(VIMC) Reports on Profitability for 2014 and Project Implementation Progress

BEIJING, Dec. 23, 2014  — Vimicro International Corporation (NASDAQ: VIMC) (“Vimicro” or the “Company”), a leading video surveillance technology and solution provider in China, is issuing this update to keep its shareholders apprised of the current status and timing of its previously announced projects. The Company also expects 2014 to be a profitable year primarily driven by on-track project deliveries and its competitiveness in China’s video surveillance market.

Vimicro Electronics Corporation (“Vimicro Tianjin”) was contracted by China Unicom to provide SVAC-compliant video surveillance system, products and installation services to the Police Traffic Control Detachment of Ziyang City, Sichuan Province (“Ziyang Project”) in September 2013, for approximately USD 9 million. Ziyang Project was already fully completed and received the satisfactory inspection and acceptance by the customer.

Shanxi Zhongtianxin Science and Technology Co., Ltd. (“Zhongtianxin), a joint venture in which Vimicro holds 51% interest, entered into a contract with the government of Baoding City, Hebei Province to provide SVAC-compliant system, products and installation services for approximately RMB 250 million (“Baoding Project”) in December 2013. Baoding Project will be completed by December 31, 2014.

Zhongtianxin was contracted to provide SVAC-compliant video surveillance system, products and installation to the Traffic Police Detachment of Taiyuan (“Taiyuan Traffic Control”) for RMB 76 million in June 2014. Taiyuan Traffic Control project is on track according to the project planning. The project is expected to be completed in 2015.

Zhongtianxin won the competitive bid to provide SVAC-compliant video surveillance system, products and installation services for Taiyuan’s Phase II Public Security Video Surveillance Information System (“Taiyuan Phase II”) with the estimated contract value of RMB 220 million, following the successful implementation of Phase I project in Taiyuan in 2013. Taiyuan Phase II project is currently being implemented in accordance with the project plan and is expected to be completed in the first quarter of 2015.

Zhongtianxin is also on track in implementing newly obtained projects in Chenzhou City, Hunan Province and Xiaodianqu District of Taiyuan City, Shanxi Province, for approximately RMB 179 million and RMB 58.6 million, respectively. Both of these contracts are expected to be completed in 2015.

“We are very pleased to announce profitability for the year of 2014, while reporting satisfactory implementation progress on some of our completed and on-going projects at the end of a successful year for Vimicro,” commented by Peter Li, CFO of Vimicro. “For the nine month period ended September 30, 2014, the company reported revenue growth at 58% compared with the same period of last year, while our video surveillance business posted a 108% growth on a year-on-year basis in the same period. In addition to Vimicro’s financial achievement, Vimicro is ranked fourth in the Top 100 Security and Surveillance Manufacturers released by China Public Security Magazine recently, after Hikvision, Dahua, and Huawei.”

John Deng, Chairman and CEO of Vimicro, further commented, “The year of 2014 will mark a milestone year for the company by turning profitable after several consecutive years of net loss. We owe our current success in 2014 to our strong focus in our new video surveillance business by transformation and divesture of non-core businesses over the past few years. We will continue to deliver solid solutions and project implementation to our customers’ satisfaction, based on our proprietary video surveillance technology and product suites. We believe our customer satisfaction, together with our leading edge on SVAC video surveillance national standard, will ensure our continued and greater success in China’s robust video surveillance industry in 2015 and beyond, to realize long-term value for our shareholders.”

About Vimicro International Corporation

Vimicro International Corporation (NASDAQ: VIMC) is a leading video surveillance technology and solution provider that designs, develops and markets a full range of video surveillance products and solutions to governments, private enterprises, and consumers in China. Vimicro co-developed SVAC (Surveillance Video and Audio Coding), the national video surveillance technological standard, which demonstrates its unique strengths in proprietary multimedia IC technology, making it a leader in China’s fast-growing security and surveillance market. Vimicro is headquartered in Beijing, China and has subsidiaries and offices throughout China and in Silicon Valley. Vimicro’s ADSs each represent four ordinary shares and are traded on the NASDAQ Global Market exchange under the ticker symbol “VIMC.”

Forward-Looking Statements

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the quotations from management in this announcement, as well as Vimicro’s expectations and forecasts, contain forward-looking statements. Vimicro may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Vimicro’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company’s ability to develop and sell new mobile multimedia products; the expected growth of the mobile multimedia market; the Company’s ability to increase sales of notebook camera multimedia processors; the Company’s ability to retain existing customers and acquire new customers and respond to competitive market conditions; the Company’s ability to respond in a timely manner to the evolving multimedia market and changing consumer preferences and industry standards and to stay abreast of technological changes; the Company’s ability to secure sufficient foundry capacity in a timely manner; the company’s ability to effectively protect its intellectual property and the risk that it may infringe on the intellectual property of others; and cyclicality of the semiconductor industry. Further information regarding these and other risks is included in Vimicro’s annual report on Form 20-F filed with the Securities and Exchange Commission. Vimicro does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release is as of the date hereof, and Vimicro undertakes no duty to update such information, except as required under applicable law.

Contact:

Vimicro International Corporation
Investor Relations
Phone: +8610-5884-8898
E-mail: ir@vimicro.com