Company: DSWL
Filing Date: 2025-07-29
Form Type: 20-F
Source: 0001174947-25-001096
Chunk: 76

Company: DESWELL INDUSTRIES INC
Filing Date: 2025-07-29
Form: 20-F
Item: Item 5
Chunk 76
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 therefore paid in RMB, Deswell’s business and financial results will be affected by the exchange rate of RMB to the U. S. dollar, as is discussed in “ Exchange Rates” immediately below.

Exchange Rates

The Company’s sales are mainly in United States dollars and Hong Kong dollars and its expenses are mainly in United States dollars, Hong Kong dollars and Chinese RMB.

The Hong Kong dollar has been pegged to the U. S. dollar at approximately 7.80 and relatively stable. The Hong Kong government may not continue to maintain the present currency exchange mechanism, which fixes the Hong Kong dollar at approximately 7.80 to each United States dollar and has not in the past presented a material currency exchange risk. Although announcements by Hong Kong’s central bank indicate its intention to maintain the currency peg between the Hong Kong dollar and the U. S. dollar, if Hong Kong does change and follows China to a floating currency system or otherwise changes the exchange rate system of Hong Kong dollars to U. S. dollars, our margins and financial results could be adversely affected.

Between 1994 and July 2005, the market and official RMB rates were unified and the value of the RMB was essentially pegged to the U. S. dollar and was relatively stable. On July 21, 2005, the People’s Bank of China adjusted the exchange rate of RMB to the U. S. dollar by linking the RMB to a basket of currencies and simultaneously setting the exchange rate of RMB to U. S. dollars, from 1:8.27, to a narrow band of around 1:8.11. The following chart illustrates the fluctuations in the exchange ratio of the RMB to the U. S. dollar at the end of each of Deswell’s fiscal years from March 31, 2015 to March 31, 2025.

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(1)RMB (yuan) to U. S. dollar data presented in this chart are the average exchange rate on March 31 of the year indicated as reported at http://www. oanda. com/currency-converter.

Since 2018 the RMB has become depreciated against the U. S. dollar, the Company’s results have benefited from this depreciation rate. However, since then, the RMB has fallen against the U. S. dollar to its 18-monthlow of 6.7110 in May 2022 amid the COVID-19lockdowns in key Chinese cities.