Since April 2019 and up to the Latest Practicable Date, we conducted transactions with a total of around 20 customers and suppliers designated on the Entity List and/or the Unverified List, with an aggregate transaction amount of less than RMB0.3 million.
Business · p. 159
Under U.S. export control regulations, notwithstanding that some of our customers have been placed on the Entity List and Unverified List, as advised by our International Sanctions Counsel, our Directors believe that our products are not subject to the U.S. Export Administration Regulations (“EAR”) and our sales in general did not violate the EAR during the Track Record Period and up to the Latest Practicable Date.
Business · p. 159
As advised by our International Sanctions Counsel, our Directors are of the view, and the Sole Sponsor concurs, that such internal control measures are effective in preventing the trigger of potential sanctions risks.
As of the Latest Practicable Date, of the five companies named in earlier versions of the legislation, we had business relationships with two companies, with the revenue from which accounting for 2.5%, 3.1%, 3.3% and 4.2% of our total revenue in 2023, 2024, 2025 and the seven months ended July 31, 2026, respectively.
Business · p. 162
As advised by our International Sanctions Counsel, our business has no relation to any covered activity and does not fall into the prohibited scope nor the notifiable scope under Section 850.224 and Section 850.217 of the Finale Rule respectively, therefore, the Final Rule will not have impact on our business and the [REDACTED].
Business · p. 161
If and when companies with which we have business relationships are in the future designated as BCCs, we have formulated relevant mitigation measures to mitigate any direct or indirect adverse impact on our business operations.
During the Track Record Period, we made a single shipment of HRS parts by our subsidiary in Mexico to a customer in Venezuela in 2024 for approximately US$15.8 thousand, representing less than 0.1% of our revenue for that year.
Business · p. 178
As advised by the International Sanctions Legal Advisor (i) it did not identify any of our business activities during the Track Record Period and up to the Latest Practicable Date to be a Primary Sanctioned Activity or a violation of International Sanctions; (ii) they had not identified any Secondary Sanctionable Activity that appears likely result in the imposition of sanctions against us or any Relevant Person; (iii) none of the members of our Group is a Sanctioned Target or is located, incorporated, organized or resident in a Sanctioned Country; and (iv) we are not a Sanctioned Trader.
The amount of Relevant Transactions in 2023, 2024, 2025, and for the six months ended June 30, 2026 was RMB25.1 million, RMB15.8 million, RMB10.9 million, and RMB11.1 million, respectively, representing 2.6%, 1.5%, 1.1%, and 1.7% of our revenue for the corresponding periods.
Business · p. 148
One of our known end-users was added to the Entity List maintained by the Bureau of Industry and Security (''BIS'') of the U.S. Department of Commerce in September 2025.
Business · p. 150
We have established an international sanctions and export control compliance framework to identify, assess and monitor the relevant risks.
As advised by our Sanctions Legal Advisor, we are likely to be deemed a “Covered Foreign Person” defined under the Final Rule due to the fact that we are incorporated in the PRC and our business activities fall within the semiconductor sector.
Business · p. 188
However, as advised by our Sanctions Legal Advisor, while the United States has not issued regulations or rules that expressly clarify the application of the Publicly Traded Securities Exemption under the Final Rule, any H Shares acquired by a U.S. person in the [REDACTED] would qualify for the Publicly Traded Securities Exemption.
Business · p. 188
Based on the above, our Directors are of the view that the impact of the Final Rule on our Group is generally limited and manageable.
During the Track Record Period, we have sold our mobile phones products and IoT products to certain regions subject to sanctions imposed by the United States, the European Union or the United Nations, primarily including Democratic Republic of the Congo, Ethiopia, Guinea, Hong Kong, Iraq, Lebanon, Mali, Myanmar, Russia, Somalia, Turkey, Venezuela, and Zimbabwe (the “Relevant Regions”).
Summary · p. 13
Revenue generated from sales to customers in Relevant Regions was approximately RMB15,638.5 million, RMB17,905.6 million, RMB14,672.3 million, and RMB4,359.0 million in 2023, 2024, 2025 and the four months ended April 30, 2026, respectively, accounting for 25.1%, 26.1%, 22.4% and 18.7% of our total revenue for the respective periods.
Business · p. 139
During the Track Record Period, one of our customers was designated on the SDN List in October 2024 and on the European Union List in May 2025, after we ceased sales to the customer in September 2024.
During the Track Record Period, revenue generated from sales of such products accounted for approximately 1.9%, 2.6%, 2.3% and 2.3% of our total revenue in 2023, 2024, 2025 and the four months ended April 30, 2026.
Business · p. 140
During the Track Record Period, our revenue generated from our product sales to the U.S. amounted to approximately RMB137.7 million, RMB63.2 million, RMB7.3 million and RMB1.2 million, respectively, accounting for 0.2%, 0.1%, 0.01% and less than 0.01% of the total revenue for the respective periods.
Business · p. 140
As advised by our International Trade Controls Legal Advisor, our AI-related research and development activities do not fall under the definition of a ‘notifiable transaction” or a “prohibited transaction” under the OISP, and we are not a “covered foreign person” under the Final Rule, as we do not engage in any “covered activity” as defined therein.
Our revenue generated from the sales to that customer amounted to RMB39.8 million, RMB8 thousand, nil and nil in 2023, 2024, 2025 and the six months ended June 30, 2026, respectively, representing approximately 5.0%, a negligible amount, nil and nil of our total revenue in the corresponding periods.
Business · p. 177
Given the above, our International Sanctions Legal Advisor is of the view that during the Track Record Period and up to the Latest Practicable Date, our sales to Russia did not constitute a Primary Sanctioned Activity or a violation of the U.S. primary sanctions.
Business · p. 178
The Group has also implemented internal control measures to manage and mitigate sanctions risks. It has established and implemented export control and economic sanctions compliance management measures and adopted a compliance manual.
As advised by our International Sanctions Legal Advisor, we are a “covered foreign person,” and U.S. person investments in our equity interests are “notifiable transactions.”
Business · p. 199
On the other hand, as advised by our International Sanctions Legal Advisor, our Directors are of the view that an investment in our Group’s equity interests by a U.S. person should not be subject to other prohibitions under the Outbound Investment Rule.
Business · p. 199
In general, our International Trade Legal Advisor has advised that U.S. persons who acquire our Company’s H Shares in the Global Offering or trade in our H Shares after Listing are not subject to notification obligations to Treasury under the Publicly Traded Securities Exception.
As advised by our U.S. export control and sanctions counsel, the products we manufactured for these customers during the Track Record Period were not subject to the EAR and therefore an U.S. export license is not required for us to supply our products to these customers.
Business · p. 147
Except for limited customers on the Entity List, the Group does not have any customers or suppliers on any sanctions lists maintained by the Relevant Sanctions Authorities.
Business · p. 148
Therefore, our Directors are of the view the U.S. sanctions during the Track Record Period did not, and going forward will not, have any material adverse impact on our business operations or financial performance.
After the consultation with our legal advisor as to the sanctions, our Directors are of the view that we were not designated as a sanctioned person or entity under the sanctions regimes of the United States, the European Union, the United Kingdom, Australia or the United Nations, and we did not conduct transactions with persons designated on the SDN List.
Business · p. 145
Certain of our customers appeared on Non-SDN restrictive lists maintained by the U.S. governmental entities.
Business · p. 145
We cannot assure you that our customers or other downstream parties will comply with all applicable sanctions requirements.
During the Track Record Period, our sales to the Relevant BIS Customers amounted to RMB0.1 million, RMB0.1 million, nil, and RMB0.3 million, accounting for 0.6%, 0.2%, nil and 0.1% of our total revenue in the same periods, respectively.
Business · p. 179
Our Directors are of the view, based on the legal advice of our legal advisor as to U.S. foreign investment law, that the Final Rule will not have a material adverse impact on our Company’s business operations, financial performance, the Offering or our investment prospects.
Business · p. 180
Our Directors are of the view, based on the advice of our legal adviser as to U.S. Tariffs, that our Group’s business is not materially affected by recent U.S.-China tariff measures
Such sales amounted to approximately RMB36.6 million in 2023, RMB42.4 million in 2024 and RMB31.1 million in 2025 and RMB4.2 million in the six months ended June 30, 2026, which represented approximately 0.9%, 1.0%, 0.8% and 0.2% of our annual sales revenue during the respective years.
Business · p. 150
Regarding U.S. secondary sanctions, our sales activities involved one supplier and two customers subject to U.S. SDN sanctions targeting Russia.
Business · p. 150
our Directors are of the view, that the international sanctions and related trade restrictions should not have any material impact on our business and financial performance.
During the Track Record Period and up to the Latest Practicable Date, we sold certain of our products to Relevant Customers on the BIS Entity List.
Business · p. 173
As advised by our International Sanctions and U.S. Tariffs Legal Advisor, our sales to these Relevant Customers did not represent a violation of applicable U.S. export controls, and no export licenses were required for our sales to the Relevant Customers.
Certain Chinese-origin products imported by us into the United States are subject to additional tariffs under Section 301 of the Trade Act of 1974 at rates ranging from 7.5% to 25%, and certain steel items such as racks may also be subject to tariffs under Section 232.
Business · p. 185
However, we have identified U.S. domestic sources and alternative foreign sources of supply for items subject to significant increased tariffs to reduce this tariff liability.
Business · p. 185
Based on the above, our business operations and financial performance have not been materially and adversely affected by such U.S. trade measures.
Twelve of our Company’s customers are listed on the 1260H list, which is a list of “Chinese Military Companies” designated under the Section 1260H of the National Defense Authorization Act (“NDAA”) for Fiscal Year 2021, effective in 2021 and updated annually, and Non-SDN Chinese Military-Industrial Complex Companies Lists (“NS-CMIC Lists”), effective in June 2021.
Summary · p. 8
Our Company’s sales to these customers during the Track Record Period were very limited, amounted to RMB11.0 million, RMB11.9 million, RMB4.2 million and RMB4.0 million, representing 2.3%, 3.2%, 0.9% and 4.9% of our total revenue in 2023, 2024, 2025 and the three months ended March 31, 2026, respectively.
Summary · p. 8
Therefore, based on the due diligence and analysis, our Sanctions Counsels are of the view, and our Directors and the Sole Sponsor concur, that our Company’s dealings with entities listed on the 1260H list and NS-CMIC Lists do not violate U.S. sanctions law and do not expose our Company to any sanction risks, either primary or secondary.
During the Track Record Period, our purchases of U.S.-origin products were relatively limited, amounted to RMB3.0 million, RMB0.1 million, RMB0.05 million and RMB0.2 million, representing only 1.2%, 0.1%, 0.05% and 0.5% of our total purchases in 2023, 2024, 2025 and the three months ended March 31, 2026, respectively.
Summary · p. 7
Going forward, the Company intends to continue and reinforce this practice of prioritizing non-U.S.-origin and local suppliers where commercially reasonable and functionally appropriate, which is expected to further reduce the Company’s reliance on U.S.-origin items over time.
Summary · p. 7
Based on the analysis by our Sanctions Counsels mentioned above, our Directors are of the view, and the Sole Sponsor concurs, that we do not expect that the U.S. tariffs, export controls or sanctions measures will have a material adverse impact on our Company’s business operations or financial performance.
During the Track Record Period, our sales to customers located in Russia amounted to approximately RMB112.9 million, RMB100.3 million, RMB46.6 million and RMB4.3 million in 2023, 2024, 2025 and the four months ended April 30, 2026, respectively, representing approximately 5.3%, 3.4%, 1.2% and 0.3% of our total revenue for the corresponding periods.
Summary · p. 13
Based on the advice of our International Sanctions Legal Advisor, none of the (i) relevant Russian customers, (ii) their payment banks, and (iii) Third-Party Payors they used were Sanctioned Targets at the time of the transactions.
Business · p. 198
Based on the review conducted by our International Sanctions Legal Advisor, our acceptance of third-party payments from certain Russian customers does not constitute sanctions evasion under the applicable sanctions regimes.
As advised by our International Sanctions Legal Advisor, our Directors are of the view that we are not a “covered foreign person,” because we do not engage in any “covered activities” under the OIR.
Business · p. 199
In light of the foregoing and as advised by our International Sanctions Legal Advisor, our Directors are of the view that the impact of the OIR on the [REDACTED] is generally limited and manageable.
The revenue derived from such customers amounted to RMB58.2 million, RMB148.2 million, RMB42.3 million and RMB1.8 million in the years ended December 31, 2023, 2024, 2025 and the six months ended June 30, 2026, respectively, accounting for 1.1%, 2.5%, 0.6% and 0.04% of our total revenue for the same periods.
Business · p. 149
Our International Trade Legal Advisor has advised that these sales activities should not give rise to material risks under applicable U.S. export control laws because (i) none of our products is a “direct product” of specified “technology” and “software” in accordance with U.S. export control regulations, (ii) none of our products contains any level of “controlled” U.S.-origin items to subject its products to license requirements for sale to PRC customers, and (iii) none of its products were sold to any entity on the BIS Entity List in violation of U.S. export control regulations.