TechFaith Reports Third Quarter 2006 Results; Receives Approved Vendor Status From Philips Consumer Electronics

China TechFaith Wireless Communication Technology Limited (NASDAQ: CNTF), a handset application software and handset solution provider based in China, today announced its unaudited financial results for the quarter ended September 30, 2006. Separately, the Company announced it has received Approved Vendor status from Philips Consumer Electronics.

Net revenue for the third quarter of 2006 was US$17.3 million, as compared to US$23.3 million for the same period in 2005. Design fee revenue for the third quarter of 2006 was US$4.1 million, as compared to US$16.6 million for the same period in 2005. Royalty income in the third quarter of 2006 was US$1.8 million, as compared to US$4.1 million for the same period in 2005. Revenue from products sales was US$11.4 million in the third quarter of 2006, as compared to US$2.6 million in the same period in 2005. In the third quarter of 2006, approximately 42.3% of revenue from products sales was from sales of wireless modules, 27.1% from sales of smart phones, 26.6% from sales of PCBAs and 4.0% from sales of other component products.

Net loss for the third quarter of 2006 was US$6.5 million or US$0.15 per weighted average outstanding ADS (basic and diluted), compared to net income of US$11.4 million or US$0.26 per weighted average outstanding ADS (basic and diluted) in the same period in 2005. Approximately US$1.5 million of our general and administrative expense incurred in the third quarter of 2006 relate to the tightening of our accounts receivable provision. In revisiting this estimate, the management has taken into consideration historical, current and future business factors.

Defu Dong, TechFaith's Chairman and CEO, said, "The third quarter developed as expected. While we have made considerable progress this year -- and believe the majority of the transition to 3G is now behind us -- we remain conservative in our short term outlook as we work to build both momentum and credibility. Also on the positive side, we ended the third quarter with 37 projects in-house, ten were for 3G and two were for 3.5G. Our engineering team remains one of the largest and most experienced in the world, which is helping us to diversify our customer base by adding on Tier 1 customers. We recently signed another agreement with a major international customer. We received Approved Vendor status from Philips Consumer Electronics. While it is too early to gauge how significant this relationship can become, we already have five contracts in place with Philips and aim to expand our relationship further. We are also optimistic that we will be able to finalize the approval process with another Tier 1 customer in the first or second quarter of next year. In the meantime, however, we are already winning contracts without such approval. Finally, we continue to win design projects with a third Tier 1 customer, with no audit approval process required."

Gilbert Lee, President and Chief Operating Officer of TechFaith, said, "From an operating standpoint our business is performing as expected. We have purchased approximately 77,000 ADRs in the third quarter, and another 500,000 since the close of the third quarter. Our balance sheet remains strong with a balance of $134.3 million in cash and cash equivalents at the end of the third quarter. We expect that our revenue will return to growth in Q4 and we maintain our annual revenue guidance in the range of approximately US$78 million to US$80 million for the full year 2006 ending December 31, 2006."

Second Quarter Corrections

Management discovered that a project code error had resulted in the company's incorrect recording of revenues in the second quarter of 2006. We have now restated the revenues for the quarter then ended accordingly. In the third quarter, the company was informed that it had previously misinterpreted certain aspects of the PRC employee welfare regulations resulting in underpayment of employee welfare for the historical periods ended March 31, 2006. This payment has been expensed in the third quarter as it is immaterial to any particular prior periods. The company also assessed the impact of this interpretation for the second quarter of 2006 and accordingly has revised its unaudited results for the second quarter of 2006 as attached hereto. The aggregate impact of both the revenue recording error and the under-accrued social welfare expense resulted in an approximately US$771,000 decrease in the company's net income as previously reported.

China TechFaith's ADSs, each of which represents 15 ordinary shares of China TechFaith, are currently trading on the Nasdaq Global Market under the symbol ''CNTF.''

Investor Conference Call / Webcast Details

The dial-in number for the live audio call beginning on November 13, 2006 at 7:00 p.m. U.S. Eastern Time (8:00 a.m., November 14, 2006 in Beijing) is 1-866-713-8564 (domestic) or 1-617-597-5312 (international). The passcode is 58252822. A live webcast of the conference call will be available on China TechFaith's website at www.techfaithwireless.com .