Himax Technologies, Inc. (NASDAQ: HIMX) is losing relevance in nearly all of the markets for which it operates. The stock fell 18.8% on the week after reporting third-quarter results. Once again, the firm forecast upside in the upcoming quarter but investors are growing tired of the company.
Himax reported $0.03 in EPS in Q3 but revenue fell 4% Y/Y to $188.4M. 3D sensing, which it developed in partnership with Qualcomm (NASDAQ: QCOM), failed to win much meaningful business. Despite months (two or three quarters) of hyping, Himax actually has few to no customers ordering enough volume to add to revenue. The premium smartphone market peaked. Consumers are sapped out of spending $1,000 - $1,500 on an Apple iPhone or super-powerful Android device. This constrains phone makers from using Himax’s more expensive 3D sensing solution.
Lumentum (NASDAQ: LITE) does not face the same issues, although it is cautious in the current quarter.
Looking ahead, Himax now sees WLO and TDDI business improving. This is consistent with ChipMOS (NASDAQ:IMOS) and Synaptics (NASDAQ: SYNA) both benefiting from strength in the display driver space.
Your Takeaway
China’s weak markets took a toll on many semiconductor chip stocks. Given the negative dynamics, Himax did not too that poorly. Markets are unforgiving, though, and punished the stock. The trading range now changes. Upside is still possible; investors need a higher-than average level of patience.
Disclosure: Author owns shares of HIMX.
