Contract analysis

I. Executive Summary Halcyon Semiconductor AG ("HSAG") is an Aktiengesellschaft organized under the laws of the Federal Republic of Germany. HSAG is publicly listed on the Frankfurt Stock Exchange (XETRA; ISIN DE000HSA0017, WKN HSA001), with its registered office at Halcyon-Allee 12, 01099 Dresden, Saxony, Germany. HSAG was originally incorporated as a Gesellschaft mit beschränkter Haftung (GmbH) and was subsequently

II. Scope of Functional Analysis A. Covered Intercompany Transactions The functional analysis set forth in this memorandum addresses HSAG's role in three principal categories of controlled transactions between HSAG and HSI. These transactions are the subject of the bilateral APA application filed with the Internal Revenue Service ("IRS") and the Bundeszentralamt für Steuern ("BZSt"), and are also the focus of the con

1. Tangible Goods (Wafer/Die Sales) HSAG manufactures semiconductor wafers and singulated die at its fabrication facilities in Dresden and Chemnitz, Germany, and sells these products to HSI under the Master Intercompany Supply Agreement (effective January 1, 2019; amended July 1, 2022) (the "Supply Agreement"). HSI, in turn, resells the products — in some cases after additional packaging, testing, or customer-specifi

2. Royalties (IP License) HSI pays HSAG a running royalty of 6.0% on IP-attributable revenues for the right to use HSAG's proprietary semiconductor process technology, design libraries, and related intangibles under the IP License Agreement (effective January 1, 2019) (the "License Agreement"). The royalty compensates HSAG for the use of its valuable intangible property by HSI in connection with HSI's US distribution

3. Cost-Sharing Contributions (R&D CSA) HSAG and HSI are parties to a Qualified Cost Sharing Arrangement (effective July 15, 2018) (the "CSA") for next-generation 2nm and sub-2nm process technology R&D. Under the CSA, HSAG and HSI share qualified R&D costs in proportion to their anticipated benefit shares: HSAG's cost-sharing percentage is 77.5%, and HSI's cost-sharing percentage is 22.5%, reflecting HSI's anticipate

1. Management Interviews Two principal interviews were conducted with members of HSAG's senior management, as follows: • Dr. Hendrik Möller, Chief Technology Officer — Interview conducted on February 11, 2025, at HSAG's headquarters in Dresden, Germany, with a follow-up video conference on March 5, 2025. Total interview duration was approximately four and one-half hours. Topics covered included: HSAG's R&D strategy a

2. Supplemental Written Responses Following the interviews, HSAG management provided supplemental written responses to detailed follow-up questionnaires prepared by Calderwood & Harkness LLP. These responses addressed, among other things, specific cost center allocations, headcount breakdowns by function, details of R&D project portfolios, and clarifications regarding certain provisions of the intercompany agreements

3. Audited Financial Statements HSAG's audited consolidated financial statements for FY 2022, FY 2023, and FY 2024 were reviewed. These financial statements were prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and were audited by Gresham Whitfield LLP. The group audit partner is Simon Cardwell, based at the firm's London office at 25 Old Broad Street,

4. Internal Management Reports A range of internal management reports were reviewed, including cost center data, departmental headcount allocation reports, capital expenditure schedules and forecasts, R&D project listings and milestone reports, capacity utilization data for Fabs 1, 2, and 3, and intercompany pricing schedules.

5. Intercompany Agreements The following intercompany agreements were reviewed in their entirety, including all amendments and schedules: • Master Intercompany Supply Agreement (effective January 1, 2019; amended July 1, 2022); • IP License Agreement (effective January 1, 2019); and • Cost Sharing Arrangement (effective July 15, 2018).

6. HSAG Annual Report and Investor Presentations HSAG's FY 2024 annual report (including management discussion and analysis and corporate governance report) and investor presentations from the 2024 fiscal year were reviewed for supplemental background information regarding HSAG's business strategy, competitive positioning, and financial performance.

7. Input from External Advisors The functional analysis also incorporates input from the following external advisors: • Meridian Economics GmbH — Dr. Annika Breitner, Managing Director, and Maximilian Voss, Senior Analyst, provided economic analysis and benchmarking support, including the identification and screening of comparable companies and comparable uncontrolled license agreements. • Kettner Pflüger Rechtsanwäl

III. Corporate Overview and Organizational Structure A. Entity Information The following table sets forth the key identifying information for HSAG: HSAG was originally organized as Halcyon Halbleitertechnologie GmbH and subsequently converted to an Aktiengesellschaft in connection with its initial public offering on the Frankfurt Stock Exchange. The entity has maintained its registered office in Dresden since its fou

IV. Functions Performed This section describes the functions performed by HSAG, organized by functional category. The analysis of HSAG's functions, when combined with the analysis of assets employed (Section V) and risks assumed (Section VI), provides the factual foundation for the characterization of HSAG as the complex, IP-rich principal entity in the Halcyon group's intercompany supply chain. A. Semiconductor Desi

1. Process Technology Development HSAG maintains the central process technology development capability for the entire Halcyon group. Process technology development is the core competence that defines HSAG's competitive position in the global semiconductor industry and is the primary source of HSAG's valuable intangible property. HSAG's process technology development function encompasses the design, characterization,

2. Product Design In addition to process technology development, HSAG performs the product design function for the Halcyon group. HSAG's product design teams develop the semiconductor product architectures and circuit layouts for the group's three principal end-market segments: automotive, industrial IoT, and data center. Product design activities include: • Architecture Definition: Specification of the overall produ

3. R&D Expenditure HSAG's R&D expenditure reflects its role as the group's principal developer of semiconductor process technology and product designs. For FY 2024, HSAG's total R&D expenditure was €1,420,000,000, representing approximately 16.2% of consolidated revenue of €8,740,000,000. This R&D intensity is consistent with the levels observed at leading integrated device manufacturers and pure-play foundries in th

1. Fabrication Facilities HSAG operates three semiconductor fabrication facilities ("fabs") in Germany, which together represent the group's entire manufacturing capacity. Each facility is described below. Fab 1 — Industriepark Klotzsche, Zur Wetterwarte 50, 01109 Dresden, Germany Fab 1 is HSAG's mature-node production facility, dedicated to high-volume manufacturing of semiconductor wafers and die using the 7nm proc

2. Manufacturing Process HSAG performs the complete semiconductor wafer fabrication process, encompassing both front-end-of-line ("FEOL") and back-end-of-line ("BEOL") processing, wafer-level testing, and die singulation: • Front-End-of-Line (FEOL): Fabrication of the active transistor structures and local interconnects on the silicon wafer. FEOL processing includes well formation, gate patterning, source/drain impla

3. Supply Chain and Procurement HSAG manages all procurement and supply chain activities related to semiconductor fabrication. This function encompasses the sourcing, qualification, and management of relationships with third-party suppliers of raw materials, process chemicals, gases, and capital equipment. Key categories of procurement managed by HSAG include: • Silicon Wafers: HSAG procures blank silicon wafers (200

1. IP Portfolio HSAG is the legal and economic owner of substantially all intangible property in the Halcyon group. HSAG's IP portfolio is the foundation of the group's competitive position and represents the most valuable category of assets in the intercompany supply chain. The principal components of HSAG's IP portfolio are as follows: • Proprietary Semiconductor Process Technology: HSAG's fabrication recipes, proc

2. IP License to HSI Under the License Agreement (effective January 1, 2019), HSAG grants HSI a non-exclusive license to use HSAG's process technology, design libraries, and related intangibles in connection with HSI's US distribution, marketing, and design-support activities. The License Agreement was entered into on arm's-length terms following a comprehensive transfer pricing analysis conducted by Calderwood & Har

3. IP Development and Enhancement HSAG continuously develops and enhances its IP portfolio through ongoing R&D activities, as described in Section IV.A.3 above. The total R&D expenditure of €1,420,000,000 in FY 2024 reflects HSAG's commitment to maintaining and extending its technological leadership. HSAG bears the cost, risk, and decision-making authority for all IP development activities outside the scope of the CS

1. Group Strategy HSAG's Vorstand sets the overall strategic direction for the Halcyon group. This function encompasses the highest-level decisions that determine the group's competitive positioning, resource allocation, and long-term value creation. Specific strategic management activities performed by the Vorstand include: • Product Roadmap: HSAG determines the technology roadmap and product mix for the group, incl

2. Control Over HSI Operations HSAG exercises both strategic and operational control over HSI's activities as its sole shareholder and as the principal entity in the intercompany supply chain. HSI operates as a limited-risk distributor under HSAG's direction for North American market access. The specific dimensions of HSAG's control over HSI include: • Board of Directors: HSAG appoints all members of HSI's board of d