Automotive Display Drives Himax Q3 Profits

Taiwan’s Himax Technologies’ Q3’23 net revenues came in at $238.5 million, up 1.5% QoQ and 11.6% YoY. This topped Himax’s guidance range of a 7% quarterly decline to flat growth. Strong sales of automotive products and TDDI chips drove the revenue beat. Q3 profit reached $11.2 million.

Himax TechnologiesQ3’23Q2’22Q3’22
Revenues (in thousands)$238,515$235,031$213,631
Cost of Revenues (in thousands)$163,692$183,961$136,828
Gross Margin31.4%21.7%36.0%
Operating Income (in thousands)$11,090-$2,142$3,945
Net Income (in thousands)$11,236$888$8,319

Gross margin expanded substantially to 31.4% from 21.7% last quarter, landing at the high end of guidance of 30.5-32%. This reflects the absence of one-time termination costs that impacted Q2 margins, as well as a favorable product mix shift towards higher margin automotive products.

“Ongoing macro headwinds are limiting our visibility as panel customers remain tentative about demand prospects, leading to shortened forecasts and more frequent last-minute orders,” said Jordan Wu, President and CEO of Himax. “Having said that, our longer-term outlook for the automotive business, our largest revenue contributor, remains positive.”

Automotive sales represented close to 45% of total revenues in Q3. The company saw robust double digit sequential growth in this segment as automotive customers resumed orders for both traditional DDIC and TDDI products. Himax also commenced mass production shipments of its LTDI technology, further cementing its leadership in automotive display drivers.

On the flip side, sales of smartphone and tablet drivers declined double digits and mid-teens respectively, reflecting weak end market demand. Overall, small and medium-sized driver IC sales grew 7.2% sequentially.

The non-driver segment, comprising areas like timing controllers and CMOS image sensors, declined 14.4% sequentially but still beat guidance thanks to stronger WLO and CIS product shipments. Moving down the income statement, operating expenses jumped 19.8% sequentially to $63.7 million, primarily reflecting the timing of annual employee bonus payments that are immediately expensed.

For Q4 2023 guidance, Himax expects revenues to decrease 5-11% sequentially, reflecting conservative inventory management by customers amid demand uncertainty. Gross margin is guided around 30%.

Wu concluded, “Thanks to accelerating growth in automotive business, improved cost structure, normalized inventory levels, favorable product mix, and our emphasis on higher margin, high value-added areas, like Tcon, OLED and AI, Himax is well positioned to deliver sustainable long term revenue growth and profitability.”