina Demand (E)

33

Semiconductor Market : Semiconductor Market : Worldwide and ChinaWorldwide and China

2435 31 39 38

51 54 55 60 6586

110

151142 147 140

170

226.2

188.4

213.3

264.9

188.4

336.9

346.5

0.960.630.41 4.842.781.63

2.35 3.35 6.63 10.8 16.93 24.18

0

50

100

150

200

250

300

350

400

83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05Year

Bill

ion

$U

SD

World IC SalesWorld IC Sales (E)China IC SalesChina IC Sales (E)China DemandChina Demand (E)

Source:Dataquest

34

Existing Suppliers in ChinaExisting Suppliers in China

Grace, Belling, Hua Xia and others are either under the construction or at the planning stageGrace, Belling, Hua Xia and others are either under the construction or at the planning stage

24,000 wafers/month 8“ wafer0.25 micronTianjinMotorola

N/A5- 6“ wafer0.6/ 1.5 micronShanghaiASMC

20,000+ wafers/month by end of 2001

8“ wafer0.25 micronShanghaiNEC HuaHong

N/A5- 6“ wafer0.5/ 0.6 micronWuxiCSMC-HJ

N/A4- 5” wafer1- 5 micronWuxiHuajing

N/A6” wafer0.35 micronBeijingNEC Shougang

85,000+ wafers/month by 2004

8” wafer0.18/ 0.25 micronShanghaiSMIC

Capacity Technology LocationCompany

35

Existing Fab Technology in ChinaExisting Fab Technology in China

Source: Computer World ， CLSA Emerging Markets

Source: Computer World ， CLSA Emerging Markets

Unit: Inch

10%

14%

5%

71%

3"-4"

5"

6"

8"

Year 2000

10%5%

24%

61%

2.0-5.0

0.8-1.2

0.5-0.8

0.25-0.35

Year 2000

Unit: Micron

35%32%

25%

15.50%

0%5%

10%15%20%25%30%35%40%

36

Market Outlook (1)Market Outlook (1)

US$Billion

Source: Gartner Dataquest

• Rapid expansion of domestic market

• Current market = US$15 Billion (8% global market)

• 30.8% Growth p.a. 1998-2000

Expected Growth

37


34.3%174Server Appliance

4.6%237Hard Disk Drive

33.7%273Handheld PC

18.4%839Optical Disk Drive

12.7%4,945Motherboard / PC

CAGR

(2000- 2005)

Revenue in 2000

(Unit :US$ million)

Product

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


Data Processing Semiconductor

38


20.7%241Cordless Phone

8.2%593Legacy Phone

11.9%689Network Line Card

33.3%401LAN Switch

35.3%509Mobile infra.

29.8%7,608Cellular Phone

CAGR

(2000-2005)

Revenue in 2000

(Unit: US$ million)

Product

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


Communications Semiconductor

39


95.6%134Digital Camcorder

44.4%263Net Audio Player

95.4%489Digital Camera

5.2%545Appliance

13.1%806Color TV

17.4%819DVD

CAGR

(2000-2005)

Revenue in 2000

(Unit :US$ million)

Product


Consumer Semiconductor

Growth drivers :• Robust GDP growth• Critical mass of middle class consumers

40


• 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 Data processing electronics = 43% p.a. growth 1997-2000

Source: IDC, JP Morgan estimates

PC Shipment (units in million)

PC Market

41


Source: IDC, JP Morgan estimates

No. of subscribers (in million)

(Accumulative)

Mobile Phone Subscribers

42

Part (IV)Part (IV)Proposed Placing of NewProposed Placing of New

H SharesH Shares

43

Proposed TransactionProposed Transaction

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

44

Special Capital & PriceSpecial 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)

RMB 96,400,000Total Issued Share Capital

964,000,000Total Number of Issued Shares

264,000,000Number of H Shares

700,000,000Number of Promoters’ Shares

RMB 0.1Nominal Value

Current Market Capitalization HK$1,426,720,000

45

Stock PerformanceStock PerformanceStock Price and Volume Performance (IPO Date to Present)

1.50

Jul-0

0

Aug

-00

Sep

-00

Nov

-00

Dec

-00

Jan-

01

Feb

-01

Mar

-01

Apr

-01

May

-01

Jul-0

1

Aug

-01

Sep

-01

Oct

-01

Nov

-01

Dec

-01

Jan-

02

Mar

-02

Apr

-02

0.50

1.00

2.00

2.50

3.00

Pri

ce (

HK

$)

20

40

60

80

100

- 120

- 140

Vo

lum

e (i

n m

illio

n)

Volume

Price

46

Thank you!!

www.china-jbu.com

Beijing Beida Jade Bird Universal Beijing Beida Jade Bird Universal

Sci-Tech Company LimitedSci-Tech Company Limited

http://www.china-jbu.com/

Documents

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