In its reply to the convertible bond review inquiry, Awinic Electronics revealed that the company predominantly conducts its business through a distribution model. From 2022 to September 2025, revenue generated from this distribution channel accounted for over 80% of the total, while direct sales contributed less than 20%. The gross margin for direct sales is marginally higher than that for distribution. This is because direct sales clients are mainly top-tier consumer electronics companies, which impose stringent product requirements and are willing to pay premium prices.

The distribution model, on the other hand, encompasses a wide array of products and caters to a vast customer base. The gross margins under this model closely align with the company's overall gross margin level. Such a disparity in gross margins is in accordance with prevailing industry standards.

The company's key distributors have remained stable over the years. From 2022 to September 2025, revenue from major distributors made up more than 49% of the total distribution revenue. Moreover, inventory clearance practices are in sync with industry cycles, with no indications of overstocking or sluggish inventory turnover.