Himax Imaging Quarterly Update

Himax reports its Q2 2014 results. The company says on the image sensor business status:

"Shipment of low-end CMOS image sensor ... had some negative impact on gross margin in Q2. Although it is expected that more sales from higher-end CMOS image sensor and smartphone driver IC in Q3, pricing remains competitive."

"The CMOS image sensors delivered another strong quarter in Q2, up over 20% sequentially. The Company’s existing 2 and 5 megapixel CMOS image sensors are producing good sales from select international brands and Chinese white-box customers. However, the Company is experiencing some delay in design-in process with its customers to replace older generation sensors with new designs. Such delays will have a negative impact on the corporate gross margin.

It is expected that the 8 megapixel sensors to start small volume shipments from Q3. The 8 megapixel sensor products will contribute to sales growth and better gross margin as they enter mass production. The Company recently launched its first 13 megapixel sensor, which positions us among a small group of players with such high end offering. Additionally, following multi-year design efforts, the Company now has a competitive CMOS image sensor product line for automotive and surveillance applications, both large, lucrative and fast-growing markets. This is a market with a high entry barrier where special know-how is required. Collectively, it is expected that the CMOS image sensor business to more than double in 2014.

The current strategy for the CMOS image sensor business is to focus on increasing shipments and gaining market share. The gross margin for this business will improve when we successfully replace certain old generation designs with new ones and the higher end products, initially 8 megapixel and then 13 megapixel products; comprise a larger portion of the revenue mix. Looking further ahead, the contribution from sensors for automotives and surveillance applications will further improve the gross margin of this product line."

"Last but not least, the Company has been working with several industry leading partners using its unique and industry-leading wafer level optics, or WLO, for the development of three exciting product areas of the future, namely array cameras, certain special purpose sensors and microdisplay light guides for wearable devices. Such development sometimes involves the capabilities of its in-house CMOS image sensor, LCOS microdisplay and video processing algorithm teams. Himax is in a unique position in these exciting new technology areas in that it is the only player in the marketplace which is able to provide a total solution. The Company is excited to be in the forefront of such technological developments thanks to many years of technological innovation which leads to a unique product portfolio covering the full range of image processing related knowhow."