ACL Semiconductors, Inc. Issues Second Quarter Results.

HONG KONG -- ACL Semiconductors, Inc. (OTCBB:ACLO) today announced operating results for the second quarter ending June 30, 2004.

Three months sales for the quarterly period ending June 30 was US$33.3 million, an increase of 100% over the comparable period last year; also, sales for the six month period ending June 30, 2004 totals US$62.8 million - double the prior year result.

The company reported a loss of US$110,605 for the three months ending June 30, and a profit for the six months ending June 30 of US$210,296. The net loss in the second quarter was due primarily to sharply lower gross margins resulting from a two-month DRAM price war initiated by Samsung as part of a deliberately engineered strategy to increase worldwide market share for high end memory chips. Samsung's DRAM pricing has now stabilized and gross margins have returned to levels consistent with historical pricing parameters.

In announcing the company's quarterly results, Alan Yang, CEO of ACL commented as follows: "We are pleased with the sharp increase in revenue which exceeded our estimate. We are now positioned to exceed US$100 million in sales for 2004. This revenue forecast for the year excludes any revenue contributions expected from our acquisition of Classic Electronics, which realized solid sales and earnings over the same three month period."

Mr. Yang further stated, "Our results for the second quarter were largely driven by Samsung, our key supplier, and their strategy to engineer price competition in DRAM memory to increase worldwide market share and decrease competition from other regional distributors. As a result, gross profit margin on sales for the quarter was significantly reduced; and therefore resulted in a reduction of operating profit for the period. As Samsung's key regional supplier, ACL coordinated closely with Samsung management during the past several months to insure benefits of reduced prices were passed on to our customers and that our increased order rate is maintained with the reduction in competition."

Mr. Yang continued, "The DRAM price war is viewed by our management team as a one-time event and part of Samsung's strategy to consolidate its global leadership position in memory product. For ACL, the indirect result will be a permanent increase in our revenue base. Since late July, DRAM price competition has decreased and our operating profits in the second half of the year are expected to be significantly improved, thus enabling the Company to achieve its forecast performance for the full year."

Mr. Yang finally stated, "Our position as the key supplier of memory solutions to major electronics manufacturers in southern China was enhanced during the period as two key competitors were largely eliminated from the business by the effects of Samsung's pricing strategy. The short term impact on our profit margin experienced during the second quarter will be more than offset by the ever-increasing strength of our relationship with Samsung, now the undisputed global leader in memory products."

About ACL Semiconductors, Inc:

ACL has been a leading distributor of Samsung memory chip products, including DRAM, Flash, SRAM and Mask ROM products for the Hong Kong and Southern China markets since 1991. ACL Semiconductors, Inc. trades on the OTCBB under the symbol, ACLO.

Forward-Looking Statements:

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made on behalf of the Company and its subsidiaries. All such forward-looking statements are, by necessity, only estimates of future results and actual results achieved by the Company may differ materially from these statements due to a number of factors. Any forward-looking statements speak only as of the date made. Statements made in this document that are not purely historical are forward-looking statements, including any statements as to beliefs, plans, expectations, or intentions regarding the future. Risk factors that may cause results to differ from projections include, without limitation, loss of suppliers, loss of customers, inadequate capital, competition, loss of key executives, declining prices, and other economic factors. The Company assumes no obligations to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such statements. You should independently investigate and fully understand all risks before making investment decisions.