HIMX - Earnings call transcript Q1 2022 | Himax Technologies, Inc.

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Operator

Hello, ladies and gentlemen. Welcome to the Himax Technologies, Inc.

First Quarter 2022 Earnings Conference Call. [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 Schwalenberg

Thank you, earnings first XXXX to Welcome everyone call. Himax’s quarter operator.

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

from copy press If you download Himax’s access release, the release please otherwise will financial results at specified, a have measures. not based discuss website copy of yet Unless www.himax.com.tw. our e-mail today’s received on or on a portals we himx@mzgroup.us, non-IFRS financials

You to can IFRS reconciliation website. find related on the our

new list expected XXXX, call. remarks, to this amended. forward-looking full and some SEC we XX, company’s filed for statements on December ended of in for entitled events be XXXX Factors company’s call, of internally independent result not the uncertainties the subjected company and were a and which statements, vary Except in the that over review the Eric, this formal remind regarding and call which financials, or in no XXXX, company’s including actual or as statements annual to results now to conference year involve as audits from risks Mr. is with auditing prepared Form same period. consolidated XX-F to is subject would conference floor the financial call our the the be SEC to is a and Risk may any Such financial Li. filings, consolidated described of from found the and year information otherwise. XX-F financial by or to been A provided external with section in growth, forward-looking industry materially internal revise I’d in factors the future consolidated future whether can accounting. the events unaudited Before financial statements Eric accordance has publicly number results risk information an information, and are obligation financial we procedures I yours. the audited that the and scrutiny, that XX, and everyone of auditor March of generated IFRS to The like in this for cause conference included those begin undertakes statements the in may differ could like materially information update the turn including same

Eric Li

these to also the Year in Omicron additional Despite XX, our all gross with XXXX. and were range major Ukraine, margin New China Lunar additional holidays. starting mainly challenges, On guided Eric EPS chain. for contain quarter joining first Chief Thank you, IR/IP Li, Mark performance financial is Officer first of name us. Himax’s at I thank you will the everyone My for and review Himax. today’s consolidated call, take an followed seasonally give business, second are Historically, will outlook. quarter of This February both year year, line of low on XXXX geographical quarter February, the due XXXX, our questions. variant update which Jordan by sales we to then on disruption the the our after causing in of lockdowns quarter issued weighed first our point status supply will the in, our to spread and erupting revenue, new conflict the from in factors

of decreased X%. our year-over-year XX.X% X.X% up sequentially, X% of First were guidance QX down Yet within on basis. quarter $XXX.X net million revenues a to sales

diluted a around $X.XXX, $X.XXX Non-IFRS IFRS $X.XX, of decrease to profit record from period Revenue XX.X% in from but sell-through. XX%, was approximately TV high-end of year. shipments $XXX.X guidance a year-over-year. came period on mid-point but the flat monitor increase sales of last being quarter of a sequentially, seasonally ADS but anchored profit XX.X% TV up guidance sequentially drivers the we XX.X% in XX% XX% guided, sequentially to XX%. same account, our a year-over-year. at end large $X.XXX to notebook in and growth, the ADS but significantly was within the high of despite year, consecutive the decrease IC a an large-sized soft $X.XX per QX, margin of per was Our continued from display fourth by quarter After key gross of the the slowing XX.X% of up the last significantly and strong guidance first TV to revenue million $X.XXX, decreased was both of of the mid-range as low quarters market demand. backdrop diluted and

a year-over-year on high-end leading grows year quarter a for both XX.X% and compared nicely model. position a driver basis, our XXXX XX.X% IC total reflection panel premium display first quarter accounted of Large of and of the However, ago. to the revenue this XX.X% for in across

segment, sales past year-over-year. small driver was decline our Automotive QX. IC during and automotive Moving increase of more continued display several but in digits XX% than quarters growth for revenue XX% a The sequentially than our to year-over-year. million, segment medium-sized robust on more mid-single more and sales an XXX% sequentially, increased than $XXX.X of the

driver in sales halt for quarter In single QX the the China. a increased largest of QX, the previous total sales. than the lockdowns representing shipment driver in to over and contributor, our in segment became despite for caused segment of a revenue by of in quarter city year the sales at XX.X% ago. XX% compared e-paper XX.X% more automotive XX.X% the quarter IC total medium-sized More accounted Our end sequentially XX%

continuing to Tier-Xs is this trend demand to coverage driver DDIC with quarter TDDI. revenue, design-win automotive makers growth was contribution and outpace by throughout backed our growth, portion than houses, alongside car discrete supply. XX% decent predominant both enjoyed upward comprehensive XXXX. DDIC in Automotive IC which continue for of more IC automotive capacity sales, still in sequentially first up increased the expect the The across panel automotive We revenue and

Our TDDI during milestone, automotive, we reached an we first impressive X the previously as million with quarter units over for shipped guided.

vehicle comprehensive sustainable, automotive growth, many a IC, robust of on with in quarters of offerings gains different top After position QX consecutive high tablet leadership by fast business our growing expect share the product and base driver market. slightly single-digit. expanding off further in growth mid our market we our automotive declined market, revenue Given

first penetration from position the our was non-iOS all adoption sales, strength revenue basis We capital geopolitical TDDI digit double leading proactive challenged tablet smartphone demand in single However, share inventory. to leading The our of TDDI IC leading non-iOS market names. reduce brand the continued resulting guidance, with significantly the reduced to line smartphone on panel quarter which and and their maintained the year-over-year tablet have market up started by In in demand declined on grew due revenue visibility at low-teens China a in which digit tension, lockdowns with sluggish OEMs, market expected low sequentially. be to names. in among our accelerated houses

mentioned designs, production call, the to our we on portion first new of transition to quarter’s output initiated key led last As expected strategical customers’ during less quarter for product which QX. a we rate decline due

year-over-year. sequential market. image sensing came in power the better driven $XX.X higher was of decrease solution notebook revenues The by shipments XX% than non-driver total to better-than-expected up a around AI quarter of million, result at our low-teens but First expected ultra-low

ago. accounted increased than mix Tcon. XX.X% was year-over-year, as of reflection total of higher of sequentially, for revenue as business in towards the of slightly area, digits Tcon compared the XK same XX.X% down last gross QX XX%, such the a high-end quarter of for Our more XX% a but much the notebook quarter, period products a year in decrease last year. XK, XX.X% fourth but quarter monitor, Non-driver to first Non-IFRS automotive gaming XX.X% mid-single low-power product and better TV, from was than XX.X% margin and XXXX

there discussed, profile. primary our were two As impacted we margin factors adversely that previously

First, of cost from goods for foundry price QX our the reflected the quarter. higher previous sold

premium Second, was gross market expedited the to orders softness. due for quarter. XX% for we QX decreased the in enjoyed prices IFRS customer margins, also which

was million, quarter, X.X% operating year Our the up a from down from non-IFRS the $XX XX.X% ago. quarter previous for expenses but first

of decrease equally increased last the be grant end $XX.X annual at date. and totaled million were bonus year a at remarkable quarter, vesting cash bonus the of in which As expenses vested year’s of our on increase was for will results. salary reward X% the caused we September mainly a each million for three the third first, remainder employees the the recognized from $XX.X year. out tranche. a of to immediately first year-over-year caused change was bonus remaining million, last from in the financial second by figures quarter preceding quarter, award period expenses. which December the $XX.X operating further and higher including the of R&D The anniversary the sequential operating at and IFRS down The compensation, over of vested tranches to was mainly end expenses by the due awards third The cash RSUs be compensation reminder, will recognized employees was of IFRS up year basis XXXX. XX.X% a each onetime ago. but XXXX expenses straight-line The annual compensation, the The and

$XXX.X than but $X.XXX period after-tax decreased higher of in The $XXX.X sales was XX.X% or ADS sales of per million significantly $XXX.X million first and million ago. quarter last Non-IFRS non-IFRS million sales quarter, for or of or profit diluted $X.XXX was $XX.X from diluted a or the ADS, same XX.X% income year operating from XX.X% last year. quarter versus per $X.XXX last the

payments customer the loans year same million their Turning supply. the XX, at of to as and ago. We unsecured inflow higher million $XX $XXX.X to had The of $XXX.X assets of other March securing XXXX balance the mainly and long-term which portion. million last and the was from long-term of received of of during million as balance cash operating the of cash from was QX, had current million financial time purpose end chip $XXX.X sheet. $XX quarter compared cash the quarter cash, $X We the equivalents a for million of

DSO inventories of the end at ago. a last Accounts million last a days quarter year year end XX, quarter end ago. up quarter and XXXX, from was and up receivables as from to Our days XX quarter. of million, up million XXXX, million $XXX.X March $XXX.X $XXX.X $XXX.X from XX $XXX.X as XX compared year was the and March $XXX.X up ago from were at million, days a for million last quarter

First versus quarter both expenditures and were a last quarter $X for year million ago. $X.X CapEx million

design for quarter for and business. first was our IC tester equipment R&D-related The mainly in-house CapEx

of XX% $X.XX today’s July last lower of is for prior million to XX, ADS, cash macroeconomic our totaling working our The net our payable Just The year, relatively of the dividend average per approximately profit light on historically. payout than an to ratio which annual $XXX.X payout uncertainties low is capital call, facilitate XXXX. the we reserve announced and anticipated in and growth payout sufficient ratio to of reflects few next years. decision the ratio

continued we business our of deliver We sustainable shareholders growth. strive are and the support for as to execute objectives to our grateful continue long-term

As basis, XXXX, diluted fully unchanged of $XXX.Xmillion Himax outstanding, for a outstanding last of ADS had March from $XXX.X first million. ADS total quarter XX, was number the quarter. On

quarter to Now, to quarter second XX% turning our XXXX XX% second guidance, decline expect to we sequentially. revenue

in yours. be expected be profit the the to around like Jordan, attributable IFRS to call XX%, final diluted of $X.XXX to is ADS. $X.XX on Non-IFRS of Jordan. shareholders the IFRS per fully I is to ADS. attributable $X.XX in depending turn to range to margin estimated now fully be the diluted to is gross to mix. range the shareholders expected is profit product Now would floor to to per XX% $X.XXX

Jordan Wu

Eric. you, Thank

our quarter and demand to to war have factors significantly The shorter the and lockdowns are forecast throughout brands. Murky and leading a panel leading impacted particularly smaller response, starting the supply for makers end visibility geopolitical demand, to short-term began aggressive of and taking the second In China by foundries prices. mainly we Ukraine, the still were their pricing in sequential ahead impairing uncertainty, inventories. IC of an electronics at the abnormal consumer order is QX, to cost in rolling chain conditions margin, quickly raising global challenges when represents sold near-term decline backdrop Against and and in our rising attempt expect the previous a host market environment. leading inflation quarter, of from Looking macroeconomic of the this gross reduce quarters because creating second measures goods outlook. quarter, pandemic-related business challenging

worldwide. demand support in adjustment price amid customers mild non-automotive some of have also our We soft

foundry will with trend However, the of continue and its sales cost half half over the year. both moving pricing the unlikely our of back-end first upward goods into already stabilizing, second

remain all COVID-induced We our demand. visibility lead to of and alleviated, year, QX two fade despite our visibility. sales enjoy XXXX, the line automotive rebound same by ultimately As the a approximately disruptions We level which murky business condition full upbeat at improve we are year lockdowns supply the to the this expect of sales for and anticipate of stay low and point to begin will streams, now chain to new XXXX be year revenue business in supported full solid XXXX. market top high short-term market for

pipeline, poised comes panel year increased the double order The large streams contribution are Meanwhile, product regardless in will of benefit last sectors added that, sensing IC business, improving sales visibility. For update concerns, With ultra-low year, of of from with begin already image driver and AI which by the business, on with automotive backed key the business. our terms mix and macroeconomic OLED than sales profit targeting strong our are an I two deliver from to is margin business more power long-term an impactful the before. doubled new the of these contribution. to both we

large second of production down driver China’s projected The business to IC notebook and to muted to sales. in revenue demand response reduced business double-digits outlook the due quarter, the control TV sequentially consumer customers’ IC decline weakness driver coupled in murky sequentially quarter sales remains in demand. with be to are display due expected global the large-sized disruptions to lockdowns, For for is in midst Chromebook and digits TV sell-through double with second moderating inventory visibility. and IC sluggish

customers IC are softness second monitor also monitor in XX%. sales sequentially, displays expected as higher-end total their expect This more year-over-year Tcons. decline our than for display demonstrates the to increase premium basis, and the our leading offer IC to position drives ability well across to as overall Yet reflecting and covering major solutions on advanced a We sales models, monitor quarter. market by

efforts decline are the in XXX% sequentially, to Turning be decline to revenue are is sales display and second single expected IC mid-teens medium-sized quarter, automotive set and the more Sales to year-over-year. than to driver digits for flat while business, foreseen up of sales sequentially. macroeconomic digit, small sequentially their of for Smartphone due the tablets are both expected to China’s decline ongoing their focus visibility reduce and demand. by near-term double of weaker sudden lockdowns, result inventory. customers’ customers to deterioration slowing end The our to environment market backdrop from on city the

quick and our Now business. for IC display major on of each update in small driver the medium-sized a sectors

with core elaborate DDIC local driver from technology over contributor market continues OLED. automotive new the our the share. comprehensive this as portfolio leader earlier, technologies automotive our automotive on consumer Eric LTDI display which and strong a are in representing to automotive product is ongoing sales. shortages dimming, ranging suffer congestion, segment, Himax Tcon, First, overtook leadership other mentioned in and revenue traditional from largest TDDI, to hurting such segment, poor sectors market demand, with XX% become to during a sales We key QX, XX% car worldwide. as global market market boast component Despite of the our To success global total on

a vehicle. the number, much inside rate, in of evolving increase content indicating the sophistication driver However, vehicles rapid size displays is IC at and more all per

foundry by from major to customer purchase OEMs. market, as We to design agreements, Tier panel Xs, backed our strong this suited automotive as and are footprint expand secured in all houses, multi-year uniquely coverage capacity well continue lucrative

for for curved interactive, of that production large-sized mass TDDI and displays. essential stylish technology pioneer is Additionally, we automotive are the

While deployment shipped TDDI in of milestone units alone. early is still achieved QX mass already automotive of a stage over for market, million we in X

upcoming to a vehicle continuing in the range see While design-win world models. across rapid TDDI customers across for coverage the automotive increases broad of

larger from touch to caters results which multi-chip tremendous see which with promising LTDI, incorporate starting XX-inch cutting-edge another and we XXXX. architecture, product is displays yet long-term design expect our addition, to In feature than sophisticated in

XXXX automotive our of double to strong again XXXX sales growth top expect the of We XXX%. sales in on already

much the second flat we TDDI up sequentially, of sales, those the than automotive still and more up year-over-year. to slightly DDIC larger expect quarter, be AMOLED For which than to are but XX%

the by unmet adversely Our was output maintenance impacted our foundry demand. quarter. was total overdue of one major end heavy fab of the the at IC of at first because maintenance long of suppliers backlog The

our capacity automotive a to sales TDDI decline single-digits sequentially to DDIC be are effect output as see QX of automotive our new automotive to for and quarter-over-quarter XXXX increase of have we foundry the a the timetable. city production severe postponement expect business War for momentum side While led second continues business. still TDDI. expected the extraordinary into of we Chinese Russian-Ukraine constraint year, to Nevertheless, the shortage DDIC automotive mass the which our for rest from projects, lockdowns, certain half for

secured prepared long-term throughout foreseeable which track automotive foundry the terms well is are We on of capacity for in future. exponential growth and XXXX for TDDI,

QX the disposable and supply Next, the market Against prolonged businesses, also rising business digits a replacement at inventory Pandemic-induced smartphone to this tablet income IC disruptions single regarding weakening market leading inflation smartphone for ODMs affects adversely are and cycle consumer we sentiment, be smartphone makers, by down panel while to to continues household sequentially. depressed end. and expect chain logistics brands. backdrop, excess

customers from this to orders first our the we high base by in tablet, quarter digits sequentially as inventory. expect in For the slowdown fall their sales purchase double driven

tablet are has With for lockdowns. non-iOS a believe pandemic which mass e-learning the towards keep fueled said, work that frame features large-sized has position postponed for share. with are consequently the to secular timetables TDDI remote in larger-sized above that market we higher new China leading tablets, penetration and seeing shift rate tablet some to particularly and levels. active towards due of production stylus were demand the adoption. addition, still will In continues pre-pandemic expanding displays, tablets moving the where Himax market decent rise we

models. brands outlook regain trough launch panel high confidence our in QX. preparing of remain from likelihood we positive from as QX soon our to inventory outlook, our therefore, As rebound business expect makers, new a replenishing to and the with the momentum in sales rebound of sequential We,

in driver representing product X% sequentially, XXX% another sequential stems business, catch-up as medium-sized total is around The to that awarded in China. business their by shipments customer a is lockdown driver a set to basis, sales phenomenal to the well e-paper business around growth growing logistics customers more to the to our our product than in grow and XXX% small e-paper from demand On quarter leading Turning number shipment. with of from leading of projects lineup, increasing last to due QX. a year-over-year increase due were delayed significantly disruption e-paper ASIC expected for as

We markets world-class certain market continue displays. supply agreements significant expanding collaborate in projects e-signage with capture products Backed their the and next-generation e-paper on efforts ever to throughout long-term towards for XXXX. higher we spent with and larger by industry-leading customers, with to increased colored e-reading and resolution ASIC e-paper size, R&D customers expect lasting partnerships share

major IC update development. on AMOLED driver in an Chinese In partnerships and for various applications, Next we continue up Korean for makers gear to AMOLED. panel with

production and solution has commenced driver we the mass both where leading provide Our are a for total source global quarter starting supplier customer. sole for tablet and Tcon tablet solution this AMOLED AMOLED

schedule secure product desired to volume. launch to the and working capacity are meet customers’ We additional

worldwide the and increasing. flagship EV is Concurrently, model for projects driver our successfully Tcon addition, vendors customers’ ramped for flexible up of automotive In conventional carmakers EV number awarded and with display QX. in AMOLED

our arrangements smartphone, top-tier AMOLED capacity As up through booked light meaningful customers. constraints resources to in with the for fully next R&D have display we makers. in continue by driver commit to In secured driver capacity the panel AMOLED leading this capacity years, secured of few area serious we with IC on

the sectors, customers is for notebook are designed next-generation made including key for sales TV in is AMOLED for slated growth quarter, progress our we houses few and leading X% and next business, with strong second and for panel driver total last years. by few AMOLED encouraged content quarters of the expected Finally, the In in products. account to our around

areas commitment some high-frame sales of local IC as to years non-driver positioned efforts, on for have including low-power R&D of The displays notebook, controller, of towards of we rate These expand Now grow result After only a let barrier automotive. higher well QX as enjoyment the tablet timing areas, Tcon comers. automotive warrant consumer on the high-end the late value low for sectors. entertainment. and also OLED TV, for to Tcon and and monitor, sequentially, Tcon XK/XK update with shipment represent content appetite continues per successfully outlet we high-end much diverse monitor a single basis, for on share entry tablet video and not we me visual businesses. towards progress higher made but gaming its ourselves Starting to panel digit dimming automotive anticipate higher for market advanced an

As and an advantages, AMOLED mass display the with panel due QX. Tcon to been solution. OLED we’ve industry-leading in to provide commencing tablet market drivers both displays both closely with We traction get AMOLED in production collaborating joint-develop major houses technological

our projects with are notebook makers panel where sector, Tcon for premium Additionally, initiating reach tablets extended product OLED we into currently, higher-end next-generation from notebook. jointly we

more that continue its image on Switching processor XX, processor optimistic Emza’s sensing sensor, capacity engagement in total subsidiary, proprietary of the This ultra-low can visual enhancing Emza, power power models. about image AI-based the and of our a facial incorporates AI partners notebook vision which presence, from image ultimately revolutionary are the and runs better innovative battery and based power The management, power CMOS business algorithm lives ultra-low wholly On features solution, range Dell’s potential sensing solution, pursuit growth. for gears long-term power sensor, WiseEye and algorithm. and AI. AI ultra-low to our CNN-based our which AI owned AI AI Himax’s announced experience. April Himax We secure look in movements our to ultra-low on to laptop AoS user technology and sensing the foundry levels contributes Tcon user sustaining detect new direction. always was maximizing laptop’s adopted solution image contextual-aware The on proprietary to

this continuous by the market partners and thrilled as deployment discussions anticipate we engage platform are proliferation we increasing notebook and of with are number ongoing We design-in where worldwide in as speak. brands projects

Himax gaining we total area our the sustainability consciousness, market. and power this is conservation past greater water the devoting environmental automotive seen intelligent solution image more technology. with With ideal eager resources few countries have implement are AI reading, with we focus Another meter and are for an over surging are sensing is technology to momentum sorry, AI the AMR fit continents AMR to embedded where application, water across preservation on quarters. adoption ultra-low

leakage. operating Our the locally consumption over itself, power-efficient device meters with of AMR AI AI water solution the automatically providing collect on data in-time water abnormal installed can traditional existing detection

received far, So a wide total inquiries area. have solution of the we AI covering has customers where widely by been geographical our most numerous adopted from China

of mass in resurgence. but subsequently the Some due were these for projects pandemic starting production to QX, delayed slated

and solution also indication India, in a as to growing now Asia inquiries In nearly function and an of number near of expanded application use effective, this every seen The way AMR well into sales our that addition the over for affordable countries to popularity of years future. business the easy their finding AI generating has as few applications and AI from past The both expected in China, advancement that we’ve the sector. other to is application. Europe are rapid start is

wide cases and smart adoption video image others. successful use solution, equipment, areas AI medical and among a we seeing For agriculture ultra-low power fitness panoramic inspection of are in conferencing, sensing as such variety parking, smart

Studio, the As their agriculture into adopted launch. platform Seeed was environmental IoT the product area into enabler in of an protection, an ‘IoT our solution smart and Wild’ by illustration,

engagements in channels. of see more some these of with to production these expect types new mass of exciting many We

our Lastly, Himax update and On an technologies play earnings many applications metaverse I of or our market. a provided optical enabling sensing. covering overview last and related is call, We our In would like early-stage give in metaverse product of on optical road in key and meticulously role technology LCOS devices. the to map brief I will short, years with WO, lines space. XD exciting a having our AR/VR optical at for companies in in technologies, individually this industry, leading the forefront combined, developed collaboration believe the

to our Now on update an provide this quarter. progress

display. on leading a LCOS the I’m First, a for LCOS global pleased to report projector from design-win new product our player. that micro

currently, several glasses, some front-lit leading AR of our using products. which have For for projects next-generation cutting-edge we dividend joint underway with tech micro-displays is names, LCOS their

glasses. form color front-lit factor, lightweight, small illumination full AR Our micro-displays making and LCOS high features future RGB display characteristics, it for ideal

gesture human XD interface on control. for Next sensing

leaders, achieve controller-free industry We precise immersive AR/VR underway to several and with gesture aiming projects have recognition.

XD to eye-tracking. on Moving

objects purpose and of the XD scanning required these sensing environmental generating device on Currently, is proprietary companies, underway objects Himax notebook of projects virtual worlds involved motion and companies scanning of reconstruction. reconstruct leading surroundings virtual image, eye-tracking by enables of whose XD to of displays datasets Creating free basis. plus object display technology, other monitor, We’re for XD we avatars, which sickness XD XD immersive some architecture applications, adoption on eye a for and devices virtual naked XD XD and dual medical being scanning leading with real-time XD the engaged few including the have adopt huge our images. XD for a

quarter, the partnerships to development. its The capitalize As product early I key yet last Himax research is come. in mentioned to on strong portfolio, still years development with production is stage, of history and metaverse well years positioned growth and in

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

Operator

[Operator Instructions] Your Donnie of the comes line Nomura. Teng question from from first

question. Please is open. line your Your ask

Donnie Teng

our to question. on for is Thank pattern comment you, sales my taking half. Eric into Jordan second My the and regarding first question the

So I’m more to seeing the shipment like for quarter driven ASP just looks quarter, quarter and like first recovery? But like deep. a I of more or Thank a recovery you. be know you are third second curious, That’s my question. fourth

Jordan Wu

mentioned it’s think we a confident to the I we shipment we primarily able last level should think achieve versus least that be XXXX total Tony, of actually flat high feel at I that year. revenue driven.

do conceptually of get and this into how that our way guess arrive products two we divide addressing do I we confidence, how another Now at your we is can Actually, number our groups. question.

group also, being with the visibility, is strong timing the ones are there high automotive, which controller, And first visibility. they are group. second The very obviously,

first Sorry, the right. that’s group,

The includes product major power which revenues, lines also visibility. right, ultra-low also, new new didn’t drivers revenue line, being exist or of stream and two kind first the this these products before. have related we year existing AMOLED group strong product very with AI two And sensor,

actually products. right. are of So, the they sole customer enjoy streams in our where good that always that first in industry nature which group, or the is are visibility the They the we new because provider new products is fact launching revenue the because the of of source

is So, quite visibility for actually the business their good. plan

number and and the are I also compared I customer which of assume primarily The the the existing if represent projection in year, consumer is projection a right. products, currently put no mean, I implies basis. the year-over-year and the group, we great Honestly, usual, for decline if for a to are actually a lower group. year first whole Now the second means material being the But year’s the revenue low revenue there phones The my cell I That from the my group, number my whole be electronics, into last TVs, second visibility, my of computers, one visibility. all take i.e., than like. group then obviously, have flat don’t no – is confidence way or pretty to that visibility deal other. visibility

the across low, easy actually thoroughly that to inventory good inventory recently we customers’ panel second of the customers’ will second particularly products. unusually news rather quarter that come an the be end However, towards level, right. the And and we towards analyzed the level this group of conclusion is quarter second inventory

down, crystal are without how actually inventory while quarter. disruption, or very China But our So, making that given control inventory lift to fact resulted very, predict will the ball in the when has to whatever. level the slightly but shipments low panel through their they its shipment don’t a the end and season customers of the whether have regular low while – towards are I during major unusually lockdown

at least the good rebound the second likelihood half. a Let’s we QX there may good give see us that for or is good a from confidence

while the consumer So, I to year-over-year, decline visibility do trying revenue say second you whole the promising actually what electronics the that will that from than we – group to severe pretty if year so be better group a it seeing is that. signs actually we predict be am are may implies flat, actually suffer to actually very

we the be coincidently year much a good from last our the by add and visibility much actually versus our we are position not second of pretty our in another at last we the very are now targeting And this half, and capacity source I year first with customers provider regard actually be products customers, all only will revenue are the for visibility very that group the for discussions believe on lot that or for the backed a will we two least, either months, the reason support. second this within visibility. that let a me us why lastly, confident We flat a first just visibility but these are capacity our for products, strong the the the And sure And have That than will on foundry enhanced. from still say, sole moment. have going about of And analysis. means demand low year. month group, feel there am And be basically shortage. very still target the So, is supply me lower is or for all let suffering group. those we

ASP So, driven but on not lower assumption. it’s inventory by chip primarily this our based the [ph],

Donnie Teng

pass to we ASP the to gross for the margin or But foundry long It’s or follow-up like recovery like the from potentially, so what side comprehensive. and expecting on seems it because or second are first you margin product positive normalized mentioned, perspective, of foundries And with the cost customers to the as is able cost be a Thank should well. you. negotiate you the gross very volume new for Thank there visibility are like for kind price you group like like you. nice, side the are as half? a

Jordan Wu

follow analysis to thank the as the my previous and the high group Tony. second you, second no in of first visibility. Again, Well, visibility group versus group,

area, price the I in position. On supply. as not we still And because way outpaces the simple that meaningful the we certainly of have any very earlier, demand a said are strong visibility very, fact lowering high our

So, no price, reason for to there us right. lower is our

group visibility honest. is low say, be to second to The harder

we directly four Now, been gross goods rising margin quarters our if two of least year, I to that through X.X side, supply of look cost have quarters, leads at at the sold erosion.

tell look guidance, can margin guided our goods second percentage-wise, as increase of if same sales right. decline our much gross expected is at So, quarter the you, our cost you pretty I

is is constantly. and because earlier the the of And also the time, fix prices way fixed half, those people how much shipments weak. its think very soft where But that were But cost right the mean seeing much our those on now, that is like prices the the of we are fact I when demand is stabilized. prices to actually in realize have going second I that making prices market foundry much lead up are foundry is fact the Now, sold products foundry QX, be are QX we production the earlier. the goods of

same seeing sponsors, foundry So, The through any our And are are expecting with think discussions for not our I price increase. – we price negotiation that try on. half. I second the trend. certainly, will any make a a promises, cannot going is but think mean get to for of lot I we and anything, we the meaningful not back I better if end. peers

on side the I group cost the that visibility So, already. talked our pricing and on about side, is high

are going think. our I some price bit, lower selectively, raise may price. in selective we We a to able And our to be not areas,

included, On the scope. amount to be or season, bottom even if is right, tell group. for very, year Right low mature price to than happens capacity our been I of be after, downs you but to selectively the the now, into foundry likely that our think of small amount visibility still inventory that second processes, it’s very And earlier, ahead offered I very during there, the QX, the a the to the lower year, What much everybody, next group, harder us, limited tight. here look in middle customers’ small is have customers towards is recognize year look the fact and normal. they are mentioned level of

So, this factor is combined.

the cost to any I half. able second I the we is as think I whether said through price such don’t earlier the be I to asked because be additional unlikely will second pass in will for major there the the second fluctuation to issue no cost group even costs, expect And continue pass through rise. you during me additional half, think

conclusion, which I as the the in predict, right QX the depend largely low, product our margin think margin than will the any don’t mentioned to as from come final visibility meaning that, QX, obviously think. in second the second level especially So, material to is we actual way outcome of guess revenue, now. actual harder year I But or our numbers on I can revenue, given higher lower the expect mix, deteriorate I group, a for gross our fact is gross or the the

Donnie Teng

is Thank ask the expecting the May one group I breakdown one you and year? sales group it. you. that, follow-up what’s Got are last for two this

Jordan Wu

X%. Group being group X% and being X%, X%. one to two About Okay.

Donnie Teng

Great. so for Thank that. much you

Jordan Wu

correction. X% X% first number. current the second half, half, to our in that’s outgrow pipeline. the group first the position the the And will actual A second group being in on small based

So, the around first XX%. group will somewhere rise to

to going it’s XX% to XX%. XX% So against be

will plus be XX% against So, something the whole something. year XX% plus

Operator

comes line [Operator Su Instructions] Credit Suisse. the from Your of next Jerry question from

Your line Please is your question. open. ask

Jerry Su

your your question had regarding pretty first you been level by than from inventory the in of the from then has we a – I end a customers year mentioned think, increased level I quite think as I inventory – ago. more at has – my is could But your another quarter. a few times to go about be low when and think XQ QX, inventory level double XX% this look Jordan

about your quarter? inventory level? or steps you control exiting second the your any your think to current are how inventory So, Are inventory with taking comfortable further you we should

Jordan Wu

Jerry. you, Thank

right, the idea we level say for with a and the was a year just like chasing good had me inventory our last of no Let in year not compare sense loss finished on it’s last daily unhealthy literally to shortage inventory, that us customers basis, goods everywhere. from because are

and was So, unusually low actually last year’s inventory unhealthily low.

cost goods look the still year, end X it’s you sold, on XX right. If of years inventory inventory of you let’s compared at the slightly our at years years, if excluding days. days, last past – the to upside, at within X the XXX meaning right, range history, to XXX we our is in look last days, range, say, to look our between XX but QX, And days our about

QX that the about least our not in year inventory still the particularly years. are foundries will fact we given worried capacity, X we at remain capacity So, are the next feeling or because short

be Now, our our of will than IC usual. the with lower be level of customers’ still hand, other first inventory the But of end said QX than expected level, on inventory revenue, QX dip the the end will I quarter. inventory higher north of earlier,

to we level two are the QX, combined, think inventory back more factors get we with So, hoping in QX I status. a normal or will our

our like this myself level at weekly we we inventory are So, is monitoring watching now, our I for monitoring I our level, are inventory – basis. mean

not So, worried. I I saying am am not

tight. still take closely, any we foreseeable in very that so the will that given healthy remain nothing more there capacity is preparation to appropriate a to view it but to probably the we still speak. future indicate foundry level, that fact, slightly reaching in normal, approach aggressive – our compared inventory watching think a are it’s And We we are

Jerry Su

tight on the days, the to have on the past will Thank news few world going few for in second not has to XXXX. saw the then you, If supply helpful. is the why And Very especially guys. years, further Okay. largest comments your half, been foundry just the about follow-up foundry the increase remain we foundries. next in raising price I of in foundry the think the the in pricing one

the be increase is half view expect longer in even next your second going Do later term? if it on flattish to of what it’s the So, foundry year, in year? pricing input further into maybe the you could the

Jordan Wu

you know I talking TSMC price. about are

the knowledge now, I in. less less Ironically, mean, actually playing just TSMC because good all for it is we to Himax as their announced Currently, for that literally TSMC are their expensive. a they is actually got They at notice it the for sent that’s catch common well. say node, news we are peers. the TSMC Actually, price notice same are is time beginning pricing. customer by node just starting let’s every and Right than market in mature price very mature of node, X%. mature they year, they up to publicly So, going raise wafers that their next node is

TSMC our foundries position So, our leader. as in right. They is meaning catch-up. compared their using not we is our on to higher, is going are to more heavily on not our TSMC to compared are the our to implies nodes nodes. TSMC I where are advanced to But the burden that playing other exposure actually And we comment the dominant peers. competitors, compared cost mature actually actually peers, clearly lowest, nodes, am That advanced position historically as

are pass of good OLED products, using against portion those heavily. weaker especially they really squeeze why products, I price, to competitors. because decide TSMC’s important that our is squeeze on demands. And will reason the I we ultra-low their suffering It’s hoping sensor customers about to mainly news some we to good power we the A price. we our think TSMC hoping And more can than group, to are through they we get raising get I of enjoy out the comparing moment, are for actually will whether first through raising big from group, is TSMC out we And first price, demand Now, core. not the be us just we supply increase. mentioned pretty the TSMC far it’s more supplier group able with are right. shortage. And from time business the weaker to price such say still welcome But second their AI where it is at our the

your to back question. Now, get

catch-up. So, they TSMC’s the being able does raise to whole follow are suit? I And Again, their playing will think mean price, that everybody industry knows that.

for to customer hoping So, soft. because market everybody hike, cost I the harder their us And believe guys time so nodes can price take. certainly they price the foundries again, other am recognize follow much hike because on. like I don’t I having on And and much the earlier there’s mature customers passing is hike mean, a already TSMC’s will are their foundries further only our customers, have had demand price

far through I me future, the X unless I put is foundry to the think think the just I market the people year. for so So, rebound, my discussions long-term, various on mature to is going then major with be to right. pricing again, healthy remainder think least consensus nodes remain tight. in another still clear is That I going maybe foreseeable X mean pretty is there the are a story stay foundries, to year in for different years that because the to at the of industry for

Jerry Su

other just one may. question, I maybe if Then

create you for foundries? think foundry players? in the coming they the current constraint take the the Chinese on environment, from especially you. and you competition this Chinese existing come supply can Thank I Regarding or outlet, volatility during from more kind do share are competition what then landscape, seeing think, the impacted of

Jordan Wu

all answer, I the depending no is think cover simple sector. to on sectors. answer straight varies It there

contribution, higher any, there much right. see much It’s to is longer it where automotive, even enjoy example, very, – best little, For takes the revenue a any presence. very much position, harder Chinese we if and active area

So, is priority. their I think for not various reasons, that

from there. So, feel stress little we

and is I areas smartphone their For and in the consumer of TV. much think monitor notebook of less area the and more electronics, presence in

For monitor, strong smartphone the simple TV, compared in is reason brand name notebook and marketplace those a in there Chinese the to very that right. with and presence

I from through better and in So, because customer. get TV they came smartphone the think easier they probably end support

think good And But be notebook, our So, on especially slightly I enjoy monitor, still presence extent I think our increasing. automotive. also low-end are but areas, there presence in notebook certainly, lesser presence probably more those and a we will enjoy to presence, shares in very the we highest in market, the in a best two honestly, competition.

repeatedly honestly in being one in because than earnings presence presence This lowest are the actually speaking, smartphone. And is previous calls, we reasons. the smartphone is now in certainly, lower Our our we before mentioned limited by right of capacity.

Chinese are capacity, names, So, with brand again more we smartphone. to the and smartphone allocating capacity support presence limited tablet right. state compared compared to We to less

good pretty with more we back driver TDDI, I smartphone AMOLED take feel presence is about. right of start our once we hopefully the it’s but come a But once our that only think presence time, Yes. bit start think are pretty now. we regain little IC to which bloody strategy. traditional It We AMOLED. we competition still I will going production, with

Jerry Su

Thank you. Okay.

Operator

further time. questions Excuse me this no are presenters. There at

You may continue.

Jordan Wu

operator. you, Thank Okay.

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

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

Operator

This participating. concludes today’s for Thank call. you conference

You disconnect. may now

Himax (HIMX) 13 May 222022 Q1 Earnings call transcript