Alliance Fiber Optic Products, Inc. (AFOP) Declares Special Cash Dividend

Alliance Fiber Optic Products, Inc. (Nasdaq:AFOP), an innovative supplier of fiber optic components, subsystems and integrated modules for the optical network equipment market, today declares special cash dividend of two cents per share to be paid on January 15, 2010, to the record holders of AFOP common stock as of the close of business on Dec 31, 2009.

Peter Chang, President and Chief Executive Officer, commented, “AFOP has been profitable since the beginning of 2006 and increased the level of cash and cash equivalent from $29.4M to $41.9M in the end of the third quarter of 2009. As we look at our cash management, our priority is to grow the business through research and development or acquisition of business. However, in the meantime, we need to enhance shareholder values as well, and we believe that a special cash dividend will contribute to this goal.”

“This payout will not affect AFOP commitment to research and development or possible merger and acquisition activities to fuel our growth in the years ahead. In addition, we are confident in our long-term ability to grow revenue, profits and shareholder value through our innovation and execution,” concluded Mr. Chang.

About AFOP

Founded in 1995, Alliance Fiber Optic Products, Inc. designs, manufactures and markets a broad range of high performance fiber optic components and integrated modules. AFOP's products are used by leading and emerging communications equipment manufacturers to deliver optical networking systems to the long-haul, enterprise, metropolitan and last mile access segments of the communications network. AFOP offers a broad product line of passive optical components including interconnect systems, couplers and splitters, thin film DWDM components and modules, fixed and variable optical attenuators, and depolarizers. AFOP is headquartered in Sunnyvale, California, with manufacturing and product development capabilities in the United States, Taiwan and China. AFOP's website is located at http://www.afop.com.

Except for the historical information contained herein, the matters set forth in this press release, including statements as to future market demand, and our expectations regarding fourth quarter 2009 and year end results, including our expectations regarding our fourth quarter 2009 revenue, gross margin and profitability, year-end profitability and the basis for our expectations, our beliefs regarding the industry downturn, our future business prospects and future customer demand, and our belief that our factory expansion will facilitate our future growth are forward looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, but not limited to, general economic conditions and trends, the impact of competitive products and pricing, timely introduction of new technologies, timely design acceptance by our customers, the acceptance of new products and technologies by our customers, order trends and customer demand, the timing of customer orders, loss of key customers, ability to ramp new products into volume production, industry-wide shifts in supply and demand for optical components and modules, industry overcapacity, failure of cost control initiatives, financial stability in foreign markets, and other risks detailed from time to time in our SEC reports, including AFOP's quarterly report on Form 10-Q for the quarter ended June 30, 2009. These forward-looking statements speak only as of the date hereof. AFOP disclaims any intention or obligation to update or revise any forward-looking statements.

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