Company: DSWL
Filing Date: 2025-04-21
Form Type: CORRESP
Source: 0001174947-25-000600
Chunk: 7

Company: DESWELL INDUSTRIES INC
Filing Date: 2025-04-21
Form: CORRESP
Chunk 7
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Our manufacturing facilities are located in
China. As a result, our operations and assets are subject to significant political, economic,
legal and other uncertainties associated with doing business in China. Over the past several years, the Chinese government has pursued
economic reform policies including the encouragement of private economic activity and greater economic decentralization. The Chinese government
may not continue to pursue these policies or may significantly alter them to our detriment from time to time without notice. Changes in
policies by the Chinese government resulting in changes in laws, regulations, or their interpretation, or the imposition of confiscatory
taxation, restrictions on currency conversion or imports and sources of supply could materially and adversely affect us. The nationalization
or other expropriation of private enterprises by the Chinese government, could result in the total
loss of our investment in that country.

All of our directors and officers have ties to Hong Kong. The Chinese government may intervene in or influence their conduct or may exert more control over them, which could result in a material adverse change in our operations.

April 21, 2025
Page 12

Because all of our directors and officers have ties to Hong Kong, the Chinese government may intervene in or influence or may exert control over them and their conduct as it relates to our business. The Chinese government may interfere with our operations at any time through our directors and officers who have ties to Hong Kong, which could result in a material change in our results of operation. Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may be adopted quickly with little advance notice and could have a significant impact upon our ability to operate and on the value of our securities.”

| 8. | In your future filings in your summary of risk factors, please disclose the risks that your corporate                                     
 structure and being based in or having the majority of the company’s operations in China poses to investors. In particular, describe      
 the significant regulatory, liquidity, and enforcement risks. For example, specifically discuss risks arising from the legal system in    
 China, including risks and uncertainties regarding the enforcement of laws and that rules and regulations in China can change quickly     
 with little advance notice; and the risk that the Chinese government may intervene or influence your operations at any time, or may exert 
 more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change  
 in your operations and/or the value of your securities. Acknowledge any risks that any actions by the Chinese government to exert more