SecProbe.io

CORRESP
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 filename1.htm

 April 21, 2025
 United States Securities and Exchange Commission

 Division of Corporation Finance

 100 F Street, N.E.

 Washington, D.C. 20549

 Attention:
 Ms. Jeanne Baker

 Mr. Al Pavot

 Mr. Nicholas O'Leary

 Mr. Conlon Danberg

 Re: Deswell Industries Inc.
Form 20-F filed August 9, 2024
File No. 001-33900

 Dear Ladies and Gentlemen:

 On behalf of our client,
Deswell Industries Inc., a company organized under the laws of the British Virgin Islands (the " Company "), we respond
to the comments contained in the letter from the staff (the " Staff ") of the Securities and Exchange Commission (the
" Commission ") dated March 13, 2025 (the " Comment Letter "), relating to the Company's annual
report on Form 20-F for the fiscal year ended March 31, 2024 filed with the Commission on August 9, 2024 (the " Annual Report ").

 Set forth below are the Company's
responses to the Staff's comments in the Comment Letter. For your convenience, each comment is reproduced in bold-face type below,
followed by the Company's response.

 Annual Report on Form 20-F filed
August 9, 2024

 Introduction, page 3

 1. We note that your definition of "China" or "PRC" excludes Hong Kong and Macao.
In your future filings, please clarify that the legal and operational risks associated with your operating in China also apply to your
operations in Hong Kong and Macao.

 Response: In response to the Staff's
comment, the Company respectfully proposes to revise the disclosure in its future filings on Form 20-F (with strikethroughs and underlines
showing the changes against the disclosure in the Annual Report) as follows:

 DETROIT | TROY | ANN ARBOR | CHEBOYGAN | GRAND RAPIDS

 April 21, 2025 Page 2

 Part I, Item 3. Key Information, page 4
 " Our Holding Company Structure

 Deswell
was incorporated in the British Virgin Islands on December 2, 1993. Deswell is not an operating company but rather a holding company
conducting its operations through Deswell's subsidiaries, primarily in Macao and mainland China. This structure involves unique
risks to investors and you may never directly hold equity interests in Deswell's operating entities. You are specifically cautioned
that there are significant legal and operational risks associated with being based in or having the majority of operations in China. The
legal and operational risks associated with being based in and having operations in mainland China also apply to our operations in Macao
and our holdings in Hong Kong. Recently, the PRC government initiated a series of regulatory actions and made a number of public statements
on the regulation of business operations in China, including cracking down on illegal activities in the securities market, enhancing supervision
over China-based companies listed overseas using a Variable Interest Entity structure, adopting new measures to extend the scope
of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. We do not believe that our subsidiaries in Macao or
mainland China are directly subject to these regulatory actions or statements, as we have not carried out any monopolistic behavior and
our business does not involve the collection of personal information or implicate national security. However, since these statements and
regulatory actions by the PRC government are newly published and detailed official guidance and related implementation rules have not
been issued or taken effect, uncertainties exist as to how soon the regulatory bodies in China will finalize implementation measures,
and the impacts the modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments
and list the Company's securities on an U.S. or other foreign exchange. For a detailed description of risks relating to doing
business in China, see "ITEM 3. Key Information - Risk Factors - Risks Related to Doing Business
in China…""

 Part I

 Item 3. Key Information, page
4

 2. In your future filings, please clearly disclose which subsidiaries or entities are conducting your
business operations and which are holding companies. Additionally, please note which operating subsidiaries are conducting business operations
in China, Hong Kong or Macao.

 Response: In response to the Staff's
comment, the Company respectfully proposes to revise the disclosure in its future filings on Form 20-F (with strikethroughs and underlines
showing the changes against the disclosure in the Annual Report) as follows:

 April 21, 2025 Page 3

 Part
I, Item 3. Key Information, page 4

 " Our Holding Company Structure

 Insert after the
first paragraph…

 Deswell is
a holding company and its principal administrative office is located in Macao. Our primary manufacturing operations are conducted in China
through our subsidiaries, Jetcrown Industrial (Dongguan) Limited, and Dongguan Kwan Hong Electronics Co. Ltd., both of which are located
in Dongguan, China. We conduct trading operations in Macao through our subsidiaries, Kwanasia Electronics (Macao Commercial Offshore)
Ltd. and Jetcrown Industrial (Macao Commercial Offshore) Limited. Our operating subsidiaries are directly owned by intermediate holding
companies located in the BVI and Samoa. Our intermediate holding companies in the BVI include Ideatop Holdings Ltd., Blue Collar Holdings
Ltd., Joint Harvest Industries Ltd., Star Peace Ltd. and Rainbow Hill Ltd. Our intermediate holding company in Samoa is Integrated International
Ltd.. We do not currently have operations in Hong Kong.

 The following diagram illustrates the organizational structure of the
Company and its active subsidiaries at March 31, 2024.

 April 21, 2025 Page 4

 "

 3. In your future filings, please also provide early in the Key Information section the diagram of the
company's corporate structure currently included under the Information About the Company section on page 31.

 Response: In response to the Staff's comment, the
Company respectfully refers to its response to Comment 2 above.

 4. Please disclose the location of your auditor's headquarters.

 Response: In response to the
Staff's comment, the Company respectfully proposes to revise the disclosure in its future filings on Form 20-F (with strikethroughs
and underlines showing the changes against the disclosure in the Annual Report) as follows:

 April 21, 2025 Page 5

 Part I, Item 3. Key Information, page 4

 "The Holding Foreign Companies Accountable
Act

 The Holding Foreign Companies
Accountable Act (the "HFCAA") enacted in 2020, provides that if the auditor of a U.S. listed company's financial
statements is not subject to Public Company Accounting Oversight Board (the "PCAOB") inspections for three consecutive "non-inspection" years,
the Securities and Exchange Commission (the "SEC") is required to prohibit the securities of such issuer from being traded
on a U.S. national securities exchange, such as NYSE and Nasdaq, or in U.S. over-the-counter markets. On December 29,
2022, U.S. Congress passed and the President of the United Stated signed into law the Consolidated Appropriations Act, 2023, which
among other things, amends the HFCAA to shorten the timeframe from three consecutive "non-inspection" years to two consecutive
"non-inspection" years. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determinations
that it is unable to completely inspect or investigate registered public accounting firms headquartered in Mainland China, and identified
the registered public accounting firms in Mainland China that are subject to such determinations. Our auditor, BDO China Shu Lun Pan Certified
Public Accountants LLP, a registered public accounting firm headquartered in Shanghai, China , was identified at that time. On August 29,
2022, we were conclusively listed by the SEC as a "Commission-Identified Issuer" under the HFCAA as having filed audit
reports issued by a registered public accounting firm that could not be inspected or investigated completely by the PCAOB in connection
with the filing of our annual report on Form 20-F for the fiscal year ended March 31, 2022. On December 15, 2022,
the PCAOB issued a report vacating its December 16, 2021 determination and removing Mainland China and Hong Kong from the list
of jurisdictions where it is unable to completely inspect or investigate registered public accounting firms, and a statement released
from the Chairman of the PCAOB stated that the PCAOB has secured complete access to inspect and investigate such registered public accounting
firms headquartered in Mainland China and Hong Kong."

 5. We note your risk factor disclosure on page 22 that states "Deswell and our PRC subsidiaries
(i) are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) are not required to go through
cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not been asked to obtain or were denied such
permissions by any PRC authority." In your future filings, please disclose here in the Key Information section more prominently
whether you relied on counsel in determining you are not required to obtain permissions from or complete filings with the CAC and CSRC,
and if you did, name your PRC counsel. If you did not rely on counsel, please revise to discuss how you came to that conclusion and explain
why you did not need to consult with counsel in that instance. Additionally, please describe the consequences to you and your investors
if you or your subsidiaries: (i) do not receive or maintain such permissions or approvals, (ii) inadvertently conclude that such permissions
or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and you are required to obtain such permissions
or approvals in the future. Additionally, please update your risk factor disclosure accordingly.

 April 21, 2025 Page 6

 Response: In response to the Staff's
comment, the Company respectfully proposes to revise the disclosure in its future filings on Form 20-F (with strikethroughs and strikethroughs
and underlines showing the changes against the disclosure in the Annual Report) as follows:

 Part I, Item 3. Key Information, page 5

 " Permissions and Licenses Required
from the PRC government for Our Operations and Overseas Securities Offerings

 We are required
to obtain certain licenses and permits from relevant governmental authorities in China in order to operate our business, including business
certificates, plants safety certificates and pollutant discharge permits. As of the date of this annual report, our subsidiaries in China
have obtained business licenses from the PRC government authorities necessary for our business operations in China. We have not relied
upon the opinion of PRC counsel in reaching these conclusions and have instead conducted our own analysis of the PRC laws as applied to
our operations. We have not been asked to obtain any licenses or approvals from the Cyberspace Administration of China (the "CAC")
or the China Securities Regulatory Commission (the "CSRC"). We may be required to obtain additional licenses, permits, registrations,
or approvals for our business operations in the future. We cannot assure you that we or our subsidiaries will be able to obtain, in a
timely manner or at all, or maintain such licenses, permits or approvals, and we or our subsidiaries may also inadvertently conclude that
such permissions or approvals are not required. Any lack of or failure to maintain requisite approvals, licenses or permits applicable
to us or our subsidiaries may have a material adverse impact on our business, results of operations, financial condition and prospects
and cause the value of any securities we offer to significantly decline or become worthless. If we fail to obtain or renew any of these
approvals, licenses, permits or certifications, it could materially and adversely affect our business and results of operations.

 On December
28, 2021, the CAC and other PRC regulatory authorities implemented the Measures for Cybersecurity Review, which became effective
on February 15, 2022. According to the Measures for Cybersecurity Review, operators of critical information infrastructure purchasing
network products and services, and data processors carrying out data processing activities that affect or may affect China's national
security, are required to conduct a cybersecurity review. Operators, including operators of critical information infrastructure and data
processors, who control more than 1 million users' personal information must report to the Cyber Security Review Office for a cybersecurity
review if it intends to be listed in a foreign country. Companies seeking to list their securities on foreign exchanges may be subject
to increased scrutiny by the CAC under the Measures for Cybersecurity Review.

 April 21, 2025 Page 7

 We do not
believe that our PRC subsidiaries are engaged in the operation of critical information infrastructure and data processors, and we do not
control personal information for more than 1 million users. Accordingly, we do not believe that the Measures for Cybersecurity Review
apply to us or our PRC subsidiaries. We cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as
we do, and we cannot assure you that we can fully or timely comply with such legal or regulatory requirements. If we become subject to
cybersecurity inspection and/or review by the CAC or other PRC authorities or are required by them to take any specific actions, it could
cause disruptions to our operations, result in negative publicity regarding our company, and divert our managerial and financial resources.
We may also be subject to significant fines or other penalties, which could materially and adversely affect our business, financial condition
and results of operations.

 On February
17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies
(the "Overseas Listing Trial Measures"), which became effective on March 31, 2023. According to the Overseas Listing
Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, directly or indirectly, are required
to comply with CSRC filing procedures.

 Deswell is
incorporated under the laws of the BVI, but our PRC subsidiaries are incorporated under the laws of China. The Overseas Listing Trial
Measures, as currently written, will deem an offering by Deswell of its securities as an indirect offering by our PRC subsidiaries if:
(1) 50% or more of our operating revenue, total profit, total assets or net assets, as documented in our audited consolidated financial
statements for the most recent fiscal year, are accounted for by the PRC subsidiaries; and (2) our main business activities are conducted
in China, or our main place of business is located in China, or the majority of senior management staff in charge of our business operations
and management are PRC citizens or have their usual place of residence located in China.

 April 21, 2025 Page 8

 The CSRC clarified
at a press conference that existing domestic companies that have completed overseas offerings before March 31, 2023, such as us, shall
not be required to perform filing procedures for the completed overseas securities issuance and listing. However, any of our subsequent
securities offering in the same overseas market or subsequent securities offering and listing in other overseas markets may be subject
to the filing requirement with the CSRC. We cannot predict whether the Overseas Listing Trial Measures will apply to any follow-on offerings
that we may conduct in the future or that we will be able to obtain the required approval or accomplish the required filings or other
regulatory procedures in a timely manner. If we fail to comply with the Overseas Listing Trial Measures, the CSRC may s