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SCM Microsystems to Supply CableCARD™ Digital TV Decryption Modules for South Korea’s Third Largest MSO


SCM Signs Comtech Korea Corp. as Sixth Korean Digital TV Customer

FREMONT, Calif., March 22, 2006 – SCM Microsystems, Inc. (NASDAQ: SCMM, Prime Standard: SMY), a leading provider of solutions that open the Digital World, today announced that it has signed a contract with Comtech Korea Corp. to supply 70,000 OpenCable™ compliant CableCARD™ digital TV decryption modules for deployment to CMB DMC, the third largest MSO in Korea. Comtech, which is one of South Korea’s largest systems integrators in digital broadcasting, has been working with CMB DMC since 2005 to plan and implement the roll out of digital equipment and services to the operator’s subscriber base of two million. SCM estimates that the modules ordered by Comtech for CMB DMC will be required and shipped over the next one and a half years.

SCM’s CableCARD modules will be used in conjunction with cable set-top boxes in subscribers’ homes to decrypt broadcast signals from CMB DMC. The modules incorporate the conditional access (CA) security system from Conax AS. CMB DMC has installations in five cities, with a potential subscriber base of two million. CMB DMC launched trials of their pay-TV and call-based event PPV services at the end of 2005, with commercial service following in early 2006. They plan to expand the services to Real Video-on-Demand and advanced bi-directional data broadcasting in May 2006.

“As co-creators of the OpenCable standard and an early participant in the industry, SCM is clearly committed to the emerging South Korean digital television market. The company’s dedication and proven ability to work with all players involved to ensure successful and cost efficient deployments for operators made them an easy choice for us,” said Mr. Young Kyu Kim, vice president, Comtech Korea Corp.

“The contract with Comtech is another important milestone in SCM’s strategy in Korea,” said Robert Schneider, chief executive officer of SCM Microsystems. “After years of preparation, the transition from analog to digital broadcasting in South Korea is now off to a strong start. We are pleased to be chosen by one of Korea’s top integrators to supply CableCARD modules to one of the largest MSOs and look forward to a long and successful relationship.”

Comtech is the sixth integrator or operator in South Korea to choose SCM’s CableCARD modules. Other customers include Broadband Solutions Inc., CJ CableNet, KCTV Jeju Broadcasting, Korea Digital Cable Media Center Co. and Qrix Communications.

The Digital TV Market in South Korea
The South Korean government is expected to oversee deployment of digital cable television to between eight and twelve million households over the next several years. In November 2001, the South Korean government selected OpenCable as the technical standard for securing the country’s digital cable TV broadcasts. By adopting this open standards-based broadcast security model, the South Korean government hopes to create a digital television industry that is both competitive for consumers and profitable for operators. OpenCable was originally developed by Cable Television Laboratories, Inc. (CableLabs®) for the North American cable TV market and subsequently was adapted for use in South Korea. Although the Korean security module is based on the same OpenCable CableCARD interface specification used in the U.S., the Korean security modules will not operate with U.S. OpenCable devices, or vice versa, for regional security purposes.

About Comtech Korea Corp.
Comtech Korea Corp., which was founded in 1991, is focusing on offering system integration of digital broadcasting solutions and convergence for the CATV, satellite, terrestrial, IP and mobile markets in Korea. In addition to providing their own solution for Digital Audio Broadcasting (DABS), NVOD and Interactive Monitoring Solution (IMS), they have partnership agreements with solution vendors supplying billing/SMS, STBs, middleware, digital H/E system and conditional access. For additional information, please visit:

CMB DMC, which was founded in 1994, is a consortium with 12 cable operators having 2 million end-users in Korea. As the third largest MSO, it is leading the way to create a new business model, focusing on end-users’ satisfaction, offering better quality of content and value-added services such as VOD and Data Broadcasting services. Based upon technology from vendors like Conax, SkyStream, SCM, Samsung and IM Neptia, they will also offer their digital services and expertise to other regions in Korea. Chairman of the company is Mr. I.S. Lee.

About Conax
Conax is a leading supplier of state-of-the-art, highly innovative solutions for smart card-based conditional access, security and payment solutions. Conax is a globally oriented player, with a solid base of clients in 60 countries. The head quarters are in Oslo, Norway, with subsidiaries in India and USA, and sales & support offices in Singapore, China, Canada, South Korea, Brazil and Germany. Conax is ISO 9001 and BS7799 certified. For additional information, please visit:

About SCM Microsystems
SCM Microsystems is a leading supplier of solutions that open the Digital World by enabling people to conveniently access digital content and services. The company develops, markets and sells its smart card reader technology for PC, network and physical access and conditional access modules for secure digital TV decryption to OEM customers in the government, financial, enterprise and broadcasting markets worldwide. Global headquarters are in Fremont, California, with European headquarters in Ismaning, Germany. For additional information, visit the SCM website at

NOTE: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These include, without limitation, our statements regarding our expectations for orders and shipments of our digital TV modules related to Comtech and the use of our modules by CMB DMC. These statements are subject to risks and uncertainties which may cause actual results to differ materially from those contemplated herein. Some of the risks and uncertainties that could cause our actual business and operating results to differ include, but are not limited to: orders for our products may not be as large, or within the time frame that we currently contemplate; demand for products such as ours may not develop as we and our customers currently contemplate; competitors could take market share or create pricing pressure. For a discussion of further risks and uncertainties related to our business, please refer to our public company reports, including our Annual Report on Form 10-K for the year ended December 31, 2005 filed with the U.S. Securities and Exchange Commission.

Note to editors: CableLabs is a registered trademark and OpenCable and CableCARD are trademarks of Cable Television Laboratories Inc. All other trade names are trademarks ore registered trademarks of their respective owners.


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