Himax, Display Industry Bellwether, Cites ‘Sudden Halt in Demand’

Several negative “macro level factors” combined to create “significant headwinds” for the Himax Technologies business in Q2, said CEO Jordan Wu on a Thursday earnings call. Himax supplies display-driver chips to the major panel makers and is viewed as an accurate bellwether of display industry conditions. Q2 revenue of $312.6 million was down 14.4% year over year and was 24.3% lower than Q1. High inflation, rapidly rising interest rates, the war in Ukraine and the potential for more Chinese COVID lockdowns “caused widespread disruption to demand,” said Wu. “Faced with frozen demand, tied-up inventory and eroding panel prices, brands are downsizing their panel procurement plans,” he said. “Consequently, panel makers initiated downward and extended fab utilization adjustments along with rigorous IC inventory cuts. The sudden halt in demand together with the rise of our production lead time has led to elevated inventory levels for Q3.” Himax is “naturally cutting back on new orders with our suppliers,” said Wu. “However, the contracts that we entered with foundries and back-end suppliers when the industry experienced unprecedented demand in 2021 may incur charges if the minimum purchase orders are not fulfilled.”