SinoHub, Inc. Begins Production at New Mobile Phone Manufacturing Facility; Receives New Orders for 61,000 Custom, Private Label Mobile Phones

SANTA CLARA, Calif. and SHENZHEN, China, April 19 /PRNewswire-Asia/ -- SinoHub, Inc. (NYSE Amex: SIHI), a leading provider of supply chain management (SCM) services for participants in the electronic components supply chain in China, today announced that its new 77,500 sq. ft. mobile phone manufacturing facility located in the Bao'an district of Shenzhen, China, has commenced operations. The Company also announced that it has received new orders for 61,000 custom, private label mobile phones from four separate customers located in Indonesia, India, Malaysia and Hungary.

New Mobile Phone Manufacturing Facility

The new mobile phone facility has annual output capacity of approximately 5.4 million handsets, or 450,000 handsets per month based on 12 assembly lines. The Company expects to reach full capacity utilization, or over 75,000 handsets per month, on the initial two assembly lines by June 2010 to produce mobile phones for developing countries, with additional assembly lines to be added based on increasing demand. In addition, the Company plans to install 3.5 surface mount lines starting in June with production capacity of over 150,000 mobile phone mother boards per month.

"The opening of SinoHub's mobile phone manufacturing facility is a significant milestone in the execution of our new virtual contract manufacturing (VCM) business segment serving the production needs of mobile phone distributors in emerging markets outside of China," stated Harry Cochran, Chairman and Chief Executive Officer of SinoHub. "When we announced our VCM business late last year, we initially planned to outsource all production. However, given the strength of our proprietary supply chain management (SCM) platform that connects all aspects of electronics product production, we elected to establish our own manufacturing facility incorporating our SCM platform to enhance the business unit's performance, and to optimize our SCM platform through manufacturing. By operating our own manufacturing facility, we feel that we will benefit from the ability to purchase directly from manufacturers of electronic components and improve our ability to ensure the quality and on-time delivery of initial and rush orders, resulting in incremental revenue and earnings growth while increasing both gross and operating margins. This factory can also serve our manufacturing customers in our SCM and ECP businesses, so we are expecting to achieve more rapid utilization of the facility than we might otherwise achieve from our growing VCM business alone."

"We are very pleased about the new business model we are bringing to mobile phone manufacturing," said Lei Xia, President of SinoHub. "Connecting critical elements of the electronics industry on a transparent platform will have many advantages over the traditional model of closed tracking systems that existed before the Internet became the medium of business communication."

New Orders for Custom, Private Label Mobile Phones

The Company received new orders for an aggregate of 61,000 custom, private label mobile phone handsets from the following new customers: Taxco (50,000), Magicon (5,000), Ximax (5,000) and My Audio (1,000), located in Indonesia, India, Malaysia and Hungary, respectively. Pricing and related terms were not disclosed. SinoHub currently serves 10 customers through its new virtual manufacturing business segment.

Taxco ( http://www.taxco-mobile.com ) ordered 50,000 S-412 mobile phones to be delivered over the next 90 days. Taxco is the fourth largest mobile phone distributor in Indonesia with monthly volume of about 300,000 units. The S-412 is a dual mode, dual standby phone, incorporating GSM and CDMA technologies that support two SIM/UIM cards online simultaneously. The phone has a full keypad, supports T-flash memory cards and has Facebook application software. Magicon ( http://www.magicon.in ) and MyAudio ( http://www.myaudio.hu ) ordered 5,000 and 1,000 S-120 mobile phones, respectively. The S-120 is a competitively priced phone incorporating GSM technology and featuring support for a T-flash memory card of up to 2GB, Mp3/Mp4 and FM. Ximax ( http://www.ximax.com.my ) ordered 5,000 S-130 mobile phones. The S-130 is a competitively priced phone incorporating CDMA technology and featuring support for a T-flash memory card of up to 2GB, Mp3/Mp4 and FM.

"We are pleased to have received these new, initial orders from well- respected distributors addressing multiple high-growth markets," added Mr. Cochran. "The addition of these new valued customers further validates our VCM strategy of serving the production needs of mobile phone distributors in emerging markets outside of China, as well as our decision to establish our own manufacturing facility. A recent JP Morgan report showed unit sales to developing countries are expected to rise to over 1 billion in 2011 compared to 797 million in 2009. We look forward to participating in this huge market as we strive to become a leading provider of mobile phones to developing countries."

About SinoHub, Inc.

SinoHub, Inc., founded in 2000 by veteran entrepreneur Harry Cochran and electronics industry veteran Lei Xia to play a part in the electronics revolution in China, provides virtual contract manufacturing, electronic component purchasing, and world-class supply chain management services with transparent information access for participants in the electronic components supply chain in China. SinoHub conducts substantially all of its operations through its wholly-owned subsidiary SinoHub Electronics Shenzhen Limited in the People's Republic of China and its wholly-owned B2B Chips subsidiary in Hong Kong, which offers electronic component purchasing and virtual contract manufacturing services currently focusing on the mobile phone market. For more information, visit the Company's Web site at http://www.sinohub.com and the B2B Chips Web site at http://www.b2bchips.com .

Cautionary Statement Regarding Forward-looking Information

Some of the statements contained in this press release that are not historical facts constitute forward-looking statements under the federal securities laws. Forward-looking statements can be identified by the use of the words "may," "will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "proposed," or "continue" or the negative of those terms. These statements involve risks known to the Company, significant uncertainties, and other factors, many of which cannot be predicted with accuracy and some of which may not even be anticipated, which may cause actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by those forward- looking statements. Such risks, uncertainties and factors include, but are not limited to, the Company's ability to expand its customer base, the ability to access capital for such expansion, assumptions concerning future economic and competitive conditions and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

    Among the factors about which assumptions have been made are:
    -- That the two assembly lines currently installed can produce 60,000 to
       90,000 handsets per month depending on functionality;
    -- That SinoHub can install 3.5 surface mount lines in June 2010;
    -- That the Company can increase margins by capturing manufacturing
       profits;
    -- That the combination of internal orders and manufacturing done for
       other customers on a subcontract basis will fully utilize the
       production capacity of SinoHub's new factory;
    -- That SinoHub's SCM platform adequately connects all aspects of
       electronics product production;
    -- That the manufacturing facility will ultimately be able to produce over
       500,000 handsets per month at full capacity; and
    -- That connecting all elements of product production on a transparent
       platform will have many advantages over the traditional model of closed
       tracking systems.

Except as required by law, the company assumes no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future. For further information on factors which could impact SinoHub and the statements contained herein, see the "Risk Factors" included pursuant to Item 8.01 and Exhibit 99.1 of the company's Current Report on Form 8-K filed with the Securities Exchange Commission on September 28, 2009. The company assumes no obligation to update and supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.

    For additional information, please contact:

    SinoHub, Inc.:
     Falicia Cheng
     Tel:   +86-755-2661-1080
     Email: [email protected]

    In the US:
     HC International, Inc.
     Ted Haberfield
     Tel:   +1-760-755-2716
     Email: [email protected]

SOURCE SinoHub, Inc.