Contract analysis

I. Risks Related to Halcyon's Business and the Semiconductor Industry A. Technology and Product Risks

1. Our future growth depends on the continued adoption of silicon carbide (SiC) and gallium nitride (GaN) power semiconductor technologies, which may not occur at the rate we anticipate or at all. Halcyon designs and manufactures advanced power semiconductor devices based on silicon carbide (SiC) and gallium nitride (GaN) wide-bandgap semiconductor technologies. Our products serve critical applications across the aut

2. Our research and development investments may not result in commercially viable products or technologies. We invest significant resources in research and development (R&D) in order to develop next-generation power semiconductor technologies, improve the performance and cost-effectiveness of our existing products, and maintain our competitive position in the rapidly evolving semiconductor industry. We intend to allo

3. Rapid technological change in the semiconductor industry could render our products or manufacturing processes obsolete. The semiconductor industry is characterized by rapid technological change, frequent introductions of new products and design techniques, evolving industry standards, and continual improvements in manufacturing processes. Our competitive position depends on our ability to anticipate these changes

5. The semiconductor industry is cyclical, and a downturn could materially reduce demand for our products and adversely affect our financial results. The semiconductor industry has historically been subject to significant cyclical fluctuations in supply and demand. These cycles are characterized by periods of rapid growth in demand followed by periods of overcapacity, excess inventory accumulation throughout the supp

6. Reduced demand in the automotive, industrial, or renewable energy sectors could adversely affect our revenue. A significant portion of our revenue is derived from customers in the automotive, industrial, and renewable energy sectors, each of which is subject to its own cyclical dynamics, regulatory environment, and market conditions. Our exposure to these sectors means that our revenue and profitability are influe

7. Disruptions in our supply chain, including shortages of raw materials and critical components, could impair our ability to manufacture and deliver products. The manufacture of SiC and GaN power semiconductor devices requires a range of specialized raw materials and components, including SiC substrates, epitaxial wafers, rare gases (such as argon and nitrogen of semiconductor-grade purity), high-purity chemicals (i

8. We depend on our manufacturing facilities, and any disruption at our fabrication plants could have a material adverse effect on our operations. Our manufacturing operations are concentrated in a limited number of fabrication and assembly facilities. Halcyon currently operates the following principal manufacturing and testing facilities: • Munich, Germany (Headquarters): Our primary fabrication facility (Fab 1), lo

9. Our capital expenditure plans are substantial, and we may not achieve anticipated returns on our investments. We have invested substantial capital in expanding and upgrading our manufacturing capabilities and infrastructure. Our capital expenditures were approximately €680 million in FY2023, approximately €750 million in FY2024, and approximately €820 million in FY2025. In addition, we plan to apply approximately

10. We may be unable to retain key customers or attract new customers, which could impair our revenue and growth prospects. Our revenue is derived from a diversified but not unlimited base of customers across the automotive, industrial, and renewable energy sectors. The loss of one or more significant customers, whether due to competitive dynamics, changes in customer sourcing strategies, customer financial difficult

11. Our order backlog may not be indicative of future revenue, and customers may cancel or defer orders. We maintain an order backlog that reflects customer orders for delivery over future periods. However, our order backlog is not a reliable indicator of future revenue for several reasons. Customer orders are typically subject to cancellation, deferral, or modification, and our cancellation policies and contractual

12. Our success depends on the continued service of key executives and technical personnel, and competition for talent in the semiconductor industry is intense. Our future success depends in significant part on the continued contributions of our senior management team and key technical personnel, who have deep expertise in wide-bandgap semiconductor technologies, manufacturing operations, and the end markets we serve

13. We may be unable to adequately protect our intellectual property, and third parties may claim that our products infringe their intellectual property rights. Our business and competitive position depend in significant part on our ability to develop and protect proprietary technologies, including our SiC and GaN device designs, manufacturing processes, circuit topologies, packaging technologies, patents, trade secr

14. We have existing indebtedness, and our ability to service our debt or access additional financing is subject to various risks. As of the end of the periods indicated, our total outstanding debt was approximately €1,180 million (FY2023), €1,020 million (FY2024), and €890 million (FY2025). Our net debt (total debt less cash and cash equivalents) declined from approximately €660 million as of the end of FY2023 to ap

I. Acquisition and Integration Risks

15. We may pursue acquisitions, joint ventures, or strategic alliances that could be difficult to integrate and may not achieve anticipated benefits. As part of our growth strategy, we may from time to time pursue acquisitions of complementary businesses, technologies, or product lines, or enter into joint ventures, strategic partnerships, or other collaborative arrangements. Such transactions involve significant ris

II. Risks Related to Operations in Multiple Jurisdictions A. General International Operations

16. We operate in multiple countries and are subject to risks inherent in international operations. Halcyon conducts business operations across multiple jurisdictions through a network of wholly owned subsidiaries and affiliated entities. Our principal operations are located in: • Germany: Our corporate headquarters and Fab 1 are located in Munich, Germany. Fab 2 is operated by Halcyon Power Solutions GmbH in Dresden

17. Our operations in the People's Republic of China are subject to significant regulatory, geopolitical, and economic risks. We operate Halcyon Shanghai Semiconductor Co., Ltd. as a wholly foreign-owned enterprise (WFOE) at No. 500 Zhangheng Road, Pudong New Area, Shanghai 201203, People's Republic of China. This entity serves as a sales and engineering center, providing customer support, application engineering, an

19. We face risks related to our US operations and our planned US listing. Halcyon Semiconductor USA Inc., our wholly owned US subsidiary (registered address: 1209 Orange Street, Wilmington, DE 19801; principal office: 2500 Augustine Drive, Suite 100, Santa Clara, CA 95054; EIN: 84-3927561), conducts sales, application engineering, and customer support activities in the United States. In connection with this offering

20. We are exposed to foreign currency exchange rate fluctuations, particularly between the euro and the US dollar, which could adversely affect our reported financial results. Halcyon reports its consolidated financial statements in euros in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). However, a meaningful portion of our revenue

III. Risks Related to the ADSs and This Offering A. Market and Liquidity Risks

21. There has been no prior public market for our ADSs in the United States, and an active trading market may not develop or be sustained. Although our ordinary shares are listed on the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) in the Prime Standard segment under the ticker symbol FRA: HCY, our American Depositary Shares have not previously been publicly traded in the United States. We intend to list our

22. The market price of our ADSs may be volatile and could decline significantly. The trading price of our ADSs may fluctuate significantly from time to time and may decline substantially from the initial public offering price. Factors that could cause significant fluctuations in the price of our ADSs include, but are not limited to: • quarterly variations in our revenue, earnings, or other key operating metrics, or

23. Sales of substantial amounts of our ADSs or ordinary shares in the public market, or the perception that such sales may occur, could cause the price of our ADSs to decline. After the completion of this offering, a substantial number of our ordinary shares and ADSs will be held by shareholders who may seek to sell their positions in the public market. Sales of substantial amounts of our ADSs or ordinary shares in