3D sensing, photonics, and lasers are an area of growth, if you look at the earnings report from Lumentum (NASDAQ: LITE), II-VI (NASDAQ: IIVI), and Acacia (NASDAQ: ACIA). For Himax Technologies (NASDAQ: HIMX), the market it is carving in 3D sensing in smartphones is a potential growth catalyst. Yet in the second quarter earnings report, trouble looms.
Himax is at least six months away from a Huawei ASC 3D. The base business weakened during the quarter. Management guided for flat revenue but talked about higher WLO sales. The company made little to mention of OLED Display Driver sales, other than in autos. OLED driver revenue is lacking, also.
On the conference call, Jordan Wu explained the uncertainties around time-of-flight for 3D sensing: Time-of-flight is a more uncertain anymore as far as we can tell for now. We will probably have a better picture next year. We are aware of a project, which the customer adopt time-of-flight for main camera, 3D sensing. And the reason why time-of-flight is chosen is for – to take advantage of this longer range. So structured light or ASC for front camera, for, it’s only within one metre.
Until more software plays enter the 3D sensing application space, uptake of the hardware technology may lag. Himax’s sales prospects are still not guaranteed. It has several leading smartphone names to mention as partners but widespread adoption has yet to play out. 2019 is the year this may happen.
Your takeaway
HIMX stock is overvalued if prospects don’t play out or undervalued if orders do come in. Time will tell. And the waiting time on HIMX stock to see what happens next is at least another three months more.
