Contract analysis

1. EXECUTIVE SUMMARY 1.1 Purpose and Scope of Documentation This US Local File (the "Local File") constitutes contemporaneous transfer pricing documentation for Halcyon Semiconductor Inc. ("HSI" or the "Taxpayer") for the fiscal year ended December 31, 2024 (the "Covered Year" or "FY 2024"). The Local File has been prepared by Calderwood & Harkness LLP ("C&H"), acting as US tax counsel to Halcyon Semiconductor AG ("H

1. Tangible Goods (Semiconductor Wafer and Die Purchases). HSI purchased semiconductor wafers and singulated die from HSAG under the Master Intercompany Supply Agreement (as amended). These transactions are analyzed under the Comparable Profits Method ("CPM") / Transactional Net Margin Method ("TNMM").

2. Royalties (IP License). HSI paid HSAG running royalties for the license of proprietary semiconductor process technology, design libraries, and related intangibles under the IP License Agreement. These transactions are analyzed under the Comparable Uncontrolled Transaction ("CUT") method, corroborated by a residual profit split analysis.

3. Cost-Sharing Contributions (R&D CSA). HSI made cost-sharing payments to HSAG under a Qualified Cost Sharing Arrangement ("CSA") for next-generation semiconductor process R&D. These transactions are analyzed under the income method framework prescribed by Treasury Regulation § 1.482-7. In addition to serving as standalone penalty protection documentation for HSI's FY 2024 federal income tax return, this Local File

2. OVERVIEW OF THE HALCYON GROUP 2.1 Halcyon Semiconductor AG — Parent Company Corporate Identity and Organization. Halcyon Semiconductor AG ("HSAG") is a stock corporation (Aktiengesellschaft) organized and existing under the laws of the Federal Republic of Germany. Its registered office is located at Halcyon-Allee 12, 01099 Dresden, Saxony, Germany. HSAG was incorporated in 2003 and has grown through a combination

3. DESCRIPTION OF CONTROLLED TRANSACTIONS 3.1 Transaction 1: Tangible Goods — Semiconductor Wafer and Die Sales 3.1.1 Nature of Transaction. The first and largest controlled transaction between HSAG and HSI involves the sale of semiconductor wafers and singulated die by HSAG to HSI. HSAG manufactures these products at its Dresden and Chemnitz fabrication facilities using advanced process technologies (7nm, 5nm, and 3

4. FUNCTIONAL ANALYSIS 4.1 Overview and Methodology A comprehensive functional analysis has been conducted to characterize the roles, contributions, and risk profiles of HSI and HSAG in the controlled transactions. The functional analysis serves as the foundation for the selection of the appropriate transfer pricing methods and the identification of the tested party, as required by Treasury Regulation § 1.482-1(d)(3)