Litigation update

Luxembourg - April 5, 2004 - Gemplus International S.A. (Euronext: LU0121706294 - GEM and NASDAQ: GEMP), the world's leading provider of smart card enabled solutions, today reported the recent developments in a lawsuit concerning an alleged breach of contract by Gemplus S.A., a subsidiary of Gemplus International S.A. in France, regarding the promotion of smart card solutions for casino slot machines.

As requested by Gemplus S.A., on April 2, 2004, the Aix-en-Provence Court of Appeal decided to suspend the decision of the Marseille Commercial Court rendered on March 18, 2004, that had ordered Gemplus S.A. to make a direct payment to the plaintiffs of damages of approximately 22 million euros, despite Gemplus S.A.'s immediate appeal. The Court of Appeal also ordered Gemplus S.A. to make a cash deposit in the same amount into an escrow account as security pending the decision on the appeal on the merits.

Following the recent decision of the Commercial Court, and based on the Company's analysis and advice of counsel, the Company decided to increase the provision made for this case in its first quarter 2003 (1.8 million euros) by an amount of 3.4 million euros. This results in a total provision for this case of 5.2 million euros in the Company's consolidated accounts at December 31, 2003.

As a consequence, the operating results relating to the fiscal year and fourth quarter 2003 will show a decrease of 3.4 million euros compared to what was previously announced. This accounting treatment complies with IFRS¹ and Luxembourg GAAP² . The latter recommends that, up to the sending of the annual accounts to the shareholders before the annual shareholders meeting, the consequences of an event subsequent to the close of a fiscal year should be integrated into the past fiscal year accounts. The financial statements including this change will be available on the Group's web site (www.gemplus.com) when the annual accounts are sent to shareholders for the annual shareholders meeting that will take place on April 27, 2004.

The payment into the escrow account will be credited during the second quarter 2004 ending June, 30, 2004. This amount will be considered as restricted cash and, as such, will be booked in other current assets, as of the second quarter 2004.

As previously reported, this lawsuit was commenced in 1997 relating to an alleged breach of a contract signed in 1992. The case involves a market segment which, from Gemplus's point of view, has very little or no development potential, as confirmed by the lack of evolution in this segment to date. The conclusions of the expert's report, on which the Marseille Commercial Court based its decision of March 18, 2004, are that the development potential of this segment is very significant. Gemplus S.A. contested the expert's report as well as the related estimated damages and the merits of the case on various grounds, and immediately filed an appeal.

Notes
1. International Financial Reporting Standard 
2. Generally Accepted Accounting Standards

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 2002: Gartner Dataquest, 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:

Marielle Bricman
Gemplus Press Relations
Tel: +33 (0) 4 42 36 55 96
Mob : +33 (0) 6 74 68 72 82
Email: marielle.bricman@gemplus.com 

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