Company: DSWL
Filing Date: 2025-07-29
Form Type: 20-F
Source: 0001174947-25-001096
Chunk: 12

Company: DESWELL INDUSTRIES INC
Filing Date: 2025-07-29
Form: 20-F
Item: Item 3
Chunk 12
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RC’s national labor law restricts our ability to reduce our workforce, and increases in labor costs of workers in the PRC, and in the Province where our manufacturing facilities are located, have and can be expected to continue to have a material and adverse effect on our operating results.

•Future relocation of certain manufacturing lines may not be successful.

•Restrictions on the convertibility of RMB into foreign currency may limit our ability to transfer excess funds or dividends to the Company’s subsidiaries outside China.

•Political and economic instability of Hong Kong and Macao could harm our operations.

Table of Contents

•Power shortages in China could affect our business.

•China’s U. S. stock market issues may raise investors’ concerns.

•Our auditor is now permitted to be inspected by the PCAOB, and as such, investors will no longer be deprived of the benefits of such inspection.

•We could be delisted if the PCAOB becomes unable to completely inspect and investigate registered public accounting firms in Mainland China and Hong Kong again.

•We depend on our Board of Directors, executive officers, senior managers and skilled personnel.

•The concentration of share ownership in our senior management allows them to control the outcome of matters requiring shareholder approval.

•Our board’s ability to amend our charter without shareholder approval could have anti-takeovereffects.

•Legislation enacted in the BVI as to Economic Substance may affect our operations.

•Because our operations are international, we are subject to significant worldwide political, economic, legal and other uncertainties.

•Uncertainty and adverse changes in the economy and financial markets have had, and could continue to have, an adverse impact on our business and operating results.

•We could suffer losses from corrupt or fraudulent business practices.

•We have established processes to safeguard our information technology systems from cybersecurity threats, but if those measures are insufficient to protect our IT systems, our IT systems and daily operations could be adversely affected.

Risks Relating to Our Business and Industry

We are, and have been, dependent on a few major customers, the loss of, or substantial reduction in orders from, which would substantially harm our business and operating results.

Historically, we have depended, currently depend, and expect to continue to depend, on a small number of customers for a significant percentage of our net sales. During the year ended March 31, 2025, we had two major customers, each accounting for more than 10% of our net sales and together for 33.8% of our net sales. If our major customers experience a