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LETTER TO THE S.E.C.

    GEMPLUS INTERNATIONAL S.A.

    46a, avenue JF Kennedy

    2nd floor

    L-1855 Luxembourg

    Grand Duchy of Luxembourg

    December 24, 2005

    Via Facsimile: +1 (202) 772-9205

    UNITED STATES SECURITIES

    AND EXCHANGE COMMISSION

    Washington, D.C. 20549

    Attention:

    Larry M. Spirgel

    Adam Washecka

    Re:

    Gemplus International S.A. (the “Company”)

Form 20-F for the fiscal year ended December 31, 2004

Filed June 30, 2005

File No. 000-31052

Dear Mr. Littlepage:

We are responding to the Staff of the Securities and Exchange Commission’s letter dated November
28, 2005, concerning the above-referenced filing. For your convenience, we have repeated the
Staff’s comments before each of our responses below.

Form 20-F for the year ended December 31, 2004

2. Summary of significant accounting policies, page F-6

2.5 Revenue recognition, page F-9

Comment:

1. We refer to your response to comment 3 in which you state “In certain other cases, the Company
provides customized operating systems and chip cards in each segment”. Please tell us whether you
sell chip cards that only are functional on your customized operating systems, and if so, when you
recognize revenue from the sale of these chip cards. Otherwise, explain to us in more detail the
nature of these customized chip cards. Reference all pertinent, authoritative, GAAP accounting
literature in your response that supports your accounting treatment.

Response:

Chip cards

The chip card production cycle consists of four main stages: chip design, micromodule
manufacturing, embedding and personalization.

    •

    Chip design: The most important features of the chips used in chip cards relate to their
memory and data processing performance. The chips used in the Company’s chip cards are
designed and manufactured by semiconductor foundries, including with technologies provided
the Company.

    •

    Micromodule manufacturing: The chips supplied by semiconductor foundries for use in the
Company’s chip cards are delivered in the form of wafers that contain up to 10,000 chips
per wafer. To be used in chip cards, the wafers are sawed into individual chips that are
then picked from the wafer and placed on printed circuit boards. After the chip is
connected to a set of contacts, a thin layer of resin is then applied to cover and protect
the micromodule assembly

    •

    Embedding: The embedding stage consists of the production and preparation of a plastic
card body and the placement of the micromodule in the card body.

    •

    Personalization: Personalization consists of both an electrical and graphical process.
The different stages of personalization can include, among other things, data processing
(such as PIN code or digital key), chip loading (personal data and applets), card body
embossing, magnetic stripe encoding, printing and packaging.

A chip card is generally complete and has value for the user only when personalized. As a result,
the Company only recognizes revenue when the chip card is personalized and delivered to the
customer, and all criteria of SAB 104 are met. Since the personalization of chip cards involves
the creation of unique cards for customers and users, these cards can be considered “customized”.
In some instances, the Company may sell cards that are not personalized, since the customer or its
customer(s) or other provider(s) will personalize the cards. For those cards, the Company
recognizes revenue when the card is delivered to the customer, and when all criteria of SAB 104 are
met.

Customized operating systems

Chip cards are sold with an embedded generic operating system supplied by the Company. Some
customers have specific requirements for the behavior of the chip cards’ operating system. The
Company develops certain applications or “filters” that, when loaded on a chip card, have the
effect of modifying the performance of its generic operating systems to accommodate customer
requirements. This development work is typically reflected only in the price of chip cards sold.
The Company recognizes revenue when the card is delivered to the customer, and when all criteria of
SAB 104 are met.

In addition to the development work by the Company to adapt its generic chip card operating systems
to accommodate customer requirements, the requirements of a small number of large customers can be
so significant as to require actual customization of the chip card operating system. This
customization of the chip card operating system is considered as a development cost by the Company,
and is not invoiced to the customer. The cost of this development work is reflected in the price
of chip cards sold. The Company recognizes revenue when the card is delivered to the customer, and
when all criteria of SAB 104 are met.

In addition to chip cards, the Company also provides certain software applications that are not
embedded or loaded on cards and infrequently, the Company may sell chip cards along with those
software applications. The software application is not essential to the functionality of the chip
cards. Such software and services are to add functionality for the customers’ intended use of the
cards, but are not necessary for the basic operation of the cards. The basic operation of
personalized chip cards is not dependent upon the use of the Company’s applications in the
substantial majority of markets. The Company does not supply essential wireless telecommunications
infrastructure (other than SIM cards), and its software marketed for use in such systems is to add
to or enhance the principal functions of wireless telecommunications networks. Similarly, in
financial services markets the Company does not supply essential elements of the network payment
systems of issuers, merchants or payment associations (other than chip cards).

The software applications not loaded on chip cards that the Company markets are designed to operate
with chip cards sold by many suppliers, whether provided by the Company or not. Most of the
Company’s customers have multiple suppliers for chip cards, as the technical specifications of the
chip cards are always defined by the Company’s customers.

2.

Revenue on software applications that is recognized independently from the sale of chip cards is
accounted for under SOP 81-1, as required by paragraph 7 of SOP 97-2. The chip card sales are not
subject to contract accounting pursuant to paragraph 14 of SOP 81-1. Revenue related to chip card
sales is recognized when the chip cards are delivered and other requirements of SAB 104 are met,
based on the selling prices charged by the Company to other customers for sales of chip cards sold
separately.

11. Goodwill, page F-20 – Impairment tests for goodwill, page F-21

Comment:

2. We note in your response to comment 8; however, it is not clear to us why the disposal of SLP
should not result in discontinued operations presentation. Please describe for us in more detail
your consideration of SFAS 144 and EITF 03-13 in making this determination. In this regard, we note
in Note 11 that you state there was “a significant decline in sales of SLP software” and “SLP
eventually ceased its activities in 2004.” Tell us if the Company continues to generate revenue in
2005 from the sale of SLP software. Further, explain to us whether the continued cash flows are the
result of the migration of SLP software revenues from the disposed component or a continuation of
activities with the disposed component.

Response:

When acquiring SLP Infoware SA, Gemplus’s key consideration was the acquisition of “anti-churn” and
customer relationship management applications, which could be integrated with Gemplus cards for
mobile telecommunication customers. The technology of SLP Infoware SA was transferred to Gemplus SA
France into its portfolio of card application.

In 2003, the sale of “stand alone” SLP software for use other than with smart cards was not
significant (revenues of € 563 thousand in 2003), and has subsequently been discontinued in
addition to the cessation of SLP’s legal existence.

In evaluating the guidance in EITF 00-13, it is important to note that there were deminimus cash
flows before and after the legal entity SLP software was dissolved in 2004. In 2003, SLP revenues
were € 563 thousand compared to the Company’s consolidated revenues of € 749 million. The
dissolution of the legal entity associated with SLP software did not qualify as discontinued
operations under IFRS (IAS 35), under which the Company presents its primary financial statements.
Paragraph 2 of IAS 35 defines a discontinued operation as follows:

“A discontinuing operation is a component of an enterprise:

    (a)

    that the enterprise, pursuant to a single plan, is:

    (i)

    disposing of substantially in its entirety, such as by selling the component in
a single transaction, by demerger or spin-off of ownership of the component to the
enterprise’s shareholders;

    (ii)

    disposing of piecemeal, such as by selling off the component’s assets and
settling its liabilities individually; or

    (iii)

    terminating through abandonment;

    (b)

    that represents a separate major line of business or geographical area of operations;
and

    (c)

    that can be distinguished operationally and for financial reporting purposes.

Under IFRS, the Company’s conclusion was that SLP:

3.

    •

    did not represent a separate major line of business (IAS 35 – 2.b.) since SLP revenues
represented less than 0.01% of the Company’s consolidated revenues in 2003, and 0.3% of
consolidated revenues in 2002; and

    •

    could not be distinguished for financial reporting purposes since SLP was part of the
sub-business unit of “mobile telecommunications”, and was never distinguished for internal
or external financial reporting purposes (IAS 35 – 2.c.).

Presenting the disposal of this business as discontinued operations under US GAAP would not have a
material impact on the financial statements other than to reclassify under US GAAP operating losses
of € 12.1 million and € 34.8 million in 2002 and 2003 from continuing operations to
discontinued operations. The 2002 amount primarily related to R&D expenses and software
amortization, and the 2003 amount primarily related to goodwill. The Company’s operating income
under US GAAP for 2002 and 2003 were (€ 257.1 million) and (€ 154.5 million), respectively.

12. Deferred development costs, page F-21

Comment:

3. We note your response to comment 9; however, it is unclear to us how you addressed these
differences in your reconciliation of net income and shareholders’ equity in note 39. Please
explain to us in detail how you calculated the “Capitalized development costs” line item values for
each of the previous three years in your reconciliation of net income and shareholders’s equity. To
the extent possible, reconcile these amounts to the deferred development costs amounts in Note 12.

Response:

Below is a roll-forward of the “Capitalized development costs” line item for the last three years:

    Opening

    Impact for

    Closing

    Impact for

    Closing

    Impact for

    Closing

    balance

    the year

    balance

    the year

    balance

    the year

    balance

    Jan. 1, 2002

    FY 2002

    Dec. 31, 2002

    FY 2003

    Dec. 31, 2003

    FY 2004

    Dec. 31, 2004

    Deferred development costs
under IFRS

    28,470

    (2,560
    )

    25,910

    (7,994
    )

    17,916

    1,306

    19,222

    US GAAP reconciling item

    Capitalized development costs

    (5,518
    )

    (1,803
    )

    (7,321
    )

    7,321

    0

    0

    0

    Deferred development costs
under US GAAP

    22,952

    (4,363
    )

    18,589

    (673
    )

    17,916

    1,306

    19,222

    Comment

    A

    B

    B

    C

    C

    D

    D

    A.

    At December 31, 2001, the Company had identified a development project other than
software, capitalized under IFRS for a total amount of € 5,518 thousand. This did not
meet the capitalization criteria under US GAAP. This project consisted in developing chip
designs in order to better take into account the requirements of chip card manufacturing.

    B.

    In FY 2002, the Company further identified an amount of € 1,803 thousand of
development costs capitalized under IFRS that did not meet the capitalization criteria
under US GAAP. In total, the reconciling item amounted to € 7,321 thousand.

    C.

    In FY 2003, as part of a restructuring plan consisting of refocusing the Company on its
core business, the Company decided to transfer this project related to chip design to a
semiconductor manufacturer. Future development costs, including those related to employees
assigned to the

4.

    project, have thus been transferred to this manufacturer. The Company was promised potential
reductions in the purchase price of certain chips, which were not guaranteed and thus for
which future cash flows were not demonstrated. Based on such uncertainty, the development
capitalized has been written-off under IFRS. As this project was not capitalized under US
GAAP, the entry was reversed under US GAAP, and at December 31, 2003, no reconciling item
remained (i.e., all development projects capitalized under IFRS were software development
costs and met the capitalization criteria under US GAAP).

    D.

    In FY 2004, all projects capitalized under IFRS met the US GAAP criteria for
capitalization. Hence, no reconciling item has been identified.

14. Investments in Associates, page F-22

Comment:

4. We note your response to comment 10. Please revise your Form 20-F to fully comply with the
disclosure requirements of Rule 4-08(g) of Regulation S-X.

Response:

Note 14 of the financial statements would be presented as follows, at December 31, 2005
(proposed modifications are underlined below):

14. INVESTMENTS IN ASSOCIATES

Investments in associates can be analyzed as follows:

    (in thousands of euros)

    2005

    2004

    2003

    As of January 1

    12,864

    19,216

    21,008

    Change in perimeter (1)

    —

    7,090

    Share of (loss) profit

    (5,970
    )

    (7,561
    )

    Currency adjustments

    (382
    )

    (1,321
    )

    As of December 31

    12,864

    19,216

    (1)

    Change in perimeter comprises the impact of changes in ownership interest
leading to reclassifications between subsidiaries, available-for-sale financial assets and
investments in associates.

The Company has investments in associates in several non-public start-up companies. These
investments are accounted for in accordance with the accounting policies described in Note 2.2. The
Company has no significant flow of transactions with these companies.

As indicated in Note 2.2.b., the Company’s investment in associates includes goodwill (net of
any amortization and any impairment loss) identified on acquisition. At December 31, 2005, 2004,
and 2003, the net book value of goodwill in associates amounted to € XXX thousand, € 6,616
thousand and € 10,851 thousand, respectively.

5.

At December 31, 2005, the Company’s investments in associates consisted of the following:

    Name of the company

    Country

    % control

    Name of the company

    Country

    % control

    Leigh Mardon Gemplus Pty Ltd

    Australia

    50
    %

    Setelis SA

    France

    21.6
    %

    Gemware Technology Ltd

    BVI

    25
    %

    CLM GmbH & Co. KG

    Germany

    50
    %

    Solutions Fides

    Canada

    49
    %

    Toppan Gemplus Services Co. Ltd

    Japan

    50
    %

    Realtime A/S

    Denmark

    49
    %

    Concesionaria Renave SA de CV

    Mexico

    20
    %

    Welcome Realtime SA

    France

    49
    %

    Gemplus EDBV Smart Labs Pte Ltd

    Singapore

    50
    %

    Immotec Systemes SAS

    France

    49
    %

    Gemplus EDBV Smart Labs Management