Contract analysis

I. EXECUTIVE SUMMARY This memorandum presents the results of Calderwood & Harkness's classification review of the products, technologies, and technical data of Marlowe Asset Management Photonics Inc. ("VPI") under both the International Traffic in Arms Regulations ("ITAR," 22 C.F.R. Parts 120–130) and the Export Administration Regulations ("EAR," 15 C.F.R. Parts 730–774). The purpose of this review is threefold: (1)

II. BACKGROUND A. The Transaction Halcyon Semiconductor AG ("HSAG"), a publicly traded German stock corporation (Aktiengesellschaft) listed on the Frankfurt Stock Exchange (XETRA: HLC) with its principal offices at Industriestraße 44, 01099 Dresden, Saxony, Germany, reported fiscal year 2022 revenue of approximately €6.12 billion. HSAG is a global semiconductor manufacturer with operations spanning power management i

III. APPLICABLE REGULATORY FRAMEWORK This section provides an overview of the U.S. export control regulatory framework applicable to VPI's products and technologies. An understanding of this framework is essential to the classification analysis that follows in Sections IV and V. A. International Traffic in Arms Regulations (ITAR) — 22 C.F.R. Parts 120–130 The International Traffic in Arms Regulations, codified at 22

IV. CURRENT VPI PRODUCT CLASSIFICATIONS — DETAILED REVIEW This section provides a detailed review of VPI's current product and technology classifications under the ITAR and the EAR. The analysis is based on Calderwood & Harkness's review of VPI's export control compliance records, product technical documentation, self-classification worksheets, prior CJ and classification determinations (where available), government

1. GaN Power Amplifier Modules for Defense Radar Systems Product Description. VPI designs and manufactures high-power GaN-on-SiC transmit/receive ("T/R") modules specifically designed for military radar applications. These modules are custom-designed to meet the performance specifications of specific military radar platforms, most notably the AN/TPS-80 Ground/Air Task-Oriented Radar ("G/ATOR") system, which is the su

2. GaN-Based T/R Modules for Missile Defense Product Description. VPI designs and manufactures GaN-based T/R modules for missile defense radar applications under its prime contract with the Missile Defense Agency. The current contract backlog for this product line is approximately $38.9 million. These modules are designed to meet the stringent performance requirements of ground-based and sea-based missile defense rad

3. Electronic Warfare (EW) Subsystem Components Product Description. VPI designs and manufactures GaN power amplifiers and related subsystem components for electronic countermeasure ("ECM") and electronic warfare ("EW") applications. These components are produced under multiple contracts with DoD agencies, including a subcontract to Ironclad Defense Systems Inc. for U.S. Navy NAVSEA programs. Certain EW programs are

4. ITAR-Controlled Technical Data and Defense Services In addition to the hardware products described above, VPI possesses extensive ITAR-controlled "technical data" as defined in ITAR § 120.10 and provides "defense services" as defined in ITAR § 120.9 in connection with its defense programs. This includes, without limitation: (a) Design drawings, schematics, circuit layouts, and mechanical packaging specifications f

1. ECCN 3A001 — High-Performance GaN HEMTs for Dual-Use Applications Product Description. VPI manufactures GaN high-electron-mobility transistors ("HEMTs") and monolithic microwave integrated circuits ("MMICs") designed for satellite communications and 5G telecommunications infrastructure applications. These devices are based on the same fundamental GaN-on-SiC semiconductor platform as VPI's defense products but are

2. ECCN 3A991 — Lower-Performance GaN Components Product Description. VPI manufactures certain GaN power transistors that do not meet the controlled performance thresholds specified in ECCN 3A001 but exceed the performance characteristics of items that would be designated EAR99. These are lower-frequency, lower-power devices designed for less demanding commercial RF applications, including industrial RF heating, medi

3. ECCN 3E001 — Technology for Production of 3A001 Items Product Description. This classification covers VPI's process technology, design methodology, manufacturing know-how, and proprietary GaN epitaxial growth recipes that are used to develop and produce items controlled under ECCN 3A001. The "technology" controlled under ECCN 3E001 is defined broadly under EAR § 772.1 to include specific information necessary for

V. ITEMS REQUIRING POST-CLOSING RECLASSIFICATION REVIEW — THE SIX IDENTIFIED ITEMS Overview This section presents a detailed analysis of the six VPI product lines or technology categories that Calderwood & Harkness has identified as requiring reclassification review in connection with or following the closing of the Transaction. These six items were identified through our review of VPI's classification records, discu