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    HIMX
    Earnings call· Jun 2026(Q2 FY26)

    Himax Technologies Q2 FY26 earnings call HIMX

    Aug 6, 2026 Source

    Executive summary

    Himax Technologies Q2 FY26 — Strong Automotive IC Sales Drive Revenue and Margin Beat

    Himax delivered a strong Q2 FY26, surpassing guidance on revenue, gross margin, and profit, primarily fueled by robust automotive IC sales and a favorable product mix. The company is navigating industry-wide supply chain constraints and rising costs by leveraging its global supply chain and implementing pricing adjustments. Strategic investments in smart glasses and CPO are progressing, with CPO poised for meaningful financial contributions starting in 2027.

    Highlights

    5

    • Q2 revenues of $227.4 million exceeded guidance, increasing 14.2% sequentially and 5.9% YoY, primarily driven by better-than-expected automotive IC sales.

    • Gross margin reached 33.1%, surpassing guidance of around 32%, due to a favorable product mix with higher-margin automotive ICs.

    • Profit per diluted ADS was $0.114, significantly exceeding guidance of $0.086 to $0.103, up from $0.046 sequentially.

    • Automotive business remained the largest revenue contributor, representing well over 50% of total revenues, with double-digit sequential growth in Q2.

    • Strong design-in momentum for WiseEye technology in smart glasses, with a leading global brand launching a product powered by WiseEye.

    Concerns

    3

    • Rapid rise in AI demand is creating capacity constraints, higher manufacturing/procurement costs, and extended lead times on mature process nodes for non-AI applications.

    • Large display driver revenue declined 21.0% sequentially to $19.2 million due to panel makers pulling forward inventory in prior quarters.

    • Q3 tablet IC sales are expected to decrease sequentially as capacity constraints limit additional shipments.

    Guidance & targets

    23
    CategoryTargetConfidence
    Revenue growth
    increase 7% to 11% sequentially
    high materiality
    High
    Gross margin
    around 34%
    high materiality
    High
    Profit per diluted ADS
    $0.08 to $0.10
    high materiality
    High
    Full-year 2026 automotive driver IC sales growth
    grow by double digits from last year
    medium materiality
    High
    CPO volume shipment
    significantly higher than in 2026
    high materiality
    Medium
    Overall business outlook (excluding CPO)
    robust sales growth for next year with continuously improved gross margin
    high materiality
    High
    Non-driver areas revenue contribution
    approaching 30% from around 20% at present
    medium materiality
    High
    Automotive Tcon growth
    another year of very strong growth
    medium materiality
    High
    WiseEye product line growth
    well positioned to contribute to growth momentum
    medium materiality
    High
    Mainstream automotive business growth
    continue to grow as well on top of a year of double-digit growth this year
    medium materiality
    High
    Large display driver IC sales
    decline by single digit from last quarter
    medium materiality
    High
    Monitor IC sales
    decline quarter-over-quarter
    low materiality
    High
    TV IC sales
    poised for sequential increases
    low materiality
    High
    Small- and medium-sized display IC business sales
    increase by high single digits from last quarter
    medium materiality
    High
    Automotive driver IC sales (TDDI and traditional DDIC)
    increase by a solid double-digit quarter-over-quarter
    medium materiality
    High
    Smartphone IC sales
    increase quarter-over-quarter
    low materiality
    High
    Tablet IC sales
    decrease sequentially
    low materiality
    High
    Non-driver IC business revenue
    increase by low teens sequentially
    medium materiality
    High
    Tcon sales
    increase by double teens quarter-over-quarter
    medium materiality
    High
    Automotive Tcon business growth
    deliver decent double-digit growth in Q3
    medium materiality
    High
    WiseGuard mass production
    scheduled to begin towards the end of this year
    low materiality
    High
    Smart glasses projects (WiseEye-powered) mass production
    expected to enter mass production in the coming quarters
    medium materiality
    Medium
    OLED adoption in automotive
    major ramping expected starting from probably second half next year and certainly well into 2028
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Large Display Driver IC
    Decline attributable to panel makers pulling forward their inventory purchases for high-end TV ICs in prior quarters. Monitor and notebook IC sales increased quarter-over-quarter due to higher legacy product shipments.
    Share of total revenues: 8.4% (Q2 FY26)Share of total revenues: 12.2% (Q1 FY26)Share of total revenues: 11.6% (Q2 FY25)
    		$19.2 million—-21.0%—
    Small- and Medium-Sized Display Driver IC
    Driven by broad-based customer replenishment of TDDI and DDIC following seasonally lower shipments in Q1, ramp-up of new TDDI and DDIC projects, and early pull-in demand for tablet ICs. Automotive business (DDIC, TDDI, Tcon, OLED IC) remained the largest revenue contributor, representing well over 50% of total revenues.
    Share of total revenues: 71.4% (Q2 FY26)Share of total revenues: 68.2% (Q1 FY26)Share of total revenues: 67.3% (Q2 FY25)Automotive driver sales (DDIC, TDDI): double-digit increase QoQTablet IC sales: increased sequentiallySmartphone IC sales: decreased sequentially
    		$162.3 million—19.6%—
    Non-driver sales
    Attributable to robust automotive Tcon shipment supported by replenishment across the board customer base. Expected strong growth momentum to continue into next year for automotive Tcon.
    Share of total revenues: 20.2% (Q2 FY26)Share of total revenues: 19.6% (Q1 FY26)Share of total revenues: 21.1% (Q2 FY25)Tcon business share of total sales: >10%Automotive Tcon share of Tcon business: >50%
    		$45.9 million—17.7%—

    Operational metrics

    26
    Gross margin
    33.1%up from 30.4% (Q1 FY26) and 31.2% (Q2 FY25)
    Q2 FY26

    Exceeded guidance of around 32%.

    Operating expenses
    $15.7 millionincrease of 0.8% QoQ and 3.6% YoY
    Q2 FY26

    Company remains disciplined in managing costs while investing strategically.

    Operating income
    $24.6 million
    Q2 FY26

    Representing an operating margin of 10.8%.

    Operating margin
    10.8%compared to 5.1% (Q1 FY26) and 8.4% (Q2 FY25)
    Q2 FY26

    Both QoQ and YoY changes driven by higher revenues and gross margin.

    After-tax profit
    $19.9 millioncompared to $8.0 million (Q1 FY26) and $15.5 million (Q2 FY25)
    Q2 FY26

    Equivalent to $0.114 per diluted ADS.

    Profit per diluted ADS
    $0.114up from $0.046 (Q1 FY26) and $0.095 (Q2 FY25)
    Q2 FY26

    Significantly exceeded guidance range of $0.086 to $0.103.

    Cash and investments balance
    $298.7 millioncompared to $332.8 million (Q2 FY25) and $287.6 million (Q1 FY26)
    June 30, 2026

    Sequential increase mainly driven by operating cash flow of $17.5 million.

    Annual dividend payment
    $44 million
    July 10, 2026

    Paid to shareholders, expected to cause a decline in Q3 cash balance.

    Employee bonus awards (immediately vested)
    $11.7 million
    Q3 FY26 estimate

    Expected to be distributed at the end of Q3, subject to Board decision.

    Inventory
    $151.5 millionabout the same as $151.7 million (Q1 FY26), but higher than $134.6 million (Q2 FY25)
    June 30, 2026

    Proactively adjusted inventory strategy about a year ago.

    Accounts receivable
    $220.3 millionup from $190.9 million (Q1 FY26) and down from $290.0 million (Q2 FY25)
    June 30, 2026

    Reflects changes in sales and payment cycles.

    DSO
    93 dayscompared to 86 days (Q1 FY26) and 92 days (Q2 FY25)
    Q2 FY26

    Days Sales Outstanding.

    Capital expenditure
    $4.3 millionversus $2.9 million (Q1 FY26) and $4.6 million (Q2 FY25)
    Q2 FY26

    Consistent investment in R&D infrastructure.

    ADS outstanding
    174.4 millionunchanged from last quarter
    June 30, 2026

    Total number of ADS outstanding.

    Diluted ADS outstanding
    174.4 million
    Q2 FY26

    On a fully diluted basis.

    Pretax gain from divestiture
    $23 million to $24 million
    Q4 FY26 expected

    Expected upon closing of divestiture of an equity method investee, subject to customary closing conditions and regulatory approval.

    Employee bonus expense (Q3 guidance)
    $11.8 million
    Q3 FY26

    Expected to lead to higher Q3 operating expenses compared to other quarters.

    Employee bonus (total annual)
    $13 millioncompared to $7.7 million (2025) and $12.5 million (2024)
    2026 estimate

    Estimated for 2026, subject to Board approval and Q4 profit expectation.

    Immediately vested bonus (total annual)
    $11.7 millioncompared to $7.5 million (2025) and $11.2 million (2024)
    2026 estimate

    Estimated for 2026, subject to Board approval and Q4 profit expectation.

    Employee bonus expenses (quarterly)
    around $0.2 million
    last 3 quarters

    Compared to the Q3 FY26 estimate of $11.8 million.

    Number of displays per vehicle
    more than 3up from 1 (15 years back)
    Current

    Continuing to rise, driving growth in automotive display IC business.

    LTDI chips per panel
    at least 5 chips
    Current

    Typically requires at least one Tcon per panel as well.

    CPO Gen 1 transmission bandwidth
    1.6T and 3.2T
    Q3 FY26

    Began engineering production ramps as scheduled.

    CPO Gen 2 transmission bandwidth
    6.4T
    Q3 FY26

    Began engineering production ramps as scheduled.

    Next CPO bandwidth target
    12.8T
    Future

    Company continues to make innovative designs for optics to meet rising needs.

    Market share
    —
    Current

    Management stated that the CPO market is too big for any single player to take 100% of the market, implying it will be shared among multiple prospering players.

    Industry KPIs

    5
    MetricValueDetails
    Lead timesextendedqualitative
    Design wins socket pipelineHundreds of design winscount
    Inventory channel inventory$151.5 millionUSD
    Node platform ramp scheduleGen 1 product (1.6T and 3.2T transmission bandwidths); Gen 2 product (6.4T bandwidth)bandwidth
    End market segment revenue mixLarge display driver IC: $19.2 million; Small- and medium-sized display driver IC: $162.3 million; Non-driver sales: $45.9 millionUSD

    Product announcements

    3
    ProductTypeDetails
    T2000 Tconmilestone
    WiseEye biometric power man modulesmilestone
    WiseGuardlaunch

    Deals & partnerships

    3
    one of our equity method investeesProposed divestiture of investment

    Transaction is subject to customary closing conditions and regulatory approval.

    FOCIStrategic partnership for Co-Packaged Optics (CPO)

    Deepening customer engagement and working towards mass production readiness for CPO products.

    multiple waveguide partnersCollaboration to deliver integrated AR display solutions

    Working with partners across Asia, Europe, and North America.

    Risks & headwinds

    5
    Supply Chain Constraintsnear term

    unprecedented strength on memory chip supply

    Mitigation: Leveraging established supply chain in Taiwan and strengthening presence across China, Singapore, Korea, Japan, and Malaysia; working with customers on pricing adjustments.

    Higher Costs & Extended Lead Timesnear term

    higher manufacturing and procurement costs, extended lead times

    Mitigation: Implementing pricing adjustments, some took effect in Q2, additional adjustments possible; securing sufficient capacity.

    Industry-wide Supply Tightnessnext year

    all major foundries indicating further price hikes next year

    Mitigation: Continuing to manage the situation like this year; proactive inventory building.

    Shorter Product Life Cycles in Automotiveongoing

    product life cycles are becoming shorter

    Mitigation: Driving broader adoption of platform standardization, favoring suppliers with comprehensive and validated technology portfolios and proven track records like Himax.

    CPO Mass Production Uncertainty2027

    outlook will be too uncertain, to quantify

    Mitigation: Focusing on getting products validated this year, ramping volume successfully with good yield, and meeting customer demands; not speculating on exact timing due to ecosystem complexity.

    What to watch in Q3 FY26

    5

    CPO Mass Production & Ramping

    2027
    CurrentGen 1 & Gen 2 engineering production ramps in Q3 FY26.
    TargetOfficial mass production kickoff and ramping curve.

    Why it matters

    CPO is a "once-in-a-lifetime opportunity" with potential for meaningful financial contribution, especially to the bottom line, starting 2027.

    The extent of CPO's contribution to our overall financial next year will depend on when the end customer kick off mass production and obviously, the ramping curve.

    Q&A highlights

    4

    How to quantify "meaningful" CPO revenue for 2027 and provide an overall business outlook for 2027.

    Jordan Wu stated that Himax does not provide guidance beyond one quarter but is well-positioned for robust sales growth and continuously improved gross margin in 2027, excluding CPO. He clarified that non-driver areas (automotive Tcon, WiseEye) will likely outgrow driver ICs, approaching 30% of revenue. For CPO, he expects very significant growth in 2027 from a low base, making a meaningful contribution to financials, especially the bottom line, with volume growth quarter-over-quarter starting Q3 2026.

    “for sure, CPO will see very significant growth next year, but we'll be comparing with the low base this year, right? But the growth will be very significant. The extent of CPO's contribution to our overall financial next year will depend on when the end customer kick off mass production and obviously, the ramping curve.”

    asked by Donnie Teng · answered by Jordan Wu

    2 min read5 chapters

    Detailed Narrative

    01

    Supply Chain & Cost Environment

    The rapid rise in AI demand is creating significant challenges for non-AI applications, leading to capacity constraints at mature process nodes for foundry, packaging, and testing. This has resulted in higher manufacturing and procurement costs, extended lead times, and difficulty securing sufficient capacity across many product lines. Himax is leveraging its global supply chain and implementing pricing adjustments to mitigate these impacts, with some adjustments taking effect in Q2 and more expected.

    02

    Automotive Display IC Leadership

    Himax is well-positioned in the automotive market, which is experiencing secular growth driven by more displays per vehicle (now averaging over 3), larger/higher-resolution displays, and diverse cabin configurations. The company's comprehensive portfolio, including LTDI solutions for ultra-large displays, advanced Tcon solutions for head-up displays, OLED drivers, and Knob-on-Display solutions, increases dollar content per vehicle. The industry shift towards platform standardization further benefits Himax, with its solutions being adopted as standard platforms across multiple car brands.

    03

    Smart Glasses & AI Sensing

    Himax is optimistic about smart glasses, offering both ultra-low power AI sensing (WiseEye) and microdisplay technologies (Front-lit LCoS). WiseEye enables always-on outward and inward sensing for AI use cases like contextual awareness and real-time visual assistance. A leading global brand recently launched a WiseEye-powered smart glasses product, and Himax is seeing strong design-in momentum with hyperscalers and platform providers, with some projects moving to mass production in 2027.

    04

    CPO Development & Outlook

    Himax, in partnership with FOCI, is making progress in Co-Packaged Optics (CPO), with Gen 1 (1.6T and 3.2T) and Gen 2 (6.4T) products beginning engineering production ramps in Q3 FY26. While official mass production timing depends on customer deployment, significant volume shipments are expected to begin in 2027, contributing meaningfully to financials. The company is also co-developing next-generation optical solutions with customers, targeting 12.8T bandwidth for HPC and AI data center applications.

    05

    Non-Driver IC Growth

    The non-driver segment, including Tcon and WiseEye products, is expected to outgrow driver ICs, approaching 30% of total revenue in 2027. Automotive Tcon is a key driver, with hundreds of design wins and strong growth momentum, including new projects entering mass production. WiseEye is expanding into new applications like smart glasses, biometric authentication (PalmVein), and security (WiseGuard), with mass production for some WiseGuard applications scheduled for late 2026.

    AI-generated summary of the company’s earnings call. Not investment advice.