Himax Technologies, Inc. Q3 FY2024 earnings call

• Q3 revenues and profits surpassed guidance, gross margin in-line with guidance despite economic challenges. Better results from stronger order momentum in automotive, tablet, and Tcon. • Large display drivers saw revenue decrease due to weaker monitor and TV IC sales, while notebook IC sales increased. • Small and medium-sized display driver segment had better-than-expected sales in automotive and tablet markets. • Automotive driver sales outperformed expectations due to Chinese government trade-in stimulus. • Non-driver sales declined, but automotive Tcon sales increased. • Strict expense controls with full-year 2024 OPEX projected to decline mid-single digit. • Jordan discussed Q4 outlook, macro challenges, focus on automotive, AI, WLO, OLED; updates on notebook, smartphone, tablet ICs, OLED business, WiseEye solution, and WLO progress.

Third quarter revenues were $222.4 million. Large display drivers revenue was $30.7 million, a sequential decrease of 21.2%, accounting for 13.8% of total revenues. Small and medium-sized display driver segment totaled $155.4 million, a decline of 2.2% sequentially, accounting for 69.9% of total sales. Non-driver sales reached $36.3 million, a decline of 13.1% from the previous quarter, accounting for 16.3% of total revenues.

• Fourth quarter revenues expected to be flat to slightly down sequentially. • Gross margin expected to be flat to slightly up sequentially depending on product mix. • Fourth quarter profit attributable to shareholders estimated in the range of 9.3 to 11.0 cents per fully diluted ADS. • Macro environment challenging with panel customers reducing production and end brands cautious on panel procurement.

• Macroeconomic challenges affecting IC demand. • Panel customers reducing production and end brands maintaining low inventory levels suppressing IC demand. • Fluctuations in automotive market demand, especially from Chinese market, with uncertain supply and demand.

Q: Regarding automotive business, why is there volatility and how confident are you to outperform peers in Q4?

A: Rush orders from various customers, including Chinese panel makers due to trade-in stimulus. Confident in projection but less confident on Q1 2025. Automotive TDDI to grow, Tcon and LTDI also expected to grow.

Q: Regarding CPO progress, is CPO playing a role in Q4 non-driver sales growth?

A: No, CPO doesn't contribute to Q4 non-driver sales growth; early, very small quantity shipment for engineering verification.

Q: Update on CPO future progress?

A: WLO for CPO has engineering challenges. Timeline uncertain, but working on squeezing more optical fiber lines. Existing WLO fab can be used, but long-term demand projections not known yet.