Himax Forecasts Q4 Revenue Drop of Up to 26% After Q3 EPS Beat

Himax Technologies (HIMX ) on November 5, 2026 reported third-quarter revenue of US$246.8 million for the period ended September 30, 2026, but forecast fourth-quarter revenue to decline 22% to 26% sequentially as automotive display-driver orders abruptly corrected after two quarters of strong growth.

Third-quarter net revenue rose 8.5% sequentially, while gross margin reached 34.2%, in line with guidance of around 34% and up from 33.1% in the second quarter. After-tax profit attributable to Himax stockholders was $18.6 million, or 10.7 cents per diluted ADS, exceeding the 8.0 to 10.0 cents guidance range; Himax attributed the outperformance to lower-than-expected operating expenses. Profit compared with $19.9 million, or 11.4 cents per diluted ADS, in the second quarter and $1.1 million, or 0.6 cents per diluted ADS, in the third quarter of 2025.

Small and medium-sized display drivers generated $176.8 million, up 8.9% sequentially and representing 71.6% of total revenue. Within that segment, sales of automotive display driver ICs (DDICs) and touch-and-display-driver integration (TDDI) chips rose by solid double digits for a second consecutive quarter, supported by broad demand and accelerated purchases by some panel makers serving Chinese automakers expanding overseas. Non-driver revenue increased 11.2% to $51.0 million, led by automotive timing controller (Tcon) shipments. Tcon exceeded 10% of total sales, with more than half coming from automotive Tcon.

Automotive Orders Drive the Fourth-Quarter Reversal

For the fourth quarter, Himax projected gross margin to be flat to slightly up sequentially, depending on product mix, and profit of 4.5 to 6.5 cents per diluted ADS. Small and medium-sized display-driver revenue was expected to decrease by double digits, with automotive, tablet and smartphone driver IC sales all declining sequentially. The guidance therefore pairs a steep revenue contraction with little expected change in gross margin.

Chief Executive Jordan Wu described the demand shift: “In Q4, however, shortly after China’s National Day holidays in early October, we saw a sudden and sizable decline in demand among the customers that had purchased aggressively in prior quarters.”

Management attributed the reduced customer forecasts partly to Chinese automakers’ earlier, overly aggressive export expectations and growing concerns about distribution-channel inventories, including shipments in transit. Himax also cited mounting pressure for tighter trade barriers on Chinese vehicle imports and China’s October announcement of reduced export tax rebates for new energy vehicles as factors limiting near-term order visibility. Panel makers primarily serving non-China customers instead maintained steady forecasts or posted slight sequential order increases.

Automotive IC sales still increased 16% year over year in the first nine months of 2026, and Himax projected full-year automotive IC revenue growth of approximately 10% despite the fourth-quarter correction. It also forecast low-teens sequential growth for automotive Tcon in the fourth quarter, a third consecutive quarter of strong growth, with full-year automotive Tcon sales on track to rise more than 40% year over year. The outlook separates a driver-chip order reset from continued expansion in automotive timing controllers.

Bonus Costs Pressure Sequential Profit

Operating expenses rose 21.9% sequentially to $61.8 million, principally because of annual employee bonus compensation. Total bonus expense was $11.9 million, compared with $0.2 million in the second quarter, helping explain why operating margin fell to 9.2% from 10.8% even as revenue and gross margin improved. Operating income was $22.7 million; the year-over-year margin comparison remained favorable, improving from negative 0.3% in the third quarter of 2025 on higher revenue and gross margin.

Cash, cash equivalents and other financial assets totaled $285.3 million at September 30, down from $298.7 million a quarter earlier, mainly reflecting a $44 million dividend and employee bonus payouts. Operating cash inflow increased to $23.9 million from $17.5 million, while inventories rose to $159.8 million from $151.5 million. The lower cash balance therefore did not reflect weaker operating cash generation.

Separately, Himax expected the proposed divestiture of its stake in an equity-method investee, announced in July 2026, to close in the fourth quarter, subject to customary closing conditions and regulatory approvals. The estimated after-tax gain of approximately $19 million to $20 million is excluded from the fourth-quarter profit guidance, keeping the potential investment gain separate from the operating outlook.

The report leaves a sharp contrast between execution in the third quarter and demand entering the fourth: Himax exceeded its earnings range, but its largest driver segment is absorbing an abrupt order reset. Management characterized the correction as a short-term adjustment; whether subsequent orders validate that characterization, while automotive Tcon growth continues, is the central question left by the guidance.