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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
OR
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
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, ZILIAN ROAD
XINSHI DISTRICT, TAINAN CITY 744092
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, Zilian Road
Xinshi District, Tainan City 744092
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
Trading Symbol
Name of each exchange on which registered
Ordinary Shares, par value $0.3 per ordinary share
HIMX
The NASDAQ Global Select Market Inc.*
* Not for trading, but only in connection with the listing on the NASDAQ Global Select Market, Inc. of American Depositary Shares representing such Ordinary Shares.
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. 349,826,828 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
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
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
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). ☒ 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
☐
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.☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).☐
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 ☒
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
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TABLE OF CONTENTS
Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
1
CERTAIN CONVENTIONS
1
PART I
4
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
4
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
4
ITEM 3. KEY INFORMATION
4
3.A. [Reserved]
4
3.B. Capitalization and Indebtedness
4
3.C. Reason for the Offer and Use of Proceeds
4
3.D. Risk Factors
4
ITEM 4. INFORMATION ON THE COMPANY
20
4.A. History and Development of the Company
20
4.B. Business Overview
21
4.C. Organizational Structure
53
4.D. Property, Plants and Equipment
54
ITEM 4A. UNRESOLVED STAFF COMMENTS
54
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
54
5.A. Operating Results
54
5.B. Liquidity and Capital Resources
66
5.C. Research and Development
68
5.D. Trend Information
68
5.E. Critical Accounting Estimates
71
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
72
6.A. Directors and Senior Management
72
6.B. Compensation
73
6.C. Board Practices
74
6.D. Employees
76
6.E. Share Ownership
79
6.F. Disclosure of a registrant’s action to recover erroneously awarded compensation
79
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
79
7.A. Major Shareholders
79
7.B. Related Party Transactions
80
7.C. Interests of Experts and Counsel
80
ITEM 8. FINANCIAL INFORMATION
81
8.A. Consolidated Statements and Other Financial Information
81
8.B. Significant Changes
82
ITEM 9. THE OFFER AND LISTING
82
9.A. Offer and Listing Details
82
9.B. Plan of Distribution
82
9.C. Markets
82
9.D. Selling Shareholders
82
9.E. Dilution
82
9.F. Expenses of the Issue
83
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ITEM 10. ADDITIONAL INFORMATION
83
10.A. Share Capital
83
10.B. Memorandum and Articles of Association
83
10.C. Material Contracts
83
10.D. Exchange Controls
83
10.E. Taxation
84
10.F. Dividends and Paying Agents
86
10.G. Statement by Experts
87
10.H. Documents on Display
87
10.I. Subsidiary Information
87
10.J. Annual Report to Security Holders
87
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
87
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
87
12.A. Debt Securities
87
12.B. Warrants and Rights
87
12.C. Other Securities
87
12.D. American Depositary Shares
88
PART II
89
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
89
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
89
ITEM 15. CONTROLS AND PROCEDURES
89
ITEM 16. [RESERVED]
92
16.A. Audit Committee Financial Expert
92
16.B. Code of Ethics
92
16.C. Principal Accountant Fees and Services
92
16.D. Exemptions from the Listing Standards for Audit Committees
92
16.E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
93
16.F. Change in Registrant’s Certifying Accountant
93
16.G. Corporate Governance
93
16.H. Mine Safety Disclosure
93
16.I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
94
16.J. Insider Trading Policies
94
16.K. Cybersecurity
94
PART III
95
ITEM 17. FINANCIAL STATEMENTS
95
ITEM 18. FINANCIAL STATEMENTS
95
ITEM 19. EXHIBITS
96
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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$32.79, 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 31, 2024. 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 28, 2025, the noon buying rate was
$1.00 to NT$33.12.
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;
“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;
“CPO” refers to Co-Packaged Optics (CPO), which integrates optical and electrical components in one package, enhancing speed, efficiency, and latency for AI, HPC,
and data centers by reducing signal loss and power consumption;
“endpoint AI” is the practice of running applications and storing data on devices located at the edge of a network. The aim is to reduce latency and network bandwidth by
performing processing and storage functions locally on the device. This approach can improve the performance, reliability, and security of applications and data.
“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;
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“IC” refers to integrated circuit;
“IFRS” refers to IFRS Accounting 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;
“Panel Manufacturer” refers to panel manufacturers of either TFT-LCD or OLED panels, as well as those that produce both types collectively;
“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 $0.3 per share;
“SLiM” refers to Structured Light Imaging Module, which is Himax homegrown structured light-based 3D sensing total solution;
“small and medium-sized panels” refers to panels that are typically around ten inches or less in diagonal measurement. All sizes of smartphone, automotive and tablet
displays are identified as small and medium;
“Structured Light” refers to a 3D infrared structure light projector, which is composed of a laser light source, a collimated lens and a diffractive optics element (DOE);
“TDDI” refers to touch display driver integrated circuit for advanced in cell touch display;
“TFT-LCD” refers to thin film transistor liquid crystal display that may adopt a-Si, IGZO or LTPS technologies;
“ToF” refers to a time-of-flight (ToF) 3D camera works by illuminating the scene with a modulated light source, and observing the reflected light;
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“WiseEyeTM Ultralow power AI sensing” refers to Company’s WiseEyeTM AI image sensing solution which includes Himax’s proprietary computer vision AI processor,
ultralow power Always-On CMOS image sensor and CNN-based AI algorithms – all equipped with ultralow power design;
“VGA” refers to Video Graphics Array;
“VR” refers to the virtual reality;
“wafer level optics” or “WLO” are optical products manufactured using semiconductor process on wafers;
“we”, “us”, “our company”, “our”, “the Company” and “Himax” refers to Himax Technologies, Inc., its predecessor entities and subsidiaries;
“WiseEye AI Processor” refers to a Himax AI processor designed with power-efficient and multi-level power schemes for real-time motion detection, object detection
and image processing, providing AI developers with possibilities of high performance and ultralow power. WiseEye1 is the first generation of WiseEye AI processor,
where WiseEye2 is the second generation one.
All references to “New Taiwan dollars”, “NT dollars” and “NT$” 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 and OLED 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 2023 and 2024, 85.1% and 82.9% of our revenues, respectively, were attributable to display drivers that were incorporated into TFT-LCD and OLED panels. We
expect to continue to substantially depend on sales to the TFT-LCD and OLED panel industry for the foreseeable future. The TFT-LCD and OLED panel industry is intensely
competitive and is vulnerable to cyclical market conditions. The average selling prices of TFT-LCD and OLED panels generally decline with time as a result of, among other
factors, drop in demand for end products that incorporate TFT LCD and OLED 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 and OLED 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
Timing controller (TCON), LCoS microdisplay, CMOS image sensor, wafer level optics (“WLO”), 3D sensing and WiseEye ultralow power AI sensing, etc.
We offer TCON for large sized TV, notebook and monitor displays, automotive display and OLED panels. For our LCoS technology, at present our main focus areas for
LCoS business are AR goggle devices, projectors and head-up-displays (HUD) for automotive. For CMOS image sensor business, in addition to the current shipment for
human vision applications, including notebook, multimedia and smart home cameras, we also extend the sensor business in machine vision application for the broad AI
market. Our AoS CMOS image sensor is designed with proprietary architectures, readout, and pixel, where the corresponding algorithms are integrated to contribute the
always-on feature that consumes only several micro watts to enable people detection, eyeball tracking and many other features. On 3D sensing business, we focus on
Structured Light and ToF 3D module solution and 3D decoder ASIC key component, aiming at emerging markets such as facial recognition-based e-payment, business access
control, biomedical inspection device, 3D naked-eye display, eye-tracking, and hand gesture control applications. Himax’s WiseEye ultralow power AI sensing business
delivers total solutions, discrete key components, and modules to meet diverse application needs. Our WiseEye AI solution was adopted by Dell in 2022 and expanded to
other leading notebook vendors, with some projects slated for production in 2025. Beyond notebooks, we partnered with DESMAN to introduce the world’s first smart door
lock with 24/7 sentry monitoring and real-time event recording, which entered production in 2024. Additional smart door lock projects are underway, with more solutions
expected in late 2025. To further expand market reach, Himax offers ultralow power, compact WiseEye Modules with no-code/low-code AI capabilities, simplifying AI
integration. Leveraging WiseEye’s broad solution offerings, we continue expanding beyond the driver IC market into applications such as smart door locks, battery-powered
surveillance cameras, access control, and smart home devices. In June 2024, Himax, in partnership with FOCI Fiber Optic Communications, Inc. (FOCI), a world leader in
silicon photonics connector, unveiled an industry-leading co-packaged optics (CPO) technology, leveraging Himax state-of-the-art WLO technology. This innovation
integrates silicon photonic chips and optical connectors within MCM, replacing traditional metal wire transmission with high-speed optical communication. The technology
significantly enhances bandwidth, boosts data transmission rates, reduces signal loss and latency, lowers power consumption, and significantly minimizes the size and cost of
MCM. In working closely with FOCI, we are making significant strides through a solid partnership with leading AI semiconductor companies and foundry, with small-scale
production of the first-generation CPO solution already underway in end of 2024.
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.
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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 2024, Customer A and its affiliates accounted for 26.4% of our revenues. Our two largest customers together accounted for over 34% of our revenues in 2024. 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, 2024, our accounts receivable from Customer
A and its affiliates were $69.0 million, which represented approximately 29.1% 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 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.
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 and OLED panels. Some panel 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 geopolitical tensions relating to invasion of Ukraine by Russia; (2) the cyclical nature of the TFT-LCD and OLED industry in average selling price
fluctuations, as well as its downstream industries; (3) the speed at which Panel Manufacturers expand production capacity; (4) brand companies’ continued needs for original
equipment manufacturing services provided by 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
and OLED panels exporting countries against the U.S. dollar.
We depend on sales of display drivers used in TFT-LCD and OLED 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 2023 and 2024, 85.1% and 82.9% of our revenues, respectively, were 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.
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We face risks related to public health epidemics, including the novel coronavirus outbreaks.
Our financial condition and results of operations may be adversely affected if a public health epidemic, such as the global Covid-19 pandemic, interferes with our ability,
or that of our employees, suppliers, customers and other business partners to fulfill our and their respective responsibilities and obligations related to the conduct of our
business. The outbreak of Covid-19 has caused significant disruption not only to the financial markets but also to global 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.
Extra export licenses may be needed for certain product or technology for certain customers. These licenses are regulated by Export Administration Regulations (EAR)
which are 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, 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. 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 Panel Manufacturers
may limit our ability to expand our customer base and our growth prospects.
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Certain of our competitors have established or may establish strategic or strong relationships with Panel Manufacturers that are also our existing or potential customers.
Marketing our display drivers to such Panel Manufacturers that have established relationships with our competitors may be difficult. Moreover, several 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 OLED offers brighter color, near-perfect-black, less power consumption and is thinner and lighter than TFT-LCD, it gradually penetrates the mid to high-end TFT-
LCD market, especially the smartphone market. OLED display and related DDICs have been dominated by Korean companies. The marketplace is increasing utilization of
the OLED display for smartphone and other electronics areas, including notebook, tablet, TV and automotive due to expanded OLED capacity. We continue to gear up for the
OLED driver IC development in partnership with major Chinese, Japan and Korean panel makers. Himax’s OLED IC offering includes driver ICs, TCON and touch
controller ICs. For tablet, we are seeing adoptions on the rise for premium models that adopt advanced OLED display, of which Himax offers both DDIC and TCON and has
commenced production to certain leading brands. For automotive OLED display, we continue to win project awards for our flexible OLED driver IC, TCON, and touch
controller IC with both conventional car makers and EV/NEV vendors. Himax’s advanced OLED on-cell touch controllers are setting new industry standards with an
impressive touch signal-to-noise ratio of over 45 dB, ensuring reliable performance under challenging conditions such as glove-wearing or wet-finger operations. The OLED
on-cell touch controller for automotive applications entered production in the second quarter of 2024 and adoption is expanding across the board, with additional projects
starting mass production in 2025. Finally, we are making good progress with leading panel houses for the development of OLED display drivers for smartphone and notebook
applications. The growth momentum in OLED solution is promising, however, we could not assure you of the success of our OLED driver IC as we are unable to penetrate
into the mass volume existing Japan, Korean and China supplier chain and/or find new OLED panel manufactures to design-wins our solutions into. OLED process maturity
for the new manufactures and the possible specification change due to the immaturity of the OLED will also be a hurdle to our OLED driver share gain and success.
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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 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 and OLED 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.
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We generally do not enter long - term agreements with our foundry partners that guarantee production capacity, prices, lead times, or delivery schedules. However, 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 potential foundry capacity shortage worldwide, we had entered into strategic agreements with our foundry partners in order to secure
capacity to fulfill our business needs. 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 competitive prices could disrupt our shipments, harm
customer relationships and reduce 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. 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 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. In case of capacity shortage of third-party tape, assembly and
testing houses, we may need to enter contractual agreements with such suppliers for securing capacity. We may also be subject to contractual penalties if we are unable to
purchase the committed volume from our partners. In addition, since these strategic agreements with our partners typically require us to make prepayments or refundable
deposits to such partners, our cash flow, liquidity and financial condition could be adversely affected.
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.
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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 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 such as high inventory carrying
costs, increased product obsolescence, erosion of the products’ market value as well as penalties incurred from unfulfillment of committed orders from capacity agreements
with the Company’s foundries and backend suppliers. If we overestimate demand for our products or if purchase orders are cancelled or shipments delayed, we may incur
charges from agreements entered with foundries and backend suppliers for securing capacity, 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 inventories.
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.
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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.
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, subject to real ever-changing circumstances over the periods, 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 purchase orders with us in the future. We also
cannot assure you that the volume of our customers’ purchase 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 unissued, 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 March 31, 2025, Jordan Wu and Dr. Biing-Seng Wu (who are brothers) beneficially owned approximately 2.1% and 22.0% 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.
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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) desist and 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 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 to undertake the contractual
obligations, product liabilities and tort liabilities in applicable law jurisdictions, and 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.
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System security risks, data protection breaches or unexpected system outages 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 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 March 31, 2025, we are not 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, excess inventory destocking amidst low market demand, 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
Climate change and natural disasters could adversely affect our business.
There is increasing concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the
atmosphere has, and will continue to, cause significant changes in weather patterns around the globe and an increase in the frequency and severity of natural disasters.
Changes in weather patterns and an increased frequency, intensity and duration of extreme weather conditions could, among other things, impair our production capabilities,
disrupt the operation of our supply chain, and impact our customers and their demand for our services. There are inherent climate-related risks regardless of where we
conduct our business. Climate-change-related weather events could negatively impact any of our locations or the locations of our customers, and may cause us to experience
project delays, financial losses and/or additional costs to resume operations, including increased insurance costs or loss of coverage, legal liability and reputational losses.
Climate change concerns have also led to international legislative and regulatory initiatives directed at limiting carbon dioxide and other greenhouse gas emissions.
Proposed and existing efforts to address climate change by reducing greenhouse gas emissions could directly or indirectly affect our costs of compliance, including costs
associated with changes to manufacturing processes or the procurement of raw materials used in manufacturing processes, increased capital expenditures to improve facilities
and equipment, and higher compliance and energy costs to reduce emissions, as well as increased indirect costs resulting from our customers, suppliers or both incurring
additional compliance costs that are passed on to us, which could harm our business and financial results by increasing our expenses or requiring us to alter our operations
and product design activities.
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In addition, climate change could cause certain natural disasters to occur more frequently or with greater intensity. 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
disruptions of operation occur at our customers’ facilities and our customers may be required to shut down temporarily or to substantially reduce the operations of their fabs,
these events 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.
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 2023 and 2024, approximately 76.2% and 73.4% 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.
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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 2024, 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 2024, approximately 62% of our operating expenses were denominated in NT dollars, with a small percentage denominated in
Japanese Yen, Korean Won 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 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 we are exposed primarily to taxes levied by the ROC
government. Any unfavorable changes of tax laws and regulations in this jurisdiction could increase our effective tax rate and have an adverse effect on our operating results.
See “Item 5.A. Operating and Financial Reviews and Prospects -Operating Results-Tax Credits” for further discussion of significant tax regulation changes.
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)
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
(ii) 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 and we
expect that CFC would have no material impact to affect our operating profit.
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.
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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 $4.8 to a high of $9.8 on the NASDAQ Global Select Market in 2024.
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 and OLED panel market; (5) changes in the economic performance or market valuations of other display 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, the worldwide financial crisis, disruptions in business and manufacture due to sluggish demand, and 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 March 31, 2025, we had
349,826,828 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.
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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.
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.
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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, 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., 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.
On October 25, 2022, we disposed of 100% of our shareholdings in Emza to a third party.
From time to time, we have also made minority investments in various companies for strategic purposes in the ordinary course of business.
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Our principal executive offices are located at No. 26, Zilian Road, Xinshi District, Tainan City 744092, 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, Chengdu, Fuzhou, Nanjing, Chongqing, Xi’an and Xiamen, China; Tokyo, Japan; Asan-si and Bundang-gu, South Korea; Munich, Germany and
Irvine and San Jose, California, Minneapolis, Minnesota and Detroit, Michigan, 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 leading global fabless semiconductor solution provider dedicated to display imaging processing technologies. Our display driver ICs and timing controllers
have been adopted at scale across multiple industries worldwide including TVs, PC monitors, laptops, mobile phones, tablets, automotive, ePaper devices, industrial displays,
among others. As the global market share leader in automotive display technology, we offer innovative and comprehensive automotive IC solutions, including traditional
driver ICs, advanced in-cell Touch and Display Driver Integration (TDDI), local dimming timing controllers (Local Dimming TCON), Large Touch and Display Driver
Integration (LTDI) for LCD displays and DDIC, TCON and on-cell touch controller for OLED displays. Besides, Himax designs and provides touch controllers, OLED ICs,
LED drivers, EPD ICs, power management ICs, and CMOS image sensors for diverse display application coverage. We are also a pioneer in tinyML AI and optical
technology related fields. Our industry-leading WiseEye Ultralow Power AI Sensing technology is composed of Himax proprietary ultralow power AI processor, always-on
CMOS image sensor, and CNN-based AI algorithm, and has been widely adopted in consumer electronics and AIoT related applications. Himax optics technologies, such as
wafer level optics (WLO), LCoS microdisplays and 3D sensing solutions, are critical for facilitating emerging AR/VR/metaverse technologies.
Industry Background
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 OLED and Electronic
Paper (e-paper) Displays. OLED display is getting more and more popular in recent years, starting from high-end smartphone and TV applications towards tablet,
notebook and automotive, while e-paper display mimics traditional paper sheet and holds static text and images indefinitely without electricity. Detailed display
driver IC specification for LCD, OLED 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. In addition, TDDI IC
integrates both display driver and in-cell touch functions and is usually adopted by small and medium sized display applications, whereas Timing Controller feature
is also embedded in TDDI.
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●
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 TFT-LCD, OLED and e-paper 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. For TFT LCD panels, the touch controller may be integrated with display drivers as an in - cell TDDI solution, commonly
adopted in devices including smartphones, tablets, automotive displays, and notebooks. In contrast, OLED panels typically adopt a discrete touch controller to
realize touch functionality.
●
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 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.
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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.
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.
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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
●
WiseEye Ultralow Power AI 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.
●
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.
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●
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 since 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 8K TV. On gaming monitor, we have high frame rate and high driving driver to meet various resolutions needs and frame rates such as UHD
240Hz, QHD 360Hz, FHD 480Hz, 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 requirements.
We also made tremendous progress in TCON product lines in 2022. The UHD TV penetration rate is larger than 65% in 2022, and we developed competitive UHD TV
TCON to seize this market. Himax UHD TV TCON has mass production at all major China LCD makers. We also provide gaming TCON for the new QHD 360Hz and UHD
240Hz gaming monitor and notebook. For high-end gaming requirement, we have developed eDP 8.1G TCON to increase bandwidth.
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The table below sets forth the features of our products for large-sized applications:
Product
Features
TFT-LCD Source Drivers
● 384 to 1920 output channels
● 6-bit (262K colors), 8-bit (16 million colors) or 10-bit (1 billion colors)
● one gamma-type driver
● two gamma-type drivers to improve display quality
● three gamma-type drivers (RGB independent gamma curve to enhance color image)
● 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
● low power consumption and low EMI
● support COF and COG package types
● support TTL, RSDS, mini-LVDS (up to 460MHz), cascade modulated driver interface, or CMDI, point-to-point high speed
interface (up to 4Gbps for 8K 120Hz) and customized interface technologies
● support dual gate and triple gate panel designs
TFT-LCD Gate Drivers
● 192 to 1600 output channels
● output driving voltage ranging from 10 up to 40v
● 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
Timing Controllers
● 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
● embedded overdrive function to improve response time
● support CABC and local dimming to save power and color engine to enhance color and sharpness
● support LVDS, eDP, MIPI and V-by-one input interface technologies
● support dual-gate, triple-gate, GOA (gate on array) and RGBW panel designs
● support amorphous silicon, IGZO and LTPS panel
● ASIC OLED Timing Controller
● ASIC uLED Timing Controller
Programmable Gamma OP
● 8 to 16 channel gamma buffer outputs
● channel VCOM buffer output
● Internal non-volatile memory
● 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
● Peak current on VCOM channel: 400mA
● Programmable VCOM limit
● 12C speed up to 1MHz
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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 OLED. Our automotive TDDI is broadly adopted by named Tier 1s and auto makers in their new launches
of vehicles. Himax also have reached over 10 million units shipment accumulated in the third quarter of 2022, a milestone that demonstrates a robust growing trajectory
moving forward. Himax has cumulatively shipped over 75 million units of automotive TDDI, with a continued adoption of TDDI technology among major customers across
all continents. We continue to reinforce our market leadership, which currently stands at well over 50%. With nearly 500 design-in projects secured and a continuous influx of
new pipeline and design-wins across the board, of which only 30% already in mass production, Himax expects to sustain this decent growth in the years ahead. Regarding
LTDI, a technology particularly suited for smart cabins that feature large-sized display, panoramic view, free-form, curved design and in-cell touch functions, we began LTDI
mass production in the third quarter of 2023, and we have since received a proliferation of inquiries. Our unwavering commitment to technological innovation sets us apart
from our competitors, positioning us as leaders in the development of next-generation automotive display solutions. In addition, on TCON ICs for automotives, we also have
embedded local dimming feature in TCON for TFT-LCD to support higher contrast instrument panels needed for drivers to read the content of the meter quickly.
Additionally, several key panel makers have sought cooperation with Himax to develop OLED solutions for automotive applications. We have developed OLED ASICs,
including traditional DDICs and TCONs, for some of these key panel makers, with some already in mass production since 2021. Furthermore, our meticulously engineered
OLED on-cell touch controllers set a new standard, boasting an industry-leading touch signal-to-noise ratio of over 45 dB, greatly enhancing sensitivity. This allows
automotive displays to maintain proper functionality under challenging conditions, such as glove-wearing and wet finger operations. OLED touch controller IC for
automotive has entered production in the third quarter of 2024.
The following table summarizes the features of our products used in automotive display applications:
Product
Features
TFT-LCD Source Drivers
●
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
TFT-LCD Gate Drivers
●
100 to 1,600 output channels
●
output driving voltage ranging up to 40V
●
support COG and COF package type
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Product
Features
TFT-LCD Integrated Drivers
●
highly integrated chip embedded with source driver, timing controller and power circuit
●
support RGB, LVDS input interfaces
●
support Single Gate, Dual Gate, Triple Gate panel structure
●
support 2MUX, 3MUX, 4MUX, 6MUX LTPS panel structure
●
support GIP panel (a-TFT GIP or LTPS GIP or IGZO GIP) and non-GIP panel
●
support resolution up to 7680 RGBx810 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 Telltale OSD function
●
support COG and COF package type
Timing Controllers
●
support LVDS, eDP 1.2 input interface
●
support 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
●
support various resolutions up to 4K2K(ICD) or 8K1K(CID)
●
support Local Dimming Function
●
support Dual Cell Panel Structure Function
●
support Fail Detect Function, including CRC Function
●
support Over Driver & De-mura function
●
support Telltale OSD function
TFT-LCD TDDI
●
highly integrated chip embedded with source driver, timing controller, touch controller and power circuit
●
support LVDS input interfaces
●
support Single Gate, Dual Gate, Triple Gate a-TFT panel structure
●
support 2MUX, 3MUX, 4MUX and 6MUX LTPS panel structure
●
support GIP panel (a-TFT GIP or LTPS GIP) and non-GIP panel
●
support resolution up to 7680RBx900 with 4 chips cascaded
●
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
TFT-LCD LTDI
●
Large-sized Touch and Display Integration solution
●
support point-to-point iSP input interface
●
support resolution up to 12K1K with multi-chip cascaded
●
support COF and COG package types
OLED Drivers
●
High-voltage process
●
High channel and high speed interface
●
Embedded P-gamma OP
●
IGZO/OLED Solution
●
Low power solution
●
Support up to 4K2K/8K4K resolution
●
Customized ASICs
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Product
Features
OLED TCONs
●
support high resolution up to 7.6Kx1K at 120Hz w/ VRR
●
support eDP v1.4 1/2/4Lane 8.1Gbps, w/ DSC1.2a
●
support 2-chip cascade
●
passed AEC-Q100 Grade 2
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 OLED.
Smartphones and tablet have gained greater popularity among small and medium-sized display drivers and enjoyed high growth in recent years. This has also contributed
to increased demand for larger size and higher resolution smartphone displays. 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. In-cell TDDI, featuring thinner display, slimmer border, and better visual quality, has been getting popular, so 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 shipments in the first half of 2018 with accelerating volume starting in the second half of 2018 into 2019 and beyond. Starting in 2020, 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. We are
collaborating closely with leading panel makers across China, Japan and Korea for OLED product development in smartphone, tablet, automotive and other consumer
electronics. In the first quarter of 2022, the Company’s flexible OLED driver and TCON for automotive display successfully ramped up for a customer’s flagship EV model,
while in the second quarter of 2022, the Company commenced production of OLED TCON and Driver IC chipsets for tablet applications for a leading OEM for their 11-inch
and 12.6-inch flagship models. Concurrently, the number of awarded projects in OLED for automotive and tables with worldwide named vendors is increasing with several
new projects that are on track to enter mass production later in 2025. Himax continues its R&D efforts to upgrade new TCON and OLED DDIC solutions for tablet PC
applications. We believe OLED solutions, including driver ICs and TCONs, will become one of the major growth engines for the Company moving forward.
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 into 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 enabled one leading tablet OEM to successfully launch a 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 which has gained several design-wins 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 contributed 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 the 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 with a leading end
customer in 2021 and expanded collaborations with more brands into more models moving forward.
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 picked up significantly,
fueled mainly by remote work and online learning demand due to the pandemic. TDDI for tablet application continues to broaden its market.
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The following table summarizes the features of our products for smartphone and tablet applications:
Product
Features
TFT-LCD TDDI for smartphone
and tablet
●
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 smartphone single chip for HD+ (720RGB x Y pixels) or FHD+ (1080RGB x Y pixels)
●
Mainstream tablet PC resolutions for WXGA (800RGB x Y) with single chip or WUXGA (1200RGB x Y), WQXGA
(1600RGB x Y) with 2-chip cascaded
●
Conventional 60Hz and up to 144Hz new high frame rate solutions
●
Support MIPI interface and VESA DSC
●
Support up to 16 million colors
●
Support active stylus for tablet PC
●
COG and COF solutions for super slim bottom border
TFT-LCD Tablet Display Drivers
●
highly integrated single chip embedded with the source driver, power circuit, and timing controller
●
suitable for a wide range of resolutions from WSVGA (600 x 1024), WXGA (800 x 1280), WUXGA (1200x1920) to
WQXGA (1600 x 2560)
●
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
●
supporting TDDI with active stylus
●
COG and COF solutions for super slim bezel
OLED Solutions
●
Smartphone single chip with sub-pixel rendering, Demura-IPs for FHD+ resolution with up to 144Hz high frame rate
●
Support MIPI interface and VESA DSC with 1 billion colors (10bit grayscale)
●
TCON and Source driver IC for tablet with high resolution of 3.2Kx2K 144Hz with VRR
●
customized ASICs
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.
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The following table summarizes the features of our Electronic Paper Display (EPD) solutions:
Product
Features
Electronic Paper Display (EPD)
Source Drivers
●
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 high-speed interface and customized interface
technologies
●
support COF and COG package types
Electronic Paper Display (EPD)
Gate Drivers
●
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
Electronic Paper Display (EPD)
Timing Controller
●
Support MIPI 4 lane input interface
●
Support TTL, mini-LVDS output interface
●
Support maximum resolution 3840x2160
●
Use USB/SPI/I2C control interface
●
Support LPDDR2 memory
Electronic Shelf Label (ESL)
Integrated Drivers
●
Highly integrated chip embedded with source driver, timing controller and power circuit
●
Source driver output driving voltage ranging up to 30V
●
Support COG package types
Touch Controller ICs
We offer touch controller solutions for capacitive touch panels. Our touch controller solutions are suitable for touch panels in electronic devices with TFT-LCD or OLED
displays, such as smartphones, tablets, automotive displays, and notebooks. We commenced production of capacitive touch controller ICs for on-cell TFT-LCD displays with
smartphone brand customer since 2011. Subsequently, we expanded our customer base to include more well-known smartphone and tablet brands. In 2015, we developed a
series of TDDI products for Tier 1 and panel makers and commenced mass production for smartphone brands. Additionally, we began mass production of our TDDI for tablet
and automotive displays in 2019. TDDI has gradually replaced on-cell touch controllers and discrete driver solutions, offering thinner displays, slimmer borders, and better
visual quality, thus becoming the mainstream technology. We continue to expand our TDDI solutions to replace discrete DDICs and touch controller ICs in the TFT-LCD
display market.
Since 2023, aligning with the market trend of OLED display proliferation, we embarked on developing OLED on-cell touch controllers tailored for tablets, notebooks,
and automotive OLED displays. Our OLED on-cell capacitive touch controller boasts several innovations and merits. It is meticulously engineered, featuring an industry-
leading touch signal-to-noise ratio exceeding 45 dB, making it the ideal solution to meet the demands of flexible OLED panels commonly required for automotive
applications. It also offers improved sensitivity to challenging user conditions such as glove-wearing and wet finger operations, ensuring exceptional performance with
display quality unaffected by touch-display interactions. Moreover, our touch controller not only supports multi-finger capacitive touch and is compatible with various types
of OLED panels, but it can also cascade multiple chips to support displays larger than 20 inches. OLED on-cell touch controller IC for automotive has entered production in
the third quarter of 2024 with several new projects underway with customers. For consumer and IT applications, it boasts a 240Hz high touch report rate at 5-finger operating
conditions, and its embedded micro-controller single-chip solution reduces costs for flexible products. To support the state-of-the-art active stylus feature of tablet and
notebook touchscreens, our OLED touch controller integrates multiple active stylus protocols, such as USI, MPP, LPP, and HPP.
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The following table summarizes the features of our touch controller products:
Product
Features
OLED Capacitive Touch Controller
●
multi-finger (up to 10 fingers) capacitive touch for on-cell OLED
●
high touch SNR > 45dB, effectively reducing display interference and offering better display quality
●
high touch report rate: 240Hz @5 fingers
●
support large size panel (>20 inches)
●
supports multi-chip cascading without extra MCU
●
integrate multiple active stylus protocols: USI, MPP, LPP and HPP
●
low power consumption
●
(automotive) support glove-wearing (> 2 mm) and wet finger operations
●
(automotive) CISPR25 Class-5 EMC qualified
●
(automotive) support temperature range from -40 °C to 105 °C
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
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LCoS and MEMS Products
Himax Display, our subsidiary, has contributed to our microdisplay products lines: Color-filter LCoS, Color-sequential LCoS, Front-lit LCoS, Phase modulation 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 its 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 over 4 million units from this ISO certified line.
Our customers use our products in various applications such as pico-projector, wavelength selective switch (WSS) for optical communication, LiDAR, toy projector, AR
glasses, and AR HUD for automotive.
The merits of our technology feature in resolution, power consumption, size, cost, optical engine design, and image quality. 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. Our pure phase modulation LCoS technology is suitable for solid-state LiDAR for autonomous driving and Wavelength Selective Switch (“WSS”)
for Wavelength-Division Multiplexing (“WDM”) optical communications networks. Himax Display offers the cutting-edge color sequential Front-lit LCoS for advanced AR
glasses solutions. It’s a innovative technology that features a lightweight, compact form factor and high brightness. It gains significant traction in the industry and attracts
several tech giants shifting their focus away from micro LED microdisplay to our Front-lit LCoS for their AR goggles after seeing Company’s live demo. This shift is
demonstrative of our exceptional achievements in both performance and functionality, marked by breakthroughs not only in the luminance performance in full RGB color, but
also in terms of superior optical efficiency, tiny form factor and ultra-lightweight design. These factors are critical and represent technological advancements that meet
rigorous requirements to support next generation see-through goggles. At CES 2025, Himax unveiled an industry-leading, ultra-luminous Front-lit LCoS Microdisplay that
achieves 400K nits, setting a new benchmark in brightness while using merely 300mW of power. Himax also demonstrated an AR glasses Proof-Of-Concept featuring this
microdisplay paired with a third-party waveguide, which achieved over 1,000 nits of brightness to the eye, highlighting its suitability for outdoor, high ambient light
conditions. With a lightweight of just 0.98 grams, an ultra-compact form factor of less than 0.5 c.c., and excellent color performance, Himax’s Front-lit LCoS Microdisplay is
ideally suited for all-day AR glasses and is ready for real-world applications.
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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
Size and Resolution
Color-Filter LCoS Microdisplays
●
0.28” (320x3x240 pixels) QVGA
●
0.29” (800x3x480 pixels) WVGA
●
0.35” (1280x3x720 pixels) HD
●
Customized design
Color-Sequential LCoS
Microdisplays
●
0.22” (640 x 360 pixels) nHD
●
0.37” (1366 x 768 pixels) WXGA
●
0.37” (1920 x 1080 pixels) Full HD
●
Customized design
Front-Lit Color Filter LCoS
●
0.22” (640 x 3x 360 pixels) nHD
●
0.35” (1280 x3x 720 pixels) HD
●
Customized design
Front-Lit Color Sequential LCoS
●
Low power and high efficiency
●
Display diagonal : 0.243”
●
Size(W*L*H) : 9*13.9*4 mm
●
Weight : 0.98 grams
●
Volume: 0.5 c.c.
●
Resolution: 1024x1024
●
Brightness: 400,000 nits
●
Power consumption : 300 mW
Phase Modulation LCoS
●
Selective phase range based on the required response time.
●
Analog drive scheme with 120Hz refresh frame rate to reduces optical flicker and provides stable phase response over time.
●
Customized design
●
Operated in full phase modulation (0~2π) in visible range
MEMS
●
0.55” (1280 x 800 pixels) WXGA
Power ICs
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.
Besides, Himax also provides power management solutions for OLED notebooks.
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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 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 and
OLED panel module. The following table summarizes certain features of our power management IC products:
Product
Features
Integrated Multi-Channel Power
Solutions for TFT-LCD and OLED
Notebooks
●
PMIC, PGOP 2-in-1 and Level Shifter
●
2ch programmable gamma voltage inside
●
PAVDD Synchronous Boost Converter
●
NAVDD Synchronous Inverting Converter
●
VGH / VGL Synchronous SIBO Converter
●
3ch Vint OP for OLED Panel
●
built-in power MOSFET
●
step-up PWM converter
●
charge pump regulator
●
LDO regulator
●
programmable voltage detector
●
gate pulse modulator
●
Vcom operational amplifier
●
I2C programmable
●
low frame rate control for power saving solution
●
built in UVLO, UVP, OVP, SCP and OTP protection
Integrated Multi-Channel Power
Solutions for Monitors
●
PMIC, PGOP and Level Shifter 3-in-1
●
built-in power MOSFET
●
step-up PWM converter
●
HV LDO regulator
●
programmable voltage detector
●
gate pulse modulator
●
programmable Vcom voltage / Vcom operational amplifier
●
programmable gamma voltage with operational amplifier
●
built in UVLO, UVP, OVP, SCP and OTP protection
Integrated Multi-Channel Power
Solutions for TVs
●
PMIC, PGOP 2-in-1 and Level Shifter
●
built-in power MOSFET
●
step-up PWM converter
●
step-down PWM converter
●
charge pump and buck-boost regulator
●
HV LDO regulator
●
programmable voltage detector
●
gate pulse modulator
●
Vcom operational amplifier
●
I2C programmable
●
programmable gamma voltage with operational amplifier
●
built in UVLO, UVP, OVP, SCP and OTP protection
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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
Features
14 channel PGOP for dual gate
GOA TFT-LCD
● 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
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
Features
16- channel output level shifter for
GOA TFT-LCD
● Support 1 or 2 or 6 input and 4/6/8/10 clock channel output
● 2 channel STV
● 2 channel LC
● Reset and charge sharing function
● OTP/ SCP and OCP function by I2C or Resistor adjustment
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
NB backlight driver IC and local
diming mini-LED backlight driver
IC
● ASIC by Customer Specification
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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 May 2024, we
announced a strategic investment in Obsidian Sensors, Inc. (“Obsidian”), a San Diego-based thermal imaging sensor solution manufacturer. The investment was motivated by
the potential of Obsidian’s proprietary and revolutionary high-resolution thermal sensors to dominate the market through low-cost, high-volume production capabilities. The
investment positions us at the forefront of machine vision AI applications, delivering high effectiveness particularly in harsh environments and completely dark scenarios. In
addition, through this strategic investment, Himax not only enhances its sensor portfolio but also expands its technology reach to include thermal image sensing, a valuable
complement to Himax’s WiseEye technology, a world-leading ultralow-power image sensing AI solution. This move will enable Himax to offer customers the best integrated
solutions across several domain.
In specific video applications such as battery-powered surveillance cameras, doorbell cameras, and door-lock cameras, customers require not just an ultralow power
sensor for sensing or pre-rolling functions but also high-resolution video for end-users after an event occurs. Himax Imaging addresses these needs by providing a 1/3” 4MP
sensor with a 1:1 aspect ratio. This sensor features a 2048x2048 resolution tailored for doorbell and door-lock cameras, delivering a broad Field of View (FOV) in both
horizontal and vertical directions. This capability allows users to observe a visitor’s entire body, even when they stand very close to the camera. Himax Imaging can offer a
variety of these 2-in-1 sensors, combining high-resolution video capabilities with low-resolution ultralow power imaging for the surveillance market.
We’re dedicated to becoming one of the key players in the CMOS image sensor industry. We achieve this through ongoing investment in skilled human resources,
optimizing our supply chain, and forging strategic technology advancements and partnerships.
The following table sets forth the features of our CMOS image sensor products:
Product
Features
4MP UltraSense 2 NIR Sensor
●
1/3” format color type with high sensitivity BSI pixel
●
4MP resolution with 1:1 aspect ratio with Staggered HDR function at 30 frames per second for doorbell application,
●
Provide ultralow power mode to support pre-rolling function with Himax WiseEye1 AI processor
●
4-lane MIPI CSI2 outputs RAW8/10
FHD 1/7” 1080p UltraSense
Color Image Sensor
●
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
●
Support line-based staggered HDR
●
2-lane MIPI CSI2 outputs
●Frame-Sync control for multiple camera system
FHD 1/4” 1080p UltraSense
Color Image Sensor
●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
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Product
Features
HD 720p UltraSense 2 Color
Image Sensor
●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
HD 720p Ultralow Power Color
Image Sensor
●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
●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
1.3MP ClearSense EDR Color
Image Sensor embedded with
image processor for Surveillance
●1/4” format with ultra-high sensitivity
●ClearSense achieves higher dynamic range in color up to 84dB with on-chip tone mapping
●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
●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 RGB565/555/444
1.2MP UltraSense 2 Color Image
Sensor embedded with image
processor for Automotive
●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
●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
NTSC/PAL WVGA Color Image
System on embedded with image
processor for Automotive and
Surveillance
●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
●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
●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
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Product
Features
VGA Ultralow Power CMOS
Color Image System for Machine
Vision and Detection
●
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 solutions for a wide array of applications, including 3D face recognition, 3D sensing, 3D reconstruction, gesture
control and more. Notably, Himax is a pioneer in high-precision diffraction optics technology with over 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, automotive, 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. In June 2024, Himax, in partnership with FOCI, a world leader in silicon photonics
connector, unveiled an industry-leading co-packaged optics (CPO) technology, leveraging Himax WLO technology. This innovation integrates silicon photonic chips and
optical connectors within MCM, replacing traditional metal wire transmission with high-speed optical communication. CPO technology significantly enhances bandwidth,
boosts data transmission rates, reduces signal loss and latency, lowers power consumption, and significantly minimizes the size and cost of MCM. In working closely with
FOCI, Himax is making significant strides through a solid partnership with leading AI semiconductor companies and foundry, with small-scale production of the first-
generation CPO solution starting end of 2024.
Our WLO technology is also adapted to form microstructures such as lens array, DOE and lenticular lenses 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-1 customers such as structured lighted and ToF 3D sensing on AR/VR gadgets, automotive, biomedical devices and many other AIoT applications. We also see
a rise in engineering collaborations with global technology leaders who are utilizing our WLO expertise to make advanced waveguides for AR glasses.
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 an anchor customer’s
higher demand with a significant year-over-year increase. We continued our shipment to this anchor customer for their legacy product and continue making progress on R&D
projects with world-leading high-tech giants for ToF 3D sensing, AR/VR gadgets, automotive, biomedical devices and others, targeting their future generation products
centered around our exceptional design know-how and mass production expertise in WLO technology. One illustration is our WLO technology being deployed by one VR
player to empower 3D perception sensing for precise controller-free gesture recognition. We initialed volume production starting in second quarter of 2023.
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The following table sets forth the features of our wafer level optics products:
Product
Features
Refractive Optical Lens
●
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
Diffractive Optical Element (DOE)
●
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
Diffuser element for flood illumination
and TOF
●
using WLO process to integral multi-layers DOE technology
●
the smallest form factor and reflowable component
●
eye safety detect circuit embedded
Near Infrared (NIR) Projector Module
●
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
●
provide customized module solution for different application
●
the smallest form factor and reflowable device
●
including active eye safety solution (Class-1)
Flood illumination Module
●
provide customized solution for specific application integral NIR Laser (830/850/940nm), and high precise active
alignment assembly solution
●
module design for smartphone and other mobile devices
●
the smallest form factor and reflowable device
●
including active eye safety solution (Class-1)
FAU (Fiber Array Unit) in CPO
●
Collaborated with FOCI to offer FAU, enabling silicon photonic-to-fiber connections for high-speed optical links,
replacing metal wire transmission to enhance bandwidth, boost data rates, reduce signal loss, latency, energy use, and
MCM module size and cost
●
WLO offers nano-scale precision optical characteristics and provides precise optical coupling capability along with
connector functionality
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.
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As 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. Leveraging on our WLO technology, we have provided our
partners with spot projectors or optics components 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. Starting in 2021, we shipped small volume of business access control and biomedical inspection devices. 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 also provide key component, including 3D decoder IC and 3D vision processors. Our proprietary 3D decoder IC can accelerate
local image processing for face recognition and offer best-in-class security authentication, therefore it is particularly suitable for 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. Our proprietary 3D decoder IC entered into volume production starting
in 2020, followed by meaningful volume shipments into 2021 and 2022. In the light of increasing adoption of 3D sensing technologies in various aspect of our daily life, a
series of next generation 3D vision processors is also under development to support a variety of state-of-the-art 3D sensing technologies in Time of Flight (”ToF”) and
structured light, aiming to improve user experience when people interact with AR and VR applications.
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, while also 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.
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.
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The following table sets forth the features of our SLiM 3D sensing solutions:
Product
Features
SLiM 3D sensing total solution
● 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, ideal for embedded and mobile device integration
HV-II 3D Decoder ASIC
●
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
WiseEye Ultralow Power AI Sensing
The demand for always-on battery-powered smart devices with AI intelligent sensing is rapidly growing, and we are committed to strengthening our WiseEye product
roadmap to maintain our leadership position through initiatives that make AI more accessible in everyday life. Himax WiseEye ultralow power AI sensing solution enriches
connected edge devices with AI capability but consumes only single digit mW power consumptions, making it ideal for the next-generation of battery operated, clever
computer vision applications. The WiseEye ultralow power AI sensing solution is already being adopted in a variety of applications, such as notebook, home appliances,
utility meter, automotive, door lock, battery-powered surveillance camera, panoramic video conferencing, and medical, just to name a few. For notebook application, Himax’s
WiseEye ultralow power AI sensing empowers human presence detection and on-looker detection, offering power saving and enhancing privacy and security for notebook
users. In 2021, we were highly encouraged by our WiseEye solution being officially awarded by Dell, with a sizable purchase order, for a series of their new notebook
models. This represented a remarkable achievement and an illustration of the robustness of our AI solution. The second-generation AI processor, WiseEye2, goes beyond by
enabling high-precision detection with features such as face mesh, facial landmarks, hand gesture recognition, and human pose and skeleton detection. This expanded
functionality broadens the intuitive, user-friendly scope of interactive applications in real-world settings, all achieved with minimal power consumption. Meanwhile, progress
also been made in smart door lock application. In 2023, we collaborated with the China smart door lock leader, DESMAN, marks a groundbreaking feature advancement in
the door lock industry, as our WiseEye ultralow power AI, with remarkably low power consumption of just single digit mW, enables the world’s first smart door lock
featuring uninterrupted surveillance with 24/7 real-time sentry monitoring while at the same time significantly extending battery life. Building on this achievement, we are
expanding globally by collaborating with other leading door lock makers worldwide to integrate innovative AI features, including parcel recognition, anti-pinch protection,
and palm vein biometric access, further extending application possibilities. Several of these value-added solutions are set to enter production later in 2025. We continue to
support the mass production of Dell’s notebook, with additional projects underway with other leading notebook vendors. We are also expanding into various endpoint AI
applications, such as shared bike parking, video conference device, door lock, medical capsule endoscope, automotive and many others.
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Concurrently, to meet various application requirements and extend market reach, we are in collaborations with numerous ecosystem partners and system integration
companies, offering hands-on development tools and vigorous AI models to streamline customer development efforts and reduce cost for their AI product introduction. The
launch of our production-ready WiseEye Modules exemplifies this business model. These modules incorporate Himax’s low-power CMOS image sensors, WiseEye1 or
WiseEye2 AI processor, and versatile AI models from either in-house or third-party partners. Meticulously designed with tiny form factors, highly integrated and plug-and-
play characteristics, the modules feature user-programmable, pre-loaded AI models to facilitate seamless system integration, lowering the entry barrier and cost for AI
development. This initiative is particularly well-suited for early-stage market engagement applications. Furthermore, we continue to collaborate with ecosystem partners to
unveil a spectrum of plug-and-play AI modules that incorporate advanced no-code/low-code AI solutions. By leveraging their strengths in specific domains and existing
channels, these collaborative efforts ensure we can meet diverse development needs for both software and hardware. A broad range of innovative, ultralow power WiseEye
Modules are also under development in collaboration with ecosystem partners, such as crying baby detection, dynamic gesture recognition, and human sensing, among
others. One standout in our WiseEye Module portfolio is the Himax WiseEye PalmVein solution, which has quickly gained traction shortly after its introduction.
The rise of physical AI agents marks a significant shift in human-machine interaction, enabling devices to perceive, process, and respond to their surroundings in real
time. A key emerging trend is the integration of cloud-based large language models (LLMs), which enables these agents’ advanced reasoning and language understanding,
enhancing their ability to interact with and adapt to the physical world. Himax WiseEye AI is at the forefront of this revolution, delivering always-on sensor fusion, ultralow
power on-device processing, while seamlessly interfacing with LLMs, to provide the essential real-time AI capabilities for next-generation applications. we are actively
working on multiple projects leveraging WiseEye AI to further drive advancements in physical AI agent applications. Meanwhile, in the realm of AI sensing for AR glasses,
Himax’s WiseEye delivers always-on sensing capabilities that developers are leveraging to dramatically enhance AR interactivity, all while operating on just a few milliwatts
of power. This underscores WiseEye’s tremendous potential in revolutionizing AR experiences.
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We expect to secure additional WiseEye design wins across a broad customer base and an expanding range of applications. This will not only drive robust sales but also
provide margin support moving forward.
The following table sets forth the features of our ultralow power WiseEye ultralow power AI sensing total solutions:
Product
Features
WiseEye AI total solution
●
The total solution incorporates Himax proprietary ultralow power WiseEye AI processor, always-on CMOS image sensor,
and CNN-based computer vision AI algorithm, featuring tinyML AI in tiny form factor, ultralow power consumption, low
latency, privacy protection and optimized cost.
●
Total solution supports use of a variety of Himax CMOS image sensors. Uniquely designed for ultralow power Computer
Vision applications with always on scanning as low as 100uW.
●
WiseEye AI processor (WiseEye1 / WiseEye2) is a uniquely designed ultralow power computer vision processing silicon,
targeting always on applications with a sub 1mW capabilities. WiseEye is especially suitable for resource-constrained and
battery powered context-aware application, such as motion detection, human detection and face detection, face mesh, face
landmark and gesture.
●
Computer vision algorithm is based on tiny machine learning framework, which is trainable for desired use cases (human
presence detection, attention detection and on-looker detection for notebook applications; occupancy detection, gesture
recognition etc. for AIoT applications) on ultralow power and resource-constrained compute platform (CPU clock, internal
memory)
For the other business model, we provide key components, such as proprietary ultralow power WiseEye1 or WiseEye2 AI processor or Always-On CMOS image sensor
(AoS). For our key component business model, we reinforced our go-to-market strategy by intensively participating in leading AI partners’ infrastructures and ecosystems
and/or AI communities. The Company collaborates with world-leading edge-to-cloud service providers and system integration companies, such as Google TensorFlow,
Microsoft Azure, Arm AI Partner Program, EDGE AI Foundation, Seeed Studio and many others, to enjoy the enormous network of these ecosystems partners and their
numerous participants to drive further adoption on applications such as smart home/ office, healthcare, agriculture, retail and many other applications. Additionally, we
continued our marketing efforts through joint webinars and other online activities with several well-known platform partners such as EDGE AI Foundation, Edge Impulse,
Digi-Key, SparkFun and Seeed Studio. 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 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 moving forward.
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The following table sets forth the features of our WiseEye product lines:
Product
Features
WiseEye1 AI Processor
●
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,
●
Memory: Up to 2MByte SRAM
●
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
●
Also support image pre-rolling feature for better security offering.
WiseEye2 AI Processor
●
dual Arm Cortex-M55 CPU cores and an Arm Ethos-U55 micro NPU core are integrated to optimize the power consumption
across various workloads
●
memory: Up to 2MB SRAM, 512KB TCM
●
supports weight compression to significantly reduce model size
●
multi-layer power management architecture
●
embedded DC/DC converter and LDO
●
feature model quantization and pruning for AI model size is significantly reduction while retaining an impressive
performance
●
support Physical Unclonable Function (PUF), Cryptography and TrustZone security
●
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: MIPI CSI-2 RX/TX, 1/4/8-bit CPI, PDM/I2S/MIPI SoundWire, SPI/UART/PWM/GPIO/I2C/I3C, SD/SDIO
●
Also support image pre-rolling feature for better security offering.
WiseEye Module
●
embedded WiseEye1 or WiseEye2 AI processors
●
support HM01B0 (320x240) and HM0360 (640x480) CMOS image sensors
●
small form factor (12.5mm x 17.0mm and 20.5mm*21.5mm)
●
plug-and-play design which support various types of connectors, such as ZIF FPC 24pin and 45-pin golden finger (model
dependent)
●
rich sets of peripherals (UART/I2C/I2S/PDM/SPI/GPIO/MIPI) and JTAG for debug (model dependent)
●
provide SDK, development tool and technical documentations
●
support various pre-trained pre-loaded AI models
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Core Technologies and Know-How
Driving System Technology. Through our collaboration with Panel Manufacturers, we have developed extensive knowledge of circuit design, TFT-LCD/OLED driving
systems, high-voltage CMOS processes and display systems, all of which are important to the design of high-performance TFT-LCD/OLED 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/OLED. We are leveraging our know-how of display
drivers and driving system technology to develop display drivers for panels utilizing other technologies such as next generation OLED 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.
WiseEye Ultralow Power AI Sensing Technologies. These technologies are 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’s exceptional low power know-how and ASIC implementation technologies, our WiseEye AI image processor featured
different 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 benefits 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 of which positions 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 semiconductors enables us to design IC that particularly matches our optical component. Our expertise in
precision assembly in optics also helps us to provide a more complete solution to our customers.
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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, 2024, we sold our products to around 300 customers. Our ten
largest customers together accounted for approximately 76.7%, 74.1% and 73.6% of our revenues in 2022, 2023 and 2024, respectively. In 2022, 2023 and 2024, our two
largest customers accounted for 10% or more of our net revenue: customer A and its affiliates accounted for 32.3% 28.7% and 26.4% of our revenues, respectively; and
customer C accounted for 9.4%, 11.0% and 8.3%, 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 Panel Manufacturers, using LTPS and a-Si TFT-LCD,
and OLED 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 is
concentrated among a limited number of major Panel Manufacturers. We also market our products directly to TV, monitor, notebook and mobile, tablet and automotive 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
WiseEye ultralow power AI 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
support offices in Hefei, Beijing, Shanghai, Fuzhou, Foshan, Fuqing, Ningbo, Wuhan, Nanjing, Chongqing, Chengdu, Xi’an and Xiamen, China; Tokyo, Japan; Asan-si and
Bundang-gu, South Korea, Munich, Germany; and Irvine and San Jose, California, Minneapolis, Minnesota and Detroit, Michigan, 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. Despite our reliance on outsourcing for CP testing, we have made investments in internal capabilities for test program development,
engineering testing, debugging capability and manufacturing support since 2022.
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We operate a fab under Himax Display primarily for performing manufacturing processes for our LCoS microdisplays. Moreover, 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.
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.
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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 Assembly
We 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 connects the 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 2024 and will expire in March 2027. In February 2006, we received ISO 14001
certification, which was renewed in December 2023 and will expire in December 2026. In addition, in March 2007, we received IECQ QC 080000 certification, which was
renewed in February 2025 and will expire in March 2028.
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.
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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. and King Yuan Electronics Co., Ltd, etc.
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.
The table below sets forth (in alphabetical order) our principal semiconductor manufacturing service providers and suppliers:
Wafer Fabrication
Gold Bumping
Globalfoundries Singapore Pte., Ltd.
Chipbond Technology Corporation
Macronix International Co., Ltd.
Chipmore International Trading Company Ltd.
Nexchip Semiconductor Corporation
ChipMOS Technologies Inc.
Powerchip Semiconductor Manufacturing Corp.
LB Semicon, Inc.
SK hynix system ic
Union Semiconductor Co., Ltd.
Semiconductor Manufacturing International (Shanghai) Corporation
Union Semiconductor (Hefei) Co., Ltd.
Taiwan Semiconductor Manufacturing Company Limited
United Microelectronics Corporation
Vanguard International Semiconductor Corporation
Processed Tape for TAB Packaging
Assembly and Testing
Chipbond Technology Corporation
Ardentec Corporation
Hefei Chipfilm Materials Technology Co., Ltd.
Advanced Semiconductor Engineering Inc.
JMC Electronics Co., Ltd.
Chipbond Technology Corporation
LG Innotek Co., Ltd.
Chipmore International Trading Company Ltd.
Stemco., Ltd.
ChipMOS Technologies Inc.
Global Testing Corporation
Greatek Electronics Inc.
Huatian Technology Electronics Co., Ltd.
Jiangsu Changjiang Electronics Technology Co., Ltd.
King Yuan Electronics Co., Ltd.
Micro Silicon Electronics Corp.
Taiwan IC Packaging Corporation
LB Lusem Co., Ltd.
Union Semiconductor Co., Ltd.
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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.
Union Semiconductor (Hefei) Co., Ltd.
YoungTek Electronics Corp.
Intellectual Property
As of March 31, 2025, we held a total of 2,603 patents, including 1,086 in Taiwan, 876 in the United States, 526 in China, and 115 in other countries. The expiration
dates of our patents range from 2025 to 2044. We also have a total of 56 pending patent applications in Taiwan, 118 in the United States and 215 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 China, Europe, Korea, Japan and the United States, “CMVT” as trademarks in Taiwan and China, as well as
“WISEEYE” as trademark in Israel and the United States.
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.
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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., LX Semicon., 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., ESWIN, Chipone, OmniVision and Ilitek
Corp., etc.
For LCoS microdisplay products, we face competition from OmniVision, Syndiant, Kopin, and RAONTECH. We also compete with alternative microdisplay technology
providers such as Texas Instruments with DLP, Sony with micro OLED and JBD with micro LED.
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., Galaxycore, Silicon
Optronics, Inc (SOI), Pixart Imaging Inc. and Smartsens Technology (Shanghai) Co. LTD.
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.
For 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 WiseEye ultralow power AI 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 are obligated to comply with valid regulations and governmental authorities’ regulatory directives in applicable jurisdictions
relating to environmental protection regulations and subject to the topic of Environmental Protection. Additionally, Himax Taiwan maintains a CP tester 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, to extents of Himax knowledge, believe that we are in compliance with the existing environmental
laws and regulations in the Taiwan 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.
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4.C. Organizational Structure
The following chart sets forth our corporate structure and ownership interest in each of our principal operating subsidiaries as of March 31, 2025.
The following table sets forth summary information for our subsidiaries as of March 31, 2025.
Percentage of
Jurisdiction of
Our Ownership
Subsidiary
Main Activities
Incorporation
Interest
Himax Technologies Limited
IC design and sales
ROC
100.0 %
Himax Technologies Korea Ltd.
IC design and sales
South Korea
100.0 %
Himax Technologies (Samoa), Inc.
Investments
Samoa
100.0 %(1)
Himax Technologies (Suzhou) Co., Ltd.
Sales and technical support
PRC
100.0 %(2)
Himax Technologies (Shenzhen) Co., Ltd.
Sales and technical support
PRC
100.0 %(2)
Himax Display, Inc.
LCoS and MEMS design, manufacturing and sales
ROC
92.0 %(1)
Integrated Microdisplays Limited
LCoS design
Hong Kong
92.0 %(3)
Himax Display (USA) Inc.
LCoS and MEMS design, sales and technical support
Delaware, USA
92.0 %(3)
Himax Analogic, Inc.
IC design and sales
ROC
98.6 %(1)
Himax Imaging, Inc.
Investments
Cayman Islands
100.0 %
Himax Imaging, Ltd.
IC design and sales
ROC
98.6 %(1)
Himax Imaging Corp.
IC design
California, USA
98.6 %(4)
Harvest Investment Limited
Investments
ROC
100.0 %(1)
Himax Technologies Japan Ltd.
Sales
Japan
100.0 %
Himax Semiconductor (Hong Kong) Limited
Investments
Hong Kong
100.0 %
Liqxtal Technology Inc.
LC Lens design and sales
ROC
62.3 %(1)
Himax IGI Precision Ltd.
3D micro and nano structure mastering and prototype replication
Delaware, USA
100.0 %(1)
CM Visual Technology Corp. (CMVT)
Omniwide film products design and sales
ROC
77.6 %(1)
Viewsil Microelectronics (Kunshan) Limited
IC design and sales
PRC
100.0 %
Viewsil Technology Limited
IC sales
British Virgin Islands
100.0 %(5)
Solvanta Investment Limited
Investments
ROC
100.0 %(1)
Solvanta Energy Limited
Renewable-energy based electricity distribution
ROC
100.0 %(6)
(1) Indirectly, through our 100.0% ownership of Himax Technologies Limited.
(2) Indirectly, through our 100.0% ownership of Himax Technologies (Samoa), Inc.
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(3) Indirectly, through our 92.0% ownership of Himax Display, Inc.
(4) Indirectly, through our 98.6% ownership of Himax Imaging, Ltd.
(5) Indirectly, through our 100.0% ownership of Viewsil Microelectronics (Kunshan) Limited.
(6) Indirectly, through our 100.0% ownership of Solvanta Investment Limited.
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, Fuqing, China;
Tokyo, Japan; Asan-si and Bundang-gu, South Korea; and Irvine and San Jose, California and Minneapolis, Minnesota, USA. The lease contracts may be renewed upon
expiration.
We have established an in-house WLO facility under Himax Taiwan for the key process of our products. The facility occupies 1,171 square meters of floor space in a
building leased from Innolux, which was already produced and shipped over 50 million optics to Tier-1 customer since 2010. However, the building lease was terminated
early at the end of January 2024, and we relocated the WLO facility to our Fab 2. 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. To build up test program development, engineering testing, debugging capability and
manufacturing support, we have established under Himax Taiwan an in-house CP test facility from 2022.
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. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ
materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in “Special Note Regarding Forward-Looking
Statements” and “Item 3. Key Information—D. Risk Factors.”
5.A. Operating Results
For discussion related to our financial condition, changes in financial condition, and the results of operations for 2023 compared to 2022, 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, 2023, which was filed with the United States
Securities and Exchange Commission on April 2, 2024.
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Overview
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.
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. The
majority of our revenues in 2024 were derived from sales of display drivers that were eventually incorporated into TFT-LCD and OLED panels. We expect display drivers for
TFT-LCD and OLED panels to continue to be our primary products. The TFT-LCD and OLED panel industry is intensely competitive and is vulnerable to cyclical market
conditions. The average selling prices of TFT-LCD and OLED 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 and OLED 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 and OLED products 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.
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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. However,
decades-high inflation, rapidly rising interest rates in addition to the ongoing war and unexpected lockdowns from Covid-19 in China starting from the end of first quarter of
2022, brought widespread demand halt, resulting in sluggish demand across every aspect of our business, followed by sales declined and average selling price erosion. 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.”
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 and OLED 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.
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.
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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.
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 2022, 2023 and 2024 was 59.5%, 72.1% and 69.5%, respectively. In
2024, as a percentage of Himax Taiwan’s total manufacturing costs, the cost of wafer fabrication was 55.5%, the cost of processed tape was 4.1%, the cost of assembly and
testing was 39.8%, 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. Meanwhile, the long-term capacity
agreements carries the risk of substantial inventory write-downs and/or contractual penalties resulted from unfulfillment of committed volume in the event of decreased end
customer demand. In second quarter of 2023, amidst strict muted market demand, we strategically terminated high-cost foundry capacity agreements, a one-time expense
included in cost of revenues. 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.
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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 $20 million, $12.1 million
and $12.2 million in 2022, 2023 and 2024, respectively. Of the total share-based compensation expenses recognized, $17.5 million, $9.5 million and $11.1 million in 2022,
2023 and 2024, respectively, were settled in cash. We measure and recognize compensation expense for all share-based payments at fair value.
Set forth below is a summary of our historical share-based compensation plans for the years ended December 31, 2022, 2023 and 2024 as reflected in our consolidated
financial statements.
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.
We made grants of 3,987,509 RSUs to our employees on September 28, 2022. The vesting schedule for such RSU grants is as follows: 86.41% of the RSU grants vested
immediately and were settled by cash in the amount of $17.5 million on the grant date, with the remainder vesting equally on each of September 30, 2023, 2024 and 2025,
which will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 1,710,607 RSUs to our employees on September 26, 2023. The vesting schedule for such RSU grants is as follows: 97.45% of the RSU grants vested
immediately and were settled by cash in the amount of $9.5 million on the grant date, with the remainder vesting equally on each of September 30, 2024, 2025 and 2026,
which will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 2,014,386 RSUs to our employees on September 26, 2024. The vesting schedule for such RSU grants is as follows: 96.76% of the RSU grants vested
immediately and were settled by cash in the amount of $11.1 million on the grant date, with the remainder vesting equally on each of September 30, 2025, 2026 and 2027,
which will be settled by our ordinary shares, subject to certain forfeiture events.
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59
The amount of share-based compensation expense with regard to the RSUs granted to our employees on September 28, 2020, September 28, 2021, September 28, 2022,
September 26, 2023 and September 26, 2024 was $3.44 per ADS, $10.39 per ADS, $5.09 per ADS, $5.68 per ADS and $5.68 per ADS, respectively, which was based on the
trading price of our ADSs on that day.
Cash Awards. We made grants annual bonus by cash payouts totaling $19.3 million, $0.7 million and $1.0 million to the Company’s employees among which $1.0
million, $0.2 million and $0.2 million was immediately vested on September 28, 2022, September 26, 2023 and September 26, 2024, respectively. 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, 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.
Description of Certain Statements of Profit or Loss Line Items
Revenues
Historically, we generated the majority of our revenues from sales of display drivers for large-sized applications and small and medium-sized applications. In addition,
our product portfolio also includes timing controllers, operational amplifiers, LCoS microdisplay, power management ICs, CMOS image sensors, 3D sensing, WiseEye
ultralow power AI sensing, wafer level optics products and ASIC service.
The 2024 full year revenues totaled $906.8 million, representing a 4.1% decline compared to 2023. Persistent global demand weakness, coupled with uncertainty about
market trends, led to conservative purchasing decisions and inventory management by our panel customers. These market dynamics adversely affected IC demand and
consequently our financial performance.
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:
Year Ended December 31,
2022
2023
2024
Percentage
Percentage
Percentage
of
of
of
Amount
Revenues
Amount
Revenues
Amount
Revenues
(in thousands, except percentages)
Display drivers for large-sized applications
$
263,992
22.0
$
175,666
18.6
$
125,936
13.9
Display drivers for small and medium-sized applications
778,946
64.8
629,174
66.5
625,390
69.0
Non-driver products(1)
158,401
13.2
140,588
14.9
155,476
17.1
Total
$
1,201,339
100.0
$
945,428
100.0
$
906,802
100.0
Note: (1) Includes, among other things, timing controllers, LCoS projector solutions, power management IC, CMOS image sensors, programmable gamma OP, wafer
level optics (WLO) products, WiseEye ultralow power AI sensing, NRE incomes, and ASIC service.
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60
A limited number of customers account for substantially all our revenues. For example, Customer A and its affiliates accounted for 32.3%, 28.7% and 26.4% of our
revenues in 2022, 2023 and 2024, respectively. Customer C accounted for 9.4%, 11.0% and 8.3% of our revenues in 2022, 2023 and 2024, respectively.
Year Ended December 31,
2022
2023
2024
Percentage
Percentage
Percentage
of
of
of
Amount
Revenues
Amount
Revenues
Amount
Revenues
(in thousands, except percentages)
Customer A and its affiliates
$
388,194
32.3
$
271,351
28.7
$
239,001
26.4
Customer C
113,396
9.4
103,839
11.0
75,564
8.3
Others
699,749
58.3
570,238
60.3
592,237
65.3
Total
$
1,201,339
100.0
$
945,428
100.0
$
906,802
100.0
The global TFT-LCD and OLED panel market is highly concentrated, with only a limited number of TFT-LCD and OLED panel manufacturers producing TFT-LCD and
OLED panels in high volumes. We sell panel display drivers to many of these 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 2022, 2023 and 2024, approximately 14.6%, 15.0% and 15.3% of our revenues, respectively, were from customers headquartered in Taiwan and
approximately 77.0%, 76.2% and 73.4% 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 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, share-based
compensation expenses and cash awards. 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.
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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.
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 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, September 28, 2021, September 28, 2022, September 26,
2023 and September 26, 2024 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 $20.0 million, $12.1 million and $12.2 million in 2022, 2023 and 2024, respectively.
Cash Awards.
We made grants annual bonus by cash payouts totaling $19.3 million, $0.7 million and $1.0 million to the Company’s employees among which $1.0 million, $0.2 million
and $0.2 million was immediately vested on September 28, 2022, September 26, 2023 and September 26, 2024, respectively. The remainder will be equally vested at the first,
second and third anniversaries of the grant date.
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62
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.
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 2022, 2023 and 2024 were approximately $22.2 million, $21.5 million and $13.6 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, 2022,
2023 and 2024, 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 discount rate, the terminal growth rate, the
independent cash flows, useful lives, expected future revenue and expenses related to the CGU.
As of December 31, 2023 and 2024, goodwill in Driver IC CGU and WLO CGU was $26,846 thousand and $1,292 thousand, respectively. For the years ended
December 31, 2022, 2023 and 2024, we did not recognize any impairment loss on goodwill.
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63
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, 2024, we have not provided for retained earnings tax on the undistributed earnings of approximately $1,386.0 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
$1,384.2 million as of December 31, 2024. We intend to use accumulated and future earnings of Himax Taiwan to expand operations in Taiwan.
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,
2022
2023
2024
Revenues
100.0 %
100.0 %
100.0 %
Costs and expenses:
Cost of revenues
59.5
72.1
69.5
Research and development
14.6
18.1
17.7
General and administrative
2.4
2.7
2.7
Sales and marketing
2.1
2.5
2.6
Total costs and expenses
78.6
95.4
92.5
Operating income
21.4
4.6
7.5
Non-operating income
1.6
0.1
1.0
Income tax expense (benefit)
3.4
(0.5)
(0.3)
Profit for the year
19.6
5.2
8.8
Loss attributable to noncontrolling interests
0.1
0.2
—
Profit attributable to Himax stockholders
19.7
5.4
8.8
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64
Year to Year Comparisons
Year Ended December 31,
% Change
2022
2023
2024
from 2023
(in thousands, except for percentages)
Consolidated Statements of Profit or Loss Data:
Revenues
$
1,201,339
$
945,428
$
906,802
(4.1)%
Costs and expenses:
Cost of revenues
714,233
681,931
630,601
(7.5)%
Research and development
175,557
171,392
160,329
(6.5)%
General and administrative
28,503
25,037
24,121
(3.7)%
Sales and marketing
25,459
23,856
23,530
(1.4)%
Total costs and expenses
943,752
902,216
838,581
(7.1)%
Operating income
257,587
43,212
68,221
57.9 %
Non-operating income
18,978
1,181
9,114
671.7 %
Income tax expense (benefit) .
41,098
(5,028)
(2,435)
(51.6)%
Profit for the year
235,467
49,421
79,770
61.4 %
Loss (profit) attributable to noncontrolling interest
1,515
1,195
(15)
(101.3)%
Profit attributable to Himax stockholders
$
236,982
$
50,616
$
79,755
57.6 %
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Revenues. Our revenues decreased by 4.1% to $906.8 million in 2024 compared to $945.4 million in 2023. The decrease was a result of persistent global demand
weakness, coupled with uncertainty about market trends, led to conservative purchasing decisions and inventory management by our panel customers. These market
dynamics adversely affected IC demand and consequently our sales.
●
Large-sized Display Drivers. Revenues from display drivers for large-sized application decreased by 28.3% to $125.9 million in 2024 from $175.7 million in 2023.
The decline was predominantly driven by the prevailing weak macroeconomic conditions compounded by ongoing production and inventory control measures by
our leading panel customers as well as heightened price competition from Chinese peers.
●
Small and Medium-sized Display Drivers. Revenues from small and medium-sized display drivers slightly decreased by 0.6% to $625.4 million in 2024 from $629.2
million in 2023. Against the backdrop of slowing end-market sell-through, sales of smartphones and tablets were particularly affected as end customers extended
their replacement cycles in response to challenging economic conditions. However, our automotive driver sales in 2024 increased nearly 20% year-over-year,
significantly outpacing global automotive growth, largely driven by the continued adoption of TDDI technology among major customers across all continents. With
nearly 500 design-in projects secured and a continuous influx of new pipeline and design-wins across the board, of which only 30% already in mass production, we
expect to sustain this decent growth in the years ahead.
●
Non-Driver Products. Revenues from non-driver products increased by 10.6% to $155.5 million in 2024 from $140.5 million in 2023. The growth was primarily
driven by our TCON segment, especially in the automotive product, along with our CMOS image sensor business. This increase in TCON performance stems from
the widespread adoption of our market-leading local dimming TCON by major panel makers, Tier 1 suppliers, and automotive manufacturers worldwide.
Additionally, a robust pipeline of over 200 design-win projects, set to gradually enter production in the coming years, combined with a continuous influx of new
design wins, will further fuel our growth and reinforce our market leadership.
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Costs and Expenses. Costs and expenses decreased by 7.1% to $838.6 million in 2024 from $902.2 million in 2023. As a percentage of revenues, costs and expenses
decreased to 92.5% in 2024 compared to 95.4% in 2023.
●
Cost of Revenues. Cost of revenues decreased to $630.6 million in 2024 from $681.9 million in 2023, which was due primarily to a 2.2% decrease in unit shipments
in 2024. As a percentage of revenues, cost of revenues decreased to 69.5% in 2024 from 72.1% in 2023, mainly due to a strategic focus on cost improvements and
operational efficiency optimization, combined with a favorable product mix that included a higher percentage of high-margin products such as automotive and
TCON. The successful diversification of foundry sources also contributed to the margin increase.
●
Research and Development. Research and development expenses decreased by 6.5% to $160.3 million in 2024 from $171.4 million in 2023. This decrease was
primarily attributable to the lower employee bonus compensation, as the amortized portion of bonuses in 2023 was higher than that in 2024.
●
General and Administrative. General and administrative expenses decreased by 3.7% to $24.1 million in 2024 from $25.0 million in 2023, primarily as a result of
decreases in compensation awards to employees described in above Research and Development, but partially offset by increase in professional fees.
●
Sales and Marketing. Sales and marketing expenses decreased by 1.4% to $23.5 million in 2024 from $23.9 million in 2023. This decrease was primarily
attributable to decrease in compensation awards to employees described in above Research and Development, but partially offset by increase in travelling expense.
Non-Operating Income. We had net non-operating income of $9.1 million in 2024 compared to $1.2 million in 2023. The increase was primarily due to increase in
foreign currency exchange gains, decrease in finance costs and a re-measurement loss on the previously held equity interest in Viewsil in 2023.
Income Tax Expense (Benefit). Our income tax benefit decreased to $2.4 million in 2024 from $5.0 million in 2023. Our effective income tax rate increased to (3.1%) in
2024 from (11.3%) in 2023. The increase in our effective income tax rate was primarily attributable to the increase in pre-tax profit, from $44.4 million in 2023 to $77.3
million in 2024 and income tax benefit for tax credit decreased to $8.6 million in 2024 from $9.9 million in 2023.
Profit for the year. As a result of the foregoing, our profit was $79.8 million in 2024, versus $49.4 million in 2023, and profit attributable to Himax stockholders was
$79.8 million in 2024, versus $50.6 million in 2023.
Segment Results
The following table sets forth the revenues and operating results for our reportable segments for the periods indicated:
Year Ended December 31,
2022
2023
2024
(in thousands)
Segment Revenues
Driver IC
$
1,042,938
$
804,840
$
751,326
Non-Driver Products
158,401
140,588
155,476
Total
$
1,201,339
$
945,428
$
906,802
Year Ended December 31,
2022
2023
2024
(in thousands)
Segment Operating Income (Loss)
Driver IC
$
275,275
$
75,282
$
92,699
Non-Driver Products
(17,688)
(32,070)
(24,478)
Total
$
257,587
$
43,212
$
68,221
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Driver IC Segment
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Segment revenues. Our revenues from the Driver IC segment decreased by 6.6% to $751.3 million in 2024 from $804.8 million in 2023. The decline stemmed from
reduced sales of display drivers mainly from large-sized sectors, driven by the prevailing weak macroeconomic conditions that adversely affected both the demand for and
procurement processes of panel customers, as well as heightened price competition from Chinese peers.
Segment operating income. Operating income from the Driver IC segment was $92.7 million in 2024, up from $75.3 million in 2023. This increase was primarily
attributable to higher gross margin, which was mainly attributable to a strategic focus on cost improvements and operational efficiency optimization, combined with a
favorable product mix as well as the lower employee bonus compensation, as the amortized portion of bonuses in 2023 was higher than that in 2024.
Non-Driver Products Segment
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Segment revenues. Our revenues from the Non-Driver Products segment increased by 10.6% to $155.5 million in 2024, compared to $140.6 million in 2023. The year-
over-year increase was mainly from the growth of TCON and CMOS image sensor. Automotive TCON sales surged by more than 70% in 2024, driven by accelerated
adoption across the board.
Segment operating loss. Operating loss from the Non-Driver Products segment decreased to $24.5 million in 2024 from $32.1 million in 2023. The operating loss
decreases were attributable mainly to the increase in revenues and the decrease in operating expenses as lower employee bonus compensation described in above Driver IC
segment.
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, 2024, we had total current assets of $1,168.0 million, total current liabilities of $706.6 million and cash and cash equivalents of $218.1 million. As
of December 31, 2024, we had short-term secured borrowings of $503.7 million with cash and time deposits of $503.7 million as collateral, and long-term unsecured
borrowings of $34.5 million, of which $6.0 million was current portion. For enhancing the guaranty, our land, building and improvements of Fab 2 totaling $60.0 million
were pledged as collateral for the long-term unsecured borrowings. As of December 31, 2024, we had total unused short-term credit lines of $258.9 million, of which $146.8
million belonging to the parent company, Himax Technologies, Inc., needs to be secured with an equal amount of cash and time deposits when borrowing money from banks.
Further, we had unused long-term credit lines of $140.0 million. We believe that our existing short-term and long-term credit lines, together with cash generated from our
operations, are sufficient to meet our 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:
Year Ended December 31,
2022
2023
2024
(in thousands)
Net cash provided by operating activities
$
82,908
$
152,841
$
115,976
Net cash provided by (used in) investing activities
14,998
(88,882)
(516)
Net cash (used in) financing activities
(211,068)
(93,591)
(88,217)
Net increase (decrease) in cash and cash equivalents
(114,443)
(29,832)
26,399
Cash and cash equivalents at beginning of period
336,024
221,581
191,749
Cash and cash equivalents at end of period
221,581
191,749
218,148
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Operating Activities. Net cash provided by operating activities in 2024 was $116.0 million compared to $152.8 million in 2023. This decrease in net cash provided by
operating activities in 2024 was mainly due to an increase in cash used for raw materials, assembly, testing process fees in 2024 compared to 2023, but partially offset by
lower income tax paid in 2024.
Investing Activities. Net cash used in investing activities in 2024 was $0.6 million compared to $88.9 million in 2023. This decrease in net cash used in investing
activities was due primarily to a refund of $33.6 million in refundable deposits in 2024, and $56.9 million refundable deposits made for securing foundry capacity in 2023, a
decrease in cash used in acquisitions of property, plant and equipment of $10.3 million but offset by an increase of $15.8 million in net cash used in acquisitions of financial
assets at fair value through other comprehensive income in 2024 compared to 2023.
Financing Activities. Net cash used in financing activities in 2024 was $88.2 million compared to $93.6 million in 2023. This change was due primarily to decrease in
distribution of cash dividends in 2024, but offset by a refund of guarantee deposits received from customers in 2024 and the increase in prepayments for purchase of treasury
shares.
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.”
During the 2021 timeframe, we took steps to address the ongoing foundry capacity shortage worldwide by entering into strategic agreements with our foundry partners to
secure the necessary capacity to meet our business requirements. 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. However, after several quarters of aggressive destocking, our inventory has reached a
comfortable level. In light of this, we strategically terminated certain high-cost foundry capacity agreements in the second quarter of 2023, prior to their expiration dates. This
move aims to improve our cost structure for new wafer starts and maintain competitiveness. This, however, also has resulted in a significant one-time early termination
expense incurred in the second quarter of 2023 and hit our gross margin. 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.
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 2030. Purchase obligations
exclude agreements that are cancelable without penalty. Contractual obligations resulting from above purchase orders and agreements with known amounts approximate
$1,258 million as of December 31, 2024. Of obligations under above purchase orders and agreements, $474 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 $11.8 million, $23.4
million and $13.1 million in 2022, 2023 and 2024, respectively. Capital expenditures of $13.1 million in 2024 was mainly for in-house testers for our IC design business as
well as R&D related equipment.
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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 2022,
2023 and 2024, we incurred research and development expenses of $175.6 million, $171.4 million and $160.3 million, respectively, representing 14.6%, 18.1% and 17.7% of
our revenues, respectively.
5.D. Trend Information
As we look ahead to 2025 and beyond, Himax is well-positioned for sustained growth, leveraging our leadership in the automotive sector, operational agility, and focus
on high-value product lines such as TCON, OLED, AI, and WLO. These segments not only generate higher gross margins than our corporate average, but we have also
secured leading positions in several key areas. With a strong pipeline, continuous R&D investments, and deepening industry partnerships, we remain committed to advancing
next-generation technologies. Our highly diversified product portfolio enables us to seize emerging opportunities, drive long-term value, and reinforce our competitive edge
in an increasingly dynamic market landscape.
Large-sized Display Driver IC Sector
Himax continues to expand its large-size driver IC portfolio, targeting high-value markets with seamless, integrated solutions for key customers. In collaboration with
leading panel makers, we are advancing next-generation products featuring high-speed interfaces, low power consumption, higher refresh rates, ultra-large displays, high-
aspect-ratio screens, and curved-view designs. These innovations create strong market differentiation, reinforcing our competitive edge against intense price competition from
local Chinese players.
In the IT sector, Himax is well-positioned to lead the rapidly evolving AI PC and premium notebook market. With the growing adoption of OLED displays and touch
functionality, driven in part by AI PCs, we offer a comprehensive IC portfolio for LCD and OLED notebooks, including DDIC, TCON, touch controllers, and TDDI. This
enables better support for high-performance displays, seamless system integration, and an enhanced user experience. Our leading in-cell touch TDDI for LCD notebooks
enhances system integration while supporting 4K resolution and 16-inch displays. Mass production for a leading AI PC vendor is already underway in 2024, with additional
projects in the pipeline. For OLED notebooks, we are advancing on-cell touch technology and the next-gen eDP 1.5 interface, delivering high frame rates, low power
consumption, and adaptive sync, key features for next-generation AI PCs. In the monitor segment, we maintain a strong market presence, with ongoing development in high-
value areas such as gaming monitors and high-frame-rate displays. This positions us as a leading provider of cutting-edge solutions that deliver superior visual performance
and an enhanced user experience.
Small and Medium-Sized Display Driver IC Sector
Himax continues to lead the market in display driver ICs for automotive and tablets. In the automotive sector, we are strengthening collaborations with top panel makers,
Tier 1 suppliers, and global customers, offering a diverse portfolio spanning both mainstream LCD and emerging OLED technologies. By 2025, automotive is expected to
remain our largest revenue contributor, accounting for half of total sales.
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With a steady influx of new pipelines and design wins across various segments, including over 500 TDDI design wins and more than 200 local dimming TCON projects,
most set for mass production within the next two years, our market leadership remains firmly established. Furthermore, our expansion into automotive OLED displays,
including DDIC, TCON, and on-cell touch controllers, further solidifies our position by delivering fully integrated, next-generation display solutions.
Himax also offers high-speed P2P bridge and LTDI solutions, specifically designed for large displays over 30 inches and pillar-to-pillar applications. These solutions
support cascading up to 30 chips, enabling ultra-high-resolution displays with exceptional touch precision, creating a significant entry barrier for competitors. Our industry-
leading automotive LTDI product entered mass production for Geely Auto’s NEVs in the third quarter of 2023, with additional projects underway. Additionally, we are seeing
a strong emerging trend where more customers are adopting our TDDI or LTDI solutions, combined with our local dimming TCON, as their standard development platform
for next-generation automotive displays of various sizes. This shift not only reinforces our market leadership but also increases the content value per panel for Himax.
In the tablet market, Himax maintains a leading position, particularly in the non-iOS segment, particularly in TDDI. For OLED tablet, we offer both DDIC and TCON
solutions, with mass production having commenced in the first quarter of 2022. Despite a soft demand environment, we are actively developing next-generation ICs for
OLED tablets to expand our product offerings and strengthen our market position when demand rebounds. We continue to broaden our customer base to reinforce our
leadership. Moreover, the growing demand for LCD displays with higher frame rates, resolutions, screen sizes, and active stylus support signals a shift toward more
advanced, feature-rich devices. This trend creates new opportunities for innovation, and Himax’s early-mover advantage positions us to capitalize on it. Leveraging our
expertise in display technology, we provide high-performance solutions tailored to evolving industry needs. In the smartphone sector, we anticipate higher exposure once our
smartphone OLED solution becomes available. As expected, our traditional discrete driver ICs for smartphones and tablets are being rapidly replaced by TDDI technology.
Himax is actively expanding its presence in the OLED market through strategic partnerships with leading panel makers in Korea, Japan, and China. Our comprehensive
OLED portfolio now includes on-cell touch controllers, enabling us to support a wide range of applications, including automotive, tablets, and notebooks. Additionally, our
flexible OLED driver and TCON for automotive displays successfully ramped up in the first quarter of 2022 for a flagship EV model, with an increasing number of awarded
projects from global automakers and EV manufacturers. “With the growing adoption of OLED displays, we expect OLED driver ICs to become a major growth driver for our
business.
Non-Driver IC Sector
The non-driver category has emerged as our most exciting growth area and a key differentiator for the company. We provide comprehensive solutions, including timing
controllers, image processing, WiseEye ultralow power AI sensing, 3D sensing technologies, and optical innovations, further strengthening our market position.
In the timing controller sector, we remain highly optimistic about growth prospects, having strategically positioned ourselves in high-end, value-added segments such as
4K/8K TVs, gaming TVs and monitors, low-power notebooks and automotive. As consumers seek more immersive entertainment experiences in film, television, and gaming,
demand for advanced display technologies continues to rise. In automotive applications, we have dedicated to developing this high-barrier technology for years, building a
comprehensive TCON product portfolio and establishing an undisputed leadership position. Local dimming technology plays a crucial role in enhancing display contrast for
better visibility in bright daylight while also improving power efficiency, a key factor for larger automotive displays for both conventional and EV models. To date, we have
secured over 200 design wins with Tier 1 suppliers and automakers, initially in premium car models, with adoption now expanding into mainstream vehicles. Automotive
TCON sales in 2024 grew by over 70% year-over-year, and we anticipate continued strong annual growth as we move into 2025. This is driven by expanding design wins, as
well as secured projects scheduled to begin mass production within the next two years. Our ongoing innovations in local dimming TCON technology reinforce our market
dominance and position us for long-term, sustainable growth.
Additionally, we began mass production of OLED TCON alongside DDIC for automotive and tablet applications back in early 2022, with design wins from leading
tablet and NEV customers continuing to expand. Meanwhile, we are actively developing the next-generation TCON IC for OLED tablets, notebooks, and automotive
applications, aiming to diversify our product offerings and strategically position ourselves for a resurgence in demand. We believe the TCON sector will be a major driving
force behind the continued growth of our non-driver business.
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In 2016, our non-driver business experienced tremendous growth, primarily driven by LCoS and WLO shipments to a leading AR device customer. WLO shipments saw
a significant year-over-year increase in 2018 due to the customer’s large-scale adoption across more models. By 2024, we continued fulfilling demand from our anchor
customer for legacy products, albeit at a lower volume due to customer’s technology migration. That said, WLO technology remains a key enabler in next-generation optical
applications. For instance, WLO technology enhances 3D perception sensing, enabling precise controller-free gesture recognition in VR devices. We began volume
production of WLO technology for a leading North American customer in the second quarter of 2023, powering their next-generation VR devices with 3D gesture control
capabilities. Another major application of WLO is in CPO (Co-Packaged Optics). In 2023, we collaborated with FOCI in CPO, where it is integrated into cutting-edge multi-
chip modules (MCMs). Himax’s WLO technology plays a critical role in CPO, providing essential optical coupling that enhances performance across High-Performance
Computing (HPC), high-performance AI and cloud servers applications and more. Our deep expertise in optical design, combined with proven nanoimprinting capabilities
and mass manufacturing experience, enables us to deliver high-quality, next-generation CPO solutions. In summary, these advancements WLO serve a broad range of
applications, including automotive, consumer, industrial, medical, AR/VR/MR devices, and advanced optical communication technologies.
Himax WiseEye ultralow power AI sensing solution, a cutting-edge endpoint AI integration, features industry-leading ultralow power AI processor, always-on CMOS
image sensor, and CNN-based AI algorithm. WiseEye AI delivers a significant competitive edge in the rapidly growing AI market through its ultralow power consumption
and context-aware, on-device AI inferencing that seamlessly integrates vision and other sensing capabilities into endpoint applications, particularly battery-powered devices.
This not only enhances intuitive user interaction but also makes AI more practical and accessible. Additionally, WiseEye AI offloads tasks from the main processor,
effectively extending battery lifespan and improving overall data processing efficiency. Building on the success with Dell notebooks, Himax WiseEye AI is continuing to
expand its market presence, with additional use cases expected across other leading notebook brands, some of which are set for production later 2025.
WiseEye also continues to achieve significant market success across various sectors. For smart door lock, we collaborated with DESMAN, a leading high-end brand in
China, to introduce the world’s first smart door lock with 24/7 sentry monitoring and real-time event recording. Building on this achievement, we are expanding globally by
collaborating with other leading door lock makers worldwide to integrate innovative AI features, including parcel recognition, anti-pinch protection, and palm vein biometric
access, further extending application possibilities. Several of these value-added solutions are set to enter production later 2025. Other than WiseEye AI total solution, we also
offer ultralow power, tiny form factor, plug-and-play WiseEye Modules, incorporating our ultralow power WiseEye AI processor, AoS image sensor, and advanced
algorithms. The modules feature no-code/low-code AI platform capabilities, simplifying AI integration and supporting diverse use cases, such as human presence detection,
gender and age recognition, gesture recognition, face mesh, voice command, thermal image sensing, pose estimation and people flow management. By streamlining
deployment and reducing development costs, WiseEye Modules open new opportunities for automation, enhance interactivity, and elevate user experiences across a variety of
industries. One standout in our WiseEye Module portfolio is the Himax WiseEye PalmVein solution, which has quickly gained traction since its introduction just one year
ago.
Moving forward, we are more committed than ever to strengthening our WiseEye product roadmap and retaining our leadership position in ultralow power AI processor
and image sensor for endpoint AI applications. WiseEye2, our latest AI processor, has earned the prestigious “2023 Best AI Product Award” from EE Awards Asia,
solidifying our leadership position in the industry. This achievement builds upon the success of our pioneering WiseEye1 AI processor where WiseEye2 goes beyond setting a
new standard in endpoint AI with exceptional inference capability, ultralow power efficiency, and advanced security features. It excels in context-aware AI with precise
detection capabilities such as face mesh, facial landmark, hand gesture, and human pose, all achieved with minimal power consumption, as well as simplifying system
integration and lowers costs by offering a rich set of peripheral interfaces, eliminating the need for additional discrete MCUs. With versatile sensor fusion capabilities,
WiseEye2 enables accurate detection across various inputs, making it ideal for various applications, including industrial. Collaboration with major CPU and AP SOC players
are in progress, facilitating integration into next-generation smart notebooks, AI PCs, surveillance systems, and beyond. We continue to advance our WiseEye AI processor
roadmap to align with industry trends and customers’ evolving demands, delivering cutting-edge, ultralow power AI solutions for next-generation applications. WiseEye
business is in a good position to enjoy rapid growth for years to come and we believe it will serve as a multi-year structural growth driver for Himax.
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In 3D sensing, we provide both total solutions and key components to our customers. Our 3D decoder IC enhances local image processing for face recognition, ensuring
advanced and secure authentication. Certified by leading Chinese electronic payment standards, it meets stringent requirements for accurate data decoding, fast operation, and
strict privacy protection. Since 2022, it has been widely adopted by major Chinese e-payment solution providers, with significant shipment volumes. At CES 2025, we
showcased our latest advancements in 3D sensing, including cutting-edge integrated solutions such as Time-of-Flight (ToF) and structured light, designed to accelerate
product development and meet growing demands for accuracy and performance in AR/VR and 3D stereoscopic displays. These innovations are driving breakthroughs in
gaming, healthcare, and education. One of the most eye-catching highlights was our groundbreaking 3D naked-eye laptop, featuring Himax’s proprietary structured light
vision AI module for real-time 3D eye and hand gesture tracking. This technology enables dynamic display adjustments based on the viewer’s perspective, delivering glasses-
free, high-quality 3D visuals without dizziness, setting a new standard for immersive experiences.
For CMOS image sensors business, we continue to supply sensors for webcams and notebooks. With the rapid expansion of AI adoption across industries, we have
developed a range of ultralow power always-on CMOS image sensors designed for AI applications that require continuous sensing or monitoring while minimizing power
consumption. We are seeing increasing customer adoption of our AI sensor worldwide across various markets, including notebooks, access control, smart home/office
solutions, medical devices, and AIoT applications. Additionally, we are expanding our sensor portfolio into thermal sensing technology through a strategic investment in
Obsidian Sensors, Inc. (“Obsidian”), a San Diego-based thermal imaging sensor provider. Obsidian’s proprietary high-resolution thermal sensors have the potential to
transform the market with their breakthrough low-cost, high-volume production capabilities. Our expansion into thermal sensing complements our existing offerings, such as
WiseEye, further broadening our technological reach and strengthening our position in the growing AI-powered sensing market.
Himax has dedicated years of R&D to advancing LCoS technology, focusing on AR goggle devices and automotive AR HUDs. Many industry-leading customers have
showcased state-of-the-art products powered by our technology, including AR glasses and LiDAR systems. Our proprietary front-lit LCoS microdisplay integrates LCoS
microdisplay, lightguide, and front-lit LED, offering a groundbreaking solution for AR applications. Our latest Front-Lit LCoS Microdisplay delivers unmatched brightness
of up to 400K nits, setting a new benchmark for microdisplay panels with vibrant RGB color reproduction. With superior optical power efficiency, a compact form factor, and
ultra-lightweight design, it stands out as the ideal choice for next-generation see-through AR devices. This is reinforced by strong partnerships with several leading tech
giants developing AR goggles. Currently, we are actively engaged in follow-up engineering efforts with key industry players, positioning us for significant opportunities in
the near future.
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.
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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 March 31, 2025. Unless
otherwise indicated, the positions or titles indicated in the table below refer to Himax Technologies, Inc.
Directors and Executive Officers
Age
Position/Title
Dr. Biing-Seng Wu
67
Chairman of the Board
Jordan Wu
64
President, Chief Executive Officer and Director
Dr. Yan-Kuin Su
76
Director
Yuan-Chuan Horng
73
Director
Dr. Liang-Gee Chen
68
Director
Jessica Pan
55
Chief Financial Officer
Hsien Chang Tsai
54
Vice President, Sales and Operations
Eric Li
61
Chief IR/PR Officer and Spokesperson
Directors
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 with profound experience 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 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 currently also serves as the dean of Academy of Innovative Semiconductor and
Sustainable Manufacturing at National Cheng Kung University, since August 2022. 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 life 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.
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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.
Dr. Liang-Gee Chen is our director. He now serves as Emeritus Professor of Department of Electrical Engineering, National Taiwan University. Dr. Chen holds a B.S.
and M.S. and Ph.D. degree in Electrical Engineering from National Cheng Kung University. Dr. Chen has previous served several roles including as Minister of Ministry of
Technology and Science, Deputy Minister of Ministry of Education, Executive Vice President for Academics and Research of NTU, Vice Dean Officer for College of
Electrical Engineering and Computer Science of NTU, and President of National Applied Research Laboratories. Dr. Chen has thorough and extensive professional expertise
and experience across the industry, government, and academia. He has devoted the Electrical Engineering specificity on VLSI design for Multimedia Processing System. He
received the IEEE Fellow in 2001, TWAS Engineering Science Medal in 2010 and Fellow of National Academy of Innovators in 2016.
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.
Hsien Chang Tsai is our vice president in charge of Sales and Operations. Mr. Tsai joined Himax in 2002 as Director of Himax Operation Division initially before
serving as Vice President of Himax Display, Inc. where he successfully led the acquisition of Spatial Photonics, Inc. Most recently, he concurrently served as Vice President
of Himax Imaging, Ltd. and Vice President of Intelligent Sensing AI Product Center of Himax. Prior to Himax, Mr. Tsai served in the process integration and customer
service department of TSMC. Mr. Tsai holds a B.S. degree and M.S. degree in Electrical Engineering from National Taiwan University and an executive M.B.A. degree from
National Taiwan 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, 2024, the aggregate cash compensation that we paid to our executive officers was approximately $1.8 million. The aggregate share-
based compensation that we paid to our executive officers was approximately $0.2 million. In 2024, our Chairman of the Board voluntarily abandon the number of RSUs to
be granted proposed by the compensation committee and then compensate other employees. The goal is to provide competitive compensation to our employees. No executive
officer is entitled to any severance benefits upon termination of his or her employment with us.
For the year ended December 31, 2024, 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.
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The following table summarizes the RSUs and cash award that we granted in 2024 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.
Total Cash
Ordinary Shares
Award
Ordinary Shares
Underlying
Unvested Portion
Total RSUs
Granted
Underlying Vested
Unvested Portion
of cash award
Name
Granted
(in thousands)
Portion of RSUs
of RSUs
(in thousands)
Dr. Biing-Seng Wu
—
—
—
—
—
Jordan Wu
17,234
—
8,616
25,852
—
Dr. Yan-Kuin Su
—
—
—
—
—
Yuan-Chuan Horng
—
—
—
—
—
Dr. Liang-Gee Chen
—
—
—
—
—
Jessica Pan
5,634
—
4,226
7,042
—
Hsien Chang Tsai
2,208
38
4,416
—
38
Eric Li
4,564
—
4,226
4,902
—
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.
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, Dr. Yan-Kuin Su and Dr. Liang-Gee Chen. 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;
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●
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, Dr. Yan-Kuin Su and Dr. Liang-Gee Chen. 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
committee consists of Yuan-Chuan Horng, Dr. Yan-Kuin Su and Dr. Liang-Gee Chen. 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.
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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, 2022, 2023 and 2024, we had 2,181, 2,164 and 2,177 employees, respectively. The following is a breakdown of our employees by function as of
December 31, 2024:
Function
Number
Research and development(1)
1,423
Engineering and manufacturing(2)
292
Sales and marketing(3)
327
General and administrative
135
Total
2,177
Notes: (1) Includes semiconductor design engineers, application engineers, assembly and testing engineers and quality control 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.
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.
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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 3rd amended and restated by
extending its duration for three (3) years to September 6, 2025, which was approved by our shareholders at the annual general meeting held on August 16, 2022. 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.
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.
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.
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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 1,402,714 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.
We made grants of 3,987,509 RSUs to our employees on September 28, 2022. The vesting schedule for such RSU grants is as follows: 86.41% of the RSU grants vested
immediately and were settled by cash in the amount of $17.5 million on the grant date, with the remainder vesting equally on each of September 30, 2023, 2024 and 2025,
which will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 1,710,607 RSUs to our employees on September 26, 2023. The vesting schedule for such RSU grants is as follows: 97.45% of the RSU grants vested
immediately and were settled by cash in the amount of $9.5 million on the grant date, with the remainder vesting equally on each of September 30, 2024, 2025 and 2026,
which will be settled by our ordinary shares, subject to certain forfeiture events.
We made grants of 2,014,386 RSUs to our employees on September 26, 2024. The vesting schedule for such RSU grants is as follows: 96.76% of the RSU grants vested
immediately and were settled by cash in the amount of $11.1 million on the grant date, with the remainder vesting equally on each of September 30, 2025, 2026 and 2027,
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. 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.
On November 9, 2022, the Company’s compensation committee made the unvested RSUs generally include forfeitable dividend-equivalent rights, which entitle holders
of RSUs to the same dividend value per share as holders of common stock. The dividend-equivalent rights are subject to the same vesting and other terms and conditions as
the underlying RSUs.
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.
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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 March 31, 2025, by each of our directors and executive officers. Beneficial
ownership is determined in accordance with the rules and regulations of the SEC.
Number of Shares
Percentage of Shares
Name
Owned
Owned
Dr. Biing-Seng Wu
76,904,468
22.0 %
Jordan Wu
7,513,833
2.1 %
Dr. Yan-Kuin Su
—
—
Yuan-Chuan Horng
916,104
*
Dr. Liang-Gee Chen
—
—
Jessica Pan
109,422
*
Hsien Chang Tsai
—
—
Eric Li
16,376
*
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.
6.F. Disclosure of a registrant’s action to recover erroneously awarded compensation
There was no erroneously awarded compensation that was required to be recovered pursuant to our Compensation Clawback Policy during the fiscal year ended
December 31, 2024.
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.
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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 March 31, 2025, 349,826,828 of our shares were outstanding. We believe that, of such shares, 211,991,772 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 March 31, 2025,
105,995,886 ADSs, representing 211,991,772 common shares, were held of record by Cede & Co. and 10 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 March 31, 2025, 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.
Percentage of
Number of Shares
Shares
Name of Beneficial Owner
Beneficially Owned(3)
Beneficially Owned(3)
Dr. Biing-Seng Wu(1)
76,904,468
22.0 %
Whei-Lan Teng(2)
22,847,370
6.5 %
All directors and executive officers as a group(3)
85,460,203
24.4 %
Note: (1) Dr. Biing-Seng Wu directly owns 315,322 ordinary shares. Dr. Biing-Seng Wu beneficially owns (a) 56,549,308 ordinary shares through Sanfair Asia
Investments Ltd., a wholly owned subsidiary of Taxus Technology Investment Pte. Ltd. and (b) 20,039,838 ordinary shares through Chi-Duan Investment Co.
Ltd. All of the three entities are investment companies controlled by Biing-Seng Wu. Accordingly, Dr. Biing-Seng Wu may be deemed to beneficially own an
aggregate of 76,904,468 ordinary shares, representing approximately 22.0% of the outstanding ordinary shares.
(2) Whei-Lan Teng beneficially owns 5,434,918 ordinary shares through Renmar Finance Limited, a wholly owned subsidiary of Pleione Technology Investment
Pte. Ltd. Both of the entities are investment companies controlled by Whei-Lan Teng. In addition, Whei-Lan Teng, may be attributed beneficial ownership of
17,412,452 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 22,847,370 ordinary shares. Accordingly, Whei-Lan Teng may be deemed to beneficially own an aggregate of 22,847,370
ordinary shares, representing approximately 6.5% of the outstanding ordinary shares.
(3) Numbers of shares beneficially owned by all directors and executive officers as a group already include an aggregate of 76,904,468 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
Cheng Mei Materials Technology Corporation (CMMT)
CMMT is an equity method investor of CMVT. However, CMMT resigned as a legal director and then lost significant influence on CM Visual Technology Corp. from
June 25, 2024. In 2022, 2023 and 2024, the purchase of raw materials from CMMT was $1.1 million, $1.3 million and nil, respectively. As of December 31, 2023 and 2024,
the related payable resulting from the purchase of raw materials were $0.9 million and nil, respectively.
7.C. Interests of Experts and Counsel
Not applicable.
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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.
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. On July 12, 2022, we paid a cash dividend in the amount of $217.9 million, or the equivalent of $1.25 per ADS. On July 12, 2023, we paid a
cash dividend in the amount of $83.7 million, or the equivalent of $0.48 per ADS. On July 12, 2024, we paid a cash dividend in the amount of $50.7 million, or the equivalent
of $0.29 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.
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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.
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.
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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 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.
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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, $100 million (and /or its equivalent settlement) for companies and $10 million (and/or its equivalent settlement) for Taiwanese
citizen 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
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”;
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●
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
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.
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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, 2024.
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.
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.
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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.
10.J. Annual Report to Security Holders
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 2024, more than
99% of our sales and cost of revenues were denominated in U.S. dollars. However, in December 2024 approximately 62% of our operating expenses were denominated in NT
dollars, with a small percentage denominated in Japanese Yen, Korean Won 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, 2024, 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
Not applicable.
12.C. Other Securities
Not applicable.
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12.D. American Depositary Shares
Fees and Charges Payable by ADS Holders
Persons depositing or withdrawing
shares or ADS holders must pay:
For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
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
$0.05 (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
$0.05 (or less) per ADS per calendar year
Depositary services
Registration or transfer fees
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
Expenses of the depositary
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 2024, 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.
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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 Accounting Standards as issued by the IASB.
Our internal control over financial reporting includes those policies and procedures that:
●
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 Accounting
Standards 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, 2024 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, 2024.
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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, 2024, 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, 2024, 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, 2023 and 2024, 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, 2024, and the related notes (collectively, the “consolidated financial statements”), and our
report dated April 2, 2025 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 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
April 2, 2025
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Changes in Internal Control over Financial Reporting
In 2024, 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, Zilian Road, Xinshi District, Tainan City 744092
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.
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, 2023 and 2024.
Year ended December 31,
Services
2023
2024
Audit Fees(1)
$
805,000
$
798,000
Tax Fees(2)
20,000
31,000
All Other Fees(3)
7,000
7,000
Total
$
832,000
$
836,000
Note: (1) Audit Fees. This category includes the audit of our annual consolidated financial statements and internal control 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 and tax compliance status.
(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.
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93
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 2024.
On December 4, 2024, our board of directors authorized another share buyback program allowing us to repurchase up to $20.0 million of our ADSs in the open market or
through privately negotiated transactions. As of March 31, 2025, we had repurchased a total of approximately $0.8 million of our ADSs (approximately 0.1 million ADSs)
under this program from the open market.
The following table sets forth information regarding transactions completed under the share buyback programs for each of the specified periods.
(d)
Approximate
(c) Total Number
Dollar Value of
of ADSs
Shares That
(a) Total
Purchased as
May Yet Be
Number of
(b) Average Price
Part of Publicly
Purchased
ADSs
Paid per
Announced Plans
Under the Plans
Period
Purchased
ADS
or Programs
or Programs
2024 Share Buyback Program:
December 10, 2024 to December 12, 2024
122,972
$
6.77
122,972
$
19,167,561
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 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.
Table of Contents
94
16.I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
16.J. Insider Trading Policies
Our board of directors has adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of our securities by directors, senior
management, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules, and regulations, and any listing standards
applicable to us. Our insider trading policy is filed as an exhibit to this annual report.
16.K. Cybersecurity
Risk Management and Strategy
To enhance information security, our company has collaborated with Deloitte Taiwan, a third-party consulting firm, for the fiscal year ended December 31, 2023 and
2024, to strengthen our risk management procedures. Currently, our company maintains the Risk Assessment Work Instructions, the Network and Communication
Management Work Instructions, and the Emergency Response and Disaster Recovery Management Work Instructions. These guidelines enable the effective implementation
of risk management and assessment strategies, network control measures, information security incident classification, and incident reporting procedures.
With the increasing frequency of cyberattacks, our company continues to implement strict preventive measures against network attacks. Our information technology (IT)
department is led by a supervisor with more than 20 years of management experience. The department comprises professionals specializing in information security
technology and software development. Security specialists within the department are responsible for implementing network security control measures, including firewall
intrusion detection and prevention, internal and external network domain access control, regular antivirus software updates, physical management of information equipment,
and periodic updates of IT hardware. These measures aim to ensure a secure R&D environment and mitigate operational risks.
For additional information regarding risks to the Company from cybersecurity threats. Please see “Item 3.D. Key Information — Risk Factors — Risks Related to Our
Financial Condition and Business —System security risks, data protection breaches or unexpected system outages or failures could impact our business.”
Governance
Our company has established an Information Security Committee, chaired by the Vice President of the Sales and Operations Center, with representatives from each
department serving as committee members. The committee coordinates various information security control measures and management strategies. Under the committee, a
task-oriented Emergency Response Team has been formed. When a suspected information security incident occurs, this team evaluates the severity of the incident. In case of
significant cybersecurity incidents, the team will implement damage control and recovery procedures, followed by root-cause analysis, investigation, and improvement
actions. Additionally, an Information Security Management Team composed of representatives from the IT department and each functional unit has been established to
execute policy discussions, policy tracking, and related operational tasks.
Our company’s Information Security Committee reports annually to the Board of Directors regarding information security achievements. The report includes assessments
of internal and external cybersecurity risks, investigation and handling of information security incidents, action plans for high-risk cybersecurity matters, and annual
information security programs. Additionally, cybersecurity awareness training is conducted annually for Board members to enhance their expertise in cybersecurity
governance.
In 2024, our company experienced no significant information security incidents. To further strengthen employees’ cybersecurity awareness, the company not only
conducts cybersecurity awareness campaigns but also administers four cybersecurity assessments each year. All employees who participated in these assessments have
successfully met the required standards, ensuring the effective implementation of our information security policies.
Table of Contents
95
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, 2023 and 2024.
(c) Consolidated Statements of Profit or Loss for the years ended December 31, 2022, 2023 and 2024.
(d) Consolidated Statements of Other Comprehensive Income for the years ended December 31, 2022, 2023 and 2024.
(e) Consolidated Statements of Changes in Equity for the years ended December 31, 2022, 2023 and 2024.
(f)
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2023 and 2024.
(g) Notes to the Consolidated Financial Statements.
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96
ITEM 19. EXHIBITS
Exhibit
Number
Description of Document
1.1
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
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.)
2.3
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
Himax Technologies, Inc. 2011 Long-Term Incentive Plan Amended and Restated as of August 31st day, 2016, 2nd Amended and Restated as of
August 28th day, 2019 and 3rd Amended and Restated as of August 16th day, 2022. (Incorporated herein by reference to Exhibit 99.4 to the
Registrant’s report of foreign private issuer on Form 6-k filed on June 15, 2022.)
4.2*
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.
11.2
Statement of Policy Concerning Insider Trading Policies
12.1
Certification of Jordan Wu, President and Chief Executive Officer of Himax Technologies, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
12.2
Certification of Jessica Pan, Chief Financial Officer of Himax Technologies, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1
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.
97.1
Compensation Clawback Policy. (Incorporated by reference to Exhibit 97.1 from our Annual Report on Form 20-F (file no. 000-51847) filed with the
Securities and Exchange Commission on April 2, 2024.)
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*Confidential treatment has been requested for portions of this exhibit.
Table of Contents
97
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: April 2, 2025
Table of Contents
98
HIMAX TECHNOLOGIES, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (KPMG, Hsinchu, Taiwan, PCAOB ID 1026)
F-2
Consolidated Statements of Financial Position as of December 31, 2023 and 2024
F-4
Consolidated Statements of Profit or Loss for the Years Ended December 31, 2022, 2023 and 2024
F-6
Consolidated Statements of Other Comprehensive Income for the Years Ended December 31, 2022, 2023 and 2024
F-7
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2023 and 2024
F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2023 and 2024
F-11
Notes to the Consolidated Financial Statements
F-13
Table of Contents
F-1
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 2022, 2023 and 2024
(With Report of Independent Registered
Public Accounting Firm Thereon)
Table of Contents
F-2
Report of Independent Registered Public Accounting Firm
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, 2023 and
2024, 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, 2024 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, 2023 and 2024, and the results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 2024, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting
Standards”).
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, 2024, 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 April 2, 2025 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.
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 non-financial asset, excluding goodwill in the Wafer Level Optics cash generating unit
As discussed in Note 14 and 15 to the consolidated financial statements, the balance of other intangible assets and property, plant and equipment were $636 thousand and
$121,280 thousand, respectively as of December 31, 2024, a portion of which related to the Wafer Level Optics cash generating unit (“CGU”). The Company’s non-
financial assets excluding goodwill are 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.
Table of Contents
F-3
We identified the impairment assessment of non-financial assets excluding goodwill 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 non-financial assets 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 non-financial assets excluding goodwill, 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 available subsequent purchase orders and industry revenue forecast. 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 an estimated discount rates
developed independently based on market data and inputs.
We have served as the Company’s auditor since 2001.
/s/ KPMG
Hsinchu, Taiwan
April 2, 2025
Table of Contents
F-4
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Position
December 31, 2023 and 2024
(in thousands of US dollars)
December 31,
December 31,
Note
2023
2024
Assets
Current assets:
Cash and cash equivalents
7, 23
$
191,749
218,148
Financial assets at amortized cost
8, 23
12,511
4,286
Financial assets at fair value through profit or loss
9, 23
2,117
2,140
Accounts receivable, net (including related parties)
11, 23, 26
235,829
236,813
Inventories
12
217,308
158,746
Income taxes receivable
23
1,454
726
Restricted deposit
17, 23, 27
453,000
503,700
Other receivable from related parties
23, 26
69
13
Other current assets
23
86,548
43,471
Total current assets
1,200,585
1,168,043
Financial assets at fair value through profit or loss
9, 23
21,650
23,554
Financial assets at fair value through other comprehensive income
10, 23
1,635
28,226
Equity method investments
13
3,490
8,571
Property, plant and equipment, net
15, 18, 27, 29, 30
130,109
121,280
Deferred tax assets
22
14,196
21,193
Goodwill
4(k)
28,138
28,138
Other intangible assets, net
14, 30
816
636
Restricted deposit
23, 27
32
31
Refundable deposits
23
222,025
221,824
Other non-current assets
19
20,728
18,025
442,819
471,478
Total assets
$
1,643,404
1,639,521
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-5
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Position (Continued)
December 31, 2023 and 2024
(in thousands of US dollars)
December 31,
December 31,
Note
2023
2024
Liabilities and Equity
Current liabilities:
Current portion of long-term unsecured borrowings
18, 23, 27
$
6,000
6,000
Short-term secured borrowings
17, 23, 27
453,000
503,700
Accounts payable (including related parties)
23, 26
107,342
113,203
Income taxes payable
22
15,309
9,514
Other payable to related parties
23, 26
110
—
Contract liabilities-current
29
17,751
10,622
Other current liabilities
5, 15, 16, 23
109,291
63,595
Total current liabilities
708,803
706,634
Long-term unsecured borrowings
18, 23, 27
34,500
28,500
Deferred tax liabilities
22
520
564
Other non-current liabilities
15, 19, 23
35,879
7,496
Total liabilities
779,702
743,194
Equity
Ordinary shares
21
107,010
107,010
Additional paid-in capital
21
114,648
115,376
Treasury shares
(5,157)
(5,546)
Accumulated other comprehensive income
21
(180)
8,621
Retained earnings
640,447
664,600
Equity attributable to owners of Himax Technologies, Inc.
856,768
890,061
Noncontrolling interests
21
6,934
6,266
Total equity
863,702
896,327
Total liabilities and equity
$
1,643,404
1,639,521
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-6
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Profit or Loss
For the years ended December 31, 2022, 2023 and 2024
(in thousands of US dollars, except per share data)
Note
2022
2023
2024
Revenues:
Revenues from third parties, net
$
1,201,124
945,309
906,737
Revenues from related parties, net
215
119
65
Total revenues
26, 29
1,201,339
945,428
906,802
Costs and expenses:
Cost of revenues
12, 19, 20, 26, 30
714,233
681,931
630,601
Research and development
19, 20, 26, 30
175,557
171,392
160,329
General and administrative
19, 20, 26, 30
28,503
25,037
24,121
Sales and marketing
19, 20, 26, 30
25,459
23,856
23,530
Total costs and expenses
943,752
902,216
838,581
Operating income
257,587
43,212
68,221
Non operating income (loss):
Interest income
4,813
8,746
9,907
Changes in fair value of financial assets at fair value through profit or loss
9, 23
1,246
1,655
1,363
Foreign currency exchange gains (losses), net
5,506
(768)
2,491
Finance costs
(2,783)
(6,080)
(4,014)
Share of losses of associates
13
(743)
(598)
(831)
Other gains (losses)
5, 6
10,694
(1,932)
—
Other income
245
158
198
18,978
1,181
9,114
Profit before income taxes
276,565
44,393
77,335
Income tax expense (benefit)
22
41,098
(5,028)
(2,435)
Profit for the year
235,467
49,421
79,770
Loss (profit) attributable to noncontrolling interests
1,515
1,195
(15)
Profit attributable to Himax Technologies, Inc. stockholders
$
236,982
50,616
79,755
Basic earnings per ordinary share attributable to Himax Technologies, Inc. stockholders
4(r)
$
0.68
0.15
0.23
Diluted earnings per ordinary share attributable to Himax Technologies, Inc. stockholders
4(r)
$
0.68
0.14
0.23
Basic earnings per ADS attributable to Himax Technologies, Inc. stockholders
4(r)
$
1.36
0.29
0.46
Diluted earnings per ADS attributable to Himax Technologies, Inc. stockholders
4(r)
$
1.36
0.29
0.46
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-7
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Other Comprehensive Income
For the years ended December 31, 2022, 2023 and 2024
(in thousands of US dollars)
Note
2022
2023
2024
Profit for the year
$
235,467
49,421
79,770
Other comprehensive income:
Items that will not be reclassified to profit or loss:
19, 21, 22, 23
Remeasurements of defined benefit pension plans
684
10
—
Unrealized gain on financial assets at fair value through other comprehensive income
152
152
9,427
Income tax related to items that will not be reclassified subsequently
(107)
1
—
Items that may be reclassified subsequently to profit or loss:
Foreign operations - foreign currency translation differences
(157)
(123)
(632)
Other comprehensive income for the year, net of tax
572
40
8,795
Total comprehensive income for the year
236,039
49,461
88,565
Total comprehensive income attributable to noncontrolling interests
1,391
1,193
(9)
Total comprehensive income attributable to Himax Technologies, Inc. stockholders
$
237,430
50,654
88,556
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-8
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the years ended December 31, 2022, 2023 and 2024
(in thousands of US dollars and shares, except per share data)
Attributable to owners of Himax Technologies, Inc.
Accumulated
Ordinary shares
Additional
Treasury shares
other
paid-in
comprehensive
Retained
Noncontrolling
Total
Shares
Amount
capital
Shares
Amount
income
earnings
Total
interests
Equity
Balance at January 1, 2022
356,700
$
107,010
108,841
(8,102)
(5,761)
(666)
660,300
869,724
2,258
871,982
Profit (loss) for the year
—
—
—
—
—
—
236,982
236,982
(1,515)
235,467
Other comprehensive income
—
—
—
—
—
448
—
448
124
572
Total comprehensive income for the year
—
—
—
—
—
448
236,982
237,430
(1,391)
236,039
Contributions by and distributions to owners
Declaration of cash dividends, $0.625 per share
—
—
—
—
—
—
(217,873)
(217,873)
—
(217,873)
Share-based compensation expenses
—
—
2,664
—
—
—
—
2,664
140
2,804
Restricted stock vested
—
—
(167)
236
167
—
—
—
—
—
—
—
2,497
236
167
—
(217,873)
(215,209)
140
(215,069)
Changes in ownership interests
New shares issued by subsidiary
—
—
115
—
—
—
—
115
445
560
Dilution gain of equity method investment
—
—
796
—
—
—
—
796
—
796
Effect of Himax Media Solutions, Inc. merged into Himax
Taiwan
—
—
—
—
—
—
(104)
(104)
(197)
(301)
Disposal of financial assets at fair value through other
comprehensive income
—
—
—
—
—
—
(180)
(180)
(6)
(186)
—
—
911
—
—
—
(284)
627
242
869
Balance at December 31, 2022
356,700
$
107,010
112,249
(7,866)
(5,594)
(218)
679,125
892,572
1,249
893,821
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-9
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity (Continued)
For the years ended December 31, 2022, 2023 and 2024
(in thousands of US dollars and shares, except per share data)
Attributable to owners of Himax Technologies, Inc.
Accumulated
Ordinary shares
Additional
Treasury shares
other
paid-in
comprehensive
Retained
Noncontrolling
Total
Shares
Amount
capital
Shares
Amount
income
earnings
Total
interests
Equity
Profit (loss) for the year
—
—
—
—
—
—
50,616
50,616
(1,195)
49,421
Other comprehensive income
—
—
—
—
—
38
—
38
2
40
Total comprehensive income for the year
—
—
—
—
—
38
50,616
50,654
(1,193)
49,461
Contributions by and distributions to owners
Declaration of cash dividends, $0.24 per share
—
—
—
—
—
—
(83,720)
(83,720)
—
(83,720)
Dividend Equivalents
—
—
—
—
—
—
(379)
(379)
—
(379)
Share-based compensation expenses
—
—
2,623
—
—
—
—
2,623
40
2,663
Restricted stock vested
—
—
(437)
615
437
—
—
—
—
—
—
—
2,186
615
437
—
(84,099)
(81,476)
40
(81,436)
Changes in ownership interests
New shares issued by subsidiary
—
—
—
—
—
—
(5,098)
(5,098)
6,015
917
Purchase of subsidiaries shares from noncontrolling
interest
—
—
—
—
—
—
(21)
(21)
12
(9)
Dilution gain of equity method investment
—
—
213
—
—
—
—
213
—
213
Acquired the controlling power from noncontrolling
interest
—
—
—
—
—
—
—
—
811
811
Liquidation of financial assets at fair value through other
comprehensive income
—
—
—
—
—
—
(76)
(76)
—
(76)
—
—
213
—
—
—
(5,195)
(4,982)
6,838
1,856
Balance at December 31, 2023
356,700
$
107,010
114,648
(7,251)
(5,157)
(180)
640,447
856,768
6,934
863,702
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-10
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity (Continued)
For the years ended December 31, 2022, 2023 and 2024
(in thousands of US dollars and shares, except per share data)
Attributable to owners of Himax Technologies, Inc.
Accumulated
Ordinary shares
Additional
Treasury shares
other
paid-in
comprehensive
Retained
Noncontrolling
Total
Shares
Amount
capital
Shares
Amount
income
earnings
Total
interests
Equity
Profit for the year
—
—
—
—
—
—
79,755
79,755
15
79,770
Other comprehensive income
—
—
—
—
—
8,801
—
8,801
(6)
8,795
Total comprehensive income for the year
—
—
—
—
—
8,801
79,755
88,556
9
88,565
Contributions by and distributions to owners
Treasury shares acquired
—
—
—
(246)
(832)
—
—
(832)
—
(832)
Declaration of cash dividends, $0.145 per share
—
—
—
—
—
—
(50,670)
(50,670)
—
(50,670)
Dividend Equivalents
—
—
2
—
—
—
(151)
(149)
—
(149)
Share-based compensation expenses
—
—
1,169
—
—
—
—
1,169
78
1,247
Restricted stock vested
—
—
(443)
625
443
—
—
—
—
—
—
—
728
379
(389)
—
(50,821)
(50,482)
78
(50,404)
Changes in ownership interests
New shares issued by subsidiary
—
—
—
—
—
—
62
62
9
71
Purchase of subsidiaries shares from noncontrolling
interest
—
—
—
—
—
—
(4,843)
(4,843)
(764)
(5,607)
—
—
—
—
—
—
(4,781)
(4,781)
(755)
(5,536)
Balance at December 31, 2024
356,700
$
107,010
115,376
(6,872)
(5,546)
8,621
664,600
890,061
6,266
896,327
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-11
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2022, 2023 and 2024
(in thousands of US dollars)
2022
2023
2024
Cash flows from operating activities:
Profit for the year
$
235,467
49,421
79,770
Adjustments for:
Depreciation and amortization
21,342
20,322
22,354
Gain on disposal of subsidiary
(10,694)
—
—
Share-based compensation expenses
3,096
2,663
1,247
Loss (gains) on disposal of property, plant and equipment, net
—
(368)
4
Loss on re-measurement of the pre-existing relationships in a business combination
—
1,932
—
Changes in fair value of financial assets at fair value through profit or loss
(1,246)
(1,655)
(1,363)
Interest income
(4,813)
(8,746)
(9,907)
Finance costs
2,783
6,080
4,014
Income tax expense (benefit)
41,098
(5,028)
(2,435)
Share of losses of associates
743
598
831
Inventories write downs
22,211
21,540
13,551
Unrealized foreign currency exchange losses (gains)
(2,883)
624
(171)
307,104
87,383
107,895
Changes in:
Accounts receivable (including related parties)
146,870
20,804
(40,738)
Inventories
(194,544)
132,090
45,011
Other receivable from related parties
(7)
5
56
Other current assets
10,099
(3,863)
3,941
Accounts payable (including related parties)
(124,870)
7,676
14,567
Other payable to related parties
927
(268)
(110)
Contract liabilities
1,283
(37,051)
45
Other current liabilities
1,831
1,246
(9,010)
Other non-current liabilities
3,972
(4,602)
(2,260)
Cash generated from operating activities
152,665
203,420
119,397
Interest received
4,525
8,567
9,732
Interest paid
(2,783)
(6,080)
(4,015)
Income tax paid
(71,499)
(53,066)
(9,138)
Net cash provided by operating activities
82,908
152,841
115,976
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-12
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the years ended December 31, 2022, 2023 and 2024
(in thousands of US dollars)
2022
2023
2024
Cash flows from investing activities:
Acquisitions of property, plant and equipment
$
(11,797)
(23,378)
(13,054)
Proceeds from disposal of property, plant and equipment
—
111
—
Acquisitions of intangible assets
(331)
(115)
(153)
Acquisitions of financial assets at amortized cost
(8,763)
(6,911)
(11,236)
Proceeds from disposal of financial assets at amortized cost
25,823
3,099
19,457
Acquisitions of financial assets at fair value through profit or loss
(108,374)
(82,628)
(76,003)
Proceeds from disposal of financial assets at fair value through profit or loss
110,283
75,539
70,389
Proceeds from disposal of a subsidiary
14,769
—
—
Acquisitions of financial assets at fair value through other comprehensive income
—
(1,379)
(17,164)
Proceeds from disposal of financial assets at fair value through other comprehensive income
96
99
—
Acquisition of a subsidiary, net of cash acquired (paid)
—
433
(5,416)
Proceeds from capital reduction of investment
—
360
338
Acquisitions of equity method investments
(3,264)
—
(1,236)
Decrease (increase) in refundable deposits
(6,144)
(56,933)
33,562
Releases (pledges) of restricted deposit
2,700
—
—
Cash received in advance from disposal of land
—
2,821
—
Net cash provided by (used in) investing activities
14,998
(88,882)
(516)
Cash flows from financing activities:
Purchase of treasury shares
—
—
(832)
Prepayments for purchase of treasury shares
—
—
(2,168)
Payments of cash dividends
(217,873)
(83,720)
(50,670)
Payments of dividend equivalents
—
(148)
(233)
Proceeds from issuance of new shares by subsidiaries
487
916
71
Purchases of subsidiary shares from noncontrolling interests
(301)
(9)
(190)
Proceeds from short-term unsecured borrowings
—
47,226
—
Repayments of short-term unsecured borrowings
—
(47,226)
—
Proceeds from long-term unsecured borrowings
40,000
—
—
Repayments of long-term unsecured borrowings
(46,000)
(6,000)
(6,000)
Proceeds from short-term secured borrowings
1,212,700
1,383,300
1,780,300
Repayments of short-term secured borrowings
(994,800)
(1,299,600)
(1,729,600)
Pledge of restricted deposit
(217,900)
(83,700)
(50,700)
Payment of lease liabilities
(4,294)
(4,830)
(5,032)
Guarantee deposits received (refunded)
16,913
200
(23,163)
Net cash used in financing activities
(211,068)
(93,591)
(88,217)
Effect of foreign currency exchange rate changes on cash and cash equivalents
(1,281)
(200)
(844)
Net increase (decrease) in cash and cash equivalents
(114,443)
(29,832)
26,399
Cash and cash equivalents at beginning of year
336,024
221,581
191,749
Cash and cash equivalents at end of year
$
221,581
191,749
218,148
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the years ended December 31, 2022, 2023 and 2024
F-13
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, Zilian Road, Xinshi District, Tainan City 744092, 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 IFRS Accounting Standards as issued by the International Accounting Standards
Board (“IASB”).
The consolidated financial statements were authorized for issuance by the Board of Directors on April 2, 2025.
(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.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-14
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
Effective Date
New, Revised or Amended Standards and Interpretations
Announced by IASB
Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”
January 1, 2024
Amendments to IAS 1 “Non-current Liabilities with Covenants”
January 1, 2024
Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangement”
January 1, 2024
Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback”
January 1, 2024
The Company believes that the adoption of the above amendments to IFRSs did not have a material 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”).
Effective Date
New, Revised or Amended Standards and Interpretations
Announced by IASB
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its
Associate or Joint Venture”
Effective date to be determined by
IASB
Amendments to IAS 21 “Lack of Exchangeability”
January 1, 2025
Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of
Financial Instruments”
January 1, 2026
Annual Improvements to IFRS Accounting Standards—Volume 11
January 1, 2026
IFRS 18 “Presentation and Disclosure in Financial Statements”
January 1, 2027
IFRS 19 “Subsidiaries without Public Accountability: Disclosures”
January 1, 2027
As of the date of the consolidated financial statements were authorized for issue, the Company continues in assessing possible impacts that application of the
abovementioned amendments will have on the Company’s financial position and financial performance and will disclose these impacts when the assessment is
completed.
Note 4. Material accounting policies
The material 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. The Company ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power over the entity. All significant intercompany balances and transactions have been
eliminated in consolidation.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-15
(b) List of Subsidiaries in the Consolidated Financial Statements
Following is general information about Himax Technologies, Inc.’s subsidiaries:
Percentage of Ownership
Jurisdiction of
December 31,
December 31,
Investor
Subsidiary
Main activities
Incorporation
2023
2024
Himax Technologies, Inc.
Himax Technologies Limited (“Himax Taiwan”)
IC design and sales
ROC
100.00 %
100.00 %
Himax Technologies, Inc.
Himax Technologies Korea Ltd.
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
Investments
Hong Kong
100.00 %
100.00 %
Himax Technologies, Inc.
Himax Imaging, Inc.
Investments
Cayman Islands
100.00 %
100.00 %
Himax Technologies, Inc.
Viewsil Microelectronics (Kunshan) Limited
(“Viewsil”) (1)
IC design and sales
PRC
49.00 %
100.00 %
Viewsil Microelectronics (Kunshan) Limited
Viewsil Technology Limited (1)
IC sales
British Virgin Islands
49.00 %
100.00 %
Himax Technologies Limited
Himax Technologies (Samoa), Inc.
Investments
Samoa
100.00 %
100.00 %
Himax Technologies (Samoa), Inc.
Himax Technologies (Suzhou) Co., Ltd.
Sales and technical support
PRC
100.00 %
100.00 %
Himax Technologies (Samoa), Inc.
Himax Technologies (Shenzhen) Co., Ltd.(1)
Sales and technical support
PRC
100.00 %
100.00 %
Himax Technologies Limited
Himax Display, Inc.
LCoS and MEMS design, manufacturing and
sales
ROC
92.08 %
92.02 %
Himax Display, Inc.
Integrated Microdisplays Limited
LCoS design
Hong Kong
92.08 %
92.02 %
Himax Display, Inc.
Himax Display (USA) Inc.
LCoS and MEMS design, sales and technical
support
Delaware, USA
92.08 %
92.02 %
Himax Technologies Limited
Himax Analogic, Inc.
IC design and sales
ROC
98.62 %
98.62 %
Himax Technologies Limited
Himax Imaging, Ltd. (“Imaging Taiwan”)
IC design and sales
ROC
98.43 %
98.64 %
Himax Imaging, Ltd.
Himax Imaging Corp.
IC design
California, USA
98.43 %
98.64 %
Himax Technologies Limited
Harvest Investment Limited
Investments
ROC
100.00 %
100.00 %
Himax Technologies Limited
Liqxtal Technology Inc.
LC Lens design and sales
ROC
62.26 %
62.26 %
Himax Technologies Limited
Himax IGI Precision Ltd.
3D micro and nano structure mastering and
prototype replication
Delaware, USA
100.00 %
100.00 %
Himax Technologies Limited
CM Visual Technology Corp.
Omniwide film products design and sales
ROC
77.63 %
77.63 %
Himax Technologies Limited
Solvanta Investment Limited
Investments
ROC
—
100.00 %
Solvanta Investment Limited
Solvanta Energy Limited
Renewable-energy based electricity
distribution
ROC
—
100.00 %
Note (1): On December 30, 2023, Himax Technologies, Inc. acquired the controlling interest in Viewsil and included it as the consolidated entity. Refer to Note 5 for further
details. In addition, on November 22, 2024, Himax Technologies (Shenzhen) Co., Ltd. acquired the 51% of the outstanding voting shares of Viewsil, then the
Company has 100% shareholdings in Viewsil.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-16
Principal Activities
The Company is a leading global fabless semiconductor solution provider dedicated to display imaging processing technologies. The Company’s display driver
ICs and timing controllers have been adopted at scale across multiple industries worldwide including TVs, PC monitors, laptops, mobile phones, tablets,
automotive, ePaper devices, industrial displays, among others. As the global market share leader in automotive display technology, the Company offers
innovative and comprehensive automotive IC solutions, including traditional driver ICs, advanced in-cell Touch and Display Driver Integration (TDDI), local
dimming timing controllers (Local Dimming TCON), Large Touch and Display Driver Integration (LTDI) for LCD displays and DDIC, TCON and on-cell
touch controller for OLED displays. Besides, the Company designs and provides touch controllers, OLED ICs, LED drivers, EPD ICs, power management ICs,
and CMOS image sensors for diverse display application coverage. The Company is also a pioneer in tinyML AI and optical technology related fields. The
Company’s industry-leading WiseEyeTM Ultralow Power AI Sensing technology is composed of Himax proprietary ultralow power AI processor, always-on
CMOS image sensor, and CNN-based AI algorithm, and has been widely adopted in consumer electronics and AIoT related applications. The Company optics
technologies, such as wafer level optics, LCoS micro-displays and 3D sensing solutions, are critical for facilitating emerging AR/VR/metaverse technologies.
(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.
(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.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-17
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.
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).
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-18
The loss allowance for accounts receivable is 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.
(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.
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HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-19
(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.
(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.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
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HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-20
Property, plant and equipment that are highly probable to be recovered primarily through sale rather than through continuing use, are reclassified as held for
sale. Immediately before classification as held for sale, the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairment
losses on assets initially classified as held for sale and any subsequent gains or losses on remeasurement are recognized in profit or loss. Gains are not
recognized in excess of the cumulative impairment loss that has been recognized. Once classified as held for sale, the property, plant and equipment are no
longer depreciated.
(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.
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.
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HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-21
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 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 9.95% and 9.04% in its test
of Goodwill impairment for Driver IC CGU as of December 31, 2023 and 2024, respectively, based on industry weighted average cost of capital. The annual
discount rate for WLO CGU was 13.96% and 13.78% as of December 31, 2023 and 2024, respectively. The terminal growth rate, based on following 5 years
average Taiwan economic growth rate published by International Monetary Fund, was 2.6% and 2.48% used in the test for both CGUs as of December 31, 2023
and 2024, 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, 2022, 2023 and 2024, the Company did not recognize any impairment loss on goodwill.
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HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-22
(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.
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”).
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.
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HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-23
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.
(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.
The Company has adopted International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12) upon their release on May 23, 2023. The amendments
provide a temporary mandatory exception from deferred tax accounting for the top-up tax, which is effective immediately, and require new disclosures about the
Pillar Two exposure.
The mandatory exception applies retrospectively. However, because no new legislation to implement the top-up tax was enacted or substantially enacted on
December 31, 2022 in any jurisdiction in which the Company operates and no related deferred tax was recognized at that date, the retrospective application has
no impact on the Company’s consolidated financial statements.
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HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-24
The Company has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax when
it is incurred. South Korea and Japan are the only two countries which represent jurisdictions where the Company maintains subsidiaries’ operations and have
already enacted tax legislation on December 31, 2023. The Company has evaluated the current tax impact to be immaterial for the year ended December 31,
2023 and 2024, respectively.
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 carryforwards. 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.
(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) granted to employees.
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HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-25
Basic and diluted earnings per ordinary share have been calculated as follows:
Year Ended December 31,
2022
2023
2024
Profits attributable to Himax Technologies, Inc. stockholders (in thousands)
$
236,982
50,616
79,755
Denominator for basic earnings per ordinary share:
Weighted average number of ordinary shares outstanding (in thousands)
349,448
348,990
349,593
Basic earnings per ordinary share attributable to Himax Technologies, Inc. stockholders
$
0.68
0.15
0.23
Basic earnings per ADS attributable to Himax Technologies, Inc. stockholders(1)
$
1.36
0.29
0.46
Contingently issuable ordinary shares underlying the unvested RSUs granted to employees are included in the calculation of diluted earnings per ordinary share
based on treasury stock method.
Year Ended December 31,
2022
2023
2024
Profits attributable to Himax Technologies, Inc. stockholders (in thousands)
$
236,982
50,616
79,755
Denominator for diluted earnings per ordinary share:
Weighted average number of ordinary shares outstanding (in thousands)
349,448
348,990
349,593
Unvested RSUs (in thousands)
187
576
434
349,635
349,566
350,027
Diluted earnings per ordinary share attributable to Himax Technologies, Inc. stockholders
$
0.68
0.14
0.23
Diluted earnings per ADS attributable to Himax Technologies, Inc. stockholders(1)
$
1.36
0.29
0.46
Note (1): 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 2022,
2023 and 2024 is 174,724 thousand, 174,495 thousand and 174,796 thousand, respectively. Additionally, the weighted average number of ADS
equivalent outstanding used in diluted earnings per ADS for 2022, 2023 and 2024 is 174,817 thousand, 174,783 thousand and 175,014 thousand,
respectively. The earnings 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.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-26
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).
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.
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.
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HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-27
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. Consolidation
The Company held 49% of the outstanding voting shares of Viewsil in 2023. One board director appointed by the one other shareholder resigned on December 30,
2023, and that other shareholder informed the Company that it would not appoint another board of director to fill the casual vacancy in the future. Therefore, there
would be 3 board directors in Viewsil and the Company would assign 2 board seats with obtaining more than half of the total number of Viewsil’s directors from
December 30, 2023 without consideration paid. An investor has power over an investee when the investor has existing rights that give it the current ability to direct
the relevant activities that significantly affect the investee returns. The Company has the power to determine the major matters and the most important decisions that
will significantly impact the operations and direct financial interests are resolved by majority vote of directors present in the meeting. Therefore, it is determined that
the Company has controlling power over Viewsil from December 30, 2023, the acquisition date.
The Company’s previously held equity interests in Viewsil was re-measured at fair value, which was determined according to the amount of underlying equity in net
assets of Viewsil at acquisition date. The re-measurement loss on the previously held equity interests in Viewsil was $1,932 thousand which is included in “other
gains (losses)” in the consolidated statements of profit or loss.
The results of Viewsil’s operations for 2023 have not been included in the Company’s consolidated financial statements until the acquisition date on December 30,
2023. If the consolidation had occurred on January 1, 2023, management estimates that consolidated revenue would have been $945,428 thousand (unaudited), and
consolidated profit for the year would have been $50,641 thousand (unaudited). In determining these amounts, management has assumed that the fair value
adjustments that arose on the date of consolidation would have been the same if the consolidation had occurred on January 1, 2023.
The following table summarizes the amounts of estimated fair value of the assets obtained and liabilities assumed at the date of consolidation.
Fair value
(in thousands)
Recognized amounts of identifiable assets obtained and liabilities assumed:
Cash
$
433
Current assets, other than cash
2,576
Other assets
7
Other current liabilities
(1,425)
Total identifiable net assets obtained
1,591
Noncontrolling interests
(811)
$
780
Obtained assets were valued at estimates of their current fair values based on management’s estimate.
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HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-28
Note 6. Disposal of subsidiary
The Company had disposed its 100% shareholdings in Emza Visual Sense Ltd. (“EMZA”) to a third party with a consideration of $15,092 thousand netting disposal
related cost in October 2022. The Company derecognized EMZA from the date of disposal as its subsidiary. The Company derecognized the assets, liabilities and the
related equity components of EMZA, and recognized a gain on disposal of $10,694 thousand, and recorded it as other gains (losses).
The carrying amount of assets and liabilities of EMZA on the date of disposal was as follow:
EMZA
(in thousands)
Cash
$
323
Current assets, other than cash
2,241
Property, plant and equipment
179
Other intangible assets
4,436
Other non-current assets
587
Other current and non-current liabilities
(4,148)
Net assets disposed of
$
3,618
Note 7. Cash and Cash Equivalents
December 31,
December 31,
2023
2024
(in thousands)
Cash, demand deposits and checking accounts
$
182,049
214,048
Time deposits with less than three months maturity date
9,700
4,100
$
191,749
218,148
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, 2023 and 2024, no cash and cash equivalents were pledged with banks as collaterals.
Note 8. Financial Assets at Amortized Cost
December 31,
December 31,
2023
2024
(in thousands)
Time deposit with original maturities more than three months
$
12,511
4,286
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, 2023 and 2024 is due in one year or less.
As of December 31, 2023 and 2024, no financial assets at amortized cost were pledged with banks as collaterals.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-29
Note 9. 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, 2023 and 2024:
December 31,
December 31,
2023
2024
(in thousands)
Money market fund
$
2,117
2,140
Equity securities-unlisted company
21,650
23,554
$
23,767
25,694
Current
$
2,117
2,140
Non-current
21,650
23,554
$
23,767
25,694
Net gain of $1,246 thousand, $1,655 thousand and $1,363 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, 2022, 2023 and 2024, respectively.
As of December 31, 2023 and 2024, no financial assets at fair value through profit or loss were pledged with banks as collaterals.
Note 10. 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, 2022, 2023 and 2024, were $283 thousand, $99 thousand and nil, respectively, all related to investments
held at the end of the reporting period.
As of December 31, 2023 and 2024, no financial assets at fair value through other comprehensive income were pledged with banks as collaterals.
Note 11. Accounts Receivable, net (including related parties)
December 31,
December 31,
2023
2024
(in thousands)
Accounts receivable
$
235,815
236,782
Accounts receivable from related parties
14
31
Less: Loss allowance
—
—
$
235,829
236,813
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-30
As of December 31, 2023 and 2024, 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:
December 31, 2023
Loss
Carrying
allowance
amount of
Weighted
for lifetime
accounts
average loss
expected
receivable
rate
credit
(in thousands)
(in thousands)
Not past due
$
231,676
0 % $
—
Past due within 30 days
3,591
0 %
—
Past due 31‑60 days
462
0 %
—
Past due 61‑90 days
9
0 %
—
Past due 91‑120 days
—
0 %
—
Past due over 121 days
91
0%-100.00 %
—
$
235,829
$
—
December 31, 2024
Loss
Carrying
allowance
amount of
Weighted
for lifetime
accounts
average loss
expected
receivable
rate
credit
(in thousands)
(in thousands)
Not past due
$
235,882
0 % $
—
Past due within 30 days
915
0 %
—
Past due 31‑60 days
14
0 %
—
Past due 61‑90 days
—
0 %
—
Past due 91‑120 days
2
0 %
—
Past due over 121 days
—
0%-100.00 %
—
$
236,813
$
—
There were no changes in loss allowance as of December 31, 2023 and 2024.
There were no activities in loss allowance for the years ended December 31, 2022, 2023 and 2024, respectively.
Note 12. Inventories
December 31,
December 31,
2023
2024
(in thousands)
Finished goods
$
47,468
40,445
Work in process
96,955
77,244
Raw materials
72,692
40,767
Supplies
193
290
$
217,308
158,746
The amounts of inventories that were charged to cost of revenues were $692,022 thousand, $660,391 thousand and $617,050 thousand, for the years ended
December 31, 2022, 2023 and 2024, respectively, and the charges for inventories written down to net realizable value amounted to $22,211 thousand, $21,540
thousand and $13,551 thousand, for the years ended December 31, 2022, 2023 and 2024, respectively, which were also included in cost of revenues.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-31
As of December 31, 2023 and 2024, none of the Company’s inventories was pledged as collateral.
Note 13. Equity Method Investments
Associates consisted of the following:
December 31, 2023
December 31, 2024
Place of
Incorporation
Principal
and
Carrying
Holding
Carrying
Holding
Name of Associate
Activities
Operation
amount
%
amount
%
(in thousands)
(in thousands)
Ganzin Technology Corp.
Eye tracking chip and module
Taipei, Taiwan
$
—
32.21
$
—
31.21
Iris Optronics Co., Ltd.
E-paper manufacturing and sales
Tainan, Taiwan
303
4.52
21
4.52
Guangzhou Pixtalks Information
Technology Co., Ltd.
3D structured light module
Guangzhou, China
153
29.50
209
29.50
Prilit Optronics, Inc.
LCD panel components
manufacturing
Tainan, Taiwan
3,034
14.95
2,505
14.95
Tilt Five, Inc.
Develops of Augmented Reality
technology
Delaware, USA
—
—
5,836
21.99
$
3,490
$
8,571
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:
For the year ended December 31,
2022
2023
2024
(in thousands)
The Company’s share of losses of associates
$
(743)
(598)
(831)
The Company’s share of other comprehensive income of associates
$
(86)
20
(146)
The Company’s share of total comprehensive income of associates
$
(829)
(578)
(977)
The Company has not recognized losses of $302 thousand, $691 thousand and $260 thousand in relation to its interest in Ganzin Technology Corp. for the year
ended December 31, 2022, 2023 and 2024, respectively, because the Company has no obligation in respect of the losses. As of December 31, 2024, the cumulative
unrecognized losses in relation to the Company’s interest in Ganzin Technology Corp. was $1,277 thousand.
As of December 31, 2023 and 2024, none of the Company’s equity method investments was pledged as collateral.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-32
Note 14. Other Intangible Assets
Technology
Software
Others
Total
(in thousands)
Cost
Balance at January 1, 2023
$
6,889
5,969
1,172
14,030
Additions
—
115
—
115
Consolidation through obtaining control of subsidiary
—
1
—
1
Effect of exchange rate changes
—
(3)
—
(3)
Balance at December 31, 2023
6,889
6,082
1,172
14,143
Additions
—
153
—
153
Disposals
—
(190)
—
(190)
Effect of exchange rate changes
—
(3)
—
(3)
Balance at December 31, 2024
$
6,889
6,042
1,172
14,103
Accumulated Amortization
Balance at January 1, 2023
$
6,889
5,531
516
12,936
Amortization for the year
—
273
121
394
Effect of exchange rate changes
—
(3)
—
(3)
Balance at December 31, 2023
6,889
5,801
637
13,327
Amortization for the year
—
214
119
333
Disposals
—
(190)
—
(190)
Effect of exchange rate changes
—
(3)
—
(3)
Balance at December 31, 2024
$
6,889
5,822
756
13,467
Carrying amounts
At December 31, 2023
$
—
281
535
816
At December 31, 2024
$
—
220
416
636
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
7-15 years
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-33
Note 15. Property, Plant and Equipment
(a)
Prepayments
for purchase
Research
Office
of equipment
Building
and
furniture
and
and
development
and
construction
Land
improvements
Machinery
equipment
equipment
Others
in progress
Total
(in thousands)
Cost
Balance at January 1, 2023
$
41,828
76,475
80,504
49,424
14,005
47,713
2,210
312,159
Additions
—
1,239
14,977
2,415
1,010
5,911
2,621
28,173
Consolidation through obtaining control of subsidiary
—
—
—
—
6
—
—
6
Transfers
—
67
334
2
—
—
(403)
—
Reclassification to assets held for sale
(4,175)
—
—
—
—
—
—
(4,175)
Disposals
—
—
(1,084)
(1,608)
(1)
(2,770)
—
(5,463)
Effect of exchange rate changes
—
1
1
-
(29)
(82)
—
(109)
Balance at December 31, 2023
37,653
77,782
94,732
50,233
14,991
50,772
4,428
330,591
Additions
—
651
2,210
5,998
739
4,844
2,028
16,470
Transfers
—
1,610
656
28
—
453
(2,870)
(123)
Disposals
—
(15)
(1,034)
(185)
(195)
(13,596)
—
(15,025)
Effect of exchange rate changes
—
—
—
(7)
(51)
(157)
—
(215)
Balance at December 31, 2024
$
37,653
80,028
96,564
56,067
15,484
42,316
3,586
331,698
Accumulated Depreciation
Balance at January 1, 2023
$
—
32,975
68,357
42,205
11,641
30,843
—
186,021
Depreciation for the year
—
4,325
4,985
3,241
1,054
6,323
—
19,928
Disposals
—
—
(1,081)
(1,596)
(1)
(2,711)
—
(5,389)
Effect of exchange rate changes
—
—
—
—
(25)
(53)
—
(78)
Balance at December 31, 2023
—
37,300
72,261
43,850
12,669
34,402
—
200,482
Depreciation for the year
—
4,394
6,863
3,823
1,018
5,923
—
22,021
Disposals
—
(15)
(1,034)
(185)
(195)
(10,504)
—
(11,933)
Effect of exchange rate changes
—
(1)
—
(6)
(43)
(102)
—
(152)
Balance at December 31, 2024
$
—
41,678
78,090
47,482
13,449
29,719
—
210,418
Carrying amounts
At December 31, 2023
$
37,653
40,482
22,471
6,383
2,322
16,370
4,428
130,109
At December 31, 2024
$
37,653
38,350
18,474
8,585
2,035
12,597
3,586
121,280
Others in property, plant and equipment includes mold equipment, leasehold improvements, right-of-use assets and other equipment.
As of December 31, 2024, a piece of land $4,175 thousand was presented as assets held for sale following the commitment of the Company’s management to sell the
land before the end of 2025. The land held for sale has been included in “Other current assets” in the consolidated statements of financial position.
The Company incurred non-cash capital expenditures of $2,551 thousand, $3,086 thousand and $3,121 thousand in the years ended December 31, 2022, 2023 and
2024.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-34
The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:
Buildings
25 years
Building improvements
4-16 years
Machinery
4-10 years
Research and development equipment
2-6 years
Office furniture and equipment
3-8 years
Others
2-15 years
For the years ended December 31, 2022, 2023 and 2024, 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 2023 and 2024 were $4,398 thousand and $2,113 thousand, respectively. The carrying amounts of right-of-use assets for
offices and buildings lease included in Others in property, plant and equipment was $13,559 thousand and $8,368 thousand as of December 31, 2023 and 2024,
respectively. Depreciation expense of right-of-use assets amounted to $4,810 thousand, $4,609 thousand and $4,178 thousand in 2022, 2023 and 2024,
respectively.
(ii) Lease liabilities
December 31,
December 31,
2023
2024
(in thousands)
Current portion (classified under other current liabilities)
$
4,636
3,708
Non-current portion (classified under other non-current liabilities)
6,744
3,452
$
11,380
7,160
(iii) Additional lease information
Year ended December 31,
2022
2023
2024
(in thousands)
Expenses relating to short-term leases
$
364
73
65
Expenses relating to low-value asset leases
$
113
368
246
Expenses relating to variable lease payments not included in the measurement of lease
liabilities
$
2,920
2,195
2,739
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-35
The reconciliation of lease liabilities to cash flows arising from financing activities was as follows:
Year ended December 31,
2023
2024
(in thousands)
Balance at beginning of year
$
11,675
11,380
Change from financing activities:
Payment of lease liabilities
(4,830)
(5,032)
Total change from financing activities
(4,830)
(5,032)
Other changes:
New lease
4,267
1,758
Interest expense
167
216
Interest paid
(167)
(216)
Lease modifications
(75)
(1,624)
Effect of exchange rate changes
343
678
Total liability-related other changes
4,535
812
Balance at end of year
$
11,380
7,160
Note 16. Other Current Liabilities
December 31,
December 31,
2023
2024
(in thousands)
Accrued payroll and related expenses
$
26,329
17,139
Guarantee deposit received
34,270
—
Accrued mask, mold fees and other expenses for RD
14,813
10,651
Received in advance from disposal of land
7,383
7,383
Accrued software maintenance
7,222
7,215
Lease liabilities
4,636
3,708
Payable for purchases of building and equipment
3,102
3,160
Allowance for sales discounts
552
207
Provision on onerous inventory contract
599
138
Accrued insurance, welfare expenses, professional fee and others
10,385
13,994
$
109,291
63,595
The activity in the sales discounts is as follows:
Allowance for sales discounts
Balance at
Balance at
beginning
Charges to
Amounts
end of
Period
of year
earnings
utilized
year
(in thousands)
Year 2022
$
1,570
26,830
(26,220)
2,180
Year 2023
$
2,180
20,429
(22,057)
552
Year 2024
$
552
12,879
(13,224)
207
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-36
Note 17. Short-Term Borrowings
December 31,
December 31,
2023
2024
(in thousands)
Secured borrowings
$
453,000
503,700
Unused credit lines
$
206,483
258,917
Interest rate-secured borrowings
0.3%~0.35 %
0.3%~0.35 %
As of December 31, 2023 and 2024, cash and time deposits totaling $453,000 thousand and $503,700 thousand are pledged as collateral, respectively.
As of December 31, 2024, unused credit lines will expire between January 2025 and October 2025. Among the unused credit lines, $92,201 thousand will expire
before the end of March 2025, and $146,800 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.
The reconciliation of borrowings to cash flows arising from financing activities was as follows:
Unsecured
Secured
borrowings
borrowings
(in thousands)
January 1, 2023
$
—
369,300
Change from financing activities:
Proceeds from borrowings
47,226
1,383,300
Repayments of borrowings
(47,226)
(1,299,600)
Total changes from financing activities
—
83,700
December 31,2023
—
453,000
Change from financing activities:
Proceeds from borrowings
—
1,780,300
Repayments of borrowings
—
(1,729,600)
Total changes from financing activities
—
50,700
December 31,2024
$
—
503,700
Note 18. Long-Term Borrowings
December 31,
December 31,
2023
2024
(in thousands)
Unsecured borrowings
$
40,500
34,500
Less: current portion
(6,000)
(6,000)
Total
$
34,500
28,500
Unused long-term credit lines
$
139,500
140,000
Interest rate
6.25%
5.39%-5.43%
Duration
2020/8/4~
2030/9/2
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.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-37
As of December 31, 2023 and 2024, for enhancing the guaranty, land and building and improvements totaling $63,352 thousand and $59,964 thousand are pledged
as collateral. Please refer to Note 27.
The reconciliation of borrowings to cash flows arising from financing activities was as follows:
Year ended December 31,
2023
2024
(in thousands)
Balance at beginning of year
$
46,500
40,500
Change from financing activities:
Proceeds from borrowings
—
—
Repayments of borrowings
(6,000)
(6,000)
Total changes from financing activities
(6,000)
(6,000)
Balance at end of year
$
40,500
34,500
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. The
contributions for the defined benefit plan of the Company are administered by a pension fund monitoring committee (the “Committee”) and is deposited in the
Committee’s name in the Bank of Taiwan.
As of December 31, 2024, the fair value of the plan assets deposited in the Committee’s name in the Bank of Taiwan was approximately $4.5 million and the
present value of the defined benefit obligation was approximately $3 million. The Company’s employees’ retirement reserve has reached the point of supporting
employees’ retirement funds, so the Company applied to the Labor Affairs Bureau of Tainan City Government to suspend contributions, which was approved.
There have not been any significant market fluctuation, reduction, repayment, or other significant one-off events during the current fiscal year.
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 2022, 2023 and 2024, based on the contribution called for
were $3,828 thousand, $3,922 thousand and $3,864 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.
Expenses recognized in 2022, 2023 and 2024, based on the contribution called for were $47 thousand, $68 thousand and $80 thousand, respectively.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-38
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 $2,088 thousand, $2,390 thousand and $2,588 thousand for the years ended December 31, 2022, 2023 and 2024, respectively.
Other foreign subsidiaries recognized pension expenses of $564 thousand, $221 thousand and $221 thousand for the years ended December 31, 2022, 2023 and
2024, respectively, for the defined contribution plans based on their respective local government regulations.
3.
Cash award
On September 28, 2022, September 26, 2023, and September 26, 2024, the Company’s compensation committee granted annual bonuses by cash payouts
totaling $19,346 thousand, $729 thousand and $1,035 thousand, respectively to the Company’s employees among which $1,015 thousand, $187 thousand and
$164 thousand, respectively 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:
Year ended December 31,
2022
2023
2024
(in thousands)
Cost of revenues
$
505
174
60
Research and development
20,792
15,273
6,193
General and administrative
2,250
1,401
546
Sales and marketing
4,147
2,797
1,086
Total compensation
$
27,694
19,645
7,885
Income tax benefit
$
5,641
4,167
1,770
Note 20. Share-Based Compensation
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,
2022
2023
2024
(in thousands)
Cost of revenues
$
481
157
173
Research and development
15,345
9,414
9,819
General and administrative
2,193
1,108
891
Sales and marketing
2,612
1,453
1,435
Total compensation
$
20,631
12,132
12,318
Income tax benefit
$
4,201
2,545
2,605
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-39
(a) Long-term Incentive Plan
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, 2025, which was approved by the Company’s shareholders at the annual general meeting held on August 16, 2022. 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, 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.
On September 28, 2022, the Company’s compensation committee made grants of 3,987,509 RSUs to the Company’s employees. The vesting schedule for the
RSUs is as follows: 86.41% of the RSUs grant vested immediately on the grant date which was settled by cash amounting to $17,535 thousand, a subsequent
4.53% will vest on each of September 30, 2023, 2024 and 2025 which will be settled by the Company’s ordinary shares, subject to certain forfeiture events.
On September 26, 2023, the Company’s compensation committee made grants of 1,710,607 RSUs to the Company’s employees. The vesting schedule for the
RSUs is as follows: 97.45% of the RSUs grant vested immediately on the grant date which was settled by cash amounting to $9,468 thousand, a subsequent
0.85% will vest on each of September 30, 2024, 2025 and 2026 which will be settled by the Company’s ordinary shares, subject to certain forfeiture events.
On September 26, 2024, the Company’s compensation committee made grants of 2,014,386 RSUs to the Company’s employees. The vesting schedule for the
RSUs is as follows: 96.76% of the RSUs grant vested immediately on the grant date which was settled by cash amounting to $11,071 thousand, a subsequent
1.08% will vest on each of September 30, 2025, 2026 and 2027 which will be settled by the Company’s ordinary shares, subject to certain forfeiture events.
On November 9, 2022, the Company’s compensation committee made the unvested RSUs generally include forfeitable dividend-equivalent rights, which entitle
holders of RSUs to the same dividend value per share as holders of common stock. The dividend-equivalent rights are subject to the same vesting and other
terms and conditions as the underlying RSUs.
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 $3.44 per ADS, $10.39 per ADS, $5.09 per ADS, $5.68 per
ADS and $5.68 per ADS on September 28, 2020, September 28, 2021, September 28, 2022, September 26, 2023 and September 26, 2024, respectively.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-40
RSUs activity under the long-term incentive plan during the periods indicated is as follows:
Number of
Weighted
Underlying
Average Grant
Shares for RSUs
Date Fair Value
Balance at January 1, 2022
386,520
$
10.17
Granted
3,987,509
5.09
Vested
(3,563,177)
5.25
Forfeited
(18,643)
10.15
Balance at December 31, 2022
792,209
6.71
Granted
1,710,607
5.68
Vested
(1,974,496)
5.91
Forfeited
(2,355)
9.81
Balance at December 31, 2023
525,965
6.36
Granted
2,014,386
5.68
Vested
(2,261,433)
5.88
Forfeited
(5,307)
7.33
Balance at December 31, 2024
273,611
5.29
As of December 31, 2024, the total compensation cost related to the unvested RSUs not yet recognized was $758 thousand. The weighted-average period over
which it is expected to be recognized is 1.33 years.
In 2022, 2023 and 2024, the Company settled RSUs release with shares buyback of 235,910 shares, 615,052 shares and 624,670 shares, respectively.
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,
2022
2023
2024
(in thousands)
Cost of revenues
$
472
153
167
Research and development
15,097
9,353
9,751
General and administrative
1,934
1,108
891
Sales and marketing
2,497
1,449
1,430
Total compensation
$
20,000
12,063
12,239
Income tax benefit
$
4,201
2,545
2,605
(b) Employee stock options
(i)
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). In addition, on December 28, 2023, board of directors of CM Visual Technology Corp. approved another a plan to grant stock options,
the 2023 plan, to certain employees. This plan authorizes grants to purchase up to 1,500,000 shares of CM Visual Technology Corp. authorized but
unissued ordinary shares. The exercise price was NT$10 (US$0.32)
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-41
The 2021 plan and 2023 plan both have 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
$76 thousand, $69 thousand and $79 thousand in 2022, 2023 and 2024, respectively. 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, 2022, 2023 and 2024,
respectively.
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.
2021 Plan
2023 Plan
Granted in
Granted in
Granted in
2021
2023
2024
Valuation assumptions:
Expected dividend yield
0 %
0 %
0 %
Expected volatility
43.82 %
44.17 %
39.76 %
Expected term (years)
3.125
3.125
3.125
Risk-free interest rate
0.223 %
1.081 %
1.150 %
Stock option activity during the periods indicated is as follows:
Weighted
Weighted
average
average
remaining
Number
exercise
contractual
of shares
price
term
Balance at January 1, 2022
2,671,000
$
0.36
3.5
Granted
—
—
Exercised
—
—
Forfeited
(380,000)
0.36
Balance at December 31, 2022
2,291,000
0.36
2.5
Granted
288,000
0.33
Exercised
—
—
Effect of capital reduction
(1,289,500)
0.36
Forfeited
—
—
Balance at December 31, 2023
1,289,500
0.50
1.5
Granted
1,201,000
0.32
Exercised
—
—
Forfeited
(138,000)
0.47
Balance at December 31, 2024
2,352,500
0.41
1.8
Exercisable at December 31, 2024
1,068,000
0.50
0.6
(ii) 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).
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-42
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 $33 thousand in 2022. 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 year ended December 31, 2022.
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.
2021 plan
Valuation assumptions:
Expected dividend yield
0 %
Expected volatility
30.06 %
Expected term (years)
1.25
Risk-free interest rate
0.107 %
Stock option activity during the periods indicated is as follows:
Weighted
Weighted
average
average
remaining
Number
exercise
contractual
of shares
price
term
Balance at January 1, 2022
910,000
$
0.65
1.0
Exercised
(840,000)
0.65
Forfeited
(70,000)
0.65
Balance at December 31, 2022
—
—
—
Exercisable at December 31, 2022
—
—
—
(iii) On January 28, 2022, board of directors of EMZA approved a plan to grant stock options, the 2022 Option Plan, to certain employees. This
plan authorizes grants to purchase up to 179,690 shares of EMZA’s authorized but unissued ordinary shares. The exercise price was $20.49.
All Options granted under this 2022 Option Plan shall vest over a 4-year period, with 25% thereof vesting on the end of a 12-month period
following the date of grant, and the remaining 75% thereof vesting in 12 equal portions at the end of each 3-month period thereafter. The
Company recognized compensation expenses of $522 thousand in 2022, including 2022 Option Plan cancelled and recognized compensation
expenses of $219 thousand. 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 year ended December 31, 2022.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-43
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. EMZA 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 EMZA’s 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 5 years Israel non-indexed government bond at the time of grant.
2022 Option Plan
Valuation assumptions:
Expected dividend yield
0 %
Expected volatility
54.05 %
Expected term (years)
6.11
Risk-free interest rate
0.65 %
Stock option activity during the periods indicated is as follows:
Weighted
Weighted
average
average
remaining
Number
exercise
contractual
of shares
price
term
Balance at January 1, 2022
—
$
—
Granted
150,940
20.49
6.11
Exercised
—
—
Forfeited
(1,797)
20.49
Cancelled
(149,143)
20.49
Balance at December 31, 2022
—
—
—
Exercisable at December 31, 2022
—
—
—
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, 2023 and 2024.
In accordance with the Company’s board of director’s resolution on December 4, 2024, the Company authorized a share buyback program. The program allows
the Company to repurchase up to $20 million of the Company’s ADSs. The Company repurchased $0.8 million or 122,972 ADSs in the open market at an
average price of $6.77 per ADS in 2024.
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, 2023 and 2024. The
outstanding ordinary shares were 349,448,102 shares and 349,826,828 shares at December 31, 2023 and 2024, respectively. 7,251,380 treasury shares and
6,872,654 treasury shares were held by the Company as of December 31, 2023 and 2024, 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.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-44
(b) Additional Paid-in Capital
Balance of additional paid-in capital as of December 31, 2023 and 2024 were as follows:
December 31,
December 31,
2023
2024
(in thousands)
From ordinary shares
$
93,341
93,341
From treasury shares
6,307
5,864
From share-based compensation
13,338
14,509
From share of changes in equities of associates
1,662
1,662
$
114,648
115,376
(c) Earnings distribution
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, 2023 and 2024 amounted to $154,743 thousand and $159,580
thousand, respectively.
For the year ended December 31, 2024, the Company declared the cash dividend of $0.145 per share, totaling $50,670 thousand, and was paid on July 12, 2024.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-45
(d) Accumulated other comprehensive income
Changes in accumulated other comprehensive income, net of tax, are as follows:
Unrealized
Defined
Accumulated
Foreign
gains
benefit
other
currency
(losses) on
pension
comprehensive
translation
securities
plans
income
(in thousands)
Beginning balance, January 1, 2022
$
144
(1,048)
238
(666)
Exchange differences arising on translation of foreign operations
(245)
—
—
(245)
Changes in fair value of financial assets
—
142
—
142
Remeasurement of defined benefit pension plans
—
—
551
551
Ending balance, December 31, 2022
(101)
(906)
789
(218)
Exchange differences arising on translation of foreign operations
(123)
—
—
(123)
Changes in fair value of financial assets
—
152
—
152
Remeasurement of defined benefit pension plans
—
—
9
9
Ending balance, December 31, 2023
(224)
(754)
798
(180)
Exchange differences arising on translation of foreign operations
(626)
—
—
(626)
Changes in fair value of financial assets
—
9,427
—
9,427
Remeasurement of defined benefit pension plans
—
—
—
—
Ending balance, December 31, 2024
$
(850)
8,673
798
8,621
(e) Noncontrolling interest
Year ended December 31,
2022
2023
2024
(in thousands)
Balance at the beginning of year
$
2,258
1,249
6,934
Equity attributable to non-controlling interests
Profit (Loss) for the year
(1,515)
(1,195)
15
Changes in fair value of financial assets
10
—
—
Remeasurement of defined benefit pension plans
26
2
—
Share-based compensation expenses
140
40
78
New shares issued by subsidiaries
445
6,015
9
Acquired the controlling power from noncontrolling interest
—
811
—
Purchase of subsidiaries shares from noncontrolling interest
—
12
(764)
Effect of Himax Media Solutions, Inc. merged into Himax Taiwan
(197)
—
—
Disposal of financial assets at fair value through other comprehensive income
(6)
—
—
Exchange differences arising on translation of foreign operations
88
—
(6)
Balance at the end of year
$
1,249
6,934
6,266
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.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-46
(a) Income tax expense (benefit) recognized in profit or loss for the years ended December 31, 2022, 2023 and 2024 consists of the following:
Year ended December 31,
2022
2023
2024
(in thousands)
Current tax expense
Current period
$
48,808
155
5,459
Adjustment for prior periods
(2,723)
(2,614)
(942)
46,085
(2,459)
4,517
Deferred tax expense
Origination and reversal of temporary differences
(5,742)
2,436
(1,590)
Investment tax credits and operating loss carryforward
755
(5,005)
(5,362)
(4,987)
(2,569)
(6,952)
Total income tax expense (benefit)
$
41,098
(5,028)
(2,435)
(b) Income taxes expense (benefit) recognized directly in other comprehensive income for the years ended December 31, 2022, 2023 and 2024 consist of the
following:
Year ended December 31,
2022
2023
2024
(in thousands)
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension plans
$
107
(1)
—
(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, 2022, 2023 and 2024 are summarized as follows:
Years ended December 31,
2022
2023
2024
Rate
Amount
Rate
Amount
Rate
Amount
(in thousands)
(in thousands)
(in thousands)
Profit before income taxes
$
276,565
$
44,393
$
77,335
Income tax expense calculated at the statutory rate
20.0 %
55,313
20.0 %
8,879
20.0 %
15,467
Tax on undistributed earnings
3.9 %
10,668
4.4 %
1,931
4.7 %
3,602
Tax benefit resulting from setting aside legal reserve from prior year’s income
(0.8)%
(2,215)
(2.9)%
(1,267)
(0.3)%
(245)
Tax benefit resulting from actual investment from prior year’s undistributed earnings
(0.1)%
(303)
—
—
—
—
Increase in tax credits
(5.6)%
(15,556)
(22.2)%
(9,864)
(11.2)%
(8,627)
Effect of change of unrecognized deductible temporary differences and tax losses carryforwards
1.7 %
4,706
9.3 %
4,127
5.5 %
4,237
Net of non-taxable income and non-deductible expense
(5.0)%
(13,728)
(16.0)%
(7,090)
(19.3)%
(14,910)
Changes in unrecognized tax benefits
1.1 %
3,003
(3.1)%
(1,380)
(4.0)%
(3,127)
Foreign tax rate differential
0.5 %
1,370
1.7 %
752
2.8 %
2,177
Variance from audits, amendments and examinations of prior years’ income tax filings
(0.1)%
(205)
(3.0)%
(1,347)
(0.9)%
(697)
Others
(0.7)%
(1,955)
0.5 %
231
(0.4)%
(312)
Income tax expense (benefit)
$
41,098
$
(5,028)
$
(2,435)
Effective tax rate
14.9 %
(11.3)%
(3.1)%
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-47
(d) As of December 31, 2023 and 2024, the components of deferred tax assets and deferred tax liabilities were as follows:
December 31,
December 31,
2023
2024
(in thousands)
Deferred tax assets:
Inventory
$
4,696
5,051
Tax credit carryforwards
5,005
10,367
Accrued compensated absences
941
1,028
Allowance for sales discounts
1,902
2,374
Depreciation
1,149
1,286
Others
503
1,087
$
14,196
21,193
Deferred tax liabilities:
Remeasurement of defined benefit plans
$
(254)
(240)
Unrealized foreign exchange gain
(261)
(264)
Others
(5)
(60)
$
(520)
(564)
As of December 31, 2024, the Company has not provided for income taxes on undistributed earnings of approximately $1,386,030 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.
(e) Changes in deferred tax assets and liabilities were as follows:
Recognized
Recognized
Recognized
in other
Recognized
in other
January 1,
in profit or
comprehensive
December
in profit or
comprehensive
December
2023
loss
income
31, 2023
loss
income
31, 2024
(in thousands)
Inventory
$
5,335
(639)
—
4,696
355
—
5,051
Tax credit carryforwards
—
5,005
—
5,005
5,362
—
10,367
Accrued compensated absences
926
15
—
941
87
—
1,028
Allowance for sales discounts
1,465
437
—
1,902
472
—
2,374
Depreciation
641
508
—
1,149
137
—
1,286
Unrealized foreign exchange loss
(364)
103
—
(261)
(3)
—
(264)
Remeasurement of defined benefit plans
(250)
(5)
1
(254)
14
—
(240)
Others
3,353
(2,855)
—
498
529
—
1,027
Total
$
11,106
2,569
1
13,676
6,953
—
20,629
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-48
(f)
Unrecognized Deferred Tax Assets
Gross amount of deferred tax assets have not been recognized in respect of the following items.
December 31,
December 31,
2023
2024
(in thousands)
Unused tax credits
$
1,560
1,560
Unused operating loss carryforwards-statutory tax
215,956
202,550
Unused operating loss carryforwards-undistributed earnings tax
288,301
284,914
Others
19,468
17,422
$
525,285
506,446
As of December 31, 2024, the unused investment tax credits with its expiration year from 2025 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.
As of December 31, 2024, the expiration period for abovementioned unrecognized deferred tax assets of unused operating loss carryforwards for statutory tax
were as follows:
Unrecognized
Deductible amount
deferred tax assets
Expiration year
(in thousands)
Taiwan operations
$
100,779
$
20,156
2025~2029
84,871
16,974
2030~2034
Hong Kong operations
1,825
150
Indefinitely
US operations
15,075
4,131
2025~Indefinitely
$
41,411
(g) Assessments by the tax authorities
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 2022. The income tax returns of 2023 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,
2024.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-49
Note 23. Financial Instruments
(a) Categories of financial instruments
(i)
Financial assets
December 31,
December 31,
2023
2024
(in thousands)
Financial assets measured at fair value through profit or loss (including current and
noncurrent)
$
23,767
25,694
Financial assets measured at fair value through other comprehensive income
1,635
28,226
Measured at amortized cost:
Cash and cash equivalents
191,749
218,148
Financial assets at amortized cost
12,511
4,286
Accounts receivable and other receivables (including related parties)
241,390
242,491
Restricted deposit (including current and noncurrent)
453,032
503,731
Refundable deposits (including current and noncurrent)
265,991
232,349
Subtotal
1,164,673
1,201,005
Total
$
1,190,075
1,254,925
(ii) Financial liabilities
December 31,
December 31,
2023
2024
(in thousands)
Measured at amortized cost:
Short-term secured borrowings
$
453,000
503,700
Accounts payables and other payables (including related parties)
174,769
160,940
Long-term unsecured borrowings (including current portion)
40,500
34,500
Lease liabilities (including current and noncurrent)
11,380
7,160
Guarantee deposits
56,749
1,006
Total
$
736,398
707,306
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-50
(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.
Contractual
Within 6
6‑12
Over 5
(in thousands)
cash flows
months
months
1‑2 years
2‑5 years
years
December 31, 2023
Non-derivative financial liabilities
Short-term secured borrowings
$
453,324
453,324
—
—
—
—
Long-term unsecured borrowings (including current portion)
49,476
4,282
4,133
7,966
22,025
11,070
Lease liabilities
11,697
3,089
1,700
4,142
2,766
—
Guarantee deposits
56,749
35,922
20,265
562
—
—
$
571,246
496,617
26,098
12,670
24,791
11,070
December 31, 2024
Non-derivative financial liabilities
Short-term secured borrowings
$
504,061
504,061
—
—
—
—
Long-term unsecured borrowings (including current portion)
40,745
4,079
3,944
7,591
20,527
4,604
Lease liabilities
7,449
2,788
1,062
1,621
1,978
—
Guarantee deposits
1,006
1,006
—
-
—
—
$
553,261
511,934
5,006
9,212
22,505
4,604
The Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.
(c) Currency risk
i. Exposure to foreign currency risk
The Company’s significant exposure to foreign currency risk was as follows:
(in thousands)
December 31, 2023
December 31, 2024
Foreign
Exchange
Functional
Foreign
Exchange
Functional
currency
rate
currency
currency
rate
currency
Financial assets
Monetary items
NTD
281,550
30.705
9,170
235,638
32.785
7,187
CNY
38,528
7.0972
5,429
38,575
7.1884
5,366
JPY
993,351
141.3674
7,027
352,275
156.1934
2,255
Financial liabilities
Monetary items
NTD
1,422,137
30.705
46,315
1,246,126
32.785
38,010
JPY
824,224
141.3674
5,830
375,040
156.1934
2,401
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.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-51
Depreciation or appreciation of the USD by 10% against the New Taiwan Dollars (NTD), CNY and JPY at December 31, 2023 and 2024, while all other
variables were remained constant, would have increased or (decreased) the net profit before tax of $3,052 thousand and $2,560 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, 2023 and 2024 by $101 thousand and $86 thousand,
respectively.
(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
December 31, 2023
Carrying
Fair Value
(in thousands)
Amount
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value through profit or loss
Money market fund
$
2,117
2,117
—
—
2,117
Equity securities-unlisted company
21,650
—
—
21,650
21,650
Subtotal
23,767
2,117
—
21,650
23,767
Financial assets measured at fair value through other
comprehensive income
Equity securities-listed company
1,128
1,128
—
—
1,128
Equity securities-unlisted company
507
—
—
507
507
Total
$
25,402
3,245
—
22,157
25,402
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-52
December 31, 2024
Carrying
Fair Value
(in thousands)
Amount
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value through profit or loss
Money market fund
$
2,140
2,140
—
—
2,140
Equity securities-unlisted company
23,554
—
—
23,554
23,554
Subtotal
25,694
2,140
—
23,554
25,694
Financial assets measured at fair value through other
comprehensive income
Equity securities-listed company
27,932
3,774
24,158
—
27,932
Equity securities-unlisted company
294
—
—
294
294
Total
$
53,920
5,914
24,158
23,848
53,920
(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 2024. 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, 2023 and 2024.
(4) Movement in financial assets included in Level 3 of fair value hierarchy
Financial assets
Financial assets
at fair value
at fair value
through other
through profit or
comprehensive
(in thousands)
loss
income
Total
January 1, 2023
$
15,350
279
15,629
Addition
5,102
562
5,664
Disposal
—
(99)
(99)
Capital reduction of investment
(360)
—
(360)
Recognized in other comprehensive income
—
(235)
(235)
Recognized in profit or loss
1,558
—
1,558
December 31, 2023
$
21,650
507
22,157
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-53
Financial assets
Financial assets
at fair value
at fair value
through other
through profit or
comprehensive
(in thousands)
loss
income
Total
January 1, 2024
$
21,650
507
22,157
Addition
5,628
—
5,628
Disposal
(4,630)
—
(4,630)
Capital reduction of investment
(338)
—
(338)
Recognized in other comprehensive income
—
(213)
(213)
Recognized in profit or loss
1,244
—
1,244
December 31, 2024
$
23,554
294
23,848
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.
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.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-54
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,
2022
2023
2024
Customer A and its affiliates
32.3 %
28.7 %
26.4 %
Customer C
9.4 %
11.0 %
8.3 %
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:
December 31,
December 31,
2023
2024
Customer A and its affiliates
28.5 %
29.1 %
Customer C
10.3 %
8.7 %
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.
At December 31, 2024, 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.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-55
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, 2024. Neither the Company nor its subsidiaries are
subject to externally imposed capital managements.
December 31,
December 31,
2023
2024
(in thousands)
Total liabilities
$
779,702
743,194
Less: cash and cash equivalents
191,749
218,148
$
587,953
525,046
Equity attributable to owners of Himax Technologies, Inc.
$
856,768
890,061
Note 26. Related-party Transactions
(a) Name and relationship
Name of related parties
Relationship
Viewsil Microelectronics (Kunshan) Limited (Viewsil)(1)
Associates
Viewsil Technology Limited (VST)(1)
Associates
Ganzin Technology Corp.
Associates
Prilit Optronics, Inc.(2)
Associates
Iris Optronics Co., Ltd.
Associates
Guangzhou Pixtalks Information Technology Co., Ltd.
Associates
Cheng Mei Materials Technology Corporation (CMMT)(3)
Other related parties
Ningbo Cheng Mei Materials Technology Co., Ltd.(3)
Other related parties
Note 1: Equity method investee of the Company, becoming as a subsidiary of the Company from December 30, 2023. VST is the subsidiary of Viewsil.
Note 2: It became equity method investee of the Company in October 2022.
Note 3: CMMT resigned as a legal director and then lost significant influence on CM Visual Technology Corp. from June 25, 2024.
(b) Significant transactions with related parties
(i)
Sales and accounts receivable
Year ended December 31,
2022
2023
2024
(in thousands)
Sales of goods
Associates
$
—
8
54
Other related parties
215
111
11
$
215
119
65
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-56
December 31,
2023
2024
(in thousands)
Accounts receivable
Other related parties
$
14
31
(ii) Purchase and accounts payable
Year ended December 31,
2022
2023
2024
(in thousands)
Purchase of raw materials
CMMT
$
1,079
1,258
—
December 31,
2023
2024
(in thousands)
Accounts payable
CMMT
$
911
—
(iii) The Company made an interest-free loan of $1,200 thousand as of December 31, 2022 to VST for its short-term funding needs. The loan is repayable on
demand. The Company may consider providing further future loans to VST.
(iv) Others
Year ended December 31,
2022
2023
2024
(in thousands)
Revenue from miscellaneous service
Associates
$
181
78
92
Other related parties
9
—
—
$
190
78
92
Technical service fee
Viewsil
$
1,050
1,140
—
Miscellaneous fee
CMMT
$
496
458
—
Associates
—
—
11
$
496
458
11
December 31,
2023
2024
(in thousands)
Other receivable
Associates
$
12
13
Other related parties
54
—
$
66
13
Other payable
Other related parties
$
110
—
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-57
(c) Compensation of key management personnel
For the years ended December 31, 2022, 2023 and 2024, the aggregate cash compensation that the Company paid to the independent directors was $150
thousand, $150 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, 2022, 2023 and 2024 were as follows:
Year ended December 31,
2022
2023
2024
(in thousands)
Short-term employee benefits
$
1,721
1,790
1,781
Post-employment benefits
11
10
10
Share-based compensation
363
202
227
$
2,095
2,002
2,018
Note 27. Pledged assets
December 31,
December 31,
Pledged assets
Pledged to secure
2023
2024
(in thousands)
Restricted cash and time deposit (1)
Short-term secured borrowings
$
453,000
503,700
Restricted time deposits (1)
For customs duties
32
31
Land (2)
Long-term unsecured borrowings
27,500
27,500
Building and improvements (2)
Long-term unsecured borrowings
35,852
32,464
$
516,384
563,695
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) As of December 31, 2023 and 2024, the Company had entered into several contracts for the acquisition of equipment and computer software. Total contract
prices amounted to $7,564 thousand and $15,845 thousand, respectively. As of December 31, 2023 and 2024, the remaining commitments were $3,747
thousand and $12,519 thousand, respectively.
(b) 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.
(c) 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.
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-58
(d) 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 2030. Purchase obligations exclude agreements that are cancelable without penalty.
Contractual obligations resulting from above purchase orders and agreements with known amounts approximate $1,415 million and $1,258 million as of
December 31, 2023 and 2024 respectively. Of obligations under above purchase orders and agreements, at December 31, 2024, $474 million is expected to be
paid in the next 12 months. The refundable deposits of the long term contract for purchase agreements with suppliers amounts approximate $265 million and
$231 million as of December 31, 2023 and 2024, respectively.
(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, 2024,
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.
Year Ended December 31, 2022
Non-driver
Consolidated
Driver IC
products
Total
(in thousands)
Segment revenues
$
1,042,938
158,401
1,201,339
Segment operating income (loss)
$
275,275
(17,688)
257,587
Non operating income, net
18,978
Consolidated profit before income taxes
$
276,565
Significant noncash items:
Share-based compensation
$
1,655
1,441
3,096
Depreciation and amortization
$
8,261
13,081
21,342
Year Ended December 31, 2023
Non-driver
Consolidated
Driver IC
products
Total
(in thousands)
Segment revenues
$
804,840
140,588
945,428
Segment operating income (loss)
$
75,282
(32,070)
43,212
Non operating income, net
1,181
Consolidated profit before income taxes
$
44,393
Significant noncash items:
Share-based compensation
$
1,608
1,055
2,663
Depreciation and amortization
$
8,601
11,721
20,322
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-59
Year Ended December 31, 2024
Non-driver
Consolidated
Driver IC
products
Total
(in thousands)
Segment revenues
$
751,326
155,476
906,802
Segment operating income (loss)
$
92,699
(24,478)
68,221
Non operating income, net
9,114
Consolidated profit before income taxes
$
77,335
Significant noncash items:
Share-based compensation
$
697
550
1,247
Depreciation and amortization
$
11,115
11,239
22,354
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, 2022
Non-driver
Consolidated
Driver IC
products
Total
(in thousands)
China
$
828,754
96,675
925,429
Taiwan
149,037
26,507
175,544
Korea
15,601
3,510
19,111
Japan
48,921
14,488
63,409
America
111
9,250
9,361
Others
514
7,971
8,485
$
1,042,938
158,401
1,201,339
For the year ended December 31, 2023
Non-driver
Consolidated
Driver IC
products
Total
(in thousands)
China
$
632,363
88,395
720,758
Taiwan
119,289
22,494
141,783
Korea
22,584
4,813
27,397
Japan
27,763
9,034
36,797
America
2,841
11,309
14,150
Mexico
—
627
627
Others
—
3,916
3,916
$
804,840
140,588
945,428
For the year ended December 31, 2024
Non-driver
Consolidated
Driver IC
products
Total
(in thousands)
China
$
567,137
98,421
665,558
Taiwan
116,145
22,183
138,328
Korea
51,672
10,015
61,687
Japan
16,372
8,203
24,575
America
—
12,545
12,545
Mexico
—
2,807
2,807
Others
—
1,302
1,302
$
751,326
155,476
906,802
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-60
The following tables summarize information pertaining to the segment revenues from major product lines:
For the year ended December 31, 2022
Non-driver
Consolidated
Driver IC
products
Total
(in thousands)
Display drivers for large-sized applications
$
263,992
—
263,992
Display drivers for small and medium-sized applications
778,946
—
778,946
Non-driver products
—
158,401
158,401
$
1,042,938
158,401
1,201,339
For the year ended December 31, 2023
Non-driver
Consolidated
Driver IC
products
Total
(in thousands)
Display drivers for large-sized applications
$
175,666
—
175,666
Display drivers for small and medium-sized applications
629,174
—
629,174
Non-driver products
—
140,588
140,588
$
804,840
140,588
945,428
For the year ended December 31, 2024
Non-driver
Consolidated
Driver IC
products
Total
(in thousands)
Display drivers for large-sized applications
$
125,936
—
125,936
Display drivers for small and medium-sized applications
625,390
—
625,390
Non-driver products
—
155,476
155,476
$
751,326
155,476
906,802
The carrying values of the Company’s property, plant and equipment are located in the following countries:
December 31,
December 31,
2023
2024
(in thousands)
Taiwan
$
126,993
117,784
U.S.
1,396
1,433
China
1,442
1,688
Korea
239
286
Japan
39
89
$
130,109
121,280
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-61
Revenues from significant customers, those representing 10% or more of total revenue for the respective periods, are summarized as follows:
Year ended December 31,
2022
2023
2024
(in thousands)
Driver IC segment:
Customer A and its affiliates
$
347,794
234,581
207,725
Customer C
112,231
102,719
73,696
$
460,025
337,300
281,421
Non-driver products segment:
Customer A and its affiliates
$
40,400
36,770
31,276
Customer C
1,165
1,120
1,868
$
41,565
37,890
33,144
Accounts receivable from significant customers, those representing 10% or more of total accounts receivable for the respective dates, is summarized as follows:
December 31,
December 31,
2023
2024
(in thousands)
Customer A and its affiliates
$
67,135
69,006
Customer C
24,303
20,521
$
91,438
89,527
The Company has recognized the following contract liabilities in relation to revenue from contracts with customers:
December 31,
December 31,
2023
2024
(in thousands)
Contract liabilities-current
$
17,751
10,622
Revenue recognized in the current reporting period amounted to $10,034 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, 2024, 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
Year ended December 31,
2022
2023
2024
(in thousands)
Recognized in cost of revenues
$
5,586
4,680
7,174
Recognized in operating expenses
14,378
15,248
14,847
$
19,964
19,928
22,021
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-62
(b) Amortization of intangible assets
Year ended December 31,
2022
2023
2024
(in thousands)
Recognized in cost of revenues
$
93
72
57
Recognized in operating expenses
1,285
322
276
$
1,378
394
333
(c) Employee benefits expense
Year ended December 31,
2022
2023
2024
(in thousands)
Salary
$
142,564
125,813
115,626
Labor and health insurance
7,421
7,548
7,472
Pension
6,527
6,588
6,753
Others
6,431
6,545
6,674
$
162,943
146,494
136,525
Employee benefits expense summarized by function
Recognized in cost of revenues
$
6,273
4,515
4,898
Recognized in operating expenses
156,670
141,979
131,627
$
162,943
146,494
136,525
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
December 31,
December 31,
2023
2024
(in thousands)
Cash
$
3,639
11,632
Financial asset at amortized cost
5,419
—
Other current assets
581
2,969
Financial asset at fair value through profit or loss
19,095
20,768
Investments in subsidiaries and affiliates
1,530,298
1,630,045
Total assets
$
1,559,032
1,665,414
Current liabilities
$
524
445
Current portion of long-term unsecured borrowings
6,000
6,000
Short-term secured borrowings
453,000
503,700
Debt borrowing from a subsidiary
208,240
236,708
Long-term unsecured borrowings
34,500
28,500
Total equity
856,768
890,061
Total liabilities and equity
$
1,559,032
1,665,414
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-63
Himax Technologies, Inc. had no guarantees as of December 31, 2023 and 2024.
Condensed Statements of Profit or Loss
Year ended December 31,
2022
2023
2024
(in thousands)
Revenues
$
—
—
—
Costs and expenses
486
547
618
Operating loss
(486)
(547)
(618)
Interest income
166
268
543
Changes in fair value of financial assets at fair value through profit or loss
1,021
1,639
1,238
Foreign currency exchange losses, net
(487)
(102)
(166)
Finance costs
(4,944)
(12,371)
(11,201)
Loss on re-measurement of the pre-existing relationships in a business combination
—
(1,932)
—
Share of profits of subsidiaries and affiliates
241,712
63,661
89,959
Profit before income taxes
236,982
50,616
79,755
Income tax expense
—
—
—
Profit for the year
$
236,982
50,616
79,755
Condensed Statements of Other Comprehensive Income
Year Ended December 31,
2022
2023
2024
(in thousands)
Profit for the year
$
236,982
50,616
79,755
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension plans
658
8
—
Unrealized gain on financial assets at fair value through other comprehensive income
142
152
9,427
Income tax related to items that will not be reclassified subsequently
(107)
1
—
Items that may be reclassified subsequently to profit or loss:
Foreign operations - foreign currency translation differences
(245)
(123)
(626)
Other comprehensive income for the year, net of tax
448
38
8,801
Total comprehensive income for the year
$
237,430
50,654
88,556
Table of Contents
HIMAX TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022, 2023 and 2024
F-64
Condensed Statements of Cash Flows
Year ended December 31,
2022
2023
2024
(in thousands)
Cash flows from operating activities:
Profit for the year
$
236,982
50,616
79,755
Adjustments for:
Changes in fair value of financial assets at fair value through profit or loss
(1,021)
(1,639)
(1,238)
Interest income
(166)
(268)
(543)
Finance costs
4,944
12,371
11,201
Share of profits of subsidiaries and affiliates
(241,712)
(63,661)
(89,959)
Loss on re-measurement of the pre-existing relationships in a business combination
—
1,932
—
Unrealized foreign currency exchange losses
493
96
—
(480)
(553)
(784)
Changes in:
Other current assets
(19)
(1)
(200)
Other current liabilities
(689)
96
55
Cash generated from operating activities
(1,188)
(458)
(929)
Interest received
172
218
329
Interest paid
(2,561)
(5,891)
(3,783)
Net cash used in operating activities
(3,577)
(6,131)
(4,383)
Cash flows from investing activities:
Acquisitions of financial asset at amortized cost
(163)
(185)
(62)
Proceeds from disposals of financial asset at amortized cost
—
—
5,481
Acquisitions of financial assets at fair value through profit or loss
—
(4,166)
(5,064)
Acquisitions of financial assets at fair value through other comprehensive income
—
—
(1,000)
Acquisitions of equity method investments
—
—
(1,236)
Net cash used in investing activities
(163)
(4,351)
(1,881)
Cash flows from financing activities:
Purchase of treasury stock
—
—
(832)
Prepayments for purchase of treasury stock
—
—
(2,168)
Payments of cash dividends
(217,873)
(83,720)
(50,670)
Payments of dividend equivalents
—
(148)
(233)
Repayments of long-term unsecured borrowings
(6,000)
(6,000)
(6,000)
Proceeds from short-term secured borrowings
1,212,700
1,383,300
1,780,300
Repayments of short-term secured borrowings
(994,800)
(1,299,600)
(1,729,600)
Proceeds from issue of RSUs from subsidiaries
1,187
2,343
2,460
Proceeds from debt from a subsidiary
197,955
182,230
203,230
Repayments of debt from a subsidiary
(187,455)
(167,230)
(182,230)
Net cash provided by financing activities
5,714
11,175
14,257
Net increase in cash
1,974
693
7,993
Cash at beginning of year
972
2,946
3,639
Cash at end of year
$
2,946
3,639
11,632
Exhibit 2.4
DESCRIPTION OF SECURITIES
REGISTERED UNDER SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 (THE “EXCHANGE ACT”)
As of December 31, 2024, Himax Technologies, Inc. (“we,” “us,” and “our”) had the following series of securities registered pursuant to Section 12(b) of the Exchange
Act:
Title of each class
Trading symbol
Name of each exchange on which registered
American depositary shares, each American depositary
shares represent two ordinary share, par value US$ 0.3
per share
HIMX
The Nasdaq Global Select Market
Ordinary shares, par value US$0.3 per share*
N/A
The Nasdaq Global Select Market
*
Not for trading, but only in connection with the listing of the American depositary shares on the Nasdaq Global Select Market
American Depositary Shares (“ADSs”), each American depositary ordinary shares represent two ordinary share, par value US$0.3 per share (the “ordinary shares”), have
been available in the US through an American Depositary Receipt (“ADR”) program since March 2006. This program was established pursuant to the Second Amended and
Restated deposit agreement that we entered into with JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as depositary (“Deposit Agreement”). Our ADRs have been listed on
the Nasdaq Global Select Market Inc. (“Nasdaq”) since March 2006 and are traded under the symbol HIMX. In connection therewith, the ordinary shares are registered under
Section 12(b) of the Exchange Act. This exhibit contains a description of the rights of (i) the holders of ordinary shares and (ii) ADR holders. The ordinary shares underlying
the ADSs are held by JPMorgan Chase, the depositary, and holders of ADSs will not be treated as holders of the ordinary shares.
DESCRIPTION OF ORDINARY SHARES
The following is a summary of material provisions of our currently effective Third Amended and Restated Memorandum and Articles of Association (the “Third
Memorandum and Articles of Association”), as well as the Companies Act (as amended) of the Cayman Islands (the “Companies Act”) insofar as they relate to the material
terms of our ordinary shares. Notwithstanding this, because
it is a summary, it may not contain all the information that you may otherwise deem important. For more complete information, you should read the entire Third
Memorandum and Articles of Association, which has been filed with the Securities and Exchange Commission (the “SEC”) as an exhibit 1.1 from our Annual Report on
Form 20-F (File No. 000-51847) filed with the SEC on June 3, 2010.
Type and Class of Securities
Each of our ordinary shares has nominal value of US$0.3 per share. The respective number of our ordinary shares that have been issued as of December 31, 2024 is
provided on the cover of the annual report on Form 20-F filed on April 2, 2025 (the “2024 Form 20-F”). Our ordinary shares may be held in either certificated or
uncertificated form. Certificates representing the ordinary shares are issued in registered form. We may not issue share to bearer. Our shareholders may freely hold and
transfer their ordinary shares in accordance with our Third Memorandum and Articles of Association. All of our ordinary shares have equal voting rights and carry equal
entitlements to dividends. No participation certificates, non-voting equity securities or profit-sharing certificates have been issued.
Preemptive Rights
Our shareholders do not have preemptive rights.
Rights of Ordinary Shares
General
Our authorized share capital is US$300,000,000 divided into 1,000,000,000 ordinary shares of a nominal or par value of US$0.3 each in accordance with our Third
Memorandum and Articles of Association. Holders of our ordinary shares have the same rights. All of our issued and outstanding ordinary shares are fully paid and non-
assessable.
Dividends
The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors subject to our Third Memorandum and Articles of
Association and the Companies Act. No dividend may be declared and paid unless our directors determine that, immediately after the payment, we will be able to pay our
debts as they become due in the ordinary course of business and we have funds lawfully available for such purpose.
Voting Rights
In respect of all matters subject to a shareholders’ vote, each ordinary share is entitled to one vote for each ordinary share registered in his or her name on our register of
members. Voting at any meeting of shareholders is by show of hands unless a poll is demanded. A poll may be demanded by the
chairman of such meeting, any three shareholders, any shareholder present holding not less than one-tenth of the total voting rights of all shareholders having the right to vote
at the meeting or any shareholder present holding shares conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less
than one-tenth of the total sum paid up on all shares conferring that right.
A quorum required for a meeting of shareholders consists of two shareholders holding not less than one-third in nominal value of the total issued voting shares present in
person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative. As a Cayman Islands exempted company, we are not obliged by the
Companies Act to call shareholders’ annual general meetings. However, our Third Memorandum and Articles of Association provide that we shall in each year hold a general
meeting as our annual general meeting in which case we will specify the meeting as such in the notices calling it, and the annual general meeting will be held at such time and
place as may be determined by our directors. Each general meeting, other than an annual general meeting, shall be an extraordinary general meeting. Shareholders’ annual
general meetings and any other general meetings of our shareholders may be called by a majority of our board of directors or our chairman. Our Third Memorandum and
Articles of Association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings. Advance notice
of at least ten (10) clear days is required for the convening of our annual general meeting and other general meetings unless such notice is waived in accordance with our
articles of association.
An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary shares cast
by those shareholders entitled to vote who are present in person or by proxy at a general meeting, while a special resolution also requires the affirmative vote of no less than
two-thirds of the votes attaching to the ordinary shares cast by those shareholders entitled to vote who are present in person or by proxy at a general meeting. A special
resolution will be required for important matters such as making changes to our Third Memorandum and Articles of Association.
Transfer of Ordinary Shares
Subject to the restrictions in our Third Memorandum and Articles of Association as set out below, any of our shareholders may transfer all or any of his or her ordinary
shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.
Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our
board of directors may also decline to register any transfer of any ordinary share unless:
●
a fee of such maximum sum as the Nasdaq may determine to be payable or such lesser sum as the Board may from time to time require is paid to the Company in
respect thereof;
●
the instrument of transfer is in respect of only one class of shares;
●
the instrument of transfer is lodged at the Office or such other place at which the Register is kept in accordance with the Companies Act or the Registration Office
(as the case may be) accompanied by the relevant share certificate(s) and such other evidence as the Board may reasonably require to show the right of the transferor
to make the transfer (and, if the instrument of transfer is executed by some other person on his behalf, the authority of that person so to do); and
●
if applicable, the instrument of transfer is duly and properly stamped.
If our directors refuse to register a transfer they shall, within two months after the date on which the transfer was lodged, send to each of the transferor and the transferee
notice of such refusal.
The registration of transfers of shares or of any class of shares may, after notice has been given by advertisement in an appointed newspaper or any other newspapers or
by any other means in accordance with the requirements of Nasdaq to that effect be suspended at such times and for such periods (not exceeding in the whole thirty (30) days
in any year) as the Board may determine.
Liquidation
On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of ordinary shares), if the assets available for distribution amongst
our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our
shareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which
there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay all of the paid-up
capital, the assets will be distributed so that the losses are borne by our shareholders in proportion to the par value of the shares held by them. Any distribution of assets or
capital to a holder of ordinary share will be the same in any liquidation event.
Requirements to Change the Rights of Holders of Ordinary Shares
Variations of Rights of Shares
All or any of the special rights for the time being attached to the shares or any class of shares may, unless otherwise provided by the terms of issue of the shares of that
class, from time to time, whether or not our company is being wound-up, may be varied with the sanction of a special resolution passed at a separate meeting of the holders of
the shares of such class by the holders of not less than two-thirds
of the votes cast at such a meeting. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly provided by the terms of issue
of the shares of that class, be deemed to be varied, modified or abrogated by the creation or issue of further shares ranking pari passu therewith.
Limitations on the Rights to Own Ordinary Shares
There are no limitations under the laws of the Cayman Islands or under the Third Memorandum and Articles of Association that limit the right of non-resident or foreign
owners to hold or vote ordinary shares.
Ownership Threshold
There are no provisions under the law of the Cayman Islands or under the Third Memorandum and Articles of Association that govern the ownership threshold above
which shareholder ownership must be disclosed.
Differences between the Law of Different Jurisdictions
We were incorporated under, and are governed by, the laws of the Cayman Islands. The Companies Act is derived, to a large extent, from the older Companies Acts of
England, but does not follow many recent English law statutory enactments. In addition, the Companies Act differs from laws applicable to United States corporations and
their shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to
companies incorporated in the State of Delaware.
Mergers and Similar Arrangements
The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands
companies. For these purposes, (1) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of
such companies as the surviving company, and (2) a “consolidation” means the combination of two or more constituent companies into a combined company and the vesting
of the undertaking, property and liabilities of such companies to the consolidated company.
In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be
authorized by (1) a special resolution of the shareholders of each constituent company, and (2) such other authorization, if any, as may be specified in such constituent
company’s articles of association. The written plan of merger or consolidation must be filed with the Registrar of Companies together with a declaration as to the solvency of
the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or
consolidation will be given to
the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Dissenting
shareholders have the right to be paid the fair value of their shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) if they follow
the required procedures, subject to certain exceptions. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory
procedures.
A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman
subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a company
is a “parent” of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman
Islands.
Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair
value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provide the
dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting
shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or
consolidation is void or unlawful.
Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and
amalgamation of companies, provided that the arrangement is approved by a majority in number of each class of shareholders or creditors with whom the arrangement is to be
made, and who must in addition represent three- fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in
person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand
Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the Grand Court can
be expected to approve the arrangement if it determines that:
●
the statutory provisions as to the required majority vote have been met;
●
the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote
interests adverse to those of the class;
●
the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and
●
the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act.
The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of dissentient minority shareholder upon a tender
offer. When a tender offer is made and accepted by holders of 90.0% of the shares affected within four months, the offeror may, within a two-month period commencing on
the expiration of such four-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand
Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily
be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders’ Suits
In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule a derivative action may not be brought by a
minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands court can
be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) which permit a minority shareholder to
commence a class action against or derivative actions in the name of the company to challenge actions where:
●
a company acts or proposes to act illegally or ultra vires;
●
an action which requires a resolution with a qualified (or special) majority which has not been obtained; and
●
those who control the company are perpetrating a “fraud on the minority.”
Indemnification of Directors and Executive Officers and Limitation of Liability
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors,
except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the
consequences of committing a crime. Our Third Memorandum and Articles of Association provide that we shall indemnify our officers and directors against all actions,
proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such directors or officer, other than by reason of such person’s dishonesty, willful
default or fraud, in or about the conduct of our company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties,
powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer
in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or elsewhere. This
standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.
In addition, we have entered into indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond
that provided in our Third Memorandum and Articles of Association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing
provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore
unenforceable.
Directors’ Fiduciary Duties
Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty
of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar
circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant
transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate
position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take
precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are
presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this
presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such
evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the
corporation.
As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered
that he owes the following duties to the company—a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his position as director
(unless the company permits him to do so), a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third
party, and a duty to exercise powers for the purpose for which such powers were intended. A director of a Cayman Islands company owes to the company a duty to act with
skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a
person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care
and these authorities are likely to be followed in the Cayman Islands.
Shareholder Action by Written Consent
Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of
incorporation. Under Cayman Islands law, a company may eliminate the ability of shareholders to approve corporate matters by way of written resolution signed by or on
behalf of each shareholder who would have been entitled to vote on such matters at a general meeting without a meeting being held by amending the articles of association.
Our Third Memorandum and Articles of Association do not allow shareholders to act by written resolutions.
Shareholder Proposals
Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the
notice provisions in the governing documents. A special meeting may be called by the board of directors, or any other person authorized to do so in the governing documents,
but shareholders may be precluded from calling special meetings.
The Companies Act provide shareholders with only limited rights to requisition a general meeting and does not provide shareholders with any right to put any proposal
before a general meeting. However, these rights may be provided in a company’s articles of association. Our Third Memorandum and Articles of Association do not allow our
shareholders to requisite with any general meeting nor to put proposals before annual general meetings or extraordinary general meetings. As an exempted Cayman Islands
company, we are not obliged by law to call shareholders’ annual general meetings, but
we are required to convene annual general meetings under the Third Memorandum and Articles of Association.
Cumulative Voting
Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation
specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority
shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing such director.
There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our Third Memorandum and Articles of Association do not provide for
cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors
Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the
outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our Third Memorandum and Articles of Association, directors may be
removed with or without cause, by an ordinary resolution of our shareholders. In addition, a director’s office shall be vacated if the director (i) becomes bankrupt or has a
receiving order made against him or suspends payment or compounds with his creditors; (ii) becomes of unsound mind or dies; (iii) resigns his office by notice in writing;
(iv) is prohibited by any applicable laws or regulations from being a director; (v) without special leave of absence from our board of directors, is absent from six consecutive
meetings of the board and the board resolves that his office be vacated; or (vi) is removed from office pursuant to any other provisions of our Third Memorandum and
Articles of Association.
Transactions with Interested Shareholders
The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically
elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested
shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which
owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a
two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such
shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person
becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s
board of directors.
Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute.
However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, the directors of the company are required to
comply with fiduciary duties which they owe to the company under Cayman Islands laws, including the duty to ensure that, in their opinion, any such transactions must be
entered into bona fide in the best interests of the company, and are entered into for a proper corporate purpose and not with the effect of constituting a fraud on the minority
shareholders.
Dissolution; Winding up
Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding
100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s
outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with
dissolutions initiated by the board.
Under the Companies Act, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the
company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified
circumstances including where it is, in the opinion of the court, just and equitable to do so. Under the Companies Act and our Third Memorandum and Articles of
Association, our company may be dissolved, liquidated or wound up by a special resolution of our shareholders.
Variation of Rights of Shares
Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such
class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and our Third Memorandum and Articles of Association, if our share capital is
divided into more than one class of shares, we may vary the rights attached to any class with the sanction of a special resolution passed at a separate meeting of the holders of
the shares of that class by the holders of not less than two-thirds of the votes cast at such a meeting.
Amendment of Governing Document
Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled
to vote, unless the certificate of incorporation provides otherwise. Under the Companies Act and our Third Memorandum and
Articles of Association, our memorandum and articles of association may only be amended by a special resolution of our shareholders.
Rights of Nonresident or Foreign Shareholders
There are no limitations imposed by our Third Memorandum and Articles of Association on the rights of nonresident or foreign shareholders to hold or exercise voting
rights on our shares. In addition, there are no provisions in our Third Memorandum and Articles of Association governing the ownership threshold above which shareholder
ownership must be disclosed.
Exempted Company
We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted
companies. Any company that is registered in the Cayman Islands but conducts business mainly outside the Cayman Islands may apply to be registered as an exempted
company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:
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does not have to file an annual return of its shareholders with the Registrar of Companies of the Cayman Islands;
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is not required to open its register of members for inspection;
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does not have to hold an annual general meeting;
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may issue bearer shares or shares with no par value;
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may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);
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may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
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may register as a limited duration company; and
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may register as a segregated portfolio company.
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder’s shares of the company, except in
exceptional circumstances, such
as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the
corporate veil.
Changes in Capital
We may from time to time by ordinary resolution increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall
prescribe. We may by ordinary resolution:
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increase its share capital by new shares of such amount as the resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as we may
determine in general meeting;
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consolidate and divide all or any of its share capital into shares of a larger amount than its existing shares;
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subdivide its shares, or any of them, into shares of an amount smaller than that fixed by our Third Memorandum and Articles of Association; and
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cancel any shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share
capital by the amount of the shares so cancelled.
We may by special resolution reduce its share capital and any capital redemption reserve or other undistributable reserve in any manner permitted by the law.
DESCRIPTION OF AMERICAN DEPOSITARY SHARES
JPMorgan Chase, as depositary, issues the ADSs. Each ADS represent two ordinary shares, par value US$0.3 per share, deposited with the custodian, as agent of the
depositary, under the deposit agreement among ourselves, the depositary, ADR holders, and all beneficial owners of an interest in the ADSs evidenced by ADRs from time to
time.
The depositary’s office is located at 383 Madison Avenue, Floor 11, New York, NY 10179.
A beneficial owner is any person or entity having a beneficial ownership interest ADSs. A beneficial owner need not be the holder of the ADR evidencing such ADS. If a
beneficial owner of ADSs is not an ADR holder, it must rely on the holder of the ADR(s) evidencing such ADSs in order to assert any rights or receive any benefits under the
deposit agreement. A beneficial owner shall only be able to exercise any right or receive any benefit under the deposit agreement solely through the holder of the ADR(s)
evidencing the ADSs owned by such beneficial owner. The arrangements between a
beneficial owner of ADSs and the holder of the corresponding ADRs may affect the beneficial owner’s ability to exercise any rights it may have.
An ADR holder shall be deemed to have all requisite authority to act on behalf of any and all beneficial owners of the ADSs evidenced by the ADRs registered in such
ADR holder’s name for all purposes under the deposit agreement and ADRs. The depositary’s only notification obligations under the deposit agreement and the ADRs is to
registered ADR holders. Notice to an ADR holder shall be deemed, for all purposes of the deposit agreement and the ADRs, to constitute notice to any and all beneficial
owners of the ADSs evidenced by such ADR holder’s ADRs.
Unless certificated ADRs are specifically requested, all ADSs are issued on the books of our depositary in book-entry form and periodic statements are mailed to ADR
holder which reflect such ADR holder’s ownership interest in such ADSs. In our description, references to American depositary receipts or ADRs shall include the statements
ADR holder receive which reflect such ADR holder’s ownership of ADSs.
An ADR holder may hold ADSs either directly or indirectly through such ADR holder’s broker or other financial institution. If ADR holder holds ADSs directly, by
having an ADS registered in such ADR holder’s name on the books of the depositary, such ADR holders are an ADR holder. This description assumes ADR holders hold the
ADSs directly. If an ADR holder holds the ADSs through such ADR holder’s broker or financial institution nominee, the ADR holder must rely on the procedures of such
broker or financial institution to assert the rights of an ADR holder described in this section. An ADR holder should consult with his or her broker or financial institution to
find out what those procedures are.
We do not treat an ADR holder or beneficial owner as a shareholder of ours and such ADR holder or beneficial owner does not have any shareholder rights. Cayman
Island law governs shareholder rights. Because the depositary or its nominee is the shareholder of record for the shares represented by all outstanding ADSs, shareholder
rights rest with such record holder. An ADR holder’s or beneficial owner’s rights are those of an ADR holder or of a beneficial owner. Such rights derive from the terms of
the deposit agreement to be entered into among us, the depositary and all holders and beneficial owners from time to time of ADRs issued under the deposit agreement and,
in the case of a beneficial owner, from the arrangements between the beneficial owner and the holder of the corresponding ADRs. The obligations of the depositary and its
agents are also set out in the deposit agreement. Because the depositary or its nominee is actually the registered owner of the shares, an ADR holder or beneficial owner must
rely on it to exercise the rights of a shareholder on his or her behalf.
The deposit agreement and the ADSs are governed by New York law. Under the deposit agreement, by holding or owning an ADR or ADS or an interest therein, ADR
holders and beneficial owners each irrevocably agree that any legal suit, action or proceeding against or involving ADR
holders or beneficial owners brought by us or the depositary, arising out of or based upon the deposit agreement, the ADSs, the ADRs or the transactions contemplated
thereby, may be instituted in a state or federal court in New York, New York, irrevocably waive any objection which ADR holders and beneficial owners may have to the
laying of venue of any such proceeding, and irrevocably submit to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. By holding or owning
an ADR or ADS or an interest therein, ADR holders and beneficial owners each also irrevocably agree that any legal suit, action or proceeding against or involving the
depositary brought by ADR holders or beneficial owners, arising out of or based upon the deposit agreement, the ADSs, the ADRs or the transactions contemplated thereby,
may only be instituted in a state or federal court in New York, New York. As a result, ADR holders may not initiate legal proceedings against or involving the depositary,
arising out of or based upon the deposit agreement, the ADSs, the ADRs or the transactions contemplated therein or thereby, in any jurisdictions outside of a state or federal
court in New York, New York, while proceedings against the ADR holders may be initiated in a state or federal court in New York, New York or other jurisdictions.
The following is a summary of what we believe to be the material terms of the deposit agreement. Notwithstanding this, because it is a summary, it may not contain all
the information that an ADS holder may otherwise deem important. For more complete information, an ADS holder should read the entire deposit agreement and the form of
ADR which contains the terms of the ADSs. The deposit agreement has been filed with the SEC as an exhibit to a Registration Statement on Form F-6 (File No. 333-219169)
for the Company. The form of ADR has also been filed with the SEC as an exhibit to our Registration Statement on Form F-6 (File No. 333-219169), as amended, initially
filed with the SEC on July 6, 2017.
Share Dividends and Other Distributions
How will ADS holders receive dividends and other distributions on the shares underlying their ADSs?
We may make various types of distributions with respect to our securities. The depositary has agreed that, to the extent practicable, it will pay to an ADS holder the cash
dividends or other distributions it or the custodian receives on shares or other deposited securities, after converting any cash received into U.S. dollars (if it determines such
conversion may be made on a reasonable basis) and, in all cases, making any necessary deductions provided for in the deposit agreement. The depositary may utilize a
division, branch or affiliate of JPMorgan Chase to direct, manage and/or execute any public and/or private sale of securities under the deposit agreement. Such division,
branch and/or affiliate may charge the depositary a fee in connection with such sales, which fee is considered an expense of the depositary. An ADS holder will receive these
distributions in proportion to the number of underlying securities that his or her ADSs represent.
Except as stated below, the depositary will deliver such distributions to ADR holders in proportion to their interests in the following manner:
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Cash. The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other
distribution or portion thereof (to the extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such
distribution being impermissible or impracticable with respect to certain registered ADR holders, and (iii) deduction of the depositary’s and/or its agents’ expenses in
(1) converting any foreign currency to U.S. dollars to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign
currency or U.S. dollars to the United States by such means as the depositary may determine to the extent that it determines that such transfer may be made on a
reasonable basis (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable
cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. If exchange rates fluctuate during a
time when the depositary cannot convert a foreign currency, an ADS holder may lose some or all of the value of the distribution.
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Shares. In the case of a distribution in shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such shares. Only whole
ADSs will be issued. Any shares which would result in fractional ADSs will be sold and the net proceeds will be distributed in the same manner as cash to the ADR
holders entitled thereto.
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Rights to receive additional shares. In the case of a distribution of rights to subscribe for additional shares or other rights, if we timely provide evidence satisfactory
to the depositary that it may lawfully distribute such rights, the depositary will distribute warrants or other instruments in the discretion of the depositary
representing such rights. However, if we do not timely furnish such evidence, the depositary may:
(i)
sell such rights if practicable and distribute the net proceeds in the same manner as cash to the ADR holders entitled thereto; or
(ii) if it is not practicable to sell such rights by reason of the non-transferability of the rights, limited markets therefor, their short duration or otherwise, do nothing and
allow such rights to lapse, in which case ADR holders will receive nothing and the rights may lapse.
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Other Distributions. In the case of a distribution of securities or property other than those described above, the depositary may either (i) distribute such securities or
property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and
practicable, sell such securities or property and distribute any net proceeds in the same way it distributes cash.
If the depositary determines in its discretion that any distribution described above is not practicable with respect to any specific registered ADR holder, the depositary
may choose any method of distribution that it deems practicable for such ADR holder, including the distribution of foreign currency, securities or property, or it may retain
such items, without paying interest on or investing them, on behalf of the ADR holder as deposited securities, in which case the ADSs will also represent the retained items.
Any U.S. dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and
dealt with by the depositary in accordance with its then current practices.
The depositary is not responsible if it fails to determine that any distribution or action is lawful or reasonably practicable.
There can be no assurance that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other securities at a
specified price, nor that any of such transactions can be completed within a specified time period. All purchases and sales of securities will be handled by the depositary in
accordance with its then current policies, which are currently set forth in the “Depositary Receipt Sale and Purchase of Security” section of
https://www.adr.com/Investors/FindOutAboutDRs, the location and contents of which the depositary shall be solely responsible for.
Deposit, Withdrawal and Cancellation
How does the depositary issue ADSs?
The depositary will issue ADSs if an ADS holder or his or her broker deposit shares or evidence of rights to receive shares with the custodian and pay the fees and
expenses owing to the depositary in connection with such issuance.
Shares deposited in the future with the custodian must be accompanied by certain delivery documentation and shall, at the time of such deposit, be registered in the name
of JPMorgan Chase Bank, N.A., as depositary for the benefit of holders of ADRs or in such other name as the depositary shall direct.
The custodian will hold all deposited shares for the account and to the order of the depositary, in each case for the benefit of ADR holders. ADR holders and beneficial
owners thus have no direct ownership interest in the shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional
securities, property and cash received on or in substitution for the deposited shares. The deposited shares and any such additional items are referred to as “deposited
securities”.
Deposited securities are not intended to, and shall not, constitute proprietary assets of the depositary, the custodian or their nominees.
Beneficial ownership in deposited securities is intended to be and shall at all times during the term of the deposit agreement continue to be, vested in the beneficial
owners of the ADSs representing such deposited securities. Notwithstanding anything else contained herein, in the deposit agreement, in the form of ADR and/or in any
outstanding ADSs, the depositary, the custodian and their respective nominees are intended to be and shall at all times during the term of the deposit agreement be, the record
holder(s) only of the deposited securities represented by the ADSs for the benefit of the ADR holders. The depositary, on its own behalf and on behalf of the custodian and
their respective nominees, disclaims any beneficial ownership interest in the deposited securities held on behalf of the ADR holders.
Upon each deposit of shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement, including the payment of the
fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name or upon the order of the person
entitled thereto evidencing the number of ADSs to which such person is entitled. All of the ADSs issued will, unless specifically requested to the contrary, be part of the
depositary’s direct registration system, and a registered holder will receive periodic statements from the depositary which will show the number of ADSs registered in such
holder’s name. An ADR holder can request that the ADSs not be held through the depositary’s direct registration system and that a certificated ADR be issued.
How do ADR holders cancel an ADS and obtain deposited securities?
When an ADR holder turns in his or her ADR certificate at the depositary’s office, or when an ADR holder provide proper instructions and documentation in the case of
direct registration ADSs, the depositary will, upon payment of certain applicable fees, charges and taxes, deliver the underlying shares to an ADR holder or upon an ADR
holder’s written order. Delivery of deposited securities in certificated form will be made at the custodian’s office. At an ADR holder’s risk, expense and request, the
depositary may deliver deposited securities at such other place as an ADR holder may request.
The depositary may only restrict the withdrawal of deposited securities in connection with:
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temporary delays caused by closing our transfer books or those of the depositary or the deposit of shares in connection with voting at a shareholders’ meeting, or the
payment of dividends;
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the payment of fees, taxes and similar charges; or
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compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited securities.
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Record Dates
The depositary may, after consultation with us if practicable, fix record dates (which, to the extent applicable, shall be as near as practicable to any corresponding record
dates set by us) for the determination of the registered ADR holders who will be entitled (or obligated, as the case may be):
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to receive any distribution on or in respect of deposited securities,
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to give instructions for the exercise of voting rights at a meeting of holders of shares, or
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to pay the fee assessed by the depositary for administration of the ADR program and for any expenses as provided for in the ADR,
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to receive any notice or to act in respect of other matters,
all subject to the provisions of the deposit agreement.
Voting Rights
How do ADR holders vote?
If the depositary asks an ADR holder to provide it with voting instructions, an ADR holder may instruct the depositary how to exercise the voting rights for the shares
which underlie an ADR holder’s ADSs. Subject to the next sentence, as soon as practicable after receiving notice from us of any meeting at which the holders of shares are
entitled to vote, or of our solicitation of consents or proxies from holders of shares, the depositary shall fix the ADS record date in accordance with the provisions of the
deposit agreement, provided that if the depositary receives a written request from us and at least 30 days prior to the date of such vote or meeting, the depositary shall, at our
expense, distribute to the registered ADR holders a “voting notice” stating (i) final information particular to such vote and meeting and any solicitation materials, (ii) that
each ADR holder on the record date set by the
depositary will, subject to any applicable provisions of Cayman Islands law, be entitled to instruct the depositary as to the exercise of the voting rights, if any, pertaining to
the deposited securities represented by the ADSs evidenced by such ADR holder’s ADRs and (iii) the manner in which such instructions may be given, including instructions
for giving a discretionary proxy to a person designated by us. Each ADR holder shall be solely responsible for the forwarding of voting notices to the beneficial owners of
ADSs registered in such ADR holder’s name. There is no guarantee that ADR holders and beneficial owners generally or any holder or beneficial owner in particular will
receive the notice described above with sufficient time to enable such ADR holder or beneficial owner to return any voting instructions to the depositary in a timely manner.
Following actual receipt by the ADR department responsible for proxies and voting of ADR holders’ instructions (including, without limitation, instructions of any entity
or entities acting on behalf of the nominee for DTC), the depositary shall, in the manner and on or before the time established by the Depositary for such purpose, endeavor to
vote or cause to be voted the deposited securities represented by the ADSs evidenced by such ADR holders’ ADRs in accordance with such instructions insofar as practicable
and permitted under the provisions of or governing deposited securities.
To the extent we have provided the depositary with at least 30 days’ notice of a proposed meeting and the notice will be received by all holders and beneficial owners of
interests in ADSs no less than 10 days prior to the date of the meeting and/or the cut-off date for the solicitation of consents, if voting instructions are not timely received by
the depositary from any holder, such holder shall be deemed, and in the deposit agreement the depositary is instructed to deem such holder, to have instructed the depositary
to give a discretionary proxy to a person designated by us to vote the shares represented by their ADSs as desired, provided that no such instruction shall be deemed given
and no discretionary proxy shall be given unless (a) we inform the depositary in writing (and we agree to provide the depositary with such instruction promptly in writing)
that (i) we wish such proxy to be given, (ii) there is no substantial opposition existing with respect to any agenda item for which the proxy would be given and (iii) the agenda
item(s), if approved, would not materially or adversely affect the rights of holders of shares and (b) with respect to such meeting, the depositary obtained an opinion of
counsel, in form and substance satisfactory to the depositary, confirming that (a) the granting of such discretionary proxy does not subject the depositary to any reporting
obligations in the Cayman Islands, (b) the granting of such proxy will not result in a violation of the laws, rules, regulations or permits of the Cayman Islands and (c) the
voting arrangement and deemed instruction as contemplated under the deposit agreement will be given effect under the laws, rules and regulations of the Cayman Islands and
(d) the granting of such discretionary proxy will not under any circumstances result in the shares represented by the ADSs being treated as assets of the depositary under the
laws, rules or regulations of the Cayman Islands.
The depositary may from time to time access information available to it to consider whether any of the circumstances described above exist, or request additional
information from us in respect thereto. By taking any such action, the depositary shall not in any way be deemed or inferred to have been required, or have had any duty or
responsibility (contractual or otherwise), to monitor or inquire whether any of the circumstances described above existed. In addition to the limitations provided for in the
deposit agreement, ADR holders and beneficial owners are advised and agree that (a) the depositary will rely fully and exclusively on us to inform it of any of the
circumstances set forth above, and (b) neither the depositary, the custodian nor any of their respective agents shall be obliged to inquire or investigate whether any of the
circumstances described above exist and/or whether we complied with our obligation to timely inform the depositary of such circumstances. Neither the depositary, the
custodian nor any of their respective agents shall incur any liability to ADR holders or beneficial owners (i) as a result of our failure to determine that any of the
circumstances described above exist or our failure to timely notify the depositary of any such circumstances or (ii) if any agenda item which is approved at a meeting has, or
is claimed to have, a material or adverse effect on the rights of holders of shares.
Holders are strongly encouraged to forward their voting instructions to the depositary as soon as possible. For instructions to be valid, the ADR department of the
depositary that is responsible for proxies and voting must receive them in the manner and on or before the time specified, notwithstanding that such instructions may have
been physically received by the depositary prior to such time. The depositary will not itself exercise any voting discretion in respect of deposited securities. The depositary
and its agents will not be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any voting instructions are
given, including instructions to give a discretionary proxy to a person designated by us, for the manner in which any vote is cast, including, without limitation, any vote cast
by a person to whom the depositary is instructed to grant a discretionary proxy, or for the effect of any such vote.
Notwithstanding anything contained in the deposit agreement or any ADR, the depositary may, to the extent not prohibited by any law, regulation, or requirement of the
stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the depositary in connection with any meeting of, or solicitation of consents
or proxies from, holders of deposited securities, distribute to the registered holders of ADRs a notice that provides such holders with, or otherwise publicizes to such holders,
instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for
requesting copies of the materials).
We have advised the depositary that under the Cayman Islands law and our constituent documents, each as in effect as of the date of the deposit agreement, voting at any
meeting of shareholders is by show of hands unless a poll is (before or on the declaration of the results of the show
of hands) demanded. In the event that voting on any resolution or matter is conducted on a show of hands basis in accordance with our constituent documents, the depositary
will refrain from voting and the voting instructions received by the depositary from holders shall lapse. The depositary will not demand a poll or join in demanding a poll,
whether or not requested to do so by holders of ADSs. There is no guarantee that an ADR holder will receive voting materials in time to instruct the depositary to vote and it
is possible that an ADR holder, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.
Reports and Other Communications
Will ADR holders be able to view our reports?
The depositary will make available for inspection by ADR holders at the offices of the depositary and the custodian the deposit agreement, the provisions of or governing
deposited securities, and any written communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made generally
available to the holders of deposited securities.
Additionally, if we make any written communications generally available to holders of our shares, and we furnish copies thereof (or English translations or summaries) to
the depositary, it will distribute the same to registered ADR holders.
Reclassifications, Recapitalizations and Mergers
If we take certain actions that affect the deposited securities, including (i) any change in par value, split-up, consolidation, cancellation or other reclassification of
deposited securities or (ii) any distributions of ordinary shares or other property not made to holders of ADRs or (iii) any recapitalization, reorganization, merger,
consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all of our assets, then the depositary may choose to, and shall if reasonably requested by us:
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amend the form of ADR;
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distribute additional or amended ADRs;
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distribute cash, securities or other property it has received in connection with such actions;
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sell by public or private sale any securities or property received; or
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none of the above.
If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited securities and each
ADS will then represent a proportionate interest in such property.
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the ADSs without an ADR holder’s consent for any reason. ADR holders must be given at least
30 days’ notice of any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or
registration fees, SWIFT, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or otherwise prejudices any substantial existing right of ADR
holders or beneficial owners. Such notice need not describe in detail the specific amendments effectuated thereby, but must identify to ADR holders and beneficial owners a
means to access the text of such amendment. If an ADR holder continues to hold an ADR or ADRs after being so notified, such ADR holder and any beneficial owner are
deemed to agree to such amendment and to be bound by the deposit agreement as so amended. No amendment, however, will impair an ADR holder’s right to surrender his
or her ADSs and receive the underlying securities, except in order to comply with mandatory provisions of applicable law.
Any amendments or supplements which (i) are reasonably necessary (as agreed by us and the depositary) in order for (a) the ADSs to be registered on Form F-6 under
the Securities Act of 1933 or (b) the ADSs or shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges
to be borne by ADR holders, shall be deemed not to prejudice any substantial rights of ADR holders or beneficial owners. Notwithstanding the foregoing, if any
governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the deposit agreement or the form of
ADR to ensure compliance therewith, we and the depositary may amend or supplement the deposit agreement and the ADR at any time in accordance with such changed
laws, rules or regulations. Such amendment or supplement to the deposit agreement in such circumstances may become effective before a notice of such amendment or
supplement is given to ADR holders or within any other period of time as required for compliance.
Notice of any amendment to the deposit agreement or form of ADRs shall not need to describe in detail the specific amendments effectuated thereby, and failure to
describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the ADR holders
identifies a means for ADR holders and beneficial owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the SEC’s, the depositary’s or our
website or upon request from the depositary).
How may the deposit agreement be terminated?
The depositary may, and shall at our written direction, terminate the deposit agreement and the ADRs by mailing notice of such termination to the holders of ADRs at
least 30 days prior to the date fixed in such notice for such termination; provided, however, if the depositary shall have (i) resigned as depositary under the deposit agreement,
notice of such termination by the depositary shall not be provided to the ADR holders unless a successor depositary shall not be operating under the deposit agreement within
90 days of the date of such resignation, and (ii) been removed as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to
registered holders of ADRs unless a successor depositary shall not be operating under the deposit agreement on the 90th day after our notice of removal was first provided to
the depositary.
After the date so fixed for termination, (a) all direct registration ADRs shall cease to be eligible for the direct registration system and shall be considered ADRs issued on
the ADR register maintained by the depositary and (b) the depositary shall use its reasonable efforts to ensure that the ADSs cease to be DTC eligible so that neither DTC nor
any of its nominees shall thereafter be a registered holder of ADRs. At such time as the ADSs cease to be DTC eligible and/or neither DTC nor any of its nominees is a
registered holder of ADRs, the depositary shall (a) instruct its custodian to deliver all shares to us along with a general stock power that refers to the names set forth on the
ADR register maintained by the depositary and (b) provide us with a copy of the ADR register maintained by the depositary. Upon receipt of such shares and the ADR
register maintained by the depositary, we have agreed to use our best efforts to issue to each registered ADR holder a Share certificate representing the Shares represented by
the ADSs reflected on the ADR register maintained by the depositary in such registered ADR holder’s name and to deliver such Share certificate to the registered ADR
holder at the address set forth on the ADR register maintained by the depositary. After providing such instruction to the custodian and delivering a copy of the ADR register
to us, the depositary and its agents will perform no further acts under the deposit agreement or the ADRs and shall cease to have any obligations under the deposit agreement
and/or the ADRs.
Limitations on Obligations and Liability to ADR holders
Limits on our obligations and the obligations of the depositary; limits on liability to ADR holders and holders of ADSs
Prior to the issue, registration, registration of transfer, split-up, combination, or cancellation of any ADRs, or the delivery of any distribution in respect thereof, and from
time to time in the case of the production of proofs as described below, we or the depositary or its custodian may require:
●
payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration
of transfers of shares or other deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the deposit agreement;
●
the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without
limitation, information as to citizenship, residence, exchange control approval, beneficial or other ownership of, or interest in, any securities, compliance with
applicable law, regulations, provisions of or governing deposited securities and terms of the deposit agreement and the ADRs, as it may deem necessary or proper;
and
●
compliance with such regulations as the depositary may establish consistent with the deposit agreement.
The issuance of ADRs, the acceptance of deposits of shares, the registration, registration of transfer, split-up or combination of ADRs or the withdrawal of shares, may
be suspended, generally or in particular instances, when the ADR register or any register for deposited securities is closed or when any such action is deemed advisable by the
depositary; provided that the ability to withdraw shares may only be limited under the following circumstances: (i) temporary delays caused by closing transfer books of the
depositary or our transfer books or the deposit of shares in connection with voting at a shareholders’ meeting, or the payment of dividends, (ii) the payment of fees, taxes, and
similar charges, and (iii) compliance with any laws or governmental regulations relating to ADRs or to the withdrawal of deposited securities.
The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and our respective agents, provided, however, that no disclaimer of
liability under the Securities Act of 1933 is intended by any of the limitations of liabilities provisions of the deposit agreement. The deposit agreement provides that each of
us, the depositary and our respective agents will:
●
incur or assume no liability if any present or future law, rule, regulation, fiat, order or decree of the United States, the Cayman Islands, Taiwan, the Republic of
China, or any other country or jurisdiction, or of any governmental or regulatory authority or securities exchange or market or automated quotation system, the
provisions of or governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism, nationalization, expropriation,
currency restrictions, work stoppage, strike, civil unrest, revolutions, rebellions, explosions, computer failure or circumstance beyond our, the depositary’s or our
respective agents’ direct and immediate control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with,
any act which the deposit agreement or the ADRs provide shall be done or performed by us, the depositary or our respective agents (including, without limitation,
voting);
●
incur or assume no liability by reason of any non-performance or delay, caused as aforesaid, in the performance of any act or things which by the terms of the
deposit agreement it is provided shall or may be done or performed or any exercise or failure to exercise discretion under the deposit agreement or the ADRs
including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable;
●
incur or assume no liability if it performs its obligations under the deposit agreement and ADRs without gross negligence or willful misconduct;
●
in the case of the depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited
securities the ADSs or the ADRs;
●
in the case of us and our agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities
the ADSs or the ADRs, which in our or our agents’ opinion, as the case may be, may involve it in expense or liability, unless indemnity satisfactory to us or our
agent, as the case may be against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be requested;
●
not be liable for any action or inaction by it in reliance upon the advice of or information from any legal counsel, any accountant, any person presenting shares for
deposit, any registered holder of ADRs, or any other person believed by it to be competent to give such advice or information and/or, in the case of the depositary,
us; or
●
may rely and shall be protected in acting upon any written notice, request, direction, instruction or document believed by it to be genuine and to have been signed,
presented or given by the proper party or parties.
Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the
ADSs or the ADRs. We and our agents shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the
ADSs or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense (including fees and disbursements of
counsel) and liability is furnished as often as may be required. The depositary and its agents may fully respond to any and all demands or requests for information maintained
by or on its behalf in connection with the deposit agreement, any registered holder or holders of ADRs, any ADRs or otherwise related to the deposit agreement or ADRs to
the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations,
administrative or judicial process, banking, securities or other regulators. The depositary shall not be liable for the acts or omissions made by, or the insolvency of, any
securities depository, clearing agency or settlement system. Furthermore, the depositary shall not be responsible for, and shall incur no liability in connection with or arising
from, the insolvency of any custodian that is not a branch or affiliate of JPMorgan Chase Bank, N.A.
Notwithstanding anything to the contrary contained in the deposit agreement or any ADRs, the depositary shall not be responsible for, and shall incur no liability in
connection with or arising from, any act or omission to act on the part of the custodian except to the extent that any registered ADR holder has incurred liability directly as a
result of the custodian having (i) committed fraud or willful misconduct in the provision of custodial services to the depositary or (ii) failed to use reasonable care in the
provision of custodial services to the depositary as determined in accordance with the standards prevailing in the jurisdiction in which the custodian is located. The depositary
shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be
responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale.
The depositary has no obligation to inform ADR holders or beneficial owners about the requirements of the laws, rules or regulations or any changes therein or thereto of
the Cayman Islands, Taiwan, the Republic of China or any other country or jurisdiction or of any governmental or regulatory authority or any securities exchange or market
or automated quotation system.
Additionally, none of us, the depositary or the custodian shall be liable for the failure by any holder of registered ADRs or beneficial owner therein to obtain the benefits
of credits or refunds of non-U.S. tax paid against such ADR holder’s or beneficial owner’s income tax liability. The depositary is under no obligation to provide the ADR
holders and beneficial owners, or any of them, with any information about our tax status. Neither we nor the depositary shall incur any liability for any tax or tax
consequences that may be incurred by registered ADR holders or beneficial owners on account of their ownership or disposition of ADRs or ADSs.
Neither the depositary nor its agents will be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any
voting instructions are given, including instructions to give a discretionary proxy to a person designated by us, for the manner in which any vote is cast, including, without
limitation, any vote cast by a person to whom the depositary is instructed to grant a discretionary proxy, or for the effect of any such vote. The depositary may rely upon
instructions from us or our counsel in respect of any approval or license required for any currency conversion, transfer or distribution. The depositary shall not incur any
liability for the content of any information submitted to it by us or on our behalf for distribution to ADR holders or for any
inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the deposited securities, for the validity or worth of the deposited
securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the deposit agreement or for the failure or timeliness of any notice
from us. The depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary
or in connection with any matter arising wholly after the removal or resignation of the depositary. Neither the depositary nor any of its agents shall be liable for any indirect,
special, punitive or consequential damages (including, without limitation, legal fees and expenses) or lost profits, in each case of any form incurred by any person or entity
(including, without limitation holders or beneficial owners of ADRs and ADSs), whether or not foreseeable and regardless of the type of action in which such a claim may be
brought.
No provision of the deposit agreement or the ADRs is intended to constitute a waiver or limitation of any rights which an ADR holder or any beneficial owner may have
under the Securities Act of 1933 or the Securities Exchange Act of 1934, to the extent applicable.
The depositary and its agents may own and deal in any class of securities of our company and our affiliates and in ADRs.
Disclosure of Interest in ADSs
To the extent that the provisions of or governing any deposited securities may require disclosure of or impose limits on beneficial or other ownership of, or interest in,
deposited securities, other shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, ADR holders or
beneficial owners agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable instructions we may provide in respect
thereof.
Books of Depositary
The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADRs, which register shall include the
depositary’s direct registration system. Registered holders of ADRs may inspect such records at the depositary’s office at all reasonable times, but solely for the purpose of
communicating with other ADR holders in the interest of the business of our company or a matter relating to the deposit agreement. Such register may be closed at any time
or from time to time, when deemed expedient by the depositary or, in the case of the issuance book portion of the ADR Register, when reasonably requested by the Company
solely in order to enable the Company to comply with applicable law.
The depositary will maintain facilities for the delivery and receipt of ADRs.
Appointment
In the deposit agreement, each registered holder of ADRs and each beneficial owner, upon acceptance of any ADSs or ADRs (or any interest in any of them) issued in
accordance with the terms and conditions of the deposit agreement will be deemed for all purposes to:
●
be a party to and bound by the terms of the deposit agreement and the applicable ADR or ADRs,
●
appoint the depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the deposit agreement and
the applicable ADR or ADRs, to adopt any and all procedures necessary to comply with applicable laws and to take such action as the depositary in its sole
discretion may deem necessary or appropriate to carry out the purposes of the deposit agreement and the applicable ADR and ADRs, the taking of such actions to be
the conclusive determinant of the necessity and appropriateness thereof; and
●
acknowledge and agree that (i) nothing in the deposit agreement or any ADR shall give rise to a partnership or joint venture among the parties thereto, nor establish a
fiduciary or similar relationship among such parties, (ii) the depositary, its divisions, branches and affiliates, and their respective agents, may from time to time be in
the possession of non-public information about us, ADR holders, beneficial owners and/or their respective affiliates, (iii) the depositary and its divisions, branches
and affiliates may at any time have multiple banking relationships with us, ADR holders, beneficial owners and/or the affiliates of any of them, (iv) the depositary
and its divisions, branches and affiliates may, from time to time, be engaged in transactions in which parties adverse to us, ADR holders, beneficial owners and/or
their respective affiliates may have interests, (v) nothing contained in the deposit agreement or any ADR(s) shall (A) preclude the depositary or any of its divisions,
branches or affiliates from engaging in any such transactions or establishing or maintaining any such relationships, or (B) obligate the depositary or any of its
divisions, branches or affiliates to disclose any such transactions or relationships or to account for any profit made or payment received in any such transactions or
relationships, (vi) the depositary shall not be deemed to have knowledge of any information held by any branch, division or affiliate of the depositary and (vii) notice
to an ADR holder shall be deemed, for all purposes of the deposit agreement and the ADRs, to constitute notice to any and all beneficial owners of the ADSs
evidenced by such ADR holder’s ADRs. For all purposes under the deposit agreement and the ADRs, the ADR holders thereof shall be deemed to have all requisite
authority to act on behalf of any and all beneficial owners of the ADSs evidenced by such ADRs.
Governing Law
The deposit agreement, the ADSs and the ADRs are governed by and construed in accordance with the laws of the State of New York.
In the deposit agreement, we have submitted to the non-exclusive jurisdiction of the courts of the State of New York and appointed an agent for service of process on our
behalf. Any action based on the deposit agreement, the ADSs, the ADRs or the transactions contemplated therein or thereby may be instituted by the depositary against us in
any competent court in the Cayman Islands, Taiwan, the Republic of China, the United States and/or any other court of competent jurisdiction.
Under the deposit agreement, by holding or owning an ADR or ADS or an interest therein, ADR holders and beneficial owners each irrevocably agree that any legal suit,
action or proceeding against or involving ADR holders or beneficial owners brought by us or the depositary, arising out of or based upon the deposit agreement, the ADSs,
the ADRs or the transactions contemplated thereby, may be instituted in a state or federal court in New York, New York, irrevocably waive any objection which ADR holders
and beneficial owners may have to the laying of venue of any such proceeding, and irrevocably submit to the non-exclusive jurisdiction of such courts in any such suit, action
or proceeding. By holding or owning an ADR or ADS or an interest therein, ADR holders and beneficial owners each also irrevocably agree that any legal suit, action or
proceeding against or involving the depositary brought by ADR holders or beneficial owners, arising out of or based upon the deposit agreement, the ADSs, the ADRs or the
transactions contemplated thereby, may only be instituted in a state or federal court in New York, New York. As a result, ADR holders may not initiate legal proceedings
against or involving the depositary, arising out of or based upon the deposit agreement, the ADSs, the ADRs or the transactions contemplated therein or thereby, in any
jurisdictions outside of a state or federal court in New York, New York, while proceedings against the ADR holders may be initiated in a state or federal court in New York,
New York or other jurisdictions.
Notwithstanding the foregoing, (i) the depositary may, in its sole discretion, elect to institute any dispute, suit, action, controversy, claim or proceeding directly or
indirectly based on, arising out of or relating to the deposit agreement, the ADSs, the ADRs or the transactions contemplated therein or thereby, including without limitation
any question regarding its or their existence, validity, interpretation, performance or termination, against any other party or parties to the deposit agreement (including,
without limitation, against ADR holders and beneficial owners of interests in ADSs), by having the matter referred to and finally resolved by an arbitration conducted under
the terms described below, and (ii) the depositary may in its sole discretion require, by written notice to the relevant party or parties, that any dispute, suit, action, controversy,
claim or proceeding against the depositary by any party or parties to the deposit agreement (including, without limitation, by ADR holders and beneficial owners of interests
in ADSs) shall be referred to and finally settled by an arbitration conducted under the terms described below. Any such arbitration shall be conducted in the English language
either in New York, New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association or in Hong Kong following the arbitration rules
of the United Nations
Commission on International Trade Law (UNCITRAL). Notwithstanding the foregoing, such provisions do not prevent an ADS holder form pursuing claims under the
United States federal securities laws in federal courts.
Jury Trial Waiver
In the deposit agreement each party thereto (including, for avoidance of doubt, each holder and beneficial owner and/or holder of interests in ADSs and ADRs)
irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any suit, action or proceeding against the depositary and/or us
directly or indirectly arising out of or relating to the shares or other deposited securities, the ADSs or the ADRs, the deposit agreement or any transaction contemplated
therein, or the breach thereof (whether based on contract, tort, common law or any other theory), including any claim under the U.S. federal securities laws.
If we or the depositary were to oppose a jury trial demand based on such waiver, the court would determine whether the waiver was enforceable in the facts and
circumstances of that case in accordance with applicable state and federal law, including whether a party knowingly, intelligently and voluntarily waived the right to a jury
trial. The waiver to right to a jury trial of the deposit agreement is not intended to be deemed a waiver by any holder or beneficial owner of ADSs of the Company’s or the
depositary’s compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.
Exhibit 8.1
Himax Technologies, Inc.
List of Subsidiaries
Subsidiary
Jurisdiction of
Incorporation
Percentage of
Our Ownership
Interest
Himax Technologies Limited
ROC
100.0%
Himax Technologies Korea Ltd.
South Korea
100.0%
Himax Technologies (Samoa), Inc.
Samoa
100.0%(1)
Himax Technologies (Suzhou) Co., Ltd.
PRC
100.0%(2)
Himax Technologies (Shenzhen) Co., Ltd.
PRC
100.0%(2)
Himax Display, Inc.
ROC
92.0%(1)
Integrated Microdisplays Limited
Hong Kong
92.0%(3)
Himax Display (USA) Inc.
Delaware, USA
92.0%(3)
Himax Analogic, Inc.
ROC
98.6%(1)
Himax Imaging, Inc.
Cayman Islands
100.0%
Himax Imaging, Ltd.
ROC
98.6%(1)
Himax Imaging Corp.
California, USA
98.6%(4)
Harvest Investment Limited
ROC
100.0%(1)
Himax Technologies Japan Ltd.
Japan
100.0%
Himax Semiconductor (Hong Kong) Limited
Hong Kong
100.0%
Liqxtal Technology Inc.
ROC
62.3%(1)
Himax IGI Precision Ltd.
Delaware, USA
100.0%(1)
CM Visual Technology Corp.
ROC
77.6%(1)
Viewsil Microelectronics (Kunshan) Limited
PRC
100.0%
Viewsil Technology Limited
British Virgin Islands
100.0%(5)
Solvanta Investment Limited
ROC
100.0%(1)
Solvanta Energy Limited
ROC
100.0%(6)
(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 92.0% ownership of Himax Display, Inc.
(4) Indirectly, through our 98.6% ownership of Himax Imaging, Ltd.
(5) Indirectly, through our 100.0% ownership of Viewsil Microelectronics (Kunshan) Limited.
(6) Indirectly, through our 100.0% ownership of Solvanta Investment Limited.
Exhibit 11.2
HIMAX TECHNOLOGIES, INC.
STATEMENT OF POLICY CONCERNING
TRADING POLICIES
Amended and Adopted on March 12, 2025
i
TABLE OF CONTENTS
Page No.
I.
SUMMARY OF THE COMPANY POLICY CONCERNING TRADING POLICIES
1
II.
THE USE OF INSIDE INFORMATION IN CONNECTION WITH TRADING IN SECURITIES
2
A. General Rule
2
B. To Whom Does the Policy Apply?
4
C. Other Companies’ Stock
4
D. Hedging and Derivatives
5
E. Pledging of Securities, Margin Accounts
5
F. General Guidelines
5
1. Nondisclosure
5
2. Trading in the Company Securities
6
3. Avoid Speculation
6
4. Trading in Other Securities
6
5. Restrictions on the Window Group
6
G. Guidelines for 10b5-1 Plans
8
H. Applicability of U.S. Securities Laws to International Transactions
11
III.
Other Limitations on Securities Transactions
12
A. Public Resales – Rule 144
12
B. Private Resales
13
C. Restrictions on Purchases of Company Securities
14
D. Filing Requirements
14
1. Schedule 13D and 13G
14
2. Form 144
14
1
I.
SUMMARY OF THE COMPANY POLICY CONCERNING
TRADING POLICIES
It is the policy of Himax Technologies, Inc. and its subsidiaries (the “Company”) that it will without exception comply with all applicable
laws and regulations in conducting its business. Each employee, each executive officer, each director and each of their respective family members
is expected to abide by this policy. When carrying out Company business, employees, executive officers and directors must avoid any activity that
violates applicable laws or regulations. In order to avoid an appearance of impropriety, the Company’s directors, executive officers and certain
other employees are subject to trading window restrictions, pre-approval requirements and other limitations on their ability to enter into
transactions involving the Company’s securities. Although these limitations do not apply to transactions pursuant to written plans for trading
securities that comply with Rule 10b5-1 under the Securities Exchange Act of 1934 (the “Exchange Act”), the entry into, amendment or
termination of any such written trading plan is subject to pre-approval requirements and other limitations.
2
II.
THE USE OF INSIDE INFORMATION IN CONNECTION WITH
TRADING IN SECURITIES
A.
General Rule.
The U.S. securities laws regulate the sale and purchase of securities in the interest of protecting the investing public. U.S. securities laws
give the Company, its executive officers and directors, and other employees the responsibility to ensure that information about the Company is not
used unlawfully in the purchase and sale of securities.
All employees, executive officers and directors should pay particularly close attention to the laws against trading on “inside” information.
These laws are based upon the belief that all persons trading in a company’s securities should have equal access to all “material” information about
that company. For example, if an employee, an executive officer or a director of a company knows material nonpublic information, that employee,
executive officer or director is prohibited from buying or selling shares (including American Depositary Shares, or ADSs) in the company until the
information has been adequately disclosed to the public. This is because the employee, executive officer or director knows information that will
probably cause the share price to change, and it would be unfair for the employee, executive officer or director to have an advantage (knowledge
that the share price will change) that the rest of the investing public does not have. In fact, it is more than unfair, it is considered to be fraudulent
and illegal. Civil and criminal penalties for this kind of activity are severe.
The general rule can be stated as follows: It is a violation of the federal securities laws for any person to buy, sell, or otherwise trade or deal
in securities if he or she is in possession of material nonpublic information. Information is material if there is a substantial likelihood that a
reasonable investor would consider it important in making an investment decision. Material information can be favorable or unfavorable. If it is not
clear whether inside information is material, it should be treated as if it was material. Some examples of information that could be considered
material include:
Significant changes in key performance indicators of the Company,
Actual, anticipated or targeted earnings and dividends and other financial information,
Financial, sales and other significant internal business forecasts, or a change in previously released estimates,
3
Mergers, business acquisitions or dispositions, or the expansion or curtailment of operations
Significant events affecting the Company’s operations, including any breach of information systems that compromises the functioning of
the Company’s information or other systems or results in the exposure or loss of customer information, in particular personal information,
New equity or debt offerings or significant borrowing,
Changes in debt ratings, or analyst upgrades or downgrades of the issuer or one of its securities,
Significant changes in accounting treatment, write-offs or effective tax rate,
Significant litigation or governmental investigation,
Changes in senior management, and
Stock splits or other corporate actions.
It is inside information if it has not been publicly disclosed. Furthermore, it is illegal for any person in possession of material nonpublic
information to provide other people (including family members such as parents, spouses and children) with such information or to recommend that
they buy or sell the securities. This is called “tipping.” In that case, they may both be held liable.
The Securities and Exchange Commission (the “SEC”), NASDAQ, and plaintiffs’ lawyers focus on uncovering insider trading. A breach
of the insider trading laws could expose the insider or anyone who trades on information provided by an insider to criminal fines up to three times
the profits earned and imprisonment up to ten years, in addition to civil penalties (up to three times of the profits earned), and injunctive actions.
Securities laws also subject controlling persons to civil penalties for illegal insider trading by employees, including employees located outside the
United States. Controlling persons include directors, executive officers, and supervisors. These persons may be subject to fines up to the greater of
US$1,000,000 or three times profit (or loss avoided) by the insider trader.
4
Material nonpublic information does not belong to the individual executive directors, officers, or other employees who may handle it or
otherwise become knowledgeable about it. It is an asset of the Company. For any person to use such information for personal benefit or to
disclose it to others outside the Company violates the Company’s interests. More particularly, in connection with trading in the Company’s
securities, it is a fraud against members of the investing public and against the Company. The mere perception that an employee, executive officer,
or director traded with the knowledge of material inside information could harm the reputation of both the Company and that employee, executive
officer or director.
B.
To Whom Does the Policy Apply?
The prohibition against trading on material nonpublic information applies to executive directors, officers, and all other employees of the
Company, and to other people who gain access to that information. The prohibition applies to both domestic and international employees of the
Company and its subsidiaries. The guidelines are discussed in section F below.
Directors, executive officers and certain designated employees (the “Window Group”) of the Company are subject to additional
restrictions on trading in the Company’s securities because of their access to confidential information on a regular basis.
The restrictions for the Window Group are discussed in Section F(5) below. Please note that household members of those designated in the
Window Group are deemed members of the Window Group and must also abide by the guidelines of the Company policy. Therefore, those in the
Window Group should notify their household members of the policy and its guidelines, including additional trading restrictions applicable to the
Window Group, outlined herein and ensure their compliance with the policy.
Finally, directors and certain employees with inside knowledge of material nonpublic information may be subject to ad hoc restrictions on
trading from time to time.
The Chief Financial Officer or Legal Department of the Company will notify those affected by ad hoc restrictions if and when necessary.
C.
Other Companies’ Stocks.
The same rules apply to other companies’ stocks. Employees, executive officers and directors who learn material nonpublic information
about suppliers, customers, or competitors through their work at the Company should keep such information confidential and not buy or sell stock
in such companies until the information becomes public. Employees, executive officers and directors should not give tips about such stocks.
5
D.
Hedging and Derivatives.
Employees, executive officers and directors are prohibited from engaging in any derivative transactions (including transactions involving
options, puts, calls, prepaid variable forward contracts, equity swaps, collars and exchange funds or other derivatives) that are designed to hedge or
speculate on any change in the market value of the Company’s equity securities. Employees, executive officers and directors are also prohibited
from shorting the Company’s shares.
The insider trading prohibition also applies to trading in options or other derivatives in general, such as put and call options. Options
trading is highly speculative and very risky. People who buy options are betting that the share price will move rapidly. For that reason, when a
person trades in options in his or her employer’s shares, it will arouse suspicion in the eyes of the SEC that the person was trading on the basis of
inside information, particularly where the trading occurs before a Company announcement or major event. It is difficult for an employee, executive
officer or director to prove that he or she did not know about the announcement or event.
If the SEC or NASDAQ were to notice active options trading by one or more employees, executive officers or directors of the Company
prior to an announcement, they would investigate. Such an investigation could be embarrassing to the Company (as well as expensive) and could
result in severe penalties and expense for the persons involved. For all of these reasons, the Company prohibits its employees, executive officers
and directors from trading in options or other securities involving the Company shares. This policy does not pertain to employee stock options
granted by the Company. Employee stock options cannot be traded.
E.
Pledging of Securities, Margin Accounts.
Pledged securities may be sold by the pledgee without the pledgor’s consent under certain conditions. For example, securities held in a
margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Because such a sale may
occur at a time when an employee, executive officer or a director has material nonpublic information or is otherwise not permitted to trade in
Company securities, the Company prohibits employees, executive officers and directors from pledging Company securities in any circumstance,
including by purchasing Company securities on margin or holding Company securities in a margin account.
F.
General Guidelines.
The following guidelines should be followed in order to ensure compliance with applicable antifraud laws and with the Company’s
policies:
1.
Nondisclosure. Material nonpublic information must not be
6
disclosed to anyone, except to persons within the Company whose positions require them to know it. No employee, executive officer, or director
should discuss material inside information in public places.
2. Trading in the Company Securities. No employee, executive officer or director should place a purchase or sale order or recommend
that another person place a purchase or sale order in the Company’s securities when he or she has knowledge of material information concerning
the Company that has not been disclosed to the public. This includes orders for purchases and sales of shares and convertible securities, and other
securities (such as bonds). The exercise of employee stock options is not subject to this policy. However, shares that were acquired upon exercise of
a stock option or upon vesting of a restricted share unit will be treated like any other shares and may not be sold by an employee who is in
possession of material nonpublic information. Any employee or director who possesses material nonpublic information should wait until the start of the
second business day after the information has been publicly released before trading.
3. Avoid Speculation. Investing in the Company’s securities provides an opportunity to share in the future growth of the Company. But
investment in the Company and sharing in the growth of the Company does not mean short range speculation based on fluctuations in the market.
Such activities put the personal gain of the employee, executive officer or director in conflict with the best interests of the Company and its
shareholders. Although this policy does not mean that employees, executive officers or directors may never sell shares, the Company encourages
employees, executive officers and directors to avoid frequent trading in Company shares. Speculating in Company shares is not part of the
Company culture.
4. Trading in Other Securities. No employee, executive officer or director should place a purchase or sale order or recommend that
another person place a purchase or sale order in the securities of another corporation, if the employee, executive officer or director learns in the
course of his or her employment confidential information about the other corporation that is likely to affect the value of those securities. For example,
it would be a violation of the securities laws if an employee, executive officer or director learned through Company sources that the Company intended to
purchase assets from a company and then bought or sold shares in that other company because of the likely increase or decrease in the value of its
securities.
5. Restrictions on the Window Group. The Window Group is subject to the following restrictions on trading in Company securities:
7
trading is permitted from the start of the second business day following an earnings release with respect to the preceding fiscal period
and end thirty (30) days thereafter (the “Window”), subject to the restrictions below;
(For example: if the Company were to announce its quarterly earnings on February 1, May 1, August 1, and November 1 of
each year, the Window would be as follows (assuming that each of these dates is a business day; if each of these days falls on a
holiday in either the U.S. or Taiwan, then the next business day applies):
First Quarter Window
February 3 – March 4
Second Quarter Window
May 3 – June 1
Third Quarter Window
August 3 – September 1
Fourth Quarter Window
November 3 – December 2
The above dates are for illustrative purposes only. Each Window period will be communicated to the Window Group once the
quarterly earnings announcement date has been determined.)
all trades subject to prior review;
clearance for all trades should be obtained from the Company’s Chief Financial Officer or Legal Department;
no trading is permitted outside the Window periods except for reasons of exceptional personal hardship and subject to prior review; and
individuals in the Window Group are also subject to the general rules and restrictions applicable to all employees.
Note that at times the Company’s Chief Financial Officer or Legal Department may determine that no trades may occur even during the
Window when clearance is requested. This may occur as a result of a pending business transaction, a cyber-breach, or any material development that
has not yet been publicly disclosed. No reasons may be provided and the closing of the Window itself may constitute material inside information that
should not be communicated.
The foregoing Window Group restrictions do not apply to transactions pursuant to written plans for trading securities that comply with Rule
10b5-1 under the Exchange Act (“10b5-1 Plans”) described in below Section G hereto. However, Window Group members may not enter into, amend
or terminate a 10b5-1 Plan relating to Company securities without
8
the prior approval of the Chief Financial Officer or the Legal Department of the Company, which will only be given during a Window period and only
if the Window Group member does not have knowledge of material nonpublic information.
The Company from time to time may also impose an ad hoc trading freeze on all executive officers, directors, and other members of the
Window Group due to significant unannounced corporate developments. These trading freezes may vary in length.
Executive officers, directors or any other member of the Window Group must promptly report to the Chief Financial Officer or the Legal
Department of the Company any transaction in any of the Company’s securities by his or her or any of their respective assistants or family members
other than transactions made pursuant to an approved 10b5-1 Plan.
IN SUMMARY, EVERY EMPLOYEE OF THE COMPANY IS SUBJECT TO TRADING RESTRICTIONS WHEN IN POSSESSION OF INSIDE
INFORMATION REGARDING THE COMPANY. IN ADDITION, EXECUTIVE OFFICERS, DIRECTORS, AND OTHER MEMBERS OF THE
WINDOW GROUP ARE SUBJECT TO PARAGRAPH 5 ABOVE RESTRICTING THEIR TRADING TO WINDOW PERIODS AND
REQUIRING PRE-CLEARANCE.
YOU MUST PROMPTLY REPORT TO THE CHIEF FINANCIAL OFFICER OR THE LEGAL DEPARTMENT OF THE COMPANY ANY
TRADING IN THE COMPANY’S SECURITIES BY ANYONE OR DISCLOSURE OF INSIDE INFORMATION BY COMPANY PERSONNEL
THAT YOU HAVE REASON TO BELIEVE MAY VIOLATE THIS POLICY OR THE SECURITIES LAWS OF THE UNITED STATES.
G.
Guidelines for 10b5-1 Plans
The following guidelines apply for any Rule 10b5-1 trading plan (a “10b5-1 Plan”) relating to the stock of Himax Technologies, Inc. (the
“Company”). All 10b5-1 Plans entered into and any amendment, suspension or termination must comply with Rule 10b5-1 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), the Company’s Statement of Policy Concerning Trading in Company Securities (the
“Trading Policy”) and other Company policies and must meet the following conditions:
1. Participants. Company directors, executive officers and employees (each, an “Insider,” and collectively, “Insiders”) are eligible to
adopt a 10b5-1 Plan.
2. Plan and Approval. The 10b5-1 Plan must be in writing and signed by the Insider, and the Insider must provide a copy to the
Company. The form of each 10b5-1 Plan and any subsequent amendment, suspension or termination must be consistent with these guidelines. Each
10b5-1 Plan must be approved in writing by the Company’s Chief Financial Officer or the Legal Department of the Company prior to the adoption,
amendment, suspension or termination of such plan. A 10b5-1 Plan must not permit an Insider to exercise any subsequent influence over how,
when or whether to effect purchases or sales. Sales under a 10b5-1 Plan must be via an approved broker. The Insider must act
9
in good faith with respect to a 10b5-1 Plan when the Plan is adopted and for the duration of the Plan and must not enter into a 10b5-1 Plan as part
of a plan or scheme to evade the prohibitions of Rule 10b-5. In addition, each 10b5-1 Plan must include a representation by the Insider certifying
that (a) such person is not in possession of material nonpublic information about the Company or its securities, and (b) the 10b5-1 Plan is being
adopted in good faith and not as part of a plan to evade the prohibitions of Rule 10b-5.
3.
Timing and Term of Plan. Each 10b5-1 Plan must be adopted (a) during an open trading window under the Company’s Trading
Policy, and (b) when the Insider does not otherwise possess material nonpublic information about the Company. Each 10b5-1 Plan must be
structured to remain in place for at least six months but no longer than 12 months after the effective date of such plan. Each 10b5-1 Plan must
provide for delayed effectiveness after adoption or amendment (a “Cooling-Off Period”). For Insiders who are directors or executive officers
(“D&O Insiders”), each 10b5-1 Plan must specify that trades may not execute under the 10b5-1 Plan until the later of (a) 90 days after the date of
adoption or amendment of the 10b5-1 Plan and (b) 2 business days following the Company’s filing of a quarterly or annual report covering the
financial reporting period in which the 10b5-1 Plan was adopted or amended, but in no event later than 120 days after the date of adoption or
amendment of the 10b5-1 Plan. For all other Insiders (the “Other Insiders”), each 10b5-1 Plan must specify that trades may not execute under the
10b5-1 Plan for a period of at least 30 days after the date of adoption or amendment of the 10b5-1 Plan.
4.
Plan Specifications. Discretion Regarding Trades. The 10b5-1 Plan must either (a) specify the amount of securities to be purchased
or sold and the price at which and the date on which the securities are to be purchased or sold, or (b) specify or set an objective formula or
algorithm for determining the amount of stock to be purchased or sold and the price at which and the date on which the securities are to be
purchased or sold.
5.
Amendment, Suspension and Termination. Amendments, suspensions, and terminations of 10b5-1 Plans must be approved in
advance by the Chief Financial Officer or the Legal Department of the Company. In addition, an Insider may voluntarily amend a 10b5-1 Plan only
(a) during an open trading window under the Company’s Trading Policy and (b) when the Insider does not otherwise possess material nonpublic
information about the Company. Insiders may make amendments to 10b5-1 Plans without triggering a Cooling-Off Period so long as the
amendment does not change the pricing provisions of the 10b5-1 Plan, the amount of securities covered under the 10b5-1 Plan or the timing of
trades under the 10b5-1 Plan, or where a broker executing trades on behalf of the Insider is substituted by a different broker (so long as the
purchase or sales instructions remain the same).
6.
Mandatory Suspension. Each 10b5-1 Plan must provide for suspension of trades under such plan if legal, regulatory or contractual
restrictions are imposed on the Insider, or if these guidelines are amended, or other events occur, that would prohibit sales under such 10b5-1 Plan.
10
7.
Results of Termination of a Plan. If an Insider terminates a 10b5-1 Plan prior to its stated duration, such Insider may not trade in
Company securities (other than pursuant to another 10b5-1 Plan already in place) for a period of at least 30 days following such termination;
provided, however, that any trades following such termination shall comply with the Company’s Trading Policy. If an existing 10b5-1 Plan is
terminated early and another 10b5-1 Plan is already in place, the first trade under the later-commencing plan must not be scheduled to occur until
after the end of the effective Cooling-Off Period following the termination of the earlier 10b5-1 Plan.
8.
Only One Plan in Effect at Any Time. An Insider may have only one 10b5-1 Plan in effect at any time, except that a written,
irrevocable election (an “Election”) by an Insider to sell a portion of shares as necessary to satisfy statutory tax withholding obligations arising
solely from the vesting of compensatory awards (not including options) (“Sales to Cover”) is permitted, provided that (a) the Election is made
during an open trading window under the Trading Policy, (b) at the time of the Election, the Insider is not aware of any material, nonpublic
information with respect to the Company or any securities of the Company, (c) the Sales to Cover are made in good faith and not as part of a plan
or scheme to evade the prohibitions of Rule 10b-5, (d) the Insider does not have, and will not attempt to exercise, authority, influence or control
over any such Sales to Cover, and (e) the Election contains appropriate representations as to clauses (b)-(d).
An Insider may adopt a new 10b5-1 Plan to replace an existing 10b5-1 Plan before the scheduled termination date of such existing
10b5-1 Plan, so long as the first scheduled trade under the new 10b5-1 Plan does not occur until after all trades under the existing 10b5-1 Plan are
completed or expire without execution (subject to any Cooling-Off Periods), and otherwise complies with the guidelines regarding the first trade
described above. A series of separate contracts with different brokers to execute trades under a 10b5-1 Plan may be treated as a single plan,
provided the contracts as a whole meet the conditions under Rule 10b5-1, and provided further that any amendment of one contract is treated as an
amendment of all of the contracts under the plan.
9.
Limitation on Single-Trade Arrangements. In any 12-month period, an Insider is limited to one “single-trade plan” — one designed
to effect the open market purchase or sale of the total amount of the securities subject to the plan as a single transaction. The following do not
constitute single-trade plans: (a) a 10b5-1 Plan that gives discretion to an agent over whether to execute the 10b5-1 Plan as a single transaction or
that provides the agent’s future acts depend on facts not known at the time the 10b5-1 Plan’s adoption and might reasonably result in multiple
transactions, and (b) Sales to Cover.
10.
No Hedging. As described in the Trading Policy, individuals subject to the policy are prohibited from engaging in any hedging or
similar transactions designed to decrease the risks associated with holding Company securities. Further to this end, an Insider adopting a 10b5-1
Plan may not have entered into or altered a corresponding or hedging transaction or position with
11
respect to the securities subject to the 10b5-1 Plan and must agree not to enter into any such transaction while the 10b5-1 Plan is in effect.
11.
Compliance with Rule 144. All sales made under a 10b5-1 Plan must be made in reliance on an exemption from registration under
the Securities Act of 1933, as amended (the “Securities Act”) and may not be made pursuant to a registration statement. To the extent that sales
made under a 10b5-1 Plan are made pursuant to Rule 144 under the Securities Act, such 10b5-1 Plan must provide for specific procedures to
comply with Rule 144, including the filing of Forms 144.
12.
Broker Obligation to Provide Notice of Trades. Each 10b5-1 Plan entered into by an Insider must provide that the broker will
provide notice of any trades under the 10b5-1 Plan to the Insider and the Company in sufficient time to allow for the Insider to make timely filings
under the Exchange Act.
13.
Insider Obligation to Make Exchange Act Filings and Company Disclosures. Each 10b5-1 Plan must contain an explicit
acknowledgement by such Insider that all filings required by the Exchange Act, as a result of or in connection with trades under such 10b5-1 Plan,
are the sole obligation of such Insider and not the Company. The Company will also disclose in its quarterly and annual reports the material terms
of the 10b5-1 Plans adopted or terminated (which includes modifications) by D&O Insiders, as required by the Securities and Exchange
Commission’s rules, including the identity of the person, the date of adoption or termination, the duration of the trading arrangement and the
aggregate number of securities under the 10b5-1 Plan.
14.
Required Footnote Disclosure. Insiders must footnote trades disclosed on Forms 144 to indicate that the trades were made pursuant
to a 10b5-1 Plan.
H.
Applicability of U.S. Securities Laws to International Transactions.
All employees of the Company’s and its subsidiaries are subject to the restrictions on trading in the Company securities and the securities
of other companies. The U.S. securities laws may be applicable to trades in the Company’s securities executed outside the U.S. as well as to the
securities of the Company’s subsidiaries or affiliates, even if they are located outside the United States. Transactions involving securities of
subsidiaries or affiliates should be carefully reviewed by counsel for compliance not only with local law but also for possible application of U.S.
securities laws.
12
III.
OTHER LIMITATIONS ON SECURITIES TRANSACTIONS
A.
Public Resales – Rule 144.
The U.S. Securities Act (the “Securities Act”) requires every person who offers or sells a security to register such transaction with the SEC
unless an exemption from registration is available. Rule 144 under the Securities Act is the exemption typically relied upon for (i) for public resales
by any person of “restricted securities” (i.e., unregistered securities acquired in a private offering or sale) and (ii) public resales by directors,
executive officers and other control persons of a company (known as “affiliates”) of any of the Company’s securities, whether restricted or
unrestricted.
The exemption in Rule 144 may only be relied upon if certain conditions are met. These conditions vary based upon whether the Company
has been subject to the SEC’s reporting requirements for 90 days (and is therefore a “reporting company” for purposes of the rule) and whether the
person seeking to sell the securities is an affiliate or not. Application of the rule is complex and Company employees, executive officers and
directors should not make a sale of Company securities in reliance on Rule 144 without obtaining the approval of the Chief Financial Officer or the
Legal Department of the Company, who may require the employee, executive officer or director to obtain an outside legal opinion satisfactory to
the Chief Financial Officer or the Legal Department of the Company concluding that the proposed sale qualifies for the Rule 144 exemption.
1.
Holding Period. Restricted securities issued by a reporting company (i.e., a company that has been subject to the SEC’s reporting
requirements for at least 90 days) must be held and fully paid for a period of six months prior to their sale. Restricted securities issued by a non-
reporting company are subject to a one-year holding period. The holding period requirement does not apply to securities held by affiliates that were
acquired either in the open market or in a public offering of securities registered under the Securities Act. Generally, if the seller acquired the
securities from someone other than the Company or an affiliate of the Company, the holding period of the person from whom the seller acquired
such securities can be “tacked” to the seller’s holding period in determining if the holding period has been satisfied.
2.
Current Public Information. Current information about the Company must be publicly available before the sale can be made. The
Company’s periodic reports filed with the SEC ordinarily satisfy this requirement. If the seller is not an affiliate of the Company issuing the
securities (and has not been an affiliate for at least three months) and one year has passed since the securities were acquired from the issuer or an
affiliate of the issuer
13
(whichever is later), the seller can sell the securities without regard to the current public information requirement.
Rule 144 also imposes the following additional conditions on sales by persons who are “affiliates.” A person or entity is considered an “affiliate,”
and therefore subject to these additional conditions, if it is currently an affiliate or has been an affiliate within the previous three months.
3.
Volume Limitations. The amount of debt securities that can be sold by an affiliate and by certain persons associated with the
affiliate during any three-month period cannot exceed 10% of a tranche (or class when the securities are non-participatory preferred stock),
together with all sales of securities of the same tranche sold for the account of the affiliate. The amount of equity securities that can be sold by an
affiliate during any three-month period cannot exceed the greater of (i) one percent of the outstanding shares of the class or (ii) the average weekly
reported trading volume for shares of the class during the four calendar weeks preceding the time the order to sell is received by the broker or
executed directly with a market maker.
4.
Manner of Sale. Equity securities held by affiliates must be sold in unsolicited brokers’ transactions, directly to a market-maker or
in riskless principal transactions.
5.
Notice of Sale. An affiliate seller must file a notice of the proposed sale with the SEC at the time the order to sell is placed with the
broker, unless the amount to be sold neither exceeds 5,000 shares nor involves sale proceeds greater than $50,000. See “Filing Requirements”.
Bona fide gifts are not deemed to involve sales of shares for purposes of Rule 144, so they can be made at any time without limitation on
the amount of the gift. Donees who receive restricted securities from an affiliate generally will be subject to the same restrictions under Rule 144
that would have applied to the donor, depending on the circumstances.
B.
Private Resales.
Directors and executive officers also may sell securities in a private transaction without registration pursuant to Section 4(a)(7) of the
Securities Act, which allows resales of shares of reporting companies to accredited investors, provided that the sale is not solicited by any form of
general solicitation or advertising. There are a number of additional requirements, including that the seller and persons participating in the sale on a
remunerated basis are not “bad actors” under Rule 506(d)(1) of Regulation D or otherwise subject to certain statutory disqualifications; the
Company is engaged in a business and not in bankruptcy; and the securities offered have been outstanding for at least 90 days and are not part of an
unsold underwriter’s allotment. Private resales raise certain documentation and other issues and must be reviewed in advance by the Company’s
Chief Financial Officer or Legal Department.
14
C.
Restrictions on Purchases of Company Securities.
In order to prevent market manipulation, the SEC adopted Regulation M under the U.S. Exchange Act. Regulation M generally restricts the
Company or any of its affiliates from buying Company stock, including as part of a share buyback program, in the open market during certain
periods while a distribution, such as a public offering, is taking place. You should consult with the Company’s Chief Financial Officer or Legal
Department if you desire to make purchases of Company shares during any period that the Company is conducting an offering or buying shares
from the public.
D.
Filing Requirements.
1.
Schedule 13D and 13G. Section 13(d) of the Exchange Act requires the filing of a statement on Schedule 13D (or on Schedule
13G, in certain limited circumstances) by any person or group which acquires beneficial ownership of more than five percent of a class of equity
securities registered under the Exchange Act. The threshold for reporting is met if the shares owned, when coupled with the amount of shares
subject to options exercisable within 60 days, exceeds the five percent limit.
A report on Schedule 13D is required to be filed with the SEC and submitted to the Company within five business days after the reporting
threshold is reached. If a material change occurs in the facts set forth in the Schedule 13D, such as an increase or decrease of one percent or more
in the percentage of shares beneficially owned, an amendment disclosing the change must be filed within two business days after the triggering
event. A decrease in beneficial ownership to less than five percent is per se material and must be reported. Schedule 13G reporting, which is more
limited and subject to fewer updating requirements that 13D, is generally available for equity securities acquired before the Company’s IPO. A
report on Schedule 13G is required to be filed with the SEC and submitted to the Company within 45 days after the end of the calendar quarter in
which the reporting threshold is reached.
A person is deemed the beneficial owner of securities for purposes of Section 13(d) if such person has or shares voting power (i.e., the
power to vote or direct the voting of the securities) or dispositive power (i.e., the power to sell or direct the sale of the securities). A person filing a
Schedule 13D or 13G may disclaim beneficial ownership of any securities attributed to him or her if he or she believes there is a reasonable basis
for doing so.
2.
Form 144. As described above under the discussion of Rule 144, a seller relying on Rule 144 must file a notice of proposed sale
with the SEC at the time the order to sell is placed with the broker unless (x) the amount to be sold neither exceeds 5,000 shares nor involves sale
proceeds greater than $50,000 or (y) the seller is not at the time of the sale, and has not been for the three months preceding such date, an affiliate
of the Company.
Exhibit 12.1
Certification
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: April 2, 2025
By: /s/ Jordan Wu
Name: Jordan Wu
Title:
President and Chief Executive Officer
Exhibit 12.2
Certification
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: April 2, 2025
By: /s/ Jessica Pan
Name: Jessica Pan
Title:
Chief Financial Officer
Exhibit 13.1
Certification
April 2, 2025
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, 2024 (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
Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
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 April 2, 2025, 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
April 2, 2025