Himax Technologies NASDAQ: HIMX reported first-quarter 2026 results that came in above its prior profit outlook despite a typical seasonal slowdown around the Lunar New Year period, as management pointed to improving demand trends into the second quarter alongside continued cost pressures tied to tight capacity in mature semiconductor nodes.
First-quarter results topped profit guidance
Karen Tiao, Head of IR and PR, said first-quarter revenue was $199.0 million, down 2.0% sequentially and at the high end of the company’s guidance range. Gross margin was 30.4%, also at the high end of the company’s outlook.
Profit per diluted ADS was $0.046, exceeding the company’s guidance range of $0.020 to $0.040. Tiao said after-tax profit was $8.0 million, compared with $6.3 million in the prior quarter and $20.0 million in the year-ago period.
Segment trends: large display strength, mixed drivers, softer non-driver shipments
In large display drivers, Tiao said revenue was $24.2 million, up 11.7% sequentially and above the company’s guidance for a single-digit increase. She attributed the upside mainly to “better-than-expected restocking of high-end TV ICs by a leading panel maker.” Large panel driver ICs represented 12.2% of total revenue, up from 10.7% in the prior quarter.
Small and medium-sized display driver revenue totaled $135.8 million, down 2.4% sequentially in what the company described as a typical low season. Within that category, Tiao said automotive driver sales (traditional DDIC and TDDI) declined double digits sequentially due to seasonality, customers’ inventory control after two quarters of restocking, and the tapering of automotive subsidy programs in major markets including China and the U.S.
By contrast, she said smartphone revenue increased sequentially, driven by a new OLED solution that began mass production with a top-tier panel maker for a leading smartphone brand’s mainstream model. Tablet IC sales also rose sequentially, which Tiao attributed to renewed demand for mainstream models after several soft quarters and the start of IC shipments for a customer’s new premium OLED tablet.
Non-driver revenue was $39.0 million, down 7.7% sequentially. Tiao said the decline reflected lower ASIC TCON shipments to a leading projector customer and moderation in automotive TCON shipments after several quarters of growth. However, she added that underlying demand for automotive TCON remained “robust,” supported by “a strong pipeline of hundreds of design win projects poised to enter mass production in the coming quarters.”
Margins, operating expenses, and balance sheet items
Operating expenses were $15.3 million, down 8.4% sequentially but up 9.9% year over year. Tiao said the quarter-over-quarter and year-over-year changes were primarily driven by stock-based compensation timing, while the year-over-year increase also reflected other expenses and the appreciation of the NT dollar versus the U.S. dollar.
Operating profit was $10.2 million, translating to an operating margin of 5.1%, up from 3.4% in the prior quarter and down from 9.2% a year earlier. Tiao attributed the sequential improvement to lower operating expenses.
On the balance sheet, the company had $287.6 million in cash equivalents and other financial assets as of March 31, 2026. Inventory was $151.7 million, slightly below the prior quarter, and accounts receivable were $190.9 million, with days sales outstanding of 86 days. Capital expenditures were $2.9 million, which Tiao said were mainly for R&D-related equipment for the company’s IC design business.
Before the call, Himax announced an annual cash dividend of $0.252 per ADS, totaling $44 million and payable on July 10, 2026. Tiao said the payout ratio was 100% of the prior year’s profit, reflecting a healthy balance sheet and a positive outlook for cash flow generation over the next few years.
Second-quarter outlook: higher revenue, gross margin expansion
For the second quarter, Tiao guided for revenue to increase 10% to 13% sequentially, with gross margin expected to be around 32%. She said the margin improvement would mainly reflect a “more saleable product mix,” including increased sales of higher-margin non-driver products and reduced sales from lower-margin products.
Profit attributable to shareholders was guided to $0.086 to $0.103 per fully diluted ADS.
CEO commentary: cost pressures, limited visibility, and growth initiatives
CEO Jordan Wu said a rapid rise in AI demand is straining memory chip supply and contributing to capacity tightness across foundry, packaging, and testing in the mature nodes Himax uses, creating upward pressure on costs. He added that rising gold prices have compounded cost pressures. Wu said the company is working with customers on pricing adjustments to share rising costs, with some increases taking effect in the second quarter.
While Wu said market visibility remains limited for consumer electronics and automotive in the second half amid geopolitical tensions, he reiterated that the first quarter marked a trough and that the second quarter recovery was tracking as expected, driven primarily by inventory restocking. He said the company expects upward momentum through the remainder of 2026, supported by a “meaningful number” of new automotive projects scheduled to enter mass production in the second half and anticipated growth in non-driver businesses including TCON and WiseEye AI.
Wu highlighted expansion beyond traditional display ICs into smart glasses, ultra-low power AI, and CPO (co-packaged optics). On smart glasses, he said a “leading brand” has adopted Himax’s WiseEye for smart glasses, with mass production expected later in the year, and that other prominent brands are expected to follow.
On CPO, Wu said the company and strategic partner FOCI are progressing on Gen 1 and Gen 2 products. He said the Gen 1 solution supporting 1.6T and 3.2T bandwidth is ready, with small quantity shipments expected in the second half of the year, while Gen 2 targeting 6.4T bandwidth is nearing completion of customer validation for AI data center applications. Wu said the goal for 2026 is mass production readiness with limited shipments, followed by an accelerated ramp beginning in 2027.
Responding to analyst questions, Wu said the company is “not worried about competition” at this stage, emphasizing execution and validation as the key priorities. He also said Himax will use its existing fab capacity, which he said could support “hundreds of millions” in annual sales for the CPO application if fully utilized, while noting that FOCI has discussed capacity expansion plans in connection with its rights issue.
On automotive, Wu reiterated Himax does not provide full-year numerical guidance but said the company is positioned for sales growth for the year with improved gross margin versus last year, with automotive a key driver. He said he expects automotive sales to grow quarter by quarter, supported by major projects scheduled to enter mass production in the second half.
About Himax Technologies NASDAQ: HIMX
Himax Technologies, Inc NASDAQ: HIMX is a fabless semiconductor company specializing in display imaging technologies. The company designs and develops a comprehensive portfolio of display driver integrated circuits (DDICs), timing controllers, and other high-speed interface chips that enable high-resolution panels for a wide array of electronic devices. Himax's solutions are tailored to support both LCD and OLED displays, ensuring compatibility with television sets, desktop monitors, laptops, tablets, smartphones and wearable devices.
In addition to core display driver products, Himax offers wafer-level optics and liquid crystal on silicon (LCOS) microdisplay solutions for applications in augmented reality (AR) and virtual reality (VR) headsets.
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