HiMax Sees Ultra HD Accounting for 5-10 Percent of Global TV Shipments This Year

While Himax took a more “conservative” position in 4K drivers in 2013 because of their sizable price gap with 1080p, the narrowing of the price difference between the two technologies to about 1.2 times that of HD will enable the company to “resume growth” in large-sized panel ICs including drivers and timing controllers, Wu said. Himax’s Q4 large-sized panel-related revenue sank to $46.8 million from $77.5 million a year earlier, amid a sharp drop in business with panelmaker Chimei Innolux, Himax officials said. Chimei, which contributed about 15-20 percent of Himax’s 2013 revenue, sold its 14.98 percent stake in the company in June, Himax said. Large-panel driver ICs were 24 percent of Himax’s Q4 sales, down from 41 percent a year earlier, the company said.

Much of Himax’s 4K driver IC and controller business is concentrated with Chinese suppliers using 60 Hz and 120 Hz panels, the bulk of which had been deployed to hit sub-$1,000 retail prices, Wu said. Himax’s 4K ICs have been popular because of their ability to handle “thermal issues” arising with the high-resolution panels, Wu said. The push in 4K won’t be limited to 10-inch and up screen sizes, and smartphone displays could near the resolution by year-end with 320 pixels per inch and up, Wu said. “Even with single digit penetration” 4K could have “meaningful impact” of Himax’s large-sized panel IC business because of the higher chip prices, he said.

The company’s Himax Display subsidiary is shipping “pilot quantities” of LCoS microdisplays to “multiple” IT and CE companies for potential use in head-up displays, Wu said. Himax’s LCoS display is at the heart of Google Glass head-up eyewear and Himax is “continuing to work with other top-notch names” in developing product, Wu said. Google bought 6.3 percent of Himax Display in July. Himax didn’t say when other head-up eyewear products will be available in volume shipments, but the LCoS displays will help drive the company’s non-driver business, which also includes CMOS image sensors and power management ICs, Himax said. In addition to consumer head-up eyewear, the LCoS chips also are being designed for military and industrial applications, although in smaller volumes, Wu said. Himax’s non-driver segment had an 28.1 percent increase in Q4 sales to $35.4 million, or 18.1 percent of total quarterly revenue, up from 14.5 percent a year ago, Himax said.

Himax hasn’t said which LCoS microdisplays Google is using. But Himax builds color filter- and color sequential-based chips ranging from 0.22-inch color sequential with 640 x 360 resolution to a 0.59-inch color filter version with 800 x 600. In between is a 0.45-inch chip with 1,024 x 768 resolution. Himax has monthly capacity for 300,000 units, up from 200,000 in Q3, and could expand it up to two million with a $30 million total investment, Chief Financial Officer Jackie Chan said. Himax has already spent about $12-$15 million of that on improving yields and expanding production, Chan said. Himax forecast spending $20-$30 million this year on capital projects, up from $18 million last year, Chan said. Himax has additional land near its Taiwan headquarters on which to build new manufacturing capacity for LCoS displays, Wu said. It also may seek agreement with third-party suppliers to handle LCoS module assembly, he said.

Having recently delivered a 5-megapixel image sensor capable of recording 30 frames per second, Himax will likely proceed with slow development of the 8-megapixel it recently shipped, Wu said. Himax has 30- and 15-fps versions of the 8-megapixel chip, having landed design wins in smartphones and tablets in China. It will now focus on replacing the 1- and 2-megapixel CMOS sensors in notebook PCs as well as chips for automotive applications, Wu said. “We are going to stop at eight megapixels for some time and try to expand our presence in notebooks,” Wu said. Himax doesn’t want to overreach in CMOS image sensors and “we have to admit we are not in the first tier yet,” Wu said. About 50 percent of Himax’s CMOS image sensor shipments this year will be with 720p and higher resolutions, Chan said.

Himax’s Q4 net income improved to $14.3 million from $14 million a year earlier, despite taking a $3.1 million inventory write down on mid- and low-end CMOS image sensors, company officials said. Himax’s Q4 sales grew to $195.2 million from $190.6 million. Sales to Chimei reached $60.6 million in Q4 2012, Himax said. Small and medium display driver IC Q4 revenue increased to $113 million from $100.5 million, benefiting from strong sales in smartphone and tablets in China, Himax said. Himax’s Q4 gross margin improved to 25.1 percent from 23.3 percent a year earlier, but was down from 25.3 percent in the previous quarter due to a “slightly unfavorable product mix,” Himax said. Himax’s inventory rose to $177.4 million in Q4, from $116.7 million a year ago and $159.6 million in the previous quarter, Himax said. The increased inventory was tied to an expected increase in Q1 sales of driver ICs, CMOS image sensors and other non-driver products, it said.