奇景光電 (HIMX) 2021 Q2 法說會逐字稿

Hello, ladies and gentlemen. Welcome to the Himax Technologies, Inc. Second Quarter 2021 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

你好，女士們，先生們。歡迎參加 Himax Technologies, Inc. 2021 年第二季度收益電話會議。 （操作員說明）作為提醒，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.

我現在想將會議轉交給您的主持人，來自 MZ Group 的 Mark Schwalenberg 先生。

Welcome everyone to Himax's second quarter 2021 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 Li, Chief IR/PR Officer.

歡迎大家參加奇景光電 2021 年第二季度財報電話會議。加入我們公司的是總裁兼首席執行官Jordan Wu先生；傑西卡潘女士，首席財務官；以及首席投資者關係/公關官 Eric Li 先生。

After the company's prepared remarks, 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.

在公司準備好發言後，我們安排了問答環節的提問時間。如果您尚未收到今天發布的結果副本，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 下載副本。

Unless otherwise specified, we will discuss our financial results based on non-IFRS measures. You can find the related reconciliation to IFRS on our website.

除非另有說明，否則我們將根據非國際財務報告準則指標討論我們的財務業績。您可以在我們的網站上找到與 IFRS 的相關對賬。

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.

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，包括關於預期未來財務業績和行業增長的陳述是前瞻性陳述，涉及可能導致的許多風險和不確定性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。

Factors that could cause actual events or results to differ materially from those described in this conference call include, but are not limited to, the effect of the COVID-19 pandemic on the company's business; general business and economic conditions and the state of the semiconductor industry; market acceptance and competitiveness of the driver and non-driver products developed by the company; demand for end-use application products; reliance on a small group of principal customers; the uncertainty of continued success in technological innovations; our ability to develop and protect our intellectual property; pricing pressures, including declines in average selling prices; changes in customer order patterns; changes in estimated full year effective tax rate; shortage in supply of key components; changes in environmental laws and regulations; changes in export license regulated by Export Administration Regulations, EAR; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; our ability to collect accounts receivable and manage inventory; and other risks described from time to time in the company's SEC filings, including those risks identified in the section entitled Risk Factors in its Form 20-F for the year ended December 31, 2020, filed with the SEC as may be amended.

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的因素包括但不限於 COVID-19 大流行對公司業務的影響；一般商業和經濟狀況以及半導體行業的狀況；公司開發的驅動和非驅動產品的市場接受度和競爭力；對最終用途應用產品的需求；依賴一小部分主要客戶；技術創新持續成功的不確定性；我們開發和保護我們的知識產權的能力；定價壓力，包括平均售價下降；客戶訂單模式的變化；估計全年有效稅率的變化；關鍵零部件供應短缺；環境法律法規的變化；出口管理條例 EAR 規定的出口許可證變更；匯率波動；對我們子公司進一步投資的監管批准；我們收集應收賬款和管理庫存的能力；以及該公司向 SEC 提交的文件中不時描述的其他風險，包括在其向 SEC 提交的截至 2020 年 12 月 31 日止年度的 20-F 表格中標題為風險因素的部分中確定的風險，該部分可能經過修訂。

Except for the company's full year of 2020 financials, which were provided in the company's 20-F and filed with the SEC on March 31, 2021, 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.

除了公司 20-F 中提供並於 2021 年 3 月 31 日向 SEC 提交的公司 2020 年全年財務數據外，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。此類財務信息由內部生成，並未接受相同的審查和審查，包括獨立審計師的內部審計程序和外部審計，我們對年度合併財務報表進行審計和審查，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。公司不承擔因新信息、未來事件或其他原因而公開更新或修改任何前瞻性陳述的義務。

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

我現在將把電話轉給 Eric Li 先生。埃里克，地板是你的。

Thank you, Mark, and thank you everybody, for joining us. My name is Eric Li, and I'm the Chief IR/PR Officer. Joining me are Jordan Wu, our CEO; and Jessica Pan, our CFO.

謝謝你，馬克，也謝謝大家加入我們。我叫 Eric Li，是首席 IR/PR 官。加入我的還有我們的首席執行官 Jordan Wu；和我們的首席財務官Jessica Pan。

On today's call, I'll first review the Himax consolidated financial performance of the second quarter 2021, followed by the third quarter 2021 outlook. Jordan will then give an update on the status of our business, after which we will take questions.

在今天的電話會議上，我將首先回顧 Himax 2021 年第二季度的綜合財務業績，然後是 2021 年第三季度的展望。喬丹隨後將提供我們業務狀況的最新信息，之後我們將回答問題。

Our second quarter revenues and gross margin were both at the upper range of the guidance issued on May 6, 2021, and EPS exceeded the guidance. Revenue, gross margin and EPS, again, all reached all-time highs in the second quarter of 2021.

我們第二季度的收入和毛利率均處於 2021 年 5 月 6 日發布的指引的上限，每股收益超過了指引。收入、毛利率和每股收益在 2021 年第二季度再次創下歷史新高。

For the second quarter, we recorded net revenue of $365.3 million, an increase of 18.2% sequentially and an increase of 95.3% compared to the same period last year. The sequential increase was at the upper range of the guidance of an increase of around 15% to 20% quarter-over-quarter. Gross margin was 47.5%, at the upper range of the guidance of 45.5% to 47.5%, and a significant 7.3 percentage points improvement from the 40.2% of the first quarter 2021.

第二季度，我們錄得淨收入 3.653 億美元，環比增長 18.2%，與去年同期相比增長 95.3%。環比增長處於指導值的上限，環比增長約 15% 至 20%。毛利率為 47.5%，處於 45.5% 至 47.5% 的指導上限，較 2021 年第一季度的 40.2% 大幅提升 7.3 個百分點。

Non-IFRS profit per diluted ADS was 62.4 cents, exceeding our guidance of 54.2 cents to 60.2 cents. IFRS profit per diluted ADS was 62.3 cents, exceeding our guidance of 54.0 cents to 60.0 cents. Revenue from large display drivers was $85.4 million, up 22.2% sequentially and up 43.7% year-over-year, with sales growing through all 3 major product areas, namely TV, monitor and notebook. Both monitor and notebook IC revenues delivered decent sequential increases, thanks to continuous home working and distance education demands.

攤薄後每份 ADS 的非 IFRS 利潤為 62.4 美分，超出我們 54.2 美分至 60.2 美分的指引。 IFRS 每攤薄 ADS 利潤為 62.3 美分，超出我們 54.0 美分至 60.0 美分的指引。來自大型顯示驅動器的收入為 8540 萬美元，環比增長 22.2%，同比增長 43.7%，銷售額在電視、顯示器和筆記本電腦這三個主要產品領域均實現增長。由於持續的在家工作和遠程教育需求，顯示器和筆記本 IC 收入均實現了可觀的連續增長。

TV revenues were up an impressive double-digit quarter-over-quarter, mainly due to strong shipment of high-end TV products including those to a world-leading end customer as we indicated in the last earnings call. Large panel driver IC accounted for 23.4% of total revenues for this quarter compared to 22.6% in the first quarter of 2021 and 31.8% a year ago. Small- and medium-sized display drivers saw continued strong momentum with revenue of $230.6 million, up 13% sequentially and up 133.4% year-over-year.

正如我們在上次財報電話會議中指出的那樣，電視收入環比增長了令人印象深刻的兩位數，主要是由於高端電視產品出貨量強勁，包括面向世界領先終端客戶的產品。大型面板驅動 IC 佔本季度總收入的 23.4%，而 2021 年第一季度為 22.6%，一年前為 31.8%。中小型顯示驅動器繼續保持強勁勢頭，收入為 2.306 億美元，環比增長 13%，同比增長 133.4%。

Automotive segment delivered more than 22% sequential increase in Q2, the highest growth among the 3 segments in the small- and medium-sized driver IC business.

汽車板塊在第二季度環比增長超過 22%，在中小型驅動 IC 業務的三個板塊中增長最快。

TDDI for tablet was up more than 30% sequentially, a continuation from the high base last quarter, while smartphone TDDI posted low single-digit sequential growth. Small- and medium-sized segments accounted for 63.1% of total sales for the quarter compared to 66.1% in the previous quarter and 52.8% a year ago.

平板電腦的 TDDI 環比增長超過 30%，延續了上個季度的高基數，而智能手機的 TDDI 環比增長低至個位數。中小型細分市場佔本季度總銷售額的 63.1%，而上一季度為 66.1%，一年前為 52.8%。

The second quarter smartphone sales came in better than expected with revenue reaching $83.9 million, up more than 200% compared to the same period last year. The smartphone segment represented around 23% of our total sales in Q2. Our smartphone TDDI sales were still capped by severe capacity constraints and, as we explained before, we continued to strategically allocate more capacity to tablet TDDI at the expense of smartphone shipments as we were the major supplier in the tablet TDDI market.

第二季度智能手機銷量好於預期，收入達到 8390 萬美元，比去年同期增長 200% 以上。智能手機部分約占我們第二季度總銷售額的 23%。我們的智能手機 TDDI 銷售仍然受到嚴重的產能限制，正如我們之前解釋的那樣，由於我們是平板電腦 TDDI 市場的主要供應商，我們繼續戰略性地為平板電腦 TDDI 分配更多容量，但以智能手機出貨量為代價。

Sales of traditional smartphone DDICs grew nicely as expected with seasonal demand. As mentioned several times before, traditional smartphone DDICs are quickly being replaced by TDDI and AMOLED.

由於季節性需求，傳統智能手機 DDIC 的銷售增長符合預期。如前所述，傳統的智能手機 DDIC 正在迅速被 TDDI 和 AMOLED 取代。

Our tablet revenue continued to break sales records reaching $85.3 million in Q2. Tablet sales grew 17% sequentially and doubled year-over-year, reflecting strong market demand from home working and online learning as well as our market share gains.

我們的平板電腦收入繼續打破銷售記錄，在第二季度達到 8530 萬美元。平板電腦銷量環比增長 17%，同比增長一倍，反映了家庭工作和在線學習的強勁市場需求以及我們的市場份額增長。

Tablet revenue accounted for more than 23% of our total sales in the second quarter, slightly above our smartphone IC business in weighting. While our tablet TDDI sales continued an uninterrupted growth streak since the product's initial mass production in the first quarter of 2020, our shipments were still limited by ongoing industry-wide capacity shortage. The accelerated growth, however, illustrated our market leadership in non-iOS tablet market and TDDI's increasing penetration in the tablet market. Revenue of traditional discrete driver IC for tablet was flat sequentially in the second quarter as the market continued to be quickly replaced by TDDI.

平板電腦收入占我們第二季度總銷售額的 23% 以上，略高於我們的智能手機 IC 業務的權重。儘管自 2020 年第一季度該產品首次量產以來，我們的平板電腦 TDDI 銷售繼續保持不間斷的增長，但我們的出貨量仍受到全行業持續的產能短缺的限制。然而，加速增長表明我們在非 iOS 平板電腦市場的市場領先地位以及 TDDI 在平板電腦市場的滲透率不斷提高。由於市場繼續迅速被 TDDI 取代，第二季度平板電腦傳統分立驅動器 IC 的收入環比持平。

Our second quarter driver IC revenue for automotive amounted to $53.3 million, up 22.1% sequentially and more than doubled year-over-year, while demand continued to outpace the supply. Automotive driver IC business accounted for around 15% of total revenue in the quarter. As we predicted in the last earnings call, we expect our automotive shipments to grow quarter-over-quarter in 2021 and into the next year. Jordan will elaborate on this in a few minutes.

我們第二季度的汽車驅動 IC 收入為 5330 萬美元，環比增長 22.1%，同比增長一倍多，而需求繼續超過供應。汽車驅動IC業務佔本季度總收入的15%左右。正如我們在上次財報電話會議中預測的那樣，我們預計我們的汽車出貨量將在 2021 年和明年環比增長。喬丹將在幾分鐘內詳細說明這一點。

Second quarter revenue for our non-driver business was $49.3 million, up more than 40% sequentially and up more than 70% year-over-year. Tcon business registered a remarkable growth of over 60% sequentially, up more than 130% year-over-year. Non-driver products accounted for 13.5% of total revenue as compared to 11.3% in the first quarter of 2021 and 15.4% a year ago.

我們的非司機業務第二季度收入為 4930 萬美元，環比增長超過 40%，同比增長超過 70%。 Tcon 業務環比增長超過 60%，同比增長超過 130%。非驅動產品佔總收入的 13.5%，而 2021 年第一季度為 11.3%，一年前為 15.4%。

Gross margin for the second quarter was 47.5%, up from 40.2% of the previous quarter and greatly increased from 21% of the same period last year. Our non-IFRS operating expenses for the second quarter were $39.3 million, a little changed from the previous quarter, but up 5.7% from a year ago, mainly because of increased salary.

第二季度毛利率為47.5%，高於上一季度的40.2%，較去年同期的21%大幅提升。我們第二季度的非國際財務報告準則運營費用為 3930 萬美元，與上一季度相比略有變化，但比去年同期增長 5.7%，主要是因為工資增加。

Reflecting higher sales and better gross margin, non-IFRS operating income was $134.3 million or 36.8% of sales versus 27.5% of sales in the last quarter. Again, both operating income and operating margin reached historical highs.

反映更高的銷售額和更高的毛利率，非國際財務報告準則營業收入為 1.343 億美元，佔銷售額的 36.8%，而上一季度佔銷售額的 27.5%。營業收入和營業利潤率再次創歷史新高。

Non-IFRS after-tax profit was $109.1 million or 62.4 cents per diluted ADS, a new record high and greatly up from $67.1 million or 38.4 cents per diluted ADS of the last quarter.

非國際財務報告準則稅後利潤為 1.091 億美元或每股攤薄後的 ADS 62.4 美分，創歷史新高，大大高於上一季度的 6710 萬美元或每股攤薄後的 ADS 38.4 美分。

Turning to the balance sheet, we had $270.4 million of cash, cash equivalents and other financial assets as of June 30, 2021, compared to $107.1 million in the same time last year and $245.8 million a quarter ago. The higher cash balance was derived mainly from $85.2 million of operating cash inflow during the quarter, offset by the $59.6 million cash outflow for refundable deposits made for purpose of securing foundry capacity.

轉向資產負債表，截至 2021 年 6 月 30 日，我們擁有 2.704 億美元的現金、現金等價物和其他金融資產，而去年同期為 1.071 億美元，上一季度為 2.458 億美元。較高的現金餘額主要來自本季度 8,520 萬美元的經營現金流入，被為確保鑄造能力而支付的可退還押金的 5,960 萬美元現金流出所抵消。

Restricted cash was $112.1 million at the end of Q2 compared to $114.8 million a quarter ago and $164 million a year ago. The restricted cash was mainly used to guarantee the short-term secured borrowings for the same amount. We had $55.5 million of long-term unsecured loans as of the end of Q2, of which $6 million was current portion.

第二季度末受限現金為 1.121 億美元，而上一季度為 1.148 億美元，一年前為 1.64 億美元。受限現金主要用於為等額的短期擔保借款提供擔保。截至第二季度末，我們有 5550 萬美元的長期無抵押貸款，其中 600 萬美元是流動部分。

Our quarter-end inventory as of June 30, 2021, were $134.2 million, up from $114.9 million last quarter and down from $161.5 million a year ago. Compared to the prior year, our inventory remains at a lower level as customers request finished goods delivery as soon as they are available, reflecting the prolonged supply-demand imbalance. As the overall semiconductor is unlikely to have sizable capacity increases anytime soon while demand far outpaces supply, we anticipate a similar level of inventory position in the next few quarters.

截至 2021 年 6 月 30 日，我們的季度末庫存為 1.342 億美元，高於上一季度的 1.149 億美元，低於一年前的 1.615 億美元。與上年相比，我們的庫存保持在較低水平，因為客戶要求成品一到就交貨，反映了長期的供需失衡。由於整體半導體不太可能在短期內大幅增加產能，而需求遠遠超過供應，我們預計未來幾個季度的庫存狀況將相似。

Accounts receivable at the end of June 2021 was $329 million, up from $289.1 million last quarter and up from $206.1 million a year ago due to higher sales. DSO was 88 days at the quarter end, as compared to 101 days a year ago and 84 days at the end of last quarter.

由於銷售額增加，截至 2021 年 6 月的應收賬款為 3.29 億美元，高於上一季度的 2.891 億美元，高於一年前的 2.061 億美元。季度末 DSO 為 88 天，而去年同期為 101 天，上季度末為 84 天。

Now turning to the cashflow for the quarter, net cash inflow for operating activities amounted to $85.2 million as compared to an inflow of $60.3 million last quarter, and an outflow of $9.2 million for the same period last year. Investing activities saw a net cash outflow of $58.2 million during the second quarter, mainly because of a net increase of $59.6 million in refundable deposits that we made during the second quarter for the purpose of securing foundry capacity. Also, as part of investing activities, second quarter capital expenditures were $1.4 million versus $2 million last quarter and $0.7 million a year ago. The second quarter CapEx was mainly for R&D-related equipment for our IC design business.

現在轉向本季度的現金流，經營活動的淨現金流入為 8520 萬美元，而上一季度流入為 6030 萬美元，去年同期為流出 920 萬美元。投資活動在第二季度出現淨現金流出 5820 萬美元，主要是因為我們在第二季度為確保代工產能而支付的可退還押金淨增加了 5960 萬美元。此外，作為投資活動的一部分，第二季度的資本支出為 140 萬美元，上一季度為 200 萬美元，一年前為 70 萬美元。第二季度資本支出主要用於我們 IC 設計業務的研發相關設備。

We declared an annual cash dividend of 27.2 cents per ADS during the second quarter, totaling $47.4 million and equivalent to 100% of last year's net profit. The dividend was paid out on July 12, 2021. As before, our dividend was determined primarily by prior year's profitability. Our decision to pay out full net profit of last year demonstrated the management's strong confidence for our business prospects. As of June 30, 2021, Himax had 174.3 million ADS outstanding, little changed from last quarter. On a fully diluted basis, the total number of ADS outstanding was 174.7 million.

我們在第二季度宣布了每股 ADS 27.2 美分的年度現金股息，總計 4740 萬美元，相當於去年淨利潤的 100%。股息於 2021 年 7 月 12 日支付。和以前一樣，我們的股息主要取決於上一年的盈利能力。我們決定支付去年的全部淨利潤，表明管理層對我們的業務前景充滿信心。截至 2021 年 6 月 30 日，Himax 的 ADS 餘額為 1.743 億，與上一季度相比變化不大。在完全攤薄的基礎上，未償還的 ADS 總數為 1.747 億股。

Now turning to our third quarter 2021 guidance. For the third quarter, we expect further revenue growth from the already high level of Q2 2021. Gross margin should see another uptick and could reach another quarterly high. For the third quarter, we expect revenue to increase 13% to 17% sequentially. Gross margin is expected to be in the range of 50.5% to 52%, depending on the final product mix.

現在轉向我們的 2021 年第三季度指導。對於第三季度，我們預計收入將在 2021 年第二季度已經很高的水平上進一步增長。毛利率應該會再次上升，並可能達到另一個季度高點。對於第三季度，我們預計收入將環比增長 13% 至 17%。毛利率預計在 50.5% 至 52% 之間，具體取決於最終產品組合。

With the increases of revenue and margin, we anticipate net profit should increase substantially in third quarter. Non-IFRS profit attributable to shareholders is expected to be in the range of 75.0 cents to 81.0 cents per fully diluted ADS. The third quarter IFRS profit attributable to shareholders is estimated to be in the range of 63.0 cents to 69.0 cents per fully diluted ADS.

隨著收入和利潤率的增加，我們預計第三季度淨利潤將大幅增長。股東應佔非國際財務報告準則的利潤預計將在每份完全攤薄的美國存託憑證的 75.0 美分至 81.0 美分之間。第三季度國際財務報告準則股東應占利潤估計在每股完全攤薄後的美國存託憑證 63.0 美分至 69.0 美分之間。

Similar to our usual practice, we will grant RSUs on or around September 30 this year for employees' share-based compensation. The third quarter guidance for IFRS profit per diluted ADS has taken into account the expected 2021 RSU grant, which, subject to Board approval, is now assumed to be around $75 million, out of which $26.3 million or 11.8 cents per diluted ADS will be vested and expensed immediately on the grant date.

與我們通常的做法類似，我們將在今年 9 月 30 日或前後授予受限制股份單位，用於員工的股份補償。 IFRS 每股攤薄 ADS 利潤的第三季度指引已考慮到預期的 2021 年 RSU 贈款，經董事會批准後，現在假設約為 7500 萬美元，其中 2630 萬美元或每股攤薄 ADS 11.8 美分將歸屬並在授予日立即支出。

As a reminder, the total RSU amount and the immediately vested portion are our current best estimates only and could vary materially depending on, among other things, our Q4 profit and the final Board decision for the total RSU amount and its vesting scheme.

提醒一下，RSU 總金額和立即歸屬部分僅是我們當前的最佳估計，可能會根據我們的第四季度利潤和董事會對總 RSU 金額及其歸屬計劃的最終決定等因素而發生重大變化。

As the case for previous year, the RSU grant in 2021 will lead to higher third quarter IFRS operating expenses compared to other quarters of the year. In comparison, the 2020 RSU totaled $5 million, out of which $4.8 million was vested immediately. Needless to say, our estimated total RSU amount is significantly higher than those of the prior years due to anticipated record high profit for this year. This is an illustration of our appreciation to the team for their hard work. This also demonstrates our confidence in our long-term growth prospects.

與上一年的情況一樣，2021 年的 RSU 贈款將導致第三季度的 IFRS 運營費用高於當年其他季度。相比之下，2020 年 RSU 總額為 500 萬美元，其中 480 萬美元立即歸屬。毋庸置疑，由於預計今年的利潤將創歷史新高，我們估計的 RSU 總金額顯著高於往年。這是我們對團隊辛勤工作的感謝。這也表明了我們對長期增長前景的信心。

I will now turn the call over to Jordan. Jordan, the floor is yours.

我現在將把電話轉給喬丹。喬丹，地板是你的。

Thank you, Eric. The semiconductor industry continues to go through a severe foundry shortage, especially in the mature process nodes where we are mainly anchored. With foundries running at more than full capacity, while demand shows no indication of abating, the long-lasting unaddressed supply-demand imbalance remains.

謝謝你，埃里克。半導體行業繼續經歷嚴重的代工短缺，尤其是在我們主要錨定的成熟工藝節點。隨著鑄造廠的產能超過滿負荷運轉，而需求沒有減弱的跡象，長期未解決的供需失衡仍然存在。

In view of the foundry shortage and anticipated growing demand for the foreseeable future, we have entered into strategic agreements with foundry partners to cover both our short-term and long-term needs. We are in the process of entering into further such agreements as we speak, with some of them involving new foundry partners, leaving nothing untried to expand our capacity pool.

鑑於代工短缺和預期在可預見的未來不斷增長的需求，我們已與代工合作夥伴簽訂戰略協議，以滿足我們的短期和長期需求。在我們發言時，我們正在進一步簽訂此類協議，其中一些協議涉及新的代工合作夥伴，不遺餘力地擴大我們的產能池。

Likewise, across various product lines, we are entering into strategic agreements with customers who wish to secure their IC supplies. Some of them are indirect customers who don't necessarily source ICs directly from us, but still wish to enter into supply deals with us to ensure that their direct vendors, mostly panel makers in our case, will get their desired supply quantities from us. All such contractual arrangements will help boost our future growth prospects and improve earnings visibility.

同樣，在各種產品線中，我們正在與希望確保其 IC 供應的客戶簽訂戰略協議。其中一些是間接客戶，他們不一定直接從我們那裡採購 IC，但仍希望與我們簽訂供應協議，以確保他們的直接供應商（在我們的案例中主要是面板製造商）將從我們那裡獲得所需的供應數量。所有此類合同安排將有助於提升我們未來的增長前景並提高盈利可見度。

Notwithstanding all these efforts, demand continues to outpace supply, and we believe the imbalance could last well into 2022. However, we are on track for more accessible capacity to grow our business quarter-by-quarter this year. Looking further ahead, we expect to also secure more capacity for 2022 as compared to this year. We will provide more details as they become available.

儘管做出了所有這些努力，但需求繼續超過供應，我們認為這種不平衡可能會持續到 2022 年。但是，我們有望獲得更多可利用的產能，以在今年逐季度增長我們的業務。展望未來，與今年相比，我們預計 2022 年的產能也將增加。我們將在可用時提供更多詳細信息。

With that, now let us start with an update on the large panel driver IC business. For the third quarter, large display driver IC revenue is projected to increase more than 30% sequentially with all the 3 major product lines set for further growth.

有了這個，現在讓我們從大型面板驅動IC業務的更新開始。第三季度，大型顯示驅動IC收入預計將環比增長30%以上，三大產品線均有望進一步增長。

In Q3, we expect both monitor and notebook businesses to post double-digit growth, benefiting from remote work and online schooling trends. For TV segment, we expect over 20% sequential growth in Q3, anchored by higher-end and larger-sized TVs, despite the slight dip in the worldwide TV shipments anticipated for the second half. While demand remains resilient for us, supply still falls well short of demand fulfillment.

在第三季度，我們預計顯示器和筆記本電腦業務將實現兩位數的增長，受益於遠程工作和在線教育趨勢。對於電視領域，儘管預計下半年全球電視出貨量將略有下降，但我們預計第三季度的環比增長將超過 20%，這主要得益於高端和大尺寸電視。儘管需求對我們來說仍然具有彈性，但供應仍然遠遠不能滿足需求。

As consumers spend more time indoors and the number of connected devices per household is rising steadily, we are seeing more demand for advanced displays such as higher resolution TV, higher refresh rate monitor and ultra large-sized, high aspect ratio curved view displays. We continue to lead the high-end TV and gaming monitor markets by offering major panel makers and end customers total solutions of our driver ICs and advanced Tcons together.

隨著消費者在室內花費的時間越來越多，每個家庭的聯網設備數量穩步上升，我們看到對更高分辨率電視、更高刷新率顯示器和超大尺寸、高縱橫比曲面顯示器等先進顯示器的需求越來越大。我們通過為主要面板製造商和最終客戶提供我們的驅動 IC 和先進 Tcon 的整體解決方案，繼續引領高端電視和遊戲顯示器市場。

In addition, we are also working on next-generation notebook DDICs, shooting for high-end and low power consumption features to enhance our product portfolio and market share gains.

此外，我們還致力於下一代筆記本 DDIC，瞄準高端和低功耗特性，以增強我們的產品組合和市場份額增長。

Now let's turn to the small- and medium-sized display driver IC business. In the third quarter, revenue is expected to increase by low-teens sequentially and around 70% year-over-year, driven by persisting demand for tablet and automotive segments, while sales for smartphones are expected to see single-digit decline.

現在讓我們轉向中小型顯示驅動IC業務。在平板電腦和汽車領域的持續需求推動下，預計第三季度收入將環比增長約 70%，而智能手機的銷售額預計將出現個位數下降。

In Q3, the automotive driver business is set to grow by more than 30% sequentially and more than 150% year-over-year, once again showing the highest growth among the 3 segments in the small- and medium-sized driver IC business.

第三季度，汽車驅動業務環比增長30%以上，同比增長150%以上，再次成為中小型驅動IC業務三大板塊中增速最高的。

In early 2020, foreseeing the foundry shortage, we secured a long-term agreement with our strategic foundry partner to enlarge our capacity, specifically for the automotive application. While the capacity accessible to us is still far behind customer demands right now, we have been able to grow our shipment and sales amidst the prevailing shortage, especially for automotive ICs. As for the tablet market, we remain committed to allocating capacity in favor of tablets over smartphone to strengthen our leading position in the tablet driver market.

2020 年初，預見到代工短缺，我們與戰略代工合作夥伴達成了一項長期協議，以擴大我們的產能，特別是在汽車應用方面。儘管目前我們可用的產能仍遠遠落後於客戶需求，但在普遍短缺的情況下，我們已經能夠增加我們的出貨量和銷售量，尤其是在汽車 IC 方面。在平板電腦市場，我們仍致力於將產能分配給平板電腦而非智能手機，以鞏固我們在平板電腦驅動市場的領先地位。

For the third quarter, we expect tablet sales to grow by mid-teens and smartphone sales to be down single digit compared to the previous quarter, reflecting our capacity allocation decision. Again, we are unable to meet all customer demands due to tight foundry capacity.

對於第三季度，我們預計平板電腦銷量將增長十幾歲，智能手機銷量將比上一季度下降個位數，這反映了我們的產能分配決定。同樣，由於代工產能緊張，我們無法滿足所有客戶的需求。

Now let's review each of the 3 major product segments within the small- and medium-sized display driver IC business. Sales growth for tablet IC business is expected to expand into the third quarter, thanks to robust consumer demand, driven by unprecedented stay-at-home lifestyle.

現在讓我們回顧一下中小型顯示驅動IC業務中的3個主要產品部分。由於前所未有的居家生活方式推動了強勁的消費者需求，平板電腦 IC 業務的銷售增長預計將擴大到第三季度。

Tablet sales are expected to account for the highest proportion of all the product lines in Q3, benefiting from the proactive adoption by all leading non-iOS tablet names of our TDDI solutions. It's worth highlighting that we are the dominant tablet TDDI player in non-iOS market, taking more than 60% market share.

得益於所有領先的非 iOS 平板電腦品牌積極採用我們的 TDDI 解決方案，平板電腦銷量預計將在第三季度佔所有產品線的最高比例。值得強調的是，我們是非 iOS 市場的主要平板 TDDI 廠商，佔據超過 60% 的市場份額。

Himax continues to lead in the next generation tablet TDDI technology by offering state-of-the-art solutions for higher frame rate, higher resolution, larger screen size and more accurate active stylus designs. We are glad to report that recently, we started mass production for the world's first 12.4-inch WQXGA super high-resolution tablet with a leading end customer. In addition, we successfully piloted our tablet TDDI solution for the fast-expanding education tablet, a market with great potential. For the third quarter, we expect tablet TDDI sales to grow mid-teens. Revenue of traditional DDIC for tablet is expected to increase high single digits sequentially.

奇景通過為更高幀率、更高分辨率、更大屏幕尺寸和更精確的主動式觸控筆設計提供最先進的解決方案，繼續引領下一代平板電腦 TDDI 技術。我們很高興地報告，最近，我們開始量產全球首款 12.4 英寸 WQXGA 超高分辨率平板電腦，並與領先的終端客戶合作。此外，我們成功地針對發展迅速的教育平板電腦這個具有巨大潛力的市場試行了我們的平板電腦 TDDI 解決方案。對於第三季度，我們預計平板電腦 TDDI 銷售額將增長十幾歲。傳統平板 DDIC 營收有望環比增長高個位數。

Next, a quick update on smartphone driver. The worldwide smartphone market confronted a short-term headwind from the recent spreading of the pandemic in the Southern Asia. However, our demand for smartphone still far surpasses supply. Limited by the total accessible capacity, we continue to strategically allocate capacity in favor of tablet over smartphone, as we mentioned before. Consequently, we anticipate our smartphone sales to be down single digit in Q3.

接下來，快速更新智能手機驅動程序。全球智能手機市場面臨近期南亞流行病蔓延的短期逆風。然而，我們對智能手機的需求仍然遠遠超過供應。正如我們之前提到的，受總可訪問容量的限制，我們繼續戰略性地分配容量以支持平板電腦而不是智能手機。因此，我們預計我們的智能手機銷量在第三季度將下降個位數。

Looking ahead at our smartphone TDDI lineups, we are undertaking new design developments supporting higher frame rate, ultra slim bezel and higher resolution features. We expect successful engagement with key customers in the coming quarters. Discrete drivers for smartphone, running at relatively low volume, are expected to grow strongly with seasonal demand for the third quarter.

展望我們的智能手機 TDDI 系列，我們正在進行新的設計開發，支持更高的幀速率、超薄邊框和更高分辨率的功能。我們預計未來幾個季度與主要客戶的成功接觸。智能手機的離散驅動，運行量相對較低，預計將隨著第三季度的季節性需求強勁增長。

Now turning to the automotive sector. As I just mentioned, we expect strong growth for automotive IC business in Q3 on the backdrop of severe global IC shortage for the automotive market. With the rising volume for EV and anticipated proliferation of autonomous driving, the displays for automotive market will grow in not only volume but also chip size and sophistication.

現在轉向汽車領域。正如我剛才提到的，在全球汽車市場嚴重短缺的背景下，我們預計第三季度汽車 IC 業務將出現強勁增長。隨著 EV 銷量的增加和預期的自動駕駛普及，汽車市場的顯示器將不僅在數量上增長，而且在芯片尺寸和復雜性方面也將增長。

As a world-leading automotive driver supplier who commands well over 30% of the global market, we are leading the charge in answering to such demands. We continue to work closely with panel suppliers, Tier 1 players and car makers for their future generation display designs. The most prominent among the new technologies for automotive display is TDDI, which is especially critical for large size and free form displays. Himax is the pioneer in the world of automotive TDDI development, having started the first-generation TDDI mass production as early as the second quarter of 2019. Taking advantage of the first-mover position and our long-standing close engineering collaboration with Tier 1 customers, we further upgraded our design. And now, our Gen 2 TDDI for automotive has officially entered into mass production in this quarter with it's dominating design-win coverage across literally all display makers, numerous Tier 1 players and leading car manufacturers across all automotive markets.

作為世界領先的汽車驅動器供應商，在全球市場上佔有超過 30% 的份額，我們在滿足這些需求方面處於領先地位。我們將繼續與面板供應商、一級供應商和汽車製造商密切合作，以實現他們的下一代顯示器設計。汽車顯示新技術中最突出的是 TDDI，它對於大尺寸和自由形式的顯示器尤其重要。奇景是全球汽車 TDDI 開發的先行者，早在 2019 年第二季度就開始了第一代 TDDI 量產。利用我們的先發優勢以及我們與一級客戶長期密切的工程合作，我們進一步升級了我們的設計。現在，我們用於汽車的 Gen 2 TDDI 已於本季度正式進入量產階段，它在幾乎所有的顯示器製造商、眾多的一級參與者和所有汽車市場的領先汽車製造商中佔據主導地位。

The number of awarded projects is already in the dozens and still growing quickly as we speak. We expect the TDDI volume to expand exponentially starting from this quarter.

獲獎項目的數量已經有幾十個，而且在我們說話的時候還在快速增長。我們預計 TDDI 交易量將從本季度開始呈指數增長。

Aside from providing comprehensive coverage to address varying design needs, most important of all, our product portfolio adheres to the demanding standards of quality and reliability required of automotive products. Our early engagement with customers and mass production experience will prove invaluable for our long-term competitiveness. Also during the third quarter, we are again pioneering in the launch of the leading-edge LTDI, or large display touch and driver integration, solution that incorporates sophisticated multi-chip system design and is essential for very large-sized, stylish, curved automotive displays in a customers' upcoming first launch in vehicles. With these new technologies unleashed, we expect our automotive driver business to enjoy phenomenal growth for the next few years.

除了提供全面的覆蓋範圍以滿足不同的設計需求外，最重要的是，我們的產品組合符合汽車產品所要求的苛刻的質量和可靠性標準。我們與客戶的早期接觸和大規模生產經驗對於我們的長期競爭力將證明是無價的。同樣在第三季度，我們再次率先推出了領先的 LTDI，即大顯示屏觸摸和驅動器集成解決方案，該解決方案融合了複雜的多芯片系統設計，對於超大尺寸、時尚、彎曲的汽車至關重要展示在客戶即將首次推出的車輛中。隨著這些新技術的推出，我們預計我們的汽車駕駛員業務將在未來幾年內實現驚人的增長。

Next for an update on AMOLED. As AMOLED technology is embraced in the high-end display market, Himax is highly devoted to this area covering smartphone, wearable, tablet and automotive areas. Our successful collaboration with BOE Varitronix, a subsidiary of BOE, the world's largest TFT LCD player, on flexible AMOLED driver and Tcon for the automotive application is expected to be in mass production commencing in the fourth quarter this year. We are also excited about the significant progress in other fields with major China panel makers and will update the status when appropriate. Capacity shortage is expected to continue across all business segments in our small- and medium-sized driver IC business. Our shipping quantity will be constrained by capacity shortage during the third quarter.

接下來是關於 AMOLED 的更新。隨著AMOLED技術進入高端顯示市場，奇景光電在智能手機、可穿戴設備、平板電腦和汽車領域都非常重視這一領域。我們與全球最大的 TFT LCD 廠商京東方的子公司京東方精電在柔性 AMOLED 驅動器和汽車應用 Tcon 方面的成功合作預計將於今年第四季度開始量產。我們也對中國主要面板製造商在其他領域的重大進展感到興奮，並將在適當時更新狀態。預計我們的中小型驅動IC業務的所有業務部門都將繼續出現產能短缺。第三季度我們的出貨量將受到運力短缺的限制。

Now let me share some of the progress we made on the non-driver IC businesses. Let's start from the timing controller. For the third quarter, we anticipate mid-teens sequential growth in Tcon sales. While also still limited by accessible capacity, we are optimistic about long-term growth prospects of the Tcon business with strong demand coming from some of the high-value products such as 4K, 8K TV, gaming monitor and low-power notebooks. Looking further ahead, we are particularly excited about the potential for automotive Tcon, which incorporates our leading-edge local dimming feature that coupled with mini-LED backlight, enables thousands of dimming zones for superior display contrast comparable to that of AMOLED. Our industry-leading local dimming Tcon already won numerous project awards from OEMs and Tier 1s. We believe Tcon segment will continue to be one of the growth drivers for our non-driver business.

現在讓我分享一下我們在非驅動IC業務方面取得的一些進展。讓我們從時序控制器開始。對於第三季度，我們預計 Tcon 銷售額將連續增長十幾歲。儘管仍受限於可用產能，但我們對 Tcon 業務的長期增長前景持樂觀態度，因為 4K、8K 電視、遊戲顯示器和低功耗筆記本電腦等一些高價值產品的需求強勁。展望未來，我們對汽車 Tcon 的潛力感到特別興奮，它結合了我們領先的局部調光功能，與 mini-LED 背光相結合，可實現數千個調光區域，實現與 AMOLED 相媲美的卓越顯示對比度。我們行業領先的局部調光 Tcon 已經贏得了 OEM 和一級供應商的眾多項目獎項。我們相信 Tcon 部門將繼續成為我們非驅動業務的增長動力之一。

Next, on WLO update. In the third quarter, we will continue to support an anchor customers' legacy product and anticipate sales to remain flat sequentially, which will still help sustain WLO factory utilization. WLO technologies continue to play an important role in enabling future generation optical applications. As a leader in the diffractive optics field, we keep on collaborating with worldwide tech giants and OEMs, where we are fully involved in optical-related innovation and development of ToF 3D sensing, AR glasses and other applications in a wide range of different fields.

接下來，關於 WLO 更新。在第三季度，我們將繼續支持主要客戶的傳統產品，並預計銷售額將連續持平，這仍將有助於維持 WLO 工廠的利用率。 WLO 技術在實現下一代光學應用方面繼續發揮重要作用。作為衍射光學領域的領導者，我們不斷與全球科技巨頭和OEM合作，全面參與ToF 3D傳感、AR眼鏡和其他不同領域應用的光學相關創新和開發。

Next, a quick update on 3D sensing. Our proprietary 3D decoder IC has been broadly acknowledged in the leading e-payment ecosystems in China since its initial mass production in the second half of 2020. Our 3D decoder IC provides high-performance decoding capability for high-precision face recognition and is particularly popular in areas such as door lock and industrial access control, where privacy is a major concern. We expect more design win awards and growing volumes throughout the year.

接下來，快速更新 3D 傳感。自2020年下半年首次量產以來，自主研發的3D解碼IC在中國領先的電子支付生態系統中獲得廣泛認可。我們的3D解碼IC為高精度人臉識別提供高性能解碼能力，尤其受歡迎在門鎖和工業門禁控制等領域，隱私是一個主要問題。我們預計全年會有更多的設計獲獎和不斷增長的銷量。

Now switching gears to the WiseEye smart sensing solution. To maximize market visibility and explore potential applications, we continue to push forward with two WiseEye business models, namely total solution and discrete component. Let's start with an update on WiseEye total solution. Our WiseEye total solution implements ultra low-power computer vision AI that aims at endpoint devices with constraints in processor resource and power consumption.

現在切換到 WiseEye 智能傳感解決方案。為了最大限度地提高市場知名度和探索潛在應用，我們繼續推進兩種WiseEye商業模式，即整體解決方案和分立元件。讓我們從 WiseEye 整體解決方案的更新開始。我們的 WiseEye 整體解決方案實現了超低功耗計算機視覺 AI，旨在針對處理器資源和功耗受限的端點設備。

In addition to the design win for a mainstream application from a leading tech name that we reported last quarter, we are pleased to report new awards during the second quarter from utility meter, battery camera and panoramic video conferencing applications. Some of these applications are expected to enter into mass production beginning in the fourth quarter of 2021.

除了我們在上一季度報告的領先技術名稱的主流應用程序的設計勝利外，我們很高興地報告第二季度在公用事業儀表、電池攝像頭和全景視頻會議應用程序方面的新獎項。其中一些應用預計將於 2021 年第四季度開始量產。

We continue to work on various new solutions, covering a wide variety of applications, including doorbells, surveillance, smart city, health care, agriculture and many other AIoT devices with joint efforts from multiple algorithm partners in different domains, including Himax owned subsidiary, Emza. We are at the forefront of delivering cutting-edge ultralow-power smart image sensing solution to the edge AI market.

我們繼續致力於各種新的解決方案，涵蓋廣泛的應用，包括門鈴、監控、智慧城市、醫療保健、農業和許多其他 AIoT 設備，並與包括 Himax 旗下子公司 Emza 在內的不同領域的多個算法合作夥伴共同努力.我們處於為邊緣人工智能市場提供尖端超低功耗智能圖像傳感解決方案的最前沿。

For WiseEye key component business model, we reinforced our go-to-market strategy by intensively participating in leading AI partners' infrastructures and ecosystems. Following the successful collaboration with Google's TensorFlow Lite for microcontrollers and Microsoft Azure, we also joined Arm AI Partner Program and tinyML Foundation in an attempt to reach out to more diverse AI communities.

對於 WiseEye 關鍵組件業務模式，我們通過深入參與領先的 AI 合作夥伴的基礎設施和生態系統來強化我們的市場進入戰略。繼與穀歌的微控制器 TensorFlow Lite 和 Microsoft Azure 成功合作之後，我們還加入了 Arm AI 合作夥伴計劃和 tinyML 基金會，試圖接觸更多樣化的 AI 社區。

More recently, we teamed up with online store Digi-Key in addition to SparkFun that we announced before to showcase our edge device components and easy-to-use development tools for developers to conveniently access our WiseEye solution.

最近，除了我們之前宣布的 SparkFun 之外，我們還與在線商店 Digi-Key 合作，展示我們的邊緣設備組件和易於使用的開發工具，以便開發人員方便地訪問我們的 WiseEye 解決方案。

Hundreds of evaluation boards and development kits have been purchased online and distributed to AI developers across the globe. With extended outreach to various AI channels, we have received priceless feedback from numerous users for different application domains that never occurred to us. We are excited about the business progress and are confident that WiseEye will play a key role in the non-driver segment looking ahead into 2022 and beyond.

數百個評估板和開發套件已在線購買並分發給全球的 AI 開發人員。隨著對各種 AI 渠道的擴展，我們從眾多用戶那裡收到了我們從未想過的不同應用領域的無價反饋。我們對業務進展感到興奮，並相信 WiseEye 將在展望 2022 年及以後的非駕駛員領域發揮關鍵作用。

For non-driver IC business, we expect revenue to increase low single digits sequentially in the third quarter. That concludes my report for this quarter. Thank you for your interest in Himax. We appreciate you joining today's call and are now ready to take questions.

對於非驅動IC業務，我們預計第三季度收入將環比增長低個位數。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，現在可以回答問題了。

(Operator Instructions) Your first question comes from the line of Donnie Teng of Nomura Securities.

（操作員說明）您的第一個問題來自野村證券的Donnie Teng。

I have 2 quick questions. The first one is the gross margin trend. So I think Jordan has mentioned multiple times that foundry capacity, particularly for driver IC, may not be easily resolved, maybe in the coming 1 to 2 years, but our gross margin in third quarter has been already surpassed 50% level. So just wondering, in the real business practice, would the further increased gross margin in the future will have some negative impact to our customers? And we may think that the gross margin to be relatively stable from fourth quarter and beyond? So that's the first question.

我有 2 個簡單的問題。第一個是毛利率趨勢。所以我認為Jordan多次提到代工產能，特別是驅動IC，可能不會輕易解決，可能在未來1到2年內，但我們第三季度的毛利率已經超過50%的水平。所以想問問，在實際的商業實踐中，未來進一步提高毛利率會對我們的客戶產生一些負面影響嗎？而且我們可能認為從第四季度及以後的毛利率會相對穩定？所以這是第一個問題。

And the second one, is that I remember in early days that we have some meaningful sales exposure to smartphone aftermarket for maintenance, right? So I'm curious about whether that market still enjoy very high gross margin at the current time point?

第二個，是我記得早期我們在智能手機售後市場有一些有意義的銷售機會進行維護，對嗎？所以我很好奇這個市場在當前時間點是否仍然享有很高的毛利率？

And how would the situation in the coming 1 to 2 quarters, as you can see that the smartphone demand in third quarter, particularly like in China is still not quite strong. Thank you.

以及未來 1 到 2 季度的情況如何，可以看到第三季度的智能手機需求，尤其是在中國，仍然不是很強勁。謝謝你。

Thank you, Donnie. Your first question about gross margin trend that our guidance for Q3 has been over 50% and whether, I guess, your question is whether it can continue to go up or at least sustain at this high level. And whether such high level of gross margin will be negative to customers. I think certainly, gross margin enhancement is always our number one priority, at least among the top priorities. So we have to try everything we can to drive our gross margin higher.

謝謝你，唐尼。關於毛利率趨勢的第一個問題，我們對第三季度的指導已經超過 50%，我猜你的問題是它是否可以繼續上升或至少維持在這個高水平。以及如此高的毛利率是否會對客戶產生負面影響。我認為當然，提高毛利率始終是我們的第一要務，至少在首要任務中是這樣。所以我們必須盡我們所能來提高我們的毛利率。

But having said that, at the end of the day, gross margin can only be determined by the market, i.e., the demand supply situation. And I think needless to say, the fact that our gross margin is so high is partially, very importantly attributable to the fact that the foundry capacity is very tight, and it's pretty much a seller's market. So that is not deniable.

但話說回來，毛利率歸根結底只能由市場決定，即供需情況。而且我認為不用說，我們的毛利率如此之高，部分非常重要的原因是代工產能非常緊張，這幾乎是一個賣方市場。所以這是不可否認的。

Having said that, I think our customers, arguably, do have the capability to absorb high costs coming of the driver IC because after all, driver IC still accounts for a pretty low portion of their total cost. Even if you look only at their material costs, driver IC is definitely not among the top items, not even close.

話雖如此，我認為我們的客戶可以說確實有能力吸收驅動IC的高成本，因為畢竟驅動IC在其總成本中所佔的比例仍然很低。即使只看他們的材料成本，驅動IC也絕對不是頂級項目，甚至沒有接近。

So if you are a panel maker, and you're sitting on multiple fabs, each one costing you billions of dollars to build. And driver IC, while the price is coming up, you still need to have driver IC, otherwise, you simply cannot run your factory.

因此，如果您是面板製造商，並且您擁有多個晶圓廠，每個晶圓廠的建造成本都高達數十億美元。還有驅動IC，在漲價的時候，你還是需要有驅動IC，否則，你的工廠根本就跑不起來。

And the last thing you want to see is to see your factory sitting idle, right? The depreciation charges is going to kill you. So I think whether driver IC's upward price trend will jeopardize the panel industry for its additional cost burden, I would argue the impact can only be marginal because, again, our cost accounts for a pretty small portion of their total cost, the importance of driver IC technically and business-wise are critical for panel makers.

你最不想看到的就是看到你的工廠閒置，對吧？折舊費會殺了你。所以我認為驅動IC的價格上漲趨勢是否會危及面板行業的額外成本負擔，我認為影響只能是微不足道的，因為我們的成本再次佔總成本的一小部分，驅動的重要性IC 在技術和業務方面對面板製造商至關重要。

So in fact, we actually mentioned briefly in our prepared remarks, we are seeing the overwhelming demand from our customers and in many cases, direct customers as well as indirect customers, to try to enter into long-term supply arrangements with us because I think they recognize it's very important and the capacity tightness is not going away anytime soon. So, but again, at the end of the day, our gross margin is determined by demand and supply. All we can do is to take advantage of the current situation, which is probably favorable to us. And also, I think, quite importantly, we are trying to take advantage of this situation and try to reposition and improve our competitiveness for the longer term. So for example, by entering into such agreements with direct and indirect customers, we get to kind of "cherry-pick", I wouldn't say cherry-pick, we tend to pick the customers and products that we prefer over others because at the end of the day, our foundry capacity is limited, i.e., our resources are limited. So we need to allocate our resources. We need to better utilize our resources to our best advantage. That includes short-term advantage, i.e., pricing, gross margin, profitability, et cetera. And longer-term advantage, which is higher-end products, better customers, higher entry-level markets, et cetera. And I think we are doing quite well in achieving this, which may not show in our immediate results, but I think in the long term, it can be quite important for us. So hopefully, that will be something that will help sustain our gross margin, hopefully, for the longer term.

所以事實上，我們實際上在準備好的評論中簡要提到，我們看到客戶的壓倒性需求，在很多情況下，直接客戶和間接客戶都試圖與我們達成長期供應安排，因為我認為他們認識到這非常重要，而且產能緊張不會很快消失。因此，歸根結底，我們的毛利率是由供需決定的。我們所能做的就是利用當前的形勢，這可能對我們有利。而且，我認為，非常重要的是，我們正試圖利用這種情況，並試圖重新定位和提高我們的長期競爭力。因此，例如，通過與直接和間接客戶簽訂此類協議，我們可以進行“精選”，我不會說精選，我們傾向於選擇我們更喜歡的客戶和產品，因為在歸根結底，我們的代工能力是有限的，即我們的資源是有限的。所以我們需要分配我們的資源。我們需要更好地利用我們的資源來發揮我們最大的優勢。這包括短期優勢，即定價、毛利率、盈利能力等。以及更長期的優勢，即更高端的產品、更好的客戶、更高的入門級市場等等。我認為我們在實現這一目標方面做得很好，這可能不會在我們的直接結果中顯示出來，但我認為從長遠來看，這對我們來說可能非常重要。因此，希望這將有助於長期維持我們的毛利率。

And your second question is about some of our sales exposure to smartphone's maintenance market in China. Indeed, we are one of the players in that market. That market certainly is relatively smaller compared to the mainstream brand name first-hand market. And also the volatility is higher. It goes up and down more dramatically than the other mainstream market, ditto for gross margin as well. And so when there's a slowdown, it tends to go faster and vice versa. When there's a pickup, it tends to go faster as well. So we try to, as we mentioned earlier, right, the capacity pool for our smartphone TDDI and tablets TDDI is the same one.

你的第二個問題是關於我們在中國智能手機維修市場的一些銷售敞口。事實上，我們是該市場的參與者之一。與主流品牌一手市場相比，這個市場肯定相對較小。而且波動性也更高。與其他主流市場相比，它的漲跌幅度更大，毛利率也是如此。因此，當減速時，它往往會更快，反之亦然。當有皮卡時，它往往也會更快。所以我們嘗試，正如我們之前提到的，對，我們的智能手機 TDDI 和平板電腦 TDDI 的容量池是同一個。

So with this, we have to and we do try to allocate our capacity to satisfy both the short-term needs and our long-term needs. Long-term needs meaning regardless of short-term gross margin, there are certain markets we simply need to support and maintain and for the long-term benefits of our customers and ourselves. But certainly, we do look at the short-term gross margin trend as well in making such allocation decision. And as you can expect, when the maintenance market goes down, when it goes down more dramatically than the other market, then we may actually allocate more resources to mainstream smartphone market and certainly tablet market as well. And I think that's pretty much, in the very short term, what we are doing a bit right now.

所以有了這個，我們必須而且我們確實試圖分配我們的能力來滿足短期需求和我們的長期需求。長期需求意味著無論短期毛利率如何，我們只需要支持和維護某些市場，並為了我們的客戶和我們自己的長期利益。但可以肯定的是，我們在做出此類分配決定時也會考慮短期毛利率趨勢。正如你所預料的那樣，當維修市場下滑時，當它比其他市場下滑得更厲害時，我們實際上可能會將更多的資源分配給主流智能手機市場，當然還有平板電腦市場。而且我認為這在短期內幾乎就是我們現在正在做的事情。

Your next question comes from the line of Jon Lopez of Vertical Group.

您的下一個問題來自 Vertical Group 的 Jon Lopez。

Hi, thank you for taking the question. I have two, if I could. The first one, I guess, is more of a clarification. Can you just comment or confirm for this year, for 2021, are you receiving a higher allocation of wafers in aggregate from your foundry partners? Do you have more wafers this year than you did in 2020?

您好，感謝您提出問題。如果可以的話，我有兩個。第一個，我想，更多的是澄清。您能否就今年（2021 年）發表評論或確認，您是否從您的代工合作夥伴那裡獲得了更多的晶圓分配？今年的晶圓數量是否比 2020 年多？

Yes. We did. We do.

是的。我們做到了。我們的確是。

Okay. Great. That's helpful. And I know it's early, but as you're having conversations for 2022, is your expectation the same? Do you expect to get more wafers in '22 versus '21?

好的。偉大的。這很有幫助。我知道現在還為時過早，但是當您正在討論 2022 年時，您的期望是否相同？您是否希望在 22 年與 21 年獲得更多的晶圓？

Again, we do. Jonathan, I have to put a disclaimer in that easy answer. The answer is yes, we do, but not by a great deal, so marginally, I cannot comment on how much exactly percentage for us. The fact is that the industry, overall, there is simply no new major capacity expansion this year and next year or even second half 2023, right? So it will be a miracle if we claim that we are going to up our capacity by like a lot, right, whether it's this year or next, next year.

同樣，我們這樣做。喬納森，我必須在這個簡單的答案中加入免責聲明。答案是肯定的，我們有，但幅度不大，所以我無法評論我們的確切百分比。事實上，整個行業，今年和明年甚至2023年下半年根本沒有新的重大產能擴張，對吧？因此，如果我們聲稱我們將把我們的產能提高很多，這將是一個奇蹟，對，無論是今年還是明年，明年。

But we mentioned in our prepared remarks that we made the early move early last year, specifically for automotive display driver IC, which is rather separate from the rest of the driver ICs in technology. So in early last year, when the COVID-19 was hitting the world and the global automotive demand is coming down to the toilet, we actually took the opportunity and struck a pretty good deal for a long time with our foundry partners, strategic foundry partner to secure (inaudible). Having said that, we're very happy because we did get to secure pretty decent growth for this year and next year. But it turns out the amount was still far less than actually the demand when the demand started to pick up towards the end of last year, and certainly very much into this year and as we can foresee next year.

但我們在準備好的評論中提到，我們在去年初就採取了早期行動，專門針對汽車顯示驅動IC，這在技術上與其他驅動IC相當不同。所以在去年初，當 COVID-19 席捲全球，全球汽車需求下降到廁所時，我們實際上抓住了這個機會，與我們的代工合作夥伴、戰略代工合作夥伴達成了很長時間的一筆不錯的交易確保（聽不清）。話雖如此，我們很高興，因為我們確實在今年和明年實現了相當可觀的增長。但事實證明，當需求在去年底開始回升時，這一數量仍遠低於實際需求，而且肯定會在今年非常多，正如我們可以預見的明年那樣。

So while our capacity increases specifically for automotive, in a pretty satisfactory portion, but the demand is still far outpacing supply. And we expect to see a good capacity increase for large panel when we enter into next year and to some extent, this year as well. And this is important. This is very important because and it's not easy because based on our internal estimates, while the display driver IC demand for large panel will grow this year and the next few years because of a few factors, namely the panels are still growing bigger and the resolution is, on average, is still rising. And also, you are getting more and more percentage of high-end large panels, for example, high refresh rates, right? 120 hertz or even 240 hertz. Some design requires more sophisticated design, i.e., larger IC per panel. So we believe the demand in terms of wafer area will increase.

因此，雖然我們專門針對汽車的產能增加了相當令人滿意的部分，但需求仍然遠遠超過供應。我們預計明年大面板的產能將會有很好的增長，在某種程度上，今年也是如此。這很重要。這一點很重要，而且不容易，因為根據我們內部的估計，今年和未來幾年大面板的顯示驅動IC需求將增長，因為有幾個因素，即面板仍然在變大，分辨率平均而言，仍在上升。而且，你正在獲得越來越多的高端大面板，例如高刷新率，對吧？ 120 赫茲甚至 240 赫茲。有些設計需要更複雜的設計，即每個面板需要更大的 IC。因此我們相信晶圓面積的需求將會增加。

We actually, based on internal estimates, the supply can actually decrease somehow. So it has been our strategy to proactively enlarge our capacity where we can with the foundry capacities, specifically for our large panel. And I think we did achieve some success. So that is how you get to see, for example, this quarter, whether it's on a sequential basis or year-over-year basis, our large panel is doing quite well. And I think, moving into next year, I think we are quite hopeful that some of this new capacity will contribute to our further growth for large panel.

實際上，根據內部估計，供應實際上會以某種方式減少。因此，我們的戰略是在我們可以利用代工能力的情況下積極擴大我們的產能，特別是對於我們的大型面板。我認為我們確實取得了一些成功。這就是您如何看到，例如，本季度，無論是按順序還是按年同比，我們的大型小組都做得很好。而且我認為，進入明年，我認為我們非常希望這些新產能中的一些將有助於我們在大型面板方面的進一步增長。

Small- and medium-sized, I talked about automotive already, so now the only large area left untouched is TDDI for smartphone and tablet. That is a difficult area because again, it's so full and it's so much in shortage right now, so it is honestly quite difficult to get more capacity. And actually, way before the pandemic, we were suffering from shortage already. So we've been trying everything we can to try to get more capacity. But the fact is that before pandemic, there was already a shortage. And the shortage -- we continue to suffer from shortage till now and foreseeable future into next year.

中小型，我已經談到了汽車，所以現在唯一沒有觸及的大領域是智能手機和平板電腦的TDDI。這是一個困難的領域，因為它現在已經很滿了，而且現在又很短缺，所以說實話，很難獲得更多的容量。實際上，在大流行之前，我們已經遭受了短缺的困擾。所以我們一直在盡我們所能來獲得更多的容量。但事實是，在大流行之前，就已經出現了短缺。和短缺——直到現在和可預見的未來到明年，我們繼續遭受短缺。

We have entered into agreements with foundry partners to hopefully at least sustain at the current level or hopefully increase a little bit. But I don't think our accessible capacity for TDDI, small panel, will see a major increase this year or even next year, 2023, because of new buildings of fabs, 2023, hopefully, we are up to see a new addition to us.

我們已經與代工合作夥伴達成協議，希望至少能維持在目前的水平，或者希望增加一點。但我認為我們的 TDDI（小型面板）產能在今年甚至明年（2023 年）不會有顯著增長，因為 2023 年新的晶圓廠建設，希望我們能夠看到新的補充.

I see. Okay. So sorry, if I could summarize, it sounds like you're comfortable that you'll have more large panel access to large panel capacity in '22. It sounds like you're a little less sure on smartphone and on tablet. And I guess my follow-up there is that seems a little counterintuitive to me just given aren't most of your large panel products produced on 8-inch foundry processes? Or sorry, on 8-inch wafers where capacity is ostensibly maybe a little less available?

我知道了。好的。很抱歉，如果我能總結一下，聽起來你很舒服，在 22 年你將有更多的大面板訪問大面板容量。聽起來您對智能手機和平板電腦不太確定。而且我想我的後續行動對我來說似乎有點違反直覺，因為你們的大部分大型面板產品不是在 8 英寸代工工藝上生產的嗎？或者抱歉，在 8 英寸晶圓上，表面上的可用容量可能會少一些？

Yes, it is counterintuitive. Jonathan, you're absolutely right. Well, before that a small correction, yes, we expect to do better in large panel, also in small panels automotive business.

是的，這是違反直覺的。喬納森，你完全正確。好吧，在那之前的一個小修正，是的，我們預計在大面板方面做得更好，在小面板汽車業務中也是如此。

All right. Sorry.

好的。對不起。

Yes. Now it's counterintuitive, but I think, in the case of automotive, for example, it's purely 8-inch, and we just move faster than anyone else because we have extensive discussions with OEMs, Tier 1s and panel makers, and we understand we could foresee there will be outbursts of demand, while nobody seemed to be ready for it. So we get to agreements, we just got prepared.

是的。現在這是違反直覺的，但我認為，以汽車為例，它是純 8 英寸的，我們只是比其他任何人都更快，因為我們與 OEM、Tier 1 和麵板製造商進行了廣泛的討論，我們知道我們可以預見到需求將會爆發，而似乎沒有人為此做好準備。所以我們達成了協議，我們只是做好了準備。

And for other large panels, it's a combination of 8-inch and 12-inch. Some of the capacity increase for next year, and in fact, this year as well actually a lot of certain new building of capacity in China, which are 8-inch -- which are 12-inch, sorry, which are 12-inch. And there will be certain 8-inch new capacities accessible to us, which involves foundry partners that we didn't have a business relationship with on the foundry side. So it's a newly developed foundry partner. And yes, there are situations which are specific to us. But I think you are right. 8-inch overall is much harder to expand compared to 12-inch.

而對於其他大型面板，則是 8 英寸和 12 英寸的組合。明年的一些產能增加，事實上，今年在中國實際上也有很多新的產能建設，它們是 8 英寸 - 是 12 英寸，對不起，是 12 英寸。我們將獲得某些 8 英寸的新產能，其中涉及與我們在代工方面沒有業務關係的代工合作夥伴。所以它是一個新開發的代工合作夥伴。是的，有些情況是我們特有的。但我認為你是對的。與 12 英寸相比，8 英寸整體難以擴展。

Understood. I'm sorry, I have one other quick one. And you could make the answer relatively quick. I don't know how much you'll be able to say, but there's been some discussion recently of a large Korean customer potentially looking to outsource some of their OLED DDIC needs. I'm wondering if that's something that you would think is possible? And is something that you would potentially look to participate in?

明白了。對不起，我還有一個很快的。你可以讓答案相對較快。我不知道你能說多少，但最近有人討論了一家大型韓國客戶可能希望外包他們的一些 OLED DDIC 需求。我想知道這是否是您認為可能的事情？您是否有可能參與其中？

The answer is yes. But I'm afraid that I certainly can't elaborate much more than that. But that is definitely a possibility and we are definitely interested, subject to terms and conditions and other stuff.

答案是肯定的。但恐怕我不能再詳細說明了。但這絕對是一種可能性，我們絕對有興趣，但須遵守條款和條件以及其他內容。

Your next question comes from the line of Jerry Su of Credit Suisse

您的下一個問題來自瑞士信貸的 Jerry Su

I think my line just got cut off earlier. So the first question is on the third quarter large driver IC guidance. I think you mentioned that 30% revenue growth. I'm just wondering what is the growth rate for the monitor and notebook? Because I think in the press release or prepared remarks, you only mentioned double-digit growth. And then TV is seeing 20% growth. So just want to double check on this.

我想我的線路剛剛被切斷了。所以第一個問題是關於第三季度大型驅動IC的指導。我想你提到了 30% 的收入增長。我只是想知道顯示器和筆記本的增長率是多少？因為我認為在新聞稿或準備好的評論中，您只提到了兩位數的增長。然後電視出現了 20% 的增長。所以只想仔細檢查一下。

And then the second question is related to the competitive landscape. I think, in China there is -- I think the China government and also there's a lot of factories they're trying to ramp up or increase the domestic usage or supply of the driver IC. How do you think about their potential threat to Himax or to the existing players in the next 1 to 3 years?

然後第二個問題與競爭格局有關。我認為，在中國有 - 我認為中國政府以及許多工廠正試圖增加或增加驅動器 IC 的國內使用或供應。您如何看待他們在未來 1 到 3 年內對 Himax 或現有玩家的潛在威脅？

Thank you, Jerry. I guess your first question is about the Q3 growth, specifically for monitor and notebook, is that right?

謝謝你，傑瑞。我想你的第一個問題是關於第三季度的增長，特別是顯示器和筆記本電腦，對嗎？

Yes.

是的。

Very strong, actually sequentially. Let me see, both monitor and notebook are in the range of above 50% growth sequentially. A combination of better capacity, accessibility and certainly some price hike. And both sectors, we are, again, our resources are limited, and we are constrained by foundry shortage so we have to allocate our products to certain products that we choose, right? So in the case of monitor, we are very much in favor of gaming monitor, which tend to be high end and high refresh rates and high resolution and so on. And in the case of notebook, it's primarily on certain low-power models and we're actually quite excited about the notebook market, needless to say the present surprise for everybody because of the COVID, where I don't need to repeat that.

非常強，實際上是依次的。讓我看看，顯示器和筆記本都在環比增長50%以上的範圍內。更好的容量，可訪問性和當然價格上漲的組合。這兩個行業，我們的資源又是有限的，而且我們受到代工廠短缺的限制，所以我們必須將我們的產品分配給我們選擇的某些產品，對吧？所以在顯示器方面，我們非常看好電競顯示器，它往往是高端、高刷新率、高分辨率等。就筆記本而言，它主要用於某些低功耗型號，我們實際上對筆記本市場感到非常興奮，不用說因為 COVID 而給每個人帶來的驚喜，我不需要重複這一點。

And I think we have intensive discussions with end customers, and they seem to be still pretty upbeat about the demand for the next few years, regardless of the pandemic having been kind of cooled down in most of the world. And also because of the pandemic and the change in people's lifestyle, notebook now people are demanding better features and larger screens and better cameras and faster refresh and so on and so forth. So we are, for example, we are moving towards more high-end FHD or even eDP 1.4, such high-end features are being some of them are being designed-in, some of them are still being discussed, developed together with our customers and end customers. So notebook is something that we are actually quite excited about.

而且我認為我們與最終客戶進行了深入的討論，他們似乎仍然對未來幾年的需求持樂觀態度，儘管世界大部分地區的流行病已經有所降溫。而且由於疫情和人們生活方式的改變，現在人們對筆記本電腦的要求是更好的功能、更大的屏幕、更好的攝像頭和更快的刷新率等等。因此，例如，我們正在向更高端的 FHD 甚至 eDP 1.4 發展，這些高端功能正在設計中，其中一些仍在討論中，與我們的客戶一起開發和最終客戶。所以筆記本是我們實際上非常興奮的東西。

Your second question, I suppose, is around local competition for I actually talked about briefly when answering Jonathan's questions. That in China, there are certain new constructions of fabs, which actually we quite welcome. We're actually one of the earliest customers. And we have entered into supply agreements with them. And for the current demand and for our future demand as well. And we pay a lot of attention to their expansion plans. So we are actually one of their earliest customers, and we believe we are certainly one of their larger customers for discrete driver ICs.

我想你的第二個問題是關於本地競爭的，因為我在回答喬納森的問題時實際上已經簡短地談到了。在中國，有一些新的晶圓廠建設，實際上我們非常歡迎。我們實際上是最早的客戶之一。我們已經與他們簽訂了供應協議。對於當前的需求和我們未來的需求也是如此。我們非常關注他們的擴張計劃。所以我們實際上是他們最早的客戶之一，我們相信我們肯定是他們分立驅動器 IC 的更大客戶之一。

Having said that, so we actually welcome they are building new fabs for the industry. And we are actually pushing them to go faster. Unfortunately, as we are all aware, these days, the lead time for new tools for fabs for foundries is actually getting longer and longer, and certainly, our Chinese foundry partners they are no exception to this problem. So we are in discussions about their expansion plan and timetable and certainly, we want to make sure we are part of their plan.

話雖如此，所以我們實際上歡迎他們為該行業建造新的晶圓廠。我們實際上是在推動他們走得更快。不幸的是，我們都知道，如今，代工廠新工具的交付週期實際上越來越長，當然，我們的中國代工廠合作夥伴也不例外。因此，我們正在討論他們的擴張計劃和時間表，當然，我們希望確保我們是他們計劃的一部分。

Having said that, certainly, the foundry partner being Chinese and backed by the government, they certainly have to support their local customers, i.e., our Chinese competitors. However, I think as I said earlier and repeatedly that we are hoping to reposition ourselves so that we get to do more higher-end products with higher entry barriers. So I think that is kind of the differentiation we try to make against our Chinese peers, who tend to still be in, for example, low-end TV and low-end smartphone areas, where in comparison, tablet and monitor notebooks and certainly automotive are much harder for them. So I think yes, there's always a threat and Chinese competition has always been a threat for decades for us. But I think, right now, I guess, we are more worried about foundry constraints than Chinese competition because I think we see, still some differentiation against local competitors and so do our customers. I think they would also position people like Himax against their Chinese supplier for different kinds of products.

話雖如此，當然，代工合作夥伴是中國人並得到政府的支持，他們當然必須支持他們的本地客戶，即我們的中國競爭對手。但是，我認為正如我之前反复說過的那樣，我們希望重新定位自己，以便我們能夠做更多具有更高准入門檻的高端產品。所以我認為這是我們試圖與中國同行做出的一種差異化，中國同行往往仍然在低端電視和低端智能手機領域，相比之下，平板電腦和顯示器筆記本電腦，當然還有汽車對他們來說更難。所以我認為是的，威脅總是存在的，幾十年來中國的競爭一直是我們的威脅。但我認為，現在，我想，我們更擔心代工限製而不是中國競爭，因為我認為我們看到，與當地競爭對手仍有一些差異化，我們的客戶也是如此。我認為他們也會將像 Himax 這樣的人與他們的中國供應商放在不同種類的產品上。

This concludes our Q&A session. I will now turn the call back over to Jordan.

我們的問答環節到此結束。我現在將把電話轉回給喬丹。

As a final note, Eric Li, our Chief IR 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，我們的首席投資者關係官 Eric Li 將維持投資者營銷活動並繼續參加投資者會議。我們將在它們出現時公佈細節。謝謝你，祝你有美好的一天。

Again, this concludes today's conference call. Thank you for participating. You may now disconnect.

同樣，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。