Himax-2015-Annual-Report.Pdf
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Dear Shareholders, Our industry endured a difficult year in 2015 which posed challenges during a cycle of soft demand across consumer electronics. Despite this, Himax remained committed to the execution of our long-term strategies. While some of our competitors might have retreated, we continued to invest in new product categories and technologies, and pave inroads into new markets. Particularly, our multi-year partnerships with leading multinationals for AR/VR technologies advanced and hit inflection point in 2015. Seeing strong momentum across all our major product lines, we are confident that we are in a position to deliver strong revenue and earnings growth in 2016. I thank the team for their dedication and to our shareholders for their support in a challenging environment. I will now highlight notable developments during 2015. Our driver ICs for small and medium-sized displays, though still the largest source of revenue for the year, experienced a decline. Notably, our shipment to a key Korean end-customer fell significantly as they replaced a substantial portion of the use of a-Si TFT LCD displays in smartphones, for which we were the main IC supplier, with ones using AMOLED technology. In addition, Chinese smartphone market suffered from three slow quarters during 2015 and the tablet market was lackluster throughout the whole year. However, we successfully mitigated these negative impacts by introducing new products to our leading Chinese smartphone end customers and adding a new top-tier Chinese customer in the second half of 2015. We remain one of the leading driver IC suppliers for small and medium-sized panel makers all across Taiwan, Korea, China and Japan. Our customer base covers the vast majority of major mobile device end customers worldwide. Our leadership in technology, including those forward-looking areas such as AMOLED display drivers and in-cell TDDI, helped secure key design-wins in the second half of 2015, paving the way for a promising year ahead. For the large panel display driver business, we continued to see accelerating sales to Chinese customers and further expanded our leading market share in the country. China’s aggressive TFT-LCD capacity expansion and the higher in-sourcing demands from the local TV set makers, coupled with our leading technology and market share, lifted our large panel segment into a high growth mode once again, despite continuous softness in the worldwide IT market. We believe that Himax is uniquely positioned for a tailwind ride over China’s panel capacity expansion and are confident that the large panel display driver business will generate solid growth in the next few years. The non-driver segment overall also experienced some slowdown in 2015 with the decline of the CMOS image sensors business being the main reason behind the performance. However, LCOS, WLO and timing controllers grew strongly during the year. Our LCOS and WLO business hit inflection in September 2015 with pilot production shipment made to a leading AR device customer. Having invested in the technologies for over 15 years, we are uniquely positioned as the provider of choice for microdisplay and related optics to enable AR devices. LCOS microdisplay and a highly customized optical system are to account for one of the parts with the highest value in the bill-of-material of any AR products. LCOS and WLO are clearly still the critical growth category in 2016, evidenced by increasing shipments and additional design engagements with existing and new customers. Separately, we have also broken into the VR space with major design-wins taking place toward the end of 2015. We stand to benefit from multi-billion dollar AR/VR industry. Lastly, the introduction and mass shipment of our on-cell and pure in-cell products have led to fast customer additions in our touch panel controller business in 2015. We believe that customer base expansion of our touch panel controller business will continue into 2016 with greater contribution coming from TDDI products. Looking ahead into 2016, we continue to stay focused on execution in the following key areas: 1. Grow our large panel display driver business in China’s fast-expanding panel market where we enjoy a long-standing leading market share by providing total solution and leading the charge in new technology areas such as 8K TV and OLED display; 2. Capitalize on our strong position in small and medium panel display drivers to lead the market in major new technologies trends including higher display resolution, AMOLED and in-cell TDDI; 3. Enlarge AR/VR sales through mass production for multiple AR/VR device customers and deepen project engagements with leading players for future versions and applications. 1 We paid a cash dividend of 30 cents per ADS, totaling $51.4 million, in 2015, illustrating our strong confidence in the business prospect. We continued to maintain a strong balance sheet with a healthy cash position and no debt I will close by thanking all of our employees, customers, suppliers and shareholders for your continued support in Himax. We look forward to another year of growth and excitement in 2016. Sincerely, Jordan Wu President and CEO Himax Technologies, Inc. 2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (Mark One) REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ________________ OR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report ________________ Commission file number: 000-51847 HIMAX TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) Not Applicable (Translation of Registrant’s name into English) CAYMAN ISLANDS (Jurisdiction of incorporation or organization) NO. 26, ZIH LIAN ROAD SINSHIH DISTRICT, TAINAN CITY 74148 TAIWAN, REPUBLIC OF CHINA (Address of principal executive offices) Jackie Chang Chief Financial Officer Telephone: +886-2-2370-3999 E-mail: [email protected] Facsimile: +886-2-2314-0877 10F, No. 1, Xiangyang Road Taipei 10046 Taiwan, Republic of China (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Ordinary Shares, par value $0.3 per ordinary share The NASDAQ Global Select Market Inc.* * Not for trading, but only in connection with the listing on the NASDAQ Global Select Market, Inc. of American Depositary Shares representing such Ordinary Shares 3 Securities registered or to be registered pursuant to Section 12(g) of the Act: None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 343,815,424 Ordinary Shares. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. x Yes No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes x No Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non- accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer x Accelerated filer Non-accelerated filer Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP x International Financial Reporting Standards as issued by the International Accounting Standards Board Other If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No 4 TABLE OF CONTENTS PAGES SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 7 CERTAIN CONVENTIONS 7 PART I 9 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 9 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 9 ITEM 3. KEY INFORMATION 9 3.A. Selected Financial Data 9 3.B. Capitalization and Indebtedness 12 3.C. Reason for the Offer and Use of Proceeds 12 3.D. Risk Factors 12 ITEM 4.