On August 27, at the semi-annual results briefing, senior Huaqin Technology explained that in the first half of this year, the company felt a rapid rise in upstream supply chain prices, so the company made sufficient hedging measures, and inventory rose significantly in the second quarter. Specifically, 1. Some active materials in the company's inventory include storage products, PCB products, high-end MLCCs, etc. with obvious price increases. Most of the company's storage is provided by customers, and price fluctuations basically do not affect gross profit; part of the business is the company's own storage. Based on Huaqin's Buy-power capabilities, it has also implemented forward-looking strategic materials ahead of time. 2. The company takes the initiative to increase the preparation of strategic materials and raise inventory levels. It is based on active layout of orders and industry cycles. The core purpose is to optimize costs and guarantee delivery. It is the core competitiveness of the supply chain, rather than inefficient use of capital; these strategic inventories form a differentiated competitive advantage and form positive profit elasticity during subsequent carry-over costs. 3. The company's inventory rose markedly in the first half of the year, and the overall impact on the consolidated statement was manageable. Inventory preparation led to a short-term increase in inventory, but it was a high-quality and strategic preparation. The inventory matched definitive orders, and there was no risk of inventory impairment. At the same time, the overall water level of finished product inventory remained low, and there was no backlog of finished products.

On August 27, at the semi-annual results briefing, senior Huaqin Technology explained that in the first half of this year, the company felt a rapid rise in upstream supply chain prices, so the company made sufficient hedging measures, and inventory rose significantly in the second quarter. Specifically, 1. Some active materials in the company's inventory include storage products, PCB products, high-end MLCCs, etc. with obvious price increases. Most of the company's storage is provided by customers, and price fluctuations basically do not affect gross profit; part of the business is the company's own storage. Based on Huaqin's Buy-power capabilities, it has also implemented forward-looking strategic materials ahead of time. 2. The company takes the initiative to increase the preparation of strategic materials and raise inventory levels. It is based on active layout of orders and industry cycles. The core purpose is to optimize costs and guarantee delivery. It is the core competitiveness of the supply chain, rather than inefficient use of capital; these strategic inventories form a differentiated competitive advantage and form positive profit elasticity during subsequent carry-over costs. 3. The company's inventory rose markedly in the first half of the year, and the overall impact on the consolidated statement was manageable. Inventory preparation led to a short-term increase in inventory, but it was a high-quality and strategic preparation. The inventory matched definitive orders, and there was no risk of inventory impairment. At the same time, the overall water level of finished product inventory remained low, and there was no backlog of finished products.