奇景光電 (HIMX) 2023 Q1 法說會逐字稿

Hello, ladies and gentlemen. Welcome to the Himax Technologies, Inc. First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

女士們，先生們，您好。歡迎來到 Himax Technologies, Inc. 2023 年第一季度收益電話會議。此時，所有參與者都處於只聽模式。稍後我們將進行問答環節，屆時將進行說明。 （操作員說明）作為提醒，正在錄製此電話會議。

I would now like to hand the conference over to your host, Mr. Mark Schwalenberg from MZ Group.

我現在想把會議交給你的東道主，MZ Group 的 Mark Schwalenberg 先生。

Welcome everyone to Himax first quarter 2023 earnings call. Joining us from the company are Mr. Jordan Wu, President and Chief Executive Officer; Ms. Jessica Pan, Chief Financial Officer; and Mr. Eric Lee, Chief IR, PR Officer. After the company's prepared comments, we have allocated time for questions and a Q&A session. If you have not yet received a copy of today's results release, please email himx@mzgroup.us, access the press release on financial portals or download a copy from Himax's website at www.himax.com.tw.

歡迎大家參加 Himax 2023 年第一季度財報電話會議。從公司加入我們的是總裁兼首席執行官 Jordan Wu 先生；首席財務官 Jessica Pan 女士；首席投資者關係、公關官 Eric Lee 先生。在公司準備好的評論之後，我們分配了時間進行提問和問答環節。如果您還沒有收到今天的業績報告副本，請發送電子郵件至 himx@mzgroup.us，訪問金融門戶網站上的新聞稿或從 Himax 的網站 www.himax.com.tw 下載一份副本。

Before we begin the formal remarks, I'd like to remind everyone that some of the statements in this conference call, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this conference call. A list of risk factors can be found in the company's SEC filings, form 20-F for the year ended December 31, 2022 in the section entitled "Risk Factors", as may be amended.

在我們開始正式發言之前，我想提醒大家，本次電話會議中的一些陳述，包括有關預期未來財務結果和行業增長的陳述，是前瞻性陳述，涉及許多風險和不確定性，可能導致實際事件或結果與本次電話會議中描述的事件或結果存在重大差異。風險因素列表可在公司向美國證券交易委員會提交的文件中找到，即截至 2022 年 12 月 31 日止年度的 20-F 表，標題為“風險因素”的部分可能會進行修訂。

Except for the company's full year of 2022 financials, which were provided in the company's 20-F and filed with the SEC on April 6, 2023, the financial information included in this conference call is unaudited and consolidated and prepared in accordance with IFRS accounting. Such financial information is generated internally and has not been subjected to the same review and scrutiny, including internal auditing procedures and external audits by an independent auditor, to which we subject our annual consolidated financial statements, and may vary materially from the audited consolidated financial information for the same period. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

除了在公司 20-F 中提供並於 2023 年 4 月 6 日向美國證券交易委員會備案的公司 2022 年全年財務信息外，本次電話會議中包含的財務信息未經審計，並根據 IFRS 會計編制。此類財務信息是內部生成的，沒有經過相同的審查和審查，包括內部審計程序和獨立審計師的外部審計，我們對年度合併財務報表進行審查和審查，可能與經審計的合併財務信息存在重大差異同期。公司不承擔公開更新或修改任何前瞻性陳述的義務，無論是由於新信息、未來事件或其他原因。

I will now turn the call over to Mr. Eric Li. Eric, the floor is yours.

我現在將電話轉給 Eric Li 先生。埃里克，地板是你的。

Thank you, Mark, and thank you everyone for joining us. My name is Eric Li, Chief IR/PR Officer at Himax. On today's call, I will first review the Himax consolidated finance performance for the first quarter 2023, followed by our second quarter outlook. Jordan will then give an update on the status of our business. After which, we will take questions. We will review our financials on both IFRS and non-IFRS basis. The non-IFRS financials exclude share-based compensation, acquisition-related charges and cash award.

謝謝你，馬克，感謝大家加入我們。我叫 Eric Li，奇景光電首席 IR/PR 官。在今天的電話會議上，我將首先回顧 Himax 2023 年第一季度的綜合財務業績，然後是我們第二季度的展望。然後，約旦將更新我們的業務狀況。之後，我們將進行提問。我們將在國際財務報告準則和非國際財務報告準則的基礎上審查我們的財務狀況。非 IFRS 財務數據不包括基於股份的薪酬、與收購相關的費用和現金獎勵。

Despite the challenges of ongoing macro headwinds and the seasonal effect, first quarter revenues and EPS, both beat our guidance, while gross margin was within the guidance range issued on February 09, 2023. First quarter revenue registered to $244.2 million, a decrease of 6.9%, sequentially, but markedly better than our guidance of a decrease of 12% to 17%, sequentially. The better than guided sales were attributable to increased order momentum, particularly in the large display driver IC Business and smartphone and the tablet TDDI segments, as well as our continuous effort to deplete inventory.

儘管面臨持續的宏觀逆風和季節性影響的挑戰，第一季度收入和每股收益均超出了我們的指導，而毛利率在 2023 年 2 月 9 日發布的指導範圍內。第一季度收入為 2.442 億美元，下降了 6.9 %，連續下降，但明顯好於我們連續下降 12% 至 17% 的指導。好於指導的銷售歸因於訂單勢頭的增加，特別是在大型顯示驅動器 IC 業務和智能手機以及平板電腦 TDDI 領域，以及我們不斷努力消耗庫存。

IFRS gross margin came in at 28.1%, a decrease from 30.5% last quarter, but within the guidance range of 28% to 30%. Gross margin was impacted by several factors: first and primarily, we incurred the high cost of our asset inventories that were thought during a period when foundry and the backend prices peaked. Second, we had to write down certain unsold inventories due to market price decline. Finally, there was price erosion, a requisite part of ongoing inventory offloading process. Yet IFRS profit per diluted ADS was $8.5, surpassing our guidance of $3.5 to $7.0. Non-IFRS profit per diluted ADS was $11.5, beating our guidance of $6.5 to $10.0.

IFRS 毛利率為 28.1%，低於上一季度的 30.5%，但在 28% 至 30% 的指導範圍內。毛利率受到幾個因素的影響：首先，也是最主要的，我們在代工和後端價格達到頂峰的時期產生了高昂的資產庫存成本。其次，由於市場價格下跌，我們不得不減記一些未售出的存貨。最後，出現了價格侵蝕，這是正在進行的庫存卸載過程中必不可少的一部分。然而，根據國際財務報告準則，每股攤薄 ADS 的利潤為 8.5 美元，超過了我們 3.5 美元至 7.0 美元的指導。非 IFRS 每股攤薄 ADS 利潤為 11.5 美元，超過我們 6.5 美元至 10.0 美元的指導。

Revenue from large display driver was $53 million, an increase of 21.8% sequentially and substantially above our prior guidance of up high single digits from last quarter. Monitor IC sales grew remarkably as expected, increasing by a decent double digit quarter-over-quarter. This increased momentum is primarily due to leading customers starting to replenish chip following several quarters of channel inventory reduction. Notebook sales were also better than guided due to demand from chip replenishment. We saw strong sequential growth of TV IC sales, stemming from increasing order from customers preparing for upcoming China shopping festivals. Large panel driver IC sales accounted for 21.7% of total revenues for this quarter compared to 16.6% last quarter and 26.8% a year ago.

大型顯示驅動器的收入為 5300 萬美元，環比增長 21.8%，大大高於我們先前對上個季度高個位數的指導。監控 IC 銷售額如預期般顯著增長，環比增長了兩位數。這種增長勢頭主要是由於領先客戶在幾個季度的渠道庫存減少後開始補充芯片。由於芯片補貨的需求，筆記本電腦的銷售也好於指導。我們看到電視 IC 銷售額的連續強勁增長，這源於為即將到來的中國購物節做準備的客戶訂單增加。大面板驅動器 IC 銷售額佔本季度總收入的 21.7%，而上一季度為 16.6%，一年前為 26.8%。

Moving on to our small and medium sized display driver segment. Revenue was $154.7 million dollars, a decrease of 12.8% sequentially, yet, ahead of our guidance due to increasing shipment of smartphone and tablet, especially TDDI products to global leading brands after Lunar New Year holidays. Q1 automotive driver sales decreased mid-teens quarter-over-quarter as guided. Automotive DDIC sales were better than expected due to customers' moderated inventory reduction measures. For automotive TDDI, despite the widespread adoption of our products in the NEV, sales unexpectedly declined as panel houses cutback their IC purchases while experiencing sudden order suspensions from their EV customers. The underlying cause is the exacerbated EV price competition, which has led major Chinese automakers to drastically cut production and enforce stringent cost control measures. Yet automotive driver business still represented the largest revenue contributor for us with 30% of total sales in the first quarter. We remains optimistic about its automotive TDDI growth potential in the coming years as we have secured about -- around -- sorry. Around 300 design-wins, a number which is still growing as we speak, which puts us significantly ahead of its peers.

繼續我們的中小型顯示驅動器部分。收入為 1.547 億美元，環比下降 12.8%，但由於智能手機和平板電腦出貨量增加，尤其是農曆新年假期後全球領先品牌的 TDDI 產品出貨量增加，仍高於我們的指引。根據指導，第一季度汽車駕駛員銷售額環比下降了十幾歲。車用 DDIC 銷售好於預期，因客戶採取適度的庫存減少措施。對於汽車 TDDI，儘管我們的產品在新能源汽車中得到廣泛採用，但由於面板廠減少了 IC 採購，同時遭遇電動汽車客戶的突然訂單暫停，銷量意外下降。根本原因是電動汽車價格競爭加劇，這導致中國主要汽車製造商大幅減產並實施嚴格的成本控制措施。然而，汽車司機業務仍然是我們最大的收入來源，第一季度佔總銷售額的 30%。我們仍然對其未來幾年的汽車 TDDI 增長潛力持樂觀態度，因為我們已經確定 - 大約 - 抱歉。大約 300 項設計獲勝，這個數字在我們說話時仍在增長，這使我們大大領先於同行。

At this moment, only one-third of the acquired design-wins have commenced production, indicating enormous upside potential in the coming years as the remaining design-wins enter mass production. Small and medium-sized driver IC segment accounted for 63.3% of total sales for the quarter, compared to 67.6% in the previous quarter and 62.6% a year ago.

目前，只有三分之一的設計勝利已經開始生產，這表明隨著剩餘的設計勝利進入大規模生產，未來幾年將有巨大的上升潛力。中小型驅動器 IC 部門佔本季度總銷售額的 63.3%，而上一季度為 67.6%，去年同期為 62.6%。

First quarter non-driver sales also exceeded guidance with revenue of $36.5 million, down 11.8% from a quarter ago. Our Tcon business was up single digit in the first quarter, markedly surpassing the guidance of mid-teens decline, bolstered by decent shipment of automotive Tcon as well as better-than-expected shipment of large sized display Tcon. Tcon business represented over 9% of our total sales in the first quarter. It's worth highlighting that our automotive local dimming Tcon technology was recently awarded Gold Panel Award at Touch Taiwan 2023, another illustration of our leading position in cutting-edge technology for automotive display. Jordan will elaborate on this later.

第一季度非司機銷售額也超過了預期，收入為 3650 萬美元，較上一季度下降 11.8%。我們的 Tcon 業務在第一季度增長了個位數，明顯超過了中期下降的指導，這得益於汽車 Tcon 的良好出貨量以及大尺寸顯示器 Tcon 的出貨量好於預期。 Tcon 業務占我們第一季度總銷售額的 9% 以上。值得一提的是，我們的汽車局部調光Tcon技術最近在Touch Taiwan 2023上獲得了金面板獎，這再次證明了我們在汽車顯示尖端技術方面的領先地位。喬丹將在稍後詳細說明。

For automotive Tcon, backed by a strong order pipeline, we anticipates business momentum to accelerate with rapidly expanding design-wins across the board. Non-driver products in Q1 accounted for 15% of total revenues, as compared to 15.8% in the previous quarter and 10.6% a year ago.

對於汽車 Tcon，在強大的訂單管道支持下，我們預計業務勢頭將隨著全面快速擴大的設計勝利而加速。第一季度非司機產品佔總收入的 15%，而上一季度為 15.8%，一年前為 10.6%。

Our IFRS operating expenses for the first quarter were $51 million, a decline of 2.9% from the previous quarter and down 1% from a year ago. Amidst prevailing macroeconomic headwinds, we continued to tighten our expense control. Non-IFRS operating expenses

我們第一季度的 IFRS 運營費用為 5100 萬美元，環比下降 2.9%，同比下降 1%。面對普遍的宏觀經濟逆風，我們繼續收緊開支控制。非 IFRS 運營費用

were $44.5 million for the first quarter, down 2.5% from the preceding quarter and up 1.1% from a year ago.

第一季度為 4450 萬美元，環比下降 2.5%，同比增長 1.1%。

First quarter IFRS operating income was $17.6 million, or 7.2% of sales, versus 10.5% of sales in the last quarter and 34.5% of sales from a year ago. Non-IFRS operating income was $24.2 million, or 9.9% of sales, compared to 13.1% last quarter and 36.3% same quarter last year.

第一季度 IFRS 營業收入為 1760 萬美元，佔銷售額的 7.2%，而上一季度佔銷售額的 10.5%，去年同期佔銷售額的 34.5%。非 IFRS 營業收入為 2420 萬美元，佔銷售額的 9.9%，上一季度為 13.1%，去年同期為 36.3%。

IFRS after-tax profit was $14.9 million, or $8.5 per diluted ADS, compared to $42.2 million, or $24.1 per diluted ADS last quarter. First quarter non-IFRS after-tax profit was $20.1 million, or $11.5 per diluted ADS, compared to $47.7 million, or $27.3 in the previous quarter.

IFRS 稅後利潤為 1,490 萬美元，即每股攤薄後的 ADS 為 8.5 美元，而上一季度為 4,220 萬美元，即每股攤薄後的 ADS 為 24.1 美元。第一季度非 IFRS 稅後利潤為 2010 萬美元，即每股攤薄美國存託憑證 11.5 美元，而上一季度為 4770 萬美元，即 27.3 美元。

Turning to the balance sheet. We had $223.8 million of cash, cash equivalents and other financial assets as of March 31, 2023, compared to $447.1 million at the same time last year and $229.9 million a quarter ago. The decrease in cash was a result of cash outflow from investing activities, which was mainly used to make final payment for a major AMOLED capacity agreement for smartphone that we had signed in 2021, offset by $66.4 million of operating cash inflow in the first quarter.

轉向資產負債表。截至 2023 年 3 月 31 日，我們擁有 2.238 億美元的現金、現金等價物和其他金融資產，而去年同期為 4.471 億美元，上一季度為 2.299 億美元。現金減少是投資活動現金流出的結果，主要用於支付我們在 2021 年簽署的一項主要智能手機 AMOLED 產能協議的最終付款，被第一季度 6640 萬美元的運營現金流入所抵消。

We had $45.0 million of long-term unsecured loans as of the end of first quarter, of which $6.0 million was current portion. The $335.2 million inventory, while still higher than $253.1 million a year ago, were markedly lower than $370.9 million last quarter. Accounts receivable at the end of March 2023 was $252.2 million, down from $261.1 million last quarter and down from $442.2 million a year ago. DSO was 93 days at the quarter end, as compared to 96 days a year ago and 79 days last quarter. First quarter capital expenditures were $2.8 million, versus $2.3 million last quarter and $3.6 million a year ago. The first quarter CapEx was mainly for IC design business.

截至第一季度末，我們擁有 4500 萬美元的長期無抵押貸款，其中 600 萬美元為流動部分。 3.352 億美元的庫存雖然仍高於一年前的 2.531 億美元，但明顯低於上一季度的 3.709 億美元。 2023 年 3 月底的應收賬款為 2.522 億美元，低於上一季度的 2.611 億美元和一年前的 4.422 億美元。 DSO 在本季度末為 93 天，而去年同期為 96 天，上季度為 79 天。第一季度資本支出為 280 萬美元，上一季度為 230 萬美元，一年前為 360 萬美元。第一季度CapEx主要用於IC設計業務。

Just prior to today's call, we announced an annual cash dividend of $0.48 cents per ADS, totaling approximately $83.7 million and payable on July 12, 2023. The payout ratio is 35.4%. We has decided on the relatively low payout ratio in the light of prevailing macroeconomic uncertainty. We are grateful for the continued support of our shareholders as we continues to execute our business objectives and strive to deliver sustainable long-term growth while maintaining a healthy balance sheet.

就在今天的電話會議之前，我們宣布派發每份 ADS 0.48 美分的年度現金股息，總額約為 8370 萬美元，將於 2023 年 7 月 12 日支付。派息率為 35.4%。鑑於普遍存在的宏觀經濟不確定性，我們決定採用相對較低的派息率。我們感謝股東的持續支持，因為我們將繼續執行我們的業務目標，並努力實現可持續的長期增長，同時保持健康的資產負債表。

As of March 31, 2023, Himax had 174.4 million ADS outstanding, unchanged from last quarter. On a fully diluted basis, total number of ADS outstanding for the first quarter was 174.8 million.

截至 2023 年 3 月 31 日，Himax 已發行 ADS 為 1.744 億股，與上一季度持平。在完全稀釋的基礎上，第一季度未償還的 ADS 總數為 1.748 億股。

Now turning to our second quarter 2023 guidance. We expect the second quarter revenue to be in the range of flat to down 9% sequentially. IFRS gross margin is expected to be around 20% to 21%, depending on the final product mix. The second quarter IFRS profit attributable to shareholder is estimated to be in the range of minus $2.9 to $0.6 per basic ADS. Non-IFRS profit attributable to shareholders is expected to be in the range of $0.1 to $3.6 per fully diluted ADS.

現在轉向我們的 2023 年第二季度指南。我們預計第二季度收入將持平至環比下降 9%。 IFRS 毛利率預計在 20% 至 21% 左右，具體取決於最終產品組合。第二季度歸屬於股東的國際財務報告準則利潤估計在每份基本 ADS 負 2.9 美元至 0.6 美元之間。非 IFRS 股東應占利潤預計在每份完全稀釋的 ADS 0.1 美元至 3.6 美元之間。

I will now turn the call over to Jordan to discuss our Q2 outlook. Jordan, the floor is yours.

我現在將電話轉給 Jordan 來討論我們的第二季度展望。喬丹，地板是你的。

Thank you, Eric. Soft consumer consumption coupled with recession fears continue to present challenges to market demand and amplify uncertainty throughout the tech world. The semiconductor industry appears to have come to a consensus to some degree with the expectation that inventory digestion will extend longer than previously projected. In the display market, end brands remain cautious toward their panel procurements, while panel makers implement stringent output controls and rigorous procurement scrutiny.

謝謝你，埃里克。消費疲軟加上對經濟衰退的擔憂繼續對市場需求構成挑戰，並加劇了整個科技界的不確定性。半導體行業似乎已經在某種程度上達成共識，預計庫存消化的時間將比此前預計的更長。在顯示市場，終端品牌對面板採購仍持謹慎態度，而面板製造商則實施嚴格的產量控制和嚴格的採購審查。

Amidst ongoing macroeconomic uncertainty, our visibility remains limited as panel customers continue to shorten the duration of their forecasts. However, our inventory has been reduced to a comfortable level after several quarters of aggressive destocking. While our current inventory level is still somewhat above the historical norm, the good news is that the remaining stocks are comprised of IC products which has a solid customer design-in base and long expected lifetimes.

在持續的宏觀經濟不確定性中，我們的能見度仍然有限，因為面板客戶繼續縮短他們的預測期限。然而，經過幾個季度的積極去庫存後，我們的庫存已降至一個舒適的水平。雖然我們目前的庫存水平仍略高於歷史標準，但好消息是剩餘庫存由 IC 產品組成，這些產品具有堅實的客戶設計基礎和較長的預期壽命。

Moreover, after quarters of write-downs, the book costs of the stocks are at least equal to and, in many cases, much lower than the prevailing market prices. In light of the better-than-expected inventory offloading, we stands by its expectation that inventory will revert to historical levels no later than the third or fourth quarter of this year.

此外，經過幾個季度的減記，股票的賬面成本至少等於，在許多情況下，遠低於現行市場價格。鑑於去庫存好於預期，我們維持其庫存最遲將在今年第三或第四季度恢復到歷史水平的預期。

In an effort to improve our cost structure for new wafer starts and maintain competitiveness, We are strategically terminated certain high-cost foundry capacity agreements recently prior to their expiration dates. This, however, has resulted in a significant one-time early termination expense incurred in the second quarter and hit our Q2 gross margin. In fact, this is the predominant factor for the second quarter gross margin contraction, on top of the price pressure incurred from destocking. Termination of the aforementioned capacity agreements is a crucial operational strategy for us, whereby making a short-term sacrifice can help us achieves long-term gains.

為了改善我們新晶圓啟動的成本結構並保持競爭力，我們最近在到期日之前戰略性地終止了某些高成本代工產能協議。然而，這導致第二季度產生了一筆可觀的一次性提前終止費用，並影響了我們第二季度的毛利率。事實上，除了去庫存帶來的價格壓力之外，這是第二季度毛利率收縮的主要因素。終止上述產能協議對我們來說是一項重要的運營戰略，做出短期犧牲可以幫助我們實現長期收益。

Moving forward, for those terminated contracts, Our new wafer starts will not be subject to minimum fulfillment requirements and fixed contractual prices set at the time of severe industry capacity shortage. This also gives us the flexibility to diversify suppliers. Given the significant contract termination expense, Q2 will mark the trough of our gross margin with sequential expansion expected throughout the second half of 2023.

展望未來，對於那些終止的合同，我們的新晶圓啟動將不受最低履行要求和在嚴重行業產能短缺時設定的固定合同價格的限制。這也使我們能夠靈活地使供應商多樣化。鑑於合同終止費用巨大，第二季度將標誌著我們毛利率的低谷，預計整個 2023 年下半年將連續擴張。

As an important side note, we have retained necessary capacity to support the growth of our AMOLED business, which we believe will be a major growth driver in the coming years as OLED displays gain traction in a wide range of applications.

作為一個重要的旁注，我們保留了支持 AMOLED 業務增長的必要能力，我們相信隨著 OLED 顯示器在廣泛應用中獲得牽引力，這將成為未來幾年的主要增長動力。

Next, on the Q2 sales guidance. Sudden demand drop in automotive business is among the main reasons causing the sequential sales decline. As we have talked about previously, automotive has been our largest business contributor for many quarters, accounting for over 30% of the total sales, a far greater contribution than its peers. The sudden decline in the automotive demands, therefore, has a heavier impact on its total sales.

接下來，關於第二季度的銷售指導。汽車業務的需求突然下降是導致銷量環比下降的主要原因之一。正如我們之前談到的，汽車在許多季度一直是我們最大的業務貢獻者，佔總銷售額的 30% 以上，遠高於同行。因此，汽車需求的突然下降對其總銷售額的影響更大。

Automotive sales are being adversely impacted by recent price turbulence in Chinese EV market as it reported earlier. However, we view the current setback as a temporary and short-term phenomenon. Our outlook for the automotive business remains positive given the megatrend of increasing quantity and sophistication of displays inside vehicles and backed by our undisputed leading market share as well as new design-win pipelines. This is particularly true for automotive TDDI where we have already achieved a global market share leadership position. Our TDDI sales are already on track to resume rapid growth momentum and we remain confident in its potential to be a primary driving force for its long-term business growth.

正如之前報導的那樣，汽車銷售正受到近期中國電動汽車市場價格動蕩的不利影響。然而，我們認為當前的挫折是暫時的和短期的現象。鑑於車內顯示器數量和復雜性不斷增加的大趨勢，以及我們無可爭議的領先市場份額以及新的設計獲勝管道的支持，我們對汽車業務的前景仍然樂觀。對於我們已經取得全球市場份額領先地位的汽車 TDDI 來說尤其如此。我們的 TDDI 銷售已經步入正軌，恢復快速增長勢頭，我們仍然相信它有潛力成為其長期業務增長的主要驅動力。

Last but not lease, we remain committed to our strategy of expanding in high value-added areas, including TDDI and Tcon for automotive, OLED and AI, where secular trends of growth remain intact, and in some of these areas we have already achieved a leading market position. This not only warrants much higher content value, but also establishes higher barriers of entry for late comers. With that said, we are going through a challenging second quarter in terms of both sales and gross margin, but believes this will be a short-term phenomenon with a rebound around the corner starting in the second quarter -- in the second half.

最後但不是租賃，我們仍然致力於在高附加值領域擴張的戰略，包括用於汽車、OLED 和 AI 的 TDDI 和 Tcon，這些領域的長期增長趨勢保持不變，並且在其中一些領域我們已經實現了領先的市場地位。這不僅保證了更高的內容價值，也為後來者設置了更高的進入壁壘。話雖如此，我們在銷售和毛利率方面都經歷了充滿挑戰的第二季度，但相信這將是一種短期現象，從第二季度開始——即下半年，反彈即將來臨。

I'll now begin with an update on the large panel driver IC business. Our second quarter 2023 large display driver IC revenue is projected to be down double digit sequentially. We expects TV IC business to decline double digit quarter-over-quarter as customers have pulled forward demand in preparation for the upcoming seasonal shopping sales, replenishing chips over the past two quarters. Monitor IC sales in the second quarter are set to decline single digit sequentially following the strong order replenishment we saw last quarter, while notebook driver segment is expected to slightly decline.

我現在將從大面板驅動器 IC 業務的更新開始。我們 2023 年第二季度的大型顯示驅動器 IC 收入預計將連續下降兩位數。我們預計電視 IC 業務將比上一季度下降兩位數，因為客戶已經提前需求以準備即將到來的季節性購物銷售，並在過去兩個季度補充芯片。在我們看到上一季度強勁的訂單補充之後，第二季度的監視器 IC 銷售額將連續下降個位數，而筆記本驅動器部分預計將略有下降。

Turning to the small and medium-sized display driver IC business, we expect Q2 revenue for this segment to be down single digit sequentially. However, there are indications of business momentum recovery for smartphone and tablet in the second quarter, particularly in TDDI products, both are projected to increase mid-teens sequentially, fueled by resumed customer orders following several quarters of downturn.

轉向中小型顯示驅動器 IC 業務，我們預計該部門第二季度的收入將連續下降個位數。然而，有跡象表明第二季度智能手機和平板電腦的業務勢頭有所恢復，尤其是在 TDDI 產品方面，在經歷了幾個季度的低迷後恢復了客戶訂單的推動下，預計兩者都將環比增長 15%。

Importantly, our inventory depletion for smartphone and tablet TDDI is progressing nicely and improving as we speak. As such, we have initiated new wafer starts for select products which will enjoy better margin starting Q2. Automotive IC sales are anticipated to be down low teens sequentially, a result of weakening demand in China, which is prompting automotive panel houses to implement cost reduction measures and to re-calibrate inventory levels. Having said that, our position as the market share leader in both DDIC and TDDI for automotive remains intact.

重要的是，正如我們所說，我們的智能手機和平板電腦 TDDI 庫存消耗進展順利並有所改善。因此，我們已經啟動了部分產品的新晶圓啟動，這些產品將從第二季度開始獲得更高的利潤率。由於中國需求疲軟，汽車 IC 銷售額預計將連續下降十幾歲，這促使汽車面板廠實施成本削減措施並重新調整庫存水平。話雖如此，我們作為汽車 DDIC 和 TDDI 市場份額領導者的地位仍然完好無損。

Looking at a longer-term perspective, while only moderate growth is anticipated for its automotive DDIC, our TDDI business is projected to expand explosively, backed by the fast-expanding TDDI adoption for new generation vehicles and our dominating new project design-win status.

從更長期的角度來看，雖然其汽車 DDIC 預計只會溫和增長，但我們的 TDDI 業務預計將爆炸式增長，這得益於 TDDI 在新一代汽車中的快速普及以及我們主導的新項目設計中標地位。

Himax also continues to lead the industry with the launch of its LTDI or Large Touch and Display Driver Integration automotive display solution, specifically designed for the next generation extra-large automotive displays, typically 30 inches or larger. Our cutting edge LTDI technology enables ultrahigh-resolution displays and high-precision touch sensitivity, catering to the growing demand for large, seamless, and intuitive in-car experiences. We are scheduled to start mass production this quarter, which is well ahead of the competition. Concurrently, we are working on several design collaborations for some of the modish automotive vehicles with major panel makers.

奇景光電還繼續引領行業，推出其 LTDI 或大型觸摸和顯示驅動器集成汽車顯示解決方案，該解決方案專為下一代超大型汽車顯示器（通常為 30 英寸或更大）而設計。我們尖端的 LTDI 技術可實現超高分辨率顯示和高精度觸摸靈敏度，滿足對大型、無縫和直觀車內體驗不斷增長的需求。我們計劃在本季度開始量產，這遠遠領先於競爭對手。同時，我們正在與主要面板製造商就一些時髦的汽車進行多項設計合作。

As we have repeatedly said before, the trend for automobile interiors continues to evolve towards more stylish and diverse designs, such as free-form and curvature, with ever improving image quality, made possible with panels equipped with advanced technologies. Himax is the front runner in automotive display IC market, offering a comprehensive product portfolio covering the entire spectrum of specifications and technologies to address varying design needs, including traditional DDIC, TDDI, local dimming Tcon, LTDI, and AMOLED.

正如我們之前反复說過的，汽車內飾的趨勢繼續朝著更加時尚和多樣化的設計發展，例如自由形式和曲率，圖像質量不斷提高，配備先進技術的面板成為可能。 Himax 是汽車顯示 IC 市場的領跑者，提供涵蓋整個規格和技術的全面產品組合，以滿足不同的設計需求，包括傳統 DDIC、TDDI、局部調光 Tcon、LTDI 和 AMOLED。

We are encouraged by our progress, having expanding design-win coverage across panel makers and engaging more Tier 1s and OEMs to incorporate new technologies into their new vehicle models. This implies we not only has been able to reinforce much higher content value on a per panel basis, but will also enjoy better profit margin. We are confident that the automotive driver business will continue to be our primary sales contributor moving forward.

我們對我們的進步感到鼓舞，在面板製造商中擴大了設計獲勝的覆蓋範圍，並吸引了更多的一級供應商和原始設備製造商將新技術整合到他們的新車型中。這意味著我們不僅能夠在每個面板的基礎上提高更高的內容價值，而且還將享有更高的利潤率。我們相信，汽車駕駛員業務將繼續成為我們未來的主要銷售貢獻者。

Next, an update on AMOLED. Himax offers both DDIC and Tcon for AMOLED display and has commenced production for tablet and automotive applications jointly with global leading panel makers. For automotive AMOLED display, we continue to see robust design in activities as well as increasing project awards with both conventional car makers and NEV vendors across different continents. Additionally, we continues to gear up for AMOLED driver IC development strategically partnering with major Korean and Chinese panel makers on various applications, covering smartphone, notebook, and TV.

接下來是關於 AMOLED 的更新。 Himax 為 AMOLED 顯示器提供 DDIC 和 Tcon，並已開始與全球領先的面板製造商合作生產平板電腦和汽車應用。對於汽車 AMOLED 顯示器，我們繼續看到活動中的穩健設計以及與不同大洲的傳統汽車製造商和新能源汽車供應商的項目獎勵不斷增加。此外，我們繼續與韓國和中國的主要面板製造商就各種應用進行戰略合作，為 AMOLED 驅動 IC 開發做好準備，涵蓋智能手機、筆記本電腦和電視。

For smartphone AMOLED display driver, we already have secured meaningful capacity and expect to commence production toward the end of 2023. Our AMOLED business, including display driver and Tcon, is slated for strong growth in the next few years.

對於智能手機 AMOLED 顯示驅動，我們已經獲得了可觀的產能，預計將在 2023 年底開始生產。我們的 AMOLED 業務，包括顯示驅動和 Tcon，預計將在未來幾年實現強勁增長。

Now let me share some of the progress we have made on the non-driver IC businesses. Stating with an update on timing controller. We anticipates Q2 Tcon sales to decrease by low teens sequentially, hampered by decreased demand for both large display panels and AMOLED displays for tablet. On a positive note, we continue to solidify its leadership in the automotive Tcon market, particularly in local dimming technology. As Eric mentioned earlier Himax automotive local dimming Tcon was awarded the Gold Panel Award by Touch Taiwan 2023, grate recognition by the industry after our years of strenuous work on this high entry barrier technology.

現在讓我分享一下我們在非驅動IC業務上取得的一些進展。說明時序控制器的更新。我們預計第 2 季度 Tcon 銷售額將連續下降十幾位，這是受平板電腦對大型顯示面板和 AMOLED 顯示器需求下降的影響。積極的一面是，我們繼續鞏固其在汽車 Tcon 市場的領導地位，尤其是在局部調光技術方面。正如Eric先前提到的Himax汽車局部調光Tcon獲得了Touch Taiwan 2023的金面板獎，經過我們多年在這項高門檻技術上的努力，獲得了業界的認可。

Let me take a few seconds to elaborate on our award local diming Tcon. The adoption of local diming Tcon not only dramatically improves contrast ratio of the display but also provides enhanced power efficiency, both of which are critical, especially for EV display. Our industry-leading local dimming Tcon offerings support super high frame rate and a wide range of resolutions from full-HD up to 8K. Additionally, when two Tcon's are paired, the solution can even accommodate up to 16K resolution.

讓我花幾秒鐘詳細說明我們獲獎的局部調光 Tcon。局部調光 Tcon 的採用不僅顯著提高了顯示器的對比度，還提供了更高的電源效率，這兩者都是至關重要的，尤其是對於 EV 顯示器。我們行業領先的局部調光 Tcon 產品支持超高幀率和從全高清到 8K 的各種分辨率。此外，當兩個 Tcon 配對時，該解決方案甚至可以適應高達 16K 的分辨率。

We see rapidly increasing adoption by all leading panel makers, Tier 1s and car makers, starting from premium new car models and, in some cases, extending to mainstream models. Tremendous progress has been made with numerous project awards already. Similar to that of TDDI for automotive, only a small number of design awards of automotive Tcon have commenced mass production starting last year. We therefore expect a strong growth trajectory for automotive Tcon starting 2023 and in the coming years.

我們看到所有領先的面板製造商、一級供應商和汽車製造商的採用率迅速增加，從高端新車型開始，在某些情況下擴展到主流車型。已經取得了巨大的進步，獲得了許多項目獎項。與車用TDDI類似，車用Tcon只有少數設計獎項從去年開始量產。因此，我們預計從 2023 年開始及未來幾年，汽車 Tcon 將出現強勁的增長軌跡。

Switching gears to the WiseEye Smart Image Sensing total solution, which incorporates Himax proprietary ultralow power AI processor, always-on CMOS image sensor, and CNN-based AI algorithm. We continues to support the mass production of Dell's notebook along with other end-point AI applications, such as video conference device, shared bike parking, door lock, smart agriculture, among others. We are unwavering in our commitment to WiseEye as we looks to proliferate our industry leading ultralow power AI solution by fostering innovation in a broad spectrum of end-point AI applications across the globe.

切換到 WiseEye 智能圖像傳感整體解決方案，該解決方案結合了 Himax 專有的超低功耗 AI 處理器、始終在線的 CMOS 圖像傳感器和基於 CNN 的 AI 算法。我們繼續支持戴爾筆記本的量產以及其他端點人工智能應用，如視頻會議設備、共享單車停放、門鎖、智慧農業等。我們對 WiseEye 的承諾堅定不移，因為我們希望通過在全球範圍內促進廣泛的端點 AI 應用創新來推廣我們行業領先的超低功耗 AI 解決方案。

Furthermore, we remain dedicated to bolstering development in the domain of energy-efficient AI processors and AI image sensors for end-point AI applications to maintain our top-ranked status in the space. The home surveillance application, such as doorbell, door lock, and security camera, showcases another successful deployment of ultralow power WiseEye technology. WiseEye offers embedded context-aware AI that accurately identifies humans to reduce excessive false triggers, avoiding unnecessary SoC processing and leading to efficient power usage for the surveillance system. This facilitates the transition of conventional surveillance systems from wired to battery-powered ones, broadening real-time adoption.

此外，我們將繼續致力於支持面向端點人工智能應用的高能效人工智能處理器和人工智能圖像傳感器領域的發展，以保持我們在該領域的領先地位。門鈴、門鎖和安全攝像頭等家庭監控應用展示了超低功耗 WiseEye 技術的又一次成功部署。 WiseEye 提供嵌入式情境感知 AI，可準確識別人類以減少過多的誤觸發，避免不必要的 SoC 處理並為監控系統帶來高效的電源使用。這促進了傳統監控系統從有線監控系統向電池供電監控系統的轉變，擴大了實時採用範圍。

Furthermore, WiseEye features ultralow power pre-roll AI to enable always-on, full-color negative time image recording before a classified event, resulting in a complete video stream and pre-roll clips of what happened before the said event. This also illustrates another significant improvement compared to existing surveillance solutions. In March this year at ISC West, a leading security industry trade show, Himax joined forces with various ecosystem partners and customers to unveil a broad array of battery-operated home surveillance devices that embed our WiseEye technology.

此外，WiseEye 具有超低功耗預卷 AI 功能，可在分類事件之前實現始終開啟的全彩色負片時間圖像記錄，從而生成完整的視頻流和所述事件之前發生的預捲片段。這也說明了與現有監控解決方案相比的另一個重大改進。今年 3 月，在領先的安全行業貿易展 ISC West 上，Himax 與各種生態系統合作夥伴和客戶聯手推出了一系列嵌入我們 WiseEye 技術的電池供電家庭監控設備。

The adoption of WiseEye in surveillance areas is quickly proliferating and we are seeing more active design-in activities and broad inquiries after the event. Moreover, for the upcoming China shopping festivals, Himax is teaming up with a leading door lock vendor in China specializing in smart home and security to debut a smart door lock solution with advanced security and low power consumption. This is yet another confirmation of the WiseEye technology in the rapidly emerging end-point ultralow power image AI era.

WiseEye 在監控領域的採用正在迅速擴散，我們看到更活躍的設計活動和活動後的廣泛詢問。此外，為了迎接即將到來的中國購物節，奇景光電與中國領先的智能家居和安防門鎖供應商合作，推出具有先進安全性和低功耗的智能門鎖解決方案。這是對WiseEye技術在快速興起的端點超低功耗圖像AI時代的又一次印證。

Now, next for an update on our next generation WE2 AI processor which builds upon its industry leading WE1 processor and performs contextual awareness AI particularly in detecting user engagement levels based on more subtle presence or movement. WE2 is designed with advanced computer vision engines that can recognize images over a longer distance at much enhanced accuracy, speed, power efficiency and inferencing performance. Based on its superb AI processing capabilities, WE2 can enable more comprehensive and detailed types of object detection such as facial landmark, hand landmark and body skeleton to perceive complex human body movement, enabling high-precision AI detection for a wide range of applications and use cases in real life.

現在，接下來是我們下一代 WE2 AI 處理器的更新，該處理器建立在其行業領先的 WE1 處理器之上，並執行情境感知 AI，特別是根據更微妙的存在或運動來檢測用戶參與度。 WE2 設計有先進的計算機視覺引擎，可以以大大提高的準確性、速度、能效和推理性能識別更遠距離的圖像。 WE2基於其超強的AI處理能力，可以實現更全面、更細緻的人臉landmark、手部landmark、身體骨骼等類型的物體檢測，感知複雜的人體運動，實現高精度的AI檢測，應用廣泛。現實生活中的案例。

We have gained significant traction for next generation smart notebook, targeting to hit the market starting 2024, where we are making solid design progress with leading top brands -- leading laptop brands as well as CPU and AP SoC partners to jointly work on the enrichment of new AI features on notebooks. The breadth of business activities is also expanding with IoT players specializing in various domains to meet different demands that were previously unknown to us. We are thrilled to be at the forefront of these innovative developments that lie ahead in the near future.

我們已經獲得了下一代智能筆記本的巨大吸引力，目標是從 2024 年開始投放市場，我們正在與領先的頂級品牌取得穩固的設計進展——領先的筆記本電腦品牌以及 CPU 和 AP SoC 合作夥伴共同致力於豐富筆記本電腦上的新 AI 功能。商業活動的廣度也在不斷擴大，物聯網玩家專注於各個領域，以滿足我們以前不知道的不同需求。我們很高興能夠在不久的將來站在這些創新發展的前沿。

Supported by fast expanding customer adoption from various domains, we are committed to the development of the WiseEye product line, while leveraging broad ecosystem partners to capture the vast end-point AI opportunities. We believe our WiseEye product line will be a significant long-term growth driver for us.

在各個領域快速擴大客戶採用率的支持下，我們致力於開發 WiseEye 產品線，同時利用廣泛的生態系統合作夥伴來捕捉巨大的端點 AI 機會。我們相信我們的 WiseEye 產品線將成為我們重要的長期增長動力。

Lastly for an update on our optical related product lines, including WLO, 3D Sensing and LCoS. Himax is one of the few companies in the technology industry with a wide array of optical related product lines that play a vital role in immersive technologies development and realization of the metaverse. Our technology leadership and manufacturing expertise are evidenced by the growing list of AR/VR goggle device customers and ongoing engineering projects. We continues to work on strengthening our optical-related technology suite, while collaborating with global technology leaders in the space.

最後更新我們的光學相關產品線，包括 WLO、3D 傳感和 LCoS。 Himax 是科技行業為數不多的幾家擁有廣泛的光學相關產品線的公司之一，這些產品線在沉浸式技術的開發和虛擬宇宙的實現中發揮著至關重要的作用。不斷增加的 AR/VR 護目鏡設備客戶和正在進行的工程項目證明了我們的技術領先地位和製造專業知識。我們繼續致力於加強我們的光學相關技術套件，同時與該領域的全球技術領導者合作。

Now quickly review some of our recent progress. First on 3D sensing. On 3D gesture control we are delighted to share that we will commence volume production of our WLO technology to one leading North American customer for their next generation VR devices starting Q2 this year. Our WLO technology is deployed to empower VR devices with 3D perception sensing for precise controller free gesture recognition. Separately, we are expanding our 3D processor offerings to cover Time of Flight or ToF 3D, in addition to structured light 3D decoding where we are already a market leader with a proven track record in mass production. This will enable us to meet the diverse use case of 3D sensing, where ToF is more effective for long-range 3D perception, while structured light excels in high precision 3D detection for shorter distance. All Our 3D processors are equipped with advanced sensor fusion, offering industry-leading, fast response rates, a characteristic that makes Himax's processors a perfect fit for high-precision spatial reality applications.

現在快速回顧一下我們最近的一些進展。首先是 3D 傳感。在 3D 手勢控制方面，我們很高興地宣布，我們將從今年第二季度開始為北美的一家領先客戶量產我們的 WLO 技術，用於他們的下一代 VR 設備。我們的 WLO 技術被部署為 VR 設備提供 3D 感知感應，以實現精確的無控制器手勢識別。另外，我們正在擴展我們的 3D 處理器產品以涵蓋飛行時間或 ToF 3D，此外還有結構光 3D 解碼，我們已經是市場領導者，在大規模生產方面擁有良好的記錄。這將使我們能夠滿足 3D 傳感的多樣化用例，其中 ToF 對於遠程 3D 感知更有效，而結構光在更短距離的高精度 3D 檢測方面表現出色。我們所有的 3D 處理器都配備了先進的傳感器融合，提供行業領先的快速響應速度，這一特性使 Himax 的處理器非常適合高精度空間現實應用。

Next on LCoS. We are delighted to announce that we will unveil its state-of-the-art Color-Sequential Front-lit LCoS technology at the Display Week 2023 in LA, one of the world's most renowned display industry symposiums and tradeshows. Our proprietary LCoS design offers unrivaled performance and functionality, featuring a lightweight and compact form factor with a total volume, that includes the illumination optics and LCoS panel, of around 0.5 cc, as well as high illumination efficiency, delivering brightness of up to 100K nits.

接下來是 LCoS。我們很高興地宣布，我們將在 2023 年洛杉磯顯示週（世界最著名的顯示行業研討會和貿易展之一）上推出其最先進的彩色順序前照式 LCoS 技術。我們專有的 LCoS 設計提供無與倫比的性能和功能，具有輕巧緊湊的外形尺寸，包括照明光學器件和 LCoS 面板在內的總體積約為 0.5 cc，以及高照明效率，可提供高達 100K 尼特的亮度.

These outstanding characteristics make it the perfect micro display solution to meet the stringent specifications of the most advanced AR glasses deploying 2D exit pupil expansion waveguides that support greater than 50 degrees field-of-view. We are honored to be invited to give a deep-dive presentation of our Color-Sequential Front-lit LCoS technology to industry experts at the symposium. Additionally, one-on-one meetings with literally all major tech names eyeing AR goggles have also been lined up. We will provide updates on our progress for this exciting new technology as they come about.

這些出色的特性使其成為完美的微顯示解決方案，可以滿足部署支持大於 50 度視野的 2D 出瞳擴展波導的最先進 AR 眼鏡的嚴格規範。我們很榮幸受邀在研討會上向行業專家深入介紹我們的色序前照式 LCoS 技術。此外，還安排了與幾乎所有關注 AR 護目鏡的主要技術名稱的一對一會議。我們將在這項激動人心的新技術出現時提供最新進展。

We remain steadfast to strengthening our optical-related technology suite and forging strong partnerships with the world's leading technology companies that are deeply committed in investing in its developments. As the metaverse and immersive technologies continue to develop, we believes that Himax is well-positioned to capitalize on its growth with years of research and development, a unique product portfolio, production history, and key partnerships. For non-driver IC business, we expects revenue to remain flattish sequentially in the second quarter.

我們將繼續堅定不移地加強我們的光學相關技術套件，並與致力於投資其發展的世界領先技術公司建立牢固的合作夥伴關係。隨著元宇宙和沈浸式技術的不斷發展，我們相信 Himax 憑藉多年的研發、獨特的產品組合、生產歷史和重要的合作夥伴關係，處於有利地位，可以利用其增長。對於非驅動器 IC 業務，我們預計第二季度收入將持平。

That concludes my report for this quarter. Thank you interest in Himax. We appreciate you joining today's call and we are now ready to take questions.

我本季度的報告到此結束。感謝您對 Himax 的關注。感謝您加入今天的電話會議，我們現在準備好回答問題。

Thank you. (Operator Instructions) Our first question comes from Jerry Su with Credit Suisse. You may proceed.

謝謝。 （操作員說明）我們的第一個問題來自瑞士信貸的 Jerry Su。你可以繼續。

Thanks for taking my question. Just want to follow-up on your previous comment about the second quarter guidance, which show the gross margins that was impacted by the termination of the wafer contracts. Can you give us an idea of what is the impact on the margin? How much of NODs that you are recognizing in the second quarter? That's the first question.

感謝您提出我的問題。只想跟進你之前關於第二季度指導的評論，它顯示了受晶圓合同終止影響的毛利率。你能告訴我們對利潤率有什麼影響嗎？您在第二季度認可了多少 NOD？這是第一個問題。

And secondly, when I look at your Large panel driver IC outlook, it seems like that you are a little bit different for the industry because I look at the panel makers or back end or your driver IC peers all are expecting a sequential growth. Can you give us an idea of what is the discrepancy between your guidance versus the industry trend? Thank you.

其次，當我看你的大面板驅動器 IC 前景時，你似乎對這個行業有點不同，因為我看面板製造商或後端或你的驅動器 IC 同行都期待連續增長。您能否告訴我們您的指導與行業趨勢之間的差異是什麼？謝謝。

Thank you, Jerry. On the first question, our last quarter gross margin was above 28%, just above 28%. And for this quarter, we are guiding for 22% -- 20% to 21% if we take the midpoint about 20.5%, so there's a differential of about 7%. So the impact from the termination of a long term contract, the impact is -- we said in the prepared remarks, the predominant factor. That means far greater than half. Right? That means far greater than half, meaning, with the 30% differential, far greater than half difference actually came from this termination, meaning, if without the termination, our margin would have been much closer to that of the previous quarter of 282% I think.

謝謝你，傑里。關於第一個問題，我們上個季度的毛利率在 28% 以上，略高於 28%。對於本季度，如果我們採用 20.5% 左右的中點，我們的指導目標是 22% - 20% 到 21%，因此差異約為 7%。因此，終止長期合同的影響是——我們在準備好的評論中說過，這是主要因素。這意味著遠遠超過一半。正確的？這意味著遠大於一半，也就是說，有 30% 的差異，遠大於一半的差異實際上來自此終止，這意味著，如果沒有終止，我們的利潤率將更接近上一季度的 282% I思考。

Now the remaining difference I think come primarily from the fact that our -- in the second quarter, the automotive business was hit by how we described as certain global turbulence in the -- especially in the EV market in China, which actually is related to your second question, right? So, because our automotive market exposure is far greater than those of our peers at 30% to more than 35% historically, over the last, I don't know how many quarters, many quarters already. So the impact, especially TDDI, which is presumably on the fast track of growth every single quarter. But I mean -- and expectedly in Q2, we are now seeing some sequential decline, which we believe will be a short term surprise and we emphasize in our prepared remarks that growth will resume probably strongly in the second half for automotive business, especially for TDDI where we are very, very confident that this temporary setback will be a short term phenomenon.

現在，我認為剩下的差異主要來自於我們 - 在第二季度，汽車業務受到我們描述的某些全球動蕩的打擊 - 特別是在中國的電動汽車市場，這實際上與你的第二個問題對吧？因此，由於我們的汽車市場敞口遠高於我們的同行，從歷史上看，在 30% 到 35% 以上，在過去，我不知道有多少個季度，已經有多少個季度了。所以影響，尤其是TDDI，估計每個季度都在快速增長。但我的意思是——預計在第二季度，我們現在會看到一些連續下降，我們認為這將是一個短期的意外，我們在準備好的評論中強調，下半年汽車業務的增長可能會強勁恢復，尤其是TDDI 我們非常非常有信心這種暫時的挫折將是一種短期現象。

So, because the weighting of sales coming from automotive is so high for Himax and there is a short term, how we call, market turbulence in automotive market. So that is why we are probably harder hit than our peers during the second quarter. So, I think that covers both part of the first question as always the second question. The difference primarily comes from automotive. We said earlier in our prepared remarks, actually, if you look at our smartphone, tablet TDDI, they will be actually growing. And non-driver will be flattish to selling small growth as that's what we expect and others. So I think automotive is the main difference. But again, I think, among all the applications for display, we are happy, we are betting big on automotive because in the long term, I'm talking about next several years, automotive is still on track to outgrow the rest in our view.

因此，由於汽車銷售的權重對 Himax 來說如此之高，而且我們稱之為短期內汽車市場的市場動盪。這就是為什麼我們在第二季度受到的打擊可能比我們的同行更嚴重。所以，我認為這涵蓋了第一個問題的兩個部分，就像第二個問題一樣。差異主要來自汽車。我們早些時候在準備好的評論中說過，實際上，如果你看看我們的智能手機、平板電腦 TDDI，它們實際上會在增長。非司機將持平地出售小幅增長，因為這是我們和其他人所期望的。所以我認為汽車是主要區別。但是，我認為，在所有顯示應用中，我們很高興，我們在汽車上押下了重註，因為從長遠來看，我說的是未來幾年，在我們看來，汽車仍有望超越其他應用.

And so, having such high exposure to automotive where it's actually negative things for Q2. I think looking forward it's going to be a very good news, especially given our dominant position in new project design wins. Covering both CDDI and local dimming Tcon. Where I mentioned in my prepared remarks, of the 100 also design win projects for CDDI only about one-third or 300 design win projects, only about 100, i.e. one third has gone to mass production with the rest – start mass production over the next one or two years. Even more so -- a lot more so for local dimming Tcon, which is a very high value and high margin. And it is -- it has appeared to be to becoming a major trend, becoming trendy for automotive makers and panel makers to adopt our local dimming Tcon, which is right now still the only choice in the industry.

因此，對汽車行業的曝光率如此之高，這實際上對第二季度是不利的。我認為展望未來這將是一個非常好的消息，特別是考慮到我們在新項目設計獲勝方面的主導地位。涵蓋CDDI和局部調光Tcon。我在準備好的發言中提到，在 100 個同時為 CDDI 設計獲勝的項目中，只有大約三分之一或 300 個設計獲勝項目，只有大約 100 個，即三分之一已經與其餘部分一起量產——開始量產未來一兩年。更重要的是——對於局部調光 Tcon 來說更是如此，這是一個非常高的價值和高利潤。它似乎正在成為一種主要趨勢，成為汽車製造商和麵板製造商採用我們的本地調光 Tcon 的趨勢，目前這仍然是該行業的唯一選擇。

So starting mass production in 2023 (inaudible) small portion. I think we expect very strong growth of local dimming Tcon going forward. So again, the difference for Q2 comes (inaudible) but we are quite positive on local in the long term.

所以在 2023 年開始批量生產（聽不清）一小部分。我認為我們預計未來局部調光 Tcon 的增長非常強勁。所以，第二季度的差異再次出現（聽不清），但從長遠來看，我們對本地非常樂觀。

I think my previous question regarding the revenue trend for this quarter was mainly large-sized driver IC, because I think you guided that the large-sized driver was declined double digit quarter-over-quarter. When we look at the guidance from the panel makers or your peers, apparently that they are guiding for some sort of growth, right, for a large-sized business. So the question was actually more related to this one. And then -- and then the other one on automotive, just a follow-up, can you elaborate a little bit about what is your end customer mix for automotive? Is it more Chinese customers or is it more global customers? Thank you.

我認為我之前關於本季度收入趨勢的問題主要是大尺寸驅動器 IC，因為我認為你引導大尺寸驅動器環比下降了兩位數。當我們查看面板製造商或您的同行的指導時，顯然他們正在指導某種增長，對，對於大型企業。所以這個問題實際上與這個問題更相關。然後 - 然後是另一個關於汽車的問題，只是一個跟進，你能詳細說明一下你的汽車最終客戶組合是什麼嗎？是更多中國客戶還是更多全球客戶？謝謝。

You mean end customer? Do you mean the end customer?

你是說終端客戶？你是指最終客戶嗎？

Yes, end customer, panel end customers, if possible? Thank you.

是的，最終客戶，面板最終客戶，如果可能的話？謝謝。

Okay. I will probably give you an overview of the customer base. Now on the first question, I apologize for misunderstanding your question. Yes, we guided for some decline for large panel, where you see certain of our peers have for large panel -- where some of our peers have guided for an upside. I think it comes primarily from TV, the difference for TV. I think TV for most of our peers, including Himax is the largest sector by far in the large display space.

好的。我可能會給你一個客戶群的概述。關於第一個問題，對你的問題產生了誤解，我深表歉意。是的，我們指導大型面板有所下降，你會看到我們的某些同行有大型面板 - 我們的一些同行已經指導了上行。我認為它主要來自電視，電視的不同之處。我認為對於我們大多數同行來說，包括奇景光電在內的電視是迄今為止大屏幕領域最大的領域。

Now, yes, we do see recovery for TV market and we have actually enjoyed over the past few quarters steady growth for TV driver. And also, another good news is, panel price through panel makers various measures has been stabilized and even going up a little bit going forward. But in this quarter, in particular, we don't get a full benefit because of the difference in customer base. Our customer base -- our TV panels are supplied primarily by Chinese makers, largely by Chinese thinkers and followed by Taiwanese panel makers. Our customer base are much more exposed in China than in Taiwan.

現在，是的，我們確實看到了電視市場的複蘇，並且在過去幾個季度中我們實際上享受了電視驅動程序的穩定增長。另外一個好消息是，通過面板廠商的各種措施，面板價格已經趨於穩定，未來還會有小幅上漲。但特別是在這個季度，由於客戶群的差異，我們沒有得到充分的好處。我們的客戶群——我們的電視面板主要由中國製造商供應，主要由中國思想家供應，其次是台灣面板製造商。我們在中國大陸的客戶群比在台灣的要多得多。

While through -- for certain reasons, (inaudible) customers panel allocation decision, hopefully, is a short term decision but has swung from bigger focus on China to more focus on Taiwan. And so, it's really our end customers paneling allocation that causes our probably different direction compared to our peers because we are -- our exposure is more towards Chinese panel makers. A lot more than Taiwan's panel makers, where the current trend is -- the short term trend is for allocation to go to Taiwan's panel makers more. So I think that is the main reason.

雖然通過 - 由於某些原因，（聽不清）客戶面板分配決定希望是一個短期決定，但已經從更關注中國轉向更多關注台灣。因此，與我們的同行相比，我們的最終客戶面板分配可能導致我們的方向可能不同，因為我們 - 我們的風險敞口更多地面向中國面板製造商。遠遠超過台灣面板製造商，目前的趨勢是 - 短期趨勢是更多地分配給台灣面板製造商。所以我認為這是主要原因。

But we are discussing extensively with eight customers who we have a very direct technical and business relationship with. I think various measures are on the way and including our (inaudible) more exposure to certain Taiwanese panel makers. And also, they are longer term strategy towards allocation among these two markets. So hopefully, we'll be on track starting in the second half for TV panels market.

但我們正在與八位與我們有非常直接的技術和業務關係的客戶進行廣泛討論。我認為正在採取各種措施，包括我們（聽不清）更多地接觸某些台灣面板製造商。而且，它們是在這兩個市場之間分配的長期戰略。因此，希望我們將從下半年開始進入電視面板市場。

As far as your second question is concerned about our customer base for automotive. With our market share every single customer, every single panel maker is our customer. And in most cases, we are -- in many cases we are actually the predominant supplier. In some other cases, we are number one or number two suppliers. So I'm talking about every single panel makers and that is the easy question. Now, with the panel makers that you have Tier 1 makers and ultimately to end user OEMs, we have also very comprehensive global reach, we realized end brand OEMs. Firstly, the number of brands are many and with a global diversification, right? You have North American brands, Korean brand, Japan, European, Chinese, et cetera. So we need to -- with our market share, we need to cover them all. So there's no focus one or the other as such for Himax.

至於你的第二個問題是關於我們的汽車客戶群。憑藉我們的市場份額，每一位客戶、每一位面板製造商都是我們的客戶。在大多數情況下，我們是 - 在許多情況下，我們實際上是主要供應商。在其他一些情況下，我們是第一或第二供應商。所以我說的是每一個面板製造商，這是一個簡單的問題。現在，有了面板製造商，你有一級製造商，最終到最終用戶 OEM，我們也有非常全面的全球影響力，我們實現了終端品牌 OEM。第一，品牌數量多，全球化多元化，對吧？你有北美品牌、韓國品牌、日本品牌、歐洲品牌、中國品牌等等。因此，我們需要——憑藉我們的市場份額，我們需要覆蓋所有這些市場。所以對於 Himax 來說，沒有一個或另一個焦點。

And detail for Tier 1s. They are European, Korean, Japanese, American and Chinese Tier 1s. There is some crossover European Tier 1s were -- in addition to European market we will also cover some Chinese market and so on. Chinese Tier 1s will cover some European market and so on and so forth, but they is still this reached global diversification with a lot of global buyers for Tier 1 market. And again, our strategy and we have implemented that quite successfully. Our strategy is to cover them all and to try to get a leadership position to the extent possible with as many of them as possible. So we have major engineering support offices certainly in China, in Japan, in Korea and we have engineering support office even in Europe in the core of Europe in Germany. And even in North America. (inaudible) And that shows -- that illustrates our efforts to cover truly -- to extend our global footprint for automotive market. I hope that answers the question.

以及第 1 層的詳細信息。他們是歐洲、韓國、日本、美國和中國的 Tier 1。有一些交叉歐洲一級 - 除了歐洲市場，我們還將覆蓋一些中國市場等。中國一級將覆蓋一些歐洲市場等等，但他們仍然達到了全球多元化，一級市場有很多全球買家。再一次，我們的戰略和我們已經非常成功地實施了該戰略。我們的策略是涵蓋所有這些，並嘗試盡可能多地獲得領導地位。所以我們在中國、日本、韓國都有主要的工程支持辦公室，我們甚至在歐洲核心的德國也有工程支持辦公室。甚至在北美。 （聽不清）這表明——這說明了我們為真正覆蓋所做的努力——擴大我們在汽車市場的全球足跡。我希望這能回答這個問題。

And this concludes the Q&A session. I now I turn the call back over to CEO, Mr. Jordan Wu for any closing remarks.

問答環節到此結束。現在，我將電話轉回給首席執行官吳小喬先生，聽取任何結束語。

As a final note, Eric Li, our Chief IR/PR Officer, will maintain investor marketing activities and continue to attend investor conference. We will announce the details as they come about. Thank you and have a nice day.

最後一點，我們的首席 IR/PR 官 Eric Li 將維持投資者營銷活動並繼續參加投資者會議。我們將在細節出現時公佈。謝謝你，祝你有美好的一天。

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

謝謝。今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。