Halo Microelectronics issued an announcement responding to the Shanghai Stock Exchange's 2025 annual report regulatory inquiry, explaining the rationale for changing its revenue recognition method from net basis to gross basis. The company's revenue from this business reached 321 million yuan in 2025, a year-on-year surge of 246.42 percent. The change was due to the business model shifting from trading to self-production. The company stated that it cooperated with South Korea's Dongwoon Anatech to obtain exclusive rights to AF and OIS technology in Greater China. Under the self-production model, it independently procures wafers and outsources packaging and testing, with no reliance on a single supplier. It has a complete research, production, and sales team and production leadership, with sales and procurement prices negotiated independently, giving it substantial pricing power. Under the trading model, revenue was recognized on a net basis and the company did not bear inventory risk. Under the self-production model, it holds control over goods and bears inventory risk, and revenue is recognized on a gross basis, which complies with the criteria for identifying a principal in the Accounting Standards for Business Enterprises.
Halo Microelectronics Co. Ltd. ACompany successfully responded to Shanghai Stock Exchange inquiry, confirming compliance of revenue recognition method change.