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In Short; An Undervalued Growth Story

Himax Technologies Inc. (HIMX US) is a fabless semiconductor company from Taiwan with leading display imaging processing technologies for smartphones, TVs, tablets, monitors, automotives and gaming. Current developments in the semiconductor industry have laid the ground for a margin expansion from around 20% to over 31% in Q4 of 2020 and 40% in Q1 of 2021. The resulting expected revenue growth for 2021 will increase EPS est. to between USD 1.20 to USD 1.50 according to various analyst sources.

Most analysts expect the positive trend to remain for at least two years, keeping in mind a strong demand for displays, smartphones, tablets, computers as well as a strong recovery in the automotive sector. Himax is furthermore engaged in smart sensing through smart AI devices and micro displays: two growing markets which offer a great opportunity for Himax and in which Himax plays a major role already with technologies like Himax Ultralow Power CMOS Image Sensor (CIS), Himax Smart Sensing and LCOS for AR goggles.

Himax is well positioned for a longer period of higher earnings and accelerated growth by being a market leader in several technological areas which profit from a boosted demand. Although the stock has been volatile over the last six months, most indicators still point at a very modest valuation for a company with its positioning, marketshare and technological ability.

Major Growth Areas:

TDDI (Touch and Display Driven Integration): Himax's biggest growth driver is the TDDI Segment where the company is one of the leaders in the market. TDDI is replacing DDCI. The global demand is expected to increase by 33% to 1.13 billion units by 2025.

DDIC (Display Driver IC): Himax is a DDCI market leader in China and it expects revenue to increase steadily between 10 and 20%.

WLO and 3D sensing: Wafer-Level Optics (WLO) and Time-of-Flight (ToF) 3D sensing are important technologies to achieve optical high efficiency; Himax is one of the few companies to offer these solutions to the industry. Main cameras in smartphones and 3D sensing for facial recognition algorithm are seen as growth opportunities for the company according to its own projections.

CMOS Image Sensors: needed in web cameras and notebooks. All in all, revenues of the non-driver IC businesses are expected to increase by low teens in the first quarter 2021.

In our view this is a very interesting moment to connect with the company to discuss matters at hand and are pleased to offer the opportunity through a small group call.

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Background

Himax Technologies, Inc. (NASDAQ: HIMX) is a fabless semiconductor provider dedicated to display imaging processing technologies. Himax is a worldwide market leader in display driver ICs and timing controllers used in TVs laptops, monitors, mobile phones, tablets, digital cameras, car navigation, virtual reality (VR) devices and many other consumer electronics devices.

Additionally, Himax designs and provides controllers for touch sensor displays, in-cell Touch and Display Driver Integration (TDDI) single-chip solutions, LED driver ICs, power management ICs, scaler products for monitors and projectors, tailor-made video processing IC Solutions, silicon IPs and LCOS micro-displays for augmented reality (AR) devices and head-up displays (HUD) for automotive.

The company also offers digital camera solutions, including CMOS image sensors and wafer level optics which are used in a wide variety of applications such as mobile phone, tablet, laptop, TV, PC camera, automobile, security, medical devices and Internet of Things.

Founded in 2001 and headquartered in Tainan, Taiwan, Himax currently employs around 2,000 people from three Taiwan-based offices in Tainan, Hsinchu and Taipei and country offices in China, Korea, Japan and the US. With more than 3,000 patents in three continents on its technologies, Himax has retained its position as the leading display imaging processing semiconductor solution provider to consumer electronics brands worldwide.

You can find the Himax 2021 Presentation here