Company: DSWL
Filing Date: 2025-07-29
Form Type: 20-F
Source: 0001174947-25-001096
Chunk: 48

Company: DESWELL INDUSTRIES INC
Filing Date: 2025-07-29
Form: 20-F
Item: Item 3
Chunk 48
---
 demand. China’s export growth slowed to a three-monthlow in May as US tariffs impacted shipments. Also, the producer price deflation had further deepened reaching the most significant drop in two years.

Global trade also remains under pressure due to geopolitical tensions, weakening global demand and tighter monetary and fiscal policies. While global inflation has decreased from 5.7% in 2023 to a projected 3.9% in 2024, the global economy is still experiencing local supply disruptions, high import costs, market imperfections, and domestic food inflation is still high in most developing countries, disproportionately affecting the poor. Most commodity prices declined to pre-Ukraine-warlevels in 2023, however they remained considerably higher than pre-pandemiclevels. Our customers that were affected by commodity exports, in turn, were more conservative in ordering our products and services. There are continuing concerns over price instability, geopolitical issues, availability and cost of credit, stability of financial markets and sovereign nations. Uncertainty or adverse changes in the economy could negatively impact:

•the demand for our customers’ products,

•the amount, timing and stability of their orders to us,

Table of Contents

•the financial strength of our customers and suppliers,

•our customers’ and suppliers’ ability or willingness to do business with us,

•our suppliers’ and customers’ ability to fulfill their obligations to us,

•the ability of our customers, our suppliers or us to obtain credit, secure funds or raise capital, or

•the prices at which we can sell our products and services, which, in turn, could adversely affect

•our ability to manage inventory levels effectively or collect receivables,

•our cash flow position,

•our net sales, gross margins and operating results; or

•otherwise adversely impact our results of operations, financial condition and liquidity.

We could suffer losses from corrupt or fraudulent business practices.

Corruption and other fraudulent practices remain a concern in China. We could suffer losses from fraudulent practices if we are not successful in implementing and maintaining preventative measures.

Cybersecurity risks

The Company has established processes for its information technology staff to take security measures to safeguard its IT systems. The Company has implemented procedures to assess, identify and manage threats to sensitive data and unauthorized access to its IT systems. Management has overall responsibility to oversee and periodically review such processes and any risks to the Company’s IT systems, and would engage external IT professionals on an as-neededbasis. There have not been any past cybersecurity events identified as threats to the Company’s IT systems.