2021 Annual Report Dear Shareholders,
Reflecting on 2021, it was an unprecedented year highlighted by strong business momentum leading to
record-breaking sales and profit for Himax. Our tremendous success was derived from macro level tailwinds,
strategically secured foundry capacity, a steadfast focus on optimizing product mix and solidification of key
customer relationships. While the ongoing pandemic coupled with supply constraints did create a challenging
operating environment, it was also one that was favorable for IC vendors such as ourselves. The record gross
margin we achieved was a reflection of favorable IC pricing, improved product mix and increased contribution
from high margin product lines amidst tight foundry capacity.
Now to briefly review the year for each of our major business segments.
Among our three major DDIC product categories, small and medium-sized display drivers posted the highest
growth in 2021 where we enjoyed extraordinary business momentum, particularly in automotive and tablet
areas. Our automotive IC sales grew more than 110%, the fastest of all product lines in 2021. Robust demand
for our traditional automotive driver IC was backed by strong foundry capacity support while automotive
TDDI, where Himax is the industry front runner, saw accelerating project design-wins. We lead the market
with hundreds of TDDI design-wins already secured with world leading panel makers, Tier-1s and major
automotive OEMs with just a small portion of them currently in mass production. We are well positioned in
terms of foundry capacity and expect automotive TDDI to outgrow DDIC and become a major growth engine
for us going forward. On the back of the remarkable growth of 2021, we believe our automotive sales will
double again in 2022 with automotive becoming our top sales contributor.
As the dominant tablet driver IC supplier for literally all non-iOS tablet vendors, our TDDI solutions gained
traction broadly in customers’ next generation tablet products leading to 8 consecutive quarters of growth since
initial production in the first quarter of 2020. We continue to reap the benefits of the acceleration in TDDI
penetration for tablets following surging demand for larger sized displays, higher frame rate and active stylus
features. As tablet and smartphone share the same foundry process pool, we strategically allocated capacity in
favor of tablet given our dominant position. Consequently, our smartphone shipments have been capped by the
total capacity accessible to us and only in support of select end customers. Yet smartphone sales still enjoyed
decent growth in 2021.
For our large display driver business, ongoing work-from-home and e-learning boosted both our monitor and
notebook display IC sales in 2021, whereas TV sales also increased on a year over year basis despite the dip
in worldwide TV shipments during the second half of the year. We continue to position our product lineups
towards high frame rate and high resolution technologies to fulfill end customers’ pursuit of visual enjoyment.
We also continued to increase market penetration with our integrated solution of high-end Tcon and drivers into
4K/8K TV, gaming monitor and low power notebook markets.
For OLED display, Himax continued to gear up for the AMOLED driver IC and Tcon development in
partnership with major Chinese and Korean panel makers in various applications. We commenced with
production of a flexible AMOLED total solution for a customer’s flagship EV model at the end of 2021.
Our AMOLED for tablet entered into mass production in early 2022, where we provide both AMOLED
driver and Tcon as the sole supplier for a leading tablet customer. For smartphone, we expect larger sales
contribution starting in 2023 and have secured meaningful capacity fully booked up by leading panel makers.
Our non-driver IC business made healthy strides during 2021. Tcon sales more than doubled amidst the
growing demand for high frame rate and high-resolution displays in 4K/8K TV, high frame rate gaming
monitor, low power notebook, and local dimming Tcon for automotive. Meanwhile, we are highly encouraged
by the success we have made with our ultralow power AI image sensing technology that incorporates
Himax’s proprietary AI processor, always-on CMOS image sensor, and visual sensing tinyML AI algorithm.
Our AI image sensing was adopted in a range of new notebook models from Dell where our solution
commenced production during the end of 2021. Additionally, we engaged with various AI developers and SI
companies to increase adoption of our AI solution in a broad range of applications including automatic meter
reading, home appliances, automotive, panoramic video conferencing, and medical, among others, where
some of them are slated for production in 2022.
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Finally, for our optical related businesses, WLO, LCoS and 3D sensing. The heightened interest in the
metaverse and immersive technologies has led to ongoing inquiries and collaborations with tech giants for
these three technologies in areas such as Front-Lit LCoS microdisplay for AR glasses, controller-free gesture
recognition, eye-tracking and 3D reconstruction for AR/VR devices. With years of research and development,
a strong product portfolio, production history and key partnerships, Himax is poised to play a key role in
enabling metaverse devices.
Looking ahead into 2022, global markets are becoming more dynamic with limited visibility into certain
areas such as consumer electronics in view of China lockdowns, rising inflation and geographical conflict.
However, we remain upbeat about our growth prospects, backed by our automotive, high-end Tcon, OLED
and ultralow power AI image sensing businesses which we feel confident will stay strong regardless of the
macroeconomic concerns. We remain committed to investing in innovative and advanced technologies in
order to strengthen our market leadership, broaden and diversify our market reach and create long-term
shareholder value.
I am grateful for the support of our shareholders, customers, partners, and employees, and look forward with
confidence to having a great year in 2022.
Sincerely,
Jordan Wu
President and CEO
Himax Technologies, Inc.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report _______________
For the transition period from ________________ to ________________
Commission file number: 000-51847
HIMAX TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
CAYMAN ISLANDS
(Jurisdiction of incorporation or organization)
NO. 26, ZIH LIAN ROAD
SINSHIH DISTRICT, TAINAN CITY 74148
TAIWAN, REPUBLIC OF CHINA
(Address of principal executive offices)
Jessica Pan
Chief Financial Officer
Telephone: +886-6-505-0880
E-mail: jessica_pan@himax.com.tw
Facsimile: +886-6-507-0038
No. 15, Zih Lian Road
Sinshih District, Tainan City 74148
Taiwan, Republic of China
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Ordinary Shares, par value $0.3 per
ordinary share
Trading Symbol
HIMX
Name of each exchange on which registered
The NASDAQ Global Select
Market Inc.*
*
representing such Ordinary Shares.
Not for trading, but only in connection with the listing on the NASDAQ Global Select Market, Inc. of American Depositary Shares
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Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the
close of the period covered by the annual report. 348,597,140 Ordinary Shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes No
x
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes No
x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes No
x
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File
required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files).
x
Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer Non-accelerated filer
Emerging growth company
x
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial
Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s
assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the
Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report.
x
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements
included in this filing:
U.S. GAAP International Financial Reporting Standards as issued Other
by the International Accounting Standards Board
x
If “Other” has been checked in response to the previous question, indicate by check mark which financial
statement item the registrant has elected to follow. Item 17 Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes No
x
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TABLE OF CONTENTS
_____________________
Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN CONVENTIONS
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3. KEY INFORMATION
3.A. [Reserved]
3.B. Capitalization and Indebtedness
3.C. Reason for the Offer and Use of Proceeds
3.D. Risk Factors
ITEM 4. INFORMATION ON THE COMPANY
4.A. History and Development of the Company
4.B. Business Overview
4.C. Organizational Structure
4.D. Property, Plant and Equipment
ITEM 4A. UNRESOLVED STAFF COMMENTS
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
5.A. Operating Results
5.B. Liquidity and Capital Resources
5.C. Research and Development
5.D. Trend Information
5.E. Critical Accounting Estimates
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A. Directors and Senior Management
6.B. Compensation
6.C. Board Practices
6.D. Employees
6.E. Share Ownership
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A. Major Shareholders
7.B. Related Party Transactions
7.C. Interests of Experts and Counsel
ITEM 8. FINANCIAL INFORMATION
8.A. Consolidated Statements and Other Financial Information
8.B. Significant Changes
ITEM 9. THE OFFER AND LISTING
9.A. Offer and Listing Details
9.B. Plan of Distribution
9.C. Markets
9.D. Selling Shareholders
9.E. Dilution
9.F. Expenses of the Issue
ITEM 10. ADDITIONAL INFORMATION
10.A. Share Capital
10.B. Memorandum and Articles of Association
10.C. Material Contracts
10.D. Exchange Controls
10.E. Taxation
10.F. Dividends and Paying Agents
10.G. Statement by Experts
10.H. Documents on Display
10.I. Subsidiary Information
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12.A. Debt Securities
12.B. Warrants and Rights
12.C. Other Securities
12.D. American Depositary Shares
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
USE OF PROCEEDS
ITEM 15. CONTROLS AND PROCEDURES
ITEM 16. [RESERVED]
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16.A. Audit Committee Financial Expert
16.B. Code of Ethics
16.C. Principal Accountant Fees and Services
16.D. Exemptions from the Listing Standards for Audit Committees
16.E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
16.F. Change in Registrant’s Certifying Accountant
16.G. Corporate Governance
16.H. Mine Safety Disclosure
16.I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
ITEM 17. FINANCIAL STATEMENTS
ITEM 18. FINANCIAL STATEMENTS
ITEM 19. EXHIBITS
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report on Form 20-F contains “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), that involve significant risks and uncertainties. Although these forward-looking
statements, which may include statements regarding our future results of operations, financial condition, or business
prospects, are based on our own information and information from other sources we believe to be reliable, you should
not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report.
The words “anticipate,” “believe,” “expect,” “intend,” “plan,” “estimate” and similar expressions, as they relate to
us, are intended to identify a number of these forward-looking statements. Our actual results of operations, financial
condition or business prospects may differ materially from those expressed or implied in these forward-looking statements
for a variety of reasons, including, among other things and not limited to, our anticipated growth strategies, our and
our customers’ future business developments, results of operations and financial condition, our ability to develop new
products, the future growth and pricing trend of the display driver markets, the future growth of end-use applications
that use flat panel displays, particularly TFT-LCD panels, development of alternative flat panel display technologies,
market acceptance and competitiveness of the driver and non-driver products developed by us, our ability to protect
intellectual property, changes in customer relations and preference, shortage in supply of key components, our ability
to collect accounts receivable and manage inventory, changes in economic and financial market conditions, and other
factors. For a discussion of these risks and other factors, please see “Item 3.D. Key Information—Risk Factors.”
CERTAIN CONVENTIONS
Unless otherwise indicated, all translations from U.S. dollars to NT dollars in this annual report were
made at a rate of $1.00 to NT$27.74, the exchange rates set forth in the H.10 weekly statistical release of
the Federal Reserve System of the United States (the “Federal Reserve Board”) on December 30, 2021. No
representation is made that the NT dollar amounts referred to herein could have been or could be converted
into U.S. dollars at any particular rate or at all. On March 18, 2022, the noon buying rate was $1.00 to
NT$28.35.
Unless otherwise indicated, in this annual report,
“ADSs” refers to our American depositary shares, each of which represents two ordinary shares;
“ADRs” refers to the American depositary receipts that evidence our ADSs;
“AIoT” refers to Artificial Intelligence & Internet of Things;
“AMOLED” refers to active matrix organic light-emitting diode;
“AR” refers to the augmented reality;
“ASIC” refers to application specific integrated circuit;
“a-Si” refers to amorphous silicon;
“CMOS” refers to complementary metal oxide semiconductor;
“edge computing” refers to a distributed computing paradigm which brings data computation closer to the
location it is needed, to reduce power consumption needed for data computation, improve response time and
save bandwidth;
“head-mounted-display” refers to a display device, worn on the head or as part of a helmet, that has a small
display optic in front of one or each;
“Himax Taiwan” refers to Himax Technologies Limited, our wholly owned subsidiary in Taiwan and our predecessor;
“IC” refers to integrated circuit;
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“IFRS” refers to The International Financial Reporting Standards as issued by the International Accounting
Standards Board;
“IGZO” refers to indium gallium zinc oxide;
“Innolux” refers to Innolux Corporation, its predecessor and consolidated subsidiaries, unless the context
otherwise requires;
“large-sized panels” refers to panels that are typically above ten inches in diagonal measurement; All sizes
of TV, monitor and notebook displays are identified as large.
“LCoS” refers to liquid crystal on silicon;
“LED” refers to light-emitting diode;
“LTPS” refers to low temperature poly silicon;
“MEMS” refers to micro-electro mechanical systems;
“OLED” refers to organic light-emitting diode;
“PRC” or “China” for purposes of this annual report refers to the People’s Republic of China, excluding
the special administrative regions of Hong Kong and Macau;
“processed tape” refers to polyimide tape plated with copper foil that has a circuit formed within it, which
is used in tape-automated bonding packaging;
“ROC” or “Taiwan” refers to the island of Taiwan and other areas under the effective control of the Republic
of China;
“RSUs” refers to restricted share units;
“semiconductor manufacturing service providers” refers to third-party wafer fabrication foundries, gold
bumping houses, and assembly and testing houses;
“shares” or “ordinary shares” refer to our ordinary shares, par value $0.3 per share;
“SLiM” refers to Structured Light Imaging Module, which is Himax homegrown structured light-based 3D
sensing total solution;
“small and medium-sized panels” refers to panels that are typically around ten inches or less in diagonal
measurement. All sizes of smartphone, automotive and tablet displays are identified as small and medium;
“Structured Light” refers to a 3D infrared structure light projector, which is composed of a laser light source,
a collimated lens and a diffractive optics element (DOE);
“TDDI” refers to touch display driver integrated circuit for advanced in cell touch display;
“TFT-LCD” refers to thin film transistor liquid crystal display that may adopt a-Si, IGZO or LTPS technologies;
“ToF” refers to a time-of-flight (ToF) 3D camera works by illuminating the scene with a modulated light
source, and observing the reflected light;
“Ultralow power AI image sensing” refers to Company’s AI image sensing solution which includes Himax’s
proprietary computer vision AI processor, ultralow power Always-On CMOS image sensor and AI
algorithms from third-party or Emza, Himax’s fully-owned subsidiary – all equipped with ultralow
power design;
“VGA” refers to Video Graphics Array;
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“VR” refers to the virtual reality;
“wafer level optics” or “WLO” are optical products manufactured using semiconductor process on wafers;
“we”, “us”, “our company”, “our”, “the Company” and “Himax” refers to Himax Technologies, Inc., its
predecessor entities and subsidiaries;
“WE-I Plus” refers to an AI accelerator-embedded ASIC platform solution for application developers to
develop and deploy CNN-based machine learning models on AIoT applications including smart home
appliances, surveillance systems, etc.;
all references to “New Taiwan dollars”, “NT dollars” and “NT$” are to the legal currency of the ROC; and
all references to “dollars”, “U.S. dollars” and “$” are to the legal currency of the United States.
On August 10, 2009, we effected: (i) a stock split in the form of a stock dividend of 5,999 ordinary shares
for each ordinary share held by shareholders of record, followed by a consolidation of every 3,000 ordinary
shares into one ordinary share; (ii) a change of the par value of our ordinary shares from $0.0001 each to
$0.3 each; and (iii) a change in our ADS ratio from one ADS representing one ordinary share to one ADS
representing two ordinary shares. See “Item 7.A. Major Shareholders and Related Party Transactions—Major
Shareholders” for more information. Unless otherwise indicated, all shares, per share and share equity data in
this annual report have been retroactively adjusted to reflect the effect of the stock split and the change in par
value for all periods presented.
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
3.A. [Reserved]
3.B. Capitalization and Indebtedness
Not applicable.
3.C. Reason for the Offer and Use of Proceeds
Not applicable.
3.D. Risk Factors
Risks Relating to Our Financial Condition and Business
Our suppliers may have increasing bargaining power as a result of industry consolidation, which could result
in an increase in our average unit cost and a decrease in our profit margin.
There may be industry consolidation among our suppliers. Merger and acquisition activities will likely increase
the size and market power of the relevant suppliers and reduce the number of suppliers we could use under a
simpler supplier chain. Therefore, suppliers could be in a better position to bargain for higher prices, longer
contract terms, higher deposit and/or higher contract breach penalties for their services and products, which could
result in an increase in our average unit cost and/or penalty expenses. If we are unable to transfer any increase in
average unit cost to our customers, our gross margin and results of operations could be adversely affected.
We derive the majority of our net revenues from sales to the TFT-LCD panel industry, which is highly cyclical
and subject to price fluctuations. Such cyclicality and price fluctuations could negatively impact our business
or results of operations.
In 2020 and 2021, 85.2% and 88.0% of our revenues, respectively, were attributable to display drivers that
were incorporated into TFT-LCD panels. We expect to continue to substantially depend on sales to the TFT-LCD
panel industry for the foreseeable future. The TFT-LCD panel industry is intensely competitive and is vulnerable
to cyclical market conditions. The average selling prices of TFT-LCD panels generally decline with time as a
result of, among other factors, drop in demand for end products that incorporate TFT LCD panels, new capacity
ramp-up or factory utilization improvement, technological advancements and cost reduction with the exception of
the new high end and high-resolution products.
The merger of certain of our major customers could result in an increase in their bargaining power and
therefore subject us to additional downward pricing pressure. We cannot assure you that in such periods in
which we experience significant downward pricing pressure, we could sufficiently reduce costs to completely
offset the loss of revenues. In addition, a severe and prolonged industry downturn could also result in
higher risks to the collectability of our accounts receivable, the marketability and valuation of inventories,
the impairment of our long-term non-financial assets, which consist of property, plant and equipment and
intangible assets, and the stability of our supply chain. As a result, the cyclicality of the TFT-LCD panel
industry could adversely affect our revenues, cost of revenues and results of operations.
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Our strategy of expanding our product offerings to non-driver products may not be successful.
We have devoted, and intend to continue to devote, financial and management resources to non-driver products’
development, manufacturing and marketing to further diversify our product portfolio and improve gross margin
as non-driver products may have higher gross margin than our driver products. Our non-driver technologies cover
LCoS microdisplay, Always-on-Sensor (“AoS”) CMOS image sensor, wafer level optics (“WLO”), 3D sensing
and ultralow power AI image sensing, etc.
For our LCoS technology, at present our main focus areas for LCoS business are AR goggle devices and
head-up-displays (HUD) for automotive. AoS CMOS image sensor is a specific sensor which consumes only
several micro watts to perform people detection, eyeball tracking and other features. The new sensor architectures,
readout, pixel, and the corresponding slim algorithms are integrated together to contribute the always-on feature.
For smartphone 3D sensing, we aggressively work with our partners from VCSEL, sensor, module and OEM
fields, jointly participate in major ongoing Android smartphone projects covering time-of-flight (ToF) for
world-facing camera. On non-smartphone 3D-sensing, with our Structured Light 3D SLiM solution and 3D
decoder ASIC key component, we aim at emerging markets such as smart door lock, facial recognition-based
e-payment, business access control, biomedical inspection device and eye-tracking applications. For our ultralow
power AI image sensing solution, we focus on providing leading edge AI solutions, in both total solution and
discrete key component, to meet diversified customer and application needs. Himax’s ultralow power AI image
sensing solution integrates in-house AoS sensor, proprietary edge AI processor and AI-based algorithm from third
party or Emza, one of Himax’s subsidiaries. Our AI image sensing solution is growing quickly in a broad range of
applications, covering notebook, home appliances, utility meter, automotive, battery-powered surveillance camera,
panoramic video conferencing, and medical. In addition, we also collaborate closely with edge-to-cloud platform
partners in areas such as smart city, smart office, healthcare, agriculture, retail and factory automation.
Developing and commercializing each of our non-driver products requires a significant amount of
management, engineering and monetary resources. For example, we have established certain in-house
facilities for key manufacturing processes of our non-driver products including LCoS microdisplay, WLO
and 3D sensing. Numerous uncertainties exist in developing new products and we cannot assure you that we
will be able to develop our non-driver products successfully. We may underestimate the amount of capital,
personnel and other resources required to develop and commercialize our non-driver products. We may also
overestimate the market potential of the end products that are utilizing or will utilize our non-driver products.
The failure or delay in the development, production or commercialization of any of our non-driver products,
the occurrence of any product defects or design flaws, or the low market acceptance of or demand for either
of our products or the end devices using our products may adversely affect the impairment of our long-term
non-financial assets, which consist of property, plant and equipment and intangible assets, for non-driver
products, our results of operations and growth prospects. The lower capacity utilization rate of our factories
will negatively affect our gross margin and our results of operations. Moreover, we will be subject to higher
ramp-up expenses in the early stage of mass production of our non-driver products.
The concentration of our revenues and accounts receivable and the extension of payment terms for certain of
our customers exposes us to increased credit risk and could harm our operating results and cash flows.
In 2021, Customer A and its affiliates accounted for 32.1% of our revenues. Our two largest customers
together accounted for over 50% of our revenues in 2021. See “Item 5.A. Operating Results—Description
of Certain Statements of Profit or Loss Line Items—Revenues” for our revenues description. Our results of
operations and financial condition would be significantly linked to the success and purchase policy of any
such customer. As of December 31, 2021, our accounts receivable from Customer A and its affiliates were
$160.1 million, which represented approximately 39.0% of our accounts receivable, net. The concentration
of our accounts receivable exposes us to increased credit risk. Moreover, we have at times agreed to extend
the payment terms for certain of our customers. As a result, any loss of or a sharp reduction in any such
customer’s sales, a default by any such customer, a prolonged delay in the payment of accounts receivable
or the extension of payment terms for our customers could adversely affect our cash flow, liquidity and our
operating results.
Our customers may experience a decline in profitability or may not be profitable at all, which could adversely
affect our results of operations and financial condition.
TFT-LCD panel manufacturers, including our customers, experience significant pressure on prices and profit
margins, due largely to growing industry capacity and fluctuations in demand for TFT-LCD panels. Some panel
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manufacturers have greater access to capital or greater production, research and development, intellectual
property, marketing or other resources than our customers, who may not be able to compete and sustain their
market positions. Further, our customers’ business performance may fluctuate significantly due to a number
of factors, many of which are beyond their control, including and not limited to: (1) consumer demand and
the general economic conditions, such as recent geopolitical tensions relating to invasion of Ukraine by
Russia; (2) the cyclical nature of the TFT-LCD industry in average selling price fluctuations, as well as its
downstream industries; (3) the speed at which TFT-LCD panel manufacturers expand production capacity; (4)
brand companies’ continued needs for original equipment manufacturing services provided by TFT-LCD panel
manufacturers; (5) access to raw materials, components, equipment and utilities on a timely and economical
basis; (6) technological changes; (7) the rescheduling and cancellation of large orders; (8) access to funding on
satisfactory terms; and (9) fluctuations in the currencies of TFT-LCD panels exporting countries against the U.S.
dollar.
We depend on sales of display drivers used in TFT-LCD panels, and the limited potential for further growth in
both the market size of display drivers and the market share of our display drivers or the absence of continued
market acceptance of our display drivers could limit our growth in revenues or harm our business.
In 2020 and 2021, 85.2% and 88.0% of our revenues, respectively, from the sale of display drivers used
for large, small and medium-sized applications, and we expect to continue to derive a substantial portion of
our revenues from these or related products. As the display driver industry is relatively mature, there may be
limited potential for the overall display drivers market to grow and for us to further grow our market share and
revenues.
Failure to grow our unit shipments for display drivers, coupled with a general decline in the average
selling prices, could adversely and materially affect our results of operations. See also “—Risks Relating
to Our Industry—The average selling prices of our products could decrease rapidly, which may negatively
impact our revenues and operating results”. Therefore, the continued market acceptance of our display
drivers is critical to our future success. Failure to grow or maintain our revenues generated from the sales of
display drivers could adversely and materially affect our results of operations and financial condition.
We face risks related to public health epidemics, including the recent novel coronavirus outbreaks.
Our financial condition and results of operations may be adversely affected if a public health epidemic
interferes with our ability, or that of our employees, suppliers, customers and other business partners to
perform our and their respective responsibilities and obligations related to the conduct of our business. Since
November 2019, a novel strain of coronavirus (Covid-19) has spread across the world. To date, the Covid-19
outbreak has caused significant disruption to the financial markets and international supply chains, which can
substantially depress global business activities, restrict access to capital and result in a long-term economic
downturn that would negatively affect our operating results.
As a result of the pandemic, numerous unprecedented measures are in place to try to contain the virus,
such as travel restrictions, quarantines, stay-at-home and social distancing orders, and shutdowns. These
measures may further impact our workforce and operations, the operations of our customers and suppliers.
The ultimate impact and efficacy of measures and potential future measures is currently unknown. We
have experienced and will experience disruptions to our business operations resulting from quarantines,
self-isolations, or other restrictions on the ability of our employees to perform their jobs that may impact our
ability to develop and design our products in a timely manner. Our suppliers, sub-contractors and customers
have been and will be disrupted by quarantines and social distancing measures, office and factory closures,
disruptions to ports and other shipping infrastructure, border closures, or other travel-related restrictions.
Depending on the magnitude of such effects on our suppliers’ manufacturing, assembling, and testing
operations, our supply chain, manufacturing and product shipments will be delayed, which could adversely
affect our business, operations and customer relationships.
We had a strong financial performance in 2021 despite the ongoing effects of the pandemic, coupled
with foundry capacity shortages. Yet, those conditions also provided favorable conditions for IC
vendors such as us, with overall market demand far outpacing supply. The gross margin year-over-year
improvement was mainly a reflection of more favorable IC pricing resulted from the tight foundry capacity
and product mix derived from high margin product lines on top of rising material costs across foundry,
assembly and testing, of which all undergoing severe capacity shortages. Under limited capacity situation,
we are unable to meet all demands, and strategically allocate our limited capacity toward the products
with better margins. However, with a growing number of vaccinations or after the pandemic is over, the
surge demand, the better pricing, the more favorable product mix as well as the better gross margin we
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currently enjoy may fade away or decrease progressively, which could materially and adversely affect
our results of operations and financial condition.
Extra export license may be needed for certain product or technology for certain customers. These licenses are
regulated by Export Administration Regulations (EAR) which is administered by the U.S. Department of
Commerce’s Bureau of Industry and Security (BIS)
Our business is subject to various international laws and legal requirements from the U.S. Export
Administration Regulations and other jurisdictions’ applicable executive orders in packaging, product content,
labor and import/export regulations, etc. These laws, regulations and orders are complex, may change frequently and
with limited notice, have generally become more rigorous and have intensified under the current U.S. administration,
especially in recent geopolitical tensions with China. We may be required to incur significant expense to comply
with, or to remedy violations of, these regulations. In addition, if our customers fail to comply with these regulations
or our customers are sanctioned, or added to the Entity List of EAR by BIS, we may be required to suspend sales to
these customers, which could damage our reputation and materially and adversely impact our results of operations. If
our foundry, tape, assembly and testing suppliers fail to comply with these regulations or our suppliers are sanctioned
or added to the Entity List of EAR by BIS, we may suspend their services and have to obtain alternative services in
a timely manner. Considering the amount of time, it usually takes to qualify assembly and testing houses, we may
experience significant delays in product shipments. Any problems that we may encounter with the delivery, quality or
cost of our products could damage our reputation and result in a loss of customers and orders. Moreover, the scarcity
and importance of services may necessitate us making investments in foundry, tape, assembly and testing service
providers in order to secure capacity, which would require us to substantially increase our capital outlays and possibly
raise additional capital, which may not be available to us on satisfactory terms, if at all.
Technological innovation may reduce the number of display drivers typically required for each panel, thereby
reducing the number of display drivers we are able to sell per panel. If such a reduction in demand is not offset
by the general growth of the industry, our market share or average selling prices, or our revenues may decline.
In order to reduce costs, TFT-LCD panel manufacturers generally seek to have display drivers with higher
channel counts and new panel designs to reduce the number of display drivers required for each panel. We have
been developing such innovative and cost-effective display driver solutions in order to grow our market share,
attract additional customers, increase our average selling prices and capture new design wins. However, we cannot
assure you that we will successfully achieve these goals. If we fail to do so and the number of display drivers
typically required per panel decreases thereby reducing our unit shipments, our revenues may decline. TFT-LCD
panel manufacturers have developed several panel designs to reduce the usage of display drivers, including gate in
panel, or GIP, amorphous silicon gate, or ASG, or simply gateless designs, which integrate the gate driver function
onto the glass and eliminate the need for gate drivers, as well as dual gate and triple gate panel designs, which
would largely reduce the usage of source drivers. If such designs or technologies become widely adopted, demand
for our display drivers may decrease significantly, which would adversely and materially affect our results of
operations.
The strategic relationships between certain of our competitors and their customers and the development of
in-house capabilities by TFT-LCD and AMOLED panel manufacturers may limit our ability to expand our
customer base and our growth prospects.
Certain of our competitors have established or may establish strategic or strong relationships with TFT-LCD
panel manufacturers that are also our existing or potential customers. Marketing our display drivers to such
TFT-LCD panel manufacturers that have established relationships with our competitors may be difficult.
Moreover, several TFT-LCD panel manufacturers have in-house design capabilities and therefore may not need
to source semiconductor products from us. If our customers successfully develop in-house capabilities to design
and develop semiconductors that can substitute for our products, they would likely reduce or stop purchasing our
products. To sell new products, we will likely need to target new market segments and new customers with whom
we do not have current relationships, which may require different strategies and may present difficulties that
we have not encountered before. Failure to broaden our customer base and attract new customers may limit our
growth prospects.
As AMOLED offer brighter color, near-perfect-black, less power consumption and are thinner and lighter
than TFT-LCD, it gradually penetrates the mid to high-end TFT-LCD market, especially the smartphone market.
AMOLED display and related DDICs have been dominated by Korean companies. The marketplace is increasing
utilization of the AMOLED display for smartphone and other consumer electronics due to expanded AMOLED
capacity. We continue to gear up for the AMOLED driver IC development in partnership with major Chinese and
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Korean panel makers. In the first quarter of 2022, our flexible AMOLED driver and Tcon for automotive application
has successfully ramped up for a customer’s flagship EV model. In addition, our AMOLED for tablet is expected to
commence mass production in 2022 with Chinese panel makers. As for smartphone, we continue to commit R&D
resources to AMOLED driver ICs through engagement with top tier customers. However, we could not assure you
the success of our AMOLED driver IC as we are unable to penetrate into the mass volume existing Korean supplier
chain and/or find new AMOLED panel manufactures to design-wins our solutions into. AMOLED process maturity
for the new manufactures and the possible specification change due to the immaturity of the AMOLED will also be a
hurdle to our AMOLED share gain and success.
We depend primarily on third-party foundries to manufacture our wafers, and any failure to obtain sufficient
foundry capacity or loss of any of the foundries we use could significantly delay our ability to ship our products,
causing us to lose revenues and damage our customer relationships.
Access to foundry capacity is crucial to our business because we do not manufacture our own wafers, instead
relying primarily on third-party foundries. The ability of a foundry to manufacture our semiconductor products
is limited by its available capacity. Access to capacity is especially important due to the limited availability of
the high-voltage CMOS process technology required for the manufacture of wafers used in display drivers. If
the primary third-party foundries that we rely upon are not able to meet our required capacity, or if our business
relationships with these foundries are adversely affected, we would not be able to obtain the required capacity to
meet increasing demand for our products. We may have to seek alternative foundries, which may not be available
on commercially reasonable terms, or which may expose us to qualifying-new-foundry risks, as further discussed
below.
We use several foundries for different semiconductor products, and certain of our products are manufactured at
only one of these foundries. If any one of the foundries is unable to provide the required capacity to us, or does not
deliver in a timely manner, or the quality or pricing terms are not acceptable to us, or any of the foundries experience
financial difficulties or insolvency risks due to the impact of the global economic turmoil or any company-specific
reasons or otherwise, if their operations are damaged or if there is any other disruption, directly or indirectly, of their
foundry operations and we cannot qualify an alternative foundry in a timely manner, we could experience significant
delays in receiving the product being manufactured by that foundry or incur additional costs to obtain substitutes,
or interruption in our supply of the affected products. If we choose to use a new foundry or process technology for
a particular semiconductor product, it will take us several quarters to qualify the new foundry or process before we
can begin shipping. If we cannot qualify a new foundry in a timely manner, we may experience and incur damages
as above mentioned and harm our customer relationships.
As a result of outsourcing the manufacturing of our wafers, we face several significant risks, including: (1)
failure to secure manufacturing capacity, or being able to obtain required capacity only at higher costs; (2) risks of
our proprietary information leaking to our competitors through the foundries we use; (3) limited control of delivery
schedules, quality assurance and control, manufacturing yields and wafer costs; (4) the unavailability of, or potential
delays in obtaining access to, key process technologies; and (5) financial risks of certain of our foundry suppliers.
To manufacture our display drivers used in TFT-LCD panels, we require foundries with high-voltage CMOS
manufacturing process capacity. As a result, our dependence on high-voltage CMOS foundries presents the
following, additional risks: (1) potential capacity constraints faced by the limited number of high-voltage CMOS
foundries and the lack of investment in new and existing high-voltage CMOS foundries; (2) difficulty in attaining
consistently high manufacturing yields from high-voltage CMOS foundries; (3) delay and time required to qualify
and ramp up production at new high-voltage CMOS foundries; and (4) price increases.
As a result, we may be required to use foundries with which we have no established relationships, which could
expose us to potentially unfavorable pricing, unsatisfactory quality or insufficient capacity allocation. Moreover,
the scarcity of high-voltage foundry capacity may necessitate us making investments in foundries in order to
secure capacity, which would require us to substantially increase our capital outlays and possibly raise additional
capital, which may not be available to us on satisfactory terms, if at all.
Since 2020, due to the pandemic lockdown, the work-from-home and learn-from-home new lifestyles triggered
increasing demands for display and display drivers related products. The surging demand in display drivers caused the
severe foundry capacity shortage, while the industry has no major expansion plan especially on the mature nodes we are
primarily anchored to. To address the continuing foundry capacity shortage worldwide, we have entered into strategic
agreements with our foundry partners in order to secure capacity to fulfill our business needs. We expect to enter into
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more additional strategic agreements to secure additional foundry capacity. Under these strategic agreements, we are
committed to purchasing a specific volume at fixed or variable prices. However, for both pricing agreements, there can
be no assurance that these prices provided in the strategic agreements with our foundry partners will always remain
competitive during the contract term. For example, in the event that the global semiconductor market changes due to
foundry capacity expansion and/or shrunken customer demand, the fixed prices we agree to pay our foundry partners
may become significantly higher than the then prevailing market price. The situation could materially adversely
impact our pricing strategies, competitive position, profitability and results of operation. We may also be subject
to contractual penalties if we are unable to purchase the committed volume from our foundry partners. In addition,
since these strategic agreements with our foundry partners typically require us to make prepayments or refundable
deposits to such foundry partners, our cash flow, liquidity and financial condition could be adversely affected.
Our inability to secure sufficient capacity from any of our third-party tape, assembly and testing houses at reasonable
and competitive prices could disrupt our shipments, harm our customer relationships and reduce our sales.
Access to third-party tape, assembly and testing capacity is critical to our business because we do not have
in-house tape, assembly and testing capabilities for commercial production and instead rely on third-party service
providers. Access to these services is especially important to our business because display drivers require specialized
tape, assembly and testing services. A limited number of third-party tape, assembly and testing houses tape, assemble
and test substantially all of our current products. There has been an increased level of industry consolidation among
our suppliers in recent years. Therefore, suppliers could be in a better position to bargain for higher prices, longer
contract terms, higher deposit and/or higher contract breach penalties for their services and products, which could
result in an increase in our average unit cost and/or penalty expenses. We do not have binding long-term supply
arrangements with tape, assembly and testing service providers that guarantee us access to our required capacity.
If the primary tape, assembly and testing service providers that we rely upon are not able to meet our requirements
in price, quality, and service, or if our business relationships with these service providers were adversely affected,
we would not be able to obtain the required capacity and would have to seek alternative providers, which may
not be available on commercially reasonable terms, or at all. As a result, we do not directly control our product
delivery schedules, tape, assembly and testing costs, and quality assurance and control. If any of these third-party
tape, assembly and testing houses experiences capacity constraints, financial difficulties, suffers any damage to its
facilities or if there is any disruption of its assembly and testing capacity, we may not be able to obtain alternative
assembly and testing services in a timely manner. Because of the amount of time, we usually take to qualify
assembly and testing houses, we may experience significant delays in product shipments if we are required to find
alternative sources. Any problems that we may encounter with the delivery, quality or cost of our products could
damage our reputation and result in a loss of customers and orders. Moreover, the scarcity and importance of tape,
assembly and testing services may necessitate us making investments in tape, assembly and testing service providers
in order to secure capacity, which would require us to substantially increase our capital outlays and possibly raise
additional capital, which may not be available to us on satisfactory terms, if at all.
Shortages of key components for our customers’ products could decrease demand for our products.
Shortages of components and other materials that are critical to the design and manufacture of our customers’
products may limit our sales. These components and other materials include, but are not limited to, color filters,
backlight modules, polarizers, printed circuit boards and glass substrates. In the past, companies that use our
products in their production have experienced delays in the availability of key components from other suppliers.
In addition, component manufacturers may not be able to increase or maintain their component supply because
of labor shortage in China or otherwise and may shut down certain of their capacity from time to time because of
weak demand, which may increase the instability of timely delivery and the risk of shortage of components. Such
shortages of components and other materials critical to the design and manufacture of our customers’ products may
cause a slowdown in demand for our products, resulting in a decrease in our sales and adversely affecting our results
of operations. In addition, as a result of uncertain demand conditions, our customers may hesitate to build inventory
on hand and tend to release orders on short notice.
We rely on the services of our key personnel, and if we are unable to retain our current key personnel and hire
additional personnel, our ability to design, develop and successfully market our products could be harmed.
We rely upon the continued service and performance of a relatively small number of key personnel, including
Jordan Wu, our president and chief executive officer, and Dr. Biing-Seng Wu, our chairman, and certain engineering,
technical and senior management personnel, in particular, who are critical to our corporate management, business
operation strategy, operation execution, future technological and product innovations. Competition for these
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personnel is intense in the semiconductor industry in Taiwan. Moreover, our future success depends on the expansion
of our senior management team and the retention of key employees. Any of our key employees could leave our
company with little or no prior notice in applicable jurisdictions and could then work with a competitor. In addition,
we do not have “key person” life insurance policies covering any of our employees. The loss of any key personnel
or our inability to attract or retain qualified personnel, whether engineers or others, could delay the development and
introduction of new products and would have a material adverse effect on our ability to sell our products and may
impact our overall business and growth. We may also incur increased operating expenses and be required to divert
the attention of other senior executives away from their original duties to recruiting replacements for key personnel.
If we fail to forecast customer demand accurately, we may have excess or insufficient inventory, which may
increase our operating costs and harm our business.
The lead time required by the semiconductor manufacturing service providers is typically longer than the lead
time that our customers provide for delivery of our products to them. To ensure availability of our products for our
customers, we will typically ask our semiconductor manufacturing service providers to start manufacturing our
products based on forecasts provided by our customers in advance of receiving their purchase orders. However,
these forecasts are not binding purchase commitments, and we do not recognize revenues until they are delivered
to customers. Moreover, for the convenience of our customers, we may agree to ship our inventory to warehouses
located near our customers, so that our products can be delivered to customers more quickly. In such cases, we will
not recognize revenues until the control over a product is given to our customers based on the shipping terms. Hence,
we incur inventory and manufacturing costs in advance of anticipated revenues.
The anticipated demand for our products may not materialize; therefore, manufacturing based on customer
forecasts exposes us to risks of high inventory carrying costs, increased product obsolescence, and erosion of the
products’ market value. If we overestimate demand for our products or if purchase orders are cancelled or shipments
delayed, we may incur excess inventory that we cannot sell, or may have to sell at low profit margins or even at a
loss, which would harm our financial results. Conversely, if we underestimate demand, we may not have sufficient
inventory and may lose market share and damage customer relationships, which also could harm our business. These
inventory risks are exacerbated by the high level of customization of our products, which limits our ability to sell
excess inventory to other customers, which could eventually lead to write-down of these excess inventory.
If we do not achieve additional design wins in the future, our ability to grow will be limited.
Our future success depends on our customers designing our products into their products. To achieve design wins,
we must design and deliver cost-effective, innovative, reliable and integrated products for our customers’ needs.
A panel manufacturer may be reluctant to change its source of components due to the significant costs and time
associated with qualifying a new supplier. A design win is not a binding commitment by a customer to purchase our
products and may not result in large volume orders of our products. Rather, it is a decision by a customer to use our
products in the design process of that customer’s products. Accordingly, our failure to successfully design, develop
and introduce new products and product enhancements could harm our business, financial condition and results of
operations.
Our products are complex and may require modifications to resolve undetected errors or failures in order for
them to function with panels at the desired specifications, which could lead to higher costs, customer dispute,
a loss of customers or a delay in market acceptance of our products.
Our products are highly complex and may contain undetected errors or failures. Our products must operate
according to specifications with the other components used by our customers in their product manufacturing process.
If our products are delivered with errors or defects, we could incur additional development, repair or replacement
costs, and our credibility and the market acceptance of our products could be harmed along with possible liability
indemnification for defective product, customer disputes and lawsuits against us or our customers.
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Our highly integrated products are difficult to manufacture without defects. The existence of defects in our products
could increase our costs, decrease our sales and damage our customer relationships and our reputation.
The manufacture of our products that incorporate mixed analog and digital signal processing and embedded
memory technology is complex and it is difficult for semiconductor foundries to manufacture them completely
without defects. Minor deviations in the manufacturing process could cause substantial reduction in yield and
quality.
Defective products can be caused by design, defective materials or component parts, or manufacturing
difficulties. Thus, quality problems can be identified only by analyzing and testing our display drivers in a system
after they have been manufactured. Difficulties in achieving defect-free products due to the increasing complexity
of display drivers and the panel system may result in an increase in our costs and expenses, and delays in the
availability of our products. In addition, if the foundries that we use fail to deliver products of satisfactory quality in
the volume and at the price required, we will be unable to meet our customers’ demand or to sell those products at an
acceptable profit margin, which could adversely affect our sales and margins and damage our customer relationships
and our reputation.
We may not have long-term purchase commitments from our customers, which may result in significant
uncertainty and volatility with respect to our revenues and could materially and adversely affect our results of
operations and financial condition.
We may not have long-term purchase commitments from our customers; our sales are made on the basis of
individual purchase orders. Our customers may also cancel or defer purchase orders. Our customers’ purchase
orders may vary significantly from period to period, and it is difficult to forecast future order quantities. In the
event of a cancellation, postponement, or reduction of an order, we would likely not be able to reduce operating
expenses sufficiently so as to minimize the impact of the lost revenues. Alternatively, we may have excess
inventory that we cannot sell, which would harm our operating results. In addition, changes in our customers’
business may adversely affect the quantity of purchase orders that we receive by reducing or canceling their
orders of our products, and/or requesting higher-than-usual price concessions. We cannot assure you that any of
our customers will continue to place orders with us in the future. We also cannot assure you that the volume of our
customers’ orders will be consistent with our expectations when we plan our expenditures. Our results of operations
and financial condition may thus be materially and adversely affected. Additionally, purchase order cancelations or
negative alternation by customers may lead to a reduction in future earnings or cash flows subject to each event.
Our corporate actions are substantially controlled by officers, directors and affiliated entities who may take
actions that are not in, or may conflict with, our or our public shareholders’ interests.
As of February 28, 2022, Jordan Wu and Dr. Biing-Seng Wu (who are brothers) beneficially owned approximately
2.1% and 21.5% of our ordinary shares, respectively. For information relating to the beneficial ownership of our
ordinary shares, see “Item 7.A. Major Shareholders and Related Party Transactions—Major Shareholders.” These
shareholders, acting together, could exert substantial influence over matters requiring approval by our shareholders,
including electing directors and approving mergers or other business combination transactions. This concentration
of ownership may also discourage, delay or prevent a change in control of our company, which could deprive our
shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and might
reduce the price of our ADSs. Actions may be taken even if they were opposed by our other shareholders.
Assertions against us by third parties for infringement of their intellectual property rights could result in significant
costs and cause our operating results to suffer.
The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights and
positions, which results in protracted and expensive litigation for many companies. We have received, and expect
to continue to receive, notices of infringement of third-party intellectual property rights. We may receive claims
from various industry participants alleging infringement of their patents, trade secrets or other intellectual property
rights in the future. Any lawsuit resulting from such allegations could subject us to significant liability for damages
and invalidate our proprietary rights. These lawsuits, regardless of their success, would likely be time-consuming
and expensive to resolve and would divert management time and attention. Any potential intellectual property
litigation also could force us to do one or more of the following: (1) stop selling products or using technology or
manufacturing processes that contain the allegedly infringing intellectual property; (2) pay damages to the party
claiming infringement; (3) attempt to obtain a license for the relevant intellectual property, which may not be
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available on commercially reasonable terms or at all; and (4) attempt to redesign those products that contain the
allegedly infringing intellectual property with non-infringing intellectual property, which may not be possible.
The outcome of a dispute may result in our need to develop non-infringing technology or enter into royalty or
licensing agreements. We have agreed to indemnify certain customers for certain claims of infringement arising out
of the sale of our products. Any intellectual property litigation could have a material adverse effect on our business,
operating results or financial condition.
Our ability to compete will be harmed if we are unable to protect our intellectual property rights adequately.
We believe that the protection of our intellectual property rights is, and will continue to be, important to the
success of our business. We rely primarily on a combination of patents, trademarks, trade secrets and copyright
laws and contractual restrictions to protect our intellectual properties. These afford only limited protection. Despite
our efforts to protect our proprietary rights, unauthorized parties may attempt to obtain, copy or use information
that we regard as proprietary, such as product design and manufacturing process expertise. Our pending patent
applications and any future applications may not result in issued patents or may not be sufficiently broad to protect
our proprietary technologies. Moreover, policing any unauthorized use of our products is difficult and costly, and we
cannot be certain that the measures which we have implemented will prevent misappropriation or unauthorized use
of our technologies, particularly in foreign jurisdictions where the laws may not protect our proprietary rights as fully
as the laws of the United States. Others may independently develop substantially equivalent intellectual properties or
otherwise gain access to our trade secrets or intellectual properties. Our failure to protect our intellectual properties
effectively could harm our business.
We may undertake acquisitions or investments to expand our business that may pose risks to our business and
dilute the ownership of our existing shareholders, and we may not realize the anticipated benefits of these
acquisitions or investments.
As part of our growth and product diversification strategy, we will continue to evaluate opportunities to acquire
or invest in other businesses, intellectual property or technologies that would complement our current offerings,
expand the breadth of markets we can address or enhance our technical capabilities. Acquisitions or investments that
we have completed or potentially may make in the future entail a number of risks that could materially and adversely
affect our business, operating and financial results, including: (1) problems integrating the acquired key employees,
operations, technologies or products into our existing business and products; (2) diversion of management’s time and
attention from our core business; (3) adverse effects of losses of the acquired target upon our financial condition and
results of operations; (4) adverse effects on existing business relationships with customers; (5) the need for financial
resources above our planned investment levels; (6) dilution of share ownership of current shareholders under share
swap transactions; (7) risks associated with entering markets in which we lack experience; (8) potential write-offs of
acquired assets; and (9) potential impairment charges related to the goodwill acquired.
We may also face challenges in international acquisitions, such as compliance with local law and regulation,
limited access to target companies and cultural assimilation challenges. Our failure to address these risks
successfully may have a material adverse effect on our financial condition and results of operations. Any such
acquisition or investment may require a significant amount of capital investment, which would decrease the amount
of cash available for working capital or capital expenditures. In addition, if we use our equity securities to pay for
acquisitions, the value of our ADSs and the underlying ordinary shares may be diluted. If we borrow funds to finance
acquisitions, such debt instruments may contain restrictive covenants that can, among other things, restrict us from
distributing dividends.
System security risks, data protection breaches or unexpected system outage or failures could impact our
business.
Our computer systems and networks are vulnerable to damage or interruption from earthquakes, fires, power
loss, telecommunications failures, cyber-attacks, computer viruses or other malicious attempts. The reliability and
safety of our information technology infrastructure / software, and the ability to continually expand and update
technologies / software in response to dynamic changing needs and cybersecurity threats, are critical to our business.
In recent years, there are increasing and evolving risks to cybersecurity and privacy, including criminal hackers,
state-sponsored intrusions, industrial espionage, employee malfeasance and human / technological errors. All of the
above could result in the loss of our intellectual property, the leak of commercially sensitive information, and the
misappropriation of confidential information of our employees, customers and suppliers, and therefore could cause
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the interruption of our business. Failures to protect the privacy of employees, customers or suppliers’ confidential
data against breaches of network security could result in the loss of existing or potential customers, other financial
loss, and damage to our reputation. In addition, the operational cost and consequences against breaches and
remedial measures could be significant. While we seek to annually review and assess our cybersecurity policies and
procedures to ensure their adequacy and effectiveness, we still cannot guarantee that we will not be susceptible to
new and emerging risks and attacks in the evolving landscape of cybersecurity threats. As of February 28, 2022,
we had not been aware of any material cyberattacks or incidents that had or would be expected to have a materially
adverse effect on our business and operations, nor had we been involved in any legal proceedings or regulatory
investigations related thereto.
Our data centers are subject to the risk of break-ins and sabotage. Our disaster recovery plan cannot account
for all eventualities. Consequently, the occurrence of a natural disaster or other unanticipated problems at our
data centers could result in loss of production capabilities and lengthy interruptions in our services and business.
Some of our system services are based on public cloud services, which are also subject to interruption due to cloud
service providers’ unexpected downtimes, cyberattacks or any type of failure, telecommunication failure and/or
other unidentified problems while connecting to cloud. These cloud services interruptions could result in loss of
production capabilities and lengthy interruptions in our services and business. Cloud cybersecurity breaches could
result in adverse effects on our customers, employees, suppliers, reputation, and business.
Risks Relating to Our Industry
The average selling prices of our products could decrease rapidly, which may negatively impact our revenues
and operating results.
The price of each semiconductor product typically declines over its product life cycle, reflecting product
obsolescence, decreased demand as customers shift to more advanced products, decreased unit costs due to advanced
designs or improved manufacturing yields, and increased competition as more semiconductor suppliers are able
to offer similar products. We may experience substantial period-to-period fluctuations in future operating results if
our average selling prices decline. We may reduce the average unit price of our products in response to competitive
pricing pressures, new product introductions by us or our competitors, and other factors. We expect that these
factors will create downward pressure on our average selling prices and operating results. If we are unable to offset
any reductions in our average selling prices by increasing our sales volumes and corresponding production cost
reductions, or if we fail to develop and introduce new products and enhancements on a timely basis, our revenues
and operating results will suffer.
The semiconductor industry, in particular semiconductors used in flat panel displays, is highly competitive,
and we cannot assure that we will be able to compete successfully against our competitors.
Increased competition in the semiconductor industry may result in pricing pressure, reduced profitability and
loss of market share, any of which could seriously harm our revenues and results of operations. We continually
face intense competition from fabless display driver companies and integrated device manufacturers. Some of
our competitors have substantially greater financial and other resources to pursue engineering, manufacturing,
marketing and distribution of their products. As a result, they may be able to respond more quickly to changing
customer demands or devote greater resources to the development, promotion and sales of their products. Some of
our competitors are affiliated with, or are subsidiaries of, our panel manufacturer customers. These relationships may
also give our competitors significant advantages such as early access to product roadmaps and design-in priorities,
which would allow them to respond more quickly to changing customer demands and achieve more design-wins
than we can. We cannot assure you that we will be able to increase or maintain our revenues and market share or
compete successfully against our competitors in the semiconductor industry.
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Our business could be materially and adversely affected if we fail to anticipate changes in evolving industry
standards, fail to achieve and maintain technological leadership in our industry or fail to develop and introduce
new and enhanced products.
Our products are generally based on industry standards, which are continually evolving. The emergence of new
industry standards could render our products or those of our customers unmarketable or obsolete and may require
us to incur substantial unanticipated costs to comply with any such new standards. Our past sales and profitability
have resulted, to a significant extent, from our ability to anticipate changes in technology and industry standards,
and to develop and introduce new and enhanced products in a timely fashion. If we do not anticipate these changes
in technologies and rapidly develop and introduce new and innovative technologies, we may not be able to provide
advanced display semiconductors on competitive terms, and some of our customers may buy products from our
competitors instead of from us. Our continued ability to adapt to such changes and anticipate future standards will
be a significant factor in maintaining or improving our competitive position and our growth prospects. We cannot
assure you that we will be able to anticipate evolving industry standards, successfully complete the design of our
new products, have these products manufactured at acceptable manufacturing yields, or obtain significant purchase
orders for these products to meet new standards or technologies. If we fail to anticipate changes in technology and
to introduce new products that achieve market acceptance, our business and results of operations could be materially
and adversely affected.
Risks Relating to Our Holding Company Structure
Our ability to receive dividends and other payments or funds from our subsidiaries may be restricted by commercial,
statutory and legal restrictions, and thereby materially and adversely affect our ability to grow, fund investments,
make acquisitions, pay dividends and otherwise fund and conduct our business.
We are a holding company and our assets consist mainly of our 100% ownership interest in Himax Taiwan. We
receive cash from Himax Taiwan through intercompany borrowings. Himax Taiwan has not paid us cash dividends
in the past. Nonetheless, dividends and interest on shareholder loans that we receive from our subsidiaries in Taiwan,
if any, will be subject to withholding tax under ROC law. The ability of our subsidiaries to provide us with loans,
pay dividends, repay any shareholder loans from us or make other distributions to us is restricted by, among other
things, the availability of funds, the terms of various credit arrangements entered into by our subsidiaries, as well as
statutory and other legal restrictions. Any limitation on dividend payments by our subsidiaries could materially and
adversely affect our ability to grow, finance capital expenditures, make acquisitions, pay dividends, and otherwise
fund and conduct our business.
Political, Geographical and Economic Risks
We operate primarily in Taiwan that are vulnerable to natural disasters.
Most of our operations, and the operations of many of our semiconductor manufacturing service providers,
suppliers and customers are located in Taiwan, which is vulnerable to natural disasters, in particular, earthquakes and
typhoons. Our principal foundries, tape and assembly and testing houses upon which we have relied to manufacture
substantially all of our display drivers are located in Taiwan. As a result of this geographic concentration, disruption
of operations at our facilities or the facilities of our semiconductor manufacturing service providers and suppliers
for any reason, including work stoppages, power outages, water supply shortages, fire, typhoons, earthquakes or
other natural disasters, could cause delays in production and shipments of our products. In addition, shortages or
interruptions in electricity supply could further be exacerbated by changes in the energy policy of the government,
such as to make Taiwan a nuclear-free country. Any delays or disruptions could result in our customers seeking to
source products from our competitors. If such disruption of operation at our customers’ facilities and our customers
may be required to shut down temporarily or to substantially reduce the operations of their fabs, these would
seriously affect demand for our products.
Disruptions in Taiwan’s political environment could negatively affect our business and ADSs market price.
Our principal executive offices and a substantial amount of our assets are located in Taiwan, and a substantial
portion of revenues is derived from operations in Taiwan. Our business, financial condition and results of operations
and our ADSs market price may be affected by changes in ROC policies, taxation, inflation or interest rates, and by
social instability and diplomatic issues that are outside of our control.
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Taiwan has a unique international political status. Since 1949, Taiwan and the PRC have been separately
governed. The government of the PRC claims that it is the sole government in China and that Taiwan is part of
China. Although significant economic and cultural relations have been established during recent years between
Taiwan and the PRC, the PRC government has refused to renounce the possibility that it may at some point use force
to gain control over Taiwan. Furthermore, the PRC government adopted an anti-secession law relating to Taiwan.
Relations between the ROC and the PRC governments have been strained in recent years for a variety of reasons,
including the PRC government’s position on the “One China” policy and tensions concerning arms sales to Taiwan
by the United States government. Any tension between the ROC and the PRC, or between the United States and the
PRC, could materially and adversely affect our ADSs market prices.
A substantial portion of our sales are made to customers in the PRC, which may expose us to additional political,
regulatory, and economic risks.
We have been increasingly selling our products to customers in the PRC. In 2020 and 2021, approximately 79.7%
and 81.5% of our revenues, respectively, were from customers headquartered in the PRC. We expect to continue to
increase our sales to customers in the PRC in the future. With regional customer concentration, we are particularly
subject to economic and political events and other developments that affect our customers in the PRC.
The PRC economy differs from the economies of most developed countries in many respects, including the
structure, level of government involvement, level of development, foreign exchange control and allocation of
resources. The PRC economy has been transitioning from a planned economy to a more market-oriented economy
and is growing rapidly. For the past two decades, the PRC government has implemented economic reform measures
emphasizing utilization of market forces in the development of the economy and also adjusted its macroeconomic
control policies from time to time. These policies have led and may continue to lead to changes in market
conditions. Further, if new, US sanctions are imposed on China and any new tariffs, legislation and/or regulations
are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government takes
retaliatory trade actions due to recent U.S.-China trade tensions, such changes could have an adverse effect on our
customers or suppliers in China. We cannot predict whether changes in the PRC’s political, economic and social
conditions, laws, regulations and policies will have any adverse effect on our customers in the PRC. In addition, the
interpretation of PRC laws and regulations involves uncertainties. We cannot assure you that changes in such laws
and regulations, or in their interpretation and enforcement, will not have a material adverse effect on the businesses
and operations of our customers in the PRC and consequently have a material adverse effect on our business and
operations.
Fluctuations in exchange rates could result in foreign exchange losses and affect our results of operations.
Our functional and reporting currency is U.S. dollars. In 2021, more than 99% of our revenues and cost of
revenues were denominated in U.S. dollars. However, we have foreign currency exposure and are primarily
affected by fluctuations in exchange rates between the U.S. dollar and the NT dollar. This is because a majority
portion of our employees and facilities are based in Taiwan and operating expenses are denominated in NT
dollars and we maintain a portion of our cash in NT dollars for Taiwan working capital purposes. For example,
in December 2021, approximately 67% of our operating expenses were denominated in NT dollars, with a
small percentage denominated in Japanese Yen, Korean Won, Israel new shekel and Chinese Renminbi, and
the majority of the remainder in U.S. dollars. As a result, any significant fluctuations to our disadvantage in
exchange rate of U.S. dollars against such currencies, in particular a weakening of the U.S. dollar against the NT
dollar, would have an adverse impact on our operating expenses as expressed in U.S. dollar and adversely affect
our operating profit.
Changes in ROC tax laws would likely increase our tax expenditures and decrease our net income.
The Statute for Industrial Innovation entitles companies to tax credits for qualifying research and
development expenses related to innovation activities but limits the amount of tax credit to only up to 15%
of the total qualifying research and development expenditure for the current year, subject to a cap of 30%
of the income tax payable for the current year. Moreover, any unused tax credits provided under the Statute
for Industrial Innovation may not be carried forward. Based on the amendments to the above, effective from
January 1, 2016 to December 31, 2019, further extended to December 31, 2029, if companies choose to extend
the tax credits to three years, the tax credit rate will be 10% of the total qualifying research and development
expenditure for the current year and subject to a cap of 30% of the income tax payable for each year.
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On July 12, 2016, the ROC Legislative Yuan passed the third reading of anti-avoidance to establish Article 43-3
Controlled Foreign Company (“CFC”) rules and Article 43-4 Place of Effective Management (“PEM”) rules of the
Income Tax Act (“ITA”). Detailed introduction of the CFC and PEM rules are described as follows:
(i)
(ii)
A profit-seeking enterprise (“PSE”) that directly or indirectly owns affiliated enterprises in low-tax
jurisdictions outside the territory of the ROC shall recognize and include its pro rata share of affiliated
enterprises’ annual profits as investment income in its income tax return for the year. Subsequent actual
dividends and distributions from such affiliated enterprises that were previously recognized as investment
income will then not be subject to income taxation; any surplus to previously recognized investment
income shall be included as taxable income in the allocated year. Low-tax jurisdictions are defined as
countries where the PSE income tax rate is lower than 70% of the income tax rate of the PSE in the ROC (the
statutory income tax rate is 20% from January 1, 2018) (Article 43-3 CFC rules); and
A PSE is incorporated based on foreign legislation but its place of effective management (PEM) is
maintained within the territory of the ROC, and the head office of such PSE will be determined to be within
the territory of the ROC and profit-seeking enterprise income tax shall be levied in accordance with the ITA
and relevant tax regulations. The aforementioned PEM refers to a place where substantive key management
and commercial decisions of an entity’s business and its operations are made (Article 43-4 PEM rule).
According to the legislative intent, the CFC and PEM rules, in principle, will not be put into force immediately,
but will wait until the China-Taiwan Cross-Strait Tax Agreement is effectuated, the OECD’s Common Reporting
and Due Diligence Standard (“CRS”) for the automatic exchange of information of financial accounts is widely
implemented internationally, and the relevant bylaws of the CFC and PEM rules have been adequately enacted and
properly advocated. The date of implementation will be determined by the Executive Yuan. On January 14, 2022,
Executive Yuan had announced the relevant bylaws of the CFC would be implemented from January 1, 2023.
Additionally, dividend payments made by us are not subject to withholding tax in the Cayman Islands.
However, if the relevant bylaws of the PEM rules have been adequately enacted and properly advocated, we may be
determined to be within the territory of the ROC and our income tax shall be levied in accordance with the Income
Tax Act and relevant tax regulations. Therefore, dividend payments made by us would be subject to withholding tax
in the ROC.
We may be affected by the Cayman Economic Substance Law
Pursuant to the International Tax Co-operation (Economic Substance) Act (2021 Revision) (as amended) of the
Cayman Islands (the “ES Act”), a “relevant entity” is required to satisfy the economic substance test set out in the
ES Act. A “relevant entity” includes an exempted company incorporated in the Cayman Islands as is our company.
Based on the current interpretation of the ES Act, we believe that our company, Himax Technologies, Inc., is a pure
equity holding company since it only holds equity participation in other entities and only earns dividends and capital
gains.
Accordingly, for so long as our company is a “pure equity holding company”, it is only subject to the minimum
substance requirements, which require us to (i) comply with all applicable filing requirements under the Companies
Act (2021 Revision) of the Cayman Islands; and (ii) have adequate human resources and adequate premises in the
Cayman Islands for holding and managing equity participations in other entities. However, there can be no assurance
that we will not be subject to more requirements under the ES Act. Uncertainties over the interpretation and
implementation of the ES Act may have an adverse impact on our business and operations.
Risks Relating to Our ADSs and Our Trading Market
The market price for our ADSs is volatile.
The market price for our ADSs is volatile and has ranged from a low of $7.01 to a high of $17.88 on the
NASDAQ Global Select Market in 2021.
The market price is subject to wide fluctuations in response to various factors, including the following: (1)
actual or anticipated fluctuations in our quarterly operating results; (2) changes in financial estimates by securities
research analysts; (3) changes in the expectation of our product launch timing, forecast and estimates; (4) conditions
in the TFT-LCD panel market; (5) changes in the economic performance or market valuations of other display
22
semiconductor companies; (6) announcements by us or our competitors of new products, acquisitions, strategic
partnerships, joint ventures or capital commitments; (7) the addition or departure of key personnel; (8) fluctuations
in exchange rates between the U.S. dollar and the NT dollar; (9) litigation related to our intellectual property; and (10)
the release of lock-up or other transfer restrictions on our outstanding ADSs or sales of additional ADSs.
In addition, as a result of the worldwide financial crisis and recent global developments relating to Russia’s
invasion of Ukraine, global stock markets have experienced extreme price and volume fluctuations. This volatility
has had a significant effect on the market prices of securities issued by many companies for reasons which may not
be directly related to their operating performance, including but not limited to events such as tax-loss selling, mutual
fund redemptions, hedge fund redemptions and margin calls. These market fluctuations may also materially and
adversely affect the market price of our ADSs.
Future sales or perceived sales of securities by us, our executive officers, directors or major shareholders may
hurt the price of our ADSs.
The market price of our ADSs could decline as a result of sales of ADSs or shares or the perception that these
sales could occur. As of February 28, 2022, we had 348,597,140 outstanding shares and a significant number of our
shares were beneficially owned by certain major shareholders such as our directors and executive officers. See “Item
7.A. Major Shareholders and Related Party Transactions—Major Shareholders.” If we, our executive officers, or
directors or our shareholders sell ADSs or shares, the market price for our shares or ADSs could decline.
You may not have the same voting rights as the holders of our ordinary shares and may not receive voting
materials sufficiently in advance to be able to exercise your right to vote.
Except as described in the deposit agreement, holders of our ADSs will not be able to exercise voting rights
attaching to the shares evidenced by our ADSs on an individual basis. Holders of our ADSs will appoint the
depositary or its nominee as their representative to exercise the voting rights attaching to the shares represented by
the ADSs. In certain circumstances, the depositary shall refrain from voting and any voting instructions received
from ADS holders shall lapse. Furthermore, in certain other circumstances, the depositary will give us a discretionary
proxy to vote shares evidenced by ADSs. You may not receive voting materials sufficiently in advance to instruct the
depositary to vote or persons who hold their ADSs through brokers, dealers or other third parties will not have the
opportunity to exercise a right to vote.
You may not be able to participate in rights offerings and may experience dilution of your holdings as a result.
We may from time to time distribute rights to our shareholders, including rights to acquire our securities. Under
the deposit agreement for the ADSs, the depositary will not offer those rights to ADS holders unless both the rights
and the underlying securities to be distributed to ADS holders are either registered under the Securities Act, or
exempt from registration under the Securities Act with respect to all holders of ADSs. We are under no obligation
to file a registration statement with respect to any such rights or underlying securities or to endeavor to cause such a
registration statement to be declared effective. In addition, we may not be able to take advantage of any exemptions
from registration under the Securities Act. Accordingly, holders of our ADSs may be unable to participate in our
rights offerings and may experience dilution in their holdings as a result.
You may be subject to limitations on transfer of your ADSs.
Your ADSs represented by the ADRs are transferable on the books of the depositary. However, the depositary
may close its transfer books at any time or from time to time whenever it deems expedient in connection with
the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of
ADSs generally when books or the books of the depositary are closed, or at any time if we or the depositary
deem it necessary or advisable to do so because of any requirement of law, any government, governmental body,
commission, or any securities exchange on which our ADSs or ordinary shares are listed, or under any provision of
the deposit agreement or provisions of, or governing, the deposited securities or any meeting of our shareholders, or
for any other reason.
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Your ability to protect your rights through the United States federal courts may be limited, because we are
incorporated under Cayman Islands law, conduct a substantial portion of our operations in Taiwan, and all of
our directors and officers reside outside the United States.
We are incorporated in the Cayman Islands. However, a substantial portion of our operations is conducted in
Taiwan through Himax Taiwan, our wholly owned subsidiary, and substantially all of our assets are located in
Taiwan. All of our directors and officers reside outside the United States, and a substantial portion of the assets of
those persons is located outside the United States. As a result, it may be difficult or impossible for you to bring an
action against us or against these individuals in the United States in the event that you believe that your rights have
been infringed under the securities laws or otherwise. Even if you are successful in bringing an action of this kind,
the laws of the Cayman Islands and of Taiwan may render you unable to enforce a United States judgment against
our assets or the assets of our directors and officers. There is no statutory recognition in the Cayman Islands of
judgments obtained in the United States, although a final and conclusive judgment in the federal or state courts of
the United States under which a sum of money is payable, other than a sum payable in respect of multiple damages,
taxes, or other charges of a like nature or in respect of a fine or other penalty, may be subject to enforcement
proceedings as debt in the courts of the Cayman Islands under the common law doctrine of obligation, provided that
(a) such federal or state courts of the United States had proper jurisdiction over the parties subject to such judgment;
(b) such federal or state courts of the United States did not contravene the rules of natural justice of the Cayman
Islands; (c) such judgment was not obtained by fraud; (d) the enforcement of the judgment would not be contrary to
the public policy of the Cayman Islands; (e) no new admissible evidence relevant to the action is submitted prior to
the rendering of the judgment by the courts of the Cayman Islands; and (f) there is due compliance with the correct
procedures under the laws of the Cayman Islands.
Therefore, our public shareholders may have more difficulty in protecting their interests through actions against
our management, directors or major shareholders than shareholders of a corporation incorporated in a jurisdiction in
the United States.
You may face difficulties in protecting your interests as a shareholder because judicial precedents regarding
shareholders’ rights are more limited under Cayman Islands law than under U.S. law, and because Cayman
Islands law generally provides less protection to shareholders than U.S. law.
Our corporate affairs are governed by memorandum and articles of association, the Companies Law, Cap. 22
(Law 3 of 1961, as consolidated and revised) of the Cayman Islands, or the Cayman Islands Companies Law, and the
common law of the Cayman Islands. The rights of shareholders to take action against directors, actions by minority
shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent
governed by the common law of the Cayman Islands. The common law is derived in part from comparatively
limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but
not binding, authority on a court in the Cayman Islands. The rights of shareholders and the fiduciary responsibilities
of directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial
precedent in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body of
securities law than the United States.
ITEM 4. INFORMATION ON THE COMPANY
4.A. History and Development of the Company
Himax Taiwan, our predecessor, was incorporated on June 12, 2001 as a limited liability company under the laws
of the ROC. On April 26, 2005, we established Himax Technologies Limited, an exempted company with limited
liability under the Cayman Islands Companies Law, as a holding company to hold the shares of Himax Taiwan in
connection with our reorganization and share exchange. On October 14, 2005, Himax Taiwan became our wholly
owned subsidiary through a share exchange consummated pursuant to the ROC Business Mergers and Acquisitions
Law through which we acquired all of the issued and outstanding shares of Himax Taiwan, and we issued ordinary
shares to the shareholders of Himax Taiwan. Shareholders of Himax Taiwan received one of our ordinary shares in
exchange for one Himax Taiwan common share. The share exchange was unanimously approved by shareholders
of Himax Taiwan on June 10, 2005 with no dissenting shareholders and by the ROC Investment Commission on
August 30, 2005 for our inbound investment in Taiwan, and on September 7, 2005 for our outbound investment
outside of Taiwan. We effected this reorganization and share exchange to comply with ROC laws, which prohibit a
Taiwan incorporated company not otherwise publicly listed in Taiwan from listing its shares on an overseas stock
exchange. Our reorganization enables us to maintain our operations through our Taiwan subsidiary, Himax Taiwan,
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while allowing us to list our shares overseas through our holding company structure.
On September 26, 2005, we changed our name to “Himax Technologies, Inc.,” and on October 17, 2005, Himax
Taiwan changed its name to “Himax Technologies Limited” upon the approval of shareholders of both companies
and amendments to the respective constitutive documents. We effected the name exchange in order to maintain
continuity of operations and marketing under the trade name “Himax Technologies, Inc.,” which had been previously
used by Himax Taiwan.
Our ADSs have been listed on the NASDAQ Global Select Market since March 31, 2006. Our ordinary shares
are not listed or publicly traded on any trading markets.
In February 2007, we completed the acquisition of Wisepal, currently known as Himax Semiconductor,
Inc., a fabless semiconductor company focusing on the development of LTPS TFT-LCD drivers for small and
medium-sized applications. This transaction strengthened our competitive position in the small and medium-sized
product areas and further diversified our technology and product offerings. For management purpose, Himax
Semiconductor Inc. was merged into Himax Taiwan on July 2, 2018.
In March 2007, we established Himax Imaging, Inc., or Himax Imaging, which develops and markets CMOS
image sensors with an initial focus on camera applications used in cell phones and notebook computers.
In July 2012, our subsidiary, Himax Display, completed the acquisition of Spatial Photonics, currently known
as Himax Display (USA) Inc., a Delaware corporation engaged in the business of manufacturing and production of
MEMS products.
In June 2018, we completed the acquisition of Emza Visual Sense Ltd., or Emza, which is dedicated to the
development of visual sensors that include proprietary machine-vision algorithms and specific architectures that
enable always-on visual sensing capabilities, achieving improvement in power consumption, price and form factor.
From time to time, we have also made minority investments in various companies for strategic purposes in the
ordinary course of business.
Our principal executive offices are located at No. 26, Zih Lian Road, Sinshih District, Tainan City 74148,
Taiwan, Republic of China. Our telephone number at this address is +886-6-505-0880. Our registered office in the
Cayman Islands is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman
Islands. Our telephone number at this address is +1-345-945-3901. In addition, we have offices in Hsinchu and
Taipei, Taiwan; Foshan, Fuqing, Ningbo, Beijing, Shanghai, Shenzhen, Suzhou, Wuhan, Hefei, Qingdao, Chongqing,
Xi’an and Xiamen, China; Tokyo, Japan; Asan-si and Bundang-gu, South Korea; Givatayim, Israel; and Irvine and
Campbell, California and Minneapolis, Minnesota, USA.
Investor inquiries should be directed to our Investor Relations department by email to hx_ir@himax.com.tw.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. The address of the SEC's Internet site is http://www.sec.gov.
Our website is www.himax.com.tw. The information contained on our website is not part of this annual report.
4.B. Business Overview
We are a fabless semiconductor solution provider dedicated to display imaging processing technologies. We are a
worldwide market leader in display driver ICs and timing controllers used in TVs, laptops, monitors, mobile phones,
tablets, automotive, digital cameras, car navigation, virtual reality (VR) devices and many other consumer electronics
devices. Additionally, we design and provide controllers for touch sensor displays, in-cell Touch and Display Driver
Integration (TDDI) single-chip solutions, LED driver ICs, power management ICs and LCoS micro-displays for
augmented reality (AR) devices and heads-up displays (HUD) for automotive. We also offer CMOS image sensors,
wafer level optics for AR devices, 3D sensing and ultralow power AI image sensing, which are used in a wide
variety of applications such as mobile phone, tablet, laptop, TV, PC camera, automobile, security, medical devices,
home appliance, AIoT, etc. For display drivers and display-related products, our customers are panel manufacturers,
agents or distributors, module manufacturers, assembly houses or end customers. We also work with camera module
manufacturers, optical engine manufacturers, and television system manufacturers for various non-driver products.
Industry Background
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We mainly operate in the flat panel display semiconductor industry. As the majority of our revenues derive from
products that are critical components of flat panel displays, such as display drivers, timing controllers, power ICs and
other semiconductor products, our industry is closely linked to the trends and developments of the flat panel display
industry.
Flat Panel Display Semiconductors
Flat panel displays require different semiconductors depending upon the display technologies and the
applications. Some of the most important ones include the following:
•
•
•
•
•
•
Display Driver. The display driver receives image data from the timing controller and delivers precise
analog voltages or currents to create images on the display. The major application of display driver IC is
used on TFT-LCDs. Other than display drivers for TFT-LCDs, we also offer display drivers for AMOLED
and Electronic Paper (e-paper) Displays. AMOLED display is getting more and more popular in recent
years, starting from high-end smartphone and TV applications, while e-paper display mimics traditional
paper sheet and holds static text and images indefinitely without electricity. Detailed display driver IC
specification for LCD, AMOLED and e-paper are different due to panel characteristics. The two main types
of display drivers for a display panel are gate drivers and source drivers. Gate drivers turn on the transistor
within each pixel cell on the horizontal line on the panel for data input at each row. Source drivers receive
image data from the timing controller and generate voltage that is applied to the liquid crystal within each
pixel cell on the vertical line on the panel for data input at each column. The combination determines the
colors generated by each pixel. Typically, multiple gate drivers and source drivers are installed separately
on the panel. However, for certain small and medium-sized applications, gate drivers and source drivers are
integrated into a single chip due to space and cost considerations. Large-sized panels typically have higher
resolution and require more display drivers than small and medium-sized panels.
Timing Controller. The timing controller receives image data and converts the format for the source drivers’
input. The timing controller also generates controlling signals for gate and source drivers. Typically, the
timing controller is a discrete semiconductor in large-sized TFT-LCD and AMOLED panels. For certain
small and medium-sized applications, however, the timing controller may be integrated with display drivers.
Operational Amplifier. An operational amplifier supplies the reference voltage to source drivers in order to
make their output voltage uniform.
Power IC. Power ICs include certain drivers, amplifiers, DC to DC converters and other semiconductors
designed to enhance power management, such as voltage regulation, voltage boosting and battery
management.
Touch controller IC. For touch screen applications, touch controller ICs enable touch interfaces, such as
capacitive touch panels, to identify, qualify and track user’s contacts with precision and sensibility.
Others. Flat panel displays also require multiple general purposes semiconductors such as memory, power
converters and inverters.
Characteristics of the Display Driver Market
Although we operate in several distinct segments of the flat panel display semiconductor industry, our principal
products are display drivers. Display drivers are critical components of flat panel displays. The display driver market
has specific characteristics, including those discussed below.
Concentration of Panel Manufacturers
The global TFT-LCD panel industry consists of a small number of manufacturers, substantially all of which
are based in Asia. In recent years, Korean TFT-LCD panel makers have gradually undergone restructurings to shift
their technology and manufacture focus from TFT-LCD to OLED and TFT-LCD panel manufacturers, especially
China-based manufacturers which have invested or are planning to invest heavily to establish, construct and ramp up
additional fab capacity. The capital-intensive nature of the industry often results in TFT-LCD panel manufacturers
operating at a high level of capacity utilization in order to reduce unit costs. This tends to create a temporary
oversupply of panels, which reduces the average selling price of panels and puts pricing pressure on component
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companies including display driver companies. Moreover, the concentration of panel manufacturers permits major
panel manufacturers to exert pricing pressure on display driver companies such as us. The small number of panel
manufacturers exacerbates this situation as display driver companies, in addition to seeking to expand their customer
base, must also focus on winning a larger percentage of such customers’ display driver requirements.
Customization Requirements
Each panel display has a unique pixel design to meet its particular requirements. To optimize the panel’s
performance, display drivers have to be customized for each panel design. The most common customization
requirement is for the display driver company to optimize the gamma curve of each display driver for each panel
design. Display driver companies must work closely with their customers to develop semiconductors that meet their
customers’ specific needs in order to optimize the performance of their products.
Mixed-Signal Design and High-Voltage CMOS Process Technology
Display drivers have specific design and manufacturing requirements that are not standard in the semiconductor
industry. Some display drivers require mixed-signal design since they combine both analog and digital devices
on a single semiconductor to process both analog signals and digital data. Manufacturing display drivers require
high-voltage CMOS process technology operating typically at 4.5 to 24 volts for source drivers and 10 to 50 volts
for gate drivers, levels of voltage which are not standard in the semiconductor industry. For display drivers, the
driving voltage must be maintained under a very high degree of uniformity, which can be difficult to achieve using
standard CMOS process technology. Moreover, manufacturing display drivers does not require very small-geometry
semiconductor processes. Typically, the manufacturing process for large panel display drivers require geometries
between 0.11 micron and 1 micron because the physical dimensions of a high-voltage device do not allow for
the economical reduction in geometries below this range. We believe that there are a limited number of fabs with
high-voltage CMOS process technology that are capable of high-volume manufacturing of display drivers.
Special Assembly and Testing Requirements
Manufacturing display drivers requires certain assembly and testing technologies and equipment that are not
standard for other semiconductors and are offered by a limited number of providers. The assembly of display
drivers typically uses either tape-automated bonding, also known as TAB, or chip-on-glass, also known as COG,
technologies. Display drivers also require gold bumping, which is a process in which gold bumps are plated onto
each wafer to connect the die and the processed tape, in the case of TAB packages, and the glass, in the case of COG
packages. TAB may utilize tape carrier packages, also known as TCP, or chip on film, also known as COF. The type
of assembly used depends on the panel manufacturer’s design, which is influenced by panel size and application and
is typically determined by the panel manufacturers. Display drivers for large-sized applications typically require
TAB package and, to a lesser extent, COG package types, whereas display drivers for smartphone, tablet and
consumer electronics products typically require COG packages. The testing of display drivers also requires special
testers that can support high-channel and high-voltage output semiconductors. Such testers are not standard in the
semiconductor industry.
Supply Chain Management
The manufacturing of display drivers is complex and requires several manufacturing stages such as wafer
fabrication, gold bumping, and assembly and testing, and the availability of materials such as the processed tape
used in TAB packaging. We refer to these manufacturing stages and material requirements collectively as the “supply
chain”. Panel manufacturers typically operate at high levels of capacity utilization and require a reliable supply
of display drivers. A shortage of display drivers, or a disruption to this supply, may disrupt panel manufacturers’
operations. As a result, a company’s ability to deliver its products on a timely basis at the quality and quantity
required is critical to satisfying its existing customers and winning new ones. Such supply chain management is
particularly crucial to fabless display driver companies that do not have their own in-house manufacturing capacity.
In the case of display drivers, supply chain management is further complicated by the high-voltage CMOS process
technology and the special assembly and testing requirements that are not standard in the semiconductor industry.
Access to this capacity also depends in part on display driver companies having received assurances of demand
for their products since semiconductor manufacturing service providers require credible demand forecasts before
allocating capacity among customers and investing to expand their capacity to support growth.
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Need for Higher Level of Integration
The small form factor of smartphone, tablet, automotive and certain consumer electronics products restricts the
space for components. Small and medium-sized panel applications typically require one or more source drivers, one
or more gate drivers and one timing controller, which can be installed as separate semiconductors or as an integrated
single-chip driver. Customers are increasingly demanding higher levels of integration in order to manufacture more
compact panels, simplify the module assembly process and reduce unit costs. Display driver companies must be
able to offer highly integrated chips that combine the source driver, gate driver and timing controller, as well as
semiconductors such as memory, power circuit and image processors, into a single chip. Due to the size restrictions
and stringent power consumption constraints of such display drivers, single-chip drivers are complex to design.
For large-sized panel applications, integration is both more difficult to achieve and less important since size and
weight are less of a priority. Lastly, as some of our TFT-LCD panel customers had turned to pure in-cell TDDI panel
development for thinner display designs, we have developed a series of single chip touch display driver integrated
circuit (TDDI) for advanced in-cell touch display panel.
Products and Solutions
We have several principal product lines:
•
•
•
•
•
•
•
•
•
display drivers and timing controllers;
touch controller ICs;
ASIC service;
LCoS and MEMS products;
power ICs;
CMOS image sensor products;
wafer level optics products;
3D sensing business; and
Ultralow power AI image sensing.
Display Drivers and Timing Controllers
Display Driver Characteristics
Display drivers deliver precise analog voltages and currents that activate the pixels on panels. The following is a
summary of certain display driver characteristics and their relationship to panel performance.
Resolution and Number of Channels. Resolution refers to the number of pixels per line multiplied by
the number of lines, which determines the level of fine detail within an image displayed on a panel. For
example, a color display screen with 1,024 x 768 pixels has 1,024 red columns, 1,024 green columns
and 1,024 blue columns for a total of 3,072 columns and 768 rows. The red, green and blue columns are
commonly referred to as “RGB.” Therefore, the display drivers need to drive 3,072 column outputs and
768 row outputs. The number of display drivers required for each panel depends on the resolution of the
panel and the number of channels per display driver. For example, an XGA (1,024 x 768 pixels) panel
requires eight 384-channel source drivers (1,024 x 3 = 384 x 8) and three 256-channel gate drivers (768
= 256 x 3), while a full HD (1,920 x 1,080 pixels) panel requires eight 720-channel source drivers and
four 270-channel gate drivers. The number of display drivers required can be reduced by using drivers
with a higher number of channels. For example, a full HD panel can have six 960-channel source drivers
instead of eight 720-channel source drivers. Thus, using display drivers with a higher number of channels
can reduce the number of display drivers required for each panel, although display drivers with a higher
number of channels typically have higher unit costs.
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•
•
•
•
•
Color Depth. Color depth is the number of colors that can be displayed on a screen, which is determined
by the number of shades of a color, also known as gray scale, that can be shown by the panel. For example,
a 6-bit source driver is capable of generating 26 x 26 x 26 = 218, or 262K colors, and similarly, an 8-bit
source driver is capable of generating 16 million colors. Typically, for TFT-LCD panels currently in
commercial production, 262K, 16 million and 1 billion colors are supported by 6-bit, 8-bit and 10-bit source
drivers, respectively.
Operational Voltage. A display driver operates with two voltages: the input voltage (which enables it to
receive signals from the timing controller) and the output voltage (which, in the case of source drivers,
is applied to liquid crystals and, in the case of gate drivers, is used to switch on the TFT device). Source
drivers typically operate at input voltages from 3.3 to 1.8 volts and output voltages ranging from 4.5 to 24
volts. Gate drivers typically operate at input voltages from 3.3 to 1.8 volts and output voltages ranging from
10 to 50 volts. Lower input voltage saves power and lowers electromagnetic interference, or EMI. Output
voltage may be higher or lower depending on the characteristics of the liquid crystal (or diode), in the case
of source drivers, or TFT device, in the case of gate drivers.
Gamma Curve. The relationship between the light passing through a pixel and the voltage applied to it
by the source driver is nonlinear and is referred to as the “gamma curve” of the source driver. Different
panel design and manufacturing processes require source drivers with different gamma curves. Display
drivers need to adjust the gamma curve to fit the pixel design. Due to the materials and processes used in
manufacturing, panels may contain certain imperfections which can be corrected by the gamma curve of
the source driver, a process which is generally known as “gamma correction.” For certain types of liquid
crystal, the gamma curves for RGB cells are significantly different and thus need to be independently
corrected. Some advanced display drivers feature three independent gamma curves for RGB cells.
Driver Interface. Driver interface refers to the connection between the timing controller and display
drivers. Display drivers increasingly require higher bandwidth interface technology to address the larger
data volume necessary for video images. Panels used for higher data transmission applications, such as
televisions, require more advanced interface technology. The principal types of interface technologies are
transistor-to-transistor logic, or TTL, reduced swing differential signaling, or RSDS, mini-low voltage
differential signaling, or mini-LVDS, and point-to-point high-speed interface. Among these, RSDS, mini-
LVDS and point-to-point interface were developed as low power, low noise and low amplitude methods
for high-speed data transmission using fewer copper wires and resulting in lower EMI. Moreover, there
are some panel manufacturers developing their proprietary point-to-point interfaces, such as embedded
panel interface, or EPI, USI-T, iSP, CEDS, CHPI, CSPI and CMPI.
Package Type. The assembly of display drivers typically uses TAB and COG package types. COF and
TCP are two types of TAB packages, of which COF packages have become predominantly used in recent
years. Customers typically determine the package type required according to their specific mechanical and
electrical considerations. In general, display drivers for small-sized panels mainly use COG package types,
whereas display drivers for large-sized panels primarily use TAB package types and, to a lesser extent,
COG package types.
Large-Sized Applications
We provide source drivers, gate drivers, PMIC, P-gamma OP level shifter and timing controllers (TCON) for
large-sized panels principally used in desktop monitors, notebook computers and televisions. Display drivers used
in large-sized applications feature different key characteristics, depending on the end-use application. For example,
the industry trend for large-sized applications is generally toward super high channel, low power consumption, low
cost, thin and light form factor, touch function, higher data transmission rate and higher driving capabilities. Higher
speed interface technologies are also key for 4Kx2K and 8Kx4K high-resolution TVs. Greater color depth, thermal
solution, high data rate and high driving, are particularly important for advanced televisions and certain monitors.
Our large display driver IC business achieved several milestones from 2019. For example, we successfully added
12-inch fabs into the pool of our foundry capacity for our large display driver ICs to ease the capacity shortage of
8” foundry where the vast majority of large panel driver ICs are fabricated. On high-end TV, Himax outpaced peers
to lead the mass production of customized high-speed point-to-point (P2P) transmission using embedded panel intra
interface such as iSP, CHPI, USI-T, CMPI, CEDS and CSPI for 4K TVs and developed a 2-in-1 COF driver to meet
the requirements of high channel count and heat dissipation for 8K TV. On gaming monitor, we have high frame rate
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and high driving driver to meet various resolutions needs and frame rates such as UHD 165Hz, QHD 240Hz, FHD
360Hz, etc. We also successfully developed low power consumption driver applied in low power monitor to satisfied
Energy Star 8.0 and even Energy Star 9.0. Lastly, our P2P driver and TCON ICs with 13.3" FHD can meet Intel 1W
project requirement.
We also made tremendous progress in TCON product lines in 2021. UHD TV penetration rate is larger than 60%
since 2021, and we developed competitive UHD TV TCON to seize this market. Himax UHD TV TCON has mass
production at all major China LCD makers and the revenues has double growth in 2021. We also provide gaming
TCON for the new QHD 240Hz and UHD 144Hz gaming monitor and notebook. For high-end gaming requirement,
we have developed eDP 8.1G TCON to increase bandwidth. We also have embedded local dimming in TCON
ICs for TFT-LCD automotive applications to support higher contrast instrument panels needed for drivers to read
the content of the meter quickly. Additionally, several key panel makers also seek Himax cooperation to develop
AMOLED for automotive applications. We have developed certain customized AMOLED ASIC for these key panel
makers and some of them started entering mass production in 2021.
The table below sets forth the features of our products for large-sized applications:
Product
TFT-LCD Source Drivers
TFT-LCD Gate Drivers
Timing Controllers
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Features
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384 to 1920 output channels
6-bit (262K colors), 8-bit (16 million colors) or 10-bit (1 billion
colors)
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one gamma-type driver
two gamma-type drivers to improve display quality
three gamma-type drivers (RGB independent gamma curve to
enhance color image)
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output driving voltage ranging from 7 up to 20V
input logic voltage ranging from standard 3.3V to low power 1.8V
and support half VDDA
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low power consumption and low EMI
support COF and COG package types
support TTL, RSDS, mini-LVDS (up to 400MHz), cascade
modulated driver interface, or CMDI, point-to-point high speed
interface (up to 4Gbps for 8K 120Hz) and customized interface
technologies
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support dual gate and triple gate panel designs
192 to 1600 output channels
output driving voltage ranging from 10 up to 50v
input logic voltage ranging from standard 3.3V to low power 1.8V
low power consumption
support COF and COG package types
support dual gate and triple gate panel designs
•
product portfolio supports a wide range of resolutions, from VGA
(640 x 480 pixels) to full HD, UHD and 8K4K (1,920 x 1,080 pixels,
1,920 x 1,200 pixels, 3840 x 2160 and 7680 x 4320)
•
support mini-LVDS, point-to-point high speed interface and
customized output interface technologies
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embedded overdrive function to improve response time
support CABC and local dimming to save power and color engine to
enhance color and sharpness
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support TTL, LVDS, eDP, G-sync, MIPI and V-by-one input
interface technologies
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support dual-gate, triple-gate, GOA (gate on array) and RGBW panel
designs
Product
Features
support amorphous silicon, IGZO and LTPS panel
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• ASIC AMOLED timing controller
Programmable Gamma OP
8 to 16 channel gamma buffer outputs
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channel VCOM buffer output
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Internal non-volatile memory
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2 gamma bank selection, setting time < 3uS
• Analog power supply voltage: 9.0V to 20.0V
• Digital power supply voltage: 2.7V to 3.6V
Peak current on gamma channels: 200mA
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Peak current on VCOM channel: 400mA
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Programmable VCOM limit
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12C speed up to 1MHz
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Tablet Display Drivers
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highly integrated single chip embedded with the source driver, power
circuit, and timing controller
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suitable for a wide range of resolutions from WSVGA (600 x 1024),
WXGA (800 x 1280), WUXGA (1200x1920) to WQXGA (1600 x 2560)
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support up to 16 million colors
support RGB separated gamma adjustment
support CABC
support color enhancement features
support MIPI interface
touch display driver integrated circuit (TDDI) for advanced in-cell touch
display
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supporting TDDI with active stylus
COG and COF solutions for super slim bezel
Small and Medium -Sized Applications
Automotive Display Applications
We offer source drivers, gate drivers, timing controllers and integrated drivers for the fast ramping automotive
display applications, such as instrument cluster display (ICD), center stack display (CSD), head-up display (HUD),
rear seat entertainment display (RSE), rearview mirror display and sideview mirror display.
The automotive display drivers can support various display resolutions to meet the customized needs of
automotive display, including GIP panel and non-GIP panel, a-Si TFT panel and LTPS panel. Meanwhile, the
automotive display drivers can support higher output driving voltage for higher contrast ratio and faster liquid
crystal response in automotive display applications. The automotive Timing Controller can support Local Dimming
function for the goal of higher contrast ratio and thermal reduction in automotive display applications. We launched
the world’s first TDDI design for automotive displays technology which started shipping in 2019 with meaningful
mass production shipment to industrial leading automotive panel house, tier-1 and brands starting 2021.Himax is
the market leader in automotive display driver business covering the entire spectrum of products and technologies,
including the industry’s most comprehensive traditional DDIC product offerings as well as leading solutions for
new technology areas such as TDDI, local dimming Tcon, LTDI and AMOLED. Our automotive TDDI is broadly
adopted by named auto makers in their new launches of vehicles and had over 1 million units and 1.4 million
units shipped in the third quarter and fourth quarter of 2021, respectively, demonstrating an exponentially growing
trajectory. With the commencement of TDDI mass production and LTDI thereafter, we are confident that our overall
market share in the automotive display driver market will continue to rise in the coming years and our technological
prowess continues to separate us from peers for the next generation display for automotive.
The following table summarizes the features of our products used in automotive display applications:
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Product
TFT-LCD Source Drivers
TFT-LCD Gate Drivers
TFT-LCD Integrated Drivers
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Features
642 to 1,920 output channels
6-bit (262K colors), 8-bit (16.7 million colors)
support RSDS, mini-LVDS, Point-to-Point interfaces
output driving voltage ranging up to 15V
support COG and COF package type
100 to 1,600 output channels
output driving voltage ranging up to 40V
support COG and COF package type
highly integrated chip embedded with source driver, timing controller
Timing Controllers
TFT-LCD TDDI Drivers
and power circuit
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support RGB, LVDS input interfaces
support Single Gate, Dual Gate, Triple Gate panel structure
support 2MUX, 3MUX, 6MUX LTPS panel structure
support GIP panel (a-TFT GIP or LTPS GIP or IGZO GIP) and non-GIP
panel
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support resolution up to 2880 RGBx1080 with cascaded chips
source driver output driving voltage ranging up to ±6.6V or 16V
support Fail Detect Function, including CRC Function
support Local Dimming Function
support Teletext OSD function
support COG and COF package type
support LVDS, eDP 1.2 input interface
support RSDS, mini-LVDS, Point-to-Point output interfaces
support Single Gate, Dual Gate, Triple Gate panel structure
support 2MUX, 3MUX, 6MUX LTPS panel structure
support GIP panel (a-TFT GIP or LTPS GIP or IGZO GIP) and non-GIP
panel
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support various resolutions up to 4K2K(ICD) or 7K1K(CID)
support Local Dimming Function
support Dual Cell Panel Structure Function
support Fail Detect Function, including CRC Function
support Telltale OSD function
highly integrated chip embedded with source driver, timing controller,
touch controller and power circuit
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support LVDS input interfaces
support Single Gate, Dual Gate, Triple Gate a-TFT panel structure
support 2MUX, 3MUX, 6MUX LTPS panel structure
support GIP panel (a-TFT GIP or LTPS GIP) and non-GIP panel
support resolution up to 5760RBx720 with cascaded chips
source driver output driving voltage ranging up to ±6.6V
support Fail Detect Function, including CRC Function
support Telltale OSD function
support Color Engine function
support COG package type
Smartphone and Tablet Applications
We offer display drivers for small and medium-sized displays in smartphone and tablet applications that combine
source driver, gate driver, timing controller, DC to DC circuits, and optional frame buffer into a single chip or
cascades chips in various display technologies, such as TFT-LCD and AMOLED.
Smartphones and tablet have gained greater popularity among small and medium-sized display drivers and
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enjoyed high growth in recent years. This has also contributed to increased demand for larger size and higher
resolution smartphone displays. In the past few years, we offered innovative handset display driver products by
providing FWVGA (480 x 864), qHD (540 x 960), WSVGA (1024 x 600), HD720 (720 x 1280)/ WXGA (800
x 1280), FHD (1080 x 1920) / WUXGA (1200 x 1920) and up to QHD (1440 x 2560) / WQXGA (1600x2560)
display driver ICs. We continue to update new products for this mainstream smartphone and tablet markets with
lower cost and new features, such as color enhancement and sun-light readability enhancement functions. In 2015,
we developed new technologies and led the display industry with next generation display driver ICs, such as a-si
FHD (1080 x 1920), AMOLED ASICs for HD and FHD and LTPS QHD (1440 x 2560) with sub-pixel rendering
technologies. In 2016, Himax developed a series of single chip touch display driver integrated circuit (TDDI) for
advanced in-cell touch display panel. Himax started the shipments of in-cell TDDI for some smartphones in 2016
and extended TDDI solution to tablet application in 2017. Smartphone display had a dramatic change in terms of
aspect ratio, instead of resolution, in 2017. Though display resolution of entry smartphones kept moving up from
WVGA or qHD to HD, high-end smartphone display may be stuck at FHD or QHD since it’s pixel per inch is good
enough for normal consumers’ daily use. OEMs start to seek for differentiation with 18:9 or even wider aspect ratio,
full front displays. Himax has designed conventional 16:9 HD and FHD DDICs capable of supporting 18:9 or wider
HD+/FHD+ displays and achieved a number of design-wins with leading Chinese smartphone brands. As in-cell
TDDI, featuring thinner display, slimmer border, and better visual quality, has been getting popular, we re-invented
a new generation of TDDIs supporting COG and COF for 18:9 or wider aspect ratio with interlaced output pins,
which makes the bottom border of the in-cell touch display even smaller to gain higher display to body ratio. Our
FHD+ and HD+ TDDI successfully gained design-wins with a few leading Korean and Chinese smartphone brands
and panel makers. We started small volume shipment in the first half of 2018 with accelerating volume started in the
second half of 2018 into 2019 and beyond. In 2020 and 2021, Himax extended our product offerings with high frame
rate TDDI solution and has started shipping to top-tier smartphone OEMs.
A major development we are seeing in the marketplace is increased utilization of the OLED display for
smartphone, smart watch, automotive and tablet. This is due to investments on expanded AMOLED capacity as well
as increased demand for under-display fingerprint technology that is only available in the AMOLED display for the
time being. We are collaborating closely with leading panel makers across China for AMOLED product development
in smartphone, tablet, automotive and other consumer electronics. We believe AMOLED driver ICs will soon
become one of the major growth engines for our small and medium-sized panel driver IC business.
On the other hand, the application of in-cell TDDI started to extend from mainstream smartphone to larger
displays in 2018. Himax started to offer various new TDDI solutions for tablet, smart speakers, and even some
infotainment displays in automobiles. The first tablet TDDI with WXGA resolution went mass production in 2018
and also extended to leading smart speaker applications as well. In 2019, Himax announced a series of new driver
and TDDIs for tablet application. The COF packaged driver IC solution enables one leading tablet OEM successfully
launching WQXGA resolution tablet with super slim bezel. We also added another new features to our TDDI that can
support up to WUXGA and WQXGA resolution has gained several design-win from tablet OEMs across Korea and
China in 2019. We also launched the first TDDI supporting active stylus function in tablets which commenced mass
production and contribute to our tablet application business in early 2020. With the demand increase for bigger size
display, higher resolution, and precise touch accuracy and stylus performance, Himax kept developing new tablet
TDDIs to broaden company’s product lineup to maintain our leading market position. We started mass production
for the world’s first 12.4” WQXGA super high-resolution in-cell tablet PC with a leading end customer in 2021.
Tablet in-cell TDDI offers the benefits of lower cost and a simplified supply chain that represents an easier
manufacturing process for panel makers. For consumers, it offers a lighter weight, slimmer and more stylish design
as well as improved touch accuracy with added option for active stylus. Our active stylus in-cell technology is
adopted in many launched tablet products. At present, we are the dominant supplier for literally all leading Android
names. In 2020, tablet demand is picking up significantly fueled mainly by remote work and online learning demand
due to the pandemic. TDDI for tablet application continues to represent a tremendous upside for Himax into 2022.
The following table summarizes the features of our products for smartphone and tablet applications:
Product
Smartphone Display Drivers
Features
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In-cell TDDI (Touch and Display Driver Integration) as a highly integrated
single chip embedded with the source driver, gate driver, power circuit,
timing controller and memory, touch sensor ADCs and microcontroller
• Mainstream resolution with HD+ (720RGB x Y pixels) and FHD+ (1080RGB
x Y pixels); extending from 16:9 to 18:9 or wider aspect ratio
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Product
Features
•
•
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support up to 16 million colors
support RGB separated gamma adjustment
support CABC
support color enhancement features including saturation, brightness,
and sharpness enhancement
•
•
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support MIPI interface for smartphone application
low power consumption and low EMI
fewer external components to reduce costs
slimmer die for compact module to fit smaller smartphone designs
application specific integrated circuits, or ASIC, can be designed to meet
customized requirements for LCD or AMOLED
•
•
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COG and COF solutions for super slim bottom border
Conventional 60Hz and up to 144Hz new high frame rate solution
AMOLED driver IC with sub-pixel rendering, Demura-IPs for FHD+
Electronic Paper Display Applications
We offer display driver for the Electronic Paper Display (EPD) applications, Electronic Shelf Label (ESL) and
Signage Display. The Electronic Paper Display (EPD) drivers can support various display resolutions to meet the
customized needs of applications. We are collaborating with world-leading e-paper customers for certain ASIC
projects on their next generation products. This consolidates our market presence in the emerging e-reading and
e-signage segments from 2022 and onward.
The following table summarizes the features of our Electronic Paper Display (EPD) solutions:
Product
Electronic Paper Display (EPD)
Source Drivers
Electronic Paper Display (EPD)
Gate Drivers
Electronic Shelf Label (ESL)
Integrated Drivers
Touch Controller ICs
Features
Features 320 to 1296 output channels
output driving voltage ranging from 15 up to 50v
input logic voltage ranging from standard 3.3V to low power 1.8V
low power consumption and low EMI
support TTL, mini-LVDS cascade modulated driver interface, or MIPI
•
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high-speed interface and customized interface technologies
•
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support COF and COG package types
100 to 972 output channels
output driving voltage ranging from 10 up to 50v
input logic voltage ranging from standard 3.3V to low power 1.8V low
power consumption
•
•
support COF and COG package types
Highly integrated chip embedded with source driver, timing controller
and power circuit
•
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source driver output driving voltage ranging up to 30V
Support COG package types
We offer touch controller solutions for capacitive touch panels. Our touch controller solutions are suitable for up
to 13” touch panel screens electronic devices, such as smartphones, mobile internet devices and tablet. In the third
quarter of 2011, we commenced shipping capacitive touch controller ICs to a worldwide brand smartphone customer.
In 2013, we expanded customers base to more well-known smartphone and tablet brand customers.
Our capacitive touch controller possesses certain innovations and merits. It could support sensing and tracking of
up to ten points. The embedded micro-controller single chip solution reduced the cost for flexible product. Its auto
calibration mechanism can meet strict validation requirements of leading smart phone brands. With sophisticated
designed hardware and firmware supporting hybrid sensing combining merits of self-capacitance and mutual
capacitance, Himax’s touch controller could support out-cell and on-cell with various sensor patterns and stack-ups.
In 2015, we shipped touch controller product as we successfully gain design-wins from several smartphone
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and tablet end brands. We continue to gain market share in out-cell and on-cell touch panel controller markets.
Meanwhile, our technological capabilities are highly recognized by end brands and caught the attention of leading
in-cell panel makers that they have some development engagement using our touch-display driver integrated circuit
(TDDI). We have developed a series of TDDI products in 2015 and 2016 for these tier one in-cell touch panel
makers and started mass production in smartphone brands. We also started the mass production of our TDDI in tablet
and automotive displays in 2019. In-cell TDDI, featuring thinner display, slimmer border, and better visual quality,
has become the mainstream technology. We kept expanding our TDDI solutions to replace discrete DDIC and touch
controller IC.
The following table summarizes the features of our touch controller products:
Product
Features
Capacitive Touch Controller
•
complete single chip touch controller solutions for handheld devices,
supporting smartphones and tablet
real multi-point capability support of up to 10 points
•
• mass production with GG, GFF and one glass solution (“OGS”), and
On-cell touch
support advanced functions such as passive stylus, glove, etc.
•
• minimum components: simple, neat, and flexible mechanical design
ASIC service
From 2012, we successfully completed several ASIC service projects for Japan top TV, Projector and HMD
makers with advanced and high-performance customized video processing chips. All of these chips are implemented
with our proprietary video process platform that includes our video process display IPs and high-speed transmission
IPs. The process nodes adopted for these ASICs are usually 40nm, 55nm and even 28nm processes. From 2016, we
also developed the depth sensing technology that aims 3D sensing and AR/VR markets.
The following table summarizes the features of our ASIC service:
Product
Features
ASIC Service
• Well-established ASIC development platform, based on our unique
•
•
•
•
•
video processor and image processing technologies.
offer a wide variety of video interface IPs, like LVDS, HDMI, DVI,
V-by-one, Display port, MIPI, MHL, etc.
built-in 8/32- bit microprocessor built-in video processing algorithm
like super-high resolution, sun-light readable, MEMC, FRC, etc
built-in 3D feature technologies like 2D-to-3D, Glasses-free 3D, 3D
multi-view, 3D visual protection, etc.
support 4K x 2K/ 5K x 2K/ 8K x 4K display
Depth sensing algorithm and hardware accelerator for 3D sensing
and AR/VR applications
LCoS and MEMS Products
Himax Display, our subsidiary, has contributed to our microdisplay products lines: Color-filter LCoS,
Color-sequential LCoS, Front-Lit LCoS and MEMS.
The latest development of Front-Lit LCoS enables an ultra-compact and extremely power-efficient optical
engine by consolidating and integrating LED illumination system and the polarization beam splitter (PBS) into
the micro display module itself. Front-Lit LCoS enables a much-simplified optical engine design and assembly
process that could successfully lowered customers’ manufacturing time and costs.
Himax Display is one of the market leaders of the LCoS industry since 2012 with the whole product line
patented. Himax Display has a mass production ready liquid crystal assembly line, which is unique in the industry
with mass production shipping volume. We have produced and shipped around 3 million units from this ISO
certified line. Our customers use our products in various applications such as pico-projector, communication, toy
projector, AR glasses, and AR-HUD for automotive.
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The merits of our technology feature in resolution, power consumption, size, cost, optical engine design, and
image quality. Many of our industry-leading customers have demonstrated their state-of-the-art products, including
pico-projector, holographic display, AR glasses and AR HUD system, with Himax LCoS technology inside at the
2020 CES with positive market feedbacks. Our technology leadership and proven manufacturing expertise have
made us a preferred partner for customers in these emerging markets and their ongoing engineering projects in AR
glasses and AR HUD for automotive applications. In May 2021, Himax Display revealed its proprietary LCoS 2.0
phase modulation technology, which enable features multi-focal plane images displaying along with less power
consumption, lower cost and smaller form factor to enable holographic display applications for AR-HUD. In
addition, phase modulation technology provides LiDAR for autonomous driving and Wavelength Selective Switch
(“WSS”) for Wavelength-Division Multiplexing (“WDM”) optical communications networks. In the near future,
holographic display will provide a revolution to AR-glasses to achieve consumer friendly products (small size,
light weight and low-power consumption).
We provide a rich products family for customers to choose for different applications, as each product has its
own most important parameters to select and Himax Display provides choices to customers. The following table
shows certain details of our products:
Product
Color-Filter LCoS Microdisplays
Color-Sequential LCoS Microdisplays
Front-Lit Color Filter LCoS
Phase Modulation LCoS
MEMS
Power ICs
Size and Resolution
0.28” (320x240 pixels) QVGA
0.29” (800x480 pixels) WVGA
0.38” (640x360 pixels) nHD
0.44” (640x480 pixels) VGA
0.59” (800x600 pixels) SVGA
Customized design
0.22” (640 x 360 pixels) nHD
0.37” (1366 x 768 pixels) WXGA
0.37” (1920 x 10890 pixels) FULL HD
0.45” (1024 x 768 pixels) XGA
Customized design
0.22” (640 x 360 pixels) nHD
0.37” (1280 x 768 pixels) HD
Customized design
Operated in full phase modulation (0~2π) in visible range.
Selective phase range based on the required response time.
Analog drive scheme with 120Hz refresh frame rate to reduces
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optical flicker and provides stable phase response over time.
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Customized design
0.55” (1280x 800 pixels) WXGA
Himax provides TFT-LCD television, monitor and notebooks power management solutions. The main products
are Power Managements ICs (PMIC), Programmable Gamma OP ICs (PGOP) and Level Shifter ICs (LS). In
recent years, PMIC/PGOP 2-in-1 and PMIC/PGOP/LS 3-in-1 PMIC have gradually become the mainstream
solutions.
Power Management ICs
A power management IC integrates several power components to fulfill system power requirements. It may
include step-up or step-down pulse width modulation, or PWM, DC-to-DC converters, low-dropout regulators, or
LDO regulators, voltage detectors, operational amplifiers, p-gamma OP, level shifters, and/or other components.
For panel module applications, a power management IC provides a reliable and precise voltage for source
drivers, gate drivers, timing controllers, and panel cells. Moreover, its built-in over-temperature and over-current
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protections help prevent components from being damaged under certain abnormal conditions. As integrating an
increasing number of components into a power management IC is likely to be a continuing trend, we believe
power management ICs will continue to be critical components of a TFT-LCD panel module. The following table
summarizes certain features of our power management IC products:
Product
Integrated Multi-Channel Power
Solutions for Notebooks
Integrated Multi-Channel Power
Solutions for Monitors
Integrated Multi-Channel Power
Solutions for TVs
Features
built-in power MOSFET
step-up PWM converter
charge pump regulator
LDO regulator
voltage detector
gate pulse modulator
Vcom operational amplifier
2ch programmable gamma voltage with operational amplifier
I2C programmable
low frame rate control for power saving solution
PMIC/PGOP/Level Shifter 3-in-1
built-in power MOSFET
step-up PWM converter
HV LDO regulator
voltage detector
gate pulse modulator
programmable Vcom voltage / Vcom operational amplifier
programmable gamma voltage with operational amplifier
level shifter
PMIC/PGOP/Level Shifter 2-in-1
built-in power MOSFET
step-up PWM converter
step-down PWM converter
charge pump regulator
HV LDO regulator
voltage detector
gate pulse modulator
Vcom operational amplifier
I2C programmable
programmable gamma voltage with operational amplifier
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Programmable Gamma OP ICs
It is a Programmable Gamma, DVR and VCOM IC. Each is controlled by a 10-bit digital analog converter
(DAC). The user can easily select one of the two gamma curves to compensate for the display. The PGOP also
includes a channel DVR, VCOM buffer and built-in 7-bit DAC. Support 128-step to adjust the VCOM output
voltage by I2C control setting automatically.
Product
14 channel PGOP for dual gate GOA
TFT-LCD
Features
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Programmable gamma buffer DVR and VCOM buffer
14 channel analog output gamma reference voltage
10-bit Gamma DAC resolution
2 Gamma bank register
2 Gamma bank NVM
Built in output channel resister
I2C interface
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Level shifter
TFT-LCD panel manufacturers have developed panel designs to reduce the usage of display drivers, like
gateless designs, which integrate the gate driver function onto the glass but needed level shifter. All level shifter
channels feature the same input circuitry and are compatible with the standard logic-level signals generated by
timing controllers in typical applications. The level shifter converts the timing-controller (TCON) logic-level
signals to the high-level signals needed by the GOA (gate on array) display. The output circuitry has been designed
to achieve high rise and fall times when driving the capacitive loads typically encountered in TFT-LCD display
applications.
Product
16- channel output level shifter for
GOA TFT-LCD
Features
Support 1 or 2 of T-con input signals
Support 1 or 2 input and 4/6/8/10 clock channel output
2 channel STV
2 channel LC
Reset function
OTP/ SCP and OCP function by I2C or Resistor adjustment
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LED driver
A light-emitting diode (LED) is a semiconductor light source that is widely used in lighting, display and TFT
LCD backlight nowadays. The advantages of LEDs as light sources are the small size, fast switching, low power
consumption and long lifetime etc.
LED driver IC is designed to dim the LEDs with critical features such as high current accuracy, high current
matching, short LED protection, open LED protection, over voltage protection, ghosting effect reduction and
current sink leakage protection etc.
Product
Features
Customer ASIC
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By Customer Specification
CMOS Image Sensor Products
The CMOS image sensor products are developed by our subsidiary, Himax Imaging. The products were
designed firstly for camera-equipped mobile devices, such as mobile phones, tablets and notebook computers, with
a focus on low light image and video quality. Although it seems relatively challenging for us to gain significant
market share in conventional RGB camera, we do think there are various interesting and different applications in
imaging. Based on the technologies and IP we developed, on top of legacy products for laptop and multimedia
we have been supplying, our product lines have been expanded to cover three domains: ultralow power computer
vision- Always-On Sensor (“AoS”), Near Infrared (“NIR”) sensor, and big pixel BSI sensors in automotive and
surveillance. In 2019, we further prioritized our focus on ultralow power computer vision- Always-On Sensor
(“AoS”) as the demand for battery-powered smart device with AI intelligent sensing is rapidly growing. Together
with the technologies we already developed, such as Near Infrared (“NIR”) sensor, we can provide our customers
the best integrated solutions for several specific domains.
In addition to advancing our AoS sensor to drive the power as low as possible, we also devote ourselves to
developing sensors that have industry leading small pixel (1.12um) with higher near infrared Quantum Efficiency
(“QE”) to support the new generation cameras. Their superior performance hugely helps to reduce the system’s
power consumption and therefore enhances the system performance. With the high QE in NIR band, we open the
doors to building more sensor and camera systems for machine vision. For example, our HM11B1 is a critical
part of Himax’s WiseEye notebook solution, an AI-based ultralow power AI image sensing total solution and
has penetrated into the laptop ecosystem for the most stylish super slim bezel design. Given its slim dimension
(narrower than 2mm of the chip itself) to support ultra-thin bezel, we originally combine IR sensor to support
Windows Hello, and then added intelligent AoS sensor into a single silicon. This 2-in-1 sensor not only enables
new features, but also greatly saves laptop makers’ effort in mechanical design and overall cost.
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We are committed to be a key player in the CMOS image sensor business with continuous investment in
experienced human resources, an efficient supply chain as well as strategic technology developments and
partnerships to further increase the performance and improve features of small and specially designed pixel
sensors.
The following table sets forth the features of our CMOS image sensor products:
Product
5MP UltraSense 2 NIR Sensor
Features
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1/2.6” format color type with high sensitivity BSI pixel
5MP resolution at 45 frames per second, support QHD video at 60
frames per second
2.0MP ClearView Color Image Sensor
FHD 1/7” 1080p UltraSense Color
Image Sensor
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Compact die size design to support small modules
4x NIR sensitivity at 940nm
4-lane MIPI CSI2 outputs RAW8/10
1/5” format color type
UXGA YUV output at 15 frames per second, RAW output at 30
frames per second
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1-lane MIPI CSI2 outputs YUV, RAW8/10
1/7” format with high sensitivity BSI pixel
1080p FHD resolution at 60 frames per second
Support Always-on mode at 480x270 < 1mW @ 2fps and motion
detection
FHD 1/4” 1080p UltraSense Color
Image Sensor
HD 720p UltraSense 2 Color Image
Sensor
HD 720p Ultra Low Power Color
Image Sensor
1.3MP ClearSense EDR Color
Image Sensor embedded with image
processor for Surveillance
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Support line-based staggered HDR
2-lane MIPI CSI2 outputs
Frame-Sync control for multiple camera system
1/4” format with high sensitivity BSI pixel
1080p FHD resolution at 30 frames per second
Low power consumption
Provide high NIR sensitivity and 4x4 RGB-IR option
2-lane MIPI CSI2 and 10bit parallel DVP outputs
Frame-Sync control for multiple camera system
1/9” format with high sensitivity BSI pixel
720p HD resolution at 30 frames per second
Low power consumption
Support LED-sync for Microsoft Windows Hello
1-lane MIPI CSI2 outputs RAW8/10
1/11” format with high sensitivity BSI pixel
720p HD resolution at 60 frames per second
Ultra slim design to meet 2.2mm narrow bezel notebook computer
Provide Ultralow Power mode <1mW for qqHD 3fps for human
detection application
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Provide RGB for video and W-IR version for AoS + Windows Hello
Support Motion Detection to save system power SPI and 1-lane
MIPI CSI2 dual outputs for both detection and video
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1/4” format with ultra-high sensitivity
ClearSense achieves higher dynamic range in color up to 84dB
with on-chip tone mapping
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800p and 720p resolution at 30 frames per second
Flexi engine automatically controls dynamic range, exposure, gain,
and white balance to balance color fidelity and contrast
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Product
Features
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Color processing pipeline including lens shading correction, defect
correction, edge enhancement, color interpolation and correction,
gamma control, and saturation/hue adjustment.
Anti-blooming and dark sun cancellation
Built-in low dropout regulator and power on reset
10-bit parallel video data port supports RAW, YUV422, and
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1.2MP UltraSense 2 Color Image
Sensor embedded with image
processor for Automotive
NTSC/PAL WVGA Color Image
System on embedded with image
processor for Automotive and
Surveillance
RGB565/555/444
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1/4” format with ultra-high sensitivity
Ultrasense 2 BSI pixel offers higher sensitivity for low light condition
Operation up to 105ºC
960p and 720p resolution at 30 frames per second
Color processing pipeline including lens shading correction, defect
correction, edge enhancement, color interpolation and correction,
gamma control, and saturation/hue adjustment
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Dynamic Range Optimizer offers best dynamic range of video
Anti-blooming and dark sun cancellation
Built-in low dropout regulator and power on reset
10-bit parallel video data port supports RAW, YUV422, and
RGB565/555/444
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High sensitivity, low noise VGA sensor operating up to 60FPS
Visible and near infrared sensitivity
Operation up to 105ºC
Ultra-compact automotive package
Advanced defect correction with built-in temperature sensor
Embedded ISP with programmable automatic exposure and white
balance
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Optical alignment pixel with crop and zoom to native resolution
4Kb OTP for sensor initialization, module storage, and overlay
setting
• Multi-color static overlay engine
QVGA Ultralow Power CMOS Color
Image System for Machine Vision and
Detection
VGA Ultralow Power CMOS Color
Image System for Machine Vision and
Detection
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High sensitivity, low noise 1/11” 320x320 image area
Under 2.5mW at QVGA 30fps and 1mW at QQVGA 15fps
Embedded auto-exposure and motion detection
NeoPac and CSP package
Parallel 8bits, 4bits and 1bit data output
High sensitivity, low noise 1/6” 640x480 image area
Operates approximately 7mA VGA 60FPS to 140µA in QVGA
2FPS mode
Provide high accurate motion detection
Pre-metered exposure provides well exposed first frame and after
extended sleep (blanking) period
Automatic wake and sleep operation with programmable event
interrupt to host processor
Parallel 8bits and 1-Lane MIPI CSI2 interface
Wafer Level Optics Products
Wafer level optics are optical products manufactured using semiconductor process on wafers. This innovative
approach enables wafer level optics to manufacture micro/nano optics structure and high temperature resistance,
making the compatible Surface-Mount Technology or SMT reflow process possible. We offer entire optical solutions
for customers who need compact and easy-to-handle optical products on their electronic devices.
Combining traditional optical lens design, precise mold control and semiconductor manufacturing expertise,
our WLO lens with integrated waveguide, refractive optics and diffractive optical element (DOE) is one of the best
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solution for next generation computational imaging module for 2D/3D illumination and 3D dot projector, which
can be applied to 3D face recognition, 3D sensing, 3D reconstruction, and gesture control. Himax is a pioneer in
high-precision diffraction optics technology with 15 years of experience, having worked on very different designs
over a variety of applications with some of the world’s most heavyweight tech names. With the innovative process
and specific structure, our wafer level optics products provide small form factor and compact module size to be
easily integrated into consumer products. The diffraction optics technology is now well adopted in 3D sensing,
AR/VR devices, holographic display, biomedical inspection, optical communication, etc. We are seeing that DOE
plays an even more decisive role for the next generation optical technology in light of its high-precision and
lightweight characteristics.
Our WLO technology is also adapted to form microstructure such as lens array, DOE and lenticular lens for
advanced applications in digital and computational imaging fields. These technologies stand in a unique position
to integral optical design, semiconductor manufacturing process, and compact packaging service, which are
rarely covered by one single company. Deeply rooted in core wafer level optics technologies, we provide highly
customized optical solutions and high-volume manufacturing to many tier-one customers such as structured lighted
and ToF 3D sensing on mobile device, AR/VR gadgets, biomedical devices and other applications.
Our WLO business hit inflection in the middle of 2017 when we began mass shipment to an anchor customer.
The overall 2018 shipment increased considerably year-over-year because of the customer’s large-scale adoption in
more models. In 2019, we continued the strong shipment momentum from 2018 to fulfill anchor customer’s higher
demand with a significant year-over-year increase. In 2021, we continued our shipment to an anchor customer for
their legacy product. We continue to make progress with ongoing R&D projects with world-leading high tech giants
for ToF 3D sensing, AR/VR gadgets, biomedical devices and others, targeting their future generation products
centered around our exceptional design know-how and mass production expertise in WLO technology.
The following table sets forth the features of our wafer level optics products:
Product
Refractive Optical Lens
Diffractive Optical Element (DOE)
Diffuser element for flood
illumination and TOF
Near Infrared (NIR) Projector
Module
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Features
for Micro Lens Array (MLA) illumination diffuser, lighting control,
flux illumination lens, collimation lens, and compact size camera lens
provide multi-layer solution including optical AR coating,
IR-cutting filter coating, aspheric surface
double-side manufacture process
already in mass production
computational imaging, flux illumination, dot projector for 3D
sensing, 3D reconstruction, gesture and illumination control
using WLO process to integral multi-layers DOE and refractive lens
provide customized solution for specific application
the smallest form factor and reflowable component
eye safety detect circuit embedded
using WLO process to integral multi-layers DOE technology
the smallest form factor and reflowable component
eye safety detect circuit embedded
dot projector module solution for computer vision, 3D sensing, 3D
reconstruction, gesture and illumination control
integral NIR Laser (830/850/940nm), optical system (refractive+
diffractive lens) and high precise active alignment assembly
solution to provide the smallest form factor
• module design for smartphone and other mobile devices
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provide customized module solution for different application
the smallest form factor and reflowable device
including active eye safety solution (Class-1)
Flood illumination Module
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provide customized solution for specific application integral NIR
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Product
Features
Laser (830/850/940nm), and high precise active alignment assembly
solution
• module design for smartphone and other mobile devices
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the smallest form factor and reflowable device
including active eye safety solution (Class-1)
3D Sensing Business
We continue to participate in most of the smartphone OEMs’ ongoing time-of-flight (ToF) 3D sensing projects.
In 2018, our structured light-based 3D sensing total solution targeting Android smartphone’s front-facing application
was unsuccessful due to the high hardware cost of 3D sensing, the long development lead time required to integrate
it into the smartphone and the lack of killer applications which is limited to phone unlock and online payment.
Instead of 3D sensing, most of the Android phone makers have chosen the lower cost fingerprint technology which
can achieve similar phone unlock and online payment functions with somewhat compromised user experience.
Being a leading provider of 3D sensing technology, Himax is also an active participant in smartphone OEMs’
design projects for new devices involving ToF technology. We are seeing increasing ToF adoption by smartphone
makers for world-facing cameras to enable advanced photography, distance/dimension measurement and 3D depth
information generation for AR. Unlike structured light 3D sensing where we provide total solution or just projector
module or optics depending on customers’ needs, with ToF, we will only focus on transmitter module or optics
component by leveraging our WLO related expertise. We continue to actively work with industry leading VCSEL
provider, sensor company, module manufactures and smartphone makers for a new and advanced ToF 3D solution
development, targeting Android smartphones. Leveraging on our WLO technology, we have provided our partners
with spot projector or optics component for their reference design.
3D sensing can have a wide range of applications beyond smartphone. We have started to explore business
opportunities in various industries by leveraging our structured light 3D sensing total solution. In 2021, we shipped
small volume of business access control and biomedical inspection devices with more design-ins and engagements
currently under progress. To strengthen our offers in 3D sensing total solution, we have been collaborating closely
mainly with two types of partners: those with industry-leading expertise in facial recognition algorithm and those
offering application processors with strong AI capability.
Other than 3D sensing total solution, we provide key component, our proprietary 3D decoder IC, to
customers who wish to design their own structured light-based 3D sensing solution. It was already certified by
the leading Chinese electronic payment standard with requirements of accurate data decoding, timely operation
and strict privacy and now it’s well-adopted by many China e-payment solution providers and entered into
small volume production from 2020. Our 3D decoder can accelerate local image processing for face recognition
and offer best-in-class security authentication. In 2021, we have shipped meaningful volume of 3D decoder ICs.
Our critical 3D sensing Technologies includes the following:
Wafer Level Optics Products
WLO is one of the key technologies enabling 3D sensing, AR goggle devices, and many other applications.
Levering on our exceptional design know-how and mass production experience in WLO technology, we are able to
produce the world’s most compact optics required for 3D sensing, meanwhile achieving superior performance and
lower costs.
ASIC
One of the critical elements of our 3D sensing total solution is an ASIC for 3D depth map generation. We are able
to develop the ASIC thanks to our unique in-house capability in developing video ASICs for customers. Equipped
with the ASIC, our 3D sensing total solution can substantially reduce the power consumed while processing 3D
sensing, enhance personal data security, accelerate the 3D depth map generation, and provide superior depth data
output that matches with our optical component. We consider this unique capability as our competitive advantage. It
has been and will continue to be one of our key drivers in the success of our 3D sensing total solution.
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Active Alignment
With much experience in optical assembly for AR and VR devices, our factory has developed a system to do
active alignment for tiny components. From the incoming quality check, assembly process, and testing, all steps
are monitored and checked. The precision assembly capability gives us a very good foundation to do the optical
assembly for DOE, WLO, and laser.
Laser Driver
Based on our expertise in projector, optics, and driver, we have designed a special Glass Broken Detection
(“GBD”) mechanism on our projector. We also have a proprietary laser driver design that detect the connection of
the GBD on the projector. When GBD connection is abnormal, which means glass was broken, the laser driver can
cease the laser to prevent users from being exposed to higher power laser energy leaking from the broken glass.
The following table sets forth the features of our SLiM 3D sensing solutions:
Product
SLiM 3D sensing total solution
Features
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Dot projector: More than 33,000 invisible dots, the highest in the
industry, projected onto object to build the most sophisticated 3D
depth map among all structured light solutions
Depth map accuracy: Error rate of < 0.5% within the entire
operation range of 30cm-100cm
Face recognition: Enabled by the most sophisticated 3D depth data
to build unique facial map that can be used for instant unlock and
secure online payment
Indoor/outdoor sensitivity: Superior sensing capability even under
total darkness or bright sunlight
Eye safety: Certified for IEC 60825 Class 1, the international laser
product standard which governs laser product safety under all
conditions of normal use with naked eyes
Glass broken detection: Patented glass broken detection mechanism
in the dot projector whereby laser is shut down instantaneously in
the event of broken glass in the projector
Power consumption: Less than 400mW for projector, sensor and
depth decoding combined, making it the lowest power consuming
3D sensing device by far among all structured light solutions
• Module size: the smallest structured light solution in the market,
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HV-II 3D Decoder ASIC
ideal for embedded and mobile device integration
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Himax 3D Depth Processor with high depth accuracy
Support up to HD resolution depth map for different applications
2D & 3D auto-exposure control for projector and sensor
Frame rate conversion for different application/capability of SOC
Scaling engine for different application/capability of SOC
Ambient light detection and removal
Embedded Security Engine
Power Management Engine for power shutdown
MIPI CSI-2 / DPHY interface
Ultralow power AI image sensing
The demand for always-on battery-powered smart devices with AI intelligent sensing is rapidly growing. By
combining an ultralow power image sensor with a custom computer vision ASIC and machine-learning algorithms,
Himax ultralow power AI image sensing solution enriches connected edge devices with AI capacity. The edge AI
system, which consumes only few mW power consumptions, is leading the industry for the next-generation, battery
operated, clever computer vision applications. The ultralow power AI image sensing solution is being engaged in a
variety of applications, such as notebook, home appliances, utility meter, automotive, battery-powered surveillance
camera, panoramic video conferencing, and medical, just to name a few. Among Himax’s ultralow power AI image
sensing business, our WiseEye notebook solution provides a ‘laptop-ready’ 3-in-1 RGB/IR/AI solution that features
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respecting privacy and enhancing security for notebook users. At the CES 2020, several leading notebook OEMs
and ODMs demonstrated our WiseEye notebook solution in their next generation premium notebooks with positive
feedback. In 2021, one of our AI image sensing solutions was officially awarded a sizable purchase order from
a top tier household name for a mainstream application. We started ramping up production for above mentioned
applications by the end of 2021. We are highly encouraged by the success. We reached this major milestone just
one year after we delivered the first samples, a remarkable achievement and an illustration of the robustness of
our AI solution. We expect to see more design-wins awarded across a broad customer base and a high variety of
applications leading to robust sales growth for this new high margin product line.
The following table sets forth the features of our ultralow power AI image sensing total solutions:
Product
WiseEye® notebook total solution
AI image total solution
Features
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Ideal for battery operated devices enables always on mode of operation
supporting both continuous operation and periodic wakeup
mode, enabling long battery life
Total solution supports use of a variety of Himax CMOS image
sensors– HM11B1 RGB/IR/AI hybrid sensor. Uniquely designed for
ULP Computer Vision applications with always on scanning as low
as 100uW.
Ultralow power CV MCU: WE-I Plus ASIC a unique ultralow power
computer vision processing silicon that is targeting always on applications
with a sub 1mW capabilities. Processing at the edge: motion detection,
human detection and face detection.
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Emza computer vision algorithms, a lean machine learning framework,
which is trainable for desired use cases (human presence detection,
attention detection and on-looker detection) and works on ultralow
compute resources platform (CPU clock, internal memory)
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Ideal for battery operated devices enables always on mode of operation
supporting both continuous operation and periodic wakeup mode,
enabling long battery life
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Total solution supports use of a variety of Himax CMOS image sensors
– HM01B0 qVGA, HM0360 VGA and HM11B1 RGB/IR/AI hybrid
sensor. Uniquely designed for ULP Computer Vision applications with
always on scanning as low as 100uW.
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Ultralow power AI processor: WE-I Plus ASIC a unique ultralow power
computer vision processing silicon that is targeting always on applications
with a sub 1mW capabilities. Processing at the edge: motion detection,
human detection and face detection.
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tinyML computer vision algorithms feature human presence detection,
people counting, face detection, face recognition, digital meter
recognition, gesture recognition, and voice command control. Also
support image pre-rolling feature to save up to 8 seconds of images
before triggering event for better security offering.
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Total solutions for laptop always-on wake on approach and walk away
lock, battery powered automatic meter reading, auto-framing video
conference machine, image and voice triggered human machine
interface devices.
For the other business model, we provide key components, such as proprietary ultralow power WE-I Plus
AI processor or Always-On CMOS image sensor (AoS). For key component business model, we reinforced our
go-to-market strategy by intensively participating in leading AI partners’ infrastructures and ecosystems. With
our prominent AI platforms, we partnered with world leading edge-to-cloud service providers, such as Google
TensorFlow, Microsoft Azure, Arm AI Partner Program, and tinyML Foundation, and enjoy the enormous network
of these ecosystems and their numerous participants to drive further adoption on applications such as smart home,
smart office, healthcare, agriculture, retail and factory automation. Additionally, we continued our marketing efforts
through joint webinars and other online activities with several well-known platform partners such as Edge Impulse,
Digi-Key and SparkFun. We continue to receive inquiries from large corporations and individual developers alike
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with hundreds of evaluation boards and developments kits having been purchased online and distributed across the
globe. We are very encouraged by the traction this relatively new product line has generated in a short amount of
time and expect to see increasing sales contribution through 2022 and beyond.
The following table sets forth the features of our WE-I Plus ASIC product:
Product
WE-I Plus ASIC
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Core Technologies and Know-How
Features
Ultralow power consumption: 40 uW/MHz
Support image, voice trigger simultaneously to wake up system
Optimized multi-layer power states for always-on applications
Ready-for- use software package and Machine Learning Library,
including device driver, SDK and embARC Machine Learning
Inference Library to support Google TensorFlow Lite Micro framework
ARC-EM9D 32-bit DSP: Frequency up to 400MHz,
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• Memory: Up to 2MByte SRAM
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High performance pixel processing accelerator and JPEG codec
Security Engine: Support secure boot, secure FW update, secure
debug mode, Support AES 128bits, RSA 2048bits, Hash-256,
TRNG, Secure key management
Peripheral: 1/4/8-bit camera interface, I2C/SPI master/slave,
UART, PWM, GPIO with 5 wake-up pins, 12-bit ADC with 4
channels, up to 1Msps, RTC Timer
Driving System Technology. Through our collaboration with panel manufacturers, we have developed extensive
knowledge of circuit design, TFT-LCD driving systems, high-voltage CMOS processes and display systems, all
of which are important to the design of high-performance TFT-LCD display drivers. Our engineers have in-depth
knowledge of the driving system technology, which is the architecture for the interaction between the source
driver, gate driver, timing controller and power systems as well as other passive components. We believe that
our understanding of the entire driving system has strengthened our design capabilities. Our engineers are highly
skilled in designing power efficient and compact display drivers that enhance the performance of TFT-LCD. We are
leveraging our know-how of display drivers and driving system technology to develop display drivers for panels
utilizing other technologies such as AMOLED and electronic paper displays.
High-Voltage CMOS Circuit Design. Unlike most other semiconductors, TFT-LCD display drivers require a
high output voltage of 3.3 to 50 volts. We have developed circuit design technologies using a high-voltage CMOS
process that enables us to produce high-yield, reliable and compact drivers for high-volume applications. Moreover,
our technologies enable us to keep the driving voltage at very high uniformity, which can be difficult to achieve
when using standard CMOS process technology.
High-Bandwidth Interfaces. In addition to high-voltage circuit design, TFT-LCD display drivers require high
bandwidth transmission for video signals. We have applied several high-speed interfaces, including transistor-transistor
logic (“TTL”), Reduced Swing Differential Signaling (“RSDS”), mini low-voltage differential signaling (“LVDS”),
dual-edge TTL (“DETTL”), turbo Reduced Swing Differential Signaling (“RSDS”), Mobile Industry Processor
Interface (“MIPI”) and other customized interfaces in our display drivers. Moreover, we are developing additional
driver interfaces for special applications with optimized speed, lower EMI and higher system stability.
Die Shrink and Low Power Technologies. Our engineers are highly skilled in employing their knowledge
of driving technology and high-voltage CMOS circuit design to shrink the die size of our display drivers while
leveraging their understanding of driving technology and panel characteristics to design display drivers with low
power consumption. Die size is an important consideration for applications with size constraints. Smaller die size
also reduces the cost of the chip. Lower power consumption is important for many portable devices such as notebook
computers, smartphone, tablet and consumer electronics products.
AI Image Sensing Technologies. Composed by an AoS sensor, an edge AI ASIC processor and computer-vision
AI algorithm, all operated in ultralow power mode. Our industrial first AoS CMOS image sensor features ultralow
power and low latency back-illuminated solution for always on, intelligent visual sensing applications. With Himax
exceptional low power know-how and ASIC implementation technologies, our AI image processor featured different
45
power domain and mode management schemes, together with advanced image processing hardwired accelerators
to construct different operating modes in balancing processor performance and power consumptions. The seamless
and proprietary interface between our AoS sensor and AI processor ensure the efficient and fast-response sensor data
transmission and wake-up mechanism operating in ultralow power mode. The computer-vision AI algorithm, which
get benefit from high performance and low power AI processor and image data from sensor, can therefore enable AI
features such as powerful human detection, occupancy detection and motion classification for various application
needs.
LCoS Microdisplay Technologies. Compared to other microdisplay technologies, LCoS microdisplay offers
smaller form factor, higher brightness, and less power consumption. Himax Display has own proficient engineering
team to develop patented industry-only non-captive LCoS, front-lit waveguide, and module design, along with
an in-house ISO certified manufacture line. All position us at the forefronts of leading AR glasses and AR-HUD
markets. The latest development of Front-Lit LCoS enables an ultra-compact and extremely power-efficient optical
engine by consolidating and integrating LED illumination system into the micro display module itself and makes
the patented technology ideal for AR headsets. Furthermore, Himax Display provided phase modulation LCoS
2.0 technologies to offer high-efficient, low power and multi-focal plane displaying features to fit for holographic
displaying needs in numerous leading applications.
3D Technologies. Several technologies in Himax are integrated together to form our 3D solution. First, wafer
level nanoimprinted technology is used to design and manufacture DOE and Waveguide. Then, our in-house
capability on semiconductor enables us to design IC particularly match our optical component. Our expertise in
precision assembly in optics also help us to provide a more complete solution to our customers.
Customers
Our customers for display drivers are primarily panel manufacturers and mobile device module manufacturers,
who in turn design and market their products to manufacturers of end-use products such as notebook computers,
desktop monitors, televisions, smartphone, tablet, automotive and consumer electronics products. We may sell our
products through agents or distributors for certain products or in certain regions. As of December 31, 2021, we sold
our products to more than 200 customers. Our ten largest customers together accounted for approximately 75.6%,
77.7% and 79.5% of our revenues in 2019, 2020 and 2021, respectively. In 2019, 2020 and 2021, our two largest
customers accounted for 10% or more of our net revenue: customer A and its affiliates accounted for 29.5%, 32.6%
and 32.1% of our revenues, respectively; and customer C accounted for 5.6%, 12.7% and 19.1%, respectively.
Certain of our customers provide us with a long-term (twelve-month) forecast plus three-month rolling
non-binding forecasts and confirm orders about one month ahead of scheduled delivery. In general, purchase
orders are not cancellable by either party, although from time to time we and our customers have agreed to
amend the terms of such orders.
Sales and Marketing
We focus our sales and marketing strategy on establishing business and technology relationships principally with
TFT-LCD panel manufacturers, panel manufacturers using LTPS or OLED, or Oxide technologies, mobile display
module and mobile device manufacturers for smartphone, tablet and automotive, and camera module houses in order
to work closely with them on future semiconductor solutions that align with their product road maps. Our engineers
collaborate with our customers’ engineers to create products that comply with their specifications and provide a high
level of performance at competitive prices and also create customized features for end brand customers. Our end
market for large-sized panels is concentrated among a limited number of major panel manufacturers. We also market
our products directly to monitor, notebook and mobile device manufacturers so that our products can be qualified for
their specifications and designed into their products. Furthermore, we extend our business development with system
and ODM companies by using strategic ASIC business model to not only develop ASIC product based on customer
specification but also jointly research and develop new technologies to meet customers' future product demand.
Additionally, we form strategic partnership with tier-1 customers for our LCoS microdisplays, 3D sensing and AI
image sensing to penetrate into the emerging market. We believe we need close alliance with our customers to build
up ecosystem for new applications.
We primarily sell our products through our direct sales teams located in Taiwan, China, South Korea and Japan.
We also have dedicated sales teams for certain of our most important current or prospective customers. We have
offices in Tainan, Hsinchu, Taipei, Taiwan; and Shenzen and Suzhou, China. We have other sales and technical
46
support offices in Hefei, Beijing, Shanghai, Fuzhou, Foshan, Fuqing, Ningbo, Wuhan, Chongqing, Chengdu,
Xi’an and Xiamen, China; Tokyo, Japan; Asan-si and Bundang-gu, South Korea, Givatayim, Israel; and Irvine
and Campbell, California and Minneapolis, Minnesota, USA, all in close proximity to our customers. For certain
products or regions, we may sell our products through agents or distributors.
Our sales and marketing team possesses a high level of technical expertise and industry knowledge used to
support a lengthy and complex sales process. This includes a highly trained team of product managers and field
applications engineers. Our team is equipped with extensive strategic marketing experience and a strong capability
to identify market trends. We also provide technical support and assistance to potential and existing customers in
system/SoC architecture, designing, testing and qualifying display modules, camera modules and end application
systems that incorporate our products and ASICs. We believe that the depth and quality of this design support are
key to improving customers’ time-to-market and maintaining a high level of customer satisfaction.
Manufacturing
We operate primarily in a fabless business model that utilizes substantially third-party foundry and assembly
and testing capabilities. We leverage our experience and engineering expertise to design high-performance
semiconductors and rely on semiconductor manufacturing service providers for wafer fabrication, gold bumping,
assembly and testing. We also rely largely on third-party suppliers of processed tape used in TAB packaging. We
engage foundries with high-voltage CMOS process technology for our display drivers and engage assembly and
testing houses that specialize in TAB and COG packages, thereby taking advantage of the economies of scale and
the specialization of such semiconductor manufacturing service providers. Our primarily fabless model enables us to
capture certain financial and operational benefits, including reduced manufacturing personnel, capital expenditures,
fixed assets and fixed costs. It also gives us the flexibility to use the technology and service providers that are the
most suitable for any given product.
We operate a fab under Himax Display primarily for performing manufacturing processes for our LCoS
microdisplays. Moreover, for better integration, we also established an in-house color filter facility under Himax
Taiwan, which commenced shipments from 2010. The color filter line is a critical and unique process for our
proprietary single-panel color LCoS microdisplays. An in-house color filter facility enhances the competitiveness
of our LCoS products and creates value for our customers. In addition, we have established an in-house WLO
facility under Himax Taiwan for the key process of our wafer level optics products, which started small-scale
shipments from December 2009 and commenced mass shipment to anchor customer from 2017 onwards. We began
construction of our new building, Fab 2, in March 2017, located nearby the current headquarters to house additional
WLO capacity, the new active alignment equipment needed for our 3D sensing business and to provide extra office
space. The construction of Fab 2 was completed in the first half of 2018.
Manufacturing Stages
The diagram below sets forth the various stages in manufacturing display drivers according to the two different
types of assembly utilized: TAB or COG. The assembly type depends primarily on the application and design of the
panel and is determined by our customers.
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48 Wafer Fabrication: Based on our design, the foundry provides us with fabricated wafers. Each fabricated wafer contains many chips, each known as a die.Gold Bumping: After the wafers are fabricated, they are delivered to gold bumping houses where gold bumps are plated on each wafer. The gold bumping process uses thin film metal deposition, photolithography and electrical plating technologies. The gold bumps are plated onto each wafer to connect the die to the processed tape, in the case of TAB package, or the glass, in the case of COG package.Chip Probe Testing: Each die is electrically tested, or probed, for defects. Dies that fail this test are discarded.Assembly and Testing: Our display drivers use two types of assembly technology: TAB or COG. Display drivers for large-sized applications typically require TAB package types and to a lesser extent COG package types,whereas display drivers for smartphone, tablet and consumer electronics products typically require COG package types.TAB AssemblyWe use two types of TAB technologies: TCP and COF. TCP and COF packages are both made of processed tape that is typically 35mm or 48mm wide, plated with copper foil and has a circuit formed within it. TCP and COF packages differ, however, in terms of their chip connections. With TCP packages, a hole is punched through the processed tape in the area of the chip, which is connected to a flying lead made of copper. By contrast, with COF packages, the lead is mounted directly on the processed tape and there is no flying lead. In recent years, COF packages have become predominantly used in TAB technology. • Inner-Lead Bonding: The TCP and COF assembly process involves grinding the bumped wafers into their required thickness and cutting the wafers into individual dies, or chips. An inner lead bonder machine connectsthe chip to the printed circuit processed tape and the package is sealed with resin at high temperatures. •
Final Testing: The assembled display drivers are tested to ensure that they meet performance specifications.
Testing takes place on specialized equipment using software customized for each product.
COG Assembly
COG assembly connects display drivers directly to LCD panels without the need for processed tape. COG
assembly involves grinding the tested wafers into their required thickness and cutting the wafers into individual dies,
or chips. Each individual die is picked and placed into a chip tray and is then visually or auto-inspected for defects.
The dies are packed within a tray in an aluminum bag after completion of the inspection process.
Quality Assurance
We maintain a comprehensive quality assurance system. Using a variety of methods, from conducting rigorous
simulations during the circuit design process to evaluating supplier performance at various stages of our products’
manufacturing process, we seek to bring about improvements and achieve customer satisfaction. In addition to
monitoring customer satisfaction through regular reviews, we implement extensive supplier quality controls so that
the products we outsource achieve our high standards. Prior to engaging a third party as our supplier, we perform
a series of audits on their operations, and upon engagement, we hold frequent quality assurance meetings with
our suppliers to evaluate such factors as product quality, production costs, technological sophistication and timely
delivery.
In November 2002, we received ISO 9001 certification, which was renewed in March 2021 and will expire in
March 2024. In February 2006, we received ISO 14001 certification, which was renewed in December 2020 and
will expire in December 2023. In addition, in March 2007, we received IECQ QC 080000 certification, which was
renewed in February 2019 and will expire in March 2022.
Environmental Management System and Safety and Health Management System
Himax follows closely the global environmental trends, including energy saving and waste reduction, in its daily
operations. The Company is certified in accordance with ISO 14001, ISO 45001 and ISO 14064.
Himax is a leader in its sector when it comes to the environment and safety, operating under measures much
more stringent than domestic regulations. The Company aims to grow sustainably, delivering economic, social and
environmental benefits with its healthy employees.
Himax has also been tirelessly reducing impacts to the environment and improving safety in its operations,
specifically targeting product design and waste handling.
Semiconductor Manufacturing Service Providers and Suppliers
Through our relationships with leading foundries, assembly, gold bumping and testing houses and processed
tape suppliers, we believe we have established a supply chain that enables us to deliver high-quality products to our
customers in a timely manner.
Access to semiconductor manufacturing service providers is critical as display drivers require high-voltage
CMOS process technology and specialized assembly and testing services, all of which are different from industry
standards. We have obtained our foundry services from TSMC, UMC, Vanguard, Macronix, Globalfoundries
Singapore, PSMC, Nexchip and SKHYSI in the past few years. These are among a select number of semiconductor
manufacturers that provide high-voltage CMOS process technology required for manufacturing display drivers.
We engage assembly and testing houses that specialize in TAB and COG packages such as Chipbond, Chipmore
International trading company Ltd., ChipMOS Technologies Inc., Nepes Corporation and King Yuan Electronics
Co., Ltd.
We plan to strengthen our relationships with our existing semiconductor manufacturing service providers and diversify
our network of such service providers in order to ensure access to sufficient cost-competitive and high-quality manufacturing
capacity. We are selective in our choice of semiconductor manufacturing service providers. It takes a substantial amount of
time to qualify alternative foundries, gold bumping, assembly and testing houses for production. As a result, we expect that
we will continue to rely on a limited number of semiconductor manufacturing service providers for a substantial portion of
our manufacturing requirements in the near future.
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The table below sets forth (in alphabetical order) our principal semiconductor manufacturing service
providers and suppliers:
Wafer Fabrication
Gold Bumping
Globalfoundries Singapore Pte., Ltd.
Macronix International Co., Ltd.
Nexchip Semiconductor Corporation
Powerchip Semiconductor Manufacturing Corp.
SK hynix system ic
Taiwan Semiconductor Manufacturing Company Limited
United Microelectronics Corporation
Vanguard International Semiconductor Corporation
Chipbond Technology Corporation
Chipmore International Trading Company Ltd.
ChipMOS Technologies Inc.
LB Semicon, Inc.
Union Semiconductor Co., Ltd.
Processed Tape for TAB Packaging
Assembly and Testing
Ardentec Corporation
Advanced Semiconductor Engineering Inc.
Chipbond Technology Corporation
Chipmore International Trading Company Ltd.
ChipMOS Technologies Inc.
Global Testing Corporation
Greatek Electronics Inc.
Jiangsu Changjiang Electronics Technology Co., Ltd.
King Yuan Electronics Co., Ltd.
Micro Silicon Electronics Corp.
Nepes Corporation
Taiwan IC Packaging Corporation
LB Lusem Co., Ltd.
Union Semiconductor Co., Ltd.
JMC Electronics Co., Ltd.
LG Innotek Co., Ltd.
Stemco., Ltd.
Chipbond Technology Corporation
Chip Probe Testing
Chipbond Technology Corporation
Chipmore International Trading Company Ltd.
ChipMOS Technologies Inc.
Global Testing Corporation
Greatek Electronics Inc.
King Yuan Electronics Co., Ltd.
Micro Silicon Electronics Corp.
LB Semicon, Inc.
Union Semiconductor Co., Ltd.
YoungTek Electronics Corp.
Intellectual Property
As of February 28, 2022, we held a total of 3,032 patents, including 1,374 in Taiwan, 962 in the United States,
602 in China, and 94 in other countries. The expiration dates of our patents range from 2022 to 2041. We also have
a total of 64 pending patent applications in Taiwan, 121 in the United States and 277 in other jurisdictions, including
the PRC, Japan, Korea, Israel and Europe. In addition, we have registered “Himax and logo” as trademarks in
Taiwan, China, Europe, Singapore, Korea, Japan and the United States. “Omniwide Film and logo” as trademarks in
Taiwan, China, Europe, Korea, Japan and the United States, “EMZA VISUAL SENSE and logo” as trademarks in
Israel and the United States, “CMVT” as trademarks in Taiwan and China, as well as “WISEEYE” as trademark in
the United States.
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Competition
The market characteristics for our products are, in general, intensely competitive, characterized by continuous
technological change, evolving industry standards, and declining average selling prices. We believe key factors that
differentiate the competition in our industry include:
•
•
•
•
•
•
customer relations;
product performance;
design customization;
development time / product release;
product integration;
technical services;
• manufacturing costs;
•
•
•
•
supply chain management;
timely delivery;
economies of scale; and
broad product portfolio.
We continually face intense competition from fabless display driver companies, including Fitipower Integrated
Technology, Inc., FocalTech Systems Co., Ltd., Novatek Microelectronics Corp., Raydium Semiconductor
Corporation, Sitronix Technology Co., Ltd., Ilitek Corp., Silicon Works Co. Ltd., ESWIN, Chipone, Newvision,
Ribbon Display Japan, Hisilicon and Synaptics Incorporated. We also face competition from integrated device
manufacturers, such as Rohm Co., Ltd.
Some of our competitors are affiliated or have established cross relationships with other panel manufacturers.
Some have longer operating histories, or greater brand recognition, or significantly greater financial, manufacturing,
technological, sales and marketing, human and other resources than we do. Additionally, we expect that as the flat
panel semiconductor industry expands, more companies may enter and compete in our markets.
For In-cell TDDI, we compete with Novatek Microelectronics Cop., Synaptics Incorporated, FocalTech Systems
Co., Ltd., and Ilitek Corp.
For LCoS microdisplay products, we face competition from OmniVision, Jasper, Citizen, Syndiant, Kopin,
Compound Photonics and RAONTECH. We also compete with alternative microdisplay technology providers such
as Texas Instruments with DLP, Sony with Micro OLED and Bosch with scanning mirror.
For power ICs, we face competition from Taiwan companies including Richtek Technology Corp., Global
Mixed-mode Technology Inc., Novatek Microelectronics Corp., Fitipower Integrated Technology Inc. We also
compete with worldwide suppliers such as Silergy Corp., and Rohm Co., Ltd.
For CMOS image sensor products, our focus is on machine vision. Competition in this space is primarily from
OmniVision Technologies Inc., Sony Corporation and Pixart Imaging Inc.
For wafer level optics products, we face competition primarily from Heptagon that was acquired by ams AG
and certain new optical design houses from China, such as Angstrong Tech, Yuguang Science and Technology
Development Co.
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52For 3D sensing, Himax is one of the few companies that can provide the one-stop solution though there are more companies attempting to jump into the game. ams AG and Orbbec will be the main competitors we face in the worldwide.For ultralow power AI image sensing, the main competition is Qualcomm with its “Glance” device. Few additional small size companies develop AI base edge devises, such as Lattice, Eta Computing, Nuvoton, Altek, etc. However, Himax is the only vendor who can offer a truly in-house vertically integrated solution comprise with all three building blocks required by customers: CMOS sensor, purposely designed MCU and the AI algorithm.Insurance We maintain insurance policies on our buildings, equipment and inventories covering property damage and damage due to, among other events, fires, typhoons, earthquakes and floods. We maintain these insurance policies on our facilities and on transit of inventories. Additionally, we maintain director and officer liability insurance. We do not have insurance for business interruptions, nor do we have key person insurance. Environmental Matters Himax is required to ensure its products and is obligated to comply with valid regulations and governmental authorities’ regulatory directives in applicable jurisdictions on topic of Environmental Protection. Additionally, Himax Taiwan maintains a color filter facility and a wafer level optics facility and Himax Display maintains a facility for our LCoS products. Himax IGI operates under the designated facility related for 3D mask production, where we have taken the necessary steps to obtain the appropriate permits and believe that we are in compliance with the existing environmental laws and regulations in the ROC and US jurisdiction applicable. In addition, we have entered into various agreements with certain customers whereby we have agreed to indemnify them, and in certain cases, their customers, for any claims made against them for hazardous material violations that are found in our products.4.C. Organizational Structure The following chart sets forth our corporate structure and ownership interest in each of our principal operatingsubsidiaries and affiliates as of February 28, 2022. The following table sets forth summary information for our subsidiaries as of February 28, 2022.
Subsidiary
Main Activities
Jurisdiction of
Incorporation
Percentage of
Our Ownership
Interest
Himax Technologies Limited
Himax Technologies Korea
Ltd.
Himax Technologies
(Samoa), Inc.
Himax Technologies
(Suzhou) Co., Ltd.
Himax Technologies
(Shenzhen) Co., Ltd.
Himax Display, Inc.
Integrated Microdisplays
Limited
Himax Display (USA) Inc.
Himax Analogic, Inc.
Himax Imaging, Inc.
Himax Imaging, Ltd.
Himax Imaging Corp.
Himax Media Solutions, Inc.
Harvest Investment Limited
Himax Technologies Japan
Ltd.
Himax Semiconductor
(Hong Kong) Limited
Liqxtal Technology Inc.
Himax IGI Precision Ltd.
Emza Visual Sense Ltd.
CM Visual Technology
Corp. (CMVT)
IC design and sales
IC design and sales
ROC
South Korea
Investments
Samoa
Sales and technical support
PRC
Sales and technical support
PRC
LCOS and MEMS design,
manufacturing and sales
ROC
LCOS design
Hong Kong
100.0%
100.0%
100.0% (1)
100.0% (2)
100.0% (2)
83.5% (1)
83.5% (3)
LCOS and MEMS design,
sales and technical support
IC design and sales
Investments
IC design and sales
IC design
ASIC service
Investments
Sales
Delaware, USA
83.5% (3)
ROC
Cayman Islands
ROC
California, USA
ROC
ROC
Japan
98.6% (1)
100.0%
98.4% (1)
98.4% (4)
99.2% (1)
100.0% (1)
100.0%
Investments
Hong Kong
100.0%
LC Lens design and sales
3D micro and nano structure
mastering and prototype
replication
Visual sensors and efficient
machine vision algorithm
Omniwide film products
design and sales
ROC
Delaware, USA
Israel
ROC
67.5% (1)
100.0% (1)
100.0% (1)
66.7% (1)
(1) Indirectly, through our 100.0% ownership of Himax Technologies Limited.
(2) Indirectly, through our 100.0% ownership of Himax Technologies (Samoa), Inc.
(3) Indirectly, through our 83.5% ownership of Himax Display, Inc.
(4) Indirectly, through our 98.4% ownership of Himax Imaging, Ltd.
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4.D. Property, Plants and Equipment
Our corporate headquarters are located at a 22,172 square meter facility within the Tree Valley Industrial Park
in Tainan, Taiwan. We began construction of our new building, Fab 2, in March 2017, located nearby the current
headquarters. The newly completed building, located at a 42,619 square meter facility, houses additional WLO
capacity, the new active alignment equipment needed for our 3D sensing business and provides extra office space.
The facilities house our research and development, engineering, sales and marketing, operations and general
administrative staff.
We also lease office space in Taipei and Hsinchu, Taiwan; Suzhou, Shenzhen, Foshan, Beijing, Shanghai, Ningbo,
Wuhan, Hefei, Xiamen, Chongqing, China; Tokyo, Japan; Asan-si and Bundang-gu, South Korea; Givatayim, Israel;
and Irvine and Campbell, California and Minneapolis, Minnesota, USA. The lease contracts may be renewed upon
expiration.
We have established under Himax Taiwan an in-house WLO facility for the key process of our products, with
1,171 square meters of floor space in a building leased from Innolux, which already produced and shipped over 50
million optics to tier-1 customer from 2010. We have also expanded certain facilities for LCoS and WLO products
to accommodate new customers and new applications located at our headquarters in Tainan, Taiwan. In addition,
Himax Taiwan owns and operates a fab with 1,431 square meters of floor space in a building leased from Innolux
in Tainan, where it established an in-house color filter facility that commenced shipments from 2010. This in-house
facility provides color filter for CMOS image sensor and LCoS products. The color filter line is a critical and unique
process for our proprietary single-panel color LCoS microdisplays. An in-house color filter facility enhances the
competitiveness of our color-filter LCoS microdisplays products and creates value for our customers.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion should be read in conjunction with our audited consolidated financial statements and
their accompanying notes included elsewhere herein which are prepared in accordance with IFRS.
5.A. Operating Results
For discussion related to our financial condition, changes in financial condition, and the results of operations for
2020 compared to 2019, refer to Part I, Item 5. Operating and Financial Review and Prospects, in our Annual Report
on Form 20-F for the fiscal year ended December 31, 2020, which was filed with the United States Securities and
Exchange Commission on March 31, 2021.
Overview
We are a fabless semiconductor solution provider dedicated to display imaging processing technologies. We
are a worldwide market leader in display driver ICs and timing controllers used in TVs, laptops, monitors, mobile
phones, tablets, automotive, digital cameras, car navigation, virtual reality (VR) devices and many other consumer
electronics devices. Additionally, we design and provide controllers for touch sensor displays, in-cell Touch and
Display Driver Integration (TDDI) single-chip solutions, LED driver ICs, power management ICs, and LCoS
micro-displays for augmented reality (AR) devices and heads-up displays (HUD) for automotive. We also offer
CMOS image sensors, wafer level optics for AR devices, 3D sensing and ultralow power AI image sensing, which
are used in a wide variety of applications such as mobile phone, tablet, laptop, TV, PC camera, automobile, security,
medical devices, home appliance, AIoT, etc. For display drivers and display-related products, our customers are
panel manufacturers, agents or distributors, module manufacturers and assembly houses. We also work with camera
module manufacturers, optical engine manufacturers, and television system manufacturers for various non-driver
products.
We commenced operations through our predecessor, Himax Taiwan, in June 2001. We must, among other things,
continue to expand and diversify our customer base, broaden our product portfolio, maintain our leading technology
position, achieve additional design wins and manage our costs to partially mitigate declining average selling
prices and any other market risks in order to maintain our profitability. Moreover, we must continue to address
the challenges of being a growing technology company, including hiring and retaining managerial, engineering,
operational and financial personnel and implementing and improving our existing administrative, financial and
operations systems.
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We operate primarily in a fabless business model that utilizes substantially third-party foundry and assembly
and testing capabilities. We leverage our experience and engineering expertise to design high-performance
semiconductors and rely largely on third-party semiconductor manufacturing service providers for wafer fabrication,
gold bumping, assembly and testing with the exception of manufacturing of LCoS microdisplay, wafer level optics
products and active alignment for 3D sensing, which we manufacture through our own factories. We are able to take
advantage of the economies of scale and the specialization of our third-party semiconductor manufacturing service
providers. Our primarily fabless model enables us to capture certain financial and operational benefits, including
reduced manufacturing personnel, capital expenditures, fixed assets and fixed costs. It also gives us the flexibility to
use the technology and service providers that are the most suitable for any given product. For LCoS microdisplay
and wafer level optics products, our in-house factories enable us to protect our proprietary technologies and
manufacturing expertise in the effort to further expand these businesses.
As our semiconductors are critical components of flat panel displays, our industry is closely linked to the trends
and developments of the flat panel display industry, in particular, the TFT-LCD panel segment. The majority of our
revenues in 2021 were derived from sales of display drivers that were eventually incorporated into TFT-LCD panels.
We expect display drivers for TFT-LCD panels to continue to be our primary products. The TFT-LCD panel industry
is intensely competitive and is vulnerable to cyclical market conditions. The average selling prices of TFT-LCD
panels could decline for numerous reasons, which could in turn result in downward pricing pressure on our products.
See “Item 3.D. Key Information—Risk Factors—Risks Relating to Our Financial Condition and Business—We
derive the majority of our net revenues from sales to the TFT-LCD panel industry, which is highly cyclical and
subject to price fluctuations. Such cyclicality and price fluctuations could negatively impact our business or results
of operations.” The revenue expansion of our non-driver products as well as TFT-LCD product trending toward high
resolution and any other new product introduction help to mitigate these risks.
Factors Affecting Our Performance
Our business, financial position and results of operations, as well as the period-to-period comparability of our
financial results, are significantly affected by a number of factors, some of which are beyond our control, including:
•
•
•
•
•
•
•
•
average selling prices;
unit shipments;
product mix;
design wins;
cost of revenues and cost reductions;
supply chain management;
share-based compensation expenses and cash awards; and
tax credits.
Average Selling Prices
Our performance is affected by the selling prices of each of our products. We price our products based on
several factors, including manufacturing costs, life cycle stage of the product, competition, technical complexity of
the product, size of the purchase order and our relationship with the customer. We typically are able to charge the
highest price for a product when it is first introduced. Although from time to time we are able to raise our selling
prices during times of supply constraints, our average selling prices typically decline over a product’s life cycle,
which may be offset by changes in conditions in the semiconductor industry such as constraints in foundry capacity.
For example, from 2020, the industry-wide tightening of foundry capacity has extended to backend facilities that
include assembly and testing and appears to be a long-term phenomenon. Robust demand pushed foundry capacity
constraints to a more severe level and rose higher material cost which in turn enabled higher average selling prices.
The general trend in the semiconductor industry is for the average selling prices of semiconductors to decline
over a product’s life cycle due to competition, production efficiencies, emergence of substitutes and technological
obsolescence. Our cost reduction efforts also contribute to this decline in average selling prices. See “—Cost of
Revenues and Cost Reductions.”
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Our average selling prices are affected by the size and bargaining power of our customers. As new China panel
makers emerge in the marketplace and continue to expand their capacity, China panel makers’ bargaining power will
increase accordingly, negatively impacting our average selling price. Our average selling prices are also affected by
the packaging type our customers choose as well as the level of product integration. See “—Product Mix” below.
Lastly, competition level affects our average selling prices as well. However, the impact of declining average selling
prices on our profitability might be offset or mitigated to a certain extent by increased volume as lower prices may
stimulate demand and thereby drive sales and TFT-LCD panel products trending toward higher resolution.
Unit Shipments
Our performance is also affected by the number of semiconductors we ship, or unit shipments. As our display
drivers are critical components of flat panel displays, our unit shipments depend primarily on our customers’
panel shipments among other factors. Our unit shipments have grown since our inception primarily as a result
of our increased market share with certain major customers and their increased shipments of panels. Our growth
in unit shipments also reflected the demand for higher resolution panels which typically require more display
drivers. However, the development of higher channel display drivers or new technologies, if successful, could
potentially reduce the number of display drivers required for each panel while achieving the same resolution. If
such technologies become commercially available, the market for our display drivers will be reduced and we could
experience a decline in revenue and profit. Our unit shipments also depend on the capacity we can get from our
foundry, assembly and testing house. Our growth was constrained by the severe foundry capacity shortage from
2020.
Product Mix
The proportion of our revenues that is generated from the sale of different product types, also referred to as
product mix, also affects our average selling prices, revenues and profitability. Our display driver products vary
depending on, among other things, the number of output channels, the level of integration and the package type.
Variations in each of these specifications could affect the average selling prices of such products. For example,
the trend for display drivers for use in large-sized panels is toward products with a higher number of channels,
which typically command higher average selling prices than traditional products with a lower number of channels.
However, panels that use higher-channel display drivers typically require fewer display drivers per panel. As a result,
our profitability will be adversely affected to the extent that the decrease in the number of display drivers required
for each panel is not offset by increased total unit shipments and/or higher average selling prices for display drivers
with a higher number of channels. The level of integration of our display drivers also affects average selling prices,
as more highly integrated chips typically have higher selling prices. Additionally, average selling prices are affected
by changes in the package types used by our customers. For example, the chip-on-glass package type typically has
lower material costs because no processed tape is required. Moreover, our different non-driver products vary in
average selling prices and costs.
The proportion of non-driver business would also affect our financial position and results of operations. For
the past few years, we have experienced operating losses from our non-driver business. This was partly due to
low sales volume during these periods that led to insufficient revenue to fully cover expenses such as research and
development and operating expenses. We expect, however, to ramp up the volume production and sales of our
non-driver products in the future and generate positive operation income from such non-driver products. Typically,
our non-driver products have higher gross margins as well as higher growth potential than our driver products, we
expect the overall profit margin across our product platform to improve.
Design Wins
Achieving design wins is important to our business, and it affects our unit shipments. Design wins occur when
a customer incorporates our products into their product designs. There are numerous opportunities for design wins,
including, but not limited to, when panel manufacturers:
introduce new models to improve the cost and/or performance of their existing products or to expand their
product portfolio;
establish new fabs and seek to qualify existing or new component suppliers; and
replace existing display driver companies due to cost or performance reasons.
•
•
•
56
Design wins are not binding commitments by customers to purchase our products. However, we believe that
achieving design wins is an important performance indicator. Our customers typically devote substantial time and
resources to designing their products as well as qualifying their component suppliers and their products. Once our
products have been designed into a system, the customer may be reluctant to change its component suppliers due to
the significant costs and time associated with qualifying a new supplier or a replacement component. Therefore, we
strive to work closely with current and prospective customers in order to anticipate their requirements and product
roadmaps and achieve additional design wins.
Cost of Revenues and Cost Reductions
We strive to control our cost of revenues. Our cost of revenues as a percentage of total revenues in 2019,
2020 and 2021 was 79.5%, 75.1% and 51.6%, respectively. In 2021, as a percentage of Himax Taiwan’s total
manufacturing costs, the cost of wafer fabrication was 58.7%, the cost of processed tape was 7.2%, the cost of
assembly and testing was 33.5%, and overhead was 0.6%. Our cost of revenues may increase as a result of an
increase in raw material prices, any failure to obtain sufficient foundry, assembly or testing capacity or any shortage
of processed tape or failure to improve our manufacturing utilization rate or production yield. As a result, our ability
to manage our wafer fabrication costs, costs for processed tape, assembly and testing costs and our manufacturing
utilization rate or production yield is critical to our performance. In addition, to mitigate declining average selling
prices, we aim to reduce unit costs by, among other things:
•
•
•
improving product design (e.g., having smaller die size allows for a larger number of dies on each wafer,
thereby reducing the cost of each die);
improving manufacturing yields through our close collaboration with our semiconductor manufacturing
service providers and in our in-house manufacturing facilities; and
achieving better pricing from a diversified pool of semiconductor manufacturing service providers and
suppliers, reflecting our ability to leverage our scale, volume requirements and close relationships as well
as our strategy of sourcing from multiple service providers and suppliers.
Supply Chain Management
Due to the competitive nature of the flat panel display industry and our customers’ need to maintain high capacity
utilization in order to reduce unit costs per panel, any delays in the delivery of our products could significantly
disrupt our customers’ operations. To deliver our products on a timely basis and meet the quality standards
and technical specifications our customers require, we must have assurances of high-quality capacity from our
semiconductor manufacturing service providers. We therefore strive to manage our supply chain by maintaining
close relationships with our key semiconductor manufacturing service providers and strive to provide credible
forecasts of capacity demand and seek for new manufacturing service providers in case of any manufacturer’s
capacity shortage. Any disruption to our supply chain could adversely affect our performance and could result in a
loss of customers as well as potentially damage our reputation.
Share-Based Compensation Expenses and Cash Awards
Our results of operations have been affected by, and we expect our results of operations to continue to be affected
by, our share-based compensation expenses and cash awards, which consist of charges taken relating to grants of
mainly RSUs as well as stock options, non-vested shares, and cash awards to employees.
Restricted Share Units (RSUs). We adopted two long-term incentive plans in October 2005 and September 2011,
respectively, which permit the grant of options or RSUs to our employees and non-employees where each unit
represents two ordinary shares. The actual awards will be determined by our compensation committee. The 2005
plan was terminated in October 2010. We recognized share-based compensation expenses regarding RSUs under the
long-term incentive plan totaling $0.1 million, $4.8 million and $23.8 million in 2019, 2020 and 2021, respectively.
Of the total share-based compensation expenses recognized, nil, $4.8 million and $23.2 million in 2019, 2020
and 2021, respectively, were settled in cash. We measure and recognize compensation expense for all share-based
payments at fair value.
57
Set forth below is a summary of our historical share-based compensation plans for the years ended December 31,
2019, 2020 and 2021 as reflected in our consolidated financial statements. However, we did not grant RSUs in 2019
but granted stock options to employees instead.
We made grants of 1,208,785 RSUs to our employees on September 28, 2016. The vesting schedule for such
RSU grants is as follows: 91.93% of the RSU grants vested immediately and were settled by cash in the amount of
$9.2 million on the grant date, with the remainder vesting equally on each of September 30, 2017, 2018 and 2019,
which will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 580,235 RSUs to our employees on September 29, 2017. The vesting schedule for such RSU
grants is as follows: 96.91% of the RSU grants vested immediately and were settled by cash in the amount of $6.1
million on the grant date, with the remainder vesting equally on each of September 30, 2018, 2019 and 2020, which
will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 676,273 RSUs to our employees on September 26, 2018. The vesting schedule for such RSU
grants is as follows: 97.15% of the RSU grants vested immediately and were settled by cash in the amount of $3.8
million on the grant date, with the remainder vesting equally on each of September 30, 2019, 2020 and 2021, which
will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 1,402,714 RSUs to our employees on September 28, 2020. The vesting schedule for such
RSU grants is as follows: 98.68% of the RSU grants vested immediately and were settled by cash in the amount of
$4.8 million on the grant date, with the remainder vesting equally on each of September 30, 2021, 2022 and 2023,
which will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 2,604,545 RSUs to our employees on September 28, 2021. The vesting schedule for such
RSU grants is as follows: 85.63% of the RSU grants vested immediately and were settled by cash in the amount of
$23.2 million on the grant date, with the remainder vesting equally on each of September 30, 2022, 2023 and 2024,
which will be settled by our ordinary shares, subject to certain forfeiture events.
The amount of share-based compensation expense with regard to the RSUs granted to our employees on
September 28, 2016, September 29, 2017, September 26, 2018, September 28, 2020 and September 28, 2021 was
$8.30 per ADS, $10.93 per ADS, $5.76 per ADS, $3.44 per ADS and $10.39 per ADS, respectively, which was based
on the trading price of our ADSs on that day.
Employee stock options. We made grants of 2,226,690 units of stock option to purchase 2,226,690 units ADS
to certain employees at an exercise price of $2.27 on September 30, 2019. The vesting schedule was that 50% of
the options vest half year after the date of grant and 50% of the options vest one year after the date of grant. During
2020, 114,500 units, 39,000 units and 10,000 units of stock option to purchase 114,500 units, 39,000 units and
10,000 units ADS were grant to certain employees at an exercise price of $2.74, $3.9 and $3.35 on March 31, 2020,
August 11, 2020 and September 25, 2020, respectively. The options granted in 2020 were fully vested on October 1,
2020. We recognized share-based compensation expenses regarding stock options under the long-term incentive plan
totaling $0.3 million and $0.7 million in 2019 and 2020, respectively.
Cash Awards. We made grants annual bonus by cash payouts totaling $47.7 million to the Company’s employees
among which $1.6 million was immediately vested on September 28, 2021. The remainder will be equally vested at
the first, second and third anniversaries of the grant date.
Tax Credits
Our results of operations have been affected by, and we expect our results of operations to continue to be affected
by, tax credits available to us.
The Statute for Industrial Innovation entitles companies to tax credits for qualifying research and development
expenses related to innovation activities but limits the amount of tax credit to only up to 15% of the total qualifying
research and development expenditure for the current year, subject to a cap of 30% of the income tax payable for
the current year. Moreover, any unused tax credits provided under the Statute for Industrial Innovation may not be
carried forward.
Based on the amendments to the above, effective from January 1, 2016 to December 31, 2019, further extended
58
to December 31, 2029, if companies choose to extend the tax credits to three years, the tax credit rate will be 10%
of the total qualifying research and development expenditure for the current year and subject to a cap of 30% of the
income tax payable for each year.
Description of Certain Statements of Profit or Loss Line Items
Revenues
Historically, we have generated revenues from sales of display drivers for large-sized applications and display
drivers for small and medium-sized applications. In addition, our product portfolio includes operational amplifiers,
timing controllers, touch controller ICs, LCoS microdisplay, power management ICs, CMOS image sensors, 3D
sensing, ultralow power AI image sensing, wafer level optics products and ASIC service.
Revenues from large-sized application totaled $397.9 million in 2021, an increase of 65.3% year-over-year,
representing 25.7% of our total revenues, as compared to 27.1% of our total revenues in 2020. During the Covid-19
pandemic, the surge in IT demand boosted the sales of monitor display drivers and notebook display drivers. TV
sales were also up despite the dip in worldwide TV shipments during the second half of 2021.
Revenues from small and medium-sized applications totaled $963.5 million in 2021, the highest growth of 86.8%
year-over-year, representing 62.3% of our total revenues, as compared to 58.1% of our total revenues in 2020. As
leading Android tablet brands all adopted our TDDI solutions and automotive displays continued to evolve at a rapid
rate in the number, size and sophistication, we saw the extraordinary business momentum for both product areas in
2021.
Revenues from non-driver products totaled $185.7 million in 2021, an increase of 42.0% year-over-year,
representing 12.0% of our total revenues, as compared to 14.8% of our total revenues a year ago. The year-over-year
increase was mainly from TCON amidst the growing need for high frame rate and high-resolution displays, and CIS,
severely capped by capacity constraint throughout 2021, due to the continuous strong demand in notebook and web
camera for work-from-home and online education. This increase was offset by WLO, as the legacy product of an
anchor customer gradually decreased.
The following table sets forth, for the periods indicated, our revenues by amount and our revenues as a
percentage of revenues by each product line:
2019
Percentage
of
Revenues
Amount
Year Ended December 31,
2020
Percentage
of
Revenues
Amount
2021
Percentage
of
Revenues
Amount
(in thousands, except percentages)
Display drivers for large-sized
applications
Display drivers for small and
medium-sized applications
Non-driver products(1)
Total
$ 237,276
35.3
$ 240,789
27.1
$ 397,905
25.7
307,451
127,108
$ 671,835
45.8
18.9
100.0
515,733
130,760
$ 887,282
58.1
14.8
100.0
963,537
185,655
1,547,097
$
62.3
12.0
100.0
Note:
(1) Includes, among other things, timing controllers, touch controller ICs, LCoS projector solutions,
power management IC, CMOS image sensors, programmable gamma OP, wafer level optics (WLO)
products, ultralow power AI image sensing, NRE incomes, and ASIC service.
A limited number of customers account for substantially all our revenues. For example, Customer A and its
affiliates accounted for 29.5%, 32.6% and 32.1% of our revenues in 2019, 2020 and 2021, respectively. Customer C
accounted for 5.6%, 12.7% and 19.1% of our revenues in 2019, 2020 and 2021, respectively.
59
2019
Percentage
of
Revenues
Amount
Year Ended December 31,
2020
Percentage
of
Revenues
Amount
2021
Percentage
of
Revenues
Amount
(in thousands, except percentages)
Customer A and its affiliates
Customer C
Others
Total
$ 198,430
37,631
435,774
$ 671,835
29.5
5.6
64.9
100.0
$ 289,663
112,504
485,115
$ 887,282
32.6
12.7
54.7
100.0
$ 497,083
295,217
754,797
$ 1,547,097
32.1
19.1
48.8
100.0
The global TFT-LCD panel market is highly concentrated, with only a limited number of TFT-LCD panel
manufacturers producing large-sized TFT-LCD panels in high volumes. We sell large-sized panel display drivers
to many of these TFT-LCD panel manufacturers. Our revenues, therefore, will depend on our ability to capture an
increasingly larger percentage of each panel manufacturer’s display driver requirements. The sales to panel makers
in China have become a significant portion of our revenue due to the Chinese panel maker business expansion which
started in 2011. We derive substantially all of our revenues from sales to Asia-based customers whose end products
are sold worldwide. In 2019, 2020 and 2021, approximately 19.2%, 13.9% and 14.2% of our revenues, respectively,
were from customers headquartered in Taiwan and approximately 70.3%, 79.7% and 81.5% of our revenues,
respectively, were from customers headquartered in China. We believe that substantially all of our revenues will
continue to be from customers located in Asia, where almost all of the TFT-LCD panel manufacturers and mobile
device module manufacturers are located. As a result of the regional customer concentration, we expect to continue
to be subject to economic and political events and other developments that affect our customers in Asia. A substantial
majority of our sales invoices are denominated in U.S. dollars.
Costs and Expenses
Our costs and expenses consist of cost of revenues, research and development expenses, general and
administrative expenses, sales and marketing expenses and share-based compensation expenses. Costs would be
greatly affected by product mix.
Cost of Revenues
The principal items of our cost of revenues are:
•
•
•
•
cost of wafer fabrication;
cost of processed tape used in TAB packaging;
cost of gold bumping, assembly and testing; and
other costs and expenses.
We outsource the manufacturing of our semiconductors and semiconductor solutions to semiconductor
manufacturing service providers. The costs of wafer fabrication, gold bumping, assembly and testing depend on
the availability of capacity and demand for such services. The wafer fabrication industry, in particular, is highly
cyclical, resulting in fluctuations in the price of processed wafers depending on the available foundry capacity and
the demand for foundry services.
Research and Development Expenses
Research and development expenses consist primarily of research and development employee salaries, including
related employee welfare costs, costs associated with prototype wafers, processed tape, masks, molding and tooling
sets and depreciation on research and development equipment. We expect to continue increasing our spending
on research and development in absolute dollar amounts in the future as we continue to increase our research
and development headcount and associated costs to pursue additional product development opportunities. As a
percentage of revenues, our research and development expenses in 2019, 2020 and 2021 were17.1%, 13.8% and
60
9.8%, respectively.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries of general and administrative employees,
including related employee welfare costs, depreciation on buildings, office furniture and equipment and professional
fees. We anticipate that our general and administrative expenses will increase in absolute dollar amounts as we
expand our operations, hire additional administrative personnel, incur depreciation expenses in connection with the
increase in office equipment and Fab 2, and incur additional compliance costs required of a publicly listed company
in the United States.
Sales and Marketing Expenses
Our sales and marketing expenses consist primarily of salaries of sales and marketing employees, including
related employee welfare costs, travel expenses and product sample costs. We expect that our sales and marketing
expenses will increase in absolute dollar amounts over the next several years. However, we believe that as we
continue to achieve greater economies of scale and operating efficiencies, our sales and marketing expenses may
decline over time as a percentage of our revenues.
Share-Based Compensation Expenses
Our share-based compensation expenses consist of various forms of share-based compensation that we have
historically issued to our employees and consultants, as well as share-based compensation issued to employees,
directors and service providers under our 2005 and 2011 long-term incentive plans. The 2005 plan was terminated
in October 2010. We allocate such share-based compensation expenses to the applicable cost of revenues and
expense categories as related services are performed. See note 20 to our consolidated financial statements. Under
the long-term incentive plan, we granted RSUs on December 30, 2005 to our employees and directors and again
on September 29, 2006, September 26, 2007, September 29, 2008, September 28, 2009, September 28, 2010,
September 28, 2011, September 26, 2012, September 26, 2013, September 26, 2014, September 25, 2015, September
28, 2016, September 29, 2017, September 26, 2018, September 28, 2020 and September 28, 2021 to our employees.
We did not grant RSUs in 2019 but granted stock options to employees instead. Share-based compensation expenses
recorded regarding RSUs under the long-term incentive plan totaled $0.1 million, $4.8 million and $23.8 million in
2019, 2020 and 2021, respectively. Share-based compensation expenses recorded regarding stock options under the
long-term incentive plan totaled $0.3 million, $0.7 million and nil in 2019, 2020 and 2021, respectively.
Cash Awards.
We made grants annual bonus by cash payouts totaling $47.7 million to the Company’s employees among which
$1.6 million was immediately vested on September 28, 2021. The remainder will be equally vested at the first,
second and third anniversaries of the grant date.
Income Taxes
Since we and our direct and indirect subsidiaries are incorporated in different jurisdictions, we file separate
income tax returns. Under the current laws of the Cayman Islands, we are not subject to income or capital gains
tax. Additionally, dividend payments made by us are not subject to withholding tax in the Cayman Islands.
However, if the relevant bylaws of the PEM rules have been adequately enacted and properly advocated, we
may be determined to be within the territory of the ROC and our income tax shall be levied in accordance with
the Income Tax Act and relevant tax regulations. Therefore, dividend payments made by us would be subject
to withholding tax in the ROC. We recognize income taxes at the applicable statutory rates in accordance with
the jurisdictions where our subsidiaries are located and as adjusted for certain items including accumulated
losses carried forward, non-deductible expenses, research and development tax credits, as well as changes in our
deferred tax assets and liabilities.
Critical Accounting Policies and Estimates
We believe the following critical accounting policies affect our more significant judgments and estimates used in
the preparation of our consolidated financial statements in accordance with IFRS.
61
Inventory
Inventories are stated at the lower of cost and net realizable value, and we use judgment and estimate to
determine the net realizable value of inventory at the end of each reporting period. Due to the rapid technological
changes, we estimate the net realizable value of inventory for obsolescence and unmarketable items at the end of
reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the
inventory is mainly determined based on assumptions of future demand within a specific time horizon. The inventory
write-downs in 2019, 2020 and 2021 were approximately $25.4 million, $11.9 million and $9.4 million, respectively,
and were included in cost of revenues in our consolidated statements of profit or loss.
Impairment of Non-financial Assets other than Goodwill
We routinely review our non-financial assets at the reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount
of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset. However, due to
the cyclical nature of our industry and changes in our business strategy, market requirements, or the needs of our
customers, we may not always be in a position to accurately anticipate declines in the utility of our equipment or
acquired technology until they occur. Although we have the recurring losses in non-Driver product segment, we
remain positive on the long-term prospect of our non-Driver product segment, judging by the expanding customer
list that covers some of the world’s biggest tech names, and the busy engineering activities going on with such
customers. For the years ended December 31, 2019, 2020 and 2021, we did not recognize any impairment loss on
non-financial assets.
Goodwill
We evaluate goodwill for impairment at least annually, or more frequently when there is an indication that the
cash-generating unit (CGU) may be impaired. For the purpose of impairment testing, goodwill is allocated to each
of the Company’s CGU or groups of CGU that are expected to benefit from the synergies of the combination. If the
recoverable amount of a CGU is less than its carrying amount, the difference is allocated first to reduce the carrying
amount of any goodwill allocated to such CGU and then to the other assets of the CGU pro rata based on the
carrying amount of each asset in the CGU. Any impairment loss for goodwill is recognized directly in profit or loss.
An impairment loss recognized for goodwill is not reversed in subsequent periods.
The recoverable amount is the higher of fair value less costs of disposal and value in use. The assessment of
impairment of goodwill requires management to make subjective judgment to determine the identified CGU, allocate
the goodwill to relevant CGU and estimate the recoverable amount of relevant CGU. In the process of estimating
the recoverable amount of relevant CGU, management is required to make subjective judgments in determining
the discounted rate, the terminal growth rate, the independent cash flows, useful lives, expected future revenue and
expenses related to the CGU.
As of December 31, 2020 and 2021, goodwill in Driver IC CGU and WLO CGU was $26,846 thousand and
$1,292 thousand, respectively. For the years ended December 31, 2019, 2020 and 2021, we did not recognize any
impairment loss on goodwill.
Income Taxes
According to the ROC Income Tax Act, dividends distributed by a Taiwan company to its foreign shareholders
are subject to ROC withholding tax, currently at the rate of 21% on the amount of the distribution in the case of cash
dividends or on the par value of the ordinary shares in the case of stock dividends. The surtax rate for undistributed
earnings is currently 5%. However, surtax paid on undistributed earnings can no longer be used to offset against the
withholding tax imposed on the dividend distributed to foreign shareholders.
As of December 31, 2021, we have not provided for retained earnings tax on the undistributed earnings
of approximately $1,096.1 million of our subsidiaries since we have specific plans to reinvest these earnings
indefinitely. The undistributed earnings in our foreign subsidiaries are mainly from Himax Taiwan totaling
approximately $1,094.9 million as of December 31, 2021. We intend to use accumulated and future earnings of
Himax Taiwan to expand operations in Taiwan.
62
However, a deferred tax liability will be recognized when the Taiwanese company can no longer demonstrate that
it plans to reinvest indefinitely these undistributed earnings. This amount becomes taxable when we execute other
investments, share buybacks or shareholder dividends to be funded by cash distribution by our foreign subsidiaries.
It is not practicable to estimate the amount of additional taxes that might be payable on such undistributed earnings.
We are a holding company located in the Cayman Islands and have paid dividends and repurchased outstanding
shares. To fund such dividends and repurchases, in the past years, we have received cash from bank loans and from
Himax Taiwan through intercompany borrowings instead of dividends distributed by Himax Taiwan.
As part of the process of preparing our consolidated financial statements, our management is required to
estimate income taxes and tax bases of assets and liabilities for us and our subsidiaries. This process involves
estimating current tax exposure together with assessing temporary differences resulting from differing treatments of
items for tax and accounting purposes and the amount of tax credits and tax loss carry-forward. These differences
result in deferred tax assets and liabilities, which are included in the consolidated statements of financial position.
Management must then assess deferred tax assets at each reporting date and reduce to the extent that it is no longer
probable that the related tax benefit will be realized; such reductions are reversed when the probability of future
taxable profits improves.
Consolidated Results of Operations
The following table sets forth a summary of our consolidated statements of profit or loss as a percentage
of revenues:
Year Ended December 31,
2020
2019
2021
Revenues
Costs and expenses:
Cost of revenues
Research and development
General and administrative
Sales and marketing
Total costs and expenses
Operating income (loss)
Non-operating income (loss)
Income tax expense
Profit (loss) for the year
Loss attributable to noncontrolling interests
Profit (loss) attributable to Himax stockholders
100.0%
100.0%
100.0%
79.5
17.1
3.5
2.6
102.7
(2.7)
0.4
0.1
(2.4)
0.4
(2.0)
75.1
13.8
2.7
1.9
93.5
6.5
(0.1)
1.3
5.1
0.2
5.3
51.6
9.8
1.9
1.5
64.8
35.2
-
7.2
28.0
0.2
28.2
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
Revenues. Our revenues increased by 74.4% to $1,547.1 million in 2021 from $887.3 million in 2020. The
increase was due to the strong demand across all of our major business segments, namely large-sized display drivers,
small and medium-sized display drivers and non-driver products:
•
Large-sized Display Drivers. Revenues from display drivers for large-sized application grew by 65.3%
to $397.9 million in 2021 from $240.8 million in 2020. During the Covid-19 pandemic, the surge in IT
demand boosted the notebook display IC sales and monitor display sales. TV sales were also up despite
the dip in worldwide TV shipments during the second half of 2021.
• Small and Medium-sized Display Drivers. Revenues from small and medium-sized display drivers
increased significantly by 86.8% to $963.5 million in 2021 from $515.7 million in 2020. The Company
saw extraordinary business momentum particularly in tablet and automotive areas in 2021 as leading
non-iOS tablet brands all adopted our tablet TDDI solutions and automotive displays continued to evolve
at a rapid rate in the number, size and sophistication.
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• Non-Driver Products. Revenues from non-driver products increased by 42.0% to $185.7 million in 2021
from $130.8 million in 2020. The increase was mainly from Tcon sales amidst the growing needs for high
frame rate and high-resolution displays. CMOS image sensor business, severely capped by capacity constraint
throughout 2021, was up from the strong demand in notebook and web camera for work-from-home and online
education. This increase was offset by WLO, as the legacy product of a major customer gradually decreased.
Costs and Expenses. Costs and expenses increased by 20.8% to $1,002.1 million in 2021 from $829.4 million
in 2020. As a percentage of revenues, costs and expenses decreased to 64.8% in 2021 compared to 93.5% in 2020.
•
Cost of Revenues. Cost of revenues increased to $798.5 million in 2021 from $666.5 million in 2020, which
was generally in line with our overall business growth. The increase in cost of revenues was also attributable
to the rising material costs across wafer foundry, assembly and testing, which underwent severe capacity
shortages. Inventory write-downs, which are included in cost of revenues, decreased to $9.4 million in 2021
from $11.9 million in 2020. As a percentage of revenues, cost of revenues decreased to 51.6% in 2021 from
75.1% in 2020, mainly due to a reflection of more favorable IC pricing and product mix resulting from the
tight foundry capacity as well as increasing contribution from high margin product lines.
•
Research and Development. Research and development expenses increased by 23.8%to $151.4 million in
2021 from $122.3 million in 2020. This increase was primarily attributable to increase in the salary expense,
RSU compensation and cash awards. The increase in salary expense was due primarily to a larger headcount
of research and development staff, higher average salaries and NT dollar appreciation against US dollar as we
pay the bulk of our employee salaries in NT dollars.
•
•
General and Administrative. General and administrative expenses increased by 22.4% to $29.3 million in
2020 from $23.9 million in 2020, primarily as a result of increases in salary expense, RSU compensation, cash
awards and professional fee.
Sales and Marketing. Sales and marketing expenses increased by 37.3% to $22.9 million in 2021 from $16.7
million in 2020. This increase was primarily attributable to increase in salary expense, RSU compensation
and cash awards.
Non-Operating Income (loss). We had net non-operating loss of $0.4 million in 2021 compared to $1.1 million in
2020. The decrease was primarily due to decrease in finance cost and increase in foreign currency exchange gains but
partially offset by an increase in share of losses of associates.
Income Tax Expense. Our income tax expense increased to $110.7 million in 2021 from $11.7 million in 2020.
The increase in our income tax expense was primarily attributable to the increase in pre-tax profit $544.6 million in
2021 from $56.9 million in 2020.
Profit for the year. As a result of the foregoing, our profit for the year of $433.9 million in 2021, versus $45.2
million in 2020, and profit attributable to Himax stockholders of $436.9 million in 2021, versus $47.1 million in
2020.
Segment Results
The following table sets forth the revenues and operating results for our reportable segments for the periods
indicated:
2019
Year Ended December 31,
2020
(in thousands)
2021
Segment Revenues
Driver IC
Non-Driver Products
Total
64
$ 544,727
127,108
$ 671,835
$ 756,522
130,760
$ 887,282
$ 1,361,442
185,655
$ 1,547,097
Segment Operating Income (loss)
Driver IC
Non-Driver Products
Total
Driver IC Segment
2019
Year Ended December 31,
2020
(in thousands)
2021
$ 29,070
(47,377)
$ (18,307)
$ 98,687
(40,761)
$ 57,926
$ 551,943
(6,922)
$ 545,021
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
Segment revenues. Our revenues from the Driver IC segment increased by 80.0% to $1,361.4 million in 2021
from $756.5 million in 2020. The increase was mainly from the significant growth of 86.8% in display drivers for
small and medium-sized applications with sales totaling $963.5 million.
Segment operating income. Operating income from the Driver IC segment increased to $551.9 million in 2021
from $98.7 million in 2020. This increase was primarily attributable to an increase in revenues and higher gross
margin.
Non-Driver Products Segment
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
Segment revenues. Our revenues from the Non-Driver Products segment increased by 42.0% to $185.7 million
in 2021 from $130.8 million in 2020. The year-over-year increase was mainly from increased revenues generated
from TCON amidst the growing need for high frame rate and high-resolution displays, but partially offset by WLO
decreased.
Segment operating loss. Operating loss from the Non-Driver Products segment decreased to $6.9 million in
2021 from $40.8 million in 2020. The narrowed operating loss decreases were attributable mainly to the increase in
revenues and higher gross margin.
5.B. Liquidity and Capital Resources
We need cash primarily for technology advancement, capacity expansion, paying dividends and working capital.
We have historically been able to meet our cash requirements through cash flow from operations and borrowings to
pay dividends.
As of December 31, 2021, we had total current assets of $1,192.8 million, total current liabilities of $601.2
million and cash and cash equivalents of $336.0 million. As of December 31, 2021, we had short-term secured
borrowings of $151.4 million with cash and time deposits of $151.4 million as collateral, and long-term unsecured
borrowings of $52.5 million, of which $6.0 million was current portion. For enhancing the guaranty, our land,
building and improvements of Fab 2 totaling $67.8 million were pledged as collateral for the long-term unsecured
borrowings. As of December 31, 2021, we had total unused short-term credit lines of $277.4 million, of which $21.7
million will expire before the end of March 2022, and $155.6 million belonging to the parent company, Himax
Technologies, Inc., needs to be secured with equal amount of cash and time deposits when borrowing money from
banks. Further, we had unused long-term credit lines of $40 million. We believe that our existing short-term and
long-term credit lines, together with cash generated from our operations, are sufficient to liquidity needs. We expect
to meet our present working capital requirements through cash flow from operations and bank borrowings from time
to time.
The following table sets forth a summary of our cash flows for the periods indicated:
Net cash provided by operating activities
2019
Year Ended December 31,
2020
(in thousands)
$ 102,610
2021
$ 388,276
$ 7,656
65
2019
Year Ended December 31,
2020
(in thousands)
2021
Net cash used in investing activities
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
(47,767)
35,261
(5,382)
106,437
101,055
(22,365)
3,261
83,883
101,055
184,938
(232,680)
(4,487)
151,086
184,938
336,024
Operating Activities. Net cash provided by operating activities in 2021 was $388.3 million compared to $102.6
million in 2020. This increase in net cash provided by operating activities in 2021 was mainly due to improved
profitability over time.
Investing Activities. Net cash used in investing activities in 2021 was $232.7 million compared to $22.4 million
in 2020. This increase in net cash used in investing activities was due primarily to an increase of $199.1 million in
refundable deposits made for the purpose of securing foundry capacity amidst the global semiconductor capacity
shortage.
Financing Activities. Net cash used in financing activities in 2021 was $4.5 million compared to net cash
provided by $3.3 million in 2020. This change was due primarily to increases in distribution of cash dividends,
repayment of long-term unsecured borrowings and payment of lease liabilities but partially offset by an increase of
guarantee deposits received from customers.
Our liquidity could be negatively impacted by a decrease in demand for our products that are subject to
rapid technological change, among other factors, which could result in revenue variability in future periods.
In addition, we have at times agreed to extend the payment terms for certain of our customers. The extension
of payment terms for our customers could adversely affect our cash flow, liquidity and our operating results.
Our subsidiaries’ ability to distribute dividends and other payments to us may be limited by ROC regulations.
See “Risk Factors — Risks Related to Our Holding Company Structure — Our ability to receive dividends and
other payments or funds from our subsidiaries may be restricted by commercial, statutory and legal restrictions, and
thereby materially and adversely affect our ability to grow, fund investments, make acquisitions, pay dividends and
otherwise fund and conduct our business.”
To address the continuing foundry capacity shortage worldwide, we have entered into strategic agreements with
our foundry partners in order to secure their foundry capacity to fulfill our business needs. We anticipate continuing
to enter into additional strategic agreements with new foundry partners to secure additional foundry capacity.
Under these strategic agreements, we are committed to purchasing a specific volume at fixed prices or variable
prices. Some of our customers, and even our indirect customers, are also entering into similar strategic agreements
to secure their IC supplies with us. However, there can be no assurance that these prices provided in the strategic
agreements with our foundry partners and our customers will always remain competitive during the contract term.
For example, in the event that the global semiconductor market changes due to foundry capacity expansion and/or
shrunken customer demand, the fixed prices we agree to pay our foundry partners may become significantly higher
than the then prevailing market price. On the other hand, if there continues to be foundry capacity shortages and/or
increases in customer demand, the fixed prices our customers agree to pay us may become significantly lower than
the then prevailing market price. Any of those situations could materially adversely impact our pricing strategies,
competitive position, profitability and results of operation. We may also be subject to contractual penalties if we are
unable to purchase the committed volume from our foundry partners. In addition, since these strategic agreements
with our foundry partners typically require us to make prepayments or refundable deposits to such foundry partners,
our cash flow, liquidity and financial condition could be adversely affected. Nevertheless, we believe these strategic
agreements will enable us to meet our customers’ unaddressed demands and are in the best interest of our company
amid the global foundry capacity shortage.
We have entered into several wafer fabrication or assembly and testing service arrangements or multi-year
purchase agreements with suppliers. We may be obligated to make payments for purchase orders entered into
pursuant to these arrangements. Our purchase obligations also include agreements to purchase goods or services,
primarily inventory, that are enforceable and legally binding on us and that specify all significant terms, including
fixed or minimum quantities to be purchased, fixed or variable price provisions, and the approximate timing of
the transaction. Among all these purchase agreements, the longest termination term shall expire in 2028. Purchase
obligations exclude agreements that are cancelable without penalty. Contractual obligations resulting from above
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purchase orders and agreements with known amounts approximate $2,655 million as of December 31, 2021. Of
obligations under above purchase orders and agreements, $628 million is expected to be paid in the next 12 months.
Our capital expenditures were incurred primarily in connection with the purchase of property and equipment.
Our capital expenditures totaled $45.9 million, $5.8 million and $7.6 million in 2019, 2020 and 2021, respectively,
higher than usual capital expenditure due to our Fab 2 construction and WLO capacity expansion in 2019. Capital
expenditures of $7.6 million in 2021 was mainly for design tools, R&D related equipment as well as in-house tester
of our traditional IC design business.
The capex budget will be funded through our internal resources and banking facilities, if so needed. We will
continue to make capital expenditures to meet the expected growth of our operations. We believe that our working
capital and borrowings under our existing and future credit lines should be sufficient for our present requirements.
5.C. Research and Development
Our research and development efforts focus on improving and enhancing our core technologies and know-how
relating to the semiconductor solutions we offer to the flat panel display industry. In particular, we have committed
a significant portion of our resources to the research and development of non-driver products because we believe
in the long-term business prospects of such products and are committed to continuing to diversify our product
portfolio. Although a significant portion of the resources at our integrated circuit design center are invested in
advanced research for future products, we continue to invest in improving the performance and reducing the costs of
our existing products. Our application engineers, who provide on-system verification of semiconductors and product
specifications, and field application engineers, who provide on-site engineering support at our customers’ offices
or factories, work closely with panel manufacturers to co-develop display solutions for their electronic devices. In
2019, 2020 and 2021, we incurred research and development expenses of $114.9 million, $122.3 million and $151.4
million, respectively, representing 17.1%, 13.8% and 9.8% of our revenues, respectively.
5.D. Trend Information
The strong business we experienced in 2021 was a result of our effort in securing solid capacity, a steadfast focus
on optimizing product mix as well as solidifying strategic relationship with both customers and suppliers. All of
these factors contributed to the record sales and profit margins. The ongoing effects of the pandemic, coupled with
foundry capacity shortage, created a challenging operating environment, yet also provided favorable conditions for
IC vendors such as us with overall market demand far outpacing supply. Among our three major product categories,
small and medium-sized display drivers posted the highest growth in 2021 and we saw extraordinary business
momentum particularly in tablet and automotive areas as leading non-iOS tablet brands all adopted our tablet
TDDI solutions and automotive displays continued to evolve at a rapid rate in the number, size and sophistication.
Automotive sales enjoyed the highest growth among all product lines and sales for tablet IC was our top sales
contributor in 2021. In addition, the surge in IT demand boosted our notebook display IC sales significantly in 2021,
whereas monitor display sales increased and TV sales also up despite the dip in worldwide TV shipments during
the second half of 2021. Non-driver sales also enjoyed decent growth derived mainly from Tcon sales due to the
growing needs for high frame rate and high-resolution displays. We are also glad to see our ultralow power AI image
sensing total solution successfully entered into mass production in fourth quarter of 2021 for a major tech name
over a mainstream application. We reached this major milestone just one year after we delivered the first samples, a
remarkable achievement and an illustration of the robustness of our AI solution. We expect to see more design-wins
awarded across a broad customer base and a high variety of applications leading to robust sales growth for this new
high margin product line.
As we look ahead, we expect the supply-demand imbalance to continue throughout 2022, especially on the
mature nodes that we are primarily anchored to. Himax has been proactive in this regard, continuing to pursue new
partnerships and agreements to increase our available capacity and achieve our 2022 business goals. We are upbeat
about our year ahead growth prospect, backed by a few product areas, notably the automotive and ultralow power AI
image sensing businesses, which we feel confident will stay strong regardless of the macroeconomic concerns. We
anticipate these two products, both with good gross margin, will outgrow other product lines in 2022.
Large-sized Display Driver IC Segment
In this segment, Himax is armed with a diversified and comprehensive product offering covering TV, monitor and
notebook, which provides us with the flexibility to take actions in tandem with our customers and suppliers to direct
production towards the sectors with stronger demand.
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Foreseeing the continuation of the prevailing foundry shortage and the demand for advanced displays to
remain strong, we continue to move toward higher end markets while providing advanced driver ICs and Tcons
for a one-stop shopping experience, focusing on higher end displays and premium models for the respective
leading end customers in TV, monitor and notebook markets. We are also supporting further feature upgrades
for customers’ next generation products, including high-speed interface, low power consumption, higher refresh
rate, ultra-large-sized, high-aspect-ratio and curved-view design. All these represent a high barrier of entry that
differentiates us from China local competition.
Looking into 2022, backed by tight strategic relationships with some of the leading end customers in TV, monitor
and NB markets, our project design coverage across all markets with all major panel makers remains strong. With
the prevailing shortage expected to continue, especially given that much of the global large display driver ICs are
still manufactured on 8” wafer where the room for capacity expansion is extremely limited, we remain positive on
the prospect of our large display driver business.
Small and Medium-Sized Display Driver IC Segment
Himax is already the market share leader in display driver IC for automotive and tablet. For automotive market,
we are deepening our working relationships with tier-1 players and end customers across all major markets. We
expect the automotive segment to be on track to become our single largest revenue contributor starting 2022
where robust demand for our traditional automotive driver IC is backed by strong foundry capacity support, while
automotive TDDI is expected to experience exponential growth throughout 2022 and beyond. Our product roadmap
as well as new design-wins with end customers and a foundry capacity advantage have positioned Himax to gain
further market share. Himax dominates the design-in and design-win of automotive TDDI with direct and indirect
customers across the continents for a technology that is essential for very large sized, stylish, and free-formed
automotive displays. We expect to reach 10 million units cumulative shipment in automotive TDDI in as soon as the
second quarter of 2022. In addition to automotive TDDI, we are also leading in the up-and-coming local dimming
technology which not only provides effective power saving, but also enhances display contrast for better viewing
under bright daylight. Last but not least, our high-speed P2P bridge and LTDI solutions are specially designed
for very large panels up to a pillar-to-pillar display size. With these new demands unleashed for advanced display
technologies, we expect exponential sales growth of automotive sector in the years to come.
Tablet was one of our top sales contributors in 2021 thanks largely to the fast-rising TDDI penetration for
non-iOS names and the strong demand driven by the stay-at-home economy. To further broaden our product
offering and solidify our market position, our tablet TDDI has moved toward higher frame rate, higher resolution,
larger screen size, and active stylus for better-quality handwriting and drawing. All these trends benefit us for
higher ASP and growing market share. We are also seeing fast expanding education tablets where our tablet TDDI
with active stylus feature has been widely adopted by several leading Chinese players. However, foundry capacity
remains a major issue that adversely impacts our shipping capability. As our smartphone and tablet TDDIs share the
same process pool, we continued with our strategy to favor tablet TDDI shipment over smartphone as we are the
preferred main or sole vendor for major non-iOS tablet names. Our traditional discrete driver IC into smartphone
and tablet continue to be quickly replaced by TDDI as expected.
Himax continues to gear up for the AMOLED driver IC development in partnership with major Chinese and
Korean panel makers. In the first quarter of 2022, our flexible AMOLED driver and Tcon for automotive application
successfully ramped up for a customer’s flagship EV model. The number of awarded projects for our automotive
AMOLED ICs is growing with further EV vendors. In addition, our AMOLED for tablet is expected to commence
mass production in the second quarter of 2022 with Chinese panel makers. As for smartphone, we continue to
commit R&D resources to AMOLED driver ICs through engagement with top tier customers. In view of serious
constraints on AMOLED display driver capacity in the next few years, we have also secured meaningful capacity for
smartphone AMOLED drivers. We believe AMOLED driver IC will soon become one of the major growth drivers
for our small and medium panel driver IC business.
Non-Driver IC Segment
The non-driver category has been our most exciting growth area and a differentiator for the Company. We are
devoted to the development, manufacturing and marketing of non-driver products to diversify our customer base and
product portfolio to offer total solutions of image processing and human interface related technologies in addition to
our driver IC products. Our non-driver products delivered the strongest growth in 2014 owing to many new product
launches and project wins. During 2016, our non-driver businesses experienced tremendous growth, primarily
68
driven by the LCOS and WLO businesses due to shipments to one of our leading AR device customers. Additionally,
our WLO business hit inflection in the middle of 2017 when we began mass shipment to an anchor customer. The
overall 2018 shipment increased considerably year-over-year because of the customer’s large-scale adoption in more
models. In 2021, we continued to fulfill anchor customer’s demand for the legacy product. The WLO technology
continues to play an important role in shaping next generation optical applications. Our exceptional optical design
knowledge, together with our production proven nanoimprinting capabilities and mass manufacturing experience,
allow us to deliver high-quality solutions to meet the requirements of the future generation optical applications
across automotive, consumer, industrial, and medical applications.
In 3D sensing for non-smartphone applications, we provide customers who wish to design their own structured
light-based 3D sensing solution with our proprietary 3D decoder IC. Our 3D decoder can accelerate local image
processing for face recognition and offer best-in-class security authentication. It was already certified by the leading
Chinese electronic payment standard with requirements of accurate data decoding, timely operation and strict
privacy. The high-performance decoding capability for high-precision face recognition is particularly popular in
areas such as door lock and industrial access control. We started volume shipment of the 3D decoder in the fourth
quarter of 2020 with more design-win awards and growing volume throughout 2021.
Regarding ultralow power AI image sensing, the demand for battery-powered smart devices with AI intelligent
sensing is rapidly growing. Our AI image sensing solution is designed for a wide range of ultralow power use cases
in consumer electronics that aim to modernize legacy end-point devices, which lack AI capability, with ultralow
power computer vision AI. The AI solution is capable of processing data locally on the end device with just metadata
output while avoiding the need to transport massive data to the cloud, thereby improving response time, saving
bandwidth and power and, last but not least, enhancing data security. The design-win with a top-tier name for a
mainstream application entered into mass production in the fourth quarter of 2021. The number of awarded projects
is also growing quickly, covering a broad range of applications, including notebook, home appliances, utility meter,
automotive, battery-powered surveillance camera, panoramic video conferencing, and medical. We are excited by
the potential opportunities presented by the edge-to-cloud platform collaboration, opening up new market frontiers
for us in areas such as smart city, smart office, healthcare, agriculture, retail and factory automation. We anticipate
more design-wins awards and growing volume shipments starting 2022.
For the other business model of our ultralow power AI image sensing where we provide key components, we
continue to leverage our key partners to amplify our offering and encourage adoption of our ultralow power solution
in AI communities, which also have strong appetites for ultralow power smart sensing AI. Being the official partner
of prominent AI platforms such as Google TensorFlow Lite for Microcontrollers, Microsoft Azure, Arm AI Partner
Program, and tinyML Foundation, just to name a few, we get to enjoy the enormous network of these ecosystems
and their numerous participants. We continue to receive inquiries from large corporations and individual developers
alike with hundreds of evaluation boards and developments kits having been purchased online and distributed across
the globe.
We continued our marketing efforts through joint webinars and other online activities with several well-known
platform partners such as Edge Impulse, Digi-Key and SparkFun to broaden our AI solution’s market reach and
establish direct contacts with more AI developers. We are confident that ultralow power AI image sensing solution
will be one of the major growth drivers for our non-driver segment looking ahead into 2022 and beyond.
On timing controller, we are optimistic about the long-term growth prospect of the Tcon business where we
have successfully positioned ourselves for higher end and higher value-added areas including 4K/8K TV, gaming
monitor, and low power notebook in view of consumers’ pursuance of various new types of entertainment for film,
television and gaming. In addition, we extend our Tcon product reach into automotive and gaming TV markets. Our
cutting-edge automotive local dimming Tcon has won numerous awards and penetrated into OEMs and tier-1 car
makers’ new premium models, with some of them slated for mass production starting the second quarter of 2022.
In the gaming TV market, we are also leading the industry by introducing the world’s first 288Hz 8K TV Tcon in
collaboration with major TV panel makers. We believe the Tcon segment will be one of the driving forces for our
non-driver business moving forward.
For CMOS image sensors business, we continue to provide CMOS image sensors for web camera and notebook.
Our industry-first 2-in-1 CMOS image sensor that supports RGB mode for video conferencing and ultralow power
AI mode for facial recognition have penetrated the laptop market for the most stylish super slim bezel designs.
Regarding ultralow power Always-On CMOS image sensor that targets always-on AI applications, we are getting
69
growing feedback and design adoptions from customers globally for various markets, such as car recorders,
surveillance, smart electric meters, drones, smart home appliances, and consumer electronics.
Lastly on LCoS, an area we have committed years of R&D efforts. We continue to focus on AR goggle
devices and head-up-displays (HUD) for automotive. Many of our industry-leading customers have demonstrated
their state-of-the-art products with our technology embedded in, including holographic HUD, AR glasses and
LiDAR system. Our proprietary front-lit LCoS microdisplay, an integrated solution covering LCoS microdisplay,
lightguide, and front-lit LED, is one of the tiniest display modules and is one of ideal display technology for AR
headsets as it offers significantly higher brightness, lighter weight, and lower power consumption. Our technology
leadership and proven manufacturing expertise have made us a preferred partner for customers in these emerging
markets and their ongoing engineering projects in AR goggles and HUD for automotive applications.
For more trend information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results.”
5.E. Critical Accounting Estimates
The preparation of the consolidated financial statements in conformity with IFRS requires management to make
judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised and in any future periods affected.
Note 4 to our audited consolidated financial statements contains a description that sets forth information about
critical judgments, estimates and assumptions in applying accounting policies that have the most significant effect on
the amounts recognized in the consolidated financial statements.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A. Directors and Senior Management
Members of our board of directors may be elected by our directors or our shareholders. Our board of directors
consists of five directors, three of whom are independent directors within the meaning of Rule 5605(a)(2) of the
Nasdaq Rules. Other than Jordan Wu and Dr. Biing-Seng Wu, who are brothers, there are no family relationships
between any of our directors and executive officers. The following table sets forth information regarding our
directors and executive officers as of February 28, 2022. Unless otherwise indicated, the positions or titles indicated
in the table below refer to Himax Technologies, Inc.
Directors and Executive Officers
Dr. Biing-Seng Wu
Jordan Wu
Dr. Yan-Kuin Su
Yuan-Chuan Horng
Hsiung-Ku Chen
Jessica Pan
Norman Hung
Eric Li
Directors
Age
64
61
73
70
70
52
64
59
Position/Title
Chairman of the Board
President, Chief Executive Officer and Director
Director
Director
Director
Chief Financial Officer
Executive Vice President, Sales and Marketing
Chief IR/PR Officer and Spokesperson
Dr. Biing-Seng Wu is the chairman of our board of directors. Prior to our reorganization in October 2005, Dr.
Wu served as president, chief executive officer and a director of Himax Taiwan. Dr. Wu also served as the vice
chairman of the board of directors of CMO prior to its merger with the predecessor of Innolux and TPO. Dr. Wu
has been active in the TFT-LCD panel industry for over 20 years and is a member of the boards of the Taiwan
TFT-LCD Association and the Society for Information Display. Prior to joining CMO in 1998, Dr. Wu was
senior director and plant director of Prime View International Co., Ltd., a TFT-LCD panel manufacturer, from
1993 to 1997, and a manager of Thin Film Technology Development at the Electronics Research & Service
70
Organization/Industry Technology Research Institute, or ERSO/ITRI, of Taiwan. Dr. Wu holds a B.S. degree,
an M.S. degree and a Ph.D. degree in electrical engineering from National Cheng Kung University. Dr. Wu is the
brother of Mr. Jordan Wu, our president and chief executive officer.
Jordan Wu is our president, chief executive officer and director. Prior to our reorganization in October 2005, Mr.
Wu served as the chairman of the board of directors of Himax Taiwan, a position which he held since April 2003.
Prior to joining Himax Taiwan, Mr. Wu served as chief executive officer of TV Plus Technologies, Inc. and chief
financial officer and executive director of DVN Holdings Ltd. in Hong Kong. Prior to that, he was an investment
banker at Merrill Lynch (Asia Pacific) Limited, Barclays de Zoete Wedd (Asia) Limited and Baring Securities,
based in Hong Kong and Taipei. Mr. Wu holds a B.S. degree in mechanical engineering from National Taiwan
University and an M.B.A. degree from the University of Rochester. Mr. Wu is the brother of Dr. Biing-Seng Wu,
our chairman.
Dr. Yan-Kuin Su is our director. He has retired from the president of Kun Shan University effective July 31,
2018 and also a professor in the Department of Electrical Engineering, National Cheng Kung University since
1983 and retired in 2011. Dr. Su is devoted to the field of research in semiconductor engineering and devices,
optoelectronic devices, and microwave device and integrated circuits. He is a fellow of the Institute of Electrical
and Electronics Engineers, or IEEE. Dr. Su holds a B.S. degree and an M.S. degree and a Ph.D. degree in Electrical
Engineering from National Cheng Kung University.
Yuan-Chuan Horng is our director. Prior to our reorganization in October 2005, Mr. Horng served as a director
of Himax Taiwan from August 2004 to October 2005. Mr. Horng retired from the position of the vice president
of the Finance Division of China Steel Corporation, a TWSE-listed Corporation, effective November 30, 2016.
During his 40 years of services with China Steel Corporation Group, Mr. Horng held various positions including
general manager, assistant vice president and vice president in the Finance Divisions. Mr. Horng currently serves
as an independent director of President Securities Corporation, listed on TWSE, since June 2018. Mr. Horng holds
a B.A. degree in economics from Soochow University.
Hsiung-Ku Chen is our director. He has a B.S. degree in Physics from Fu-Jen University, an M.A. degree in
Physics from Temple University and a Ph.D. degree in Applied Physics from Oregon Graduate Center. Dr. Chen
specializes in areas including Thin Film Transistor Technology, Liquid Crystal Display Technology, IC Process
Technology and Patent field. He has dedicated himself to the researching and performing practice of the TFT-LCD
industry. From 1980 to 2002, Dr. Chen held various positions including manager, director and special assistant
of the director’s office in the Electronics Research & Service Organization of the Industrial Technology Research
Institute for over 20 years and was the leader of many research projects during his tenure. Additionally, Dr. Chen
was elected as Society of Information Display, Taipei Chapter Director and Treasurer from 1992 to 1997 and
as Taiwan TFT LCD Association Secretary General from 2000 to 2002. Furthermore, Dr. Chen contributed his
professional knowledge to serve as a supervisor of Himax Technologies Limited from April 2003 to December
2003 and as a director from December 2003 to October 2005. Dr. Chen was also the Special Assistant of the CEO
Office at Etron Technology, Inc. from 2005 to 2007. Dr. Chen had served as consultants in various organizations,
including Color Imaging Industry Promotion Office and the Intellectual Property Innovation Corporation.
Currently, Dr. Chen serves as consultant of Color Display Industry Promotion Office.
Other Executive Officers
Jessica Pan is our chief financial officer. Jessica joined Himax in 2006 with over 22 years of experience in
finance and accounting. Jessica has played an integral role at Himax on finance, accounting, financial planning and
analysis, forecasting and tax, having served as interim Chief Financial Officer from October 2010 to January 2012.
Prior to joining Himax, Jessica worked as Assistant Finance Manager for Advanced Semiconductor Engineering,
Inc. from 2002 to 2006 and as Auditor at Arthur Andersen LLP in Taiwan from 1998 to 2001. She holds a B.S.
degree in Agriculture Chemistry from National Taiwan University and an M.B.A. degree from the State University
of New York at Buffalo.
Norman Hung is our executive vice president in charge of Sales and Marketing and also serves as a supervisor
of Himax Analogic and Himax Media Solutions. From 2000 to 2006, Mr. Hung served as president of ZyDAS
Technology Corp., a fabless integrated circuit design house. From 1999 to 2000, he served as vice president of
Sales and Marketing for HiMARK Technology Inc., another fabless integrated circuit design house. Prior to that,
from 1996 to 1998, Mr. Hung served as Director of Sales and Marketing for Integrated Silicon Solution, Inc. He
71
has also served in various Marketing positions for Hewlett-Packard and Logitech. Mr. Hung holds a B.S. degree
in electrical engineering from National Cheng Kung University and an executive M.B.A. degree from National
Chiao Tung University.
Eric Li is our chief IR/PR officer and Spokesperson. Joining Himax in 2012, Mr. Eric Li has an extensive
experience in image processing related IC design, having worked in the areas of sales, marketing, R&D and served
as Associate Vice President at Himax covering the Intelligent Sensing AI product line. Mr. Li has previously
worked in video processing ASIC service and TV/monitor ASSP products before he was put in charge of the
fab construction and operation of Himax’s WLO advanced optics operation. Prior to Himax, Mr. Eric Li served
in executive positions of Cadence Design Systems, Socle Technology, Macronix International and Powerchip
Semiconductor. He holds a B.S. degree in Nuclear Engineering from National Tsing Hua University and an M.S.
degree in Computer and Information Science from New Jersey Institute of Technology.
6.B. Compensation
For the year ended December 31, 2021, the aggregate cash compensation that we paid to our executive officers
was approximately $1.1 million. The aggregate share-based compensation that we paid to our executive officers
was approximately $0.7 million. No executive officer is entitled to any severance benefits upon termination of his
or her employment with us.
For the year ended December 31, 2021, the aggregate cash compensation that we paid to our independent
directors was approximately $150,000. The aggregate share-based compensation that we paid to our independent
directors was nil.
The following table summarizes the RSUs and cash award that we granted in 2021 to our directors and
executive officers under our 2011 long-term incentive plan. Each unit of RSU represents two ordinary shares. See
“Item 6.D. Directors, Senior Management and Employees—Employees––Share-Based Compensation Plans” for
more details regarding our RSU grants.
Name
Dr. Biing-Seng Wu
Jordan Wu
Dr. Yan-Kuin Su
Yuan-Chuan Horng
Hsiung-Ku Chen
Jessica Pan
Norman Hung
Eric Li
Total RSUs
Granted
23,118
Total Cash
Award Granted
(in thousands)
721
Ordinary Shares
Underlying Vested
Portion of RSUs
46,236
Ordinary Shares
Underlying Unvested
Portion of RSUs
-
Unvested Portion
of cash award
(in thousands)
721
21,962
-
-
-
5,652
8,125
5,155
685
-
-
-
176
253
161
43,924
-
-
-
11,304
16,250
10,310
-
-
-
-
-
-
-
685
-
-
-
176
253
161
6.C. Board Practices
General
Our board of directors consists of five directors, three of whom are independent directors within the meaning of
Rule 5605(a)(2) of the Nasdaq Rules. We intend to comply with Rule 5605(b)(1) of the Nasdaq Rules that require
boards of U.S. companies to have a board of directors which is comprised of a majority of independent directors.
We intend to follow home country practice that permits our independent directors not to hold regularly scheduled
meetings at which only independent directors are present in lieu of complying with Rule 5605(b)(2). None of our
non-executive directors has a service contract with us that provides for benefits upon termination of service.
72
Committees of the Board of Directors
To enhance our corporate governance, we have established three committees under the board of directors: the
audit committee, the compensation committee and the nominating and corporate governance committee. We have
adopted a charter for each of the three committees. Each committee’s members and functions are described below.
Audit Committee. Our audit committee currently consists of Yuan-Chuan Horng, Hsiung-Ku Chen and Dr.
Yan-Kuin Su. Our board of directors has determined that all of our audit committee members are “independent
directors” within the meaning of Rule 5605(a)(2) of the Nasdaq Rules and meet the criteria for independence
set forth in Section 10A(m)(3)(B)(i) of the Exchange Act. Our audit committee will oversee our accounting and
financial reporting processes and the audits of our financial statements. The audit committee will be responsible
for, among other things:
•
•
•
•
•
selecting the independent auditors and pre-approving all auditing and non-auditing services permitted to be
performed by the independent auditors;
reviewing with the independent auditors any audit problems or difficulties and management’s response;
reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation SK
under the Securities Act;
discussing the annual audited financial statements with management and the independent auditors;
reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in
light of significant deficiencies or material weaknesses in internal controls;
•
annually reviewing and reassessing the adequacy of our audit committee charter;
• meeting separately and periodically with management and the independent auditors;
•
•
reporting regularly to the board of directors; and
such other matters that are specifically delegated to our audit committee by our board of directors from time
to time.
Compensation Committee. Our current compensation committee consists of Yuan-Chuan Horng, Hsiung-Ku
Chen and Dr. Yan-Kuin Su. Our compensation committee assists our board of directors in reviewing and approving
the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our
chief executive officer may not be present at any committee meeting where his or her compensation is deliberated.
We intend to follow Rule 5605(d)(1)(B) and (2)(B) of the Nasdaq Rules which requires the compensation committees
of U.S. companies to be comprised solely of independent directors. The compensation committee will be responsible
for, among other things:
•
•
•
•
•
reviewing and making recommendations to our board of directors regarding our compensation policies and
forms of compensation provided to our directors and officers;
reviewing and determining bonuses for our officers and other employees;
reviewing and determining share-based compensation for our directors, officers, employees and consultants;
administering our equity incentive plans in accordance with the terms thereof; and
such other matters that are specifically delegated to the compensation committee by our board of directors
from time to time.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee
assists the board of directors in identifying individuals qualified to be members of our board of directors and in
determining the composition of the board and its committees. Our current nominating and corporate governance
73
committee consists of Yuan-Chuan Horng, Hsiung-Ku Chen, and Dr. Yan-Kuin Su. We intend to follow Rule
5605(e)(1)(B) of the Nasdaq Rules which requires that nominations committees of U.S. companies be comprised
solely of independent directors. Our nominating and corporate governance committee will be responsible for,
among other things:
•
•
•
•
•
identifying and recommending to our board of directors nominees for election or re-election, or for
appointment to fill any vacancy;
reviewing annually with our board of directors the current composition of our board of directors in light of
the characteristics of independence, age, skills, experience and availability of service to us;
reviewing the continued board membership of a director upon a significant change in such director’s
principal occupation;
identifying and recommending to our board of directors the names of directors to serve as members of the
audit committee and the compensation committee, as well as the nominating and corporate governance
committee itself;
advising the board periodically with respect to significant developments in the law and practice of
corporate governance as well as our compliance with applicable laws and regulations, and making
recommendations to our board of directors on all matters of corporate governance and on any corrective
action to be taken; and
• monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and
effectiveness of our procedures to ensure proper compliance.
Terms of Directors and Officers
Under Cayman Islands law and our articles of association, each of our directors holds office until a successor
has been duly elected or appointed, except where any director was appointed by the board of directors to fill a
vacancy on the board of directors or as an addition to the existing board, such director shall hold office until the
next annual general meeting of shareholders at which time such director is eligible for re-election. Our directors
are subject to periodic retirement and re-election by shareholders in accordance with our articles of association,
resulting in their retirement and re-election at staggered intervals. At each annual general meeting, one-third of our
directors are subject to retirement by rotation, or if their number is not a multiple of three, the number nearest to
one-third but not exceeding one-third shall retire from office. Any retiring director is eligible for re-election. The
chairman of our board of directors and/or the managing director will not be subject to retirement by rotation or be
taken into account in determining the number of directors to retire in each year. Under our articles of association,
which director will retire at each annual general meeting will be determined as follows: (i) any director who
wishes to retire and not offer himself for re-election, (ii) if no director wishes to retire, the director who has been
longest in office since his last re-election or appointment, and (iii) if two or more directors have served on the
board the longest, then as agreed among the directors themselves or as determined by lot.
6.D. Employees
As of December 31, 2019, 2020 and 2021, we had 1,975, 2,056 and 2,083 employees, respectively. The
following is a breakdown of our employees by function as of December 31, 2021:
Function
Research and development(1)
Engineering and manufacturing(2)
Sales and marketing(3)
General and administrative
Total
Number
1,335
312
295
141
2,083
Note:
and quality control engineers.
(1)
Includes semiconductor design engineers, application engineers, assembly and testing engineers
(2)
Includes manufacturing personnel of Himax Taiwan, Himax Display, Himax IGI and CMVT, our
subsidiaries focused on design and manufacturing of WLO and LCoS products.
(3)
Includes field application engineers.
74
Share-Based Compensation Plans
Himax Technologies, Inc. 2005 and 2011 Long-Term Incentive Plan
We adopted two long-term incentive plans in October 2005 and September 2011, however, the 2005 plan was
terminated in October 2010. The following description of the plan is intended to be a summary and does not describe
all provisions of the plan.
Purpose of the Plan. The purpose of the plan is to advance our interests and those of our shareholders by:
•
•
providing the opportunity for our employees, directors and service providers to develop a sense of
proprietorship and personal involvement in our development and financial success and to devote their best
efforts to our business; and
providing us with a means through which we may attract able individuals to become our employees or to
serve as our directors or service providers and providing us a means whereby those individuals, upon whom
the responsibilities of our successful administration and management are of importance, can acquire and
maintain share ownership, thereby strengthening their concern for our welfare.
Type of Awards. The plan provides for the grant of stock options and restricted share units.
Duration. Generally, the plan will terminate five years from the effective date of the plan. But, the amended and
restated 2011 Plan was 2nd amended and restated by extending its duration for three (3) years to September 6, 2022,
which was approved by our shareholders at the annual general meeting held on August 28, 2019. After the plan is
terminated, no awards may be granted, but any award previously granted will remain outstanding in accordance with
the plan.
Administration. The plan is administered by the compensation committee of our board of directors or any other
committee designated by our board to administer the plan. Committee members will be appointed from time to time
by, and will serve at the discretion of, our board. The committee has full power and authority to interpret the terms
and intent of the plan or any agreement or document in connection with the plan, determine eligibility for awards
and adopt such rules, regulations, forms, instruments and guidelines for administering the plan. The committee may
delegate its duties or powers.
Number of Authorized Shares. We have authorized a maximum issuance of 36,153,854 shares in the 2005 plan
and 20,000,000 shares in the 2011 plan, and the 2005 plan was terminated in October 2010. As of the date of this
annual report, there were no stock options or restricted share units outstanding under the plan except as described
under “—Stock Options” and “—Restricted Share Units.”
Eligibility and Participation. All of our employees, directors and service providers are eligible to participate in
the plan. The committee may select from all eligible individuals those individuals to whom awards will be granted
and will determine the nature of any and all terms permissible by law and the amount of each award.
Stock Options. The committee may grant options to participants in such number, upon such terms and at any
time as it determines. Each option grant will be evidenced by an award document that will specify the exercise
price, the maximum duration of the option, the number of shares to which the option pertains, conditions upon
which the option will become vested and exercisable and such other provisions which are not inconsistent with the
plan.
The exercise price for each option will be:
•
•
•
based on 100% of the fair market value of the shares on the date of grant;
set at a premium to the fair market value of the shares on the date of grant; or
indexed to the fair market value of the shares on the date of grant, with the committee determining the
index.
The exercise price on the date of grant must be at least equal to 100% of the fair market value of the shares on
the date of grant.
75
Each option will expire at such time as the committee determines at the time of its grant; however, no option
will be exercisable later than the 10th anniversary of its grant date. Notwithstanding the foregoing, for options
granted to participants outside the United States, the committee can set options that have terms greater than ten
years.
Options will be exercisable at such times and be subject to such terms and conditions as the committee
approves. A condition of the delivery of shares as to which an option will be exercised will be the payment of
the exercise price. Subject to any governing rules or regulations, as soon as practicable after receipt of written
notification of exercise and full payment, we will deliver to the participant evidence of book-entry shares or, upon
his or her request, share certificates in an appropriate amount based on the number of shares purchased under
the option(s). The committee may impose such restrictions on any shares acquired pursuant to the exercise of an
option as it may deem advisable.
Each participant’s award document will set forth the extent to which he or she will have the right to exercise
the options following termination of his or her employment or services.
We made grants of 2,226,690 units employee stock options to our certain employees on September 30, 2019
with exercise price $2.27 per option. The vesting schedule is, 50% of the options vest half year after the date of
grant and 50% of the options vest one year after the date of grant. During 2020, 114,500 units, 39,000 units and
10,000 units of stock option to purchase 114,500 units, 39,000 units and 10,000 units ADS were grant to certain
employees at an exercise price of $2.74, $3.9 and $3.35 on March 31, 2020, August 11, 2020 and September 25,
2020, respectively. The options granted in 2020 were fully vested on October 1, 2020.
Restricted Share Units. The committee may grant restricted share units to participants. Each grant will be
evidenced by an award document that will specify the period(s) of restriction, the number of restricted share units
granted and such other provisions as the committee determines.
Generally, restricted share units will become freely transferable after all conditions and restrictions applicable
to such shares have been satisfied or lapse and restricted share units will be paid in cash, shares or a combination
of the two, as determined by the committee.
The committee may impose such other conditions or restrictions on any restricted share units as it may deem
advisable, including a requirement that participants pay a stipulated purchase price for each restricted share unit,
restrictions based upon the achievement of specific performance goals and time-based restrictions on vesting.
A participant will have no voting rights with respect to any restricted share units.
Each award document will set forth the extent to which the participant will have the right to retain restricted
share units following termination of his or her employment or services.
We made grants of 1,208,785 RSUs to our employees on September 28, 2016. The vesting schedule for such
RSU grants is as follows: 91.93% of the RSU grants vested immediately and were settled by cash in the amount of
$9.2 million on the grant date, with the remainder vesting equally on each of September 30, 2017, 2018 and 2019,
which will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 580,235 RSUs to our employees on September 29, 2017. The vesting schedule for such RSU
grants is as follows: 96.91% of the RSU grants vested immediately and were settled by cash in the amount of $6.1
million on the grant date, with the remainder vesting equally on each of September 30, 2018, 2019 and 2020, which
will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 676,273 RSUs to our employees on September 26, 2018. The vesting schedule for such RSU
grants is as follows: 97.15% of the RSU grants vested immediately and were settled by cash in the amount of $3.8
million on the grant date, with the remainder vesting equally on each of September 30, 2019, 2020 and 2021, which
will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 1,402,714 RSUs to our employees on September 28, 2020. The vesting schedule for such
RSU grants is as follows: 98.68% of the RSU grants vested immediately and were settled by cash in the amount of
$4.8 million on the grant date, with the remainder vesting equally on each of September 30, 2021, 2022 and 2023,
which will be settled by our ordinary shares, subject to certain forfeiture events.
76
We made grants of 2,604,545 RSUs to our employees on September 28, 2021. The vesting schedule for such
RSU grants is as follows: 85.63% of the RSU grants vested immediately and were settled by cash in the amount of
$23.2 million on the grant date, with the remainder vesting equally on each of September 30, 2022, 2023 and 2024,
which will be settled by our ordinary shares, subject to certain forfeiture events.
Dividend Equivalents. Any participant selected by the committee may be granted dividend equivalents based on
the dividends declared on shares that are subject to any award, to be credited as of dividend payment dates, during
the period between the date the award is granted and the date the award is exercised, vests or expires, as determined
by the committee, provided that unvested RSUs are currently not entitled to dividend equivalents. Dividend
equivalents will be converted to cash or additional shares by such formula and at such time and subject to such
limitations as determined by the committee.
Transferability of Awards. Generally, awards cannot be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and distribution.
Adjustments in Authorized Shares. In the event of any of the corporate events or transactions described in the
plan, to avoid any unintended enlargement or dilution of benefits, the committee has the sole discretion to substitute
or adjust the number and kind of shares that can be issued or otherwise delivered.
Forfeiture Events. The committee may specify in an award document that the participant’s rights, payments
and benefits with respect to an award will be subject to reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of
an award.
If we are required to prepare an accounting restatement owing to our material noncompliance, as a result of
misconduct, with any financial reporting requirement under the securities laws, then if the participant is one of the
individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the participant
will reimburse us the amount of any payment in settlement of an award earned or accrued during the twelve-month
period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document
embodying such financial reporting requirement.
Amendment and Termination. Subject to, and except as, provided in the plan, the committee has the sole
discretion to alter, amend, modify, suspend, or terminate the plan and any award document in whole or in part.
Amendments to the plan are subject to shareholder approval, to the extent required by law, or by stock exchange
rules or regulations.
6.E. Share Ownership
The following table sets forth the beneficial ownership of our ordinary shares, as of February 28, 2022, by
each of our directors and executive officers. Beneficial ownership is determined in accordance with the rules and
regulations of the SEC.
Name
Dr. Biing-Seng Wu
Jordan Wu
Dr. Yan-Kuin Su
Yuan-Chuan Horng
Hsiung-Ku Chen
Jessica Pan
Norman Hung
Eric Li
Number of Shares
Owned
74,969,818
7,399,077
-
916,104
-
81,112
562,680
15,000
Percentage of Shares
Owned
21.5%
2.1%
-
*
-
*
*
*
* The sum of the number of ordinary shares held is less than 1.0% of our total outstanding shares.
None of our directors or executive officers has voting rights different from those of other shareholders.
77
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7.A. Major Shareholders
On August 10, 2009, we effected certain changes in our capital stock structure in order to meet the Taiwan
Stock Exchange’s primary listing requirement that the par value of shares be NT$10 or $0.3 per share and in order
to increase the number of outstanding ordinary shares to be listed on the Taiwan Stock Exchange. In particular, we
increased our authorized share capital from $50,000 (divided into 500,000,000 shares of par value $0.0001 each) to
$300,000,000 (divided into 3,000,000,000,000 shares of par value $0.0001 each) and distributed 5,999 bonus shares
for each share of par value $0.0001 held by shareholders of record as of August 7, 2009. These were followed by a
consolidation of every 3,000 shares of par value $0.0001 each into one ordinary share of par value $0.3 each. As a
result, the number of ordinary shares outstanding was doubled and each of our ordinary shares had a par value of $0.3.
In connection with the above changes, we also changed our ADS ratio effective August 10, 2009 from one
ADS representing one ordinary share to one ADS representing two ordinary shares. Such change in ADS ratio was
intended to adjust for the net dilutive effect due to the bonus shares distribution and the shares consolidation so that
each ADS would represent the same percentage ownership in our share capital immediately before and after the
above changes. The number of ADSs also remained the same immediately before and after the above changes.
As of February 28, 2022, 348,597,140 of our shares were outstanding. We believe that, of such shares,
213,034,620 shares in the form of ADSs were registered in the name of a nominee of JPMorgan Chase Bank, N.A.,
the depositary under our ADS deposit agreement. JPMorgan Chase Bank, N.A., advised us that, as of February 28,
2022, 106,517,310 ADSs, representing 213,034,620 common shares, were held of record by Cede & Co. and 9 other
registered shareholders domiciled in and outside of the United States. We have no further information as to common
shares held, or beneficially owned, by U.S. persons.
The following table sets forth information known to us with respect to the beneficial ownership of our shares as
of February 28, 2022, the most recent practicable date, by (i) each shareholder known by us to beneficially own more
than 5% of our shares and (ii) all directors and executive officers as a group.
Name of Beneficial Owner
Dr. Biing-Seng Wu(1)
Whei-Lan Teng(2)
Yiheng Capital Management, L.P.(3)
All directors and executive officers as a group(4)
Number of Shares
Beneficially Owned(4)
74,969,818
21,135,720
17,796,244
83,943,791
Percentage of Shares
Beneficially Owned(4)
21.5%
6.1%
5.1%
24.1%
Note: (1) Dr. Biing-Seng Wu directly owns 315,322 ordinary shares. Dr. Biing-Seng Wu beneficially owns
54,224,784 ordinary shares and 20,039,838 ordinary shares through Sanfair Asia Investments Ltd. and
Chi-Duan Investment Co., Ltd., respectively, both of which are investment companies controlled by Dr.
Biing-Seng Wu. Additionally, Dr. Biing-Seng Wu beneficially owns 194,937 ADSs purchased through
Sanfair Asia Investments Ltd. in the open market according to his share purchase plan announced on
December 3, 2021. Accordingly, Dr. Biing-Seng Wu may be deemed to beneficially own an aggregate
of 74,969,818 ordinary shares, representing approximately 21.5% of the outstanding ordinary shares.
(2) Whei-Lan Teng directly owns 1,335,548 ordinary shares. Whei-Lan Teng beneficially owns 2,643,782
ordinary shares through Renmar Finance Limited, which is an investment company controlled by
Whei-Lan Teng. In addition, Whei-Lan Teng, may be attributed beneficial ownership of 17,156,390
ordinary shares held in trust by Corenmar Investment Limited for the benefit of her children. Whei-Lan
Teng therefore may be deemed to have shared power to vote or dispose of 21,135,720 ordinary shares.
Accordingly, Whei-Lan Teng may be deemed to beneficially own an aggregate of 21,135,720 ordinary
shares, representing approximately 6.1% of the outstanding ordinary shares.
(3) According to the Schedule 13G/A filed with the SEC on February 14, 2022, Yiheng Capital Management,
L.P., together with its affiliates, beneficially owned 17,796,244 of our shares, some or all of which may
include shares represented by our ADS, as of December 31, 2021. We do not have further information
with respect to any changes in Yiheng Capital Management, L.P.’s beneficial ownership of our shares
subsequent to December 31, 2021.
78
(4) Numbers of shares beneficially owned by all directors and executive officers as a group already include
an aggregate of 74,969,818 ordinary shares beneficially owned by Dr. Biing-Seng Wu.
None of our major shareholders has voting rights different from those of other shareholders. We are not aware
of any arrangement that may, at a subsequent date, result in a change of control of our company.
7.B. Related Party Transactions
Viewsil Technology Limited (VST)
VST is a subsidiary of our equity method investee, Viewsil Microelectronics (Kunshan) Limited. As of
December 31, 2020 and 2021, we made an interest free loan of $1.2 million and $1.2 million, respectively, to VST
for short-term funding needs. The loan is repayable on demand and the Company expects it will be repaid in full
during 2022. We may consider providing further future loans to VST.
Viewsil Microelectronics (Kunshan)Limited (Viewsil)
Viewsil is an equity method investee of the Company. In 2019, 2020 and 2021, Viewsil provided technical
service on a new source driver chip and integrated circuit module for the Company’s research activities for a fee of
$1.8 million, $1.4 million and $1.4 million, respectively, which was charged to research and development expense.
As of December 31, 2020 and 2021, the related payables were $2.5 million and $1.4 million, respectively.
Cheng Mei Materials Technology Corporation (CMMT)
CMMT is an equity method investor of CMVT, which became as a subsidiary of the Company from October
30, 2020. From acquisition date of CMVT to December 31, 2020 and in 2021, the purchase of raw materials from
CMMT was $0.7 million and $3.5 million, respectively. As of December 31, 2020 and 2021, the related payable
resulting from the purchase of raw materials were $1.5 million and $0.2 million, respectively.
7.C. Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
8.A. Consolidated Statements and Other Financial Information
8.A.1. See “Item 18. Financial Statements” for our audited consolidated financial statements.
8.A.2. See “Item 18. Financial Statements” for our audited consolidated financial statements, which cover the last
three financial years.
8.A.3. See page F-2 for the report of our independent registered public accounting firm.
8.A.4. Not applicable.
8.A.5. Not applicable.
8.A.6. See Note 29 to our audited consolidated financial statements included in “Item 18. Financial Statements.”
8.A.7 Litigation
We may be subject to legal proceedings, investigations and claims relating to the conduct of our business from
time to time. We may also initiate legal proceedings in order to protect our contractual and property rights. However,
as of the date of this annual report, we are not currently a party to, nor are we aware of, any legal proceeding,
investigation or claim which, in the opinion of our management, is likely to have a material adverse effect on our
business, financial condition or results of operations.
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8.A.8. Dividends and Dividend Policy
Subject to the Cayman Islands Companies Law, we may declare dividends in any currency, but no dividend
may be declared in excess of the amount recommended by our board of directors. Whether our board of directors
recommends any dividends and the form, frequency and amount of dividends, if any, will depend upon our future
operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and
other factors as the board of directors may deem relevant.
On June 27, 2008, we paid a cash dividend in the amount of $66.8 million, or the equivalent of $0.350 per
ADS. In 2009, we paid a cash dividend on June 29, 2009 in the amount of $55.5 million, or the equivalent of
$0.300 per ADS, and distributed a stock dividend on August 10, 2009 of 5,999 ordinary shares of par value
$0.0001 for each ordinary share of par value $0.0001 held by shareholders of record as of August 7, 2009. On
August 13, 2010, we paid a cash dividend in the amount of $44.1 million, or the equivalent of $0.250 per ADS.
On July 20, 2011, we paid a cash dividend in the amount of $21.2 million, or the equivalent of $0.120 per
ADS. On July 25, 2012, we paid a cash dividend in the amount of $10.7 million, or the equivalent of $0.063 per
ADS. On July 31, 2013, we paid a cash dividend in the amount of $42.4 million, or the equivalent of $0.250 per
ADS. On July 23, 2014, we paid a cash dividend in the amount of $46.0 million, or the equivalent of $0.270 per
ADS. On July 8, 2015, we paid a cash dividend in the amount of $51.4 million, or the equivalent of $0.300 per
ADS. On August 3, 2016, we paid a cash dividend in the amount of $22.3 million, or the equivalent of $0.130
per ADS. On August 14, 2017, we paid a cash dividend in the amount of $41.3 million, or the equivalent of
$0.240 per ADS. On July 31, 2018, we paid a cash dividend in the amount of $17.2 million, or the equivalent of
$0.10 per ADS. On July 12, 2021, we paid a cash dividend in the amount of $47.4 million, or the equivalent of
$0.272 per ADS. For more information on the stock dividend distribution, see “Item 7.A. Major Shareholders
and Related Party Transactions—Major Shareholders.” The dividends for any of these years should not be
considered representative of the dividends that would be paid in any future periods or of our dividend policy.
Our ability to pay cash or stock dividends will depend, at least partially, upon the amount of funds
received by us from our direct and indirect subsidiaries, which must comply with the laws and regulations
of their respective countries and respective articles of association. We receive cash from Himax
Taiwan through intercompany borrowings. Himax Taiwan has not paid us cash dividends in the past. In
accordance with amended ROC Company Act and regulations and Himax Taiwan’s amended articles of
incorporation, Himax Taiwan is permitted to distribute dividends after allowances have been made for:
•
•
•
•
•
payment of taxes;
recovery of prior years’ deficits, if any;
legal reserve (in an amount equal to 10% of annual profits after having deducted the above items until such
time as its legal reserve equals the amount of its total paid-in capital);
special reserve based on relevant laws or regulations, or retained earnings, if necessary; and
dividends for preferred shares, if any.
Furthermore, if Himax Taiwan does not generate any profits for any year as determined in accordance with
generally accepted accounting principles in Taiwan, it generally may not distribute dividends for that year.
Any dividend we declare will be paid to the holders of ADSs, subject to the terms of the deposit agreement,
to the same extent as holders of our ordinary shares, to the extent permitted by applicable laws and regulations,
less the fees and expenses payable under the deposit agreement. Any dividend we declare will be distributed by
the depositary bank to the holders of our ADSs. Cash dividends on our ordinary shares, if any, will be paid in U.S.
dollars.
8.B. Significant Changes
Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the
date of the annual financial statements.
80
ITEM 9. THE OFFER AND LISTING
9.A. Offer and Listing Details
Our ADSs have been quoted on the NASDAQ Global Select Market under the symbol “HIMX” since March 31,
2006.
9.B. Plan of Distribution
Not applicable.
9.C. Markets
The principal trading market for our shares is the NASDAQ Global Select Market, on which our shares are
traded in the form of ADSs.
9.D. Selling Shareholders
Not applicable.
9.E. Dilution
Not applicable.
9.F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
10.A. Share Capital
Not applicable.
10.B. Memorandum and Articles of Association
Our shareholders previously adopted the Amended and Restated Memorandum of Association on September 26,
2005 by a special resolution passed by the sole shareholder of our company and the Amended and Restated Articles
of Association at an extraordinary shareholder meeting held on October 25, 2005, both of which were filed as an
exhibit to our registration statement on Form F-1 (file no. 333-132372) with the SEC on March 13, 2006.
At our annual general meeting on August 6, 2009, our shareholders adopted the Second Amended and Restated
Memorandum and Articles of Association, which became effective on August 10, 2009 and were filed as exhibits to
our current report on Form 6-K with the SEC on July 13, 2009. These were adopted primarily in connection with
our proposed Taiwan listing to meet the Taiwan Stock Exchange’s primary listing requirement concerning protection
of material shareholders’ rights under the ROC’s Company Act and Securities Exchange Act. At the same time, our
shareholders also adopted the Third Amended and Restated Memorandum and Articles of Association, which were
filed as an exhibit to our annual report on Form 20-F for the fiscal year ended December 31, 2009 with the SEC on
June 3, 2010 and are substantially the same as the Amended and Restated Memorandum and Articles of Association
of our company except that our authorized share capital is stated to be $300,000,000 divided into 1,000,000,000
shares of nominal or par value of $0.3 each, on the condition that it shall become effective if the application made
by our company to list its ordinary shares on the Taiwan Stock Exchange is rejected or aborted. On May 20, 2010,
the Third Amended and Restated Memorandum and Articles of Association became effective as a result of the
termination of our primary listing application to the Taiwan Stock Exchange.
We incorporate by reference into this annual report the description of our Amended and Restated Memorandum
and Articles of Association (except for provisions relating to our authorized share capital) contained in our F-1
registration statement (File No. 333-132372) filed with the SEC on March 13, 2006. Such description sets forth
a summary of certain provisions of our memorandum and articles of association as currently in effect, which is
qualified in its entirety by reference to the full text of the Third Amended and Restated Memorandum and Articles
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of Association. As of the date of this annual report, our authorized share capital is $300,000,000 divided into
1,000,000,000 shares of nominal or par value of $0.3 each.
10.C. Material Contracts
We are not currently, and have not been in the last two years, party to any material contract, other than contracts
entered into the ordinary course of business.
10.D. Exchange Controls
We have extracted from publicly available documents the information presented in this section. The information
below may be applicable because our wholly owned operating subsidiary, Himax Taiwan, is incorporated in the
ROC. Please note that citizens of the PRC and entities organized in the PRC are subject to special ROC laws, rules
and regulations, which are not discussed in this section.
The ROC’s Foreign Exchange Control Statute and regulations provide that all foreign exchange transactions must
be executed by banks designated to handle foreign exchange transactions by the Central Bank of the ROC. There is
an annual limit on the amount of currency a Taiwanese entity may convert into, or out of, NT dollars other than for
trade purposes. Current regulations favor trade-related foreign exchange transactions.
With regard to inward and outward remittances (foreign exchange purchased or sold), approval by the Central
Bank of the ROC is generally required for any conversion exceeding, in aggregate in each calendar year, $50
million (and /or its equivalent) for companies and $5 million (and/or its equivalent) for Taiwanese and long term 1
year-valid resident permit of foreign individuals. A requirement is also imposed on all private enterprises to report
all medium- and long-term foreign debt with the Central Bank of the ROC.
In addition, a foreign person without an alien resident card or an unrecognized foreign entity may remit to and
from Taiwan foreign currencies of up to $100,000 per remittance if required documentation is provided to the ROC
authorities. This limit applies only to remittances involving a conversion between NT dollars and U.S. dollars or
other foreign currencies.
10.E. Taxation
Cayman Islands Taxation
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or
appreciation, and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to
be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable
on instruments executed in, or brought within the jurisdiction of, the Cayman Islands. The Cayman Islands is not
party to any double tax treaties. There are no exchange control regulations or currency restrictions in the Cayman
Islands.
We have, pursuant to Section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, obtained an
undertaking from the Governor-in-Council that:
(a) no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income or gains or
appreciations shall apply to us or our operations;
(b) the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on our
ordinary shares, debentures or other obligations.
The undertaking that we have obtained is for a period of 20 years from May 3, 2005.
United States Federal Income Taxation
The following is a description of material U.S. federal income tax consequences to the U.S. Holders described
below of owning and disposing of ordinary shares or ADSs, but it does not purport to be a comprehensive
description of all tax considerations that may be relevant to a particular person’s decision to hold the securities. This
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discussion applies only to a U.S. Holder that holds ordinary shares or ADSs as capital assets for U.S. federal income
tax purposes. This discussion does not address any aspect of the “Medicare contributions tax” on “net investment
income.” In addition, it does not describe all of the tax consequences that may be relevant in light of the U.S.
Holder’s particular circumstances, including alternative minimum tax consequences and tax consequences applicable
to U.S. Holders subject to special rules, such as:
•
•
•
•
•
•
•
•
certain financial institutions;
dealers or traders in securities who use a mark-to-market method of tax accounting;
persons holding ordinary shares or ADSs as part of a hedging transaction, straddle, wash sale, conversion
transaction or integrated transaction or persons entering into a constructive sale with respect to the ordinary
shares or ADSs;
persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
entities classified as partnerships for U.S. federal income tax purposes;
tax-exempt entities, including “individual retirement accounts” or “Roth IRAs”;
persons that own or are deemed to own ten percent or more of our voting stock; or
persons holding ordinary shares or ADSs in connection with a trade or business conducted outside of the
United States.
If an entity that is classified as a partnership for U.S. federal income tax purposes owns ordinary shares or
ADSs, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the
activities of the partnership. Partnerships holding ordinary shares or ADSs and partners in such partnerships should
consult their tax advisers as to the particular U.S. federal income tax consequences of owning and disposing of the
ordinary shares or ADSs.
This discussion is based on the Internal Revenue Code of 1986, as amended, administrative pronouncements,
judicial decisions and final, temporary and proposed Treasury regulations, all as of the date hereof. These laws
are subject to change, possibly on a retroactive basis. It is also based in part on representations by the depositary
and assumes that each obligation under the deposit agreement and any related agreement will be performed
in accordance with its terms. You should consult your tax adviser concerning the U.S. federal, state, local and
non-U.S. tax consequences of owning and disposing of ordinary shares or ADSs in your particular circumstances.
As used herein, a “U.S. Holder” is a person that is, for U.S. federal tax purposes, a beneficial owner of ordinary
shares or ADSs and is: (i) a citizen or resident of the United States; (ii) a corporation, or other entity taxable as a
corporation, created or organized in or under the laws of the United States or any political subdivision thereof; or
(iii) an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
In general, a U.S. Holder of ADSs will be treated for U.S. federal income tax purposes as the owner of the
underlying ordinary shares represented by those ADSs. Accordingly, no gain or loss will be recognized if a U.S.
Holder exchanges ADSs for the underlying ordinary shares represented by those ADSs.
The U.S. Treasury has expressed concerns that parties to whom American depositary shares are released
before delivery of shares to the depositary (“pre-release”) may be taking actions that are inconsistent with the
claiming of foreign tax credits for U.S. holders of American depositary shares. Such actions would also be
inconsistent with the claiming of the preferred rates of tax, described below, applicable to dividends received
by certain non-corporate U.S. holders. Accordingly, the availability of the preferential tax rates for dividends
received by certain non-corporate U.S. Holders, described below, could be affected by actions taken by parties to
whom ADSs are pre-released.
This discussion assumes that we are not, and will not become, a passive foreign investment company (as
discussed below).
Taxation of Distributions
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Distributions received by U.S. Holders with respect to the ordinary shares or ADSs, other than certain pro
rata distributions of ordinary shares, will constitute foreign-source dividend income for U.S. federal income tax
purposes to the extent paid out of our current or accumulated earnings and profits, as determined in accordance
with U.S. federal income tax principles. We do not to maintain records of earnings and profits in accordance with
U.S. federal income tax principles, and therefore it is expected that distributions will generally be reported to U.S.
Holders as dividends. Dividends will be included in a U.S. Holder’s income on the date of the U.S. Holder’s (or
in the case of ADSs, the depository’s) receipt of the dividends. Subject to applicable limitations and the discussion
above regarding concerns expressed by the U.S. Treasury, certain dividends paid by qualified foreign corporations
to certain non-corporate holders may be taxable at preferential tax rates applicable to long-term capital gains.
A foreign corporation is treated as a qualified foreign corporation with respect to dividends paid on stock that is
readily tradable on a securities market in the United States, such as the NASDAQ Global Select Market, where our
ADSs are traded. Our ordinary shares are not traded on a securities market in the United States. Non-corporate U.S.
Holders of our ordinary shares or ADSs should consult their tax advisers regarding their eligibility for taxation at
such preferential rates and whether they are subject to any special rules that limit their ability to be taxed at such
preferential rates. Corporate U.S. Holders will not be entitled to claim the dividends-received deduction with
respect to dividends paid by us.
Sale and Other Disposition of Ordinary Shares or ADSs
A U.S. Holder will generally recognize U.S.-source capital gain or loss for U.S. federal income tax purposes
on the sale or other disposition of ordinary shares or ADSs, which will be long-term capital gain or loss if the
ordinary shares or ADSs were held for more than one year. Long-term capital gains of certain non-corporate U.S.
Holders may be taxable at preferential rates. The amount of gain or loss will be equal to the difference between the
amount realized on the sale or other disposition and the U.S. Holder’s tax basis in the ordinary shares or ADSs.
The deductibility of capital losses is subject to limitations.
Passive Foreign Investment Company Rules
We believe that we were not a passive foreign investment company (a “PFIC”) for U.S. federal income tax
purposes for our taxable year ended December 31, 2021.
In general, a non-U.S. company will be a PFIC for U.S. federal income tax purposes for any taxable year
in which (i) 75% or more of its gross income consists of passive income (such as dividends, interest, rents and
royalties) or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held
for the production of, passive income (including cash). If a corporation owns at least 25% (by value) of the stock
of another corporation, the corporation will be treated, for purposes of the PFIC tests, as owning its proportionate
share of the 25%-owned subsidiary’s assets and receiving its proportionate share of the 25%-owned subsidiary’s
income. As PFIC status depends upon the composition of our income and assets and the value of our assets from
time to time (and the value of our assets may be determined, in part, based on the market price of our shares
and ADSs, which may fluctuate considerably from time to time given that market prices of certain technology
companies historically have been volatile), there can be no assurance that we will not be a PFIC for any taxable
year.
If we were a PFIC for any taxable year during which a U.S. Holder held ordinary shares or ADSs, certain
adverse U.S. federal income tax rules would apply on a sale or other disposition (including a pledge) of ordinary
shares or ADSs by the U.S. Holder. In general, under those rules, gain recognized by the U.S. Holder on a sale or
other disposition of ordinary shares or ADSs would be allocated ratably over the U.S. Holder’s holding period for
the ordinary shares or ADSs. The amounts allocated to the taxable year of the sale or other disposition and to any
year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable
year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that
taxable year, and an interest charge would be imposed on the tax attributable to such allocated amounts. Similar
rules would apply to any distribution in respect of ordinary shares or ADSs to the extent in excess of 125% of the
average of the annual distributions on ordinary shares or ADSs received by the U.S. Holder during the preceding
three years or the U.S. Holder’s holding period, whichever is shorter. Certain elections may be available that
would result in alternative treatments (such as a mark-to-market treatment of the ADSs). U.S. Holders should
consult their tax advisers to determine whether any of these elections would be available and, if so, what the
consequences of the alternative treatments would be in their particular circumstances.
If we were a PFIC in a taxable year in which we pay a dividend or in the prior taxable year, the preferential tax
rates discussed above with respect to dividends received by certain non-corporate U.S. Holders would not apply.
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In addition, if a U.S. Holder owns ordinary shares or ADSs during any year in which we are a PFIC, the U.S.
Holder may be required to file certain information reports, containing such information as the U.S. Treasury may
require.
Information Reporting and Backup Withholding
Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related
financial intermediaries generally are subject to information reporting, and may be subject to backup withholding,
unless the U.S. Holder is an exempt recipient or, in the case of backup withholding, the U.S. Holder provides a
correct taxpayer identification number and certifies that it is not subject to backup withholding. The amount of any
backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S.
federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is
timely furnished to the Internal Revenue Service.
10.F. Dividends and Paying Agents
Not applicable.
10.G. Statement by Experts
Not applicable.
10.H. Documents on Display
It is possible to read and copy documents referred to in this annual report that have been filed with the SEC at
the SEC’s public reference rooms in Washington, D.C., New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the reference rooms.
10.I. Subsidiary Information
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk. Our exposure to interest rate risk for changes in interest rates is primarily the interest income
generated by our cash deposited with banks. In addition, we are exposed to interest rate risks related to bank
borrowings.
Foreign Exchange Risk. The U.S. dollar is our reporting currency. The U.S. dollar is also the functional currency
for the majority of our operations. In 2021, more than 99% of our sales and cost of revenues were denominated in U.S.
dollars. However, in December 2021 approximately 67% of our operating expenses were denominated in NT dollars,
with a small percentage denominated in Japanese Yen, Korean Won, Israel new shekel and Chinese Renminbi,
and the majority of the remainder denominated in U.S. dollars. We anticipate that we will continue to conduct
substantially all of our sales in U.S. dollars. We do not believe that we have a material currency risk with regard to
the NT dollar. We believe the majority of any potential adverse foreign currency exchange impacts on our operating
assets may be offset by a potential favorable foreign currency exchange impact on our operating liabilities. From
time to time we have engaged in, and may continue to engage in, forward contracts to hedge against our foreign
currency exposure.
As of December 31, 2021, no foreign currency exchange contracts are outstanding.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
12.A. Debt Securities
Not applicable.
12.B. Warrants and Rights
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Not applicable.
12.C. Other Securities
Not applicable.
12.D. American Depositary Shares
Fees and Charges Payable by ADS Holders
Persons depositing or withdrawing
shares or ADS holders must pay:
$5.00 (or less) per 100 ADSs (or portion of 100
ADSs)
For:
Issuance of ADSs, including issuances resulting
from a distribution of shares or rights or
other property
Cancellation of ADSs for the purpose of
withdrawal, including if the deposit
agreement terminates
$.05 (or less) per ADS
Any cash distribution to ADS holders
A fee equivalent to the fee that would be payable if
securities distributed to you had been shares and the
shares had been deposited for the issuance of ADSs
Distribution of securities distributed to holders of
deposited securities which are distributed by the
depositary to ADS holders
$.05 (or less) per ADS per calendar year
Depositary services
Registration or transfer fees
Expenses of the depositary
Transfer and registration of shares on our share register
to or from the name of the depositary or its agent when
you deposit or withdraw shares
Cable, telex and facsimile transmissions (when expressly
provided in the deposit agreement) converting foreign
currency to U.S. dollars
Taxes and other governmental charges that the depositary
or custodian have to pay on any ADS or share underlying
an ADS, e.g., stock transfer taxes, stamp duty or
withholding taxes
As necessary
Any charges incurred by the depositary or its agents for
servicing the deposited securities
As necessary
The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or
surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects
fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a
portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services
by deduction from cash distributions or by directly billing investors or charging the book-entry system accounts
of participants acting for them. The depositary may collect any of its fees by deduction from any cash distribution
payable to ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-
attracting services until its fees for those services are paid.
From time to time, the depositary may make payments to us to reimburse and/or share revenue from the fees
collected from ADS holders, or waive fees and expenses for services provided, generally relating to costs and
expenses arising out of establishment and maintenance of the ADS program. In performing its duties under the
deposit agreement, the depositary may use brokers, dealers or other service providers that are affiliates of the
depositary and that may earn or share fees or commissions.
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Fees and Other Payments from the Depositary to Us
In 2021, we received $0.6 million netting of 30% withholding tax from the depositary relating to the ADR
program. The payment from the depositary would be intended to cover certain of our expenses incurred in relation
to the ADR program for the year, including:
•
legal, audit and other fees incurred in connection with preparation of Form 20-F and annual reports and
ongoing SEC compliance and listing requirements;
•
•
•
•
•
•
director and officer insurance;
stock exchange listing fees;
non-deal roadshow expenses;
costs incurred by financial printer and share certificate printer;
postage for communications to ADR holders;
costs of retaining third-party public relations, investor relations and/or corporate communications advisory
firms in the U.S.; and
•
costs incurred in connection with participation in retail investor shows and capital markets days.
Appointment of New Depositary Bank
On July 14, 2017, we appointed JPMorgan Chase Bank, N.A. as our new American depositary receipt bank.
Effective the same day, our ADR program was officially transferred to JPMorgan Chase Bank, N.A. for a contract
term of ten years.
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE
OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls
and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this
report, have concluded that based on the evaluation of these controls and procedures required by Rule 13a-15(b) of
the Exchange Act, our disclosure controls and procedures are effective.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
IFRS as issued by the IASB.
Our internal control over financial reporting includes those policies and procedures that:
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•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions
and dispositions of our assets;
•
•
provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our
financial statements in accordance with IFRS as issued by the IASB, and that our receipts and expenditures
are being made only in accordance with authorizations of our management and our directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of internal control effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management, with the participation of our chief executive and chief financial officers, assessed the effectiveness
of our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) as of December
31, 2021 based on the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. Based on the assessment, our management believes that
our internal control over financial reporting was effective as of December 31, 2021.
Attestation Report of the Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Himax Technologies, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Himax Technologies, Inc. and subsidiaries’ (the “Company”) internal control over financial
reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the consolidated statements of financial position of the Company as of December 31, 2020 and
2021, the related consolidated statements of profit or loss, other comprehensive income, changes in equity, and cash
flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the
“consolidated financial statements”), and our report dated March 23, 2022 expressed an unqualified opinion on those
consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion
on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit
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also included performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ KPMG
Hsinchu, Taiwan
March 23, 2022
Changes in Internal Control over Financial Reporting
In 2021, no change in our internal control over financial reporting has occurred during the period covered by
this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
ITEM 16. [RESERVED]
16.A. Audit Committee Financial Expert
Our board of directors has determined that Yuan-Chuan Horng is an audit committee financial expert, as that term
is defined in Item 16A(b) of Form 20-F and is independent for the purposes of Rule 5605(a)(2) of the Nasdaq Rules
and Rule 10A-3 of the Exchange Act.
16.B. Code of Ethics
Our board of directors has adopted a code of business conduct and ethics that applies to our directors, officers
and employees, including our principal executive officer, principal financial officer, principal accounting officer
or controller and any other persons who perform similar functions for us. We will provide a copy of our code of
business conduct and ethics without charge upon written request to:
Himax Technologies, Inc.
Human Resources Department
No. 26, Zih Lian Road,Sinshih District, Tainan City 74148
Taiwan, Republic of China
16.C. Principal Accountant Fees and Services
KPMG, our independent registered public accounting firm, began serving as our independent auditor upon the
formation of our company in 2001.
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Our audit committee is responsible for the oversight of KPMG’s work. The policy of our audit committee is to
pre-approve all audit and non-audit services provided by KPMG, including audit services, audit-related services,
tax services and other services.
We paid the following fees for professional services to KPMG for the years ended December 31, 2020 and
2021.
Services
Audit Fees(1)
Tax Fees(2)
All Other Fees(3)
Total
Year ended December 31,
2020
$ 800,000
12,000
7,000
$ 819,000
2021
$ 955,000
19,000
7,000
$ 981,000
(1) Audit Fees. This category includes the audit of our annual financial statements and internal control
Note:
over financial reporting, quarterly review procedures, services that are normally provided by the
independent auditors in connection with statutory and regulatory filings or engagements for those
fiscal years. This category also includes statutory audits required by the Tax Bureau of the ROC.
(2) Tax Fees. This category consists of fees in relation to transfer pricing reports.
(3) All Other Fees. This category consists of fees in relation to audit of conflict mineral report.
16.D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
16.E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On November 1, 2007, our board of directors authorized a share buyback program allowing us to repurchase
up to $40.0 million of our ADSs in the open market or through privately negotiated transactions. We concluded
this share buyback program in the first quarter of 2008 and repurchased a total of approximately $33.1 million of
our ADSs (equivalent to approximately 7.7 million ADSs) from the open market.
On November 14, 2008, our board of directors authorized another share buyback program allowing us to
repurchase up to $50.0 million of our ADSs in the open market or through privately negotiated transactions. We
concluded this share buyback program in the third quarter of 2010 and repurchased a total of approximately $50.0
million of our ADSs (approximately 19.3 million ADSs) under this program from the open market.
In April 2011, the Companies Law of the Cayman Islands was amended to permit treasury shares if so
approved by the board of directors and to the extent that the articles do not prohibit treasury shares. Therefore, we
would hold the treasury shares for future employee awards.
On June 20, 2011, our board of directors authorized another share buyback program allowing us to repurchase
up to $25.0 million of our ADSs in the open market or through privately negotiated transactions. We concluded
this share buyback program in the fourth quarter of 2012 and repurchased a total of approximately $13.4 million of
our ADSs (approximately 9.5 million ADSs) under this program from the open market. We did not conduct any
repurchase under this program in 2021.
16.F. Change in Registrant’s Certifying Accountant
Not applicable.
16.G. Corporate Governance
The Nasdaq Rules provide that foreign private issuers may follow home country practice in lieu of the
corporate governance requirements of the NASDAQ Stock Market LLC, subject to certain exceptions and
90
requirements and except to the extent that such exemptions would be contrary to U.S. federal securities laws and
regulations. The significant differences between our corporate governance practices and those followed by U.S.
companies under the Nasdaq Rules are summarized as follows:
• We follow home country practice that permits our independent directors not to hold regularly scheduled
meetings at which only independent directors are present in lieu of complying with Rule 5605(b)(2).
16.H. Mine Safety Disclosure
Not applicable.
16.I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
ITEM 17. FINANCIAL STATEMENTS
Not applicable.
ITEM 18. FINANCIAL STATEMENTS
Our consolidated financial statements and the report thereon by our independent registered public accounting
firm listed below are attached hereto as follows:
(a) Report of Independent Registered Public Accounting Firm.
(b) Consolidated Statements of Financial Position as of December 31, 2020 and 2021.
(c) Consolidated Statements of Profit or Loss for the years ended December 31, 2019, 2020 and 2021.
(d) Consolidated Statements of Other Comprehensive Income for the years ended December 31, 2019, 2020
and 2021.
(e) Consolidated Statements of Changes in Equity for the years ended December 31, 2019, 2020 and 2021.
(f) Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2020 and 2021.
(g) Notes to the Consolidated Financial Statements.
91
ITEM 19. EXHIBITS
Exhibit Number
1.1
Description of Document
Third Amended and Restated Memorandum and Articles of Association of the Registrant, as
currently in effect. (Incorporated by reference to Exhibit 1.1 from our Annual Report on Form
20-F (file no. 000-51847) filed with the Securities and Exchange Commission on June 3, 2010.)
2.1
Registrant’s Specimen American Depositary Receipt (included in Exhibit 2.3).
2.2
2.3
Registrant’s Specimen Certificate for Ordinary Shares. (Incorporated by reference to Exhibit 4.2
from our Registration Statement on Form F-1 (file no. 333-132372) filed with the Securities and
Exchange Commission on March 13, 2006.)
Form of Deposit Agreement among the Registrant, JPMorgan Chase Bank, N.A., as depositary,
and holders of the American depositary receipts. (Incorporated by reference to Exhibit (a) to the
Registrant’s Registration Statement on Form F-6 (file no. 333-219169) filed with the Securities
and Exchange Commission on July 6, 2017.)
2.4
Description of Securities
4.1
4.2*
Himax Technologies, Inc. 2011 Long-Term Incentive Plan Amended and Restated as of August
31st day, 2016 and 2nd Amended and Restated as of August 28th day, 2019. (Incorporated
herein by reference to Exhibit 99.4 to the Registrant’s report of foreign private issuer on Form
6-k filed on July 15, 2019.)
Agreement and Plan of Merger dated November 8, 2010 among Himax Display, Inc., Spatial
Photonics, Inc. and Wen Hsieh. (Incorporated herein by reference to Exhibit 4.3 from our
Annual Report on Form 20-F (file no. 000-51847) filed with the Securities and Exchange
Commission on May 20, 2011.)
8.1
List of Subsidiaries.
12.1
12.2
13.1
Certification of Jordan Wu, President and Chief Executive Officer of Himax Technologies, Inc.,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Jessica Pan, Chief Financial Officer of Himax Technologies, Inc., pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Certification pursuant to 18 USC. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
15.1
Consent of KPMG, Independent Registered Public Accounting Firm.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
XBRL Taxonomy Extension Definition Linkbase
101.LAB
XBRL Taxonomy Extension Label Linkbase
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
*Confidential treatment has been requested for portions of this exhibit.
92
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies
that it meets all of the requirements for filing on Form 20-F and has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
HIMAX TECHNOLOGIES, INC.
By: /s/ Jordan Wu
Name: Jordan Wu
Title: President and Chief Executive Officer
Date: March 23, 2022
93
HIMAX TECHNOLOGIES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (KPMG, Hsinchu, Taiwan, PCAOB ID
1026)
Consolidated Statements of Financial Position as of December 31, 2020 and 2021
Consolidated Statements of Profit or Loss for the Years Ended December 31, 2019, 2020 and 2021
Consolidated Statements of Other Comprehensive Income for the Years Ended December 31, 2019,
2020 and 2021
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2019, 2020 and
2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2020 and 2021
Notes to the Consolidated Financial Statements
page
F-1
F-3
F-5
F-6
F-7
F-10
F-12
94
Himax Technologies, Inc.
List of Subsidiaries
Exhibit 8.1
Jurisdiction of
Incorporation
ROC
Percentage of
Our Ownership
Interest
100.0%
Himax Technologies Limited
Subsidiary
Himax Technologies Korea Ltd.
South Korea
100.0%
Himax Technologies (Samoa), Inc.
Himax Technologies (Suzhou) Co., Ltd.
Himax Technologies (Shenzhen) Co., Ltd.
Himax Display, Inc.
Integrated Microdisplays Limited
Himax Display (USA) Inc.
Himax Analogic, Inc.
Himax Imaging, Inc.
Himax Imaging, Ltd.
Himax Imaging Corp.
Himax Media Solutions, Inc.
Harvest Investment Limited
Himax Technologies Japan Ltd.
Samoa
PRC
PRC
ROC
Hong Kong
Delaware, USA
ROC
Cayman Islands
ROC
California, USA
ROC
ROC
Japan
Himax Semiconductor (Hong Kong) Limited
Hong Kong
Liqxtal Technology Inc.
Himax IGI Precision Ltd.
Emza Visual Sense Ltd.
CM Visual Technology Corp.
ROC
Delaware, USA
Israel
ROC
(1) Indirectly, through our 100.0% ownership of Himax Technologies Limited.
(2) Indirectly, through our 100.0% ownership of Himax Technologies (Samoa), Inc.
(3) Indirectly, through our 83.5% ownership of Himax Display, Inc.
(4) Indirectly, through our 98.4% ownership of Himax Imaging, Ltd.
100.0%(1)
100.0%(2)
100.0%(2)
83.5%(1)
83.5%(3)
83.5%(3)
98.6%(1)
100.0%
98.4%(1)
98.4%(4)
99.2%(1)
100.0%(1)
100.0%
100.0%
67.5%(1)
100.0%(1)
100.0%(1)
66.7%(1)
95
Certification
Exhibit 12.1
I, Jordan Wu, certify that:
1. I have reviewed this annual report on Form 20-F of Himax Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the company, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting
that occurred during the period covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the company’s internal control over financial reporting;
and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the company’s auditors and the audit committee of the
company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the company’s ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the company’s internal control over financial reporting.
Date: March 23, 2022
By: /s/ Jordan Wu
Name: Jordan Wu
Title: President and Chief Executive Officer
96
Certification
Exhibit 12.2
I, Jessica Pan, certify that:
1. I have reviewed this annual report on Form 20-F of Himax Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the company, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting
that occurred during the period covered by the annual report that has materially affected, or is
reasonably likely to materially affect, the company’s internal control over financial reporting;
and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the company’s auditors and the audit
committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the company’s
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the company’s internal control over financial reporting.
Date: March 23, 2022
By: /s/ Jessica Pan
Name: Jessica Pan
Title: Chief Financial Officer
97
Certification
Exhibit 13.1
March 23, 2022
The certification set forth below is being submitted to the Securities and Exchange
Commission in connection with the Annual Report on Form 20-F for the year ended December 31,
2021 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the
Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of
the United States Code.
Jordan Wu, the President and Chief Executive Officer of Himax Technologies, Inc., and
Jessica Pan, the Chief Financial Officer of Himax Technologies, Inc., each certifies that, to the best of
his or her knowledge:
1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act;
and
2. the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of Himax Technologies, Inc.
By: /s/ Jordan Wu
Name: Jordan Wu
Title: President and Chief Executive Officer
By: /s/ Jessica Pan
Name: Jessica Pan
Title: Chief Financial Officer
98
Consent of Independent Registered Public Accounting Firm
Exhibit 15.1
We consent to the incorporation by reference in the registration statements (No. 333-137585 and No.
333-176863) on Form S-8 and the registration statement (No. 333-189052) on Form F-3 of our reports
dated March 23, 2022, with respect to the consolidated financial statements of Himax Technologies, Inc.
and subsidiaries and the effectiveness of internal control over financial reporting.
/s/ KPMG
Hsinchu, Taiwan
March 23, 2022
99
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 2019, 2020 and 2021
(With Report of Independent Registered
Public Accounting Firm Thereon)
Report of Independent Registered Public Accounting Firm
F-1
To the Stockholders and Board of Directors
Himax Technologies, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Himax Technologies, Inc.
and subsidiaries (the “Company”) as of December 31, 2020 and 2021, the related consolidated statements
of profit or loss, other comprehensive income, changes in equity, and cash flows for each of the years in the
three-year period ended December 31, 2021, and the related notes (collectively, the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2020 and 2021, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with
International Financial Reporting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December
31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated
March 23, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over
financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits. We are
a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement, whether due to error or fraud. Our audits included performing procedures
to assess the risks of material misstatement of the consolidated financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits
provide a reasonable basis for our opinion.
F-2
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of
the consolidated financial statements that was communicated or required to be communicated to the
audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of a critical audit matter does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a
separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impairment assessment of property, plant and equipment in the Wafer Level Optics cash generating unit
As discussed in Note 15 to the consolidated financial statements, the balance of property, plant and equipment
was $133,236 thousand as of December 31, 2021, a portion of which related to the Wafer Level Optics
cash generating unit (“CGU”). The Company’s property, plant and equipment is reviewed at the reporting
date to determine whether there is any indication of impairment. If any such indication exists, impairment
assessment will be performed by comparing the carrying amount of the CGU with its recoverable amount,
which is the higher of the fair value less costs of disposal and the value in use. The value in use is determined
by discounting the estimated future cash flows to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset.
We identified the impairment assessment of property, plant and equipment in the Wafer Level Optics CGU as
a critical audit matter because of the high degree of subjective auditor’s judgment required in evaluating the
forecasted future revenues and discount rate assumptions and minor changes to those assumptions could have
a significant effect on the Company’s impairment assessment of property, plant and equipment in the Wafer
Level Optics CGU. In addition, the evaluation of the discount rate involved specialized skills and knowledge.
The primary procedures we performed to address this critical audit matter included the following. We
tested certain internal controls over the Company’s impairment assessment process of property, plant and
equipment, including controls related to the determination of forecasted future revenues and the assumptions
used to develop the discount rate. We evaluated the Company’s forecasted future revenues by comparing
them to the historical revenues of the CGU and industry revenue forecasts. We compared the Company’s
historical revenue forecasts to actual results to assess the Company’s ability to accurately forecast future
revenues. We performed sensitivity analyses over the forecasted future revenues and discount rate to assess
their impact on the recoverable amount of the CGU. In addition, we involved valuation professionals with
specialized skills and knowledge, who assisted in evaluating the Company’s discount rate, by comparing it
against a range of estimated discount rates developed independently based on market data and inputs.
/s/ KPMG
We have served as the Company’s auditor since 2001.
Hsinchu, Taiwan
March 23, 2022
F-3
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Position
December 31, 2020 and 2021
(in thousands of US dollars)
Assets
Current assets:
Cash and cash equivalents
Financial assets at amortized cost
Financial assets at fair value through profit or loss
Accounts receivable, net (including related parties)
Inventories
Income taxes receivable
Restricted deposit
Other receivable from related parties
Other current assets
Total current assets
Financial assets at fair value through profit or loss
Financial assets at fair value through other
comprehensive income
Equity method investments
Property, plant and equipment, net
Deferred tax assets
Goodwill
Other intangible assets, net
Restricted deposit
Refundable deposits
Other non-current assets
December 31,
December 31,
Note
2020
2021
6, 23
7, 23
8, 23
11, 23, 26
12
23
17, 23, 27
23, 26
23
$
184,938
8,682
7,799
243,626
108,707
91
104,000
1,200
35,368
694,411
336,024
26,013
2,345
410,211
198,600
54
154,100
1,217
64,280
1,192,844
8, 23
13,966
13,668
9, 23
13
15, 18, 27,29,
30
5, 22
4(k)
5, 14, 30
23, 27
23,
19
742
3,983
132,074
15,739
28,138
7,876
141
12,144
604
215,407
909,818
410
3,302
133,236
7,191
28,138
6,617
36
199,982
17,770
410,350
1,603,194
Total assets
$
The accompanying notes are an integral part of these consolidated financial statements.
F-4
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Position (Continued)
December 31, 2020 and 2021
(in thousands of US dollars)
Liabilities and Equity
Current liabilities:
December 31,
December 31,
Note
2020
2021
Current portion of long-term unsecured borrowings
Short-term secured borrowings
Accounts payable (including related parties)
Income taxes payable
Other payable to related parties
Contract liabilities-current
Other current liabilities
Total current liabilities
Long-term unsecured borrowings
Deferred tax liabilities
Contract liabilities-non-current
Other non-current liabilities
Total liabilities
$
18, 23, 27
17, 23, 27
23, 26
22
23, 26
29
5, 15, 16,23
18, 27
5, 22
29
15, 19, 23
Equity
Ordinary shares
Additional paid-in capital
Treasury shares
Accumulated other comprehensive income
Retained earnings
Equity attributable to owners of Himax
Technologies, Inc.
Noncontrolling interests
Total equity
Total liabilities and equity
21
21
21
21
6,000
104,000
173,471
13,466
2,572
6,622
46,111
352,242
52,500
1,138
-
18,739
424,619
107,010
107,293
(6,516)
(548)
272,937
480,176
5,023
485,199
909,818
$
6,000
151,400
248,425
96,552
1,641
37,663
59,544
601,225
46,500
965
10,221
72,301
731,212
107,010
108,841
(5,761)
(666)
660,300
869,724
2,258
871,982
1,603,194
The accompanying notes are an integral part of these consolidated financial statements.
F-5
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Profit or Loss
For the years ended December 31, 2019, 2020 and 2021
(in thousands of US dollars, except per share data)
Revenues:
Revenues from third parties, net
Revenues from related parties, net
Total revenues
Costs and expenses:
Cost of revenues
Research and development
General and administrative
Expected (reversal of) credit losses
Sales and marketing
Note
2019
2020
2021
$
671,835
-
671,835
887,282
-
887,282
1,546,972
125
1,547,097
26, 29
12,19,20,26,30
19,20,26,30
5,19,20,26,30
11
19, 20, 30
533,916
114,859
23,672
67
17,628
666,501
122,265
23,915
-
16,675
798,519
151,386
29,281
(190)
23,080
Total costs and expenses
690,142
829,356
1,002,076
Operating income(loss)
(18,307)
57,926
545,021
2,013
967
876
8, 23
3,746
472
(284)
Non operating income (loss):
Interest income
Changes in fair value of financial assets at fair
value through profit or loss
Foreign currency exchange gains(losses),
net
Finance costs
Share of losses of associates
Other income
Profit (loss) before income taxes
Income tax expense
Profit (loss) for the year
Loss attributable to noncontrolling interests
Profit (loss) attributable to Himax Technologies,
Inc. stockholders
13
22
Basic earnings (loss) per ordinary share attributable
to Himax Technologies, Inc.stockholders
Diluted earnings (loss) per ordinary share attributable
to Himax Technologies, Inc. stockholders
Basic earnings (loss) per ADS attributable to Himax
Technologies, Inc. stockholders
Diluted earnings (loss) per ADS attributable to Himax
Technologies, Inc. stockholders
4(r)
4(r)
4(r)
4(r)
(546)
(2,325)
(477)
128
2,539
(15,768)
416
(16,184)
2,570
(327)
(1,705)
(638)
177
(1,054)
56,872
11,712
45,160
1,974
1,096
(1,074)
(1,392)
349
(429)
544,592
110,657
433,935
2,961
(13,614)
47,134
436,896
(0.04)
0.14
1.25
(0.04)
0.14
1.25
(0.08)
0.27
2.50
(0.08)
0.27
2.50
$
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
F-6
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Other Comprehensive Income
For the years ended December 31, 2019, 2020 and 2021
(in thousands of US dollars)
Profit (loss) for the year
Other comprehensive income:
Items that will not be reclassified
to profit or loss:
Remeasurements of defined
benefit pension plans
Unrealized gain (loss) on
financial assets at fair value
through other comprehensive
income
Income tax related to items that
will not be reclassified
subsequently
Items that may be reclassified
subsequently to profit or loss:
Foreign operations - foreign
currency translation
differences
Other comprehensive income for
the year, net of tax
Total comprehensive income for the
year
Total comprehensive income
attributable to noncontrolling
interests
Total comprehensive income
attributable to Himax
Technologies, Inc. stockholders
Note
2019
2020
2021
$
(16,184)
45,160
433,935
19, 21, 22,
23
214
(214)
165
(35)
65
(181)
(25)
38
(27)
(545)
556
(72)
(391)
445
(115)
(16,575)
45,605
433,820
2,558
1,933
2,958
$
(14,017)
47,538
436,778
The accompanying notes are an integral part of these consolidated financial statements.
F-7
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F-10
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2019, 2020 and 2021
(in thousands of US dollars)
Cash flows from operating activities:
$
Profit (loss) for the year
Adjustments for:
Depreciation and amortization
Expected (reversal of) credit losses recognized on
accounts receivable
Share-based compensation expenses
Gain on disposals of property, plant and
equipment, net
Changes in fair value of financial assets at fair value
through profit or loss
Interest income
Finance costs
Income tax expense
Share of losses of associates
Inventories write downs
Unrealized foreign currency exchange losses (gains)
Changes in:
Accounts receivable (including related parties)
Inventories
Other receivable from related parties
Other current assets
Other non-current assets
Accounts payable (including related parties)
Other payable to related parties
Contract liabilities
Other current liabilities
Other non-current liabilities
Cash generated from operating activities
Interest received
Interest paid
Income tax paid
Net cash provided by operating activities
2019
2020
2021
(16,184)
45,160
433,935
24,399
23,596
21,342
67
457
-
763
(190)
700
(90)
(244)
(147)
(3,746)
(2,013)
2,325
416
477
25,447
121
31,676
23,992
(6,660)
-
35
-
(36,180)
(1,577)
1,447
(581)
256
12,408
2,060
(2,372)
(4,440)
7,656
(472)
(967)
1,705
11,712
638
11,919
(239)
93,571
(78,297)
24,772
-
(2,881)
-
57,335
352
4,720
1,134
5,350
106,056
1,066
(1,811)
(2,701)
102,610
284
(876)
1,074
110,657
1,392
9,448
(953)
576,666
(166,395)
(99,341)
(17)
(7,633)
(19,460)
74,954
(931)
41,262
13,736
(4,697)
408,144
852
(1,074)
(19,646)
388,276
The accompanying notes are an integral part of these consolidated financial statements.
F-11
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the years ended December 31, 2019, 2020 and 2021
(in thousands of US dollars)
Cash flows from investing activities:
Acquisitions of property, plant and equipment
Proceeds from disposal of property, plant and
equipment
Acquisitions of intangible assets
Acquisitions of financial assets at amortized cost
Proceeds from disposal of financial assets at amortized
cost
Acquisitions of financial assets at fair value through
profit or loss
Proceeds from disposal of financial assets at fair value
through profit or loss
Acquisition of business
Acquisition of a subsidiary, net of cash acquired
Proceeds from capital reduction of investment
Acquisitions of equity method investments
Increase in refundable deposits
Releases (pledges) of restricted deposit
Cash paid for loan made to related party
Cash received from loan made to related party
Cash received in advance from disposal of land
Net cash used in investing activities
Cash flows from financing activities:
Payments of cash dividends
Proceeds from issuance of new shares by subsidiaries
Purchases of subsidiary shares from noncontrolling
interests
Proceeds from short-term unsecured borrowings
Repayments of short-term unsecured borrowings
Proceeds from long-term unsecured borrowings
Repayments of long-term unsecured borrowings
Proceeds from short-term secured borrowings
Repayments of short-term secured borrowings
Release (pledge) of restricted deposit
Payment of lease liabilities
Guarantee deposits received
Proceeds from exercise of employee stock options
Net cash provided by (used in) financing
activities
Effect of foreign currency exchange rate changes on
cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2019
2020
2021
$
(45,922)
(5,786)
(7,562)
98
(152)
(4,023)
249
(87)
(3,829)
-
(468)
(25,362)
4,171
6,735
8,011
(50,487)
(19,743)
(23,417)
50,648
(700)
(400)
47
(129)
(2,821)
323
(1,200)
2,780
-
(47,767)
-
-
-
244,224
(207,006)
-
-
158,000
(158,000)
-
(1,957)
-
-
12,068
-
1,302
32
(792)
(13,992)
(8)
-
-
1,486
(22,365)
(4)
884
-
208,137
(265,355)
60,000
(1,500)
278,000
(338,000)
60,000
(2,608)
-
3,707
29,141
-
-
151
(598)
(213,056)
(2,595)
-
-
3,075
(232,680)
(47,424)
-
(1,627)
15,000
(15,000)
-
(6,000)
611,600
(564,200)
(47,400)
(4,668)
54,050
1,182
35,261
3,261
(4,487)
(532)
(5,382)
106,437
101,055
$
377
83,883
101,055
184,938
(23)
151,086
184,938
336,024
The accompanying notes are an integral part of these consolidated financial statements.
F-12
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the years ended December 31, 2019, 2020 and 2021
Note 1. Reporting entity
Himax Technologies Limited, an exempted company with limited liability under the Cayman Islands
Companies Law, was incorporated on April 26, 2005 and changed the name to “Himax Technologies,
Inc.” on September 26, 2005. Since March 2006, Himax Technologies, Inc.’s ordinary shares have
been quoted on the NASDAQ Global Select Market under the symbol “HIMX” in the form of ADSs
and two ordinary shares represent one ADS with effect from August 10, 2009.
The registered office in the Cayman Islands is located at Cricket Square, Hutchins Drive, P.O. Box
2681, Grand Cayman KY1-1111, Cayman Islands. The principal executive office is located at No.
26, Zih Lian Road, Sinshih District, Tainan City 74148, Taiwan, Republic of China.
The principal operating activities of Himax Technologies, Inc. and subsidiaries (collectively, the
Company) are described in Note 4(b).
Note 2. Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards
Board (“IASB”).
The consolidated financial statements were authorized for issuance by the Board of Directors
on March 23, 2022.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for
the following material items in the statement of financial position:
1. Financial assets at fair value through profit or loss;
2. Financial assets at fair value through other comprehensive income;
3. The defined benefit liability (asset) is recognized as the fair value of the plan assets less the
present value of the defined benefit obligation.
F-13
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Note 3. Application of new and revised IFRS as issued by the IASB
a. Amendments to IFRSs and the new interpretation that are mandatorily effective for the current
year
New, Revised or Amended Standards and Interpretations
Effective Date
Announced by IASB
Amendments to IFRS 4 “Extension of the Temporary Exemption
from Applying IFRS 9”
Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16
“Interest Rate Benchmark Reform—Phase 2”
Amendments to IFRS 16 “Covid-19-Related Rent Concessions
beyond June 30, 2021’’
January 1, 2021
January 1, 2021
April 1, 2021
The Company believes that the adoption of the above IFRSs did not have a significant impact
on its consolidated financial statements.
b. New and revised standards, amendments and interpretations in issue but not yet effective
In preparing the accompanying consolidated financial statements, the Company has not
adopted the following International Financial Reporting Standards (“IFRS”), International
Accounting Standards (“IAS”), Interpretations developed by the International Financial
Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations
Committee (“SIC”) issued by the International Accounting Standards Board (“IASB”)
(collectively, “IFRSs”).
New, Revised or Amended Standards and Interpretations
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of
Assets Between an Investor and Its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IFRS 17 “Insurance Contracts”
Amendments to IAS 1 “Disclosure of Accounting Policies”
Amendments to IAS 8 “Definition of Accounting Estimates”
Amendments to IAS 12 “Deferred Tax related to Assets and
Liabilities arising from a Single Transaction”
Amendments to IAS 16 “Property, Plant and Equipment—Proceeds
before Intended Use”
Amendments to IAS 37 “Onerous Contracts—Cost of Fulfilling a
Contract”
Annual Improvements to IFRS Standards 2018–2020
Amendments to IFRS 3 “Reference to the Conceptual Framework”
Effective Date
Announced by IASB
Effective date to be
determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2022
F-14
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
As of the date of the consolidated financial statements were authorized for issue, the Company
continues in assessing other possible impacts that application of the abovementioned
amendments will have on the Company’s financial position and financial performance and
will disclose these other impacts when the assessment is completed.
Note 4. Significant accounting policies
The significant accounting policies applied in the preparation of these consolidated financial
statements are set out as below. The accounting policies set out below have been applied
consistently to all periods presented in these consolidated financial statements, except if mentioned
otherwise. The accounting policies have been applied consistently by consolidated entities.
(a) Basis of Consolidation
The accompanying consolidated financial statements include the accounts and operations
of Himax Technologies, Inc. and its majority owned subsidiaries and entities that it has a
controlling financial interest. All significant intercompany balances and transactions have
been eliminated in consolidation.
(b) List of Subsidiaries in the Consolidated Financial Statements
Following is general information about Himax Technologies, Inc.’s subsidiaries:
Percentage of Ownership
Investor
Subsidiary
Main activities
Jurisdiction of
Incorporation
December 31,
2020
December 31,
2021
Himax Technologies,
Inc.
Himax Technologies
Limited (“Himax
Taiwan”)
Himax Technologies,
Inc.
Himax Technologies
Korea Ltd.
IC design and sales
ROC
100.00%
100.00%
IC design and sales
South Korea
100.00%
100.00%
Himax Technologies,
Inc.
Himax Technologies
Japan Ltd.
Sales
Japan
100.00%
100.00%
Himax Technologies,
Inc.
Himax Semiconductor
(Hong Kong) Limited
Himax Technologies
Limited
Himax Technologies
(Samoa), Inc.
Investments
Hong Kong
100.00%
100.00%
Investments
Samoa
100.00%
100.00%
Himax Technologies
(Samoa), Inc.
Himax Technologies
(Suzhou) Co., Ltd.
Sales and technical
support
PRC
Himax Technologies
(Samoa), Inc.
Himax Technologies
(Shenzhen) Co., Ltd.
Sales and technical
support
PRC
Himax Technologies
Limited
Himax Display, Inc.
LCoS and MEMS
design, manufacturing
and sales
ROC
100.00%
100.00%
100.00%
100.00%
82.68%
83.54%
F-15
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Investor
Subsidiary
Main activities
Percentage of Ownership
Jurisdiction of
Incorporation
December 31,
2020
December 31,
2021
Himax Display, Inc.
Integrated
Microdisplays Limited
LCoS design
Hong Kong
82.68%
83.54%
Himax Display, Inc.
Himax Display (USA)
Inc.
LCoS and MEMS
design, sales and
technical support
Delaware, USA
82.68%
83.54%
Himax Technologies
Limited
Himax Technologies,
Inc.
Himax Analogic, Inc.
IC design and sales
ROC
98.62%
98.62%
Himax Imaging, Inc.
Investments
Cayman Islands
100.00%
100.00%
Himax Technologies
Limited
Himax Imaging, Ltd.
(“Imaging Taiwan”)
IC design and sales
ROC
96.85%
98.42%
Himax Imaging, Ltd.
Himax Imaging Corp.
IC design
California, USA
96.85%
98.42%
Himax Technologies
Limited
Himax Media
Solutions, Inc.
ASIC service
ROC
99.22%
99.22%
Himax Technologies
Limited
Harvest Investment
Limited
Investments
Himax Technologies
Limited
Liqxtal Technology
Inc.
LC Lens design and
sales
ROC
ROC
100.00%
100.00%
67.49%
67.49%
Himax Technologies
Limited
Himax IGI Precision
Ltd.
Himax Technologies
Limited
Emza Visual Sense Ltd.
3D micro and nano
structure mastering and
prototype replication
Visual sensors and
efficient machine
vision algorithm
Delaware, USA
100.00%
100.00%
Israel
100.00%
100.00%
Himax Technologies
Limited
CM Visual
Technology Corp.(1)
Omniwide film products
design and sales
ROC
66.71%
66.71%
Note(1): On October 30, 2020, Himax Technologies Limited acquired 66.71% of the shareholdings of CM
Visual Technology Corp. (“CMVT”) and therefore, obtained control over CMVT. Refer to Note
5(c) for further details.
F-16
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Principal Activities
The Company is a fabless semiconductor solution provider dedicated to display imaging
processing technologies. The Company is a worldwide market leader in display driver ICs
and timing controllers used in TVs, laptops, monitors, mobile phones, tablets, automotive,
digital cameras, car navigation, virtual reality (VR) devices and many other consumer
electronics devices. Additionally, the Company 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, and LCoS micro-displays for augmented reality (AR)
devices and heads-up displays (HUD) for automotive. The Company also offers CMOS image
sensors, wafer level optics for AR devices, 3D sensing and ultralow power AI image sensing,
which are used in a wide variety of applications such as mobile phone, tablet, laptop, TV, PC
camera, automobile, security, medical devices, home appliance, AIoT, etc.
(c) Foreign Currency
The reporting currency of the Company is the United States dollar (USD). The functional
currency for the Company and its major operating subsidiaries is the USD. Accordingly,
the assets and liabilities of subsidiaries whose functional currency is other than the USD
are included in the consolidation by translating the assets and liabilities into the reporting
currency (the USD) at the exchange rates applicable at the end of the reporting period. Equity
accounts are translated at historical rates. The statements of profit or loss and cash flows are
translated at the average exchange rates at the date of transaction. Translation gains or losses
are accumulated as a separate component of equity in accumulated other comprehensive
income.
(d) Classification of Current and Noncurrent Assets and Liabilities
Current assets are assets held for trading purposes and assets expected to be converted to cash,
sold or consumed within one year from the end of the reporting period. Current liabilities are
obligations incurred for trading purposes and obligations expected to be settled within one year
from the end of the reporting period. Assets and liabilities that are not classified as current are
noncurrent assets and liabilities, respectively.
(e) Cash and Cash Equivalents
Cash comprise cash balances and demand deposits. Cash equivalents comprise short-term
highly liquid investments that are readily convertible into known amounts of cash and are
subject to an insignificant risk of changes in their fair value. Deposits with an original maturity
of three months or less at the time of purchase but not for investments and other purposes and
are qualified with the aforementioned criteria are classified as cash equivalent.
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
F-17
(f) Financial Instruments
The Company shall recognize a financial asset or a financial liability in its statement of
financial position when, and only when, the Company becomes party to the contractual
provisions of the instrument. A regular way purchase or sale of financial assets shall be
recognized and derecognized, as applicable, using trade date accounting.
1. Financial Assets
(i) Classification of financial assets
The classification of financial assets depends on the nature and purpose of the
financial assets and is determined at the time of initial recognition. Financial assets
are classified into the following categories: measured at amortized cost, measured
at fair value through other comprehensive income (FVTOCI) and measured at
fair value through profit or loss (FVTPL). The classification of financial assets is
generally based on the business model in which a financial asset is managed and its
contractual cash flow characteristics. When, and only when, the Company changes
its business model for managing financial assets it shall reclassify all affected
financial assets.
i. Financial assets measured at amortized cost
A financial asset is measured at amortized cost if it meets both of the following
conditions and is not designated as measured at fair value through profit or loss:
(i) the asset held within a business model whose objective is to hold assets to
collect contractual cash flows; and
(ii) the contractual terms give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at amortized cost are subsequently measured at
amortized cost using the effective interest method. The amortized cost is reduced
by impairment losses. Interest income, foreign exchange gains and losses and
impairment are recognized in profit or loss. Any gain or loss on derecognition is
recognized in profit or loss.
ii. Financial assets measured at fair value through other comprehensive income
(FVTOCI)
On initial recognition of an equity investment that is not held for trading, the
Company may irrevocably elect to present subsequent changes in the investment’s
fair value in OCI. This election is made on an investment-by-investment basis.
F-18
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Equity investments at FVTOCI are subsequently measured at fair value. Dividends
are recognized as income in profit or loss unless the dividend clearly represents
a recovery of part of the cost of the investment. Other net gains and losses are
recognized in OCI. When an investment is derecognized, the cumulative gain
or loss in equity will not be reclassified to profit or loss, instead, is reclassified to
retained earnings.
iii. Financial assets measured at fair value through profit or loss (FVTPL)
All financial assets not classified as measured at amortized cost or at fair value
through other comprehensive income as described above are measured at fair
value through profit or loss.
Such financial assets are initially recognized at fair value, and attributable
transaction costs are recognized in profit or loss as incurred. Subsequent to initial
recognition, they are measured at fair value and changes therein are recognized in
profit or loss.
(ii) Impairment of financial assets
The Company recognizes loss allowances for expected credit loss on financial assets
measured at amortized cost (including accounts receivable) and contract assets.
The loss allowance for accounts receivable and contract assets are measured at an
amount equal to lifetime expected credit losses. For financial assets at amortized cost
and contract assets, when the credit risk on the financial instrument has not increased
significantly since initial recognition, a loss allowance is recognized at an amount
equal to expected credit loss resulting from possible default events of a financial
instrument within 12 months after the reporting date. If, on the other hand, there has
been a significant increase in credit risk since initial recognition, a loss allowance
is recognized at an amount equal to expected credit loss resulting from all possible
default events over the expected life of a financial instrument.
When determining whether the credit risk of a financial instrument has increased
significantly since initial recognition, the Company considers reasonable and
supportable information that is relevant. This includes both qualitative and
quantitative information and analysis, based on the Company’s historical experience
and credit assessment as well as forward-looking information.
The Company recognizes an impairment gain or loss in profit or loss for all financial
instruments with a corresponding adjustment to their carrying amount through a loss
allowance account.
F-19
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(iii) Derecognition of financial assets
The Company derecognizes a financial asset only when the contractual rights to the
cash flows from the financial asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the financial asset to another
entity.
On derecognition of a financial asset at amortized cost in its entirety, the difference
between the asset’s carrying amount and the sum of the consideration received
and receivable is recognized in profit or loss. However, on derecognition of an
investment in an equity instrument at FVTOCI, the cumulative gain or loss that had
been recognized in other comprehensive income is transferred directly to retained
earnings, without recycling through profit or loss.
2. Financial Liabilities
(i) Classification of financial liability
The Company classify all financial liabilities as measured at amortized cost, except
for financial liabilities measured at fair value through profit or loss. Such liabilities,
including derivatives that are liabilities, shall be subsequently measured at fair value.
(ii) Derecognition of financial liability
The Company removes a financial liability from its statement of financial position
when, and only when, it is extinguished-when the obligation specified in the contract
is discharged or cancelled or expires.
On derecognition of a financial liability at amortized cost in its entirety, the difference
between the carrying amount of a financial liability extinguished or transferred to
another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, shall be recognized in profit or loss.
(g) Inventories
Inventories primarily consist of raw materials, work-in-process and finished goods awaiting
final assembly and test and are stated at the lower of cost and net realizable value. Cost is
determined using the weighted-average method. For work-in-process and manufactured
inventories, cost consists of the cost of raw materials (primarily fabricated wafer and processed
tape), direct labor and an appropriate proportion of production overheads. Net realizable value
for raw materials is based on replacement cost. Net realizable value for finished goods and
work in process is calculated based on the estimated selling price less all estimated costs of
completion and necessary selling costs.
F-20
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(h) Equity Method Investments
Equity investments in entities where the Company has the ability to exercise significant
influence over the operating and financial policy decisions of the investee but does not have
a controlling financial interest in the investee, are accounted for using the equity method.
The Company’s share of the net income or net loss of an investee is recognized in earnings
from the date the significant influence commences until the date that significant influence
ceases. The difference between the cost of an investment and the amount of underlying
equity in net assets of an investee at investment date is allocated to related assets which are
amortized over their useful lives. Any unallocated difference is treated as investor-level
goodwill and is not amortized.
The Company discontinues the use of the equity method from the date when the Company
ceases to have significant influence over an associate, and then measures the retained interests
at fair value at that date. The difference between the carrying amount of the investment at the
date the equity method was discontinued and the fair value of the retained interests along with
any proceeds from disposing of a part of the interest in the associate is recognized in profit
or loss. When the Company discontinues the use of the equity method, the Company shall
account for all amounts previously recognized in other comprehensive income in relation to
that investment on the same basis as would have been required if the investee had directly
disposed of the related assets or liabilities.
At the end of each reporting period, if there is any indication of impairment, the entire carrying
amount of the investment including goodwill is tested for impairment as a single asset, by
comparing its recoverable amount with its carrying amount. An impairment loss recognized
forms part of the carrying amount of the investment in associates. Accordingly, any reversal of
that impairment loss is recognized to the extent that the recoverable amount of the investment
subsequently increases.
(i) Property, Plant and Equipment
Property, plant and equipment consists primarily of land, building and machinery and
equipment used in the design and development of products, and is stated at cost less
accumulated depreciation and any accumulated impairment loss. Depreciation on building and
machinery and equipment commences when the asset is ready for its intended use. Except for
the following paragraph, depreciation is primarily calculated on the straight-line method over
the estimated useful lives of related assets which range as follows: building 25 years, building
improvements 4 to 16 years, machinery 4 to 10 years, research and development equipment
2 to 6 years, office furniture and equipment 3 to 8 years, others 2 to 10 years. Leasehold
improvements are amortized on a straight-line basis over the shorter of the lease term or the
estimated useful life of the asset. Embedded software is amortized on a straight-line basis over
the estimated useful lives ranging from 2 to 10 years. Land is not depreciated.
If significant parts of an item of property, plant and equipment have different useful lives, then
they are accounted for as separate items (major components) of property, plant and equipment.
F-21
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
During the year 2017, certain new machinery and equipment have been acquired for specific
project. The depreciation on these new assets is calculated on Fixed-Percentage-on-Declining-Base
Method basis over the estimated useful lives of 3 years. The Company thinks that method
would most closely reflect the expected pattern of consumption of the future economic benefits
embodied in those assets.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and
adjusted if appropriate.
(j) Leases
a. Identifying a lease
A contract is, or contains, a lease when all the following conditions are satisfied:
(i) the contract involves the use of an identified asset, and the supplier does not have a
substantive right to substitute the asset; and
(ii) the Company has the right to obtain substantially all of the economic benefits from
use of the identified asset throughout the period of use; and
(iii) the Company has the right to direct the use of the identified asset throughout the
period of use.
b. As a lessee
Payments for leases of low-value assets and short-term leases are recognized as expenses
on a straight-line basis during the lease term for which the recognition exemption is
applied. Except for leases described above, a right-of-use asset and a lease liability shall be
recognized for all other leases at the lease commencement date.
The Company recognizes a right-of-use asset and a lease liability at the lease commencement
date. The lease liability is initially measured at the present value of the lease payments,
discounted using the lessee’s incremental borrowing rate. The Company determines its
incremental borrowing rate by obtaining interest rates from various external financing
sources. The right-of-use asset is initially measured at cost, which comprises the initial
amount of the lease liability, adjusted for any lease payments made at or before the
commencement date, less any lease incentives received, plus any initial direct costs incurred
and an estimate of costs to be incurred in restoring the underlying asset.
F-22
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The right-of-use asset is subsequently depreciated using the straight-line method over
the shorter of the useful life of the right-of-use asset or the lease term. The lease liability
is subsequently measured at amortized cost using the effective interest method. It is
remeasured (i) if there is a change in the lease term; (ii) if there is a change in future lease
payments arising from a change in an index or a rate; (iii) if there is a change in the amounts
expected to be payable under a residual value guarantee; or (iv) if the Company changes its
assessment of whether it will exercise a purchase, extension or termination option. When
the lease liability is remeasured in the circumstances aforementioned, a corresponding
adjustment is made to the carrying amount of the right-of-use asset. However, if the
carrying amount of the right-of-use asset is reduced to zero, any remaining amount of the
remeasurement is recognized in profit or loss.
Lease payments included in the measurement of the lease liability comprise the following:
(i) fixed payments, including in-substance fixed payments.
(ii) the exercise price under a purchase option that the Company is reasonably certain to
exercise and lease payments in an optional renewal period if the Company is
reasonably certain to exercise an extension option.
Moreover, the lease liability is remeasured when lease modifications occur that decrease
the scope of the lease. The Company accounts for the remeasurement of the lease liability
by decreasing the carrying amount of the right-of-use asset to reflect the partial or full
termination of the lease and recognizes in profit or loss any gain or loss relating to the
partial or full termination of the lease.
c. As a lessor
Lease income from an operating lease is recognized in profit or loss on a straight-line basis
over the lease term. Initial direct costs incurred in negotiating and arranging an operating
lease are added to the carrying amount of the asset leased.
(k) Goodwill
Goodwill is recognized when the purchase price exceeds the fair value of identifiable net
assets acquired in a business combination. Goodwill is measured at cost less accumulated
impairment losses, if any.
Goodwill from acquisition of Himax Semiconductor, Inc. (formerly Wisepal Technologies,
Inc., merged into Himax Technologies Limited on July 2, 2018) in 2007 amounting $26,846
thousand has been assigned to Driver IC cash generating unit (“CGU”) and goodwill from
acquisition of Himax Display (USA) Inc. in 2012 amounting $1,292 thousand has been
assigned to WLO CGU because these CGUs are expected to benefit from the synergies of the
business combinations.
Goodwill is not amortized and instead is reviewed for impairment at least annually, or more
frequently when there is an indication that the CGU may be impaired. For the purpose of
F-23
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
impairment testing, goodwill is allocated to each of the Company’s CGU or groups of CGU
that are expected to benefit from the synergies of the combination. If the recoverable amount
of a cash-generating unit is less than its carrying amount, the difference is allocated first to
reduce the carrying amount of any goodwill allocated to such CGU and then to the other assets
of the CGU pro rata based on the carrying amount of each asset in the CGU. Any impairment
loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for
goodwill is not reversed in subsequent periods.
The recoverable amount is the higher of fair value less costs of disposal and value in use. In
assessing value in use which was calculated based on the cash flow forecast from the financial
budgets covering the future five-year period with the terminal growth rate. The annual
discount rate was 18.28% and 8.05% in its test of Goodwill impairment for Driver IC CGU
as of December 31, 2020 and 2021, respectively, based on industry weighted average cost of
capital. The annual discount rate for WLO CGU was 15.41% and 13.33% as of December 31,
2020 and 2021, respectively. The terminal growth rate, based on following 5 years average
Taiwan economic growth rate published by International Monetary Fund, was 2.32% and 2.46%
used in the test for both CGUs as of December 31, 2020 and 2021, respectively. The key
assumptions abovementioned represents the management’s forecast of the future for the related
industry by considering the history information from internal and external sources.
For the years ended December 31, 2019, 2020 and 2021, the Company did not recognize any
impairment loss on goodwill.
(l) Other Intangible Assets
Acquired intangible assets include patents, intellectual property and developed technology
acquired in a business combination. These intangible assets are amortized on a straight-line
basis over the following estimated useful lives: software 2-10 years, patents 12-15 years,
intellectual property 10 years and technology 7 years.
Amortization methods, useful lives and residual values are reviewed at each reporting date and
adjusted if appropriate.
(m) Impairment of Non-Financial Assets
The Company’s long-term non-financial assets, which consist of property, plant and
equipment and intangible assets, are reviewed at the reporting date to determine whether there
is any indication of impairment. If any such indication exists, then the asset’s recoverable
amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use
and its fair value less costs to sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. Considering the
terminal growth rate if non-financial assets with an indefinite useful life are allocated to the
CGU in comparison with its carrying amount.
F-24
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
For the purpose of impairment testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups of assets (the “cash-generating
unit, or CGU”).
The annual discount rate was 13.23% and 11.40% in its test of non-financial assets impairment
with an indefinite useful life for CMOS CGU as of December 31, 2020 and 2021, respectively,
based on industry weighted average cost of capital. The terminal growth rate, based on
following 5 years average Taiwan economic growth rate published by International Monetary
Fund, was 2.32% and 2.46% used in the test as of December 31, 2020 and 2021, respectively.
The key assumptions abovementioned represents the management’s forecast of the future for
the related industry by considering the history information from internal and external sources.
An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its
estimated recoverable amount. Impairment losses are recognized in profit or loss. When an
impairment loss subsequently reverses, the carrying amount of the asset or a CGU is increased
to the revised estimate of its recoverable amount, but the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been
recognized for the asset or CGU in prior years. A reversal of an impairment loss is recognized
immediately in profit or loss.
(n) Revenue Recognition
IFRS 15 establishes principles for recognizing revenue that apply to all contracts with
customers, using a five-step model framework to determine the method, timing and amount of
revenue recognized. The Company generates revenue primarily from sale of goods or services.
Revenue from contracts with customers is disaggregated by primarily geographical market and
major products.
Under IFRS 15, the Company identifies the contract with the customers and recognizes revenue
when performance obligations are satisfied.
Revenue is measured based on the consideration that the Company expects to be entitled
in the transfer of goods or services to a customer. The Company recognizes revenue when
it satisfies a performance obligation by transferring control over a product or service to a
customer. Customers obtain control of the product when the goods are delivered and accepted
by customers. Invoices are generated at that point in time.
The Company’s revenue recognition from product sales is measured at the amount that is
highly probable that a significant reversal in the amount of cumulative revenue recognized will
not occur. Revenue is reduced for estimated rebates and other similar allowances.
Trade receivable is recognized when the Company is entitled for unconditional right to
receive payment upon delivery of goods to customers. The consideration received in advance
from the customer but without delivery of goods is recognized as a contract liability, for
which revenue is recognized when the control over the goods is transferred to the customer.
F-25
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The Company expects that the length of time when the Company transfers the goods or
services to the customer and when the customer pays for those goods or services will be less
than one year. Therefore, the amount of consideration is not adjusted for the time value of
money.
(o) Employee Benefits
1. Short-term employee benefits
Short-term employee benefits are expensed unless another policy allows or requires it to be
capitalized. Liabilities recognized in respect of short-term employee benefits are measured
at the undiscounted amount of the benefits expected to be paid in exchange for service
rendered by employees.
2. Share-based payment arrangements
The cost of employee services received in exchange for share-based compensation is
measured based on the grant-date fair value of the share-based instruments issued. The
cost of employee services is equal to the grant-date fair value of shares issued to employees
and is recognized in earnings with a corresponding increase in equity over the service
period by graded vesting. Compensation cost also considers the number of awards
management believes will eventually vest. As a result, compensation cost is reduced by the
estimated forfeitures. The estimate is adjusted each period to reflect the current estimate of
forfeitures, and finally, the actual number of awards that vest.
3. Defined contribution plans
Obligations for contributions to defined contribution pension plans are recognized as an
employee benefit expense in profit or loss in the periods during which services are rendered
by employees.
4. Defined benefit plans
The Company’s net obligation in respect of defined benefit pension plans is calculated
separately for each benefit plan by estimating the amount of future benefit that employees
have earned in the current and prior periods, discounting that amount and deducting
the fair value of any plan assets. For defined benefit retirement benefit plans, the cost
of providing benefit is recognized based on actuarial calculations. Defined benefit
costs (including service cost, net interest and remeasurement) under the defined benefit
retirement benefit plans are determined using the Projected Unit Credit Method. Service
cost (including current service cost), and net interest on the net defined benefit liability
(asset) are recognized as employee benefits expense in profit or loss in the period they
occur. Remeasurement, comprising actuarial gains and losses and the return on plan
assets (excluding interest), is recognized in other comprehensive income in the period in
which they occur. Remeasurement recognized in other comprehensive income is reflected
immediately in retained earnings and will not be reclassified to profit or loss.
F-26
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(p) Income Taxes
Income tax expense comprises current and deferred taxes. It is recognized in profit or loss
except to the extent that it relates to a business combination, or items recognized directly in
equity or in other comprehensive income.
1. Current tax
Current taxes comprise the expected tax payable or receivable on the taxable income or
losses for the year and any adjustments to tax payable or receivable in respect of previous
years. It is measured using tax rates enacted or substantively enacted tax rate at the
reporting date.
2. Deferred tax
Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the carrying amounts of existing assets and liabilities in the financial
statements and their respective tax bases, and operating loss and tax credit carry-forwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date. Deferred tax
assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realized; such reductions are reversed when the
probability of future taxable profits improves.
(q) Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. Acquisition-
related costs are generally recognized in profit or loss as incurred. Goodwill is measured as
the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in
the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and
the liabilities assumed. Non-controlling interests are initially measured at the non-controlling
interests’ proportionate share of the fair value of the acquiree’s identifiable net assets.
Any contingent consideration payable is measured at fair value at the acquisition date. If the
contingent consideration is classified as equity, then it is not remeasured and settlement is
accounted for within equity. Otherwise, subsequent changes in the fair value of contingent
consideration are recognized in profit or loss.
When a business combination is achieved in stages, the Company’s previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date, and the resulting gain
or loss is recognized in profit or loss.
F-27
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(r) Earnings Per Ordinary Share
Basic earnings per ordinary share is computed using profit or loss attributable to the
shareholders and weighted average number of ordinary shares outstanding during the period.
Diluted earnings per ordinary share is computed using the weighted average number of
ordinary and diluted ordinary equivalent shares outstanding during the period. Ordinary
equivalent shares are ordinary shares that are contingently issuable upon the vesting of
unvested restricted share units (RSUs) and employee stock options granted to employees.
Basic and diluted earnings per ordinary share have been calculated as follows:
Profits (loss) attributable to Himax
Technologies, Inc. stockholders (in thousands)
Denominator for basic earnings per ordinary share:
Weighted average number of ordinary shares outstanding
Year Ended December 31,
2019
2020
2021
$
(13,614)
47,134
436,896
(in thousands)
345,101
345,708
349,228
Basic earnings (loss) per ordinary share attributable to Himax
Technologies, Inc. stockholders
Basic earnings (loss) per ADS attributable to
Himax Technologies,Inc. stockholders(2)
$
$
(0.04)
(0.08)
0.14
0.27
1.25
2.50
Contingently issuable ordinary shares underlying the unvested RSUs and employee stock
options granted to employees are included in the calculation of diluted earnings per ordinary
share based on treasury stock method.
Profits (loss) attributable to Himax
Technologies, Inc. stockholders (in thousands)
Denominator for diluted earnings per ordinary share:
Weighted average number of ordinary shares
outstanding (in thousands)
Unvested RSUs (in thousands)(1)
Employee stock options (in thousands)(1)
Year Ended December 31,
2019
2020
2021
$
(13,614)
47,134
436,896
345,101
-
-
345,101
345,708
-
1,058
346,766
349,228
505
-
349,733
F-28
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Diluted earnings (loss) per ordinary share
attributable to Himax Technologies, Inc.
stockholders
Diluted earnings (loss) per ADS attributable
to Himax Technologies, Inc. stockholders(2)
Year Ended December 31,
2019
2020
2021
$
$
(0.04)
0.14
1.25
(0.08)
0.27
2.50
Note (1): Since the Company had net loss for 2019, the unvested RSUs and employee stock options
are not being considered with dilutive effect for the year.
Note (2): As the Company’s ordinary shares have been quoted on the NASDAQ Global Select Market
under the symbol “HIMX” in the form of ADSs and two ordinary shares represent one
ADS with effect from August 10, 2009. The number of ADS equivalent outstanding is
determined by dividing the number of ordinary shares by two. Therefore, the weighted
average number of ADS equivalent outstanding used in basic earnings per ADS for 2019,
2020 and 2021 is 172,550 thousand, 172,854 thousand and 174,614 thousand, respectively.
Additionally, the weighted average number of ADS equivalent outstanding used in diluted
earnings per ADS for 2019, 2020 and 2021 is 172,550 thousand, 173,383 thousand and
174,867 thousand, respectively. The earnings (loss) per ADS is presented solely for the
convenience of the reader and does not represent a measure under IFRS.
(s) Segment Reporting
An operating segment is a component of the Company that engages in business activities from
which it may earn revenues and incur expenses. All operating segments’ operating results
are reviewed regularly by the Company’s chief operating decision maker (“CODM”) to make
decisions about resources to be allocated to the segment and assess its performance, and for
which discrete financial information is available.
The Company’s CODM has been identified as the Chief Executive Officer, who regularly
reviews operating results to make decisions about allocating resources and assessing
performance for the Company. Management has determined that the Company has two
operating segments: Driver IC and Non-driver products.
The CODM assesses the performance of the operating segments based on segment sales and
segment profit and loss. There are no intersegment sales in the segment revenues reported to
the CODM. Segment profit and loss is determined on a basis that is consistent with how the
Company reports operating income (loss) in its consolidated statements of operations. Segment
profit (loss) excludes income taxes and items in non-operating income (loss).
F-29
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The Company does not report segment asset information to the Company’s CODM.
Consequently, no asset information by segment is presented.
(t) Noncontrolling Interests
Noncontrolling interests are classified in the consolidated statements of profit or loss as part
of profit (loss) for the period and the accumulated amount of noncontrolling interests as part
of equity in the consolidated statements of financial position. If a change in ownership of a
consolidated subsidiary results in loss of control and deconsolidation, any retained ownership
interests are re-measured with the gain or loss reported in net earnings.
(u) Use of Judgments and Estimates
The preparation of the consolidated financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimates are revised and in any
future periods affected.
Information about critical judgments, estimates and assumptions in applying accounting
policies that have the most significant effect on the amounts recognized in the consolidated
financial statements is included in the following notes:
1. Valuation of inventory
Inventories are stated at the lower of cost or net realizable value, and the Company uses
judgment and estimate to determine the net realizable value of inventory at the end of each
reporting period.
Due to the rapid technological changes, the Company estimates the net realizable value of
inventory for obsolescence and unmarketable items at the end of reporting period and then
writes down the cost of inventories to net realizable value. The net realizable value of the
inventory is mainly determined based on assumptions of future demand within a specific
time horizon.
2. Impairment of non-financial assets other than goodwill
In the process of evaluating the potential impairment of non-financial assets other than
goodwill, the Company is required to make subjective judgments in determining the
independent cash flows, useful lives, expected future revenue and expenses related to
the specific asset groups. Any changes in these estimates based on changed economic
conditions or business strategies could result in significant impairment charges or reversal
in future years.
F-30
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
3. Recognition of deferred tax assets
Deferred tax assets are recognized to the extent that it is probable that future taxable profits
will be available against which those deferred tax assets can be utilized. Assessment of
the realization of the deferred tax assets requires the Company’s subjective judgment and
estimate, including the future revenue growth and profitability, the sources of taxable
income, the amount of tax credits that can be utilized and feasible tax planning strategies.
Changes in the economic environment, the industry trends and relevant laws and
regulations may result in adjustments to the deferred tax assets.
4. Impairment of goodwill
The assessment of impairment of goodwill requires the Company to make subjective
judgment to determine the identified CGU, allocate the goodwill to relevant CGU and
estimate the recoverable amount of relevant CGU. In the process of estimating the
recoverable amount of relevant CGU, the Company is required to make subjective
judgments in determining the discounted rate, the terminal growth rate, the independent
cash flows, useful lives, expected future revenue and expenses related to the CGU.
Note 5. Acquisition
(a) Acquisition of nano 3D mastering related business
On February 21, 2018, the Company, through Himax IGI Precision Ltd., completed the
acquisition of nano 3D mastering related business with total cash consideration approximating
$1,400 thousand, and half of which, $700 thousand, was paid in 2019.
The advanced nano 3D manufacturing masters are primarily used in imprinting or stamping
replication process to fabricate devices such as diffractive optical element (DOE), diffuser,
collimator lens and micro lens array. The acquisition brings the Company the very upstream
master tooling capability to supplement its world leading wafer level optics (WLO) technology,
which is critical in its efforts to offer 3D sensing total solutions.
Acquired assets were valued at estimates of their current fair values. Property, plant and
equipment, other intangible asset and prepaid maintenance acquired were $700 thousand, $400
thousand and $300 thousand, respectively.
F-31
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(b) Acquisition of Emza Visual Sense Ltd.
Emza Visual Sense Ltd.(“Emza”) was purchased in April 2017 with an original investment
amount of $2,230 thousand together with an additional investment amount of $270 thousand
through conversion of equal amount of debts which occurred in 2016. On June 28, 2018, the
Company completed the acquisition of all the outstanding common shares of Emza with total
cash consideration approximating $6,371 thousand, including $400 thousand holdback was
paid in 2019. The Company’s previously held equity interests in Emza was re-measured at
fair value, which was determined with the assistance of an independent appraiser using the
equity value allocation method at acquisition date. The re-measurement gain on the previously
held equity interests in Emza was $1,662 thousand which is included in “other income” in the
consolidated statements of profit or loss.
Emza is an Israeli company dedicated to the development of visual sensors that include
proprietary machine-vision algorithms and specific architectures that enable always-on visual
sensing capabilities, achieving improvement in power consumption, price and form factor.
This acquisition would allow the Company to fully leverage the synergy into producing visual
sensors that integrate camera, hardware and algorithms and operate at unprecedented power,
cost and size.
The results of Emza’s operations have been included in the Company’s consolidated
financial statements since that date. The amounts of Emza’s revenues and losses included
in the consolidated statements of profit or loss from the acquisition date to the period ended
December 31, 2018 were $72 thousand and $2,858 thousand, respectively. If the acquisition
had occurred on January 1, 2018, management estimates that consolidated revenue would have
been $723,605 thousand (unaudited), and consolidated profit for the year would have been
$7,291 thousand (unaudited). In determining these amounts, management has assumed that
the fair value adjustments that arose on the date of acquisition would have been the same if the
acquisition had occurred on January 1, 2018.
The Company incurred acquisition-related costs of $195 thousand on legal fees and due
diligence costs. These costs have been included in “general and administrative expenses” in
the consolidated statements of profit or loss.
The following table summarizes the amounts of estimated fair value of the assets acquired and
liabilities assumed at the date of acquisition.
F-32
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Recognized amounts of identifiable assets acquired and liabilities
assumed:
Cash
Current assets, other than cash
Property, plant and equipment
Deferred tax assets
Other intangible assets
Other current liabilities
Deferred tax liabilities
Total identifiable net assets acquired
Fair value
(in thousands)
$
$
170
335
27
1,445
8,545
(2,706)
(1,445)
6,371
Acquired tangible assets were valued at estimates of their current fair values. The valuation
of acquired intangible assets consisting of the core and developed technology $6,282
thousand and trademark $1,800 thousand were determined based on management’s estimates
and consultation with an independent appraiser. The multi-period excess earnings method
was used in applying the income approach to determine the fair value of acquired intangible
assets. Significant assumptions inherent in the valuation method for acquired intangible
assets are employed and included, but are not limited to, prospective financial information,
terminal value, and discount rates. When performing the multi-period excess earnings
method for acquired intangible assets, the Company incorporates the use of projected
financial information and a discount rate that are developed using market participant
based assumptions. The cash-flow projections are based on seven-year financial forecasts
developed by management that include revenue projections, capital spending trends, and
investment in working capital to support anticipated revenue growth, which are regularly
reviewed by management. The selected discount rate considers the risk and nature of the
comparative companies and the rates of return market participants would require to investing
their capital in reporting units.
The acquired intangible assets, the core and developed technology, will be amortized based on
a weighted-average useful life of approximately 7 years. However, the acquired trademark is
intangible asset with an indefinite useful life.
(c) Acquisition of CM Visual Technology Corp.
On October 30, 2020, the Company infused cash of $6,680 thousand into CMVT in exchange
for 66.71% of the outstanding common shares of CMVT. Acquisition-related costs, which
were charged to expense as incurred, were insignificant.
CMVT is a Taiwan company dedicated to the development and production of Omniwide film
for display with its own technology: ultra view switching. As a result of the acquisition, the
Company is expected to further strengthen the Company’s competitiveness in the displays with
the addition of technology resources.
F-33
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The results of CMVT’s operations have been included in the Company’s consolidated
financial statements since that date. The amounts of CMVT’s revenues and losses included
in the consolidated statements of profit or loss from the acquisition date to the period ended
December 31, 2020 were $1,231 thousand and $214 thousand, respectively. If the acquisition
had occurred on January 1, 2020, management estimates that consolidated revenue would have
been $891,038 thousand (unaudited), and consolidated profit for the year would have been
$46,361 thousand (unaudited). In determining these amounts, management has assumed that
the fair value adjustments that arose on the date of acquisition would have been the same if the
acquisition had occurred on January 1, 2020.
The following table summarizes the amounts of estimated fair value of the assets acquired and
liabilities assumed at the date of acquisition.
Recognized amounts of identifiable assets acquired and liabilities
assumed:
Cash
Current assets, other than cash
Property, plant and equipment
Other intangible assets
Other current liabilities
Total identifiable net assets acquired
Noncontrolling interests
Total consideration paid
Fair value
(in thousands)
$
$
7,982
2,602
1,906
704
(3,181)
10,013
(3,333)
6,680
Acquired assets were valued at estimates of their current fair values based on management’s
estimates and consultation with an independent appraiser.
Note 6. Cash and Cash Equivalents
Cash, demand deposits and checking accounts
Time deposits with less than three months maturity date
December 31,
2020
December 31,
2021
(in thousands)
$
$
178,938
6,000
184,938
333,524
2,500
336,024
Refer to Note 23 and Note 24 for the disclosure of credit risk, currency risk and sensitivity analysis
of the financial assets and liabilities of the Company.
As of December 31, 2020 and 2021, no cash and cash equivalents were pledged with banks as
collaterals.
F-34
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Note 7. Financial Assets at Amortized Cost
December 31,
2020
December 31,
2021
(in thousands)
Time deposit with original maturities more than three months
$
8,682
26,013
The financial assets at amortized cost are in China Yuan (CNY) and US dollar denominated time
deposits with original maturities of more than three months and the expected holding period as of
December 31, 2020 and 2021 is due in one year or less.
As of December 31, 2020 and 2021, no financial assets at amortized cost were pledged with banks as
collaterals.
Note 8. Financial Assets at Fair Value Through Profit or Loss
Following is a summary of financial assets at fair value through profit or loss as of December 31,
2020 and 2021:
Money market fund
Equity securities-unlisted company
Current
Non-current
December 31,
2020
December 31,
2021
(in thousands)
$
$
$
$
7,799
13,966
21,765
7,799
13,966
21,765
2,345
13,668
16,013
2,345
13,668
16,013
Net gain of $3,732 thousand and $472 thousand and net loss of $284 thousand was recognized
under changes in fair value of financial assets at fair value through profit or loss in the consolidated
statement of profit or loss for the years ended December 31, 2019, 2020 and 2021, respectively.
As of December 31, 2020 and 2021, no financial assets at fair value through profit or loss were
pledged with banks as collaterals.
Note 9. Financial Assets at Fair Value Through Other Comprehensive Income
The equity securities are held for long-term strategies and therefore are accounted for as FVTOCI.
Capital reduction from equity security investments designated as at FVTOCI recognized for the years
ended December 31, 2019, 2020 and 2021, were $47 thousand, $32 thousand and $151 thousand,
respectively, all related to investments held at the end of the reporting period.
F-35
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
As of December 31, 2020 and 2021, no financial assets at fair value through other comprehensive
income were pledged with banks as collaterals.
Note10. Financial Liability at Amortized Cost
During 2013, Himax Display, Inc., a consolidated subsidiary of the Company, issued redeemable
convertible preferred shares to a non-controlling shareholder. The noncontrolling shareholder
may, solely at its option, convert the preferred shares at any time into ordinary shares of Himax
Display, Inc. on a one to one basis. Additionally, Himax Display, Inc. provided the noncontrolling
shareholder with a liquidation preference, redemption feature and a warrant to purchase additional
preferred shares of Himax Display, Inc., within one year from the original investment closing date.
The warrant expired in October 2014.
The redeemable convertible preferred shares of Himax Display, Inc. are presented as financial
liability at amortized cost on the Company’s consolidated statements of financial position and
subsequently measured using effective interest method. The interest related to financial liability at
amortized cost was $234 thousand for the year ended December 31, 2018.
As the noncontrolling shareholder didn’t exercise its redemption right before the deadline, the
financial liability at amortized cost was transferred to noncontrolling interest in 2019 on the
Company’s consolidated statements of financial position.
Note 11. Accounts Receivable, net (including related parties)
Accounts receivable
Accounts receivable from related parties
Less: Loss allowance
December 31,
2020
December 31,
2021
(in thousands)
$
$
243,816
-
(190)
243,626
410,140
71
-
410,211
As of December 31, 2020 and 2021, the Company measures the loss allowance for accounts
receivable using the simplified approach under IFRS 9 with the lifetime expected credit losses. To
measure the expected credit losses, accounts receivable have been grouped based on the days past
due, as well as incorporated forward looking information, including relevant industry information.
Analysis of expected credit losses which was measured based on the aforementioned method, was
as follows:
F-36
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
December 31, 2020
Carrying
amount of
accounts
receivable
(in thousands)
Weighted
average loss
rate
Loss
allowance
for lifetime
expected
credit
(in thousands)
243,208
36
382
-
-
-
243,626
0%
0%
0%
0%
0%-6.32%
100.00%
$
$
-
-
-
-
-
-
-
December 31, 2021
Carrying
amount of
accounts
receivable
(in thousands)
Weighted
average loss
rate
Loss
allowance
for lifetime
expected
credit
(in thousands)
408,415
795
924
77
-
-
410,211
0%
0%
0%
0%
0%
100.00%
$
$
-
-
-
-
-
-
-
$
$
$
$
Not past due
Past due within 30 days
Past due 31-60 days
Past due 61-90 days
Past due 91-120 days
Past due over 121 days
Not past due
Past due within 30 days
Past due 31-60 days
Past due 61-90 days
Past due 91-120 days
Past due over 121 days
There were no changes in loss allowance as of December 31, 2020. As of December 31, 2021, the
Company recognized a reversal of credit losses amounting to $190 thousand for accounts receivable
due to recovery.
F-37
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The activity in the loss allowance is as follows:
Loss Allowance
Period
Year 2019
Year 2020
Year 2021
Note 12. Inventories
Finished goods
Work in process
Raw materials
Supplies
Balance at
beginning
of year
Charges to
earnings
Amounts
utilized /
write-offs
Balance at
end of year
(in thousands)
$
$
$
290
190
190
67
-
(190)
(167)
-
-
190
190
-
December 31,
2020
December 31,
2021
(in thousands)
$
$
23,990
63,025
21,346
346
108,707
53,884
107,355
36,963
398
198,600
The amounts of inventories that were charged to cost of revenues were $508,469 thousand,
$654,582 thousand and $789,071 thousand, for the years ended December 31, 2019, 2020 and 2021,
respectively, and the charges for inventories written down to net realizable value amounted to $25,447
thousand, $11,919 thousand and $9,448 thousand, for the years ended December 31, 2019, 2020 and
2021, respectively, which were also included in cost of revenues.
As of December 31, 2020 and 2021, none of the Company’s inventories was pledged as collateral.
F-38
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Note 13. Equity Method Investments
Associates consisted of the following:
Name of
Associate
Principal
Activities
Place of
Incorporation
and Operation
December 31,2020
December 31,2021
Carrying
amount
Holding
%
Carrying
amount
Holding
%
(in thousands)
(in thousands)
Ganzin Technology Corp.
Eye tracking chip and
module
Taipei, Taiwan
$
$
577
45.64
-
42.01
Iris Optronics Co., Ltd.
E-paper manufacturing and
sales
Tainan, Taiwan
61
1.25
174
6.25
Viewsil Microelectronics
(Kunshan) Limited
Guangzhou Pixtalks
Information
Technology Co., Ltd.
IC design and sales
Kunshan, China
2,621
49.00
2,671
49.00
3D structured light module
Guangzhou,
China
724
3,983
25.00
$
457
3,302
$
22.50
Guangzhou Pixtalks Information Technology Co., Ltd. was purchased with original investment
amount of $758 thousand in November 2020.
There is no individually significant associate for the Company. The following table summarized the
amount recognized by the Company at its share of those associates:
The Company’s share of losses of
associates
The Company’s share of other
comprehensive income of associates
The Company’s share of total
comprehensive income of associates
For the year ended December 31,
2019
2020
(in thousands)
2021
$
$
$
(477)
(638)
(1,392)
26
58
55
(451)
(580)
(1,337)
As of December 31, 2020 and 2021, none of the Company’s equity method investments was
pledged as collateral.
F-39
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Note 14. Other Intangible Assets
Cost
Balance at January 1, 2020
Acquisitions through business
combinations
Additions
Transfer from other current assets
Disposals
Effect of exchange rate changes
Balance at December 31, 2020
Additions
Disposals
Effect of exchange rate changes
Balance at December 31, 2021
Accumulated Amortization
Balance at January 1, 2020
Amortization for the year
Transfer from other current assets
Disposals
Effect of exchange rate changes
Balance at December 31, 2020
Amortization for the year
Disposals
Effect of exchange rate changes
Balance at December 31, 2021
Carrying amounts
At December 31, 2020
At December 31, 2021
Technology
Software
Others
Total
(in thousands)
$
13,171
5,342
2,789
21,302
-
-
-
-
-
13,171
-
-
-
13,171
7,681
1,105
-
-
-
8,786
1,105
-
-
9,891
41
87
21
-
15
5,506
468
(332)
22
5,664
4,615
464
-
-
13
5,092
452
(332)
21
5,233
663
-
-
-
(8)
3,444
-
-
(21)
3,423
256
154
-
-
(43)
367
181
-
(31)
517
704
87
21
-
7
22,121
468
(332)
1
22,258
12,552
1,723
-
-
(30)
14,245
1,738
(332)
(10)
15,641
4,385
3,280
414
431
3,077
2,906
7,876
6,617
$
$
$
$
$
Others in other intangible assets includes the acquired trademark $1,800 thousand with an indefinite
useful life.
F-40
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Other intangible assets were amortized on a straight-line basis over their estimated useful lives as
follows:
Technology 7 years
Software 2-10 years
Others (except for trademark) 7-15 years
Note 15. Property, Plant and Equipment
(a)
Building
and
improvements
Land
Machinery
Research
and
development
equipment
Office
furniture
and
equipment
Others
(in thousands)
Prepayments
for purchase
of equipment
and
construction
in progress
Total
$
41,828
75,357
74,326
44,638
13,666
39,248
564
289,627
-
-
-
-
-
-
46
-
-
1,476
1,031
386
(2,350)
189
1,189
178
(730)
19
857
-
-
222
9,952
(706)
(15,720)
-
840
(552)
-
1,906
13,915
(694)
(18,800)
-
87
23
115
252
-
477
41,828
-
-
-
75,403
60
-
(79)
74,956
1,705
783
(5)
45,487
4,565
69
(895)
14,657
731
-
(2,286)
33,248
13,307
-
(106)
852
447
(852)
-
286,431
20,815
-
(3,371)
-
(1)
2
1
25
(7)
-
20
41,828
75,383
77,441
49,227
13,127
46,442
447
303,895
-
-
-
-
-
-
-
-
-
-
20,124
4,523
-
-
54,215
5,644
(1)
(2,350)
36,519
3,469
-
(725)
10,986
994
-
-
28,845
7,243
102
(15,604)
-
-
-
-
150,689
21,873
101
(18,679)
-
68
20
96
189
-
373
24,647
4,232
(79)
57,576
5,824
(5)
39,283
2,551
(895)
12,076
1,048
(2,286)
20,775
5,949
(89)
-
-
-
154,357
19,604
(3,354)
-
-
2
21
29
-
52
28,800
63,395
40,941
10,859
26,664
-
170,659
41,828
41,828
50,756
46,583
17,380
14,046
6,204
8,286
2,581
2,268
12,473
19,778
852
447
132,074
133,236
$
$
$
$
$
Cost
Balance at January 1, 2020
Acquisitions through
business combinations
Additions
Transfers
Disposals
Effect of exchange rate
changes
Balance at December 31,
2020
Additions
Transfers
Disposals
Effect of exchange rate
changes
Balance at December 31,
2021
Accumulated Depreciation
Balance at January 1, 2020
Depreciation for the year
Transfers
Disposals
Effect of exchange rate
changes
Balance at December 31,
2020
Depreciation for the year
Disposals
Effect of exchange rate
changes
Balance at December 31,
2021
Carrying amounts
At December 31, 2020
At December 31, 2021
F-41
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Others in property, plant and equipment includes mold equipment, leasehold improvements,
right-of-use assets and other equipment.
The Company incurred non-cash capital expenditures of $1,999 thousand, $345 thousand and
$2,006 thousand in the years ended December 31, 2019, 2020 and 2021.
The above items of property, plant and equipment, except certain machinery and equipment for
specific project depreciated on Fixed-Percentage-on-Declining-Base Method basis mentioned in
Note 4(i), are depreciated on a straight-line basis over their estimated useful lives as follows:
Buildings
Building improvements
Machinery
Research and development equipment
Office furniture and equipment
Others
25 years
4-16 years
4-10 years
2-6 years
3-8 years
2-15 years
For the years ended December 31, 2019, 2020 and 2021, the Company did not recognize any
impairment loss on property, plant and equipment.
Information on property, plant and equipment that were pledged to bank as collateral is provided in
Note 27.
(b) Lease Arrangements
(i) Right-of-use assets
Addition to right-of use assets during 2020 and 2021 were $8,474 thousand and $11,247
thousand, respectively. The carrying amounts of right-of use assets for offices and buildings
lease included in Others in property, plant and equipment was $10,020 thousand and $16,660
thousand as of December 31, 2020 and 2021, respectively. Depreciation expense of right-of-use
assets amounted to $2,018 thousand, $2,619 thousand and $4,554 thousand in 2019, 2020 and
2021.
(ii) Lease liabilities
Current portion (classified under other current liabilities)
Non-current portion (classified under other non-
current liabilities)
December 31,
2020
December 31,
2021
(in thousands)
$
$
3,068
4,602
7,386
10,454
11,258
15,860
F-42
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(iii) Additional lease information
Expenses relating to short-term leases
Expenses relating to low-value asset leases
Expenses relating to variable lease payments not
included in the measurement of lease liabilities
$
$
$
Year ended December 31,
2019
313
143
2020
(in thousands)
258
230
2021
162
342
1,631
2,018
1,874
The reconciliation of lease liabilities to cash flows arising from financing activities was as follows:
Balance at beginning of year
Change from financing activities:
Payment of lease liabilities
Total change from financing activities
Other changes:
New lease
Interest expense
Interest paid
Effect of exchange rate changes
Total liability-related other changes
Balance at end of year
Note 16. Other Current Liabilities
Accrued payroll and related expenses
Accrued mask, mold fees and other expenses for RD
Payable for purchases of building and equipment
Accrued software maintenance
Allowance for sales discounts
Lease liabilities
Accrued insurance, welfare expenses, professional fee
Year ended December 31,
2020
2021
(in thousands)
$
4,220
10,454
(2,608)
(2,608)
8,474
155
(155)
368
8,842
10,454
(4,668)
(4,668)
11,247
213
(213)
(1,173)
10,074
15,860
December 31,
2020
December 31,
2021
(in thousands)
10,681
11,503
1,599
4,531
809
3,068
13,920
46,111
18,515
13,379
3,481
4,359
1,570
4,602
13,638
59,544
$
$
$
F-43
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The activity in the sales discounts is as follows:
Allowance for sales discounts
Period
Balance at
beginning
of year
Charges to
earnings
Amounts
utilized
(in thousands)
Balance at
end of
year
Year 2019
Year 2020
Year 2021
$
$
$
494
896
809
6,448
8,791
13,632
(6,046)
(8,878)
(12,871)
896
809
1,570
Note 17. Short-Term Borrowings
Secured borrowings
Unused credit lines
Interest rate-secured borrowings
December 31,
2020
December 31,
2021
(in thousands)
$
$
104,000
280,921
0.33%~0.40%
151,400
277,362
0.32%~0.38%
As of December 31, 2020 and 2021, cash and time deposits totaling $104,000 thousand and $151,400
thousand are pledged as collateral, respectively.
As of December 31, 2021, unused credit lines will expire between February 2022 and October 2022.
Among the unused credit lines, $21,676 thousand will expire before the end of March 2022, and
$155,600 thousand belonging to the parent company, Himax Technologies, Inc., needs to be secured
with equal amount of cash and time deposits when borrowing money from banks.
F-44
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The reconciliation of borrowings to cash flows arising from financing activities was as follows:
January 1, 2020
Change from financing activities:
Proceeds from borrowings
Repayments of borrowings
Total changes from financing activities
Other changes:
Effect of exchange rate changes
Total liability-related other changes
December 31, 2020
Change from financing activities:
Proceeds from borrowings
Repayments of borrowings
Total changes from financing activities
December 31, 2021
Note 18. Long-Term Borrowings
Unsecured borrowings
Less: current portion
Total
Unused long-term credit lines
Interest rate
Duration
Unsecured
borrowings
Secured
borrowings
(in thousands)
$
57,339
164,000
208,137
(265,355)
(57,218)
278,000
(338,000)
(60,000)
(121)
(121)
-
-
-
104,000
15,000
(15,000)
-
-
611,600
(564,200)
47,400
151,400
$
December 31,
2020
December 31,
2021
(in thousands)
$
$
$
58,500
(6,000)
52,500
40,000
0.68819%~
0.92112%
2020/8/4~
2030/9/2
52,500
(6,000)
46,500
40,000
0.62467%~
0.73055%
2020/8/4~
2030/9/2
The Company entered into unsecured borrowings with Chang Hwa Bank, in the amount of $40,000
thousand on August 4, 2020 and $20,000 thousand on September 2, 2020, respectively, with a term
of ten years. Funding from long-term unsecured borrowings was used to repay the existing debts of
financial institutions and broaden the Company’s working capital.
As of December 31, 2020 and 2021, for enhancing the guaranty, land and building and
improvements totaling $71,116 thousand and $67,810 thousand are pledged as collateral. Please
refer to Note 27.
The reconciliation of borrowings to cash flows arising from financing activities was as follows:
F-45
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
December 31,
2020
December 31,
2021
(in thousands)
$
$
-
58,500
60,000
(1,500)
58,500
58,500
-
(6,000)
(6,000)
52,500
Balance at beginning of year
Change from financing activities:
Proceeds from borrowings
Repayments of borrowings
Total changes from financing activities
Balance at end of year
Note 19. Employee benefits
1. Defined benefit plans
Pursuant to the ROC Labor Standards Law, the Company has established a defined benefit
pension plan covering full-time employees in the ROC that provides retirement benefits to
retiring employees based on years of service and the average salary for the six-month period
before the employee’s retirement.
Reconciliations of defined benefit obligation at present value and plan asset at fair value are as
follows:
Present value of the defined benefit obligations
Fair value of plan assets
Net defined benefit liabilities
Prepaid pension costs
December 31,
2020
December 31,
2021
(in thousands)
$
$
$
3,562
(3,952)
(390)
47
(437)
(390)
3,489
(4,065)
(576)
-
(576)
(576)
F-46
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(i) Plan assets
The Fund is administered by a pension fund monitoring committee (the “Committee”)
and is deposited in the Committee’s name in the Bank of Taiwan. Under the ROC Labor
Standards Law, the minimum return on the plan assets should not be lower than the average
interest rate on two-year time deposits published by the local banks. As of December 31,
2021, the Funds deposited in the Committee’s name in the Bank of Taiwan amounted to
$4,065 thousand.
(ii) Movements in present value of the defined benefit obligations
Balance at beginning of year
Service costs
Interest expense
Remeasurements loss (gain):
Actuarial loss (gain) arising from:
-Changes in demographic assumptions
-Experience adjustment
-Change in financial assumptions
Effect of changes in exchange rates
Balance at end of year
(iii) Movements in the fair value of plan assets
Balance at beginning of year
Interest income
Remeasurements gain :
-Return on plan assets excluding interest income
Contributions paid by the employer
Effect of changes in exchange rate
Balance at end of year
Year ended December 31,
2020
2021
(in thousands)
3,142
6
27
91
56
196
44
3,562
3,562
-
15
32
116
(253)
17
3,489
Year ended December 31,
2020
2021
(in thousands)
3,730
31
129
15
47
3,952
3,952
17
60
20
16
4,065
$
$
$
$
F-47
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(iv) Expenses recognized in profit or loss
Current service costs
Interest income
Cost of revenues
Research and development
General and administrative
Sales and marketing
Year ended December 31,
2019
2020
(in thousands)
2021
$
$
$
$
26
(19)
7
6
1
-
-
7
6
(4)
2
6
(5)
1
-
2
-
(2)
(2)
6
(8)
-
-
(2)
(v) Remeasurement of net defined benefit liability recognized in other comprehensive income
Year ended December 31,
2020
2021
(in thousands)
$
$
(60)
176
116
116
(138)
(22)
Balance at beginning of year
Recognized during the period
Balance at end of year
(vi) Actuarial assumptions
The principal actuarial assumptions were as follows:
Discount rate
Rate of increase in compensation levels
December 31,
2020
0.42%
3.00%
December 31,
2021
0.82%-0.85%
3.00%
The Company expects to make contribution of $20 thousand to the defined benefit plans in
the next year starting from January 1, 2022.
As at December 31, 2021, the weighted average duration of the defined benefits obligation
was between 17 years to 18 years.
F-48
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(vii) Sensitivity analysis
Reasonably possible changes at December 31, 2020 and 2021 to one of the relevant
actuarial assumptions, holding other assumptions constant, would have affected the
defined benefit obligation by the amounts shown below.
Discount rate
Rate of increase in compensation levels
(306) 339
328 (300)
(290) 319
310 (285)
December 31, 2020
+0.5% -0.5%
December 31, 2021
+0.5% -0.5%
(in thousands)
2. Defined contribution plans
Beginning July 1, 2005, pursuant to the newly effective ROC Labor Pension Act, the Company
is required to make a monthly contribution for full-time employees in the ROC that elected
to participate in the Defined Contribution Plan at a rate no less than 6% of the employee’s
monthly wages to the employees’ individual pension fund accounts at the ROC Bureau of
Labor Insurance. Expenses recognized in 2019, 2020 and 2021, based on the contribution
called for were $3,316 thousand, $3,330 thousand and $3,683 thousand, respectively.
The Company established a defined contribution plan in the United States that qualifies under
Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees
who meet the service requirement. The Company’s contribution to the plan may be made
at the discretion of the board of directors. As now, no contributions have been made by the
Company to the plan.
All PRC employees participate in employee social security plans, including pension and other
welfare benefits, which are organized and administered by governmental authorities. The
Company has no other substantial commitments to employees. The premiums and welfare
benefit contributions that should be borne by the Company are calculated in accordance with
relevant PRC regulations, and are paid to the labor and social welfare authorities. Expenses
recognized based on this plan were $1,489 thousand, $707 thousand and $1,695 thousand for
the years ended December 31, 2019, 2020 and 2021, respectively.
Other foreign subsidiaries recognized pension expenses of $434 thousand, $497 thousand and
$617 thousand for the years ended December 31, 2019, 2020 and 2021, respectively, for the
defined contribution plans based on their respective local government regulations.
F-49
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
3. Cash award
On September 28, 2021, the Company’s compensation committee granted annual bonuses by
cash payouts totaling $47,657 thousand to the Company’s employees among which $1,582
thousand was immediately vested on the grant date. The remainder will be equally vested at the
first, second and third anniversaries of the grant date.
The amounts of cash award expenses included in applicable costs of revenues and expense
categories and related tax effects are summarized as follows:
Cost of revenues
Research and development
General and administrative
Sales and marketing
Total compensation recognized in income
Income tax benefit
Note 20. Share-Based Compensation
Year ended
December 31,
2021
(in thousands)
$
$
$
511
5,876
678
1,223
8,288
1,444
The amounts of share-based compensation expenses included in applicable costs of revenues and
expense categories and related tax effects are summarized as follows:
Year ended December 31,
2020
2019
2021
(in thousands)
Cost of revenues
Research and development
General and administrative
Sales and marketing
Total compensation recognized in income
Income tax benefit
$
$
$
9
339
50
59
457
89
87
4,467
368
603
5,525
1,176
682
17,662
2,367
3,163
23,874
4,896
F-50
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(a) Long-term Incentive Plan
(i) Restricted share Units (RSUs)
On September 7, 2011, the Company’s shareholders approved a long-term incentive plan.
The amended and restated plan was amended and restated by extending its duration to
September 6, 2022, which was approved by the Company’s shareholders at the annual
general meeting held on August 28, 2019. The plan permits the grants of options or RSUs
to the Company’s employees, directors and service providers where each unit of RSU
represents two ordinary shares of the Company.
On September 28, 2016, the Company’s compensation committee made grants of 1,208,785
RSUs to the Company’s employees. The vesting schedule for the RSUs is as follows:
91.93% of the RSUs grant vested immediately on the grant date which was settled by cash
amounting to $9,223 thousand, a subsequent 2.69% will vest on each of September 30,
2017, 2018 and 2019 which will be settled by the Company’s ordinary shares, subject to
certain forfeiture events.
On September 29, 2017, the Company’s compensation committee made grants of 580,235
RSUs to the Company’s employees. The vesting schedule for the RSUs is as follows:
96.91% of the RSUs grant vested immediately on the grant date which was settled by cash
amounting to $6,147 thousand, a subsequent 1.03% will vest on each of September 30,
2018, 2019 and 2020 which will be settled by the Company’s ordinary shares, subject to
certain forfeiture events.
On September 26, 2018, the Company’s compensation committee made grants of 676,273
RSUs to the Company’s employees. The vesting schedule for the RSUs is as follows:
97.15% of the RSUs grant vested immediately on the grant date which was settled by cash
amounting to $3,778 thousand, a subsequent 0.95% will vest on each of September 30,
2019, 2020 and 2021 which will be settled by the Company’s ordinary shares, subject to
certain forfeiture events.
On September 28, 2020, the Company’s compensation committee made grants of 1,402,714
RSUs to the Company’s employees. The vesting schedule for the RSUs is as follows:
98.68% of the RSUs grant vested immediately on the grant date which was settled by cash
amounting to $4,762 thousand, a subsequent 0.44% will vest on each of September 30,
2021, 2022 and 2023 which will be settled by the Company’s ordinary shares, subject to
certain forfeiture events.
On September 28, 2021, the Company’s compensation committee made grants of 2,604,545
RSUs to the Company’s employees. The vesting schedule for the RSUs is as follows:
85.63% of the RSUs grant vested immediately on the grant date which was settled by cash
amounting to $23,174 thousand, a subsequent 4.79% will vest on each of September 30,
2022, 2023 and 2024 which will be settled by the Company’s ordinary shares, subject to
certain forfeiture events.
F-51
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The amount of compensation expense from the long-term incentive plan was determined
based on the estimated fair value and the market price of ADS (one ADS represents two
ordinary shares) underlying the RSUs granted on the date of grant, which were $8.30 per
ADS, $10.93 per ADS, $5.76 per ADS, $3.44 per ADS and $10.39 per ADS on September
28, 2016, September 29, 2017, September 26, 2018, September 28, 2020 and September 28,
2021, respectively.
RSUs activity under the long-term incentive plan during the periods indicated is as follows:
Balance at January 1, 2019
Vested
Forfeited
Balance at December 31, 2019
Granted
Vested
Forfeited
Balance at December 31, 2020
Granted
Vested
Forfeited
Balance at December 31, 2021
Number of
Underlying
Shares for RSUs
Weighted
Average Grant
Date Fair Value
$
60,338
(38,878)
(2,967)
18,493
1,402,714
(1,392,355)
(5,963)
22,889
2,604,545
(2,237,499)
(3,415)
386,520
7.98
8.29
7.98
7.34
3.44
3.47
6.57
3.88
10.39
10.37
4.38
10.17
As of December 31, 2021, the total compensation cost related to the unvested RSUs not yet
recognized was $3,059 thousand. The weighted-average period over which it is expected to
be recognized is 2.72 years.
In 2019, 2020 and 2021, the Company settled RSUs release with shares buyback of 77,756
shares, 16,302 shares and 14,264 shares, respectively.
F-52
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The allocation of compensation expenses and related tax effects from the RSUs
granted to employees under the long-term incentive plan are summarized as follows:
Year ended December 31,
2020
2019
2021
(in thousands)
Cost of revenues
Research and development
General and administrative
Sales and marketing
Total compensation recognized in income
Income tax benefit
$
$
$
-
86
26
19
131
30
70
3,924
319
520
4,833
1,044
676
17,592
2,343
3,149
23,760
4,896
(ii) Employee stock options
On September 23, 2019, the Company’s compensation committee approved a plan to grant
stock options, the 2019 plan, to certain employees. The 2019 plan authorizes grants to
purchase up to 3,000,000 units ADS, representing 6,000,000 shares of the Company’s ordinary
share. 2,226,690 units of stock option to purchase 2,226,690 units ADS were grant to certain
employees at an exercise price of $2.27 on September 30, 2019.
The 2019 plan has two years contractual life and one year vesting period. Based on the vesting
schedule, 50% of the options vest half year after the date of grant and 50% of the options vest
one year after the date of grant. The Company recognized compensation expenses of $326
thousand and $570 thousand in 2019 and 2020, respectively. Such compensation expense
was recorded as cost of revenues, sales and marketing expenses, general and administrative
expenses and research and development expenses in the consolidated statements of profit or
loss. Income tax benefits of $59 thousand and $103 thousand are realized in the consolidated
statements of profit or loss for employee stock options for the year ended December 31, 2019
and 2020, respectively.
During 2020, 114,500 units, 39,000 units and 10,000 units of stock option to purchase 114,500
units, 39,000 units and 10,000 units ADS were grant to certain employees at an exercise
price of $2.74, $3.9 and $3.35 on March 31, 2020, August 11, 2020 and September 25, 2020,
respectively. The options granted in 2020 were fully vested on October 1, 2020. The Company
recognized compensation expenses of $122 thousand and recorded income tax benefits of $29
thousand for employee stock options in the consolidated statements of profit or loss for the year
ended December 31, 2020.
F-53
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The calculated value of each option award is estimated on the date of grant using the
Black-Scholes option-pricing model that used the weighted average assumptions in the
following table. The Company uses the simplified method to estimate the expected term
of the options as it does not have sufficient historical share option exercise experience
and the exercise data relating to employees of other companies is not easily obtainable.
The risk-free rates for the expected term of the options are based on the interest rates of 1
years and 1.5 years U.S. Treasury yield at the time of grant.
Valuation assumptions:
Expected dividend yield
Expected volatility
Expected term (years)
Risk-free interest rate
Stock option activity during the periods indicated is as follows:
2019 plan
3.5%
51.96%-57.79%
1-1.5
1.69%-1.75%
$
Weighted
average
exercise
price
2.27
-
-
2.27
3.05
2.32
2.30
2.36
2.37
2.27
-
-
Weighted
average
remaining
contractual
term
1.75
1.5
0.88
0.54
-
-
Number
of Units
2,226,690
-
-
2,226,690
163,500
(1,574,869)
(236,853)
578,468
(524,387)
(54,081)
-
-
Granted
Exercised
Forfeited
Balance at December 31, 2019
Granted
Exercised
Forfeited
Balance at December 31, 2020
Exercised
Expired
Balance at December 31, 2021
Exercisable at December 31, 2021
(b) Employee stock options
(i) On January 1, 2016, board of directors of Himax Imaging, Inc. approved a plan to grant
stock options, the 2016 plan, to certain employees. The 2016 plan authorizes grants
to purchase up to 1,760,000 shares of Imaging Taiwan’ issued ordinary shares held by
Himax Imaging, Inc. The exercise price was NT$30 (US$0.9139). Himax Taiwan
obtained all Imaging Taiwan’ issued ordinary shares previously held by Himax Imaging,
Inc. in March, 2017, in a re-organization of entities under common control, whereby
Himax Taiwan assumed the obligation to sell Imaging Taiwan’ ordinary shares once
employees exercised the options for the 2016 plan.
F-54
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The 2016 plan has four years contractual life and three years vesting period. Based on
the vesting schedule, 50% of the options vest one and half years after the date of grant
and 50% of the options vest three years after the date of grant. Because the exercise
price of the options are higher than the estimated fair value of Imaging Taiwan shares
at the date of grant, the calculated value of each option award estimated using the
Black-Scholes option-pricing model was nil.
The calculated value of option award is estimated on the date of grant using the
Black-Scholes option-pricing model that used the weighted average assumptions in
the following table. Himax Imaging, Inc. uses the simplified method to estimate the
expected term of the options as it does not have sufficient historical share option exercise
experience and the exercise data relating to employees of other companies is not easily
obtainable. Since Imaging Taiwan’ shares are not publicly traded and its shares are
rarely traded privately, expected volatility is computed based on the average historical
volatility of similar entities with publicly traded shares. The risk-free rates for the
expected term of the option are based on the interest rates of 2 years and 5 years ROC
central government bond at the time of grant.
Valuation assumptions:
Expected dividend yield
Expected volatility
Expected term (years)
Risk-free interest rate
Stock option activity during the periods indicated is as follows:
2016 plan
0%
38.04%
3.125
0.50%
Weighted
average
exercise
price
Weighted
average
remaining
contractual
term
$
0.9139
-
-
0.9139
0.9139
-
-
1.0
-
Number
of shares
546,000
-
-
(25,000)
(521,000)
-
-
Balance at January 1, 2019
Granted
Exercised
Forfeited
Expired
Balance at December 31, 2019
Exercisable at December 31, 2019
(ii)
On January 1, 2016, board of directors of Imaging Taiwan approved a plan to grant stock
options, the 2016 plan, to certain employees. This plan authorizes grants to purchase up
to 2,040,000 shares of Imaging Taiwan’ authorized but unissued ordinary shares. The
exercise price was NT$30 (US$0.9139).
F-55
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The 2016 plan has four years contractual life and three years vesting period. Based on
the vesting schedule, 50% of the options vest one and half years after the date of grant
and 50% of the options vest three years after the date of grant. Because the exercise
price of the options are higher than the estimated fair value of Imaging Taiwan shares
at the date of grant, the calculated value of each option award estimated using the
Black-Scholes option-pricing model was nil.
The calculated value of each option award is estimated on the date of grant using the
Black-Scholes option-pricing model that used the weighted average assumptions in the
following table. Imaging Taiwan uses the simplified method to estimate the expected
term of the options as it does not have sufficient historical share option exercise
experience and the exercise data relating to employees of other companies is not easily
obtainable. Since Imaging Taiwan’ shares are not publicly traded and its shares are rarely
traded privately, expected volatility is computed based on the average historical volatility
of similar entities with publicly traded shares. The risk-free rates for the expected term of
the options are based on the interest rates of 2 years and 5 years ROC central government
bond at the time of grant.
Valuation assumptions:
Expected dividend yield
Expected volatility
Expected term (years)
Risk-free interest rate
Stock option activity during the periods indicated is as follows:
2016 plan
0%
38.04%
3.125
0.50%
Weighted
average
exercise
price
Weighted
average
remaining
contractual
term
1.0
-
-
0.9139
-
-
0.9139
0.9139
0.9139
0.9139
-
-
$
Number
of shares
1,359,000
-
-
(209,000)
(1,135,000)
15,000
(15,000)
-
-
Balance at January 1, 2019
Granted
Exercised
Forfeited
Expired
Balance at December 31, 2019
Expired
Balance at December 31, 2020
Exercisable at December 31, 2020
(iii) On October 6, 2015, board of directors of Himax Display, Inc. approved a plan to grant
stock options, the 2015 plan, to certain employees. This plan authorizes grants to
purchase up to 2,528,000 shares of Himax Display, Inc.’ authorized but unissued
ordinary shares. The exercise price was NT$65 (US$1.986).
F-56
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The 2015 plan has four years contractual life and three years vesting period. Based
on the vesting schedule, 50% of the options vest one and half years after the date of
grant and 50% of the options vest three years after the date of grant. The Company
had recognized all compensation expenses before 2019.
The calculated value of each option award is estimated on the date of grant using
the Black-Scholes option-pricing model that used the weighted average assumptions
in the following table. Himax Display, Inc. uses the simplified method to estimate
the expected term of the options as it does not have sufficient historical share option
exercise experience and the exercise data relating to employees of other companies
is not easily obtainable. Since Himax Display, Inc.’ shares are not publicly traded
and its shares are rarely traded privately, expected volatility is computed based on
the average historical volatility of similar entities with publicly traded shares. The
risk-free rate for the expected term of the options is based on the interest rates of 2
years and 5 years ROC central government bond at the time of grant.
Valuation assumptions:
Expected dividend yield
Expected volatility
Expected term (years)
Risk-free interest rate
2015 plan
0%
33.52%
3.125
0.65%
Stock option activity during the periods indicated is as follows:
Weighted
average
exercise
price
Number
of shares
$
1,911,000
-
-
(22,200)
(1,888,800)
-
-
1.986
-
-
1.986
1.986
-
-
Weighted
average
remaining
contractual
term
0.75
-
Balance at January 1, 2019
Granted
Exercised
Forfeited
Expired
Balance at December 31, 2019
Exercisable at December 31, 2019
F-57
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(iv)
On March 19, 2021, board of directors of CM Visual Technology Corp. approved a
plan to grant stock options, the 2021 plan, to certain employees. This plan authorizes
grants to purchase up to 3,000,000 shares of CM Visual Technology Corp.’ authorized
but unissued ordinary shares. The exercise price was NT$10 (US$0.36).
The 2021 plan has four years contractual life and three years vesting period. Based
on the vesting schedule, 50% of the options vest one and half years after the date of
grant and 50% of the options vest three years after the date of grant. The Company
recognized compensation expenses of $71 thousand in 2021. Such compensation
expense was recorded as cost of revenues, sales and marketing expenses, general and
administrative expense and research and development expenses in the consolidated
statements of income. There was no income tax benefit realized in the consolidated
statements of income for employee stock options for the years ended December 31,
2021.
The calculated value of each option award is estimated on the date of grant using the
Black-Scholes option-pricing model that used the weighted average assumptions in the
following table. CM Visual Technology Corp. uses the simplified method to estimate
the expected term of the options as it does not have sufficient historical share option
exercise experience and the exercise data relating to employees of other companies
is not easily obtainable. Since CM Visual Technology Corp.’ shares are not publicly
traded and its shares are rarely traded privately, expected volatility is computed based
on the average historical volatility of similar entities with publicly traded shares. The
risk-free rate for the expected term of the options is based on the interest rates of 2
years and 5 years ROC central government bond at the time of grant.
Valuation assumptions:
Expected dividend yield
Expected volatility
Expected term (years)
Risk-free interest rate
Stock option activity during the periods indicated is as follows:
2021 plan
0%
43.82%
3.125
0.223%
Weighted
average
exercise
price
Weighted
average
remaining
contractual
term
Number
of shares
Balance at January 1, 2021
Granted
Exercised
Forfeited
Balance at December 31, 2021
Exercisable at December 31, 2021
$
-
2,791,000
-
(120,000)
2,671,000
-
-
0.36
-
0.36
0.36
-
3.5
F-58
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(v)
On June 28, 2021, board of directors of Liqxtal Technology Inc. approved a plan
to grant stock options, the 2021 plan, to certain employees. This plan authorizes
grants to purchase up to 1,000,000 shares of Liqxtal Technology Inc.’ authorized but
unissued ordinary shares. The exercise price was NT$18 (US$0.65).
The 2021 plan has one and half years contractual life and one year vesting period.
Based on the vesting schedule, 100% of the options vest one year after the date
of grant. The Company recognized compensation expenses of $43 thousand in
2021. Such compensation expense was recorded as sales and marketing expenses,
general and administrative expense and research and development expenses in the
consolidated statements of income. There was no income tax benefit realized in the
consolidated statements of income for employee stock options for the years ended
December 31, 2021.
The calculated value of each option award is estimated on the date of grant using the
Black-Scholes option-pricing model that used the weighted average assumptions in
the following table. Liqxtal Technology Inc. uses the simplified method to estimate
the expected term of the options as it does not have sufficient historical share option
exercise experience and the exercise data relating to employees of other companies
is not easily obtainable. Since Liqxtal Technology Inc.’ shares are not publicly
traded and its shares are rarely traded privately, expected volatility is computed
based on the average historical volatility of similar entities with publicly traded
shares. The risk-free rate for the expected term of the options is based on the interest
rates of 2 years ROC central government bond at the time of grant.
Valuation assumptions:
Expected dividend yield
Expected volatility
Expected term (years)
Risk-free interest rate
Stock option activity during the periods indicated is as follows:
2021 plan
0%
30.06%
1.25
0.107%
Weighted
average
exercise
price
Weighted
average
remaining
contractual
term
Number
of shares
Balance at January 1, 2021
Granted
Exercised
Forfeited
Balance at December 31, 2021
Exercisable at December 31, 2021
$
-
1,000,000
-
(90,000)
910,000
-
-
0.65
-
0.65
0.65
-
1.0
F-59
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Note 21. Equity
(a) Ordinary Shares
The Company’s authorized ordinary shares, with par value of $0.3 per share, were
1,000,000,000 shares at December 31, 2020 and 2021.
The Company’s issued and fully paid ordinary shares, with par value of $0.3 per share, were
356,699,482 shares at December 31, 2020 and 2021. The outstanding ordinary shares were
347,534,102 shares and 348,597,140 shares at December 31, 2020 and 2021, respectively.
9,165,380 treasury shares and 8,102,342 treasury shares were held by the Company as of
December 31, 2020 and 2021, respectively.
The Company’s ordinary shares have been quoted on the NASDAQ Global Select Market
under the symbol “HIMX” in the form of ADSs and two ordinary shares represent one ADS
with effect from August 10, 2009.
(b) Additional Paid-in Capital
Balance of additional paid-in capital as of December 31, 2020 and 2021 were as follows:
From ordinary shares
From treasury shares
From share-based compensation
From share of changes in equities of associates
(c) Earnings distribution
December 31,
2020
December 31,
2021
(in thousands)
$
$
93,341
6,422
7,389
141
107,293
93,341
6,911
8,051
538
108,841
As a holding company, the major asset of the Company is the 100% ownership interest in
Himax Taiwan. Dividends received from the Company’s subsidiaries in Taiwan, if any, will
be subjected to withholding tax under ROC law. The ability of the Company’s subsidiaries
to pay dividends, repay intercompany loans from the Company or make other distributions
to the Company may be restricted by the availability of funds, the terms of various credit
arrangements entered into by the Company’s subsidiaries, as well as statutory and other legal
restrictions. The Company’s subsidiaries in Taiwan are generally not permitted to distribute
dividends or to make any other distributions to shareholders for any year in which it did not
have either earnings or retained earnings (excluding reserve). In addition, before distributing
a dividend to shareholders following the end of a fiscal year, a Taiwan company must recover
any past losses, pay all outstanding taxes and set aside 10% of its annual net income (less
prior years’ losses and outstanding taxes) as a legal reserve until the accumulated legal reserve
equals its paid-in capital, and may set aside a special reserve.
The accumulated legal and special reserve provided by Himax Taiwan as of December 31,
F-60
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
2020 and 2021 amounted to $79,931 thousand and $85,200 thousand, respectively.
For the year ended December 31, 2021, the Company declared the cash dividend of $0.136 per
share, totaling $47,404 thousand, and was paid on July 12, 2021.
(d) Accumulated other comprehensive income
Changes in accumulated other comprehensive income, net of tax, are as follows:
Foreign
currency
translation
Unrealized
gains
(losses) on
securities
Defined
benefit
pension
plans
Accumulated
other
comprehensive
income
Beginning balance, January 1, 2019
Exchange differences arising on
$
249
(in thousands)
(906)
108
translation of foreign operations
(545)
-
Changes in fair value of financial
assets
Remeasurement of defined benefit
pension plans
Ending balance, December 31, 2019
Exchange differences arising on
translation of foreign operations
Changes in fair value of financial
assets
Remeasurement of defined benefit
pension plans
Ending balance, December 31, 2020
Exchange differences arising on
translation of foreign operations
Changes in fair value of financial
assets
Remeasurement of defined benefit
pension plans
Ending balance, December 31, 2021
$
-
-
(296)
512
-
-
216
(30)
-
(936)
-
67
-
(869)
(72)
-
-
-
144
(179)
-
(1,048)
-
-
172
280
-
-
(175)
105
-
-
133
238
(549)
(545)
(30)
172
(952)
512
67
(175)
(548)
(72)
(179)
133
(666)
F-61
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(e) Noncontrolling interest
Year ended December 31,
2020
2019
2021
Balance at the beginning of year
Equity attributable to non-controlling interests
Loss for the year
Transfer of financial liability to noncontrolling
interests
Changes in fair value of financial assets
Remeasurement of defined benefit pension
plans
Share-based compensation expenses
New shares issued by subsidiaries
Purchase of subsidiaries shares from
noncontrolling interest
Exchange differences arising on translation of
foreign operations
Declaration of cash dividends
Balance at the end of year
(in thousands)
$
(4,261)
(1,743)
5,023
(2,570)
(1,974)
(2,961)
5,071
(5)
-
(2)
-
(2)
17
5
-
(1)
8
8,695
5
38
-
-
-
175
-
-
(1,743)
$
44
(4)
5,023
-
(20)
2,258
Note 22. Income Taxes
The Company is incorporated in the Cayman Islands, a tax-free country; accordingly, pretax
income generated by the group parent company is not subject to local income tax. Substantially
all of the Company’s taxable income is derived from the operations in the ROC and, therefore,
substantially all of the Company’s income tax expense attributable to income from continuing
operations is incurred in the ROC. Other foreign subsidiary companies calculate income tax in
accordance with local tax law and regulations.
According to the amendments to the ROC Statute for Industrial Innovation in July 2019, in
addition to providing 10 year extension for the existing tax credits for qualifying research and
development expenses, deduction of actual investment from tax base of undistributed earning
tax and tax credit for smart machinery and 5G system expenditures were added as new incentive
items.
Eligible investment amount applicable for deduction of tax base of undistributed earning tax
is effective for undistributed earnings invested in substantive investment within 3 years after
fiscal year-end. Tax credit for investment amount eligible for smart machinery limited to 5% of
expenditure for the current year or 3% of expenditure within 3 consecutive year. Tax credit for
smart machinery combined with R&D tax credit shall not exceed 50% of current year corporate
income tax plus undistributed earnings tax payable.
F-62
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(a) Income tax expense (benefit) recognized in profit or loss for the years ended December 31,
2019, 2020 and 2021 consists of the following:
Current tax expense
Current period
Adjustment for prior periods
2019
Year ended December 31,
2020
(in thousands)
2021
$
1,461
(126)
1,335
13,599
(363)
13,236
102,297
12
102,309
Deferred tax expense
Origination and reversal of temporary
differences
Investment tax credits and operating loss
carryforward
Total income tax expense
247
370
310
(1,166)
(919)
416
$
(1,894)
(1,524)
11,712
8,038
8,348
110,657
(b) Income taxes expense (benefit) recognized directly in other comprehensive income for the
years ended December 31, 2019, 2020 and 2021 consist of the following:
Year ended December 31,
2019
2020
2021
(in thousands)
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension
plans
$
25
(38)
27
(c)
Reconciliation of the expected income tax expense computed based on the ROC statutory
income tax rate of 20% compared with the actual income tax expense as reported in the
consolidated statements of profit or loss for the years ended December 31, 2019, 2020 and
2021 are summarized as follows:
F-63
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Year ended December 31,
2019
Rate Amount
(in thousands)
$
(15,768)
20.0% (3,154)
2020
Rate Amount
(in thousands)
56,872
$
20.0% 11,374
2021
Rate Amount
(in thousands)
544,592
$
20.0% 108,919
8.0% (1,261)
0.3% (51)
3.0% 1,727
- -
4.2% 22,648
- (267)
2.8% (443)
- -
- -
- -
- -
- (161)
17.1% (2,698)
(40.9%) 6,455
(12.1%) (6,895)
8.7% 4,954
(3.3%) (17,934)
0.7% 3,668
(2.2%) 343
0.2%
129
(2.0%) (10,680)
(1.2%) 194
(1.2%) (709)
0.5% 2,763
(3.5%) 548
(2.3%) 368
881
1.5%
(0.6%) (363)
837
0.2%
- 440
(0.7%) 115
$
416
(2.6%)
1.1%
614
11,712
$
20.6%
-
424
110,657
$
20.3%
Profit (loss) before income taxes
Income tax expense calculated
at the statutory rate
Tax on undistributed earnings
Tax benefit resulting from setting
aside legal reserve from prior
year’s income
Tax benefit resulting from
offsetting prior year’s
undistributed earning tax
with current year’s loss
Tax benefit resulting from
actual investment from prior
year’s undistributed earnings
Increase in tax credits
Effect of change of
unrecognized deductible
temporary differences, tax
losses carryforwards and
investment tax credits
Net of non-taxable income
and non-deductible expense
Changes in unrecognized
tax benefits related to prior
year tax positions, net of its
impact to tax-exempted
income
Foreign tax rate differential
Variance from audits,
amendments and
examinations of prior
years’ income tax filings
Others
Income tax expense
Effective tax rate
F-64
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(d) As of December 31, 2020 and 2021, the components of deferred tax assets and deferred tax
liabilities were as follows:
Deferred tax assets:
Inventory
Tax credit carryforwards
Operating loss carryforward-statutory tax
Accrued compensated absences
Allowance for sales discounts
Depreciation
Unrealized foreign exchange loss
Others
Deferred tax liabilities:
Acquired intangible assets
Remeasurement of defined benefit plans
Unrealized foreign exchange gain
December 31,
2020
December 31,
2021
(in thousands)
$
$
$
$
4,426
7,780
1,013
735
411
561
179
634
15,739
(1,014)
(107)
(17)
(1,138)
2,955
-
755
901
720
601
-
1,259
7,191
(756)
(138)
(71)
(965)
As of December 31, 2021, the Company has not provided for income taxes on undistributed
earnings of approximately $1,096,052 thousand of its foreign subsidiaries since the Company
has specific plans to reinvest these earnings indefinitely. A deferred tax liability will be
recognized when the Company can no longer demonstrate that it plans to indefinitely reinvest
these undistributed earnings. This amount becomes taxable when the ultimate parent company,
Himax Technologies, Inc., executes other investments, share buybacks or shareholder
dividends to be funded by cash distribution by its foreign subsidiaries. It is not practicable to
estimate the amount of additional taxes that might be payable on such undistributed earnings
because of the complexities of the hypothetical calculation.
F-65
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(e) Changes in deferred tax assets and liabilities were as follows:
January 1,
2020
Recognized
in profit or
loss
Recognized
in other
comprehensive
income
December
31, 2020
(in thousands)
Recognized
in other
comprehensive
income
December
31, 2021
Recognized in
profit or loss
Inventory
Tax credit carryforwards
Operating loss
carryforward
Accrued compensated
absences
Allowance for sales
discounts
Depreciation
Unrealized foreign
exchange loss
Remeasurement of defined
benefit plans
Acquired intangible assets
Others
Total
$
5,089
5,645
1,254
588
576
521
102
(663)
2,135
(241)
147
(165)
40
60
(139)
(6)
(1,255)
658
13,039
241
(24)
1,524
$
-
-
-
-
-
-
-
38
-
-
38
4,426
7,780
1,013
735
411
561
162
(1,471)
(7,780)
(258)
166
309
40
(233)
-
-
-
-
-
-
-
2,955
-
755
901
720
601
(71)
(107)
(4)
(27)
(138)
(1,014)
634
14,601
258
625
(8,348)
-
-
(27)
(756)
1,259
6,226
(f) Unrecognized Deferred Tax Assets
Gross amount of deferred tax assets have not been recognized in respect of the following items.
Unused tax credits
Unused operating loss carryforwards-statutory tax
Unused operating loss carryforwards-undistributed
earnings tax
Others
December 31,
2020
December 31,
2021
(in thousands)
$
$
1,560
241,371
261,659
29,897
534,487
1,560
246,023
283,578
30,364
561,525
As of December 31, 2021, the unused investment tax credits with its expiration year from 2022
to 2034 from US operations were $1,560 thousand.
Tax loss carryforwards is utilized in accordance with the relevant jurisdictional tax laws and
regulations. Net losses from foreign subsidiaries are approved by tax authorities in respective
jurisdiction to offset future taxable profits. Under ROC Income Tax Acts, the tax loss
carryforward in the preceding ten years is available to be deducted from tax income for Taiwan
operations. The statutory losses would be deducted for undistributed earnings tax and were not
subject to expiration for Taiwan operations.
F-66
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
As of December 31, 2021, the expiration period for abovementioned unrecognized deferred tax
assets of unused operating loss carryforwards for statutory tax were as follows:
Deductible amount
Unrecognized
deferred tax assets
Expiration year
Taiwan operations
$
Hong Kong operations
US operations
Israel operations
103,870
107,909
1,818
12,451
19,975
(in thousands)
$
$
20,774
21,582
150
3,510
4,594
50,610
(g) Assessments by the tax authorities
2022~2026
2027~2031
Indefinitely
2024~2041
Indefinitely
The Company’s major taxing jurisdiction is Taiwan. All Taiwan subsidiaries’ income tax returns
have been examined and assessed by the ROC tax authorities through 2019. The income tax
returns of 2020 for all Taiwan subsidiaries are open to examination by the ROC tax authorities.
Taiwanese entities are customarily examined by the tax authorities and it is possible that a future
examination will result in a positive or negative adjustment to the Company's unrecognized tax
benefits within the next 12 months; however, management is unable to estimate a range of the
tax benefits or detriment as of December 31, 2021.
Note 23. Financial Instruments
(a) Categories of financial instruments
(i) Financial assets
Financial assets measured at fair value through profit or
loss (including current and noncurrent)
Financial assets measured at fair value through other
comprehensive income
Measured at amortized cost:
Cash and cash equivalents
Financial assets at amortized cost
Accounts receivable and other receivables (including
related parties)
Restricted deposit (including current and noncurrent)
Refundable deposits (including current and
noncurrent)
Subtotal
Total
December 31,
2020
December 31,
2021
(in thousands)
$
21,765
16,013
742
410
184,938
8,682
252,162
104,141
12,144
336,024
26,013
423,357
154,136
231,415
562,067
584,574
1,170,945
1,187,368
$
F-67
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(ii) Financial liabilities
December 31,
2020
December 31,
2021
(in thousands)
Measured at amortized cost:
Short-term secured borrowings
Accounts payables and other payables (including related
parties)
Long-term unsecured borrowings (including current
portion)
Lease liabilities (including current and noncurrent)
Guarantee deposits
Total
$
104,000
151,400
222,739
305,755
58,500
10,454
5,765
401,458
$
52,500
15,860
55,215
580,730
(b) Liquidity risk
The following, except for payables (including related parties) that are repayable within a year,
are the contractual maturities of financial liabilities, including estimated interest payments of
unsecured borrowings, secured borrowings and lease liabilities.
(in thousands)
December 31, 2020
Non-derivative financial
liabilities
Short-term secured
borrowings
Long-term unsecured
borrowings (including
current portion)
Lease liabilities
Guarantee deposits
December 31, 2021
Non-derivative financial
liabilities
Short-term secured
borrowings
Long-term unsecured
borrowings (including
current portion)
Lease liabilities
Guarantee deposits
Contractual
cash flows
Within 6
months
6-12
months
1-2 years
2-5 years
Over 5
years
$
104,106
104,106
-
-
-
-
60,684
10,725
5,765
181,280
$
3,216
1,600
5,765
114,687
3,209
1,603
-
4,812
6,379
4,538
-
10,917
18,862
2,984
-
21,846
29,018
-
-
29,018
$
151,601
111,582
40,019
-
-
-
54,015
16,174
55,215
277,005
$
3,167
2,460
1,165
118,374
3,159
2,298
-
45,476
6,287
3,881
5,840
16,008
18,624
7,513
48,210
74,347
22,778
22
-
22,800
The Company does not expect the cash flows included in the maturity analysis to occur
significantly earlier or at significantly different amounts.
F-68
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(c) Currency risk
i. Exposure to foreign currency risk
The Company’s significant exposure to foreign currency risk was as follows:
December 31, 2020
December 31, 2021
Foreign
currency
Exchange
rate
Functional
currency
Foreign
currency
Exchange
rate
Functional
currency
155,418
35,630
28.48
6.5428
5,457
5,461
447,596
36,450
27.68
6.3941
16,170
5,701
1,084,594
632,215
28.48
103.0786
38,083
6,133
3,450,959
1,459,700
27.68
115.0936
124,672
12,683
(in thousands)
Financial assets
Monetary items
NTD
CNY
Financial liabilities
Monetary items
NTD
JPY
ii. Sensitivity analysis
The Company’s exposure to foreign currency risk arises from the translation of the foreign
currency exchange gains and losses on cash and cash equivalents, accounts receivable,
other receivable, accounts payable, other payable and lease liabilities that are denominated
in foreign currency.
Depreciation or appreciation of the USD by 10% against the New Taiwan Dollars (NTD),
CNY and JPY at December 31, 2020 and 2021, while all other variables were remained
constant, would have increased or (decreased) the net profit before tax of $3,330 thousand
and $11,548 thousand, respectively.
iii. Interest rate risk
The Company’s short-term secured borrowings and long-term unsecured borrowings
carried floating interest rates and fixed interest rates. The Company’s exposure to changes
in interest rates is mainly from floating-rate borrowings. Any change in interest rates will
cause the effective interest rates of borrowings to change and thus cause the future cash
flows to fluctuate over time.
The following sensitivity analysis is determined based on the exposure to interest rate risk.
For floating-rate debts, the analysis assumes that the balances of outstanding debts at the
end of the reporting period had been outstanding for the entire year.
For the Company’s floating-rate debts, assuming all other variables were remained
constant, an increase or a decrease in the interest rate by 0.25% would have resulted in a
decrease or an increase in the net profit before tax for the years ended December 31, 2020
and 2021 by $146 thousand and $131 thousand, respectively.
F-69
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(d) Fair value information
i. Financial instruments not measured at fair value
The Company considers that the carrying amounts of financial assets and financial
liabilities measured at amortized cost approximate their fair values.
ii. Financial instruments measured at fair value
(1) Fair value hierarchy
(in thousands)
Financial assets measured at
fair value through profit or
loss
Money market fund
Equity securities-unlisted
company
Subtotal
Financial assets measured at
fair value through other
comprehensive income
Equity securities-unlisted
company
Total
(in thousands)
Financial assets measured at
fair value through profit or
loss
Money market fund
Equity securities-unlisted
company
Subtotal
Financial assets measured at
fair value through other
comprehensive income
Equity securities-unlisted
company
Total
December 31, 2020
Fair Value
Level 1
Level 2
Level 3
Total
Carrying
Amount
$
7,799
13,966
21,765
7,799
-
7,799
-
-
-
-
7,799
13,966
13,966
13,966
21,765
742
22,507
$
-
7,799
-
-
742
14,708
742
22,507
December 31, 2021
Fair Value
Level 1
Level 2
Level 3
Total
Carrying
Amount
$
2,345
2,345
-
-
2,345
13,668
16,013
-
2,345
-
-
13,668
13,668
13,668
16,013
410
16,423
$
-
2,345
-
-
410
14,078
410
16,423
F-70
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(2) Valuation techniques and assumptions used in fair value measurement
The fair value of financial instruments traded in active markets is determined with
reference to quoted market prices.
The fair value of financial instruments is based on the valuation techniques. The fair
value using valuation techniques refers to the current fair value of other financial
instruments with similar conditions and characteristics, or using a discounted cash
flow method, or other valuation techniques which include model calculating with
observable market data at the reporting date.
The fair value of equity securities-unlisted company is determined by reference
to market valuations for similar operating entities quoted in an active market
based on the net assets value of investees. The significant unobservable input
is primarily the liquidity discounts, 28% for 2021. The estimated fair value
would increase (decrease) if the liquidity discount rate were lower (higher).
(3) Transfer between levels of the fair value hierarchy
There were no transfers between levels for the years ended December 31, 2020 and
2021.
(4) Movement in financial assets included in Level 3 of fair value hierarchy
Financial assets
at fair value
through profit
or loss
13,500
Financial assets
at fair value
through other
comprehensive
income
709
Total
14,209
-
-
466
13,966
(32)
(32)
65
-
742
65
466
14,708
(in thousands)
January 1, 2020
Disposal-capital reduction
$
of investment
Recognized in other
comprehensive income
Recognized in profit or loss
December 31, 2020
$
F-71
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Financial assets
at fair value
through profit
or loss
13,966
Financial assets
at fair value
through other
comprehensive
income
742
-
-
(298)
13,668
(151)
(181)
-
410
Total
14,708
(151)
(181)
(298)
14,078
(in thousands)
January 1, 2021
Disposal-capital reduction
of investment
Recognized in other
comprehensive income
Recognized in profit or loss
December 31, 2021
$
$
Note 24. Financial Risk Management
(a)
Overview
The Company is exposed to the following risks due to usage of financial instruments:
(1) Credit risk
(2) Liquidity risk
(3) Market risk
Hereinafter discloses information about the Company’s exposure to variable risks, and the
goals, policies and procedures of the Company’s risk measurement and risk management.
(b)
Risk management framework
Management of related divisions are appointed to review, control, trace and monitor the
strategic risks, financial risks and operational risks faced by the Company. Management
reports to executive officers the progress of risk controls from time to time and, if necessary,
report to the board of directors, depending on the extent of impact of risks.
(c)
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a
financial instrument fails to meet its contractual obligations. The Company’s exposures to
credit risk are primarily from cash and cash equivalents, financial assets at amortized cost
and accounts receivable.
The Company deposits its cash and cash equivalents with various reputable financial
institutions. Financial assets at amortized cost are time deposits with original maturities
of greater than three months. The Company has not experienced any material losses on
deposits of the Company’s cash and cash equivalents and financial assets at amortized cost.
Management performs periodic evaluations of the relative credit standing of these financial
institutions and limits the amount of credit exposure with any one institution. Management
believes that there is a limited concentration of credit risk in cash and cash equivalent and
financial assets at amortized cost.
F-72
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The Company derived substantially all of its revenues from sales of display drivers that are
incorporated into TFT-LCD panels. The TFT-LCD panel industry is intensely competitive
and is vulnerable to cyclical market conditions and subject to price fluctuations. Management
continuously evaluates and controls the credit quality, credit limit and financial strength of its
customers to ensure any overdue receivables are taken necessary procedures.
The Company depends on two customers for majority of its revenues. The Company’s sales
to these two customers as a percentage of revenues are as follows:
Year Ended December 31,
2020
2021
2019
Customer A and its affiliates
Customer C
29.5%
5.6%
32.6%
12.7%
32.1%
19.1%
The percentage of the Company’s accounts receivable accounted by customers, those
representing more than 10% of total accounts receivable balance, is summarized as follows:
Customer A and its affiliates
Customer C
December 31,
2020
December 31,
2021
36.3%
13.6%
39.0%
12.1%
Refer to Note 11 for aging analysis of accounts receivable and the movement in the loss
allowance.
In addition, the Company has at times agreed to extend the payment terms for certain of
its customers. Other customers have also requested extension of payment terms, and the
Company may grant such requests for extension in the future. As a result, a default by any
such customer, a prolonged delay in the payment of accounts receivable, or the extension of
payment terms for the Company’s customers could adversely affect the Company’s cash flow,
liquidity and operating results. Management performs ongoing credit evaluations of each
customer and adjusts credit policy based upon payment history and the customer’s credit
worthiness, as determined by the review of their current credit information.
(d)
Liquidity risk
The objective of liquidity risk management is to ensure the Company has sufficient liquidity
to fund its business requirements associated with existing operations over the next 12
months. The Company manages its liquidity risk by maintaining adequate working capital
and unused credit facilities.
F-73
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
At December 31, 2021, the Company’s working capital together with existing unused credit
facilities under its existing loan agreements will be sufficient to fulfill all of its contractual
obligations. Therefore, management believes that there is no liquidity risk resulting from
incapable of financing to fulfill the contractual obligations.
(e)
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and
interest rates, will affect the Company’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimizing the return.
(1)
Currency risk
The Company is exposed to currency risk on operating activities that are denominated
in a currency other than the respective functional currency of the Company, the USD.
The currencies used in these transactions are the NTD, CNY and JPY.
(2)
Interest rate risk
The Company is exposed to interest rate risk primarily related to its outstanding
borrowings. The Company’s borrowings carried floating interest rates. To manage the
interest rate risk, the Company periodically assesses the interest rates of bank loans
and maintains good relationships with financial institutions to obtain lower financing
costs. The Company also strengthens the management of working capital to reduce the
dependence on bank loans as well as the risk arising from fluctuation of interest rates.
Note 25. Capital management
Through clear understanding and managing of significant changes in external environment, related
industry characteristics, and corporate growth plan, the Company manages its capital structure
in a manner to ensure it has sufficient financial resources to fund its working capital needs,
capital expenditures, research and development activities, dividend payments and other business
requirements associated with its existing operations over the next 12 months.
There were no changes in the Company’s approach to capital management during the year ended
December 31, 2021. Neither the Company nor its subsidiaries are subject to externally imposed
capital managements.
Total liabilities
Less: cash and cash equivalents
Equity attributable to owners of Himax Technologies, Inc.
December 31,
2020
December 31,
2021
(in thousands)
$
$
$
424,619
184,938
239,681
480,176
731,212
336,024
395,188
869,724
F-74
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Note 26. Related-party Transactions
(a) Name and relationship
Name of related parties
Relationship
Viewsil Microelectronics (Kunshan)
Limited (Viewsil)
Viewsil Technology Limited (VST)
Ganzin Technology Corp.
Cheng Mei Materials Technology
Corporation (CMMT)(1)
Ningbo Cheng Mei Materials
Technology Co., Ltd. (1)
Prilit Optronics, Inc.
Associates
Associates
Associates
Other related parties
Other related parties
Other related parties
Note 1: It became related parties from acquisition date of CMVT, October 30, 2020.
(b) Significant transactions with related parties
(i) Sales and accounts receivable
2019
Year Ended December 31,
2020
(in thousands)
2021
Sales of goods
Other related parties
$
-
-
125
Accounts receivable
Other related parties
(ii) Purchase and accounts payable
December 31,
2020
2021
(in thousands)
$
-
71
2019
Year Ended December 31,
2020
(in thousands)
2021
Purchase of raw materials
CMMT
Other related parties
$
$
-
-
-
663
26
689
3,469
63
3,532
F-75
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Accounts payable
CMMT
Other related parties
December 31,
2020
2021
(in thousands)
$
$
1,530
38
1,568
233
32
265
(iii) The Company made an interest-free loan of $1,200 thousand and $1,200 thousand as of
December 31, 2020 and 2021, respectively, to VST for its short-term funding needs. The
loan is repayable on demand and the Company expects it will be repaid in full during 2022.
The Company may consider providing further future loans to VST.
(iv) Others
2019
Year Ended December 31
2020
(in thousands)
2021
Revenue from miscellaneous
service
Associates
Other related parties
Technical service fee
Viewsil
Miscellaneous fee
CMMT
Associates
$
$
$
$
$
-
-
-
-
-
-
63
3
66
1,800
1,400
1,400
-
-
-
84
-
84
791
4
795
Other receivable
Associates
Other related parties
Other payable
Viewsil
Other related parties
December 31,
2020
2021
(in thousands)
$
$
$
$
-
-
-
2,480
92
2,572
14
3
17
1,400
241
1,641
F-76
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(c)
Compensation of key management personnel
For the years ended December 31, 2020 and 2021, the aggregate cash compensation that
the Company paid to the independent directors was $135 thousand and $150 thousand,
respectively. The aggregate share-based compensation that the Company paid to the
independent directors was nil.
The compensation to key management personnel for the years ended December 31, 2019,
2020 and 2021 were as follows:
Short-term employee benefits
Post-employment benefits
Share-based compensation
2019
822
7
14
843
$
$
Note 27. Pledged assets
2021
Year ended December 31,
2020
(in thousands)
884
9
41
934
1,068
12
671
1,751
Pledged assets
Pledged to secure
Restricted cash and time deposit (1)
Restricted time deposits (1)
Restricted time deposits (1)
Land (2)
Building and improvements (2)
Short-term secured borrowings
For foundry capacities
For customs duties
Long-term unsecured borrowings
Long-term unsecured borrowings
December 31,
2020
December 31,
2021
(in thousands)
$
$
104,000
-
141
27,500
43,616
175,257
151,400
2,700
36
27,500
40,310
221,946
Note (1): The pledged assets are booked as restricted deposits and classified as current or noncurrent
by its liquidity.
Note (2): Guarantee and collateral for long-term unsecured borrowings.
Note 28. Commitments and Contingencies
(a)
(b)
As of December 31, 2020 and 2021, the Company had entered into several contracts for
the acquisition of equipment and computer software. Total contract prices amounted to
$4,893 thousand and $2,377 thousand, respectively. As of December 31, 2020 and 2021, the
remaining commitments were $3,902 thousand and $2,030 thousand, respectively.
The Company from time to time is subject to claims regarding the proprietary use of certain
technologies. Currently, management is not aware of any such claims that it believes could
have a material adverse effect on the Company’s financial position or results of operations.
F-77
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(c)
(d)
Since Himax Taiwan is not a listed company, it will depend on Himax Technologies,
Inc. to meet its equity financing requirements in the future. Any capital contribution by
Himax Technologies, Inc. to Himax Taiwan may require the approval of the relevant ROC
authorities. The Company may not be able to obtain any such approval in the future in
a timely manner, or at all. If Himax Taiwan is unable to receive the equity financing it
requires, its ability to grow and fund its operations may be materially and adversely affected.
The Company has entered into several wafer fabrication or assembly and testing service
arrangements or multi-year purchase agreements with suppliers. The Company may be
obligated to make payments for purchase orders entered into pursuant to these arrangements.
The Company’s purchase obligations also include agreements to purchase goods or services,
primarily inventory, that are enforceable and legally binding on us and that specify all
significant terms, including fixed or minimum quantities to be purchased, fixed or variable
price provisions, and the approximate timing of the transaction. Among all these purchase
agreements, the longest termination term shall expire in 2028. Purchase obligations exclude
agreements that are cancelable without penalty. Contractual obligations resulting from
above purchase orders and agreements with known amounts approximate $290 million and
$2,655 million as of December 31, 2020 and 2021, respectively. Of obligations under above
purchase orders and agreements, at December 31, 2021, $628 million is expected to be paid
in the next 12 months.
(e)
The Company is involved in various claims arising in the ordinary course of business. In
the opinion of management, the ultimate disposition of these matters will not have a material
adverse effect on the Company’s consolidated financial position, results of operations, or
liquidity. As of December 31, 2021, management is not aware of any pending litigation
against the Company.
Note 29. Segment, Product and Geographic Information
The Company has two operating segments: Driver IC and Non-driver Products. The Driver IC
segment generally is engaged in the design, research, development and sale of displays driver for
large-sized TFT-LCD panels, which are used in televisions and desktop monitors, and displays
driver for small and medium-sized TFT-LCD panels, which are used in mobile handsets and
consumer electronics products. The Non-driver segment primarily is engaged in the design,
research, manufacturing and sale of non-driver products, such as timing controllers, 3D Sensing
Solution, LCoS, CMOS Image Sensors and WLO.
F-78
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Segment revenues
Segment operating income (loss)
Non operating income, net
Consolidated loss before income taxes
Significant noncash items:
Share-based compensation
Depreciation and amortization
Segment revenues
Segment operating income (loss)
Non operating loss, net
Consolidated profits before income taxes
Significant noncash items:
Share-based compensation
Depreciation and amortization
$
$
$
$
$
$
$
$
Year Ended December 31, 2019
Non-driver
products
(in thousands)
Consolidated
Total
Driver IC
544,727
29,070
127,108
(47,377)
221
5,511
236
18,888
$
671,835
(18,307)
2,539
(15,768)
457
24,399
Year Ended December 31, 2020
Non-driver
products
(in thousands)
Consolidated
Total
Driver IC
756,522
98,687
130,760
(40,761)
481
5,959
282
17,637
$
887,282
57,926
(1,054)
56,872
763
23,596
Year Ended December 31, 2021
Non-driver
products
(in thousands)
Consolidated
Total
Driver IC
Segment revenues
Segment operating income (loss)
Non operating loss, net
Consolidated profits before income taxes
Significant noncash items:
Share-based compensation
Depreciation and amortization
$
$
1,361,442
551,943
185,655
(6,922)
1,547,097
545,021
(429)
544,592
$
$
$
424
5,598
276
15,744
700
21,342
F-79
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The following tables summarize information pertaining to the segment revenues from customers in
different geographic region (based on customer’s headquarter location):
For the year ended December 31, 2019
Non-driver
products
(in thousands)
Consolidated
Total
Driver IC
China
Taiwan
Other Asia Pacific (Philippines, Korea and Japan)
Europe and America
China
Taiwan
Other Asia Pacific (Philippines, Korea and Japan)
Europe and America
$
$
$
$
421,729
90,971
31,861
166
544,727
50,643
38,286
36,918
1,261
127,108
472,372
129,257
68,779
1,427
671,835
For the year ended December 31, 2020
Non-driver
products
(in thousands)
Consolidated
Total
Driver IC
643,527
88,001
24,964
30
756,522
63,475
35,179
31,231
875
130,760
707,002
123,180
56,195
905
887,282
For the year ended December 31, 2021
Non-driver
products
(in thousands)
Consolidated
Total
Driver IC
China
Taiwan
Other Asia Pacific (Philippines, Korea and Japan)
Europe and America
$
$
1,149,442
167,728
44,272
-
1,361,442
111,656
51,378
21,912
709
185,655
1,261,098
219,106
66,184
709
1,547,097
F-80
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The following tables summarize information pertaining to the segment revenues from major
product lines:
For the year ended December 31, 2019
Non-driver
products
(in thousands)
Consolidated
Total
Driver IC
Display drivers for large-sized applications
Display drivers for small and medium-sized
applications
Non-driver products
$
237,276
-
237,276
307,451
-
544,727
$
-
127,108
127,108
307,451
127,108
671,835
For the year ended December 31, 2020
Non-driver
products
(in thousands)
Consolidated
Total
Driver IC
Display drivers for large-sized applications
Display drivers for small and medium-sized
applications
Non-driver products
$
240,789
-
240,789
515,733
-
756,522
$
-
130,760
130,760
515,733
130,760
887,282
For the year ended December 31, 2021
Non-driver
products
(in thousands)
Consolidated
Total
Driver IC
Display drivers for large-sized applications
Display drivers for small and medium-sized
applications
Non-driver products
$
397,905
-
397,905
963,537
-
1,361,442
$
-
185,655
185,655
963,537
185,655
1,547,097
F-81
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The carrying values of the Company’s property, plant and equipment are located in the following
countries:
Taiwan
U.S.
China
Korea
Israel
Japan
December 31,
2020
December 31,
2021
(in thousannds)
$
$
128,941
1,413
878
524
167
151
132,074
130,951
1,163
662
343
65
52
133,236
Revenues from significant customers, those representing 10% or more of total revenue for the
respective periods, are summarized as follows:
Driver IC segment:
Customer A and its affiliates
Customer C
Non-driver products segment:
Customer A and its affiliates
Customer C
2019
Year Ended December 31,
2020
(in thousands)
2021
$
$
$
$
182,442
33,318
215,760
15,988
4,313
20,301
264,700
109,911
374,611
24,963
2,593
27,556
443,930
290,578
734,508
53,153
4,639
57,792
Accounts receivable from significant customers, those representing 10% or more of total accounts
receivable for the respective dates, is summarized as follows:
Customer A and its affiliates
Customer C
December 31,
2020
December 31,
2021
(in thousands)
$
$
88,353
33,171
121,524
160,107
49,806
209,913
F-82
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
The Company has recognized the following contract liabilities in relation to revenue from contracts
with customers:
Contract liabilities-current
Contract liabilities-non-current
December 31,
2020
December 31,
2021
(in thousands)
$
$
6,622
-
37,663
10,221
Revenue recognized in the current reporting period amounted to $6,146 thousand was related to
carried-forward contract liabilities for performance obligations not satisfied in prior year.
All of the service contracts are for periods of one year or less. As permitted under IFRS 15, the
transaction price allocated to these unsatisfied contracts is not disclosed. As of December 31, 2021,
the Company did not recognize an asset in relation to costs to fulfill a service contract.
Note 30. The Nature of Expenses
(a)
Depreciation of property, plant and equipment
Recognized in cost of revenues
Recognized in operating expenses
(b)
Amortization of intangible assets
Recognized in cost of revenues
Recognized in operating expenses
$
$
$
$
2019
Year Ended December 31,
2020
(in thousands)
2021
8,146
14,040
22,186
6,935
14,938
21,873
6,093
13,511
19,604
2019
Year Ended December 31,
2020
(in thousands)
2021
58
2,155
2,213
57
1,666
1,723
78
1,660
1,738
F-83
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
(c)
Employee benefits expense
2019
Year Ended December 31,
2020
(in thousands)
2021
Salary
Labor and health insurance
Pension
Others
Employee benefits expense summarized by
function
Recognized in cost of revenues
Recognized in operating expenses
$
$
80,617
5,668
5,246
3,586
95,117
88,149
5,805
4,536
4,867
103,357
126,976
7,232
5,993
6,608
146,809
$
$
5,597
89,520
95,117
5,579
97,778
103,357
7,856
138,953
146,809
F-84
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Note 31.Himax Technologies, Inc. (the Parent Company only)
As a holding company, dividends received from Himax Technologies, Inc.’s subsidiaries in Taiwan,
if any, will be subjected to withholding tax under ROC law as well as statutory and other legal
restrictions.
The condensed separate financial information of Himax Technologies, Inc. is presented as follows:
Condensed Statements of Financial Position
Cash
Financial asset at amortized cost
Other current assets
Financial asset at fair value through profit or loss
Investments in subsidiaries and affiliates
Total assets
Current liabilities
Current portion of long-term unsecured borrowings
Short-term secured borrowings
Debt borrowing from a subsidiary
Long-term unsecured borrowings
Total equity
Total liabilities and equity
December 31,
2020
December 31,
2021
(in thousands)
$
$
$
$
1,980
5,405
434
12,412
791,056
811,287
195
6,000
104,000
168,416
52,500
480,176
811,287
972
5,659
516
12,269
1,228,969
1,248,385
885
6,000
151,400
173,876
46,500
869,724
1,248,385
Himax Technologies, Inc. had no guarantees as of December 31, 2020 and 2021.
F-85
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Condensed Statements of Profit or Loss
2019
Year Ended December 31,
2020
(in thousands)
2021
Revenues
Costs and expenses
Operating loss
Interest income
Changes in fair value of financial assets at fair value
through profit or loss
Foreign currency exchange gains (losses), net
Finance costs
Share of profits (loss) of subsidiaries and affiliates
Profit (loss) before income taxes
Income tax expense
Profit (loss) for the year
$
-
1,206
(1,206)
162
-
704
(704)
126
-
1,037
(1,037)
148
3,755
(69)
(4,165)
(12,091)
(13,614)
-
(13,614)
$
427
356
(3,629)
50,558
47,134
-
47,134
(143)
115
(1,320)
439,133
436,896
-
436,896
Condensed Statements of Other Comprehensive Income
2019
Year Ended December 31,
2020
(in thousands)
2021
Profit (loss) for the year
Other comprehensive income:
Items that will not be reclassified to
profit or loss:
Remeasurements of defined benefit
pension plans
Unrealized gain (loss) on financial
assets at fair value through other
comprehensive income
Income tax related to items that will not
be reclassified subsequently
Items that may be reclassified
subsequently to profit or loss:
Foreign operations - foreign currency
translation differences
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
$
(13,614)
47,134
436,896
197
(213)
160
(30)
67
(179)
(25)
38
(27)
(545)
512
(72)
(403)
404
(118)
$
(14,017)
47,538
436,778
F-86
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2019, 2020 and 2021
Condensed Statements of Cash Flows
2019
Year Ended December 31,
2020
(in thousands)
2021
Cash flows from operating activities:
Profit (loss) for the year
Adjustments for:
Changes in fair value of financial assets at
fair value through profit or loss
Interest income
Finance costs
Share of losses (profits) of subsidiaries and
affiliates
Unrealized foreign currency exchange losses
(gains)
Changes in:
Other current assets
Other current liabilities
Cash generated from operating activities
Interest received
Interest paid
Net cash used in operating activities
Cash flows from investing activities:
Acquisitions of financial asset at amortized cost
Acquisitions of equity method investment
Cash received from loan made to related party
Net cash provided by (used in) investing
activities
Cash flows from financing activities:
Payments of cash dividends
Proceeds from long-term unsecured borrowings
Repayments of long-term unsecured borrowings
Proceeds from short-term secured borrowings
Repayments of short-term secured borrowings
Proceeds from issue of RSUs from a subsidiary
Proceeds from exercise of employee stock
options
Proceeds from debt from a subsidiary
Repayments of debt from a subsidiary
Net cash provided by (used in) financing
activities
Net increase (decrease) in cash
Cash at beginning of year
Cash at end of year
$
(13,614)
47,134
436,896
(3,755)
(162)
4,165
(427)
(126)
3,629
143
(148)
1,320
12,091
(50,558)
(439,133)
69
(1,206)
(356)
(704)
(115)
(1,037)
320
(58)
(944)
174
(844)
(1,614)
(267)
(71)
(1,042)
130
(730)
(1,642)
(72)
750
(359)
139
(858)
(1,078)
(170)
-
2,780
(129)
(758)
-
(139)
-
-
2,610
(887)
(139)
-
-
-
158,000
(158,000)
311
-
60,000
(1,500)
278,000
(338,000)
-
(47,404)
-
(6,000)
611,600
(564,200)
31
-
150,430
(151,548)
3,707
151,730
(150,430)
1,182
159,205
(154,205)
(807)
189
813
1,002
$
3,507
978
1,002
1,980
209
(1,008)
1,980
972
Corporate Information
Board of Directors
Chairman
Dr. Biing-Seng Wu
Directors
Jordan Wu
Dr.Yan-Kuin Su
Yuan-Chuan Horng
Dr. Hsiung-Ku Chen
Senior Management
Jordan Wu
Chief Executive Officer
Jessica Pan
Chief Financial Officer
Norman Hung
Executive VP, Sales and Marketing
Eric Li
Chief IR / PR officer and Spokesperson
Corporate Headquarter
Himax Techologies, Inc.
No.26, Zilian Road, Xinshi Dist., Taninan City 74148,
Taiwan
Tel:+886-6-505-0880
Fax:+886-6-507-0000
Investor Information
Shareholder Services for American Depositary
Shares (ADSs)
JP Morgan Chase Bank, N. A.
383 Madison Avenue, Floor11 New York,
NY10179
Stock Listings
The Company's common stock trade on the
NASDAQ National Market under the symbol
"HIMX"
Independent Auditors
KPMG Certified Public Accountants
Investor Contacts
Eric Li / Karen Tian
Investor Relations
Himax Technologies,lnc.
10F, No. 1, Xiang Yang Road, Taipei 10046, Taiwan
hx_ir@himax.com.tw
Mark Schwalenberg
Investor Relations-US Representative
MZ North America
Tel:+1-312-261-6430
Fax:HIMX@mzgroup.us