奇景光電 (HIMX) 2023 Q2 法說會逐字稿

Hello, ladies and gentlemen, welcome to the Himax Technologies, Inc. Second Quarter 2023 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

大家好，女士們、先生們，歡迎參加奇景光電 2023 年第二季度收益電話會議。 （操作員指示）謹此提醒，本次會議正在錄製中。

I would now like to turn the conference over to your host, Mr. Mark Schwalenberg from MZ Group. You may begin.

現在我想將會議交給東道主、來自 MZ 集團的 Mark Schwalenberg 先生。你可以開始了。

Welcome, everyone, to the Himax Second Quarter 2023 Earnings Call.

歡迎大家參加奇景光電 2023 年第二季度財報電話會議。

Joining us from the company are Mr. Jordan Wu, President and Chief Executive Officer; Ms. Jessica Pan, Chief Financial Officer; and Mr. Eric Li, Chief IR/PR Officer. After the company's prepared comments, we have allocated time for questions in a Q&A session. If you have not yet received a copy of today's results release, please e-mail HIMX@mzgroup.us, access the press release on financial portals or download a copy from Himax's website at www.himax.com.tw.

加入我們公司的還有總裁兼首席執行官吳喬丹先生；潘潔女士，首席財務官；以及首席 IR/PR 官 Eric Li 先生。在公司準備好意見後，我們在問答環節分配了提問時間。如果您尚未收到今天的業績發布副本，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奇景網站 www.himax.com.tw 下載副本。

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 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聲明，包括有關預期未來財務業績和行業增長的聲明，都是前瞻性聲明，涉及許多風險和不確定性，這些風險和不確定性可能會影響您的投資決策。導致實際事件或結果與本次電話會議中描述的情況存在重大差異。因素列表可在公司提交給 SEC 的文件（截至 2022 年 12 月 31 日的年度的 20-F 表）標題為“可能會修訂的風險因素”的部分中找到。

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.

除公司 20-F 中提供並於 2023 年 4 月 6 日向 SEC 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 會計進行合併和編制。此類財務信息是內部生成的，並未經過相同的審查和審查，包括我們年度合併財務報表所接受的內部審計程序和獨立審計師的外部審計，並且可能與經審計的合併財務信息存在重大差異。同一時期。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、未來事件還是其他原因。

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

我現在想把電話轉給Eric Li先生。埃里克，地板是你的。

Thank you, Mark. Thank you, everyone, for joining us.

謝謝你，馬克。謝謝大家加入我們。

My name is Eric Li, Chief IR/PR Officer at Himax. On today's call, I'll first review Himax's consolidated financial performance for the second quarter 2023, followed by our third 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 an IFRS basis.

我是 Eric Li，奇景光電首席 IR/PR 官。在今天的電話會議上，我將首先回顧奇景 2023 年第二季度的綜合財務業績，然後是我們對第三季度的展望。然後喬丹將介紹我們業務的最新狀況，然後我們將回答問題。我們將根據國際財務報告準則審查我們的財務狀況。

Challenging business conditions due to ongoing macro headwinds persisted during the second quarter, yet we continued to execute successfully with gross margin, surpassing the guidance range, while both revenues and EPS landed at the upper end of guidance range issued on May 11, 2023. Second quarter revenues registered $235 million, a decrease of 3.8% sequentially, yet at the upper end of our guidance range. This was attributable to improved order momentum, particularly in the automotive DDIC, large display driver IC and the non-driver business.

由於持續的宏觀逆風，第二季度的業務環境仍然充滿挑戰，但我們繼續成功執行，毛利率超過了指導範圍，而收入和每股收益均達到了2023 年5 月11 日發布的指導範圍的上限。該季度收入為 2.35 億美元，環比下降 3.8%，但仍處於我們指導範圍的上限。這歸因於訂單勢頭的改善，特別是在汽車 DDIC、大型顯示驅動器 IC 和非驅動器業務方面。

Gross margin came in at 21.7%, a decrease from 28.1% over last quarter, but above our guidance range of 20% to 21% due to a favorable product mix. As we previously reported, Q2 gross margin was impacted significantly by a onetime expense related to the strategic termination of certain high-cost foundry capacity agreements in addition to price erosion related to destocking.

毛利率為 21.7%，較上季度的 28.1% 有所下降，但由於有利的產品組合，仍高於我們 20% 至 21% 的指導範圍。正如我們之前報導的，除了與去庫存相關的價格侵蝕之外，第二季度的毛利率還受到與戰略性終止某些高成本代工產能協議相關的一次性費用的顯著影響。

Q2 profit per diluted ADS was $0.005 at the upper end of the guidance range of minus $0.029 to $0.006. Revenue from large display drivers came in at $45.4 million, a decrease of 14.3% sequentially, yet above our prior guidance. Monitor IC sales surpassed our prior guidance, up single digits sequentially, driven by our clients' proactive pull forward in preparation for the Q2 sales festival and the recovery of gaming display. Notebook sales notably outperformed our guidance, thanks to strong shipments to key customers. TV IC sales declined as expected as customers suspended pull-ins, having already replenished their inventory over prior 2 consecutive quarters. Large panel driver IC sales accounted for 19.3% of total revenues for the quarter compared to 21.7% last quarter and 22% a year ago.

第二季度每股攤薄美國存託憑證利潤為 0.005 美元，處於指導範圍負 0.029 美元至 0.006 美元的上限。大型顯示驅動器的收入為 4540 萬美元，比上一季度下降 14.3%，但高於我們之前的指導。在客戶為第二季度銷售節做準備和遊戲顯示器復甦的積極推動下，顯示器 IC 銷售額超出了我們之前的指引，環比增長了個位數。由於主要客戶的出貨量強勁，筆記本電腦的銷售明顯超出了我們的指導。由於客戶已連續兩個季度補充庫存，因此電視 IC 銷售額出現預期下降，導致客戶暫停採購。大尺寸面板驅動IC銷售額佔本季度總收入的19.3%，而上季度為21.7%，去年同期為22%。

Moving on to our small and medium-sized display driver segment. Revenue was $150.3 million, a slight decline of 2.9% sequentially. Smartphone and tablet driver sales increased mid-teens and single digit, respectively, in second quarter as we saw a recovery in business momentum, particularly in TDDI products. Q2 automotive driver sales decreased single digit sequentially, but outperformed our guidance of low-teens decline as clients resumed order replenishment for both traditional DDIC and TDDI. Automotive driver business was still our largest revenue contributor with around 30% of total sales in the second quarter.

繼續我們的中小型顯示驅動器部分。收入為 1.503 億美元，比上一季度小幅下降 2.9%。隨著我們看到業務勢頭（尤其是 TDDI 產品）的複蘇，第二季度智能手機和平板電腦驅動器銷售額分別實現了兩位數和個位數的增長。第二季度汽車驅動器銷售額環比下降個位數，但由於客戶恢復了傳統 DDIC 和 TDDI 的訂單補充，其表現優於我們的低雙位數下降指引。汽車驅動器業務仍然是我們最大的收入來源，佔第二季度總銷售額的 30% 左右。

We are particularly confident in our automotive TDDI growth potential, backed by hundreds of design wins already secured significantly ahead all our peers and among these design wins, only a small portion has commenced mass production. With the design win projects under our belt, we believe we can continue to grow our market share in automotive TDDI in addition to our already dominant position in traditional DDICs where we have a 40% global market share. Small- and medium-sized driver IC segment accounted for 63.9% of total sales for the quarter compared to 63.3% in previous quarter and 64.5% a year ago.

我們對汽車 TDDI 的增長潛力特別有信心，這有數百項設計勝利的支持，這些設計勝利已經遠遠領先於我們的所有同行，而在這些設計勝利中，只有一小部分已經開始批量生產。憑藉我們贏得的設計項目，我們相信，除了我們在傳統 DDIC 中已經佔據的主導地位（擁有 40% 的全球市場份額）之外，我們還可以繼續擴大在汽車 TDDI 領域的市場份額。中小型驅動IC領域佔本季度總銷售額的63.9%，而上一季度為63.3%，去年同期為64.5%。

Second quarter nondriver sales also exceeded guidance with revenue of $39.3 million, up 7.9% from a quarter ago. The better-than-expected sales performance was a result of higher shipment for Tcon and CMOS image sensor. Despite the slight sequential decline in Tcon sales in second quarter, it surpassed guidance of a low-teens decline, bolstered by a better-than-expected shipment of monitor and automotive Tcon. Tcon business represented over 9% of our total sales in second quarter. Lastly, for WLO, notably, during the quarter, we commenced volume production to one leading North American customer for their new generation VR devices to enable gesture control. Nondriver products accounted for 16.8% of total revenues as compared to 15% in the previous quarter and 13.5% a year ago.

第二季度非駕駛員銷售額也超出了預期，收入為 3,930 萬美元，較上一季度增長 7.9%。銷售業績好於預期是由於Tcon 和CMOS 圖像傳感器出貨量增加。儘管第二季度 Tcon 銷售額環比略有下降，但由於顯示器和汽車 Tcon 出貨量好於預期，其跌幅超過了雙位數的指引。 Tcon 業務佔第二季度總銷售額的 9% 以上。最後，對於 WLO 來說，值得注意的是，在本季度，我們開始為北美一家領先客戶批量生產他們的新一代 VR 設備，以實現手勢控制。非驅動產品佔總收入的 16.8%，而上一季度為 15%，一年前為 13.5%。

Our operating expenses for the second quarter were $53.2 million, an increase of 4.3% from the previous quarter and 1.2% from a year ago. The sequential increase was mainly a result of increased R&D expenses. Yet amidst the prevailing macroeconomic headwinds, we remain focused on strict cost controls. Our second quarter operating expenses include the amortized expenses for annual bonus grants made in prior years of $6.4 million as compared to $6.5 million in previous quarter and $7.4 million from a year ago.

我們第二季度的運營費用為 5320 萬美元，環比增長 4.3%，同比增長 1.2%。環比增長主要是由於研發費用增加。然而，在當前的宏觀經濟逆風中，我們仍然專注於嚴格的成本控制。我們第二季度的運營費用包括前幾年年度獎金補助的攤銷費用 640 萬美元，而上一季度為 650 萬美元，去年同期為 740 萬美元。

As a reminder, we grant annual bonuses to employees at the end of September each year, including RSU and cash award. A portion of those bonuses is immediately vested and recognized in the third quarter with the remainder equally vested in 3 tranches on the first, second and third anniversary of the grant date and recognized on a straight-line basis over the vesting period of each tranche. Second quarter after-tax profit was $0.9 million or $0.005 per diluted ADS compared to $14.9 million or $0.085 per diluted ADS last quarter.

提醒一下，我們在每年 9 月底向員工發放年度獎金，包括 RSU 和現金獎勵。這些獎金的一部分立即歸屬並在第三季度確認，其餘部分在授予日的第一、第二和第三週年時分三批平均歸屬，並在每批歸屬期內按直線法確認。第二季度稅後利潤為 90 萬美元，即每稀釋後美國存託憑證 0.005 美元，而上一季度為 1,490 萬美元，即每稀釋後美國存託憑證 0.085 美元。

Turning to the balance sheet. We had $219.5 million of cash, cash equivalents and other financial assets as of June 30, 2023, compared to $461.6 million at the same time last year and $223.8 million a quarter ago. Second quarter operating cash inflow was approximately $1.7 million as compared to an inflow of $66.4 million in Q1, primarily due to $51 million income tax paid during Q2, an illustration of our continuous effort to deplete inventory for the past few quarters. We had $43.5 million of long-term unsecured loans as of the end of second quarter, of which $6 million was the current portion.

轉向資產負債表。截至 2023 年 6 月 30 日，我們擁有 2.195 億美元的現金、現金等價物和其他金融資產，而去年同期為 4.616 億美元，上季度為 2.238 億美元。第二季度運營現金流入約為170 萬美元，而第一季度的流入為6640 萬美元，這主要是由於第二季度繳納了5100 萬美元的所得稅，這說明我們在過去幾個季度不斷努力消耗庫存。截至第二季度末，我們擁有 4350 萬美元的長期無擔保貸款，其中 600 萬美元為流動部分。

During the third quarter, we have made a payment of $83.7 million for annual dividend to shareholders. Further, we expect to pay out a total of around $30 million for employee bonus awards comprised of around $9.3 million for the immediately vested portion of this year's award and $21 million for vested awards granted over the last 3 years. Despite the substantial employee bonus payout, we still expect to guarantee positive -- to generate, I'm sorry, we still expect to generate positive operating cash flow in Q3 again due to the ongoing destocking process across major product lines.

第三季度，我們向股東支付了 8370 萬美元的年度股息。此外，我們預計將總共支付約 3000 萬美元的員工獎金，其中約 930 萬美元用於今年獎勵的立即歸屬部分，2100 萬美元用於過去 3 年授予的既得獎勵。儘管支付了大量員工獎金，但我們仍然希望保證產生積極的現金流，抱歉，由於主要產品線正在進行的去庫存過程，我們仍然希望在第三季度再次產生積極的運營現金流。

Our quarter end inventories as of June 30, 2023, were $297.3 million, markedly lower than $335.2 million last quarter. Accounts receivables at the end of June 2023 was $239 million, down from $252.2 million last quarter and down from $371 million a year ago. DSO was 90 days at the quarter end as compared to 93 days last quarter and a year ago. Second quarter capital expenditures were $2.9 million versus $2.8 million last quarter and $2.5 million a year ago. The second quarter CapEx was mainly for our IC design business.

截至 2023 年 6 月 30 日，我們的季末庫存為 2.973 億美元，明顯低於上季度的 3.352 億美元。截至 2023 年 6 月末，應收賬款為 2.39 億美元，低於上季度的 2.522 億美元，也低於一年前的 3.71 億美元。季度末的 DSO 為 90 天，而上季度和一年前為 93 天。第二季度資本支出為 290 萬美元，上季度為 280 萬美元，一年前為 250 萬美元。第二季度資本支出主要用於我們的IC設計業務。

As of June 30, 2023, Himax has 174.4 million ADS outstanding, unchanged from last quarter. On a fully diluted basis, total number of ADS outstanding for the second quarter was 174.7 million.

截至2023年6月30日，奇景已發行美國存託股1.744億股，與上季度持平。在完全稀釋的基礎上，第二季度流通在外的美國存託股份總數為1.747億股。

Now turning to our third quarter 2023 guidance. We expect third quarter revenues to be flat to decline 7% sequentially. Gross margin is expected to be around 30.5% to 32%, depending on the final product mix. The third quarter profit attributable to shareholders is estimated to be in the range of $0.015 to $0.06 per fully diluted ADS. As we have done historically, we will grant employees annual bonus, including RSUs and cash awards on or around September 30 this year. The third quarter guidance for profit per diluted ADS has taken into account the expected 2023 annual bonuses, which, subject to Board approval, is now assumed to be around $10.5 million, out of which $9.3 million or $0.042 per diluted ADS will be vested and expensed immediately on the grant date.

現在轉向我們的 2023 年第三季度指導。我們預計第三季度收入將持平，環比下降 7%。毛利率預計約為 30.5% 至 32%，具體取決於最終產品組合。第三季度股東應占利潤預計為每股完全稀釋的美國存託股0.015至0.06美元。正如我們以往所做的那樣，我們將在今年 9 月 30 日左右向員工發放年度獎金，包括 RSU 和現金獎勵。第三季度每稀釋美國存託股利潤指引已考慮到預期的2023 年年度獎金，目前假設該獎金約為1,050 萬美元，但須經董事會批准，其中930 萬美元或每稀釋美國存託股0.042 美元將歸屬和支出立即在授予日。

As a reminder, the total annual bonus amount and the immediately vested portion are our current best estimate only, and the actual amount could vary materially depends on, among other things, our Q4 profit and the final board decision for the total bonus amount and its vesting scheme. As is the case for previous year, we expect the annual bonus grant in 2023 to lead to higher third quarter operating expenses compared to other quarters of the year. In comparison, the annual bonus for 2022 and 2021 were $39.6 million and $74.7 million, respectively, of which $18.5 million and $24.8 million vested immediately.

提醒一下，年度獎金總額和立即歸屬部分只是我們當前的最佳估計，實際金額可能會發生重大變化，其中包括我們第四季度的利潤以及董事會對獎金總額及其獎金總額的最終決定。歸屬計劃。與去年的情況一樣，我們預計 2023 年的年度獎金發放將導致第三季度運營費用高於今年其他季度。相比之下，2022年和2021年的年度獎金分別為3960萬美元和7470萬美元，其中1850萬美元和2480萬美元立即歸屬。

I will now turn the call over to Jordan to discuss our Q3 outlook. Jordan, the floor is yours.

我現在將把電話轉給喬丹，討論我們第三季度的前景。喬丹，地板是你的。

Thank you, Eric.

謝謝你，埃里克。

The prevailing sentiment in the consumer electronics market for semiconductor remains sluggish. Customers continue to exercise caution towards panel procurements, limiting our visibility into the second half for consumer products. However, we see improving business momentum in the automotive sector, our largest sales contributor, where a healthy rebound for the first half weakness appears to be underway. As a reminder, the global automotive market experienced a severe downturn throughout the first half of the year as major Chinese automakers cut back production and implemented strict cost control measures due to intensified EV price competition adversely impacting our first half sales. Now looking ahead with renewed momentum in the automotive market, we believe the stage is set for a sales rebound as we approach the end of the year, supported by more favorable product mix, improved cost structure and normalized inventory level, which should also lead to improved gross margin.

消費電子市場對半導體的普遍信心仍然低迷。客戶對面板採購繼續持謹慎態度，限制了我們對下半年消費產品的能見度。然而，我們看到汽車行業的業務勢頭有所改善，汽車行業是我們最大的銷售貢獻者，該行業似乎正在從上半年的疲軟狀態中健康反彈。值得注意的是，全球汽車市場上半年經歷了嚴重下滑，由於電動汽車價格競爭加劇，中國主要汽車製造商削減產量並實施嚴格的成本控制措施，對我們上半年的銷量產生了不利影響。現在展望汽車市場的新動能，我們相信，在更有利的產品組合、改善的成本結構和正常的庫存水平的支持下，隨著年底的臨近，銷售反彈的階段已定，這也將導致毛利率提高。

In terms of gross margin, for the third quarter, we expect substantial improvement from the Q2 trough, which was primarily related to the onetime early termination expense to foundry partners as we reported last quarter. I would like to stress again how this early termination decision was part of a crucial operating strategy for us. By sacrificing margin last quarter, we now have added flexibility where new wafer starts are no longer bound by minimal fulfill requirements and higher wafer costs set during the severe foundry capacity shortage period. Furthermore, we can now leverage diverse foundry sources for optimal operational efficiency, a much improved cost structure, thereby maintaining our product competitiveness.

就毛利率而言，我們預計第三季度的毛利率將較第二季度的低谷大幅改善，這主要與我們上季度報告的代工合作夥伴的一次性提前終止費用有關。我想再次強調，這一提前終止的決定是我們關鍵運營戰略的一部分。通過犧牲上季度的利潤率，我們現在增加了靈活性，新晶圓的投產不再受到最低滿足要求和在嚴重的代工產能短缺期間設定的更高晶圓成本的約束。此外，我們現在可以利用多樣化的代工資源來實現最佳運營效率，大大改善成本結構，從而保持我們的產品競爭力。

Favorable product mix shift is also a key factor contributing to our expected Q3 gross margin expansion. This is predominantly driven by increased automotive sales, as discussed earlier, thanks to a robust recovery in the Chinese automotive market, leading to order resumption from customers. Notably, our automotive sales for traditional DDIC, TDDI and Tcon are all set to enjoy decent double-digit sequential growth in the third quarter and collectively are expected to represent almost 45% of our total sales. As a reminder, all these automotive products have a better than corporate average profit margin profile.

有利的產品結構轉變也是我們預期第三季度毛利率擴張的關鍵因素。正如前面所討論的，這主要是由於中國汽車市場的強勁復甦導致汽車銷量的增加，導致客戶訂單的恢復。值得注意的是，我們的傳統 DDIC、TDDI 和 Tcon 汽車銷量在第三季度都將實現兩位數的連續增長，預計將占我們總銷量的近 45%。提醒一下，所有這些汽車產品的利潤率都高於企業平均水平。

Moving on to inventory destocking. Our inventory depletion is progressing nicely with Q3 inventory level on track for meaningful reduction. At this point, we are comfortable in our overall inventory level, thanks to our continuous effort to destock for several quarters. In addition, the remaining stocks are comprised of IC products, which have a solid customer design base and long-expected lifetimes. We now expect that our inventory will normalize near historical average levels by the end of the year. While the macroeconomic environment still presents some headwinds for us, given the expected strength in automotive sales, improve operating flexibility and cost structure, in addition to our commitment to expand our presence in high value-added areas such as Tcon, OLED and AI. We expect second half sales and gross margin to improve from the first half and believe we are well positioned for long-term sustainable revenue growth.

繼續去庫存。我們的庫存消耗進展順利，第三季度庫存水平有望顯著減少。目前，由於我們連續幾個季度持續努力去庫存，我們對整體庫存水平感到滿意。此外，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。我們現在預計，到今年年底，我們的庫存將恢復正常，接近歷史平均水平。儘管宏觀經濟環境仍然給我們帶來一些阻力，但考慮到汽車銷售的預期強勁、運營靈活性和成本結構的改善，以及我們致力於擴大在 Tcon、OLED 和 AI 等高附加值領域的業務。我們預計下半年銷售額和毛利率將較上半年有所改善，並相信我們已做好長期可持續收入增長的準備。

With that, I will now begin with an update of the large panel driver IC business. Our third quarter 2023 large display driver IC revenue is projected to be down single digit sequentially. We expect TV IC business to be down high teens quarter-over-quarter due to leading end brands stringent production control measures amid soft market. Notebook IC sales are expected to increase by a decent double digits sequentially, predominantly from Russia orders from one leading brand. Meanwhile, monitor IC sales are set to increase single digits sequentially, continuing the customers are restocking momentum we saw last quarter.

首先介紹一下大面板驅動IC業務的最新情況。我們的 2023 年第三季度大型顯示驅動器 IC 收入預計將環比下降個位數。我們預計，由於領先終端品牌在疲軟的市場中採取嚴格的生產控制措施，電視​​ IC 業務將環比下降高位。筆記本電腦 IC 銷售額預計將連續增長兩位數，主要來自一個領先品牌的俄羅斯訂單。與此同時，監控 IC 銷售額預計將連續增長個位數，延續我們上季度看到的客戶補充庫存的勢頭。

Turning to the small and medium-sized display driver IC business. Despite continuing uncertainty in consumer electronics, with improved visibility and demand in the automotive market, Q3 revenue is expected to be flat or slightly up sequentially. Our automotive driver IC business is poised to increase by decent double-digit sequentially on a strong uptick in both TDDI and traditional DDIC. However, smartphone and tablet sales are both projected to decline double digit. The sequential growth of automotive DDIC business is fueled by a resumption of customer orders across the board following several quarters of inventory correction.

轉向中小尺寸顯示驅動IC業務。儘管消費電子產品持續存在不確定性，但隨著汽車市場的知名度和需求的改善，第三季度收入預計將持平或略有上升。隨著 TDDI 和傳統 DDIC 的強勁增長，我們的汽車驅動 IC 業務有望連續實現兩位數的增長。然而，智能手機和平板電腦的銷量預計均將下降兩位數。汽車DDIC業務的環比增長得益於經過幾個季度的庫存調整後客戶訂單全面恢復。

Automotive TDDI business also resumed its growth trajectory in the third quarter, driven by increasing production of customers' new vehicles after an unexpected second quarter disruption. The automotive recovery has been further bolstered by supportive governmental policies, especially in China and the U.S. to incentivize new vehicle purchases. Given the rapid adoption of TDDI in new-generation vehicles, where we have already secured well over 300 design wins and a number of new design-in projects is still increasing as we speak. We remain confident that we'll continue to enjoy strong growth as our leading market share position remains unchallenged. It is worth noting that automotive TDDI sales will account for over 30% of total automotive sales in the third quarter and are poised to continue to increase.

汽車 TDDI 業務在第三季度也恢復了增長軌跡，這是在第二季度意外中斷後客戶新車產量增加的推動下。政府的支持性政策進一步推動了汽車業的複蘇，特別是在中國和美國刺激新車購買的政策。鑑於 TDDI 在新一代汽車中的迅速採用，我們已經贏得了 300 多項設計勝利，並且截至我們發言時，許多新的設計項目仍在增加。我們仍然有信心，我們將繼續享受強勁的增長，因為我們的領先市場份額地位仍然不受挑戰。值得注意的是，第三季度汽車TDDI銷量將佔汽車總銷量的30%以上，並有望繼續增長。

Let's move on to LTDI, a technology where Himax has been a pioneer in the market. Given the growing global demand for large, panoramic, interactive and intuitive in-car display experiences, we anticipate accelerating adoption of LTDI in the coming years. LTDI is gaining popularity particularly among high-end car models with fancy and/or larger than 30-inch automotive displays. Our integrated solution of LTDI and local dimming Tcon has been adopted by many customers as their standard platform for higher displays for which a variety of large automotive displays will be developed. This further solidifies our position among customers in the high-end automotive display market. We expect an influx of collaborations, leading to a growing number of projects slated for mass production starting 2024.

讓我們繼續討論 LTDI，奇景光電一直是這項技術的市場先驅。鑑於全球對大型、全景、交互式和直觀的車載顯示體驗的需求不斷增長，我們預計未來幾年將加速採用 LTDI。 LTDI 越來越受歡迎，尤其是在配備精美和/或大於 30 英寸汽車顯示屏的高端車型中。我們的LTDI和局部調光Tcon集成解決方案已被許多客戶採用作為他們的更高顯示器的標準平台，並將為其開發各種大型汽車顯示器。這進一步鞏固了我們在高端汽車顯示市場客戶中的地位。我們預計合作將會大量湧入，從而導致越來越多的項目計劃從 2024 年開始大規模生產。

As we have mentioned repeatedly, Himax is at the front runner position 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. Having the broadest one-stop shop offering also drives customer loyalty as evidenced by years of extensive collaboration with panel makers across the globe as well as deep engagement with Tier 1s and OEMs who deeply trust and rely on Himax expertise for their product road map. We are confident that our automotive business will continue to be our primary sales growth engine moving forward.

正如我們多次提到的，奇景在汽車顯示IC市場處於領先地位，提供全面的產品組合，涵蓋整個規格和技術範圍，以滿足不同的設計需求，包括傳統DDIC、TDDI、局部調光Tcon、 LTDI和AMOLED。擁有最廣泛的一站式服務還可以提高客戶忠誠度，多年來與全球面板製造商的廣泛合作以及與深深信任並依賴奇景專業知識來製定產品路線圖的一級供應商和原始設備製造商的深入合作就證明了這一點。我們相信，我們的汽車業務將繼續成為我們未來的主要銷售增長引擎。

Next, on smartphone and tablet product lines. We continue to see lackluster demand in the market. Currently, a small group of peers are still in the midst of offloading inventory, offering aggressive pricing while enduring losses to deplete their excess inventory. As we near the end of our destocking process, our strategy is to not engage in pricing competition, even at the expense of forfeiting revenues by turning away unprofitable projects. Having said that, we have placed wafer starts for select products starting Q2.

接下來是智能手機和平板電腦產品線。我們繼續看到市場需求低迷。目前，一小部分同行仍在清理庫存，提供激進的定價，同時承受損失以消耗多餘的庫存。當我們的去庫存過程接近尾聲時，我們的策略是不參與價格競爭，即使以放棄無利可圖的項目而損失收入為代價。話雖如此，我們已從第二季度開始為選定的產品開始晶圓生產。

Next, for an update on AMOLED. Himax offers both DDIC and Tcon for OLED displays and has commenced production for tablet and automotive applications jointly with global leading panel makers. For automotive OLED display, design activities are going smoothly with both conventional carmakers and NEV vendors across different continents. Concurrently, we continue to gear up for AMOLED driver IC development by strategically partnering with major Korean and Chinese panel makers of various applications covering smartphone, tablet, notebook and TV. For smartphone AMOLED display driver, amidst a muted smartphone market, we still target to commence production towards the end of 2023.

接下來是 AMOLED 的更新。奇景光電為 OLED 顯示器提供 DDIC 和 Tcon，並已開始與全球領先的面板製造商聯合生產平板電腦和汽車應用。對於汽車 OLED 顯示屏，各大洲的傳統汽車製造商和新能源汽車供應商的設計活動進展順利。同時，我們通過與韓國和中國主要面板製造商戰略合作，涵蓋智能手機、平板電腦、筆記本電腦和電視等各種應用，繼續加速AMOLED驅動IC的開發。對於智能手機 AMOLED 顯示驅動器，在智能手機市場低迷的情況下，我們仍計劃在 2023 年底開始生產。

Now let me share some of the progress we made on the nondriver IC businesses. Starting with an update on timing controller. We anticipate Q3 Tcon sales to decrease single digits sequentially, hampered by reduced shipment for monitors and OLED displays for tablet. For OLED tablet business, our customers are still in the midst of inventory offloading due to muted end market demand. Despite the soft demand environment, we are actively working on the next-generation IC for OLED tablet, aiming to broaden our offering and better position us for when demand returns.

現在我來分享一下我們在非驅動IC業務方面取得的一些進展。從時序控制器的更新開始。我們預計第三季度 Tcon 銷售額將環比下降個位數，原因是顯示器和平板電腦 OLED 顯示器出貨量減少。對於OLED平板業務，由於終端市場需求低迷，我們的客戶仍處於庫存卸載階段。儘管需求環境疲軟，我們仍在積極開髮用於 OLED 平板電腦的下一代 IC，旨在擴大我們的產品範圍，並在需求恢復時更好地定位我們。

Next, on our automotive Tcon business. We continue to solidify our leadership position, particularly in local dimming Tcon, which can improve display contrast while also lowering power consumption. We are encouraged by the growing validation and widespread deployment in both premium and mainstream car models across the globe. Our automotive Tcon business is poised to experience explosive growth with notable sales contribution starting 2024. We expect it to be one of our major growth engines in coming years.

接下來是我們的汽車 Tcon 業務。我們繼續鞏固我們的領導地位，特別是在局部調光 Tcon 方面，它可以提高顯示對比度，同時降低功耗。我們對全球高端和主流車型不斷增長的驗證和廣泛部署感到鼓舞。從 2024 年開始，我們的汽車 Tcon 業務有望實現爆炸性增長，銷售貢獻顯著。我們預計它將成為我們未來幾年的主要增長引擎之一。

Switching gears to the WiseEye Smart Image Sensing total solution, which incorporates Himax's proprietary ultralow power AI processor, always on CMOS image sensor and CNN-based AI algorithm. We continue to support the mass production of Dell's notebook, along with other endpoint AI applications, including video conference device, shared bike parking, door lock and smart agriculture, among others. We are also focused on strengthening our Intelli-Sensing Module business in an effort to further broaden our customer base and applications.

轉向 WiseEye 智能圖像傳感整體解決方案，該解決方案採用奇景專有的超低功耗 AI 處理器、始終採用 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，包括視頻會議設備、共享單車停車、門鎖和智慧農業等。我們還致力於加強我們的智能傳感模塊業務，以進一步擴大我們的客戶群和應用。

The module offering incorporating WiseEye technology provides clients with a series of highly integrated plug-and-play module boards, which are user programmable, but also loaded with our pretrained AI models for simple system integration. This can effectively shorten customers' time to market and reduce development costs, making it particularly well suited for markets featuring high variety and small quantity. Throughout recent quarters, we have received excellent feedback from customers while seeing large increases in projects for various applications. Building on this momentum, we plan to roll out a series of modules that will expand our product offerings to cover more diverse markets and seize upon the vast opportunities presented in endpoint AI.

該模塊產品採用 WiseEye 技術，為客戶提供一系列高度集成的即插即用模塊板，這些模塊板是用戶可編程的，但也加載了我們預先訓練的 AI 模型，以實現簡單的系統集成。這可以有效縮短客戶的上市時間，降低開發成本，特別適合多品種、小批量的市場。在最近幾個季度中，我們收到了客戶的良好反饋，同時看到各種應用的項目大幅增加。在此勢頭的基礎上，我們計劃推出一系列模塊，擴大我們的產品範圍，覆蓋更多元化的市場，並抓住端點人工智能領域帶來的巨大機遇。

Over the past few quarters, we have witnessed steady growth in the adoption of our WiseEye products, particularly in home surveillance applications, specifically door lock, door bell and battery camera. Notably, we are pleased to report a successful collaboration with a leading door lock vendor in China, the largest market globally. The project is steady for mass production starting in the second half of this year with anticipated growth extending to 2024. Our WiseEye solution is also being implemented for automotive applications, where it can intelligently detect the presence, movement or posture of driver or passenger delivering a broad array of AI use cases inside a vehicle. Such demand is expanding rapidly with global leading car brands for new car models, primarily in application for car owner recognition and keyless access with other new use cases also under development.

在過去的幾個季度中，我們見證了 WiseEye 產品的採用率穩步增長，特別是在家庭監控應用領域，特別是門鎖、門鈴和電池攝像頭。值得注意的是，我們很高興地報告與全球最大市場中國的一家領先門鎖供應商的成功合作。該項目將於今年下半年開始穩定量產，預計增長將持續到2024 年。我們的WiseEye 解決方案也正在應用於汽車應用，它可以智能地檢測駕駛員或乘客的存在、移動或姿勢，從而提供信息車輛內廣泛的人工智能用例。全球領先汽車品牌對新車款的需求正在迅速擴大，主要應用於車主識別和無鑰匙進入應用，其他新用例也在開發中。

Next for an update on our WE2 AI processor, where we have engaged global network names for their next-generation product development. We have met significant progress in enriching AI features and use cases through collaborations with major CPU and AP SoC players for next-generation smart notebook, surveillance and the host of other endpoint AI applications. The WE2 processor offers further advancements in inference speed and ultralow power, maintaining superior power efficiency compared to our already industry-leading first-generation AI processor, WE1. Furthermore, in context aware AI, WE2 enables more detailed computer vision object analysis, such as real-time facial landmark, hand landmark and human pose skeleton, among others at extremely low power consumption. This enables sophisticated human expression detection for smart notebook and broader AI applications.

接下來是我們的 WE2 AI 處理器的更新，我們已經聘請了全球網絡名稱來開發他們的下一代產品。通過與下一代智能筆記本、監控和其他端點人工智能應用主機的主要 CPU 和 AP SoC 廠商合作，我們在豐富人工智能功能和用例方面取得了重大進展。與我們已經行業領先的第一代人工智能處理器 WE1 相比，WE2 處理器在推理速度和超低功耗方面提供了進一步的進步，保持了卓越的功效。此外，在上下文感知人工智能中，WE2能夠以極低的功耗實現更詳細的計算機視覺對象分析，例如實時面部標誌、手部標誌和人體姿勢骨骼等。這使得智能筆記本電腦和更廣泛的人工智能應用能夠進行複雜的人類表情檢測。

Having established a leading position in ultralow power AI processing and image sensing for endpoint AI applications, we are firmly committed to the WiseEye product line's ongoing development and growth. By leveraging broad ecosystem partners and customers, we aim to maximize market reach and explore potential applications. We believe that our WiseEye AI business will serve as a multiyear structural growth driver for Himax.

我們在端點人工智能應用的超低功耗人工智能處理和圖像傳感領域建立了領先地位，堅定致力於 WiseEye 產品線的持續開發和增長。通過利用廣泛的生態系統合作夥伴和客戶，我們的目標是最大限度地擴大市場覆蓋範圍並探索潛在的應用。我們相信，我們的 WiseEye AI 業務將成為奇景光電的多年結構性增長動力。

Lastly, for an update on our optical-related product lines. Himax is one of the few companies in the world that can offer a diverse range of optical products, including WLO, 3D Sensing and LCOS for the development of immersive technologies and the realization of the metaverse. Himax is well positioned to capitalize on the growth of this nascent industry. As our technologies are vital for facilitating immersive content, evidenced by the growing list of AR/VR goggle device engineering projects with leading customers across the board.

最後，更新我們的光學相關產品線。奇景光電是全球少數能夠提供多種光學產品的公司之一，包括 WLO、3D Sensing 和 LCOS，用於開發沉浸式技術和實現虛擬宇宙。奇景已做好充分準備，充分利用這一新興行業的增長。我們的技術對於促進沉浸式內容至關重要，領先客戶的 AR/VR 護目鏡設備工程項目不斷增加就證明了這一點。

First on WLO update. We recently commenced for the production of our WLO technology to a leading North American customer starting in the second quarter for their new generation VR devices to enable 3D gesture control. We expect a decent shipment for this customer in the second half in preparation for the upcoming seasonal shopping sales.

首先是 WLO 更新。我們最近開始為一家領先的北美客戶生產 WLO 技術，從第二季度開始，為他們的新一代 VR 設備提供 3D 手勢控制。我們預計下半年該客戶將有不錯的出貨量，為即將到來的季節性購物銷售做好準備。

On LCOS, Himax's state-of-the-art Color Sequential Font-lit LCOS microdisplay technology was one of the most high-profile demos at the Display Week 2023 in May and successfully captured the attention of numerous tech giants. Through years of strenuous development, our Color Sequential Front-lit LCOS has achieved exceptional and industry-leading illumination in full RGB color, along with a groundbreaking tiny form factor, ultra lightweight and a wide degree field of view. These features make our LCOS microdisplay, particularly well suited for next-generation AR goggles, outperforming other competing technologies, mainly MicroLED. A growing number of engineering engagements are proceeding nicely with leading tech names. We are confident our Color Sequential Front-lit LCOS can be one of the most promising technologies that meets the rigorous requirements to enable AR goggles.

在LCOS方面，奇景光電最先進的彩色順序字體照明LCOS微顯示技術是2023年5月顯示週上最受矚目的演示之一，成功吸引了眾多科技巨頭的關注。經過多年的艱苦開發，我們的彩色順序前照式 LCOS 已經實現了業界領先的全 RGB 彩色照明，以及突破性的微小外形、超輕量和寬視場。這些功能使我們的 LCOS 微顯示器特別適合下一代 AR 護目鏡，優於其他競爭技術（主要是 MicroLED）。越來越多的工程項目與領先的技術公司合作進展順利。我們相信，我們的彩色順序前照式 LCOS 可以成為最有前途的技術之一，滿足實現 AR 護目鏡的嚴格要求。

The introduction of the latest mixed reality device of a leading tech giant exhibited a significant advancement for the whole metaverse ecosystem. It illustrates how the metaverse and immersive technologies continue to evolve, are increasingly accessible and may gradually become a more integral part of our everyday life in the future. We believe, given our expertise in optical-related technologies, including hundreds of patents in AR, VR and 3D customers can leverage our product suite to develop immersive experiences for a variety of futuristic and mainstream products in their metaverse applications. We continue to strengthen our optical-related technology suite while forging partnerships with global technology leaders to strategically secure a distinct position in the space and create an additional diverse long-term revenue stream. For nondriver IC business, we expect revenues to decline double digits sequentially in the third quarter.

領先科技巨頭最新混合現實設備的推出，展示了整個元宇宙生態系統的重大進步。它說明了虛擬宇宙和沈浸式技術如何不斷發展、變得越來越容易使用，並可能逐漸成為我們未來日常生活中更不可或缺的一部分。我們相信，鑑於我們在光學相關技術方面的專業知識，包括數百項 AR、VR 和 3D 專利，客戶可以利用我們的產品套件為其元宇宙應用中的各種未來和主流產品開發沉浸式體驗。我們繼續加強我們的光學相關技術套件，同時與全球技術領導者建立合作夥伴關係，以戰略性地確保在該領域的獨特地位，並創造額外的多元化長期收入來源。對於非驅動器 IC 業務，我們預計第三季度收入將環比下降兩位數。

That concludes my report for this quarter. Thank you for your 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。感謝您對奇景光電的關注。我們感謝您參加今天的電話會議，我們現在準備好回答問題。

(Operator Instructions) Our first question will be coming from Jerry Su of Credit Suisse.

（操作員說明）我們的第一個問題將來自瑞士信貸銀行的 Jerry Su。

Jordan, I just want to ask you on the -- you have previously noted that the revenue is likely to improve from first half. So judging from the guidance you provided already for the third quarter, does that imply that the fourth quarter revenue should recover from the third quarter? And then what are the drivers behind that? That's the first question.

喬丹，我只想問你——你之前已經指出，收入可能比上半年有所改善。那麼，從您已經提供的第三季度指導來看，這是否意味著第四季度收入應該會比第三季度恢復？那麼這背後的驅動因素是什麼？這是第一個問題。

And then in terms of the automotive, I think you have mentioned about a lot of the new products in this area. But I want to ask about what is the pricing trend you are seeing for the automotive driver IC or timing controllers? And how does that compare with the other product lines?

然後在汽車方面，我想您已經提到了該領域的很多新產品。但我想問一下，您所看到的汽車驅動IC或時序控制器的定價趨勢是什麼？與其他產品線相比如何？

And then maybe on the wafer pricing side, as you had already terminated your long-term agreement with foundry partners in the second quarter. How should we think about wafer cost into the second half? Can you benefit from some of the renegotiation or the wafer foundry price reduction to help your margin? Those are my 3 questions.

然後也許是在晶圓定價方面，因為您已經在第二季度終止了與代工合作夥伴的長期協議。下半年晶圓成本該如何看待？您能否從重新談判或晶圓代工價格下調中受益，以提高您的利潤？這是我的三個問題。

Jerry, yes, I think there is a good likelihood. The Q4 where we'll see a further recovery from the trough in Q3. However, as a disclaimer, we are very confident on the continuous growth of automotive sector in Q4. However, in the consumer sector, the Q4 visibility still remains quite low. So it really depends on the outcome of how the market is going to develop for the consumer products. But in our current projection, yes indeed, second half is likely to be better than the first half and Q4 is hopefully going to recover from the trough in Q3. That's the first question.

傑瑞，是的，我認為可能性很大。第四季度我們將看到從第三季度的低谷進一步復甦。但需要聲明的是，我們對第四季度汽車行業的持續增長充滿信心。然而，在消費領域，第四季度的能見度仍然很低。因此，這實際上取決於消費品市場將如何發展的結果。但根據我們目前的預測，確實，下半年可能會好於上半年，第四季度有望從第三季度的低谷中恢復過來。這是第一個問題。

The second question, really, there are quite a few questions surrounding automotive sector. I think you mentioned pricing trend and specifically, pricing trend for automotive sector compared to lows of other markets, I think -- I mean, Himax does enjoy a very nice leading position with dominating market share in the automotive sector. And inevitably, we are seeing competition both internationally and coming from China. And certainly, for competitors, one of the approach they will take for this relatively new market for them is to undercut our price. But I think -- and certainly, I mean, in that end, you mentioned -- you also asked a question about our cost structure. I think certainly, I will elaborate a little bit on that in a few minutes. But certainly, we are committed to continue to improve our cost through various means, including diversifying our foundry base as we reported earlier, by terminating certain long-term agreements that are not favorable to us, our long-term competitiveness. So yes, we will certainly be prepared to compete on pricing by improving our cost structure vigorously.

第二個問題，確實，圍繞汽車行業存在很多問題。我認為您提到了定價趨勢，特別是與其他市場的低點相比的汽車行業的定價趨勢，我認為，奇景確實享有非常好的領先地位，在汽車行業佔據主導市場份額。我們不可避免地會看到來自國際和中國的競爭。當然，對於競爭對手來說，他們針對這個相對較新的市場將採取的方法之一就是降低我們的價格。但我認為——當然，我的意思是，最後，你提到——你還問了一個關於我們成本結構的問題。我想當然，我會在幾分鐘內詳細闡述這一點。但當然，我們致力於通過各種方式繼續改善我們的成本，包括如我們之前報導的那樣，通過終止某些不利於我們和我們長期競爭力的長期協議來實現我們的代工基地多元化。所以，是的，我們肯定會準備好通過大力改善成本結構來進行定價競爭。

Having said that, I think automotive sector compared to consumer markets has a much higher entry barrier for newcomers because of this very different ecosystem or supply chain. Here we talk about not just panel makers and end customers, also OEM, although Tier 1s play a very, very important role. And also, we have geographical diversity, which is certainly very, very different from any of the consumer markets. Here, you have the U.S. market, Japanese market, Korean, European and certainly China market, which are all really quite different, and they are dominated by very different players. And also these very different names, which dominate different markets, they partner with sometimes very different Tier 1 players, too. So you're talking about a much more complex and diverse ecosystem players for IC vendors to cover. And I think we do have a very clear advantage being the early mover and also in joining the leading market share.

話雖如此，我認為與消費市場相比，汽車行業對於新進入者來說具有更高的進入壁壘，因為這種非常不同的生態系統或供應鏈。這裡我們談論的不僅僅是面板製造商和最終客戶，還有 OEM，儘管一級供應商發揮著非常非常重要的作用。而且，我們擁有地理多樣性，這當然與任何消費市場都非常非常不同。這裡有美國市場、日本市場、韓國市場、歐洲市場，當然還有中國市場，這些市場都非常不同，並且由非常不同的參與者主導。這些截然不同的品牌主宰著不同的市場，有時也與截然不同的一級參與者合作。因此，您談論的是 IC 供應商需要覆蓋的更加複雜和多樣化的生態系統參與者。我認為，作為先行者，我們確實擁有非常明顯的優勢，並且在加入領先的市場份額方面也具有非常明顯的優勢。

And also, you are aware, automotive market replacement of any part is a lot harder compared to consumer products, right? So we feel, yes, there are price competition and customers do try to undercut our price, but that doesn't mean we always have to meet their price to make the competitiveness. We do enjoy a better position and very, very often customer will see all with high mix, even having very aggressive prices on hand from our competitors. But I think -- so we are taking competition lightly, but we are still confident across different product segments for multimarket, namely DDIC, TDDI, timing controller, OLED and LTDI. We are going to lead the market and this is evidenced by the fact that our customer engagement and design win projects under our sales for larger compared to any of our peers. So yes, there are price competition, but we remain quite confident in any foreseeable future for our leading position to be unchallenged.

而且，您也知道，與消費產品相比，汽車市場更換任何零件都困難得多，對吧？所以我們覺得，是的，存在價格競爭，客戶確實試圖降低我們的價格，但這並不意味著我們總是必須滿足他們的價格才能獲得競爭力。我們確實享有更好的地位，而且非常非常經常，客戶會看到所有產品都具有高混合性，甚至我們的競爭對手手頭有非常激進的價格。但我認為，我們正在淡化競爭，但我們仍然對多市場的不同產品領域充滿信心，即 DDIC、TDDI、時序控制器、OLED 和 LTDI。我們將引領市場，事實證明，與任何同行相比，我們的客戶參與和設計在我們的銷售中贏得了更大的項目。所以，是的，存在價格競爭，但在可預見的未來，我們仍然對我們的領先地位不受挑戰充滿信心。

And wafer price in constant memory cost structure. For statistical reasons, we did and still do have a slightly larger inventory level than normal, particularly for DDIC products. But we're not worried about that because, again, we are secured by a lot of design wins and with those projects or products expected to enjoy a very long lifetime. But we are approaching the end of our inventory destocking process even for DDIC. And with our new wafer starts, certainly, we will certainly negotiate typically spot deals, volume for price kind of arrangement with our foundry vendors. And so I think you can expect at least the latest starting from about end of Q1 or Q2 of next year, you'll see our DDIC cost structure will see a major improvement because of new wafer starts, that is likely to see better prices.

並且晶圓價格處於恆定的存儲器成本結構中。出於統計原因，我們的庫存水平確實比正常水平略高，尤其是 DDIC 產品。但我們並不擔心這一點，因為我們再次獲得了許多設計勝利，並且這些項目或產品預計將享有很長的使用壽命。但即使對於 DDIC，我們的庫存去庫存流程也即將結束。當然，隨著我們新晶圓的啟動，我們肯定會與我們的代工供應商協商典型的現貨交易、量價安排。因此，我認為您至少可以預計從明年第一季度末或第二季度開始，您將看到我們的DDIC 成本結構將因新晶圓的啟動而出現重大改善，這可能會看到更好的價格。

And certainly, foundry diversification, I mentioned earlier, is a key area that we are exploring. And we are not just diversified our foundry in Taiwan. We also diversified into China, where China, as we know, is the biggest market in the world for automotive market. And the country does favor an awful lot of production. And for that reason, we are diversifying into China as well. And moving to China for foundry service has been most welcome by Chinese foundry players because they all know Himax is the leading player in this market. So there are various measures that we take -- we are taking to hopefully lower our cost and also to strengthen our supply chain for automotive market.

當然，我之前提到的鑄造廠多元化是我們正在探索的一個關鍵領域。我們不僅僅是在台灣實現晶圓代工廠的多元化。我們還進軍中國，眾所周知，中國是世界上最大的汽車市場。而且該國確實支持大量生產。出於這個原因，我們也正在向中國多元化發展。而轉向中國提供代工服務是最受中國代工企業歡迎的，因為他們都知道奇景光電是這個市場的領先企業。因此，我們採取了各種措施——我們希望能夠降低成本，並加強我們在汽車市場的供應鏈。

I hope that answers your question, Jerry.

我希望這能回答你的問題，傑瑞。

Yes, very clear.

是的，非常清楚。

(Operator Instructions) And our next question will come from Donnie Teng of Nomura.

（操作員說明）我們的下一個問題將來自野村證券的鄧尼特（Donnie Teng）。

I have only 2 questions. The first one is regarding to the automotive drive IC. So I think you have made a very clear comment on the EV market recovery in China in the second half and likely customers start to review some of the automotive driver IC inventory. But recently, like some of the leading auto IDM companies or IC design companies mentioned about some slowdown in terms of some kind of automotive IC demand into the second half. So I'm just wondering if you could give us some color on -- in terms of the end market, do we have like a majority of the market in China or we still have some exposure to the overseas markets? So that's the first question.

我只有 2 個問題。第一個是關於汽車驅動IC。因此，我認為您對下半年中國電動汽車市場的複蘇做出了非常明確的評論，並且可能的客戶開始審查一些汽車驅動IC庫存。但最近，像一些領先的汽車IDM公司或IC設計公司提到下半年某種汽車IC需求會有所放緩。所以我想知道您是否可以給我們一些關於終端市場的信息，我們是否擁有中國的大部分市場，或者我們仍然有一些海外市場的業務？這是第一個問題。

And second one is that I think you have mentioned about the cost structure will be improved into the first half next year. I think we have a very good progress in terms of the gross margin recovery already in the third quarter. But in terms of a normalized gross margin, considering the cost structure improvement, could you kind of give us some idea is like, for example, where is the normalized gross margin is compared with like the COVID period in '21 and 2022?

第二個問題是，我認為您提到成本結構將在明年上半年得到改善。我認為我們在第三季度的毛利率恢復方面已經取得了非常好的進展。但就標準化毛利率而言，考慮到成本結構的改善，您能否給我們一些想法，例如，與 21 年和 2022 年的新冠疫情期間相比，標準化毛利率在哪裡？

Donnie, the first question, the simple answer is, given our market share, you should not be surprised that our customer base in terms of OEMs, covers the whole world, not just China. We have mentioned in DDIC, our market share is above 40%. in TDDI, we believe our market share is even higher than that. Just that is a relatively new market, so market statistics are not particularly mature. So we are not talking about that number out loud, but we believe, based on our internal count, our market share should be higher than that. And then in timing controller, our market share is even higher than TDDI. Again, based on internal count, we believe it is probably 60% or higher. So at LTDI, we are likely to be the pioneer with mass production -- the first month production of the whole world expected to start from this quarter. So we do enjoy the leading market share in literally every single technology area for automotive market. So our end customer base does cover the whole world, all major continents in all major markets.

Donnie，第一個問題，簡單的答案是，考慮到我們的市場份額，你不應該感到驚訝，我們的 OEM 客戶群覆蓋了整個世界，而不僅僅是中國。我們在DDIC提到過，我們的市場份額在40%以上。在TDDI方面，我們相信我們的市場份額甚至更高。只是那是一個相對較新的市場，所以市場統計還不是特別成熟。因此，我們不會大聲談論這個數字，但我們相信，根據我們的內部統計，我們的市場份額應該高於這個數字。然後在時序控制器方面，我們的市場份額甚至高於TDDI。同樣，根據內部統計，我們認為該比例可能為 60% 或更高。所以在LTDI，我們很可能成為量產的先鋒——預計從本季度開始全球第一個月的量產。因此，我們確實在汽車市場的每個技術領域都享有領先的市場份額。所以我們的最終客戶群確實覆蓋了全世界、各大洲的所有主要市場。

Now you talk about other IT vendors, their view on the second half. I think there could be a difference between us and those where there is a panel maker market in between for us in between ourselves and the Tier 1 part in their case, they may not be the same. Now so our first half, so I believe our first half, the first quarter and second quarter, our automotive revenue probably were more hampered compared to those. And our customers are just coming back and trying to restock and catch up for our supply, which otherwise should have been made in the first half. And more specifically, I'll give you some color, TDDI and Tcon are well positioned to enjoy very strong growth, high -- very decent double-digit growth, not just quarter-over-quarter, but also first half over second half and also this year over last year, okay. I repeat, for automotive area, in TDDI and Tcon, both are relatively new markets where we have a leading position, and they are in very strong growing stage. So we expect to enjoy the decent double-digit growth not just quarter-over-quarter, but also second half over first half and year-over-year for this year. And also, I can pretty much say the same for next year too. I think we have good confidence in that because they are relatively new markets.

現在您談談其他IT廠商，他們對下半年的看法。我認為我們和那些中間有面板製造商市場的人之間可能存在差異，我們自己和他們的一級零件之間可能存在差異，它們可能不一樣。現在，我們的上半年，所以我相信我們的上半年、第一季度和第二季度，我們的汽車收入可能比那些受到更多阻礙。我們的客戶剛剛回來，試圖補充庫存並趕上我們的供應，否則這些供應應該在上半年完成。更具體地說，我會給你一些信息，TDDI 和Tcon 處於有利地位，可以享受非常強勁的增長，高——非常體面的兩位數增長，不僅是季度環比增長，而且是上半年和下半年的增長，今年也比去年好吧。我再說一遍，對於汽車領域，TDDI和Tcon都是相對較新的市場，我們處於領先地位，而且它們正處於非常強勁的增長階段。因此，我們預計今年不僅會實現季度環比、下半年較上半年和同比的兩位數增長。而且，我也可以對明年說同樣的話。我認為我們對此充滿信心，因為它們是相對較新的市場。

However, for DDIC for the second half quarter reported third quarter exactly to see a strong rebound for the second quarter with second half also expected to enjoy a double-digit growth over first half. However, for DDIC, year-over-year, we are likely to see a decline. We are going to see a decline, DDIC and given that DDIC is still the biggest component of our overall automotive business. So fiscal year '23 for overall automotive business, we are still likely to see some decline over last year. I don't know if I'm confusing you guys, but I believe I made it quite clear. So because DDIC is being replaced by TDDI and also, I talked about our governmental policies to incentivize new purchases from China and the U.S., right. And those incentives are provided primarily to EVs, which are predominantly new design models. And given that they are new, they tend to use TDDI and in many cases, local dimming Tcon as well.

不過，DDIC下半年季度報告顯示，第三季度正好看到第二季度的強勁反彈，預計下半年也將比上半年實現兩位數增長。然而，對於 DDIC 來說，我們可能會看到同比下降。鑑於 DDIC 仍然是我們整個汽車業務的最大組成部分，我們將會看到 DDIC 的下滑。因此，對於整個汽車業務來說，23 財年我們仍然可能會看到比去年有所下降。我不知道我是否讓你們感到困惑，但我相信我已經說得很清楚了。因為 DDIC 正在被 TDDI 取代，而且我還談到了我們政府鼓勵從中國和美國購買新產品的政策，對吧。這些激勵措施主要提供給電動汽車，而電動汽車主要是新設計車型。鑑於它們是新產品，它們傾向於使用 TDDI，並且在許多情況下還使用局部調光 Tcon。

So the replacement of TDDI over traditional DDIC, honestly, is probably quicker than we anticipated last year. The replacement -- the panel replacement is faster. But that is not bad news for us because that means on a per panel basis, our content is higher. And as I mentioned earlier, we do enjoy the even stronger market share compared to DDIC. So I think so because of this reason, TDDI and Tcon, I think we feel quite confident that next year, our automotive business will start to see a decent growth from this year again. Although this year, our overall automotive business is likely to see some decline from last year, not a severe decline, but some decline.

因此，說實話，TDDI 取代傳統 DDIC 的速度可能比我們去年的預期要快。更換——面板更換更快。但這對我們來說並不是壞消息，因為這意味著在每個面板的基礎上，我們的內容更高。正如我之前提到的，與 DDIC 相比，我們確實享有更大的市場份額。所以我認為因為這個原因，TDDI和Tcon，我認為我們非常有信心明年我們的汽車業務將再次從今年開始看到像樣的增長。雖然說今年我們整體的汽車業務很可能會比去年出現一些下滑，不是嚴重下滑，而是有一些下滑。

Your second question is about our cost and margin profile, I believe. I think I can say in the long term, I mean, as a reminder, we are not -- the intention is there to provide our long-term gross margin guidance, right. And just give a flavor of how we believe our gross margin trend is going to be like as we take a longer term -- look at the longer-term horizon. I think it is probably difficult for us to see the same level of very high gross margin during COVID at its peak. We're talking about well over 50%. Honestly, it is probably difficult to see in the coming years. However, whether our gross margin will return to the pre-COVID period when we typically had some 24%, 25% kind of gross margin. I don't think so. I'm not that pessimistic either.

我認為你的第二個問題是關於我們的成本和利潤狀況。我想我可以說，從長遠來看，我的意思是，作為提醒，我們不是——目的是提供我們的長期毛利率指導，對吧。並簡單介紹一下我們認為從長遠來看我們的毛利率趨勢將會如何——著眼於更長期的前景。我認為我們可能很難在新冠疫情高峰期看到同樣水平的高毛利率。我們談論的是遠遠超過 50%。老實說，未來幾年可能很難看到。然而，我們的毛利率是否會回到新冠疫情之前的水平，當時我們的毛利率通常為 24%、25% 左右。我不這麼認為。我也沒有那麼悲觀。

And I think there are a lot of reasons to explain that, but I will emphasize on Himax specifically in our situation. I think we feel good about our going through a structural change in terms of our product mix and overall company profile. We said earlier in my prepared remarks that our automotive market is likely to account for almost 45% of our total sales this quarter. This was a part of whether it's during COVID or pre-COVID, our automotive market at the time was at best 10-plus percent of our total sales. Now this higher percentage certainly comes from 2 factors. One, automotive has been growing very fast, and the automotive market for display is likely to outgrow other markets in the coming years. So that is very good news for us.

我認為有很多理由可以解釋這一點，但我會在我們的情況下特別強調奇景。我認為我們對產品組合和公司整體形象方面經歷的結構性變革感到滿意。我們之前在準備好的發言中說過，我們的汽車市場可能佔本季度總銷售額的近 45%。這是因為無論是在新冠疫情期間還是在新冠疫情之前，我們當時的汽車市場充其量也只占我們總銷售額的 10% 以上。現在這個較高的百分比肯定來自兩個因素。第一，汽車行業的增長速度非常快，未來幾年汽車顯示屏市場的增長可能會超過其他市場。這對我們來說是個好消息。

Certainly, that 45% high number is also the result of a very sluggish consumer market, right, which pushed down other product contributions. So -- but in any case, in the long term, our automotive market contribution is likely to be much, much higher than previously. So that is what I say, fundamental change. And the automotive market does enjoy not just higher, but also more stable and more predictable gross margin compared to other markets. So again, having a much higher exposure to automotive market in the next few years, I think is a very good news for Himax.

當然，45%的高數字也是消費市場非常低迷的結果，對吧，這壓低了其他產品的貢獻。所以——但無論如何，從長遠來看，我們的汽車市場貢獻可能會比以前高得多。這就是我所說的根本性改變。與其他市場相比，汽車市場的毛利率不僅更高，而且更穩定、更可預測。因此，在未來幾年中，我認為對奇景來說是一個非常好的消息。

And we are also investing aggressively in a few new areas -- automotive market covers not just driver IC, but also timing controller, right. So that I've mentioned and also, our WiseEye products is in still very early stage, but we expect to double our revenue for the coming years, and that enjoys the best gross margin among all our product lines. And for example, I'll give another example, e-paper is turning into color version and with a fast-growing market potential, and we have a good and major exposure over there as well. So these new markets are likely to drive our gross margin up in the long term.

我們還在一些新領域積極投資——汽車市場不僅涵蓋驅動IC，還包括時序控制器，對吧。正如我所提到的，我們的 WiseEye 產品還處於非常早期的階段，但我們預計未來幾年我們的收入將翻一番，並且在我們所有產品線中享有最好的毛利率。比如說，我再舉一個例子，電子紙正在走向彩色版，市場潛力正在快速增長，我們在那裡也有很好的、主要的曝光。因此，從長遠來看，這些新市場可能會推動我們的毛利率上升。

What I cannot tell with a similar degree uncertainty is consumer market. where really there's a poor visibility not just for the rest of the year, but also into next year. Having said it's poor visibility, it doesn't mean it's necessarily bad forever, right. So at some point, we certainly hope it will recover. But for now, I think, at least for Himax, visibility for automotive market is quite good. And for WiseEye is quite good as well. So I believe that will improve our long-term margin profile significantly.

我無法以類似程度的不確定性來判斷消費市場。事實上，不僅今年剩餘時間，而且明年的能見度都很差。雖然說能見度很差，但這並不意味著它一定永遠不好，對吧。因此，在某個時候，我們當然希望它能夠恢復。但目前我認為，至少對於奇景來說，汽車市場的能見度是相當不錯的。對於 WiseEye 來說也相當不錯。因此，我相信這將顯著改善我們的長期利潤狀況。

I hope that answers your question, Donnie.

我希望這能回答你的問題，唐尼。

Yes.

是的。

And one moment for our next question. And our next question will be coming from Tiffany Yeh of Morgan Stanley.

請稍等一下我們的下一個問題。我們的下一個問題將來自摩根士丹利的蒂芙尼葉。

I have 3 questions. My first question is relating to the pricing side. As the management mentioned earlier in the prepared remarks and in the Q&A section that smartphone and tablets market are seeing some pricing erosion. And I'm just wondering, what's the current pricing environment for like non-auto Tcons and large display driver ICs like TV? Are we seeing like severe pricing competition now in the market? This is my first question.

我有 3 個問題。我的第一個問題與定價方面有關。正如管理層之前在準備好的發言和問答部分中提到的那樣，智能手機和平板電腦市場的價格正在受到一定程度的侵蝕。我只是想知道，非汽車 Tcons 和電視等大型顯示驅動器 IC 的當前定價環境如何？我們現在市場上的價格競爭是否激烈？這是我的第一個問題。

Okay. A quick answer. I think we have seen the worst. And now this market is actually stabilizing. The worst being at a time when everybody suffers from overstock. And as we are nearing, I would say, nearing the end of destocking process throughout the whole industry, I think pricing has now become healthier, pricing environment. Certainly, that is my general comment. And specifically, I think TV certainly stabilizing IT, the notebook and monitors are stabilizing. Automotive market also is holding up, even tablet, I think, is stabilizing quite nicely. I think -- I mean, from our point of view, the white spot for now remains to be smartphone, where we mentioned in our prepared remarks that there are certain -- there are still a small group of our peers, which there are going through aggressive destocking price process. But hopefully, towards the end of the year or early next year, that will also come to an end.

好的。快速回答。我認為我們已經看到了最糟糕的情況。現在這個市場實際上正在趨於穩定。最糟糕的是每個人都面臨庫存過剩的時候。我想說，隨著整個行業的去庫存過程接近結束，我認為定價現在已經變得更加健康，定價環境。當然，這是我的一般評論。具體來說，我認為電視肯定會穩定 IT，筆記本電腦和顯示器正在穩定。汽車市場也表現強勁，我認為甚至平板電腦也相當穩定。我認為——我的意思是，從我們的角度來看，目前的白點仍然是智能手機，我們在準備好的評論中提到，有一些——我們的同行仍然有一小部分人正在開發智能手機。通過積極的去庫存價格過程。但希望到今年年底或明年初，這種情況也能結束。

But I think -- so I think I say we have gone through the worst because inventory position is healthier. But certainly, we are still suffering from low visibility throughout the whole industry. So what is going to detect our margin profile for nonautomotive markets, I think not just for Himax, but throughout the whole industry, the end market demand is still sluggish. So the end customers are definitely going to demand aggressive pricing from us while our foundry partners because of low utilization, they are not really enjoying good profitability either. Some of our foundry partners are actually suffering from some losses already.

但我認為——所以我認為我說我們已經經歷了最糟糕的時期，因為庫存狀況更加健康。但可以肯定的是，我們仍然面臨著整個行業知名度較低的問題。那麼如何檢測我們非汽車市場的利潤狀況呢，我想不僅僅是奇景，整個行業，終端市場需求仍然低迷。因此，最終客戶肯定會要求我們提供激進的定價，而我們的代工合作夥伴由於利用率低，他們也沒有真正享受到良好的盈利能力。我們的一些代工合作夥伴實際上已經遭受了一些損失。

So can we get more aggressive pricing from our foundries? Or can we -- to help us substantially lower our costs, continue to allow our cost to support our end customers or can the end customers support a more healthy environment because their market may have studied to turn around, that is yet to be seen. We don't know yet. But as it is IC design company, our current strategy certainly is not to -- just for the sake of enlarging our revenue size, to make wherever it starts while knowing the new OEM starts may not be -- maybe loss-making business or not unprofitable business. Our strategy is not to do that and not to compete too aggressively on those markets where some of our peers are still going through the stocking process.

那麼我們能否從代工廠獲得更激進的定價？或者我們能否——幫助我們大幅降低成本，繼續讓我們的成本支持我們的最終客戶，或者最終客戶能否支持一個更健康的環境，因為他們的市場可能已經研究好扭轉局面，這還有待觀察。我們還不知道。但作為IC設計公司，我們目前的策略肯定不是——只是為了擴大我們的收入規模，就從哪裡開始做，而知道新的OEM開始可能不會——也許會虧損。無利可圖的生意。我們的策略是不這樣做，也不在我們的一些同行仍在經歷庫存過程的市場上過於激烈地競爭。

So your second question?

那麼你的第二個問題是？

My second question is, I want to ask about the foundries node side. Are we seeing any specific foundry node that is still in shortage right now?

我的第二個問題是，我想詢問代工廠節點方面的情況。我們是否看到目前仍然短缺的特定代工節點？

No. I don't think there is any -- no, there isn't any shortage right now. I'm not too familiar with the very, very advanced nodes like 3-nanometer, 4-nanometer, 5-nanometer. But for the space, we are aware of the answer is no.

不，我認為沒有——不，現在不存在任何短缺。我對3納米、4納米、5納米等非常非常先進的節點不太熟悉。但對於空間，我們知道答案是否定的。

Okay. And my last question is regarding the technology side. Could you just kind of provide us your view on the development of gate driver IC in the next few years? Could you also share the current penetration rate of the GoA driver IC also?

好的。我的最後一個問題是關於技術方面的。您能否向我們介紹一下您對未來幾年柵極驅動IC發展的看法？您也可以分享一下目前GoA驅動IC的滲透率嗎？

Well, given gate driver IC has been a very old thing that's been going around for, I don't know, maybe more than 10 years, well over 10 years, so it's not exactly the same of the day, so to speak, because customers who can adopt GoA technology has already done so. I'm talking about across different panels, different applications. So get on where rate, ages ago, I can't even recall when was the final time a hit to guys by Timex because all of a sudden, our gate driver market was disappearing. But now gate driver accounted for very, very like negligible portion of our business already because of the GoA technology, which has been putting in place for many years. So it is not really the same that we discussed about anymore.

嗯，考慮到柵極驅動器 IC 已經是一個非常古老的東西了，我不知道，也許已經超過 10 年了，遠超過 10 年，所以可以說，它現在並不完全一樣，因為能夠採用GoA技術的客戶已經這樣做了。我說的是不同的面板、不同的應用程序。所以，就這樣吧，很久以前，我什至不記得 Timex 最後一次對人們造成打擊是什麼時候，因為突然之間，我們的柵極驅動器市場正在消失。但現在，由於 GoA 技術已經投入使用多年，柵極驅動器在我們的業務中所佔的比例已經非常非常微不足道了。所以我們討論的已經不一樣了。

And I'm showing no further questions. I would like to hand the call over to Jordan for closing remarks.

我沒有再提出任何問題。我想將會議轉交喬丹致閉幕詞。

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

最後一點，我們的首席投資者關係/公關官 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。

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.

女士們、先生們，今天的會議到此結束。感謝您的參與。您現在可以斷開連接。