Himax Technologies NASDAQ: HIMX expects fourth-quarter revenue to fall sharply from the third quarter as some automotive display customers reduce orders after building inventory earlier in the year. The forecast comes despite third-quarter profit that exceeded the company’s guidance.
The display chipmaker expects fourth-quarter revenue to decline 22% to 26% sequentially, with gross margin flat to slightly higher. Profit attributable to shareholders is projected at $0.045 to $0.065 per diluted American depositary share (ADS), excluding a potential gain from a proposed investment divestiture.
President and Chief Executive Officer Jordan Wu described the automotive order correction as a short-term setback and said the company expects double-digit revenue growth in 2027, excluding its emerging co-packaged optics business.
Automotive orders drive fourth-quarter decline
Wu said the revenue forecast primarily reflects an abrupt reduction in orders for automotive display driver ICs, including traditional display driver ICs and touch and display driver integration products. Some panel makers had accelerated purchases in the second and third quarters to meet orders tied to Chinese automakers’ overseas expansion, he said.
In recent weeks, certain panel makers with significant exposure to Chinese vehicle exports sharply reduced their fourth-quarter forecasts, Wu said. He attributed the change in part to earlier aggressive export expectations and concerns about inventory in distribution channels. Potential trade barriers and reductions in Chinese export tax rebates for new energy vehicles have added uncertainty, he said.
By contrast, forecasts from panel makers primarily serving non-China customers have remained steady, with some posting slight sequential increases in fourth-quarter orders, according to Wu.
Himax still expects full-year automotive IC revenue to grow approximately 10% in 2026, even after the fourth-quarter correction. Wu said the company’s 2027 outlook assumes roughly flat global vehicle shipments and is supported by new project launches, more displays per vehicle and higher chip content per display.
Third-quarter profit tops guidance
Third-quarter revenue rose 8.5% from the prior quarter to $246.8 million, while gross margin increased to 34.2% from 33.1%. Profit was $0.107 per diluted ADS, above the company’s $0.080 to $0.100 guidance range because operating expenses were lower than expected, Head of IR/PR Karen Tiao said.
Net profit was $18.6 million, compared with $19.9 million in the second quarter and $1.1 million a year earlier. Operating expenses increased 21.9% sequentially to $61.8 million, largely because of the company’s annual employee bonus expense.
Small and medium-sized display driver IC revenue rose 8.9% sequentially to $176.8 million, aided by double-digit growth in automotive driver sales and higher smartphone IC shipments. Non-driver revenue increased 11.2% to $51.0 million, supported by automotive timing controller, or Tcon, shipments. Large display driver IC revenue slipped 1% to $19.0 million.
Himax ended September with $285.3 million in cash equivalents and other financial assets. Its proposed divestiture of a stake in an equity-method investee is expected to close in the fourth quarter, subject to customary conditions and regulatory approvals. The company expects an after-tax gain of approximately $19 million to $20 million upon closing.
Growth plans and supply costs
Although automotive driver IC sales are expected to decline in the fourth quarter, automotive Tcon sales are projected to rise by a low-teens percentage sequentially. Wu said full-year automotive Tcon sales are on track to grow more than 40%, with another strong year expected in 2027.
Wu also pointed to opportunities in electronic paper displays and the company’s WiseEye AI processor. Alibaba adopted WiseEye for its Qwen Glasses, he said, and numerous smart-glasses projects involving the technology are expected to enter mass production starting in 2027.
Himax expects non-driver products to approach 30% of revenue next year, up from about 20% currently, Wu said. He added that those products generally carry higher gross margins than driver ICs. Despite announced price increases by foundries and packaging and testing providers, the company expects gross margin to remain relatively stable or improve slightly in 2027, excluding co-packaged optics.
Wu said Himax has secured 2027 capacity commitments from key suppliers for key product areas and is working with customers to share rising costs.
Optics production remains a focus
Himax is working with strategic partner FOCI on optical components for co-packaged optics applications. Wu said engineering ramps are underway and that shipments are expected to grow over coming quarters, although the timing of mass production rests with end customers.
FOCI’s board approved approximately $100 million in capital expenditures for additional manufacturing space and equipment, Wu said. Himax expects the business to contribute meaningfully to revenue and profitability starting in 2027, but excluded it from its double-digit growth outlook because the pace of the initial ramp remains uncertain.
During the question-and-answer session, Wu said Himax remains exclusive with FOCI for the time being and is focused on establishing reliable mass production. He said it was too early to assess market-share changes in the developing market.
About Himax Technologies (NASDAQ:HIMX)
Himax Technologies, Inc is a fabless semiconductor company headquartered in Tainan, Taiwan. Founded in 2001, the company designs and supplies display-related integrated circuits and other semiconductor components for manufacturers of consumer electronics, automotive systems and industrial devices. Himax has been listed on the Nasdaq since 2006 under the symbol HIMX.
The company's product portfolio includes display driver ICs, timing controllers, touch and display driver integration products, and other components used in televisions, monitors, notebook computers, smartphones, tablets and automotive displays.
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