HIMX - Earnings call transcript Q2 2022 | Himax Technologies, Inc.

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Operator

Hello, ladies and gentlemen, welcome to Himax Technologies, Inc.

Second Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Mark Schwalenberg from MZ Group. ahead. go Please

Mark Schwalenberg

everyone, Call. Welcome, Himax Quarter Second Thank to Earnings XXXX you. the

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

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

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

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

Eric Li

After is business. Li, and our will by will followed Thank then take questions. the we Himax's quarter Himax. Eric you, everyone, On second the at you, give XXXX of outlook, on Mark, third today's our Officer, Chief performance joining call, IR/PR thank status consolidated XXXX, name My I update quarter will us. for review for an financial Jordan first which,

these guidance reduced activities brands from growing the forecast panel and led customer The reflect with We reduce to along better of conditions. consumer houses. more soft across board inventory to XXXX, and confidence. revised end control to our June flag stringent The presented hikes lockdowns long-term rolling challenging various navigating environment, war obstacles we business rate second combat ongoing while for interest the a diligently in yet continue on breakdown Russia-Ukraine ourselves and growth. quarter [Accelerating] business sustainable inflation, China focus -- continue rising positioning to disability the our XX, to shorter on to

updated were with margin in all range. Our the guidance line revenues, second and EPS quarter gross

XX%. of XX% XX.X% Second of to a $XXX.X quarter decreased updated net were million revenues but our decline within of guidance sequentially,

XX% $X.XXX, range XX%. Revenue diluted an at gross sales from declined more decrease XX, updated X the in sell-through Monitor year-over-year backdrop came IC guidance increased reduced areas notebook the ADS ADS Thanks per customers' Non-IFRS per June was in sequentially slowing end of the substantial to than QX, were and drivers growth to around of at $XX.X of Our end last XXXX. $X.XXX, of decrease display but sequentially of on initial guidance quarter, XX% a diluted updated visibility. sequentially. and IC QX, profit TV business was large high margin $X.XXX. IFRS XX.X%, was revenues XXX% [Technical Difficulty] ended upper for $X.XX. high-end guidance months of down market control within of digits $X.XX inventory but the for million to to of as to double a $X.XXX in our due XX% shipment profit such

Eric Li

Mark. you us Can Hello. hear This Hi, Eric. now? is

Mark Schwalenberg

Yes.

our in interruption the using some smartphones. are is there connectivity, but we So

Eric. will we on, So carry

Eric Li

So I'll probably display start drivers. from large the revenue for our

XX, than QX, the to XX% rate our panel from and thanks TV for sequentially. of QX, on to in IC revenues digits to shipment June were quarter display last revenue XX% year months a control decrease sequentially was quarter driver large and of area, total high-frame sell-through Large reduced on the due for revenue customers X XX.X% high-end sales this backdrop sequentially the XXXX, double So market for declined of as in $XX.X slowing IC IC inventory visibility. XX.X% more a ago. XXX% down sales increased and monitor. the end accounted such year-over-year Monitor ended but notebook million driver business growth compared gaming substantial for

decline display small driver on $XXX.X XX% segment. of was our million, a and Revenue medium-sized sequentially. Moving to

in in of was Our automotive representing as once XX% quarter, the QX, over business the largest contributor sales. second again was total revenue the case

DDIC supplier. total the premium trend a demand of upward throughout source sole XXXX. solution contribution a the as We this continue covering expect Meanwhile, to we for global business, leading for tablet automotive sales Tcon AMOLED production for piloted and in our successfully

X% IC for XX.X% to total in second XX.X% accounted more by the logistical decreased the Small medium-sized lockdown. impacted The adversely hurdles IC automotive of sales quarter low compared a China ago. for teens in market business on and quarter XX.X% the the but by AMOLED brought for than previous quarter in Our was sales accounted sequentially, year driver of total sales. and segment QX

year-over-year product better win mix. However, up on to sales were for a the thanks broad automotive coverage IC XXX%, and quarters basis, almost design

the first Our half despite and disruption. automotive the sales headwinds supply IC up XXX% chain macroeconomic year-over-year were in

Second high revenues remain channel in almost declined brands quarter smartphone backdrop OEMs tablet as represented of continued second ratings and houses, against driver quarter. stubbornly double digits and demand. sequentially sales the end across inventory both the the IC and tablet sales smartphone panel a core sluggish Both

in China. stemming with a from disruption due the E-Paper last the delayed than grew XXX% to business that customer, shipment logistical by increasing sequentially quarter along quarter, leading were from Our demand second more lockdowns in catch-up

slightly from a $XX.X ago. million, Second quarter quarter was down nondriver revenue

total XX.X% of in total business year. by automotive decrease Tcon the same for displays. of supported Non-IFRS Tcon quarter. XX.X%, quarter Tcon revenues previous -- Non-driver over flat quarter gross QX accounted of shipment sales high-end tablet was XX% year in from a second sequentially, and Our as X% represented for increasing the AMOLED our compared and margin XX.X% products period second for of for XX.X% a last and to ago. quarter in the XX.X% the was business last

were margin we adversely X factors reported, that primary As impacted profile. our previously there

support in worldwide. demand nonautomotive price First, of soft adjustments customers amid our

margin higher of Second, IFRS the for for foundry previous quarter. was our QX also the the cost gross prices reflected XX.X% goods sold quarters. for

were each of ago. increase quarter from operating previous the of a the XXXX. caused year-over-year will quarter the was up sequential annual the ago The remaining expenses we and preceding XX.X% of R&D non-IFS bonus period $XX.X second of will change. September quarter and expenses grant up a $XX.X increased each quarter due bonus award including because X a date. employees tranches immediately mainly vested be R&D out expenses the third X.X% tranche compensation, mainly year recognized increased from for on year. operating quarter first, and The Our third compensation, The XXXX end higher of cash were and which from and recognized the of figures million, quarter, salary compensation the million -- equally awards be at second $XX.X annual vesting The which the vested by and over the in from a IFRS ago. basis expenses, from expenses were $XX X.X% while up of expenses. RSUs year the was million IFRS in up to totaled straight-line million, anniversary for second higher remainder The XX.X%

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

secure annual cash year macroeconomic and portion. the substantially $X.X compared quarter in The following We balance of of end The will reserve was time equivalents of of million historical cash third cash which higher uncertainties. ADS to inflow as annual had million quarter long-term that as a $XXX.X decision profit. at of and received during and last current same the It customers average, be ratio Turning cash of the was operating dividend net to financial is was per The QX, assets cash other from quarter, the payout balance million $X.XX $X June of to million chip payout the July. last of million noting sheet. had payments our cash the our our their light balance million year's loans than in long-term the $XX.X unsecured equivalent to reduced of was XX% mainly XXXX, the $XXX.X to $XXX.X cash, of worth end dividend XX, lower of supply. ago. of million reflecting $XXX.X at from We

were ago. inventory from XX, last from XXXX quarter million up million end $XXX.X of a up as and quarter year million, June Our $XXX.X $XXX.X

the quarter, Our XX Accounts customer compared $XXX.X quarter. turn a was XX demand growing high from due days The year advance. to electronics. inventory as million, down million demand to inventory, led end sales by in as control triggered the a visibility, $XXX particularly strict at last end in the our sluggish in quarter drop but inventory and from last adversely up XX from XX, cost abrupt days production DSO at months halt begins always $XXX June ago XXXX was of and our ago. market elevated receivable year million affected in days end consumer reflected level in to and customer reduced inventory level which demand

Second a quarter $X.X $X.X were million versus million year million quarter and last ago. capital expenditures $X.X

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

last June has diluted the $XXX.X quarter basis, from fully was outstanding, ADS of XX, million. million On a ADS number for Himax $XXX.X outstanding second of As unchanged XXXX, quarter. total

third turning Now guidance. quarter to our XXXX

the XX% depending on XX.X% around to mix. range revenue to margin of expected is decrease fully profit XX.X% diluted third expect be $X.XXX Non-IFRS in shareholders to final sequentially. to gross attributable ADS. to per XX.X% We quarter is XX% expected product be to to Non-IFRS

third to this diluted estimated shareholders September usual of $X.X bonus, IFRS per RSU to profit year. grant the ADS. range including or XX on annual will to awards in our quarter practice, and Similar employees we The attributable is to cash fully around be $X.XX

IFRS taken $XX.X XXXX diluted per to The expensed will board ADS ADS on is date. which which for around bonus, third per be immediately vested grant million, profit quarter assumed has $X.XX the subject be the and annual to account of expected million now or diluted guidance into $XX out approval,

total and among best decision and board amount depending and its total our the profit bonus a are scheme. bonus actual the amount immediately As the our amount current vesting materially other reminder, QX for the portion on, things, and vested vary the final could only, estimates annual

In we to the compared immediately. expenses XXXX is $XX.X previous XXXX to for other third out quarters to the million expect case vested annual As was of year. bonus IFRS comparison, quarter in of bonus the totaled higher million, $XX.X annual the operating years, lead which

at As company's X regarding clarify to the another General rather be duration is proposed existing XX, the Annual on held that Plan, than LTIP, for of plan. August regarding company's side Long-Term XXXX, note, a we'd Meeting to the LTIP the to proposal initiate a year's Incentive new to resolution years like the this extend

incentive RSU XX to years them an compensation. bonus, expire this grant years, to every again including for of Therefore, past the of X other on September end an the we employees at which a The is new RSU at for is long-term RSU LTIP, of of unless couple in the annual September earlier, use around a success will mentioned year to General important cash September this thereafter X, is means employees Meeting to existing of We XXXX. time in company. the was employees as claim duration year's on the extended companies. to plan As and bonus, their extended grant devotion on initiated will believe the focus cash and or XXXX annual a we year again be to for or few only for Annual and initiated, award able

end As if already June now the been of employees the remaining over to extended. ordinary of XX% of is I floor the among existing number award of Jordan, the this call XX shares will authorized XX% is total Jordan. still the to the have turn valid granted plan year, our with the million yours. LTIP,

Jordan Wu

panel to city Thank to frozen rapidly Eric. initiated cuts. for caused extended faced business, are downward time led the and along of demand, eroding High year. as interest have for QX. and present ongoing together Consequently, IC adjustments panel the the downsizing demand while demand to level to panel inventory visibility fab in makers continue in clouding and headwinds halt macro our disruption with Several of you, we inventory level their inventory and production war more has with lead factors The widespread also China second brands plans. sudden inflation, enter prices rates potential rise to elevated lockdowns our tied-up the rigorous addition utilization with significant rising half procurement

the new cycle, back orders cutting offloading this we naturally inventory While in are with on suppliers. our midst of

not industry suppliers charges that XXXX entered orders contracts the in foundries However, unprecedented when we the incur and demand minimum with purchase back-end are the if may experienced fulfilled.

to ongoing predominant increase for negotiation in the gross margin the already and in executing with QX ways as seek factored still is are the for charges agreements suppliers have the flexibility we prior such been While guidance contraction. QX factor

inventory environment current believe it around, While restock turn our QX inventory curtail new our to continue we off we peak and will are business we customers starts when the digestion. labor the uncertain as about could in our

healthy On segments, remainder growth we backdrop be for LDDIC is demand sluggish for front, and remain Yet the visibility. the the by revenue automotive set still believe restored is tablet in the there the will better sector QX, boosted where to quarters, of pressure Against be reflects market of could goods still our inventory of to prices conditions, the price selling to offloading margin QX the cost erosion. because previous we lead year. still gross challenging sold our expect under high from

sensing, there support gross automotive, of margin decline likely few will modest and is price image product for still more XX% a sales. AMOLED which sequential the account solid QX be notably as Tcon, altogether However, in from than now areas, AI our total

Our panel quarter that, our trough automotive on a longer-term large fourth I business. a high From are with especially automotive QX. continue have of we position. begin sales to our With to the and update leading about optimistic from business the of strong look expand very an driver rebound a IC likelihood will perspective, market

control with and monitor, and our outlook visibility muted from basis impose large inventory driver strict business sell-through forecast customers. inventory decline revenue digit, notebook expected pressure reduced sales remains our the are TV due destocking inventory deterioration from to measures digit Our moderated while control. a and to for market Chromebook IC third customers soft typically sequentially IC monitor is sales, double customers what near-term decline continuous IC to and TV customers. double large visibility their business QX reflecting quarter seasonal of display we on overall The see softness, exercise by driver as to below projected reduce

sequentially. In revenue to third digits turning expected Now decline is medium-sized display quarter, and IC driver small- the to business. double the

lockdowns are China. severely when sales the second double QX was production during inventory sequentially disrupted down quarter accumulated digits by in automotive Our destock widespread IC the to anticipated customers city be driver as

However, is areas, those better the automotive next the for sequential much than likely less year decline and of to business QX automotive suffered by be other revenue business. into product for extent while also our visibility are

sales QX As despite to we outgrowing indicated with momentum our QX strong expect DDIC. driver sales the in earlier, automotive decline, business of loss IC TDDI see

driver We The and to their amidst our meantime, are the to set reduce decline double sales driver visibility business to the efforts IC Himax growth and the of of digit. a continue soft the macro weaker for key be inventory ongoing come. quarters expect of our for forecast as prolong demand high-margin to environment. In customers TDDI deterioration smartphone result backdrop tabelt automotive many to of

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

contributor. sales of First, QX. automotive Sector represents our sector, on automotive the earlier, as XX% largest our mentioned revenue total now in is over Eric

We are our such as local AMOLED. and position IC dimming poised sustain technologies TDDI LTDI as traditional most to the automotive comprehensive offer ranging and dominant to Tcon, we portfolio share market from product TDDI, leading global

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

for segment. While on mass market, deployment in it early TDDI still be of to track stage is is fast-growing automotive a

are coverage automotive our a our auto trigger displays adoption which sales, of Tier automotive the that makers, adoption units incentives in-cell panel at to million Xs NAV for design of over of a continues expect brands. and quickly stimulate has cumulatively accelerated China's TDDI we by rapid higher TDDI. government XX to We rate incorporate been end glad to report Meanwhile, QX. reach TDDI milestone and automotive recently may more with expand win shipped created that to pace advancing

that While smart small growth electrification growing rapidly the than automotive content per cabin semiconductor increasing smart might values by increasing vehicle. our content that automotive and on sales -- small dictates XXXX and -- be reliance for and by predicted, values less semiconductor previously cabin

of top the will beneficiary the to already market these sustainable and strong see a key of expect trends on base. XXXX We automotive in be growth

sequentially where momentum our AMOLED to for start stated. businesses, tablet both with high-end tablet expect and and brands to foreseeable certain future. are to to provide in both it We who product shipments smartphone as expected rise last decline earlier regarding digits on DDIC lines we Tcon double Next, the the set

a despite their bezel of on smartphone, awarded number much postponed and backdrop support new high-resolution frozen growing of being midst demand. growing the ultra our their high-frame designs that of the inventory customers, customers older for have slim for market As next-generation for projects of models end excess shipments to by key been in rate, features

business. the E-paper driver to Turning

product lineup. Another small in medium-sized and driver

amisdt decline business market. business soft expected double downsizing their electronics due to to is E-paper plans consumer digit Our customers quarter-over-quarter annual

long-term continues for e-paper world projects reduction, we the efforts endure. to displays. ASIC toward spent colored size, customers next resolution, higher As we R&D expects for footprint to with Therefore, certain e-paper continues their to energy demand carbon green and transition collaborate with world-class and on generation toward products larger increased

glad improving latest critical Ink devices. COMPUTEX of was e-book Award” in reduced also display, The “Best their e-paper E greatly report for power awarded are e-paper with that latency display the We e-paper of of handwriting next that the XXXX. while one enables average ASICs consumption, Choice for for ASIC characteristics to our with collaboration solution speed fast generation are

an for update on AMOLED. Next

up In with applications. makers with panel for gear mass AMOLED AMOLED third the and tablet in quarter. to production more various commencing continue major development models than sales Chinese sequentially IC XX% We Korean this for to are expected driver jointly quarter, AMOLED increase more

is few driver, years. X% the next more Our Tcon of to AMOLED business, amount sales and to and than growth slated in in strong QX for total including expected

and customer. both AMOLED a sole driver supplier the source As we tablet are Tcon global leading provides reminder, and a for

projects worldwide NEV of increasing number is our driver with and vendors. the Tcon for and automotive car for makers awarded AMOLED flexible addition, conventional In also

for for of smartphone, future. light the such drivers driver leading years, few making the constraints notebook next progress for are for secured AMOLED smartphone In capacity continues the houses and development on panel display capacity vie serious more we we Finally, display TV in with have for AMOLED to and of good applications. the

momentum Tcon Starting these Yet, me sales for growth see share sequentially, let digit made for sectors controller. pressured notebook on Tcon automotive we progress the and markets. decline we've non-driver of coming to to Now, QX to We expects the some update two shipment decent shipment in IC TV, tablet businesses. double an on the areas anticipates by lower timing set monitor quarters. is enjoy AMOLED and design-in accelerating and with

bigger OEMs, already sales about and projects models car will Our of local growth cutting-edge sales XX% anticipates Tcon into makers’ which volume quarter We some with penetrated represent of has and commencing mass dimming starting automotive numerous won of premium in shipment which with awards additional X% Tier-Xs production. Tcon more new year-over-year for total the car automotive third XXXX. than slated

Tcon, including their source the a as second in commenced production AMOLED as and tablet AMOLED model. leading supplier newly mass to driver, both support quarter, the Tcon earlier, of For tablet Company tablet sole reported solution, launched in the tablet brand the successfully

design more new undertaking are panel larger we even customers. with Additionally, developments supporting sizes named

sensor, with to more with shipments customers partners CNN-based Tcon We foundry Company’s AI pursuit and expect image sensing in of and gears quarters secured our ultralow-power about incorporates our to gain AI of Switching optimistic algorithm. long-term image are capacity ultralow key CMOS in proprietary total traction business the processor potential growth. the upcoming power to AI solutions, from which sustainable

image On notebook, continue their support up business Dell’s production the sensing AI a range ramp we models. in new to of for

number use effort interest cases to for AI of CPU solution an other in have notebooks. further a players also addition, shown total broaden next in laptop vendors platform our leading and generation In

and to market. new In variety smart look-away context-aware AI next developing detections, a notebook are presence, onlooker of features for generation addition we

by Chinese some a Our AI the for delays and in adopted fit is now city is sensing industry a AI end-point resource-constrained tiny featuring or ultralow ardently is this AI one by battery-powered new factor, begin China. area solution AMR shipments slated has end-point several caused in meter vendors of after solution, to half second our a explored in AI Automatic perfect our reading showcases image and to vision of successful form tinyML lockdowns AI is the AI total where by the communities. power been applications, which year

the and/or with IoT meter few Europe, India providers China, quarters. OEM/ODMs over We and network Japan, water have past off kicked jointly from authorities, utility companies, projects also

battery Our real-time over easy water detection conventional pack operate a power and leakage. such years install over with can readout existing solution X as for consumption water efficient and abnormalities to water the AMR of is meters for

we We in solution smart bike areas in such of our tinyML and seeing parking, as an office, room save endoscope automotive, are new where energy of agriculture power projects automation several and also our smart AI have aim ultralow office, expanding solution and with home, environmental AI office based, broadly used smart presence shared meeting temperature conservation. areas ongoing to with adoption people control. is for counting human ODMs capsule end-point more detection for lighting In and

we Seeed environmental with aiming real-world organizing XXXX", conservation, Edge Sustainable Hackster.io, challenges. experts the the Contest environmental Studio, For and collaborating Into are of for AI to Planet to event Wild world different "IoT around Impulse tackle the cluster jointly

excited are throughout line has We beyond. generated product increasing traction AI this to the see by and XXXX new expect relatively sales contribution and

technologies, WLO, metaverse. continues LCoS like future same of Himax on the work know-how giants the aggressively lines time with a generation next multiple metaverse key lot exceptional applications. production, role ongoing of have covering this years an proven the potential. positioning playing world-leading are by the is who to Currently of product record in intensive optical a our Sensing. on tech give Himax enabling ourselves field optical-related XD capture mass with emerging investing in vast opportunity related we presented collaborations and of track I'd and our Lastly, related to update with at Equipped strengthening to better

recent go Now, few a to over updates. quickly

microdisplay. LCoS our on First,

front-lit their color joint-collaboration where power which glasses. have to AR and high factor, leading names full future OEMs steady the illumination for AR unique features microdisplay in continues light-weight, characteristics edge critical glasses generation with products low form tech leading small of of are LCoS and next for with consumption, we offers success and We that

We in have more and course. thus progress received due promising far feedback report will

control interface on gesture update for human the Moving to sensing. for XD

Our camera an for perception gesture is AR/VR Last, and update technology gesture XD be on to for applied current can that recognition. for project. controller-free goggles sensing precise scanning deployed WLO into control, reconstruction technology a to XD XD empower

still real begin purpose build XD Our is to device environment technology for collaboration of avatar engineering expects the customer’s time XD twins, is sensing of deployed generating XXXX. scanning The XD and we end and digital surroundings. the from for underway,

While much still related optical the the it products innings. in metaverse vast, and very is opportunity in is early

about We in and the are come. to strong years product potential its for its work continue optical though to future growth portfolio position optimistic to

expect business, revenues decline non-driver IC your are to in Thank We interest For concludes you quarter. this and now double digits That today's you my questions. ready report in third take sequentially the Himax. for to we joining call, we for quarter. appreciate

Operator

Su question first our And Instructions] Suisse. Credit comes [Operator Jerry from from

Jerry Su

Jordan, I want on you wafer capacity. regarding to ask about, think, I the LTA

I think type turning has for related. of except been you as wafer -- this know, has OLED of the most

about obligation and perhaps penalties your to are structure to foundry? the these first is then what question So current you of pretty us much pay you to the foundry mentioned regarding That's And question. by quarter, some with is what quarter tablet. tablet then of -- could forced fourth you revenue comments the automotive more our contracts recovery? and business But Are Or some color keep suppliers? to second you see can more think terms? fourth rebound. for know the the you about give your able I about the renegotiate it new the for

Jordan Wu

Thank Jerry. you,

to degree well. LTA. some mostly That LTAs our on also foundry, -- backend Firstly as but actually actually cover

me negotiating I remarks but prepared and And end the for right? are are to mean total. everybody that I Some the I I said people expiring better the in year, of are need compared we getting mean, that prospect indeed, better towards the a mean no market, short-term of -- to is my portion there's small elaborate. about the picture

to and I So of our in I remarks, partners our said contracts. our of increase prepared execution think those to together, hopefully as are flexibility the working us we

saying are agreement. we we to going the going away not walk to are or from are the agreement we so And cancel

important I for will this Firstly, the look And time mean, our longer-term a a you feel growth. agreements. long-term company, horizon certainly, we as secondly, we contract very still -- if to horizon, be need into honour

are So QX guidance, contracts. have because the would flexibility think on in required mutually fact to we potential There increase for factored want understanding new agreement. though than by is the we hopefully we incurred our be on the the according this these penalties basis, minimum our is execution to In repeat a to -- starts important. agreement our a I working less this where I

So been factored portion construction. represent our the those margin those in in. And charges QX of fact, have predominant

honour goes those but So negotiating, be us we incurred in to QX contracts. if those less than major -- guess we're hopefully, as think and everything short, QX. will charges planned continue such will I without And surprises, to of hopefully think any I I

reason if towards simple the in a you based sudden wafer end of the is our QX, For starts, there's market look demand. on freeze so back in application that QX, right,

will be depend our year or selectively and LTA started possession be push outlook the in reach QX hopefully also, with already was or and the question too So And that said, the certainly, surprise. peak in your visibility comment wafers, And from much I we so also itself rules QX new we starting everybody reason really and revenue. that of scenario some as And that for hit lower and limited, of And out is be was start or But That's also of wafer QX, to now. certainly come customers' and LTA the inventory, most can't the starts that our plan. is too our QX, new wafer in hopefully is the one very after will because wafer is will we next negotiation the QX QX QX. will on by QX, peak. that minimum. reason start well, why our end starts late, charges of main but on explains the charges. certainly that in inventory -- much QX. about because brakes, in hopefully I able -- in the have why QX all when compromised. to will much reduced the But be rewritten new some will will And the to our the QX there will QX, right? be looks that even new that And will certain likely second And

automotive, And very and relatively really will automotive say but relatively of our both sectors, saying exactly inventory chance and their QX’s good from is to QX. to those decent be recover explains QX back it. deal certain emerging from say they widespread are therefore, X tablet, and normal, a great few limited. of tablet. must it as off quarters starting it automotive just lockdowns customers hiccup as we strong these we TV, so I in I that, significant shipments And a China, customers have declines or small, already, believe there's right? tablet. the be supposed pretty visibility took are a the can't the And QX, during -- new other few will unused. and of sectors, towards our are be smartphone, Having and in be level QX other for generation -- running dip by and now we especially inventory rebound -- our than as Automotive, see AMOLED We In although sequential QX, supported QX, panel, revenue QX. where at et we in of The say, of for in our there’s AI visibility customers' visibility said must are inventories than business inventories similar loss. areas appears But for from like suffered that there's -- again, for story severe -- I to cetera, in was a in think normal used and during remains a end will was large consuming our that a our said, I rising QX, which QX

QX a Having that terms that, So visibility of longer-term than must restocking. for of is us, lower in of process I visibility for said will automotive. be say the tablet certainly

Operator

would further over like the for turn no questions. to closing showing I Instructions] remarks. I'm now Jordan call to back [Operator Now

Jordan Wu

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

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

Operator

This today concludes participation.

now disconnect. You may

Mark Schwalenberg	Investor Relations
Jordan Wu	President and Chief Executive Officer
Jessica Pan	Chief Financial Officer
Eric Li	Chief IR/PR Officer
Jerry Su	Credit Suisse

Himax (HIMX) 11 Aug 222022 Q2 Earnings call transcript