Contract analysis

I. EXECUTIVE SUMMARY This Cost Sharing Arrangement Documentation Addendum (this "Addendum") constitutes supplemental contemporaneous transfer pricing documentation specific to the Qualified Cost Sharing Arrangement (the "CSA") entered into between Halcyon Semiconductor AG ("HSAG") and Halcyon Semiconductor Inc. ("HSI," and together with HSAG, the "Participants") on July 15, 2018. This Addendum is intended to be read

II. BACKGROUND AND PARTIES TO THE CSA

II.A. Halcyon Semiconductor AG (HSAG) — CSA Participant and IP Principal Halcyon Semiconductor AG ("HSAG") is the primary participant in the CSA and the principal owner of the Halcyon Semiconductor group's intellectual property portfolio. HSAG is an Aktiengesellschaft organized and existing under the laws of the Federal Republic of Germany. The company is publicly listed on the Frankfurt Stock Exchange (XETRA trading

II.B. Halcyon Semiconductor Inc. (HSI) — CSA Participant and US Exploitation Party Halcyon Semiconductor Inc. ("HSI") is a C-corporation incorporated in the State of Delaware under File Number 7341825 and holding Employer Identification Number (EIN) 84-2917630. HSI's registered agent in Delaware is Capitol Registered Agents LLC, located at 1209 Orange Street, Wilmington, Delaware 19801. HSI's principal office and hea

II.C. Affiliated Entities Not Party to the CSA The Halcyon Semiconductor group includes additional affiliated entities that are not participants in the CSA and do not hold CSA exploitation rights. These entities are identified below for completeness and context. Halcyon Semiconductor Japan K.K. ("HSJ") is a Kabushiki Kaisha organized under the laws of Japan, with its registered office in Tokyo, Japan. HSJ serves as t

II.D. Advisors and Third Parties The following advisors and third parties have been engaged in connection with the CSA, the PCT valuation, and the preparation of this Addendum and related transfer pricing documentation: US Tax Counsel: Calderwood & Harkness LLP, 599 Lexington Avenue, 38th Floor, New York, New York 10022. The engagement team comprises Leonard Cross (Partner, Tax) serving as the lead partner and superv

III. DESCRIPTION OF THE COST SHARING ARRANGEMENT

III.A. Effective Date and Term The CSA became effective on July 15, 2018, upon execution of the Cost Sharing Arrangement Agreement by HSAG and HSI. The PCT was executed simultaneously with the CSA on the same date, with the PCT buy-in payment of $312,500,000 funded and wire-transferred on July 15, 2018. The CSA Agreement was executed by Dr. Klaus-Dieter Wehrheim on behalf of HSAG and by Victor Almeida on behalf of HS

III.B. Scope of the CSA — Intangible Development Activities The CSA encompasses a defined scope of intangible development activities ("IDAs") directed at the development of advanced semiconductor process technology at the 2nm and sub-2nm nodes. The IDAs represent the core joint R&D effort funded and shared under the CSA and are described in detail below. The IDAs covered by the CSA include, but are not limited to, th

III.C. Cost Sharing Percentages and Reasonably Anticipated Benefits The costs of the CSA's intangible development activities are shared between HSAG and HSI in proportion to each Participant's reasonably anticipated benefits ("RABs") from exploitation of CSA-developed intangibles in its respective territory. The cost-sharing percentages applicable to the CSA are as follows: • HSI's cost-sharing percentage: 22.5% • HS

III.D. Qualified R&D Costs — Definition and Scope "Qualified R&D Costs" under the CSA are defined in Article V of the CSA Agreement as the costs of intangible development activities that are directly related to the development of 2nm and sub-2nm semiconductor process technology. The definition encompasses the following cost categories: Direct personnel costs include salaries, wages, bonuses, benefits (including healt

III.E. Division of Exploitation Rights The CSA establishes a clear territorial division of exploitation rights between the Participants. Under Article IV of the CSA Agreement, the division of exploitation rights is as follows: HSI holds exclusive rights to exploit CSA-developed intangibles in North America, defined as the United States of America, Canada, and Mexico. These exploitation rights encompass the right to u

IV. PLATFORM CONTRIBUTION TRANSACTION (PCT) — BUY-IN PAYMENT

IV.A. Overview of the PCT At CSA inception on July 15, 2018, HSAG contributed pre-existing intangible property to the CSA, consisting of a comprehensive portfolio of semiconductor process technology intellectual property that served as the foundation or "platform" upon which the CSA's intangible development activities would be conducted. The pre-existing intangible property contributed by HSAG included the following

IV.B. Valuation Methodology The PCT was valued using the income method in accordance with Treas. Reg. § 1.482-7(g)(4). The income method was selected as the most reliable method for determining the arm's-length value of the PCT, given the unique and non-routine nature of HSAG's pre-existing semiconductor process technology intellectual property and the absence of comparable uncontrolled transactions for platform cont

IV.C. Arm's-Length Standard and Regulatory Compliance The PCT valuation complies with Treas. Reg. § 1.482-7(g)(1), which provides that each PCT payment must be consistent with the arm's-length standard as defined in Treas. Reg. § 1.482-1(b). The arm's-length standard requires that the results of a controlled transaction be consistent with the results that would have been realized if uncontrolled taxpayers had engaged

IV.D. Consistency with OECD Guidelines The PCT valuation approach is consistent with Chapter VIII of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2022 edition), which addresses cost contribution arrangements ("CCAs"). Chapter VIII of the OECD Guidelines provides that when a participant in a CCA makes a contribution of pre-existing assets or rights (a "balancing payment"

V. FY 2024 COST SHARING — COMPUTATION AND ALLOCATION

V.A. Total Qualified R&D Costs (FY 2024) Total Qualified R&D Costs incurred by the CSA Participants in FY 2024 amounted to €998,200,000. This figure represents the aggregate cost of intangible development activities conducted during the twelve-month period from January 1, 2024 through December 31, 2024, determined in accordance with the cost pool definition set forth in Article V of the CSA Agreement and described in

V.B. Cost Allocation — HSI's Share HSI's cost-sharing percentage under the CSA is 22.5%, as determined by the anticipated benefit share analysis described in Section VI of this Addendum. Applying this percentage to the total FY 2024 qualified R&D cost pool yields the following cost allocation: The USD equivalent of HSI's cost-sharing contribution was approximately $231,300,000, calculated at the blended EUR/USD excha

V.C. Reconciliation with HSI Financial Statements To demonstrate the consistency of the CSA cost-sharing contributions with HSI's overall financial results for FY 2024, the following reconciliation is presented: HSI's intercompany cost-sharing contributions of approximately $231,300,000 (the USD equivalent of €224,600,000) are included within HSI's operating expenses line. These contributions represent HSI's 22.5% sh

V.D. Aggregate Intercompany Flows — Context For purposes of providing complete context for the CSA cost-sharing contributions within the broader framework of intercompany transactions between HSAG and HSI, the following summary of FY 2024 aggregate intercompany flows is presented: The total aggregate intercompany flows between HSAG and HSI in FY 2024 amounted to approximately €1.28 billion, reflecting the substantial

VI. ANTICIPATED BENEFIT SHARE ANALYSIS

VI.A. Methodology — Income Method Under Treas. Reg. § 1.482-7 HSI's anticipated benefit share of 22.5% is determined using the income method prescribed by Treas. Reg. § 1.482-7(e)(2)(ii). The income method is one of several methods specified in the Treasury Regulations for determining a participant's share of reasonably anticipated benefits in a qualified cost sharing arrangement. Under this method, each participant'

VI.B. Key Assumptions and Inputs The anticipated benefit share analysis is based on the following key assumptions and inputs: Geographic Market Allocation. The starting point for the RAB share analysis is the division of the global semiconductor market into two exploitation territories: North America (United States, Canada, and Mexico), assigned to HSI, and the rest of the world (all other territories), assigned to H