Gemplus International implements plans for further manufacturing restructuring

Luxembourg and Herne, Germany, 18 May 2004: Gemplus International S.A. (Euronext: LU0121706294 - GEM and NASDAQ: GEMP), the world's leading provider of smart card solutions, today announces a further step in the implementation of its global operational strategy, aimed at rationalising its manufacturing capacity to continue to build a more efficient organisation for the benefit of its customers.

The step announced today results from the sector's general over-capacity for the manufacture of PVC* card bodies in Europe. In order to align its operations with the current realities of the market, and to strengthen its ability to respond to future opportunities, Gemplus is proposing to implement this further step to restructure its European production sites.

There are three key intentions: 1) To operate with one specialist PVC site in Europe, at Havant, England. 2) To concentrate its activities (mainly personalization) for Germany on one site, in Filderstadt. 3) To close its other German manufacturing facility in Herne.

The plans foresee the transfer of all Herne's PVC activities to Havant; and its local activities, including the personalization of German bank and Healthcare cards, to Filderstadt. The salesforce, technical consultants and the R&D team at Ismaning, Germany, are unaffected by these plans.

Havant is well positioned to become a specialist centre for PVC activity in Europe, since it already successfully supplies the fast-growing bankcard market in the UK. Equally, Filderstadt has a strong reputation for its current activities, and is best placed to respond to the significant opportunities which Gemplus foresees developing in the German market. However, as a result of the changing demands in the marketplace, Herne's manufacturing and embedding activities have been witnessing a progressive decline.

The proposed plan for Herne could result in some 180 redundancies. Gemplus currently employs some 350 employees in Germany. A plan for the transfer of some employees within the group will be offered and supported.

This is part of the execution of the restructuring plan announced by CEO Alex Mandl on 9th December 2002, in line with the group strategy.

Commenting on the restructuring, Philippe Combes, Executive Vice President of Operations, Gemplus, said: "As markets evolve, so must our policies. Clearly, it is imperative that we review our operations, streamline our business where necessary to ensure that we are competitive, and develop a global strategy which gives us the best opportunities for long-term success. This includes establishing an appropriate structure for Germany, so that we can continue to serve our clients there with the greatest efficiency, and position Gemplus to make the most of future opportunities in this important market."

Johannis Debissis, General Manager, Gemplus MIDS GmbH, added: "We deeply regret that this proposal today entails a number of job losses. We understand the difficult impact of these decisions, and we will be taking all reasonable measures to provide appropriate support for all those who may be affected."

*PVC: Polyvinyl Chloride: the plastic used to produce laminated card bodies for certain types of smart cards including bank cards.

About Gemplus 

Gemplus International S.A.(Euronext: LU0121706294 - GEM and NASDAQ: GEMP) is the world's leading player in the smart card industry in both revenue and total shipments (source: Gartner-Dataquest (2003); Frost & Sullivan, Datamonitor.) It has the largest R&D team, unrivalled experience, and an outstanding track record of technological innovation.

Gemplus offers an exceptional range of portable, personalized solutions that bring security and convenience to people's lives. These include Mobile Telecommunications, Public Telephony, Banking, Retail, Transport, Identity, WLAN, Pay-TV, e-government, access control, and a wealth of other applications.

Gemplus' revenue in 2003 was 749 million Euros.

www.gemplus.com

For more information, contact:

Christian Heizmann, 
Gemplus PR 
Tel: +49 (0)89 96116 - 535 
E-Mail: Christian.Heizmann@gemplus.com 

Celine Berthier, 
Gemplus Investor Relations 
Tel: +41 22 544 5065 
Email: celine.berthier@gemplus.com

Remi Calvet, 
VP Corporate Communications, Gemplus
Tel: +33 44 2 36 60 76 
Email: remi.calvet@gemplus.com

©2004 Gemplus. All rights reserved. Gemplus, and the Gemplus logo are trademarks and service marks of Gemplus S.A. and are registered in certain countries. All other trademarks and service marks, whether registered or not in specific countries, are the property of their respective owners.

Some of the statements contained in this release constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activities, performance, or achievements expressed or implied by such forward-looking statements. Actual events or results may differ materially. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this release include, but are not limited to: trends in wireless communication and mobile commerce markets; our ability to develop new technology, and the effects of competing technologies developed and expected intense competition generally in our main markets; profitability of our expansion strategy; challenges to or loss of our intellectual property rights; our ability to establish and maintain strategic relationships in our major businesses; our ability to develop and take advantage of new software and services; and the effect of future acquisitions and investments on our share price. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. The forward-looking statements contained in this release speak only as of this release. We are under no duty to update any of the forward-looking statements after this date to conform such statements to actual results or to reflect the occurrence of anticipated results.