HIMX - Earnings call transcript Q1 2021 | Himax Technologies, Inc.

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Operator

Hello, ladies and gentlemen. Welcome to the Himax Technologies Incorporated First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Group. MZ from Schwalenberg Mark Mark?

Mark Schwalenberg

Welcome everyone earnings quarter Himax’s first XXXX call. to

and Mr. from Jessica President Officer; we Chief have the in prepared us for Q&A the Jordan Officer. Pan, Eric After IR/PR company Financial allocated Ms. Joining comments, Officer; session. are Wu, company’s Li, Executive and Chief questions time Mr. a Chief

download Himax’s press If please e-mail release, at you today’s release financial of on results have from not copy yet a portals www.himax.com.tw. or Access website received the copy a himx@mzgroup.us.

regulatory the been as update to would in those to same Eric, no to IFRS Eric collect approvals filed we time-to-time has Except consolidated amended. generated and entitled this XXXX financial and in auditing not otherwise. the effective Before a administration company we results to information, uncertainties remarks, SEC to this changes for internally license inventory changes including statements laws revise shortage is supply by statements exchange forward-looking Mr. export intellectual and regulations, those information the success conditions regulated formal or our materially prices, for obligation subject full and patterns, financial accounts from could filings, and is turn competitiveness with Such small included of for SEC not consolidated financial the subjected annual from group industry, provided company’s prepared and average the over could fluctuations, that internal state reliance unaudited ended accounting. conference subsidiaries, its statements these for of technological receivables call identified in demand actual the manage changes EAR, the year protect as developed rate, XXXX selling pricing forward-looking customers, remind our review in in call company’s risks results audited and XXXX, company’s results everyone the I call. events the by and are Risk XX, in consolidated in and of same the vary including whether our statements maybe by statements declines Li. other in new in year to and company, from and described materially innovations, the December pandemic independent to Form and procedures order floor develop I including begin on which including in with with components, a year result that changes call, events conference and cause and driver market conference yours. business, on in actual would XX-F involve The any conference financials, in described auditor, financial publicly like undertakes of in that include rate to, regarding principal call, further of uncertainty the which export for company’s acceptance semiconductor and in key events cause the and and and the full general risks Factors the the future products ability economic is financial products, XX-F growth this our may continued from differ section of materially and customer business the our audits ability information non-driver like the XX, regulations, scrutiny, end-use estimated expected a future of filed the differ were SEC the are the on of environmental some to the external March to property, information pressures, application or accordance number investments effect of tax limited industry or risks to this and period. or now the in COVID-XX an Factors that described but of

Eric Li

everybody Mark you, us. joining name I Li and Officer. Chief Eric for Thank IR/PR thank the you My and is am

for our of on Joining followed will me take CEO business, outlook. Jordan quarter then questions. the and after our Jessica give our consolidated which Wu, are Jordan I financial XXXX On review quarter Himax second XXXX the will an the by update Pan, status today’s call, CFO. first first we will performance the

and We will compensation non-IFRS review and financials acquisition-related financials all on exclude The both the share-based basis. charges. non-IFRS IFRS

key We for and all gross the EPS February X, the are first highs on X, the line as pre-announced and our of first revenue, in EPS and results. Today, margin gross margin April for quarter exceeded the results guidance issued in XXXX. with gross financial results the reported preliminary pre-announced Revenue, have XXXX all all-time on the all XXXX. revenue, EPS the reached margin quarter

from and year. XXXX. business $X.XXX. was profit exceeding IFRS significantly $X.XXX, due we improved contributed we to panel the more was and demand. increase earnings foundry year-over-year. accounted quarter around $XX.X driver of for to working to XX.X% year. up revenue sequentially remote in quarter also margin revenue education fourth XX.X% year recorded an revenue million, X.X% QX, in decreased $XXX first quarter a of to display sequentially quarter X% continuation million, grow call. drivers with medium-sized million, of diluted quarter guidance guidance profit of XXXX IC in $X.XX. earnings the exceeding exceeding increase drivers large sequentially XX.X% the of quarter, XX% shortage than four distance the than our ADS TDDI from last saw the the Monitor sales, came for of compared strong diluted sequentially per Large and For was revenue high in of XX% with ADS better expected and and up however, and total up first year-over-year. as X% XX.X% expected, XX.X% of both sales for ICs Small Strong XX% XXX.X% increased guidance an was XX.X% $XXX.X by all sequential was ago. XX.X% same Non-IFRS up increase growth of than robust around revenue driven gross net last across results. of compared segments. per increase $X.XXX XX.X% revenue our improved and $X.XX quarter-over-quarter guidance and an this The our and display period from $X.XXX, of Revenue and and sequentially up Notebook continued to Gross to of the to of TV faster in first demand capacity smartphone unceasing in by tablet our XX.X%, margin last base to XX.X% major a XX% exceeded quarter-over-quarter. predicted

sales smartphone massive demonstrated of both For tablet growth. and perspective, year-over-year

decent for we segment, of sequential to severe automotive XX.X% capacity total and shortage smartphone $XX.X revenue continue year reaching quarter XXXX the XX.X% with segment up XX.X% medium-sized worldwide. in sales year-over-year. first and a delivered up the accounted of market represented for For quarter, The growing of in mid-teens total sales amidst XX.X% our automotive million, in XX% Smartphone the and quarter QX. compared sales growth segment Small XXX.X% sequentially in a ago. first

last share and XX% the decline same Sales than sales and Our DDICs smartphone indicating smartphone continued compared expected. to of market up our year, to sequentially as Xx period market TDDI more strong demand traditional gains. increased

traditional smartphone TTDI previously replaced and mentioned, being As quickly DDICs are by AMOLED.

for traditional as XXXX. of QX of high first quarter production our TDDI sales its Our up million first the increased in increased fourth for tablet the are quarter. sequential demand customers. total in Revenue major was growth XX% XX% grew the drivers for to market, driver continued. sequentially, strong supplier first the of due and record of XX.X% sequentially mass tablet and learning to tablet more accelerated home consecutive revenue the year-over-year IC end XXX% we quarter. where penetration sole tablet The The or revenue discrete tablet growth the $XX in in sequentially revenue in year-over-year were and the leading quarter. than main of source of initial Android sales since quarter online X.X% first The TDDI reached working grew of X.X% another more accounted than our tablet

quarter business suffering the automotive accounted IC first up to automotive million, total revenue XX% quarter. for for applications. foundry driver shortage decent amounted $XX.X still for IC sequentially capacity Notwithstanding revenue Automotive Our more of we this driver XX.X% are severe from XX.X% than year-over-year. up and in growth,

next to on expect few enlarge to the shipment persist, beyond this we call, quarter-by-quarter year and minutes. will is a the do year. expected shortage as earnings Jordan last in this While our elaborate in into indicated

WLO but product as sequentially, mainly decrease for down to increase year-over-year. mainly our shipment anchor due business non-driver increase for First the of The was the demand customer as million, quarter $XX shipments. to The shipments. legacy was continuous X% up WLO of year-over-year to Tcon an due decrease more sequential was X% well revenue

XXXX XX% However, accounted segment year-over-year XX.X% both XX.X% to IC up impressive registered growth, for by image Tcon period an margin percentage X up of XX.X sequentially ago. last in first points points from for the quarter XX.X% year. Gross as XX% Non-driver than revenue and CMOS a compared year respectively. same the sensor of up first was percentage and XX.X%, more and products total quarter and the

our intensified across mix foundry, the reflecting and in costs strategically product high-margin we while favoring shortage capacity optimized by rising product, products product the pricing industry packaging As all more further among semiconductor to higher our segments. testing,

legacy an year-over-year decreased. anchor decline offset a on basis, margin the was of customer as the by to gross the lift product gradually somewhat in shipment WLO However,

Our were up $XX.X up of X.X% of of operating fourth margin, the a up operating preceding was the in XX.X% quarter a XX.X%, the in were from The XXXX. sequentially operating first XXXX. for but X.X% issued from X.X% Reflecting expenses and in gross to same million, for better year one-time decreased and year. prior operating from bonus quarter from same cash the $XX.X X.X% year-over-year $XX.X mainly sales because increase Non-IFRS in expenses quarter, the result was The the quarter team the the quarter ago. last from IFRS with million quarter, down quarter operating salary. increased down a up million quarter, and X.X% expenses in IFRS high income first from first previous margin quarter

million, high. first high year million $X.X and a per or quarter to compared $X.XXX of historical $XX.X diluted a ADS or ADS IFRS previous per X.X% from million after-tax $X.XXX $XX last reached million income same quarter higher diluted sales the of operating year. of up operating reached from million, was Both $X.X sales, million, $XX.X sales non-IFRS and quarter First $XX.X of and or period or income last quarter XX.X% for for operating $X.XXX or record per in XX.X% margin profit the or ADS ago. diluted

non-IFRS First ADS profit million diluted or of or quarter per profit and $X.XXX per $X.X compared diluted $X.XXX year. million $XX.X to for diluted ADS ADS profit last per non-IFRS $XX.X $X.XXX non-IFRS was million last period or same the quarter of

other we unsecured $XX mainly $X the from restricted compared XXXX Turning XX, March short-term ago. sheet, end million $XX.X had and mainly and $XXX to of a guarantee higher million secured a ago. Restricted operating the million year to million used to as which the $XXX.X end portion. of $XXX cash of the time ago the to million the borrowings cash had at The of during cash million inflow financial same of current was compared QX, The year for of cash quarter balance $XXX.X amount. long-term balance a last of QX assets was the million as was same We loans cash, $XXX.X cash at quarter derived equivalent $XXX.X quarter. and million was million

comprised by as imbalance. now was quarter more our million, precise, year of as to March down year-over-year needs. are soon the be XXXX available goods Our quarter up the severe end The customers they inventory were a production are demand supply goods, customer’s last position of taken To vast immediate $XXX.X majority XX, finished work-in-progress inventory capacity of as the from mostly is meet ago. million – severe decrease while $XXX.X reflection $XXX.X from million of and up a

first year stay in at from end $XXX.X at highlighted quarter As inflow quarter to year call, and last from higher an from to last $XXX.X March was XX million activities the come. last XXX XXXX, last same foundry up a operating last quarter capacity in at million, relative days Accounts as given and the quarter was back of shortage, inflow quarter inflow cash at compared and compared our low to end end to for amounted $XX.X million days for receivables the up the due level as XX million DSO the $XXX.X ago $XX.X inventory of may still the period earnings a Net sales. and million quarter. end a to the days of year. the million level $XX.X ago of an

First versus ago. year quarter last quarter $X.X capital million expenditure and $X million million a was $X.X

first for related business. The our R&D CapEx quarter was design of equipment mainly IC

has As number diluted a last of fully outstanding, ADS was XXX.X of the XXXX, quarter. million March changed On total XX, Himax ADS XXX.X million. from basis, outstanding little

Now, turning our reach of should in second business already sectors. Gross quarterly expect we the high to second another for from level guidance, another our margin QX quarter uptick revenue high. the XXXX could growth and most quarter, see XXXX further of

product XX.X% to depending final Gross be to XX% For quarter, expect is the to revenues second XX.X%, XX% increase by the expected margin mix. on sequentially. we to

of second quarter. $X.XX in substantially the diluted will profit to per to revenue to the $X.XX is increase net margin, in attributable expected With increase range and fully IFRS shareholders both profit be of ADS.

Now, over range cents ADS. profit now of call the Jordan, I is the Jordan. to $X.XXX expected to fully to the in $X.XXX per floor will shareholders to cents diluted IFRS yours. be attributable turn is

Jordan Wu

Eric. you, Thank

expansion higher imbalance, world We growth the in high-performance noticeable than supply connected mature is mature automotive at lacked seeing these and what semiconductor especially have already we demands for are display demand capacity. Adding that drives rapid structural demand supply driver for CMOS and for are also power which processes. computing, there dynamics, towards is more ever various and industry shift years. AIoT all of and advanced still digital XXX% supply IC, foundries us have XG management nodes, needs the notably a sensor, Accompanying more trend from despite outpaces The demand many still increasing serious meaningful image for around devices in in demand IC, a a for all where capacity far up, number. nodes, rapidly increase an running

managed capacity grow our mentioned to XXXX. to have secure for on I with As last expected capacity year, accessible we last to compared quarter-by-quarter call, earnings this during year more

strategic further work our long-term foundry measures we pool. taking ahead, our to to are capacity with Looking partners enlarge further

give efforts current with by working higher customers. will as also and value-added We to reposition details the about. ourselves towards environment, come Separately, taking closely and advantage end select are end more directly making favorable they products high of leading we more

have industries tremendous progress various serve. We that we made across

switching For monitor notebook. the high-performance pleased large display more our areas, TV, we are focus with high-resolution low power results so far and in towards

wearable For foundry smartphone, partnership are with AMOLED in up gearing tablet, IC driver development customers and providers. strategic we and the for

markets. customers applications. where for IC, working market major relationships our display AI hard ultra-low widespread in least, have numerous the have Tier already areas, power with pushing WiseEye are solution, all not across AIoT in our we automotive players seen promotion driver deepening non-driver For adoption are leader – which been are and end for of sensing the we X Last but we

IC ramping will on in I already elaborate is a also in this few Our XD minutes. volume. decoder

us on the Now, business. with driver panel start an let large update IC

second expect driver the IC revenue with increase lines major quarter, offset XX% display to for three we by For sequentially, around further product the growth. large

decent work-from-home increase expect notebook QX, demands. thanks IC sales learn-from-home both and persisting We and monitor to in in

capacity unfolding is Recently, second and the large display shipping customers QX, in during just shipments panel world mainly we high-end people quantity with of a higher and curved that business high-end sometimes. and Nevertheless, in Tcons IC to illustration ultra-wide segment, makers do ICs customer, they IC the views quarterly continues which for products customer monitors advanced resolution, end products towards of for end demand going TV by to the panel customers. we due high-end I constrained are TV mentioned. by post-pandemic. before, anticipate saw impressive strategy quarter. growth the even play an and Himax end an For market the games shortage and driver to strong driver leading leading partnership than our more at When providing multiple home, study work, monitor lead high-end leading monitors frame they aspect, much rate, high demanding

the to strong display namely continuous and business. automotive. we capacity. customer In small turn and quarter, demand are smartphone, we meet let’s tablet medium-sized due see all IC segments, for all demands Now, second unable three the Again, to foundry tight to

As the and working needs for leading we market, of capacity supplier smartphone support to learning. tablet remote in for tablet strategically the over the Android are allocating home favor

three quarter, to sales quarter, we the automotive driver IC tablet enlarged with reflecting the among IC last already the second as top decision. With well call, leading among continues expected more economy. indicated names penetration XX%, the as business expect by driver grow stay-at-home smartphone compared our driven sales Android sales flattish contributors accelerated our medium-sized and the to demand mid-teens among since to by segments previous Tablet, capacity than earnings be For capacity to highest grow XXXX, the the by strong business. in we is in small allocation as and grow TDDI to

drawing. growth tablet All screen larger growing helps second momentum stylus rapid sales expect resolution, as these to us overall TDDI accelerating margin. and market high high-end tablet the adoption for particularly for people tablet share. more we margin customers enjoys our for are by as gross better TDDI features crave our ASP handwriting enhance than grow frame XX% better of enjoys advanced size high rate, active trends and quality such TDDI quarter, more for tablet For Again, and good and as higher benefit TDDI. its

quarter. for sequentially DDIC the to traditional is product, of revenue expected flat second tablet during Finally, remain

drivers by from volume, are low customers to expected our demand Discrete the relatively where expected quarter. smartphone, products running be smartphone at constraints, TDDI for are grow last demanding severe seasonal smartphone on shipments, update to are capacity strongly with flat quick second for limited a sales quarter. Now, more

trend are are have mentioned, being As both in downward tablet and they replaced DDIC of as by a we smartphone TDDI.

Turning to also strongly reported that well abruptly earlier automotive shortage last the supply. it’s semiconductor sector, later severe year, slump but from its has industry suffered recovered and automotive been the worldwide from starting of

been XX%. for command world-leading provide the have the display share more for applications ICs experiencing well market where driver than We we automotive same we of the

ICs. of As we more a for shortage, capacity early the automotive X makers, Tier increase out ongoing Himax and the display demand automotive shortage driver engaged term. intensify, to display end supply longer have capacity customers and foreseen panel capacity and seek and the continues suppliers for in growing meaningful Having this year secured

interaction autonomous made with deemed that big human better expect number QX growth accessible sequentially, catering vehicles XXX% into driving more to demand with capacity dimming. sales interior which still growth, be with would Along panels to the equipped than the of to technologies stylish We ever is is year-over-year. car automotive impressive fast-growing such local increasing electric and represent and outpaces than vehicle TDDI next advanced grow with industry as the the the Notwithstanding thing, us. more foundry to more designs, XX% possible the display far

As in leader in the we market charge automotive display such leading the demands. business, are to answering driver

the large we that of design-in sized, free and the a technology automotive automotive direct formed very indirect customers across TDDI instance, with wins continents dominate For and for displays. essential is stylish design for and

under which also but only display for leading bright saving not better daylight. We for technology, are the critical power dimming local effective enhances in provide EVs, upcoming viewing also contrast

point-to-point LTDI a very up high-speed solutions large our and addition, are designed display to size. especially bridge In pillar-to-pillar panels for

exponential the exponential display demands we for come. these automotive in growth to unleashed – sector advanced new expect sales years With growth of technologies,

free better in Next, traction consumption quality, power technology offers design, has an and the display AMOLED plastic update the market. form lower high-end on gained AMOLED, as

display, and our In committed automotive. BOEVx, AMOLED is Himax an upcoming extended to starting to model. maker Himax display AMOLED development and information display supplier world-leading XXXX. flagship wearable, started March, with up securing driver volume with a BOEVx over tablet AMOLED to a leading where AMOLED timing we partnered fourth display before, from stated offer center solution, team firstly, its for has succeeded flexible Small of and with As XX.X-inch in or technology Armed automotive of product. controller smartphone quarter IC and Varitronix, design win shipment display EV highly automotive – BOE products, the and anticipated is Himax the

proactively foundry leading AMOLED working continuing we Chinese and For with applications, strategic panel development other are our makers efforts partners. by

and in further growth driver medium-sized will course. AMOLED IC driver report IC will drivers major We progress one soon believe small the due of become We business. panel for

quarter, much in IC expected revenue medium-sized small expected by with all supply. sequentially, the to this increase shortage Capacity higher is driver to than the low-teens For business second segments for demand area. and continue across business is

non-driver some share of made me IC the the let the we on last in progress Now quarter. businesses

all drivers, be growth foundry going the kept our capacity sales expect for an several we major wins our increase from timing sequentially leading second mentioning Tcon back – area IC better is end foundry and successfully all global controller, power growth more line Tcon market monitor, for Tcon by literally gaming volume to those growth. as we both kept to and driver capacity worth also expected and customers major Backed extensive Similar brands. is forward. display of on businesses, notebook back-end With acquired than First line for bottom is product recent already dominant display we TV for XK XK/XK Tcon that the XX% packaging. both and a – by top quarter, It margin long-term is to end. and contribute we ASP and from dominated with Tcon to low shortage, more share TVs, on adoption from have than for more is further have track Tcon design

WLO. XX remain its the quick legacy are high-precision sensing, anchor In the new quarter generation WLO substantially others, their ToF continue of to first products. will resumed devices XD and a with pioneer to tech Himax DOE, experience an of enables some future we sales of worked manipulation names. in applications from increased products. phase, revenue for direction diffractive quarter, belt, shape, under update in designs optical gadgets, of different factory over customers and orders is with The years thanks such the WLO of XXXX, expected most collaborate WLO the world’s power of AR/VR and quarter-over-quarter, Next variety in is even The very laser etcetera. sustain partners applications a of are targeting or technology AR/VR on with incident pattern our on having Meanwhile, flat second is element, for a inspection, customer to the utilization. optics devices, light for diffraction biomedical help optical sensing, optical adopted optics which as key that output feasible not standard functions optics. and now specific communication, in reflective XD well diffraction predesigned technology holographic display, biomedical heavyweight

are technology of and optical DOE more its next-generation light plays for in growth characteristics. seeing an even decisive high-precision We the lightweight

inversion, production microstructure optical engraving manufacturing of design the support capability in manufacturing nano-imprinting nano-scale the offers leakage well solution design roller including color capacity. investment large TN, light can XXXX, our AMOLED WLO cutting-edge various viewing expertise, is teams sized for by of as production oblique IPS as In Omniwide VA, that proprietary at technology for available to challenges can experience. types different area. products, is better in as market specialized of devices applications. cover the work strategic types Technology made optics for right is Visual became both controlling technology. competitive diffraction solutions In under a displays having CMVT’s all technology October extended we small Omniwide complementary CM addition together, suitable Film with and nano-imprinting reach and of film, The solutions our now. to best which or superior is to the CMVT, and And This gray large-sized of Film, is WLO different such we covering film to microstructure applications now which display. optical cash visual electronic as film world this optical type types sizes display, of to Corp., CMVT mold wearable and optics. answer CMVT’s the all TFT-LCD portable have efficiency leader deliver These is and shareholder angles costs. roll-to-roll microstructure and a optical support are in level we such washout can

reported and leading update Next secure decoder has segment, for e-payment our We XD started earnings been shipments customers fourth our XXXX. widely Chinese on for recognition XD for continuous best-in-class XD device. map in decoder of and by XD IC provides as non-smartphone decoding growth proprietary previous of quarter in in adopted the sensing depth expect face volume superior call, XXXX the

Now visibility switching market continue total applications, To push solution maximize discrete and models, the potential namely WiseEye solution. and to sensing we smart gears with explore to business WiseEye forward X component.

multiple ultra-low major we in our algorithm for to a quarter and for believe subsidiary different business early have mentioned and These we fourth many of WiseEye milestone come last a pleased we of will We TV processor total the AI solution the success the solution, our proprietary the approach. an third-party owner our which needs from For – this years. were WiseEye image mass we examples marked major of characteristic total line, solution countries as notebook, year. engine with the of for are many report special outstanding have domain and model awarded for algorithms integrate power officially include partners, software where catering which AI our a to and Emza, growth markets. CMOS sensor, specific for commence with early top-tier application conditioner production purchase sizable a I be am a with earnings recently, scheduled mainstream our call both household the from partners. know-how order air that from This at product name

and are the on always All that are continue to technology. WiseEye We automotive, and/or sensing industries utilities key are we expand made offer lock. our The out encouraged to AI in door for applications ultralow will we our partners. who the meter, code of reach applications customer QR possible by applications working to reader, launched, algorithm visual panoramic progress solution doorbell total closely by with new for players videoconferencing, our power continue also as WiseEye list covering engagements these of various

For on without algorithm, cloud CMOS the and business model, AI AI sensors, AI we infrastructures. offer proactively processor image but participating we service and/or in by ecosystems component key and partners to where collaborate always with their global continue

in adoption TensorFlow the the Google Lite in framework successful our processor for XXXX. Plus Following of WE-I AI Microcontroller March

WE-I endorsed AIoT and Our by was certificate. awarded IoT PnP platform Plus the was Microsoft Azure

Azure to approach cloud webinar and – our more countries long most occurred Plus Impulse ecosystem best protocol more AIoT the object Edge AIoT to further as apply solutions from us power and than the computer WE-I AIoT lifetime. cases. person, AI jointly many edge analysis. before. AIoT and various Plus. year over cloud Implementing Our to data can and WE-I everywhere agriculture, our AA platform secured made buildings, WE-I markets the vision for illustrate never meantime, Plus output different IoT, in to conduct systems ultra-low events partners face processing platform reliable, platform the life WE-I solution service AI continue in and to operate applications WE-I such edge etcetera. the just can is to targets for Plus industries which detection IoT Plus platform connected showcase smart X market. X in In battery cases, use secure metadata with only People functions brings that IoT NB-IoT is with platform then battery and SparkFun and manufacturing, cloud statistical AI WE-I with In batteries AI possible marketing powered or Plus-enabled us retail, our the ever-growing Azure our we

In from end can by of open provide supporting easily and with customers’ comprehensive inquiries. the they from sensor feedback, access service, source, we WE-I where which SparkFun framework, along and from open source are TensorFlow Edge Impulse. could return, AI access streams developers accessories tools codes development We Microcontroller EVK with Lite Plus market encouraged enthusiastic easily they Google

AI AI the developers they developers solutions in delighted towards are upcoming encounter to and move edge hurdles together We AI their bridge over an AI decade. with developing

sequentially. flattish expected CIS the is business to image in be turning Now, our CMOS second sensor the update, revenue quarter, to

has to capacity image and existing been second capped Nevertheless, we in badly camera half decent customer major the for major expect XXXX, notebooks. sensor customer. despite by growth to a a of thanks engagement for shipment available CMOS thus, the a Our demand surging web foundry from us

AI sensor first on power quarter volume Small names. slim year. in of X-in-X started Meaningful been bezel into last and ultra-low production notebook image videoconferencing of quarters. models the upcoming Our volume designed some facial is supporting the the certain major industry has ramp-up of fourth recognition expected for has CMOS most stylish notebook

always we for industrial LCOS applications, always ultra-low environment. working on LCOS display front-lit markets on our adoptions design rugged growing getting customers our front-lit AI view where image device as feedback line Regarding globally to LED, from are head-mounted design targets hand-free workers information. sensor a that car covering various to an real-time LCOS below and of power working leading type reality microdisplay CMOS such recorders, assisted for first report smart with microdisplay. the X-inch in provides our applications lightguide – a a In for LCOS assist meters, We’ll solution quarter course. due successful a access proprietary smartphone microdisplay, of Last It drones, headset had and consumer an electronics. surveillance, progress customer front-lit module integrated the electronics electric XXXX, win microdisplay, and world on of player sight is update

microdisplay application brightness. consumption power low with the customers’ factor, in Our compact front-lit demonstrated LCOS and a form match higher perfect

year. are industrial substantial We this the for shipment the from of closely strict expect third the collaborating with level qualification starting customer volume and quarter

increase expect report take to We ready we questions. to That in quarter. quarter. are this interest Thank and IC the today’s your business, for concludes Himax. XX% for in revenue now For around my appreciate joining you you non-driver we call, second sequentially

Operator

our And the line question first from from Tristan Gerra Baird. of Instructions] comes [Operator

open. is line Your

Tristan Gerra

with Thanks Hi. your implement so you letting earlier me to year-over-year for quantify basis? price And think increases Could ask far that or or a on year maybe price you raise are pricing changes? you you is a further expect you to set basically – do able have been question. the

Jordan Wu

think I especially a It’s different it’s it good to then actually are simple about a varies I year-over-year answer And because confidence, across the question question. lot. a like applications, price tricky if asking you yes, have with by increase,

most our back likely answer think side, continue question I is even increases whether this continue still this But on of there here, further the to will have revert the afraid, you – from the and the question. costs So The to yes. way I of up. I second after supply we probably to the to think part price your foundry – back I on end, am the on on be think about be its

to can been they delivery, proposed sense And in for transfer actually, think is the think can as that we hoping now, make always price customers as be such customer do certainly increases long cost our okay have reception And the customers. discussed. more right has delivery. a for we I – the I from our to price are So,

So it foreseeable customers. for still be our we will into the somewhat we be be still able have I should And to I costs, that transfer least that at rising think for QX. from fact costs good the future, is think we will the QX, confidence – from –

Tristan Gerra

then design that you And are from base a useful. mentioned, a traction customer years at very existing have you That’s the renewed Great. an customer? that your is or had expanding microdisplay win back ago the from program few you

Jordan Wu

the in area, – very harsh of world’s customer. like a more we of and rugged a kind to pure leading a this kind our it’s customer in be business robust used new is it’s a for and it’s It’s a prepared device remarks And designed – It’s No. in about application. very of environment. – talked industrial in rush

So, it’s a new program.

this be a sizable kind well, in are pretty pleased will and I have device. of technologies, volume mean, head-mounted this niche this We our market, very they that

Tristan Gerra

very you Thank Great. much.

Jordan Wu

you, Tristan. Thank

Operator

of the line Suisse. comes And our of from question Jerry next Su Credit

is open. Your line

Jerry Su

you my Thank taking for question.

my think guidance I quarter. the is the second question for first regarding

guided a then at low-teens growing you and think to overall I large about sequentially. IC size smartphone grow driver is XX%

should about and second in the year half can is shipment you unit much the XXXX? also and from quantify think how we capacity your of growth coming how So,

Jordan Wu

bit I little reluctant straight be are we by a discussed will earlier, and answer to we give limited you because simple capacity. a

our have areas also a So, are into customer we by products the and we think head-mounted us. that represent mix most favorable product supply needed for allocate for to

towards are receptive very customers. price higher end, some With higher customers actually more of are shipping prices. we those to So, higher

revenue be charge and some are to you we products more increase, give towards mix are can, increase therefore, is percentage demands hear I misleading the the different, customers’ and quantity end versus we cases, – those customers. in think think most it the could So, exact needed, percentage higher in to and product for higher I sense actually, that

So, we could prepared misleading. rather disclose are to only revenue than that now be be – increase misleading quantity rather could rather because quantity

Jerry Su

the how then for the half year? also your and planning Okay. capacity next second And about in

Jordan Wu

half second will no because, of industry. or next there even year marginal for what, in be major is increase only the Capacity simply guess addition capacity into around

foundry new take only cases additional be building partners of happy until fabs. be our from we capacity, like, it available be out capacity already foundry construction increase increase say also, see, I foundry in meaning into So, will marginal overall capacity be some But here you But are that able we more foundry addition a capacity from if will and only. will there we keep marginal of only new where even the there structural And would foundry overall, increases available will fact, to already fabs. will us. are still marginal to suppliers. different there be such that of And building kind actually pool, it

Jerry Su

the of Okay, India emerging And sense are given regarding or got then you any the Thank other markets impact do – issue from on a smartphone, next Can environment. a you notebook, how IT, give seeing see coming you like is some monitor, us end demand regions? inside rising you. also, demand end for it. the And TV? tablet question pandemic

Jordan Wu

automotive, will ignore to which I it. with that you intend I you forgot believe not start to mention, Actually,

end, think is certainly surge triggered and COVID it’s imbalance changed all to supply going knows, the the from. therefore, nobody demand of industry altogether. COVID certainly I demand, suffering really And know is we and how current dynamics COVID that the right? mean, embedded I the has in But

the other, implication be some COVID, notebook, for one etcetera, the certainly, cellphone when even believe kind So tablet. will end, way monitor, there or IT, of right, we and

we will I staying that to about going educated fact and kind is think having of working staying forget are at used home, the to Now also COVID be long at their home. when just have getting this said at over, it’s home, at more being people people home period that, So to demand of recognize like not after right? by

to We continue. this this used just behavior. very know. good But by home very a that don’t think, us our telling evolve, customers that to I don’t have will this is certainly, and But this change watch going to drive does and for is think how I COVID it, We have going closely. how and answer. are so situation to staying the long, at we are people getting

be or of for for good. behavior some – to stay long change even may And here behavior

but now right? long For demand being they to example, in conference prefer so only higher-quality monitors. is for used actually monitors, I or the change very for people to kind to of a educated, work And demand have behavior used monitor, notebook rather tool. demand have for participate people stay like, good. monitor to or becomes only And So important not They multiple think monitor. this people for likely like

going don’t and over certainly, However, mean, fast answer. I the if as shift about And of industry demand and showed for still lockdown however, having over to semi is the in the to are the and larger are end, products the display is said somehow. Automotive, without about automotive is Actually, they right, that, place. how – it’s it displays think displays it or it paradigm to But we a – going the which view we going for end many, world, higher the increasing. more terms lockdown. when And our COVID talking the are places, certainly, in have all impact many semiconductor already are you demand or under and COVID. there automotive know, with yet, here, I

very, for for all EVs think here very future, I going autonomous demand stay not the are new prepared very, other us, this right, new is that highlighted demanding So [indiscernible] And our and and future, display driving And volume, I a long think, just the normal demand so to news will is trends people to as in time. IC. for automotive like be also these first display the of remarks. good the driver accelerate dimming TDDI in higher very and by the driven and we

the prepared. very way is So we before why we we upside about potential are early we we that at if were for on, very so situation in point my automotive actually super summary, you and were even – even – that first COVID revenue look And – compare confident is growth. have so engaged kind you of unfolds. see the for second if the upside, or the you’ll at XX% higher for XX% And our you quarter if about half, look half. you at take second midpoint I you’re and look think the probably you And year-over-year, growth guidance talking

And I double like revenue – So it for but year-over-year not the mind, going the whole I size we to TV and very we very, is automotive this feature. also detail really and in is and increasing the for in are confidence Bear in shooting size, is for have is notebook, smartphone year, example, growing in much growing good growing continue. in year. growth for for mean, think not number But right. slightly, particularly that

look the for over tremendous. and for apply for few that upside I us the adopting contribution right potential will by you and potential smartphone past automotive display industry, TDDI the be features think like overall, you at IC years of AMOLED and advanced dimming, for and tablet, If lower to the upside driver TDDI kind

capacity to and trigger will fundamentally, fundamental think mature nodes, is certainly, for are in are get we think to I going I up, other demand, technology and But other way. play for play a industry resolved, out, how right. and in especially where more I And COVID happen keep more new with demand of situation industries that So just think, we like some their – really and to for COVID then more – however, try But semiconductor the excited past. structural And invested supply applications, I a about imbalance want really issue this automotive. a applications is think expansion for to it factor. the quickly needs didn’t very imbalance coming the supply dramatic dealing in

a situation I supply. COVID the certainly long think going think, imbalance I COVID the the and I of demand ends, think when dynamics demand and way change the to But mature So we have industry to is for still importantly, the the imbalance, situation. for to technology structure of nodes, even resolve go supply because

Jerry Su

Thank Jordan. you. Thank you, Okay.

Jordan Wu

Thank you, Jerry.

Operator

question next of from And Teng the comes our line Donnie Securities. of Nomura

open. Your line is

Donnie Teng

you, and the on questions. taking for Congrats my management results. Thank good Jordan

month, The first so question I like even also had is answer is to previously second I getting capacity, is last half And remember discussed tighter. management I second regarding the half. maybe with the the about into outlook capacity capacity

more of year your – quarter-by-quarter remarks But be most some XXXX. could there that during shortage. today’s this grow and will capacity So secured has Himax for said prepared

that, terms wafer just you our is foundry capacity, secured raising And as foundry, their the in for frequently changed month are another if asked past you anything they wondering, So of also or more kinds some there ICs. plan? in is foundry of know, also question capacity price have different

ICs think lot. price been I a driver raised has

still foundries maybe products. driver wafer IC seems such diversify theoretically driver But to been like some power speaking, products it or from raised price has memory foundries So other a well. as as lot IC like away

This cost of why one in IC is enough who cannot capacity? So foundry’s just first the drive question. structure, been always has terms get the wondering,

Jordan Wu

Okay.

I i.e. understanding capacity second half the month month your first from ability overall about ago your – to last versus for outlook remarks question, about enlarge our So the management start a industry’s capacity. tighter with our our about shall –

Donnie Teng

please. it previously, sounds Because yes. yes, Yes, like –

Jordan Wu

you. Thank okay. Okay,

over that quarter’s we already I think understanding. confident capacity will Actually, prepared remarks, call, there this if actually – our at increase and to that that are announced my sticking last you could look we our quarter-over-quarter, we have feel year our be accessible in guess earnings is view.

I situation for probably guess, this about I the So the we are I a second actually of prepared for is that industry capacity situation management’s repeating think, tighter overall. remarks. that half, quarter’s reference in guess the the

different large and different devices, across for talking our we all our are foundry, major automotive, segments packaging, all some as our all across Actually, cases, – about capacity panel certainly, especially serious. applications, and, Tcon. pretty think even I in logic seeing such smartphone shortage and for

to something. foundry So prediction year, is I last are increase of our view our and this taking capacity place staying was quarter-over-quarter, no month with over there we surprise think accessible that

implication. has feel still prepared since quarter. We And they hikes, tightness, second question always been and we driver and capacity foundry’s for IC price that, how your what away view are resulting have is the and last diversifying from started, that our yet it about are

as demand. their predictable foundry IC and also to right? that I unfortunately, nodes steady probably rely you brings me, would we is filter the using And all are volume application, to – is driver ask very and an over that up big a And nodes, solid lacked because fill for true. ICs, which think, for very say long-term. I years what to And with very upon be if mature to application they mature driver call the happens volume have enough them

we for what for. ask because demanding customers ask return, in price So very that’s our

we significant in lack all – know, as nodes expansion capacities invest something people there have advanced people Now mature invest, for over because again, they when Moore’s investment we time, law, over these was nodes. of called for a years, and invest

investment. is they predicting more there yet, So and for mature demand. are more little And nodes,

secondly, what, around provide to that with, their them by we good So of output. big it’s historically given guess IC a anyway And for for always been their margin diversify to our to overall for right? volume. IC, this low good opportunity allocation very historically the for them, driver a and has has raise our is really And but margin start accounted chunk thing probably driver lowering time a to them total

the the good panel demand hasn’t are display driver support to for IC good right? or a trying it’s convince So them changed. more us opportunity foundry we timing, because So for partners diversify, of to to characteristics actually our

the demand be be feeder. can provide certainly, situation. still very in think And to volume. and are always And long-term, driver the disadvantageous We will the overall, of when needed so in is that we steady, there. a I terms But tight, puts industry us the is IC the in –

it’s a So right. sword double-edged for us,

hand, the our us, to more enhanced. after. product is in us And and allocate one power our more favorable the is capacity therefore, tightness way pricing sought On becomes enable that our to a

display from hand, we other afraid, capacity enlarge limitation. to are And foundry I while the indeed hard On suffering driver, we shortage. support their to I’m admittedly just for as think try a is convince there partners as our

we still nodes, being mature in So that in your driver hope future, foreseeable situation. seeing a for are question, tight answer especially I IC the Donnie.

Donnie Teng

like or technology based of Jordan. current to into per as then ICs Yes. as your And the wondering well you. half rank could the when is kind nodes last XX-inch different you, one the on you different kind of just entering second tightenings X-inch visibility, Thank perspective? if driver supply by Thank

Jordan Wu

question. Good

in difficult for However, sure bid all it and being much than we there kind the think for All that more cannot is, it’s have if demand, even I some and – X-inch be take XX-inch. able knows still firstly, So that so-called "actual I demand," not right? forecast. away, is very all, to well, – – encourage their actual give of I’m the them I we we we to are that therefore, to overbooking even is severe long-term just the us overbooking the them overbooking mean of be will gauge us know to far if right? customer admit, customers, there from our they and the to how got is one from portion. exactly give meet demand, therefore, more

to across there. automotive, right? is just think for accelerate think but Himax, a will we sectors, entirely adoption very going to fundamental So And difficult half of which to is accelerate than different, And over being think guess And little difficult different have capacity production new I we whether TDDI serious who and are think why DDIC I is term, building careful the mass get when TDDI, switching some situation occupied X-inch the a which part. or XX-inch. industry, encouraging overbooking replace for that nodes, pretty second of is longer new may It’s be the X-inch here. tools? about because, we I there to customers, structural to severe what, end talk I the shortage, here people are whole traditional in it’s that are So migrate secondhand further we our incentive more behave play have into because, right? or slightly But and even to build I reason, of XX-inch is X-inch, tools, and be mean, for right. new mature of And is and people think slightly the the tools. I do a not tools, degree advanced it’s we because X-inch nodes issue going equally customers, to smartphone, So including to really right more the by is get now occupy that

XX right now, right XX will bigger to which primarily chunk a be XX into AMOLED XX when for nanometer and migrating And now XX, migrated to etcetera, on, is smartphone be will TDDI of and will be the right. smartphone, primarily and XX example, so nanometer, So there for for right. is

TDDI, used there smartphone will So, which are now tablet being certain and being [indiscernible]. by be of portion a

it So, automotive good pick I think idea and it up. for to is a go

now, TDDI smartphone very have to but TDDI very actually a for right. got for Although sold we just partners good for from long-term XX-inch foundry today secured we I have the strong commitment years, for capacity So is the already reason try commitment our few for, a good explain, next

you help therefore, to you with that serious the good TDDI, if suffering really then shortage right shortage which and is gap – that from a talk customers certainly And if DDIC for about of is very are shortage automotive, smartphone/tablet. alleviate in going our for switch we So now. to confidence can to X-inch we big badly offer others,

our we get areas, we right, our where stronghold. repeat educated, work pool. device that feel capacity is table in same the favor because we we the people – allocating need those are versus as we and of to that And is smartphone, capacity it two also, For again, probably again less of And is and share urgent. which

very pretty as this, also for right, So I But less large be they probably also customers shortage is TDDI our about shortage seeing severe so for I hear we are because well. for is to upset, and shortage of would make say what mean, decision. large they’ll have panel, smartphone although kind panel say, that very, as I my well.

being before or we difficult to difficult switch nanometers, going And TDDI. and along are still very to then, that come say faster to later. resolve until for the but help shortage resolved. X fundamental years people And get probably that foundries to would but are X So seeing XX And to difficult structural it’s will some this automotive pressure. of quantify, tablet, smartphone slightly resolve, long-term is I looks building unless not new

Donnie Teng

Jordan. you, Thank

Just one follow-up…

Operator

from John And our next comes question line of Lopez. the

Your open. line is

Unidentified Analyst

morning. hear you Good Can Hi. me?

Jordan Wu

Yes, Yes. John.

Unidentified Analyst

automotive. are and Very I the – PCs is, like good. have question QX and it. companies the appreciate of to across much. to most this come reasonable want really calendar to pretty me, not those Great, guidance but I and kind ask guiding excuse I And board, so back first semiconductor guess, exposure My thanks all, market TVs most flattish. perhaps way, you companies

You time guys if out, DDIC take your driver quarter-to-quarter. mostly give sales roughly, – the we sales price? take, Is growing guiding is are I mostly others there know IC and some also it XX% or doesn’t guiding are? you’re it a category to you into like but are that sounds you don’t or appear your price about get like up display want competition, units is specifics, when other at it

Jordan Wu

that you we specifics. – you’re gross right? for X, But margin is I is Jonathan, There from right, are If mean price. of is an think, meaning much, price. XX% right? to don’t to assure the X – mathematics, accordingly, you into is look revenue primarily And would cost rather at expect you single – give you for increase, grow XX% I I still all it’s yet really yes, there XX% will XX%, to then I XX%. than can growth quantity a is I yes, get right? But percentage element right, – And you, XX%, sense – to points not our the definitely, margin, if But increase our driven if I by want guiding mean, about price, of increase. our

Unidentified Analyst

it. Got

others out Okay. bit, on we little a the of let’s That look topic and hitting talked middle the couple now, I try get helps. very and to or And you until which the go is actually, up. wanted guys requirement for have to from and this right ability year the acute last have tightness of last you’re say, foundry about if quarters, the second prices at talked

quarters, by percentage foundries by last XXX-millimeter X, their heavy X the I foundries these increased points. have over And mean, foundries, margins. gross maybe of So couple

Your gross basis points. X,XXX margin up by is

the of difference think In supplier? between other faster – what we of two? rate do So your about say, the margin than, is the increasing gross words, those much so change why how

Jordan Wu

really And I mean, but output, our time partially taking explained just That the goods is the probably don’t reality. foundry difference. certainly, Honestly, from talk right, a just fact. from there and suppliers, of my know. I don’t that – I on to I think know, behalf there is I is but can’t a is it, that

I and desperate they think also I major, hikes, major enjoying of driver more And their panel really IC, profit we expansion industry IC, them driver is display you price expansion. – need think their in which represents driver withstanding good margin IC for right? is at certainly, the for And panels, a the recent still material. now to produce if relatively portion display bottleneck look small are

if relatively overhead, they is make account for costs into take small you their depreciation and right, support, get if alone, a their lot, that Let of shipment. portion can’t the a they meaning IC their and cost, utilities don’t

So makers, they to with empty are billion, $XX right? not the panel pretty more up" sorry, to of they market foundries, – IC. heavy, is pay so the industries price. days, around sit wait difference that is fundamental driver their close when – for I probably talking overhead not – price about, “bid so – these going because are in $XX billion think sense than meaning – And idle a more there and not their because right? XX% And don’t to So IC being investment healthy they a are willing they yes you’re know, difference new the fab, still or lot make other foundries eager the I XX% to driver

good that think is I probably a explanation.

Unidentified Analyst

sense. Sure. No, makes that

one sorry, last go one, there million, my forget back it take, are about and was And time maturity, just to $XXX of I automotive a sort bit. year, penetration automotive some this – forget declined the XXXX actually could. maybe recollection automotive second, around way. discussion if maturity your we had numbers or If of and our some your was was and give right, And revenue to thresholds. automotive a for maybe COVID to at last if if talk that about and industry we XXXX, I want want that I at frame point,

So forward of doubling. I company are close double, we to, but know, don’t year, this it like if fast kind going to maybe you not now to sounds

Can factors going versus were are to there? of about what understand be to all sort maybe just So from you’re XXXX. XXXX other resurgence us variables that the Is what you or the maybe bridges you of in today? demand double help it a

Jordan Wu

down, basis, towards year-over-year last year, primarily you industry the workers purchase playing last half think of drove have year I then wake talking of right? suspended first ever So their shutting and really XXXX, are because orders catch the and they auto and up, they was off factories and parts. a they a down of on bad up unusual. particularly actually way of their kind actually they – since, situation their end and the it’s laying the sudden a about COVID are especially all semiconductor for – year And which in been

cover larger and quarters have very been then of So quarter year, and years for a see simply little if few a that’s to exception, everybody’s I you’ll and resolution nicely growing our And just an time three quarter. effect. driver simple the panels after – as is last extend panels trend. will first and models very, last especially cars, than of year, long year the COVID. quarters earlier than you high It’s display the new And a last very, three longer very more the business older almost see driven steadily last growing automotive the panels have in frame models that bit because by

and growth volume right, your larger Now features, opportunity room and larger the people display, better EV think a passenger as really I very becomes very, and display think of here I mentioned, us. with meaning long-term into displays, this from when display, for display, even demanding I going forward, for mainstream, demand more coming complexity terms quality higher-end is in of a

I year, this of advanced therefore, and EV. two is more and more higher so – it’s panels. kind – think but the turning the adoption catching – terms a is And and more of point, in volume; two, of panels One This and now and up recovery right. So factors. COVID,

at from much they start being I same this the the year, kind – point. of point, hit starting think pretty turning

is ourselves in for is didn’t getting earlier, ready industry, up for gear big why actually as such the to that about terms pretty a automotive, of even So that early, – where is why impact know but more we excited we going are prepared we and COVID I before very have we capacity. automotive COVID pretty we mentioned will aggressively

Unidentified Analyst

very you Thank much. Understood.

Jordan Wu

Jonathan. you, Thank

Operator

President I And at remarks. Director, to and to Wu, Mr. turn and our the this like would Jordan back CEO closing for it time,

Jordan Wu

final note, Li, to continue a our maintain investor Chief will marketing investor IR/PR Officer, Eric As and activities conferences. attend

come we details nice about. have So a day. the you, will they Thank announce as and

Operator

in program. participating This gentlemen, today’s the thank and concludes you for conference. Ladies

You may now disconnect.

Himax (HIMX) 6 May 212021 Q1 Earnings call transcript